G.R. No.

106296 July 5, 1996

ISABELO T. CRISOSTOMO, petitioner,

vs.
THE COURT OF APPEALS and the PEOPLE OF THE PHILIPPINES, respondents.

This is a petition to review the decision of the Court of Appeals dated July 15, 1992, the dispositive portion
of which reads:

WHEREFORE, the present petition is partially granted. The questioned Orders and writs directing (1)
"reinstatement" of respondent Isabelo T. Crisostomo to the position of "President of the Polytechnic
University of the Philippines", and (2) payment of "salaries and benefits" which said respondent failed to
receive during his suspension insofar as such payment includes those accruing after the abolition of the
PCC and its transfer to the PUP, are hereby set aside. Accordingly, further proceedings consistent with this
decision may be taken by the court a quo to determine the correct amounts due and payable to said
respondent by the said university.

The background of this case is as follows:

Petitioner Isabelo Crisostomo was President of the Philippine College of Commerce (PCC), having been
appointed to that position by the President of the Philippines on July 17, 1974.

During his incumbency as president of the PCC, two administrative cases were filed against petitioner for
illegal use of government vehicles, misappropriation of construction materials belonging to
the college, oppression and harassment, grave misconduct, nepotism and dishonesty. The
administrative cases, which were filed with the Office of the President, were subsequently referred to the
Office of the Solicitor General for investigation.

Charges of violations of R.A. No. 3019, 3(e) and R.A. No. 992, 20-21 and R.A. No. 733, 14 were likewise
filed against him with the Office of Tanodbayan.

On June 14, 1976, three (3) informations for violation of Sec. 3(e) of the Anti-Graft and Corrupt Practices
Act (R.A. No. 3019, as amended) were filed against him. The informations alleged that he appropriated for
himself a bahay kubo, which was intended for the College, and construction materials worth P250,000.00,
more or less. Petitioner was also accused of using a driver of the College as his personal and family
driver. 1

On October 22, 1976, petitioner was preventively suspended from office pursuant to R.A. No. 3019, 13, as
amended. In his place Dr. Pablo T. Mateo, Jr. was designated as officer-in-charge on November 10, 1976,
and then as Acting President on May 13, 1977.

On April 1, 1978, P.D. No. 1341 was issued by then President Ferdinand E. Marcos, CONVERTING THE
PHILIPPINE COLLEGE OF COMMERCE INTO A POLYTECHNIC UNIVERSITY, DEFINING ITS OBJECTIVES,
ORGANIZATIONAL STRUCTURE AND FUNCTIONS, AND EXPANDING ITS CURRICULAR OFFERINGS.

Mateo continued as the head of the new University. On April 3, 1979, he was appointed Acting President
and on March 28, 1980, as President for a term of six (6) years.

On July 11, 1980, the Circuit Criminal Court of Manila rendered judgment acquitting petitioner of the
charges against him. The dispositive portion of the decision reads:

WHEREFORE, the Court finds the accused, Isabelo T. Crisostomo, not guilty of the violations charged in all
these three cases and hereby acquits him therefrom, with costs de officio. The bail bonds filed by said
accused for his provisional liberty are hereby cancelled and released.

Pursuant to the provisions of Section 13, R.A. No. 3019, as amended, otherwise known as The Anti-Graft
and Corrupt Practices Act, and under which the accused has been suspended by this Court in an Order
dated October 22, 1976, said accused is hereby ordered reinstated to the position of President of the
Philippine College of Commerce, now known as the Polytechnic University of the Philippines, from which he
has been suspended. By virtue of said reinstatement, he is entitled to receive the salaries and other
benefits which he failed to receive during suspension, unless in the meantime administrative proceedings
have been filed against him.

The bail bonds filed by the accused for his provisional liberty in these cases are hereby cancelled and
released.

SO ORDERED.
The cases filed before the Tanodbayan (now the Ombudsman) were likewise dismissed on August 8, 1991
on the ground that they had become moot and academic. On the other hand, the administrative cases
were dismissed for failure of the complainants to prosecute them.

On February 12, 1992, petitioner filed with the Regional Trial Court a motion for execution of the judgment,
particularly the part ordering his reinstatement to the position of president of the PUP and the payment of
his salaries and other benefits during the period of suspension.

The motion was granted and a partial writ of execution was issued by the trial court on March 6, 1992. On
March 26, 1992, however, President Corazon C. Aquino appointed Dr. Jaime Gellor as acting president of
the PUP, following the expiration of the term of office of Dr. Nemesio Prudente, who had succeeded Dr.
Mateo. Petitioner was one of the five nominees considered by the President of the Philippines
for the position.

On April 24, 1992, the Regional Trial Court, through respondent Judge Teresita Dy-Liaco Flores, issued
another order, reiterating her earlier order for the reinstatement of petitioner to the position of PUP
president. A writ of execution, ordering the sheriff to implement the order of reinstatement, was issued.

In his return dated April 28, 1992, the sheriff stated that he had executed the writ by installing petitioner
as President of the PUP, although Dr. Gellor did not vacate the office as he wanted to consult with the
President of the Philippines first. This led to a contempt citation against Dr. Gellor. A hearing was set on
May 7, 1992. On May 5, 1992, petitioner also moved to cite Department of Education, Culture and Sports
Secretary Isidro Cario in contempt of court. Petitioner assumed the office of president of the PUP.

On May 18, 1992, therefore, the People of the Philippines filed a petition for certiorari and prohibition (CA
G.R. No. 27931), assailing the two orders and the writs of execution issued by the trial court. It also asked
for a temporary restraining order.

On June 25, 1992, the Court of Appeals issued a temporary restraining order, enjoining petitioner to cease
and desist from acting as president of the PUP pursuant to the reinstatement orders of the trial court , and
enjoining further proceedings in Criminal Cases Nos. VI-2329-2331.

On July 15, 1992, the Seventh Division of the Court of Appeals rendered a decision, 2 the dispositive portion
of which is set forth at the beginning of this opinion. Said decision set aside the orders and writ of
reinstatement issued by the trial court. The payment of salaries and benefits to petitioner accruing after
the conversion of the PCC to the PUP was disallowed. Recovery of salaries and benefits was limited to
those accruing from the time of petitioner's suspension until the conversion of the PCC to the PUP. The
case was remanded to the trial court for a determination of the amounts due and payable to petitioner.

Hence this petition. Petitioner argues that P.D. No. 1341, which converted the PCC into the PUP, did not
abolish the PCC. He contends that if the law had intended the PCC to lose its existence, it would have
specified that the PCC was being "abolished" rather than "converted" and that if the PUP was intended to
be a new institution, the law would have said it was being "created." Petitioner claims that the PUP is
merely a continuation of the existence of the PCC, and, hence, he could be reinstated to his former position
as president.

In part the contention is well taken, but, as will presently be explained, reinstatement is no longer possible
because of the promulgation of P.D. No. 1437 by the President of the Philippines on June 10, 1978.

P.D. No. 1341 did not abolish, but only changed, the former Philippine College of Commerce into what is
now the Polytechnic University of the Philippines, in the same way that earlier in 1952, R.A. No. 778 had
converted what was then the Philippine School of Commerce into the Philippine College of Commerce.
What took place was a change in academic status of the educational institution, not in its
corporate life. Hence the change in its name, the expansion of its curricular offerings, and the changes in
its structure and organization.

As petitioner correctly points out, when the purpose is to abolish a department or an office or an
organization and to replace it with another one, the lawmaking authority says so. He cites the following
examples:

E.O. No. 709:

1. There is hereby created a Ministry of Trade and Industry, hereinafter referred to as the Ministry. The
existing Ministry of Trade established pursuant to Presidential Decree No. 721 as amended, and the
existing Ministry established pursuant to Presidential Decree No. 488 as amended, are abolished together
with their services, bureaus and similar agencies, regional offices, and all other entities under their
supervision and control.

E.O. No. 710:

1. There is hereby created a Ministry of Public Works and Highways, hereinafter referred to as the Ministry.
The existing Ministry of Public Works established pursuant to Executive Order No. 546 as amended, and the
existing Ministry of Public Highways established pursuant to Presidential Decree No. 458 as amended, are
abolished together with their services, bureaus and similar agencies, regional offices, and all other entities
within their supervision and control. . . .

R.A. No. 6975:

13. Creation and Composition. -- A National Police Commission, hereinafter referred to as the Commission,
is hereby created for the purpose of effectively discharging the functions prescribed in the Constitution and
provided in this Act. The Commission shall be a collegial body within the Department. It shall be composed
of a Chairman and four (4) regular commissioners, one (1) of whom shall be designated as Vice-Chairman
by the President. The Secretary of the Department shall be the ex-officio Chairman of the Commission,
while the Vice-Chairman shall act as the executive officer of the Commission.

90. Status of Present NAPOLCOM, PC-INP. - Upon the effectivity of this Act, the present National Police
Commission, and the Philippine Constabulary-Integrated National Police shall cease to exist. The Philippine
Constabulary, which is the nucleus of the integrated Philippine Constabulary-Integrated National Police,
shall cease to be a major service of the Armed Forces of the Philippines. The Integrated National Police,
which is the civilian component of the Philippine Constabulary-Integrated National Police, shall cease to be
the national police force and in lieu thereof, a new police force shall be established and constituted
pursuant to this Act.

In contrast, P.D. No. 1341, provides:

1. The present Philippine College of Commerce is hereby converted into a university to be

known as the "Polytechnic University of the Philippines," hereinafter referred to in this Decree
as the University.

As already noted, R.A. No. 778 earlier provided:

1. The present Philippine School of Commerce, located in the City of Manila, Philippines, is hereby granted
full college status and converted into the Philippine College of Commerce, which will offer not only its
present one-year and two-year vocational commercial curricula, the latter leading to the titles of Associate
in Business Education and/or Associate in Commerce, but also four-year courses leading to the degrees of
Bachelor of Science in Business in Education and Bachelor of Science in Commerce, and five-year courses
leading to the degrees of Master of Arts in Business Education and Master of Arts in Commerce,
respectively.

The appellate court ruled, however, that the PUP and the PCC are not "one and the same institution" but
"two different entities" and that since petitioner Crisostomo's term was coterminous with the legal
existence of the PCC, petitioner's term expired upon the abolition of the PCC. In reaching this conclusion,
the Court of Appeals took into account the following:

a) After respondent Crisostomo's suspension, P.D. No. 1341 (entitled "CONVERTING THE PHILIPPINE
COLLEGE OF COMMERCE INTO A POLYTECHNIC UNIVERSITY, DEFINING ITS OBJECTIVES, ORGANIZATIONAL
STRUCTURE AND FUNCTIONS, AND EXPANDING ITS CURRICULAR OFFERINGS") was issued on April 1, 1978.
This decree explicitly provides that PUP's objectives and purposes cover not only PCC's offering of
programs "in the field of commerce and business administration" but also "programs in other polytechnic
areas" and "in other fields such as agriculture, arts and trades and fisheries . . ." (section 2). Being a
university, PUP was conceived as a bigger institution absorbing, merging and integrating the entire PCC
and other "national schools" as may be "transferred" to this new state university.

b) The manner of selection and appointment of the university head is substantially different from that
provided by the PCC Charter. The PUP President "shall be appointed by the President of the
Philippines upon recommendation of the Secretary of Education and Culture after consultation with the
University Board of Regents" (section 4, P.D. 1341). The President of PCC, on the other hand, was
appointed "by the President of the Philippines upon recommendation of the Board of Trustees" (Section 4,
R.A. 778).

c) The composition of the new university's Board of Regents in likewise different from that of the PCC Board
of Trustees (which included the chairman of the Senate Committee on Education and the chairman of the
House Committee on Education, the President of the PCC Alumni Association as well as the President of the
Chamber of Commerce of the Philippines). Whereas, among others, the NEDA Director-General, the
Secretary of Industry and the Secretary of Labor are members of the PUP Board of Regents. (section 6, P.D.
1341)

d) The decree moreover transferred to the new university all the properties including "equipment and
facilities:"
". . . owned by the Philippine College of Commerce and such other National Schools as may be
integrated . . . including their obligations and appropriations . . ." (sec. 12; emphasis supplied) 3

But these are hardly indicia of an intent to abolish an existing institution and to create a new one. New
course offerings can be added to the curriculum of a school without affecting its legal existence. Nor will
changes in its existing structure and organization bring about its abolition and the creation of a new one.
Only an express declaration to that effect by the lawmaking authority will.

The Court of Appeals also cites the provision of P.D. No. 1341 as allegedly implying the abolition of the PCC
and the creation of a new one - the PUP - in its stead:

12. All parcels of land, buildings, equipment and facilities owned by the Philippine College of Commerce
and such other national schools as may be integrated by virtue of this decree, including their obligations
and appropriations thereof, shall stand transferred to the Polytechnic University of the
Philippines, provided, however, that said national schools shall continue to receive their
corresponding shares from the special education fund of the municipal/provincial/city
government concerned as are now enjoyed by them in accordance with existing laws and/or
decrees.

The law does not state that the lands, buildings and equipment owned by the PCC were being "transferred"
to the PUP but only that they "stand transferred" to it. "Stand transferred" simply means, for example, that
lands transferred to the PCC were to be understood as transferred to the PUP as the new name of the
institution.

But the reinstatement of petitioner to the position of president of the PUP could not be ordered by the trial
court because on June 10, 1978, P.D. No. 1437 had been promulgated fixing the term of office of presidents
of state universities and colleges at six (6) years, renewable for another term of six (6) years, and
authorizing the President of the Philippines to terminate the terms of incumbents who were not
reappointed. P.D. No. 1437 provides:

6. The head of the university or college shall be known as the President of the university or college. He
shall be qualified for the position and appointed for a term of six (6) years by the President of the
Philippines upon recommendation of the Secretary of Education and Culture after consulting with the Board
which may be renewed for another term upon recommendation of the Secretary of Education and Culture
after consulting the Board. In case of vacancy by reason of death, absence or resignation, the Secretary of
Education and Culture shall have the authority to designate an officer in charge of the college or university
pending the appointment of the President.

The powers and duties of the President of the university or college, in addition to those specifically
provided for in this Decree shall be those usually pertaining to the office of the president of a university or
college.

7. The incumbent president of a chartered state college or university whose term may be terminated
according to this Decree, shall be entitled to full retirement benefits: provided that he has served the
government for at least twenty (20) years; and provided, further that in case the number of years served is
less than 20 years, he shall be entitled to one month pay for every year of service.

In this case, Dr. Pablo T. Mateo Jr., who had been acting president of the university since April 3, 1979, was
appointed president of PUP for a term of six (6) years on March 28, 1980, with the result that petitioner's
term was cut short. In accordance with 7 of the law, therefore, petitioner became entitled only to
retirement benefits or the payment of separation pay. Petitioner must have recognized this fact, that is
why in 1992 he asked then President Aquino to consider him for appointment to the same position after it
had become vacant in consequence of the retirement of Dr. Prudente.

WHEREFORE, the decision of the Court of Appeals is MODIFIED by SETTING ASIDE the questioned orders of
the Regional Trial Court directing the reinstatement of the petitioner Isabelo T. Crisostomo to the position of
president of the Polytechnic University of the Philippines and the payment to him of salaries and benefits
which he failed to receive during his suspension in so far as such payment would include salaries accruing
after March 28, 1980 when petitioner Crisostomo's term was terminated. Further proceedings in
accordance with this decision may be taken by the trial court to determine the amount due and payable to
petitioner by the university up to March 28, 1980.

SO ORDERED.
G.R. No. 115844 August 15, 1997

CESAR G. VIOLA, Chairman, Brgy. 167, Zone 15, District II, Manila, petitioner,
vs.
HON. RAFAEL M. ALUNAN III, Secretary DILG, ALEX L. DAVID, President/Secretary General,
National Liga ng mga Barangay, LEONARDO L. ANGAT, President, City of Manila, Liga ng mga
Barangay, respondents.

This is a petition for prohibition challenging the validity of Art. III, 1-2 of the Revised Implementing Rules
and Guidelines for the General Elections of the Liga ng mga Barangay Officers so far as they provide for
the election of first, second and third vice presidents and for auditors for the National Liga ng mga
Barangay and its chapters. The provisions in question read:

1. Local Liga Chapters. The Municipal, City, Metropolitan and Provincial Chapters shall directly elect the
following officers and directors to constitute their respective Board of Directors, namely:

1.1 President
1.2 Executive Vice-President
1.3 First Vice-President
1.4 Second Vice-President
1.5 Third Vice-President
1.6 Auditor
1.7 Five (5) Directors
2. National Liga. The National Liga shall directly elect the following officers and directors to constitute the
National Liga Board of Directors namely:
2.1 President
2.2 Executive Vice-President
2.3 First Vice-President
2.4 Second Vice-President
2.5 Third Vice-President
2.6 Secretary General
2.7 Auditor
2.8 Five (5) Directors
Petitioner Cesar G. Viola brought this action as barangay chairman of Brgy. 167, Zone 15, District II, Manila
against then Secretary of Interior and Local Government Rafael M. Alunan III, Alex L. David,
president/secretary general of the National Liga ng mga Barangay, and Leonardo L. Angat, president of the
City of Manila Liga ng mga Barangay, to restrain them from carrying out the elections for the questioned
positions on July 3, 1994.

Petitioner's contention is that the positions in question are in excess of those provided in the Local
Government Code (R.A. No. 7160), 493 of which mentions as elective positions only those of president,
vice president, and five members of the board of directors in each chapter at the municipal, city,
provincial, metropolitan political subdivision, and national levels. Petitioner argues that, in providing for the
positions of first, second and third vice presidents and auditor for each chapter, 1-2 of the Implementing
Rules expand the number of positions authorized in 493 of the Local Government Code in violation of the
principle that implementing rules and regulations cannot add or detract from the provisions of the law they
are designed to implement.

Although the elections are now over, the issues raised in this case are likely to arise again in future
elections of officers of the Liga ng mga Barangay. For one thing, doubt may be cast on the validity of the
acts of those elected. For another, this comes within the rule that courts will decide a question which is
otherwise moot and academic if it is "capable of repetition, yet evading review." 1

We will therefore proceed to the merits of this case.

Petitioner's contention that the additional positions in question have been created without authority of law
is untenable. To begin with, the creation of these positions was actually made in the Constitution and By-
laws of the Liga ng Mga Barangay, which was adopted by the First Barangay National Assembly on January
11, 1994. This Constitution and By-laws provide in pertinent parts:

ARTICLE VI

OFFICERS AND DIRECTORS

Sec. 1. Organization of Board of Directors of Local Chapters. The chapters shall directly elect their
respective officers, namely, a president; executive vice president; first, second, and third vice presidents;
auditor; and five (5) members to constitute the Board of Directors of their respective chapter. Thereafter,
the Board shall appoint a secretary, treasurer, and public relations officer from among the five (5)
members, with the rest serving as Directors of Board. The Board may create such other positions as it may
deem necessary for the management of the chapter. Pending elections of the president of the municipal,
city, provincial and metropolitan chapters of the Liga, the incumbent presidents of the ABCs of the
municipality, city province and Metropolitan Manila shall continue to act as presidents of the corresponding
Liga chapters, subject to the provisions of the Local Government Code of 1991.

Sec. 2. Organization of Board of Directors of the National Liga. The National Liga shall be composed of
the presidents of the provincial Liga chapters, highly urbanized and independent component city chapters,
and the metropolitan chapter who shall directly elect their respective officers, namely, a president,
executive vice president; first, second, and third vice president, auditor, secretary general; and five (5)
members to constitute the Board of Directors of the National Liga. Thereafter, the Board shall appoint a
treasurer, secretary and public relations officers from among the five (5) members with the rest serving as
directors of the Board. The Board may create such other positions as it may deem necessary for the
management of the National Liga. Pending election of Secretary-General, the incumbent president of the
Pambansang Katipunan ng mga Barangay (PKB) shall act as the Secretary-General. The incumbent
members of the Board of the PKB, headed by the Secretary-General who continue to be presidents of the
respective chapters of the Liga to which they belong, shall constitute a committee to exercise the powers
and duties of the National Liga and with the primordial responsibility of drafting a Constitution and By-Laws
needed for the organization of the Liga as a whole pursuant to the provisions of the Local Government
Code of 1991.

The post of executive vice president is in reality that of the vice president in 493 of the LGC, so that the
only additional positions created for each chapter in the Constitution and By-laws are those of first, second
and third vice presidents and auditor. Contrary to petitioner's contention, the creation of the additional
positions is authorized by the LGC which provides as follows:

493. Organization. The liga at the municipal, city, provincial, Metropolitan political subdivision, and
national levels directly elect a president, a vice-president, and five (5) members of the board of
directors. The board shall appoint its secretary and treasurer and create such other positions as it may
deem necessary for the management of the chapter. A secretary-general shall be elected form among the
members of the national liga and shall be charged with the overall operation of the liga on the national
level. The board shall coordinate the activities of the chapters of the liga. (emphasis added)

This provision in fact requires and not merely authorizes the board of directors to "create such other
positions as it may deem necessary for the management of the chapter" and belies petitioner's claim that
said provision (493) limits the officers of a chapter to the president, vice president, five members of the
board of directors, secretary, and treasurer. That Congress can delegate the power to create positions such
as these has been settled by our decisions upholding the validity of reorganization statutes authorizing the
President of the Philippines to create, abolish or merge officers in the executive department. 2 The question
is whether, in making a delegation of this power to the board of directors of each chapter of the Liga ng
Mga Barangay, Congress provided a sufficient standard so that, in the phrase of Justice Cardozo,
administrative discretion may be "canalized within proper banks that keep it from overflowing." 3

Statutory provisions authorizing the President of the Philippines to make reforms and changes in
government owned or controlled corporations for the purpose of promoting "simplicity, economy and
efficiency" 4 in their operations and empowering the Secretary of Education to prescribe minimum
standards of "adequate and efficient instruction" 5 in private schools and colleges have been found to be
sufficient for the purpose of valid delegation. Judged by these cases, we hold that 493 of the Local
Government Code, in directing the board of directors of the liga to "create such other positions as may be
deemed necessary for the management of the chapter[s]," embodies a fairly intelligible standard. There is
no undue delegation of power by Congress.

Justice Davide contends in dissent, however, that "only the Board of Directors and not any other body
is vested with the power to create other positions as may be necessary for the management of the
chapter" and that, in any case, there is no showing that the Barangay National Assembly was authorized to
draft the Constitution and By-laws because he is unable to find any creating it. The Barangay National
Assembly is actually the Pambansang Katipunan ng mga Barangay (PKB) referred to in Art. 210(f)(2)(3) of
the Rules and Regulations Implementing the Local Government Code of 1991, which Justice Davide's
dissent cites. It will be helpful to quote these provisions:

(2) A secretary-general shall be elected from among the members of the national liga who shall be
responsible for the overall operation of the liga. Pending election of a secretary-general under this rule, the
incumbent president of the pambansang katipunan ng mga barangay shall act as the secretary-
general. The incumbent members of the board of the pambansang katipunan ng mga barangay, headed
by the secretary-general, who continue to be presidents of the respective chapters of the liga to which
they belong, shall constitute a committee to exercise the powers and duties of the national liga and draft
or amend the constitution and by-laws of the national liga to conform to the provisions of this Rule.

(3) The board of directors shall coordinate the activities of the various chapters of the liga.

(Emphasis added)
Pursuant to these provisions, pending the organization of the Liga ng mga Barangay, the board of directors
of the PKB was constituted into a committee, headed by the PKB president, who acted as secretary
general, with a two-fold mandate: "[I] exercise the powers and duties of the national liga and [2] draft or
amend the constitution and by-laws of the national liga to conform to the provisions of this Rule." The
board of directors of the PKB, functioning in place of the board of directors of the National Liga ng mga
Barangay, exercised one of these powers of the National Liga board, namely, to create additional positions
which it deemed necessary for the management of a chapter. There is therefore no basis for the claim that
because the power to create additional positions in the Liga on its chapters is vested only in the board of
directors the exercise of this power by the Barangay National Assembly is unauthorized and illegal and
positions created are void. The Barangay National Assembly was actually the Pambansang Katipunan ng
mga Barangay or PKB. Pending the organization of the Liga ng mga Barangay, it served as the Liga.

But it is contended in the dissent that "Section 493 of the LGC . . . vests the power to create additional
positions in the Board of Directors of the chapter." The implication seems to be that the board of the
directors at the national level did not have that power. It is necessary to consider the organizational
structure of the Liga ng mga Barangay as provided in the LGC, as follows:

492. Representation, Chapters, National Liga. Every barangay shall be represented in said liga by the
punong barangay, or in his absence or incapacity, by a sangguniang member duly elected for the purpose
among its members, who shall attend all meetings or deliberations called by the different chapters of the
liga.

The liga shall have chapters at the municipal, city, provincial and metropolitan political subdivision levels.

The municipal and city chapters of the liga shall be composed of the barangay representatives of
municipal and city barangays, respectively. The duly elected presidents of component municipal and city
chapters shall constitute the provincial chapter or the metropolitan political subdivision chapter. The duly
elected presidents of highly-urbanized cities, provincial chapters, the Metropolitan Manila chapter and
metropolitan political subdivision chapters shall constitute the National Liga ng mga Barangay.

493. Organization. The liga at the municipal, city, provincial, metropolitan political subdivision, and
national levels directly elect a president, a vice-president, and five (5) members of the board of directors.
The board shall appoint its secretary and treasurer and create such other positions as it may deem
necessary for the management of the chapter. A secretary-general shall be elected from among the
members of the national liga and shall be charged with the overall operation of the liga on the national
level. The board shall coordinate the activities of the chapters of the liga.

While the board of directors of a local chapter can create additional positions to provide for the needs of
the chapter, the board of directors of the National Liga must be deemed to have the power to create
additional positions not only for its management but also for that of all the chapters at the municipal, city,
provincial and metropolitan political subdivision levels. Otherwise the National Liga would be no different
from the local chapters. There would then be only so many local chapters without a national one, when
what is contemplated in the above-quoted provisions of the LGC is that there should be one Liga ng mga
Barangay with local chapters at all levels of local government units. The dissent, by denying to the board
of directors at the National Liga the power to create additional positions in the local chapters, would reduce
such board to a board of a local chapter. The fact is that 493 grants the power to create positions not only
to the boards of the local chapters but to the board of the Liga at the national level as well.

Indeed what was done in the Constitution and By-laws of their liga was to create additional
positions in each chapters, whether national or local, without however precluding the boards of
directors of the chapters as well as that of the national liga from creating other positions for their peculiar
needs. The creation by the board of the National Liga of the positions of first, second and third
vice presidents, auditors and public relations officers was intended to provide uniform officers
for the various chapters in line with the mandate in Art. 210(g)(2) of the Rules and Regulations
Implementing the Local Government Code of 1991 to the Barangay National Assembly to
"formulate uniform constitution and by-laws applicable to the national liga and all local
chapters." The various chapters could have different minor officers depending on their local
needs, but they must have the same major elective officers, meaning to say, the additional
vice-presidents and auditors.

The dissent further argues that, following the rule of ejusdem generis, what may be created as
additional positions can only be appointive ones because the positions of secretary and
treasurer are appointive positions. The rule might apply if what is involved is
the appointment of other officers. But what we are dealing with in this case is the creation of
additional positions. Section 493 actually gives the board the power to "[1] appoint its secretary and
treasurer and [2] create such other positions as it may deem necessary for the management of the
chapter." The additional positions to be created need not therefore be appointive positions.

Nor is it correct to say that 493, in providing that additional positions to be created must be those which
are "deemed necessary for the management of the chapter," contemplates only appointive positions.
Management positions are not necessarily limited to appointive positions. Elective officers, such
as the president and vice-president, can be expected to be involved in the general administration or
management of the chapter. Hence, the creation of other elective positions which may be deemed
necessary for the management of the chapter is within the purview of 493.

WHEREFORE, the petition for prohibition is DISMISSED for lack of merit.

SO ORDERED.
G.R. No. 192935 December 7, 2010

LOUIS "BAROK" C. BIRAOGO, Petitioner,

vs.
THE PHILIPPINE TRUTH COMMISSION OF 2010, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 193036

REP. EDCEL C. LAGMAN, REP. RODOLFO B. ALBANO, JR., REP. SIMEON A. DATUMANONG, and REP.
ORLANDO B. FUA, SR., Petitioners,
vs.
EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR. and DEPARTMENT OF BUDGET AND
MANAGEMENT SECRETARY FLORENCIO B. ABAD, Respondents.

DECISION

MENDOZA, J.:

When the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over
the other departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts
the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of
authority under the Constitution and to establish for the parties in an actual controversy the rights which
that instrument secures and guarantees to them.

--- Justice Jose P. Laurel1

The role of the Constitution cannot be overlooked. It is through the Constitution that the fundamental
powers of government are established, limited and defined, and by which these powers are distributed
among the several departments.2 The Constitution is the basic and paramount law to which all other laws
must conform and to which all persons, including the highest officials of the land, must
defer.3 Constitutional doctrines must remain steadfast no matter what may be the tides of time. It cannot
be simply made to sway and accommodate the call of situations and much more tailor itself to the whims
and caprices of government and the people who run it.4

For consideration before the Court are two consolidated cases 5 both of which essentially assail the validity
and constitutionality of Executive Order No. 1, dated July 30, 2010, entitled "Creating the Philippine Truth
Commission of 2010."

The first case is G.R. No. 192935, a special civil action for prohibition instituted by petitioner Louis Biraogo
(Biraogo) in his capacity as a citizen and taxpayer. Biraogo assails Executive Order No. 1 for being violative
of the legislative power of Congress under Section 1, Article VI of the Constitution 6 as it usurps the
constitutional authority of the legislature to create a public office and to appropriate funds therefor. 7

The second case, G.R. No. 193036, is a special civil action for certiorari and prohibition filed by petitioners
Edcel C. Lagman, Rodolfo B. Albano Jr., Simeon A. Datumanong, and Orlando B. Fua, Sr. (petitioners-
legislators) as incumbent members of the House of Representatives.

The genesis of the foregoing cases can be traced to the events prior to the historic May 2010 elections,
when then Senator Benigno Simeon Aquino III declared his staunch condemnation of graft and corruption
with his slogan, "Kung walang corrupt, walang mahirap." The Filipino people, convinced of his sincerity and
of his ability to carry out this noble objective, catapulted the good senator to the presidency.

To transform his campaign slogan into reality, President Aquino found a need for a special body to
investigate reported cases of graft and corruption allegedly committed during the previous administration.

Thus, at the dawn of his administration, the President on July 30, 2010, signed Executive Order No. 1
establishing the Philippine Truth Commission of 2010 (Truth Commission). Pertinent provisions of said
executive order read:

EXECUTIVE ORDER NO. 1

CREATING THE PHILIPPINE TRUTH COMMISSION OF 2010

WHEREAS, Article XI, Section 1 of the 1987 Constitution of the Philippines solemnly enshrines the
principle that a public office is a public trust and mandates that public officers and employees, who are
servants of the people, must at all times be accountable to the latter, serve them with utmost
responsibility, integrity, loyalty and efficiency, act with patriotism and justice, and lead modest lives;
WHEREAS, corruption is among the most despicable acts of defiance of this principle and notorious
violation of this mandate;

WHEREAS, corruption is an evil and scourge which seriously affects the political, economic, and social life
of a nation; in a very special way it inflicts untold misfortune and misery on the poor, the marginalized and
underprivileged sector of society;

WHEREAS, corruption in the Philippines has reached very alarming levels, and undermined the peoples
trust and confidence in the Government and its institutions;

WHEREAS, there is an urgent call for the determination of the truth regarding certain reports of large
scale graft and corruption in the government and to put a closure to them by the filing of the appropriate
cases against those involved, if warranted, and to deter others from committing the evil, restore the
peoples faith and confidence in the Government and in their public servants;

WHEREAS, the Presidents battlecry during his campaign for the Presidency in the last elections "kung
walang corrupt, walang mahirap" expresses a solemn pledge that if elected, he would end corruption and
the evil it breeds;

WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth
concerning the reported cases of graft and corruption during the previous administration, and which will
recommend the prosecution of the offenders and secure justice for all;

WHEREAS, Book III, Chapter 10, Section 31 of Executive Order No. 292, otherwise known as the Revised
Administrative Code of the Philippines, gives the President the continuing authority to reorganize the Office
of the President.

NOW, THEREFORE, I, BENIGNO SIMEON AQUINO III, President of the Republic of the Philippines, by
virtue of the powers vested in me by law, do hereby order:

SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE TRUTH

COMMISSION, hereinafter referred to as the "COMMISSION," which shall primarily seek and find the
truth on, and toward this end, investigate reports of graft and corruption of such scale and magnitude that
shock and offend the moral and ethical sensibilities of the people, committed by public officers and
employees, their co-principals, accomplices and accessories from the private sector, if any, during the
previous administration; and thereafter recommend the appropriate action or measure to be taken thereon
to ensure that the full measure of justice shall be served without fear or favor.

The Commission shall be composed of a Chairman and four (4) members who will act as an independent
collegial body.

SECTION 2. Powers and Functions. The Commission, which shall have all the powers of an
investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily
tasked to conduct a thorough fact-finding investigation of reported cases of graft and corruption referred to
in Section 1, involving third level public officers and higher, their co-principals, accomplices and
accessories from the private sector, if any, during the previous administration and thereafter submit its
finding and recommendations to the President, Congress and the Ombudsman.

In particular, it shall:

a) Identify and determine the reported cases of such graft and corruption which it will investigate;

b) Collect, receive, review and evaluate evidence related to or regarding the cases of large scale corruption
which it has chosen to investigate, and to this end require any agency, official or employee of the
Executive Branch, including government-owned or controlled corporations, to produce documents, books,
records and other papers;

c) Upon proper request or representation, obtain information and documents from the Senate and the
House of Representatives records of investigations conducted by committees thereof relating to matters or
subjects being investigated by the Commission;

d) Upon proper request and representation, obtain information from the courts, including the
Sandiganbayan and the Office of the Court Administrator, information or documents in respect to
corruption cases filed with the Sandiganbayan or the regular courts, as the case may be;

e) Invite or subpoena witnesses and take their testimonies and for that purpose, administer oaths or
affirmations as the case may be;
f) Recommend, in cases where there is a need to utilize any person as a state witness to ensure that the
ends of justice be fully served, that such person who qualifies as a state witness under the Revised Rules
of Court of the Philippines be admitted for that purpose;

g) Turn over from time to time, for expeditious prosecution, to the appropriate prosecutorial authorities, by
means of a special or interim report and recommendation, all evidence on corruption of public officers and
employees and their private sector co-principals, accomplices or accessories, if any, when in the course of
its investigation the Commission finds that there is reasonable ground to believe that they are liable for
graft and corruption under pertinent applicable laws;

h) Call upon any government investigative or prosecutorial agency such as the Department of Justice or
any of the agencies under it, and the Presidential Anti-Graft Commission, for such assistance and
cooperation as it may require in the discharge of its functions and duties;

i) Engage or contract the services of resource persons, professionals and other personnel determined by it
as necessary to carry out its mandate;

j) Promulgate its rules and regulations or rules of procedure it deems necessary to effectively and
efficiently carry out the objectives of this Executive Order and to ensure the orderly conduct of its
investigations, proceedings and hearings, including the presentation of evidence;

k) Exercise such other acts incident to or are appropriate and necessary in connection with the objectives
and purposes of this Order.

SECTION 3. Staffing Requirements. x x x.

SECTION 4. Detail of Employees. x x x.

SECTION 5. Engagement of Experts. x x x

SECTION 6. Conduct of Proceedings. x x x.

SECTION 7. Right to Counsel of Witnesses/Resource Persons. x x x.

SECTION 8. Protection of Witnesses/Resource Persons. x x x.

SECTION 9. Refusal to Obey Subpoena, Take Oath or Give Testimony. Any government official or
personnel who, without lawful excuse, fails to appear upon subpoena issued by the Commission or who,
appearing before the Commission refuses to take oath or affirmation, give testimony or produce
documents for inspection, when required, shall be subject to administrative disciplinary action. Any private
person who does the same may be dealt with in accordance with law.

SECTION 10. Duty to Extend Assistance to the Commission. x x x.

SECTION 11. Budget for the Commission. The Office of the President shall provide the necessary
funds for the Commission to ensure that it can exercise its powers, execute its functions, and perform its
duties and responsibilities as effectively, efficiently, and expeditiously as possible.

SECTION 12. Office. x x x.

SECTION 13. Furniture/Equipment. x x x.

SECTION 14. Term of the Commission. The Commission shall accomplish its mission on or before
December 31, 2012.

SECTION 15. Publication of Final Report. x x x.

SECTION 16. Transfer of Records and Facilities of the Commission. x x x.

SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the President
there is a need to expand the mandate of the Commission as defined in Section 1 hereof to include the
investigation of cases and instances of graft and corruption during the prior administrations, such mandate
may be so extended accordingly by way of a supplemental Executive Order.

SECTION 18. Separability Clause. If any provision of this Order is declared unconstitutional, the same
shall not affect the validity and effectivity of the other provisions hereof.

SECTION 19. Effectivity. This Executive Order shall take effect immediately.
DONE in the City of Manila, Philippines, this 30th day of July 2010.

(SGD.) BENIGNO S. AQUINO III

By the President:

(SGD.) PAQUITO N. OCHOA, JR.

Executive Secretary

Nature of the Truth Commission

As can be gleaned from the above-quoted provisions, the Philippine Truth Commission (PTC) is a mere ad
hoc body formed under the Office of the President with the primary task to investigate reports of graft and
corruption committed by third-level public officers and employees, their co-principals, accomplices and
accessories during the previous administration, and thereafter to submit its finding and recommendations
to the President, Congress and the Ombudsman. Though it has been described as an "independent
collegial body," it is essentially an entity within the Office of the President Proper and subject to his control.
Doubtless, it constitutes a public office, as an ad hoc body is one. 8

To accomplish its task, the PTC shall have all the powers of an investigative body under Section 37,
Chapter 9, Book I of the Administrative Code of 1987. It is not, however, a quasi-judicial body as it cannot
adjudicate, arbitrate, resolve, settle, or render awards in disputes between contending parties. All it can do
is gather, collect and assess evidence of graft and corruption and make recommendations. It may have
subpoena powers but it has no power to cite people in contempt, much less order their arrest. Although it
is a fact-finding body, it cannot determine from such facts if probable cause exists as to warrant the filing
of an information in our courts of law. Needless to state, it cannot impose criminal, civil or administrative
penalties or sanctions.

The PTC is different from the truth commissions in other countries which have been created as official,
transitory and non-judicial fact-finding bodies "to establish the facts and context of serious violations of
human rights or of international humanitarian law in a countrys past." 9 They are usually established by
states emerging from periods of internal unrest, civil strife or authoritarianism to serve as mechanisms for
transitional justice.

Truth commissions have been described as bodies that share the following characteristics: (1) they
examine only past events; (2) they investigate patterns of abuse committed over a period of time, as
opposed to a particular event; (3) they are temporary bodies that finish their work with the submission of a
report containing conclusions and recommendations; and (4) they are officially sanctioned, authorized or
empowered by the State.10"Commissions members are usually empowered to conduct research, support
victims, and propose policy recommendations to prevent recurrence of crimes. Through their
investigations, the commissions may aim to discover and learn more about past abuses, or formally
acknowledge them. They may aim to prepare the way for prosecutions and recommend institutional
reforms."11

Thus, their main goals range from retribution to reconciliation. The Nuremburg and Tokyo war crime
tribunals are examples of a retributory or vindicatory body set up to try and punish those responsible for
crimes against humanity. A form of a reconciliatory tribunal is the Truth and Reconciliation Commission of
South Africa, the principal function of which was to heal the wounds of past violence and to prevent future
conflict by providing a cathartic experience for victims.

The PTC is a far cry from South Africas model. The latter placed more emphasis on reconciliation than on
judicial retribution, while the marching order of the PTC is the identification and punishment of
perpetrators. As one writer12 puts it:

The order ruled out reconciliation. It translated the Draconian code spelled out by Aquino in his inaugural
speech: "To those who talk about reconciliation, if they mean that they would like us to simply forget about
the wrongs that they have committed in the past, we have this to say: There can be no reconciliation
without justice. When we allow crimes to go unpunished, we give consent to their occurring over and over
again."

The Thrusts of the Petitions

Barely a month after the issuance of Executive Order No. 1, the petitioners asked the Court to declare it
unconstitutional and to enjoin the PTC from performing its functions. A perusal of the arguments of the
petitioners in both cases shows that they are essentially the same. The petitioners-legislators summarized
them in the following manner:

(a) E.O. No. 1 violates the separation of powers as it arrogates the power of the Congress to create a public
office and appropriate funds for its operation.

(b) The provision of Book III, Chapter 10, Section 31 of the Administrative Code of 1987 cannot legitimize
E.O. No. 1 because the delegated authority of the President to structurally reorganize the Office of the
President to achieve economy, simplicity and efficiency does not include the power to create an entirely
new public office which was hitherto inexistent like the "Truth Commission."

(c) E.O. No. 1 illegally amended the Constitution and pertinent statutes when it vested the "Truth
Commission" with quasi-judicial powers duplicating, if not superseding, those of the Office of the
Ombudsman created under the 1987 Constitution and the Department of Justice created under the
Administrative Code of 1987.

(d) E.O. No. 1 violates the equal protection clause as it selectively targets for investigation and prosecution
officials and personnel of the previous administration as if corruption is their peculiar species even as it
excludes those of the other administrations, past and present, who may be indictable.

(e) The creation of the "Philippine Truth Commission of 2010" violates the consistent and general
international practice of four decades wherein States constitute truth commissions to exclusively
investigate human rights violations, which customary practice forms part of the generally accepted
principles of international law which the Philippines is mandated to adhere to pursuant to the Declaration
of Principles enshrined in the Constitution.

(f) The creation of the "Truth Commission" is an exercise in futility, an adventure in partisan hostility, a
launching pad for trial/conviction by publicity and a mere populist propaganda to mistakenly impress the
people that widespread poverty will altogether vanish if corruption is eliminated without even addressing
the other major causes of poverty.

(g) The mere fact that previous commissions were not constitutionally challenged is of no moment because
neither laches nor estoppel can bar an eventual question on the constitutionality and validity of an
executive issuance or even a statute."13

In their Consolidated Comment,14 the respondents, through the Office of the Solicitor
General (OSG), essentially questioned the legal standing of petitioners and defended the assailed
executive order with the following arguments:

1] E.O. No. 1 does not arrogate the powers of Congress to create a public office because the Presidents
executive power and power of control necessarily include the inherent power to conduct investigations to
ensure that laws are faithfully executed and that, in any event, the Constitution, Revised Administrative
Code of 1987 (E.O. No. 292), 15 Presidential Decree (P.D.) No. 1416 16 (as amended by P.D. No. 1772), R.A.
No. 9970,17 and settled jurisprudence that authorize the President to create or form such bodies.

2] E.O. No. 1 does not usurp the power of Congress to appropriate funds because there is no appropriation
but a mere allocation of funds already appropriated by Congress.

3] The Truth Commission does not duplicate or supersede the functions of the Office of the Ombudsman
(Ombudsman) and the Department of Justice (DOJ), because it is a fact-finding body and not a quasi-
judicial body and its functions do not duplicate, supplant or erode the latters jurisdiction.

4] The Truth Commission does not violate the equal protection clause because it was validly created for
laudable purposes.

The OSG then points to the continued existence and validity of other executive orders and presidential
issuances creating similar bodies to justify the creation of the PTC such as Presidential Complaint and
Action Commission (PCAC) by President Ramon B. Magsaysay, Presidential Committee on Administrative
Performance Efficiency (PCAPE) by President Carlos P. Garcia and Presidential Agency on Reform and
Government Operations (PARGO) by President Ferdinand E. Marcos. 18

From the petitions, pleadings, transcripts, and memoranda, the following are the principal issues to be
resolved:

1. Whether or not the petitioners have the legal standing to file their respective petitions and question
Executive Order No. 1;

2. Whether or not Executive Order No. 1 violates the principle of separation of powers by usurping the
powers of Congress to create and to appropriate funds for public offices, agencies and commissions;

3. Whether or not Executive Order No. 1 supplants the powers of the Ombudsman and the DOJ;

4. Whether or not Executive Order No. 1 violates the equal protection clause; and

5. Whether or not petitioners are entitled to injunctive relief.

Essential requisites for judicial review

Before proceeding to resolve the issue of the constitutionality of Executive Order No. 1, the Court needs to
ascertain whether the requisites for a valid exercise of its power of judicial review are present.

Like almost all powers conferred by the Constitution, the power of judicial review is subject to limitations,
to wit: (1) there must be an actual case or controversy calling for the exercise of judicial power; (2) the
person challenging the act must have the standing to question the validity of the subject act or issuance;
otherwise stated, he must have a personal and substantial interest in the case such that he has sustained,
or will sustain, direct injury as a result of its enforcement; (3) the question of constitutionality must be
raised at the earliest opportunity; and (4) the issue of constitutionality must be the very lis mota of the
case.19

Among all these limitations, only the legal standing of the petitioners has been put at issue.

Legal Standing of the Petitioners

The OSG attacks the legal personality of the petitioners-legislators to file their petition for failure to
demonstrate their personal stake in the outcome of the case. It argues that the petitioners have not shown
that they have sustained or are in danger of sustaining any personal injury attributable to the creation of
the PTC. Not claiming to be the subject of the commissions investigations, petitioners will not sustain
injury in its creation or as a result of its proceedings. 20

The Court disagrees with the OSG in questioning the legal standing of the petitioners-legislators to assail
Executive Order No. 1. Evidently, their petition primarily invokes usurpation of the power of the Congress
as a body to which they belong as members. This certainly justifies their resolve to take the cudgels for
Congress as an institution and present the complaints on the usurpation of their power and rights as
members of the legislature before the Court. As held in Philippine Constitution Association v. Enriquez, 21

To the extent the powers of Congress are impaired, so is the power of each member thereof, since his
office confers a right to participate in the exercise of the powers of that institution.

An act of the Executive which injures the institution of Congress causes a derivative but nonetheless
substantial injury, which can be questioned by a member of Congress. In such a case, any member of
Congress can have a resort to the courts.

Indeed, legislators have a legal standing to see to it that the prerogative, powers and privileges vested by
the Constitution in their office remain inviolate. Thus, they are allowed to question the validity of any
official action which, to their mind, infringes on their prerogatives as legislators. 22

With regard to Biraogo, the OSG argues that, as a taxpayer, he has no standing to question the creation of
the PTC and the budget for its operations. 23 It emphasizes that the funds to be used for the creation and
operation of the commission are to be taken from those funds already appropriated by Congress. Thus, the
allocation and disbursement of funds for the commission will not entail congressional action but will simply
be an exercise of the Presidents power over contingent funds.

As correctly pointed out by the OSG, Biraogo has not shown that he sustained, or is in danger of
sustaining, any personal and direct injury attributable to the implementation of Executive Order No. 1.
Nowhere in his petition is an assertion of a clear right that may justify his clamor for the Court to exercise
judicial power and to wield the axe over presidential issuances in defense of the Constitution. The case of
David v. Arroyo24 explained the deep-seated rules on locus standi. Thus:

Locus standi is defined as "a right of appearance in a court of justice on a given question." In private suits,
standing is governed by the "real-parties-in interest" rule as contained in Section 2, Rule 3 of the 1997
Rules of Civil Procedure, as amended. It provides that "every action must be prosecuted or defended
in the name of the real party in interest." Accordingly, the "real-party-in interest" is "the party who
stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit."
Succinctly put, the plaintiffs standing is based on his own right to the relief sought.

The difficulty of determining locus standi arises in public suits. Here, the plaintiff who asserts a "public
right" in assailing an allegedly illegal official action, does so as a representative of the general public. He
may be a person who is affected no differently from any other person. He could be suing as a "stranger," or
in the category of a "citizen," or taxpayer." In either case, he has to adequately show that he is entitled to
seek judicial protection. In other words, he has to make out a sufficient interest in the vindication of the
public order and the securing of relief as a "citizen" or "taxpayer.

Case law in most jurisdictions now allows both "citizen" and "taxpayer" standing in public actions. The
distinction was first laid down in Beauchamp v. Silk, where it was held that the plaintiff in a taxpayers suit
is in a different category from the plaintiff in a citizens suit. In the former, the plaintiff is affected by the
expenditure of public funds, while in the latter, he is but the mere instrument of the public concern. As
held by the New York Supreme Court in People ex rel Case v. Collins: "In matter of mere public right,
howeverthe people are the real partiesIt is at least the right, if not the duty, of every citizen to
interfere and see that a public offence be properly pursued and punished, and that a public grievance be
remedied." With respect to taxpayers suits, Terr v. Jordan held that "the right of a citizen and a taxpayer to
maintain an action in courts to restrain the unlawful use of public funds to his injury cannot be denied."

However, to prevent just about any person from seeking judicial interference in any official policy or act
with which he disagreed with, and thus hinders the activities of governmental agencies engaged in public
service, the United State Supreme Court laid down the more stringent "direct injury" test in Ex Parte
Levitt, later reaffirmed in Tileston v. Ullman. The same Court ruled that for a private individual to invoke
the judicial power to determine the validity of an executive or legislative action, he must show that he
has sustained a direct injury as a result of that action, and it is not sufficient that he has a
general interest common to all members of the public.

This Court adopted the "direct injury" test in our jurisdiction. In People v. Vera, it held that the person
who impugns the validity of a statute must have "a personal and substantial interest in the case
such that he has sustained, or will sustain direct injury as a result." The Vera doctrine was upheld
in a litany of cases, such as, Custodio v. President of the Senate, Manila Race Horse Trainers Association v.
De la Fuente, Pascual v. Secretary of Public Works and Anti-Chinese League of the Philippines v.
Felix. [Emphases included. Citations omitted]

Notwithstanding, the Court leans on the doctrine that "the rule on standing is a matter of procedure,
hence, can be relaxed for nontraditional plaintiffs like ordinary citizens, taxpayers, and legislators when the
public interest so requires, such as when the matter is of transcendental importance, of overreaching
significance to society, or of paramount public interest." 25

Thus, in Coconut Oil Refiners Association, Inc. v. Torres, 26 the Court held that in cases of paramount
importance where serious constitutional questions are involved, the standing requirements may be relaxed
and a suit may be allowed to prosper even where there is no direct injury to the party claiming the right of
judicial review. In the first Emergency Powers Cases, 27 ordinary citizens and taxpayers were allowed to
question the constitutionality of several executive orders although they had only an indirect and general
interest shared in common with the public.

The OSG claims that the determinants of transcendental importance 28 laid down in CREBA v. ERC and
Meralco29are non-existent in this case. The Court, however, finds reason in Biraogos assertion that the
petition covers matters of transcendental importance to justify the exercise of jurisdiction by the Court.
There are constitutional issues in the petition which deserve the attention of this Court in view of their
seriousness, novelty and weight as precedents. Where the issues are of transcendental and paramount
importance not only to the public but also to the Bench and the Bar, they should be resolved for the
guidance of all.30 Undoubtedly, the Filipino people are more than interested to know the status of the
Presidents first effort to bring about a promised change to the country. The Court takes cognizance of the
petition not due to overwhelming political undertones that clothe the issue in the eyes of the public, but
because the Court stands firm in its oath to perform its constitutional duty to settle legal controversies with
overreaching significance to society.

Power of the President to Create the Truth Commission

In his memorandum in G.R. No. 192935, Biraogo asserts that the Truth Commission is a public office and
not merely an adjunct body of the Office of the President. 31 Thus, in order that the President may create a
public office he must be empowered by the Constitution, a statute or an authorization vested in him by
law. According to petitioner, such power cannot be presumed 32 since there is no provision in the
Constitution or any specific law that authorizes the President to create a truth commission. 33 He adds that
Section 31 of the Administrative Code of 1987, granting the President the continuing authority to
reorganize his office, cannot serve as basis for the creation of a truth commission considering the aforesaid
provision merely uses verbs such as "reorganize," "transfer," "consolidate," "merge," and
"abolish."34 Insofar as it vests in the President the plenary power to reorganize the Office of the President
to the extent of creating a public office, Section 31 is inconsistent with the principle of separation of
powers enshrined in the Constitution and must be deemed repealed upon the effectivity thereof. 35

Similarly, in G.R. No. 193036, petitioners-legislators argue that the creation of a public office lies within the
province of Congress and not with the executive branch of government. They maintain that the delegated
authority of the President to reorganize under Section 31 of the Revised Administrative Code: 1) does not
permit the President to create a public office, much less a truth commission; 2) is limited to the
reorganization of the administrative structure of the Office of the President; 3) is limited to the
restructuring of the internal organs of the Office of the President Proper, transfer of functions and transfer
of agencies; and 4) only to achieve simplicity, economy and efficiency. 36 Such continuing authority of the
President to reorganize his office is limited, and by issuing Executive Order No. 1, the President
overstepped the limits of this delegated authority.

The OSG counters that there is nothing exclusively legislative about the creation by the President of a fact-
finding body such as a truth commission. Pointing to numerous offices created by past presidents, it argues
that the authority of the President to create public offices within the Office of the President Proper has long
been recognized.37 According to the OSG, the Executive, just like the other two branches of government,
possesses the inherent authority to create fact-finding committees to assist it in the performance of its
constitutionally mandated functions and in the exercise of its administrative functions. 38 This power, as the
OSG explains it, is but an adjunct of the plenary powers wielded by the President under Section 1 and his
power of control under Section 17, both of Article VII of the Constitution. 39

It contends that the President is necessarily vested with the power to conduct fact-finding investigations,
pursuant to his duty to ensure that all laws are enforced by public officials and employees of his
department and in the exercise of his authority to assume directly the functions of the executive
department, bureau and office, or interfere with the discretion of his officials. 40 The power of the President
to investigate is not limited to the exercise of his power of control over his subordinates in the executive
branch, but extends further in the exercise of his other powers, such as his power to discipline
subordinates,41 his power for rule making, adjudication and licensing purposes 42 and in order to be
informed on matters which he is entitled to know. 43

The OSG also cites the recent case of Banda v. Ermita, 44 where it was held that the President has the power
to reorganize the offices and agencies in the executive department in line with his constitutionally granted
power of control and by virtue of a valid delegation of the legislative power to reorganize executive offices
under existing statutes.

Thus, the OSG concludes that the power of control necessarily includes the power to create offices. For the
OSG, the President may create the PTC in order to, among others, put a closure to the reported large scale
graft and corruption in the government.45

The question, therefore, before the Court is this: Does the creation of the PTC fall within the ambit of the
power to reorganize as expressed in Section 31 of the Revised Administrative Code? Section 31
contemplates "reorganization" as limited by the following functional and structural lines: (1) restructuring
the internal organization of the Office of the President Proper by abolishing, consolidating or merging units
thereof or transferring functions from one unit to another; (2) transferring any function under the Office of
the President to any other Department/Agency or vice versa; or (3) transferring any agency under the
Office of the President to any other Department/Agency or vice versa. Clearly, the provision refers to
reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of
functions. These point to situations where a body or an office is already existent but a modification or
alteration thereof has to be effected. The creation of an office is nowhere mentioned, much less envisioned
in said provision. Accordingly, the answer to the question is in the negative.

To say that the PTC is borne out of a restructuring of the Office of the President under Section 31 is a
misplaced supposition, even in the plainest meaning attributable to the term "restructure" an "alteration
of an existing structure." Evidently, the PTC was not part of the structure of the Office of the President prior
to the enactment of Executive Order No. 1. As held in Buklod ng Kawaning EIIB v. Hon. Executive
Secretary,46

But of course, the list of legal basis authorizing the President to reorganize any department or agency in
the executive branch does not have to end here. We must not lose sight of the very source of the power
that which constitutes an express grant of power. Under Section 31, Book III of Executive Order No. 292
(otherwise known as the Administrative Code of 1987), "the President, subject to the policy in the
Executive Office and in order to achieve simplicity, economy and efficiency, shall have the continuing
authority to reorganize the administrative structure of the Office of the President." For this purpose, he
may transfer the functions of other Departments or Agencies to the Office of the President. In Canonizado
v. Aguirre [323 SCRA 312 (2000)], we ruled that reorganization "involves the reduction of personnel,
consolidation of offices, or abolition thereof by reason of economy or redundancy of functions." It takes
place when there is an alteration of the existing structure of government offices or units therein, including
the lines of control, authority and responsibility between them. The EIIB is a bureau attached to the
Department of Finance. It falls under the Office of the President. Hence, it is subject to the Presidents
continuing authority to reorganize. [Emphasis Supplied]

In the same vein, the creation of the PTC is not justified by the Presidents power of control. Control is
essentially the power to alter or modify or nullify or set aside what a subordinate officer had done in the
performance of his duties and to substitute the judgment of the former with that of the latter. 47 Clearly, the
power of control is entirely different from the power to create public offices. The former is inherent in the
Executive, while the latter finds basis from either a valid delegation from Congress, or his inherent duty to
faithfully execute the laws.

The question is this, is there a valid delegation of power from Congress, empowering the President to
create a public office?

According to the OSG, the power to create a truth commission pursuant to the above provision finds
statutory basis under P.D. 1416, as amended by P.D. No. 1772. 48 The said law granted the President the
continuing authority to reorganize the national government, including the power to group, consolidate
bureaus and agencies, to abolish offices, to transfer functions, to create and classify functions, services
and activities, transfer appropriations, and to standardize salaries and materials. This decree, in relation to
Section 20, Title I, Book III of E.O. 292 has been invoked in several cases such as Larin v. Executive
Secretary.49
The Court, however, declines to recognize P.D. No. 1416 as a justification for the President to create a
public office. Said decree is already stale, anachronistic and inoperable. P.D. No. 1416 was a delegation to
then President Marcos of the authority to reorganize the administrative structure of the national
government including the power to create offices and transfer appropriations pursuant to one of the
purposes of the decree, embodied in its last "Whereas" clause:

WHEREAS, the transition towards the parliamentary form of government will necessitate flexibility in the
organization of the national government.

Clearly, as it was only for the purpose of providing manageability and resiliency during the interim, P.D. No.
1416, as amended by P.D. No. 1772, became functus oficio upon the convening of the First Congress, as
expressly provided in Section 6, Article XVIII of the 1987 Constitution. In fact, even the Solicitor General
agrees with this view. Thus:

ASSOCIATE JUSTICE CARPIO: Because P.D. 1416 was enacted was the last whereas clause of P.D. 1416 says
"it was enacted to prepare the transition from presidential to parliamentary. Now, in a parliamentary form
of government, the legislative and executive powers are fused, correct?

SOLICITOR GENERAL CADIZ: Yes, Your Honor.

ASSOCIATE JUSTICE CARPIO: That is why, that P.D. 1416 was issued. Now would you agree with me that
P.D. 1416 should not be considered effective anymore upon the promulgation, adoption, ratification of the
1987 Constitution.

SOLICITOR GENERAL CADIZ: Not the whole of P.D. [No.] 1416, Your Honor.

ASSOCIATE JUSTICE CARPIO: The power of the President to reorganize the entire National Government is
deemed repealed, at least, upon the adoption of the 1987 Constitution, correct.

SOLICITOR GENERAL CADIZ: Yes, Your Honor. 50

While the power to create a truth commission cannot pass muster on the basis of P.D. No. 1416 as
amended by P.D. No. 1772, the creation of the PTC finds justification under Section 17, Article VII of the
Constitution, imposing upon the President the duty to ensure that the laws are faithfully executed. Section
17 reads:

Section 17. The President shall have control of all the executive departments, bureaus, and offices. He
shall ensure that the laws be faithfully executed. (Emphasis supplied).

As correctly pointed out by the respondents, the allocation of power in the three principal branches of
government is a grant of all powers inherent in them. The Presidents power to conduct investigations to
aid him in ensuring the faithful execution of laws in this case, fundamental laws on public accountability
and transparency is inherent in the Presidents powers as the Chief Executive. That the authority of the
President to conduct investigations and to create bodies to execute this power is not explicitly mentioned
in the Constitution or in statutes does not mean that he is bereft of such authority. 51 As explained in the
landmark case of Marcos v. Manglapus: 52

x x x. The 1987 Constitution, however, brought back the presidential system of government and restored
the separation of legislative, executive and judicial powers by their actual distribution among three distinct
branches of government with provision for checks and balances.

It would not be accurate, however, to state that "executive power" is the power to enforce the laws, for the
President is head of state as well as head of government and whatever powers inhere in such positions
pertain to the office unless the Constitution itself withholds it. Furthermore, the Constitution itself provides
that the execution of the laws is only one of the powers of the President. It also grants the President other
powers that do not involve the execution of any provision of law, e.g., his power over the country's foreign
relations.

On these premises, we hold the view that although the 1987 Constitution imposes limitations on the
exercise of specific powers of the President, it maintains intact what is traditionally considered as within
the scope of "executive power." Corollarily, the powers of the President cannot be said to be limited only to
the specific powers enumerated in the Constitution. In other words, executive power is more than the sum
of specific powers so enumerated.

It has been advanced that whatever power inherent in the government that is neither legislative nor
judicial has to be executive. x x x.

Indeed, the Executive is given much leeway in ensuring that our laws are faithfully executed. As stated
above, the powers of the President are not limited to those specific powers under the Constitution. 53 One of
the recognized powers of the President granted pursuant to this constitutionally-mandated duty is the
power to create ad hoc committees. This flows from the obvious need to ascertain facts and determine if
laws have been faithfully executed. Thus, in Department of Health v. Camposano,54 the authority of the
President to issue Administrative Order No. 298, creating an investigative committee to look into the
administrative charges filed against the employees of the Department of Health for the anomalous
purchase of medicines was upheld. In said case, it was ruled:

The Chief Executives power to create the Ad hoc Investigating Committee cannot be doubted.
Having been constitutionally granted full control of the Executive Department, to which respondents
belong, the President has the obligation to ensure that all executive officials and employees faithfully
comply with the law. With AO 298 as mandate, the legality of the investigation is sustained. Such validity is
not affected by the fact that the investigating team and the PCAGC had the same composition, or that the
former used the offices and facilities of the latter in conducting the inquiry. [Emphasis supplied]

It should be stressed that the purpose of allowing ad hoc investigating bodies to exist is to allow an inquiry
into matters which the President is entitled to know so that he can be properly advised and guided in the
performance of his duties relative to the execution and enforcement of the laws of the land. And if history
is to be revisited, this was also the objective of the investigative bodies created in the past like the PCAC,
PCAPE, PARGO, the Feliciano Commission, the Melo Commission and the Zenarosa Commission. There
being no changes in the government structure, the Court is not inclined to declare such executive power as
non-existent just because the direction of the political winds have changed.

On the charge that Executive Order No. 1 transgresses the power of Congress to appropriate funds for the
operation of a public office, suffice it to say that there will be no appropriation but only an allotment or
allocations of existing funds already appropriated. Accordingly, there is no usurpation on the part of the
Executive of the power of Congress to appropriate funds. Further, there is no need to specify the amount to
be earmarked for the operation of the commission because, in the words of the Solicitor General,
"whatever funds the Congress has provided for the Office of the President will be the very source of the
funds for the commission."55 Moreover, since the amount that would be allocated to the PTC shall be
subject to existing auditing rules and regulations, there is no impropriety in the funding.

Power of the Truth Commission to Investigate

The Presidents power to conduct investigations to ensure that laws are faithfully executed is well
recognized. It flows from the faithful-execution clause of the Constitution under Article VII, Section 17
thereof.56 As the Chief Executive, the president represents the government as a whole and sees to it that
all laws are enforced by the officials and employees of his department. He has the authority to directly
assume the functions of the executive department. 57

Invoking this authority, the President constituted the PTC to primarily investigate reports of graft and
corruption and to recommend the appropriate action. As previously stated, no quasi-judicial powers have
been vested in the said body as it cannot adjudicate rights of persons who come before it. It has been said
that "Quasi-judicial powers involve the power to hear and determine questions of fact to which the
legislative policy is to apply and to decide in accordance with the standards laid down by law itself in
enforcing and administering the same law." 58 In simpler terms, judicial discretion is involved in the exercise
of these quasi-judicial power, such that it is exclusively vested in the judiciary and must be clearly
authorized by the legislature in the case of administrative agencies.

The distinction between the power to investigate and the power to adjudicate was delineated by the Court
in Cario v. Commission on Human Rights.59 Thus:

"Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research
on, study. The dictionary definition of "investigate" is "to observe or study closely: inquire into
systematically: "to search or inquire into: x x to subject to an official probe x x: to conduct an official
inquiry." The purpose of investigation, of course, is to discover, to find out, to learn, obtain information.
Nowhere included or intimated is the notion of settling, deciding or resolving a controversy involved in the
facts inquired into by application of the law to the facts established by the inquiry.

The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient inquiry or
observation. To trace or track; to search into; to examine and inquire into with care and accuracy; to find
out by careful inquisition; examination; the taking of evidence; a legal inquiry;" "to inquire; to make an
investigation," "investigation" being in turn described as "(a)n administrative function, the exercise of
which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; x x an inquiry, judicial or otherwise,
for the discovery and collection of facts concerning a certain matter or matters."

"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine,
resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights and duties of the
parties to a court case) on the merits of issues raised: x x to pass judgment on: settle judicially: x x act as
judge." And "adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial powers: x
x to award or grant judicially in a case of controversy x x."
In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally.
Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to decide,
settle or decree, or to sentence or condemn. x x. Implies a judicial determination of a fact, and the entry of
a judgment." [Italics included. Citations Omitted]

Fact-finding is not adjudication and it cannot be likened to the judicial function of a court of justice, or even
a quasi-judicial agency or office. The function of receiving evidence and ascertaining therefrom the facts of
a controversy is not a judicial function. To be considered as such, the act of receiving evidence and arriving
at factual conclusions in a controversy must be accompanied by the authority of applying the law to the
factual conclusions to the end that the controversy may be decided or resolved authoritatively, finally and
definitively, subject to appeals or modes of review as may be provided by law. 60 Even respondents
themselves admit that the commission is bereft of any quasi-judicial power. 61

Contrary to petitioners apprehension, the PTC will not supplant the Ombudsman or the DOJ or erode their
respective powers. If at all, the investigative function of the commission will complement those of the two
offices. As pointed out by the Solicitor General, the recommendation to prosecute is but a consequence of
the overall task of the commission to conduct a fact-finding investigation." 62 The actual prosecution of
suspected offenders, much less adjudication on the merits of the charges against them, 63 is certainly not a
function given to the commission. The phrase, "when in the course of its investigation," under Section 2(g),
highlights this fact and gives credence to a contrary interpretation from that of the petitioners. The
function of determining probable cause for the filing of the appropriate complaints before the courts
remains to be with the DOJ and the Ombudsman. 64

At any rate, the Ombudsmans power to investigate under R.A. No. 6770 is not exclusive but is shared with
other similarly authorized government agencies. Thus, in the case of Ombudsman v. Galicia, 65 it was
written:

This power of investigation granted to the Ombudsman by the 1987 Constitution and The Ombudsman Act
is not exclusive but is shared with other similarly authorized government agencies such as the PCGG and
judges of municipal trial courts and municipal circuit trial courts. The power to conduct preliminary
investigation on charges against public employees and officials is likewise concurrently shared with the
Department of Justice. Despite the passage of the Local Government Code in 1991, the Ombudsman
retains concurrent jurisdiction with the Office of the President and the local Sanggunians to investigate
complaints against local elective officials. [Emphasis supplied].

Also, Executive Order No. 1 cannot contravene the power of the Ombudsman to investigate criminal cases
under Section 15 (1) of R.A. No. 6770, which states:

(1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public
officer or employee, office or agency, when such act or omission appears to be illegal, unjust, improper or
inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of
its primary jurisdiction, it may take over, at any stage, from any investigatory agency of government, the
investigation of such cases. [Emphases supplied]

The act of investigation by the Ombudsman as enunciated above contemplates the conduct of a
preliminary investigation or the determination of the existence of probable cause. This is categorically out
of the PTCs sphere of functions. Its power to investigate is limited to obtaining facts so that it can advise
and guide the President in the performance of his duties relative to the execution and enforcement of the
laws of the land. In this regard, the PTC commits no act of usurpation of the Ombudsmans primordial
duties.

The same holds true with respect to the DOJ. Its authority under Section 3 (2), Chapter 1, Title III, Book IV
in the Revised Administrative Code is by no means exclusive and, thus, can be shared with a body likewise
tasked to investigate the commission of crimes.

Finally, nowhere in Executive Order No. 1 can it be inferred that the findings of the PTC are to be accorded
conclusiveness. Much like its predecessors, the Davide Commission, the Feliciano Commission and the
Zenarosa Commission, its findings would, at best, be recommendatory in nature. And being so, the
Ombudsman and the DOJ have a wider degree of latitude to decide whether or not to reject the
recommendation. These offices, therefore, are not deprived of their mandated duties but will instead be
aided by the reports of the PTC for possible indictments for violations of graft laws.

Violation of the Equal Protection Clause

Although the purpose of the Truth Commission falls within the investigative power of the President, the
Court finds difficulty in upholding the constitutionality of Executive Order No. 1 in view of its apparent
transgression of the equal protection clause enshrined in Section 1, Article III (Bill of Rights) of the 1987
Constitution. Section 1 reads:

Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall
any person be denied the equal protection of the laws.
The petitioners assail Executive Order No. 1 because it is violative of this constitutional safeguard. They
contend that it does not apply equally to all members of the same class such that the intent of singling out
the "previous administration" as its sole object makes the PTC an "adventure in partisan hostility." 66 Thus,
in order to be accorded with validity, the commission must also cover reports of graft and corruption in
virtually all administrations previous to that of former President Arroyo. 67

The petitioners argue that the search for truth behind the reported cases of graft and corruption must
encompass acts committed not only during the administration of former President Arroyo but also during
prior administrations where the "same magnitude of controversies and anomalies" 68 were reported to have
been committed against the Filipino people. They assail the classification formulated by the respondents as
it does not fall under the recognized exceptions because first, "there is no substantial distinction between
the group of officials targeted for investigation by Executive Order No. 1 and other groups or persons who
abused their public office for personal gain; and second, the selective classification is not germane to the
purpose of Executive Order No. 1 to end corruption." 69 In order to attain constitutional permission, the
petitioners advocate that the commission should deal with "graft and grafters prior and subsequent to the
Arroyo administration with the strong arm of the law with equal force." 70

Position of respondents

According to respondents, while Executive Order No. 1 identifies the "previous administration" as the initial
subject of the investigation, following Section 17 thereof, the PTC will not confine itself to cases of large
scale graft and corruption solely during the said administration. 71 Assuming arguendo that the commission
would confine its proceedings to officials of the previous administration, the petitioners argue that no
offense is committed against the equal protection clause for "the segregation of the transactions of public
officers during the previous administration as possible subjects of investigation is a valid classification
based on substantial distinctions and is germane to the evils which the Executive Order seeks to
correct."72 To distinguish the Arroyo administration from past administrations, it recited the following:

First. E.O. No. 1 was issued in view of widespread reports of large scale graft and corruption in the previous
administration which have eroded public confidence in public institutions. There is, therefore, an urgent
call for the determination of the truth regarding certain reports of large scale graft and corruption in the
government and to put a closure to them by the filing of the appropriate cases against those involved, if
warranted, and to deter others from committing the evil, restore the peoples faith and confidence in the
Government and in their public servants.

Second. The segregation of the preceding administration as the object of fact-finding is warranted by the
reality that unlike with administrations long gone, the current administration will most likely bear the
immediate consequence of the policies of the previous administration.

Third. The classification of the previous administration as a separate class for investigation lies in the
reality that the evidence of possible criminal activity, the evidence that could lead to recovery of public
monies illegally dissipated, the policy lessons to be learned to ensure that anti-corruption laws are
faithfully executed, are more easily established in the regime that immediately precede the current
administration.

Fourth. Many administrations subject the transactions of their predecessors to investigations to provide
closure to issues that are pivotal to national life or even as a routine measure of due diligence and good
housekeeping by a nascent administration like the Presidential Commission on Good Government (PCGG),
created by the late President Corazon C. Aquino under Executive Order No. 1 to pursue the recovery of ill-
gotten wealth of her predecessor former President Ferdinand Marcos and his cronies, and the Saguisag
Commission created by former President Joseph Estrada under Administrative Order No, 53, to form an ad-
hoc and independent citizens committee to investigate all the facts and circumstances surrounding
"Philippine Centennial projects" of his predecessor, former President Fidel V. Ramos. 73 [Emphases supplied]

Concept of the Equal Protection Clause

One of the basic principles on which this government was founded is that of the equality of right which is
embodied in Section 1, Article III of the 1987 Constitution. The equal protection of the laws is embraced in
the concept of due process, as every unfair discrimination offends the requirements of justice and fair play.
It has been embodied in a separate clause, however, to provide for a more specific guaranty against any
form of undue favoritism or hostility from the government. Arbitrariness in general may be challenged on
the basis of the due process clause. But if the particular act assailed partakes of an unwarranted partiality
or prejudice, the sharper weapon to cut it down is the equal protection clause. 74

"According to a long line of decisions, equal protection simply requires that all persons or things similarly
situated should be treated alike, both as to rights conferred and responsibilities imposed." 75 It "requires
public bodies and institutions to treat similarly situated individuals in a similar manner." 76 "The purpose of
the equal protection clause is to secure every person within a states jurisdiction against intentional and
arbitrary discrimination, whether occasioned by the express terms of a statue or by its improper execution
through the states duly constituted authorities." 77 "In other words, the concept of equal justice under the
law requires the state to govern impartially, and it may not draw distinctions between individuals solely on
differences that are irrelevant to a legitimate governmental objective." 78
The equal protection clause is aimed at all official state actions, not just those of the legislature. 79 Its
inhibitions cover all the departments of the government including the political and executive departments,
and extend to all actions of a state denying equal protection of the laws, through whatever agency or
whatever guise is taken. 80

It, however, does not require the universal application of the laws to all persons or things without
distinction. What it simply requires is equality among equals as determined according to a valid
classification. Indeed, the equal protection clause permits classification. Such classification, however, to be
valid must pass the test of reasonableness. The test has four requisites: (1) The classification rests on
substantial distinctions; (2) It is germane to the purpose of the law; (3) It is not limited to existing
conditions only; and

(4) It applies equally to all members of the same class. 81 "Superficial differences do not make for a valid
classification."82

For a classification to meet the requirements of constitutionality, it must include or embrace all persons
who naturally belong to the class. 83 "The classification will be regarded as invalid if all the members of the
class are not similarly treated, both as to rights conferred and obligations imposed. It is not necessary that
the classification be made with absolute symmetry, in the sense that the members of the class should
possess the same characteristics in equal degree. Substantial similarity will suffice; and as long as this is
achieved, all those covered by the classification are to be treated equally. The mere fact that an individual
belonging to a class differs from the other members, as long as that class is substantially distinguishable
from all others, does not justify the non-application of the law to him." 84

The classification must not be based on existing circumstances only, or so constituted as to preclude
addition to the number included in the class. It must be of such a nature as to embrace all those who may
thereafter be in similar circumstances and conditions. It must not leave out or "underinclude" those that
should otherwise fall into a certain classification. As elucidated in Victoriano v. Elizalde Rope Workers'
Union85 and reiterated in a long line of cases,86

The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws
upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional
prohibition against inequality, that every man, woman and child should be affected alike by a statute.
Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but
on persons according to the circumstances surrounding them. It guarantees equality, not identity of rights.
The Constitution does not require that things which are different in fact be treated in law as though they
were the same. The equal protection clause does not forbid discrimination as to things that are different. It
does not prohibit legislation which is limited either in the object to which it is directed or by the territory
within which it is to operate.

The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in
the other departments of knowledge or practice, is the grouping of things in speculation or practice
because they agree with one another in certain particulars. A law is not invalid because of simple
inequality. The very idea of classification is that of inequality, so that it goes without saying that the mere
fact of inequality in no manner determines the matter of constitutionality. All that is required of a valid
classification is that it be reasonable, which means that the classification should be based on substantial
distinctions which make for real differences, that it must be germane to the purpose of the law; that it
must not be limited to existing conditions only; and that it must apply equally to each member of the class.
This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable
foundation or rational basis and is not palpably arbitrary. [Citations omitted]

Applying these precepts to this case, Executive Order No. 1 should be struck down as violative of the equal
protection clause. The clear mandate of the envisioned truth commission is to investigate and find out the
truth "concerning the reported cases of graft and corruption during the previous administration" 87 only. The
intent to single out the previous administration is plain, patent and manifest. Mention of it has been made
in at least three portions of the questioned executive order. Specifically, these are:

WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth
concerning the reported cases of graft and corruption during the previous administration, and which will
recommend the prosecution of the offenders and secure justice for all;

SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE TRUTH

COMMISSION, hereinafter referred to as the "COMMISSION," which shall primarily seek and find the
truth on, and toward this end, investigate reports of graft and corruption of such scale and magnitude that
shock and offend the moral and ethical sensibilities of the people, committed by public officers and
employees, their co-principals, accomplices and accessories from the private sector, if any, during the
previous administration; and thereafter recommend the appropriate action or measure to be taken thereon
to ensure that the full measure of justice shall be served without fear or favor.

SECTION 2. Powers and Functions. The Commission, which shall have all the powers of an
investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily
tasked to conduct a thorough fact-finding investigation of reported cases of graft and corruption referred to
in Section 1, involving third level public officers and higher, their co-principals, accomplices and
accessories from the private sector, if any, during the previous administration and thereafter submit its
finding and recommendations to the President, Congress and the Ombudsman. [Emphases supplied]

In this regard, it must be borne in mind that the Arroyo administration is but just a member of a class, that
is, a class of past administrations. It is not a class of its own. Not to include past administrations similarly
situated constitutes arbitrariness which the equal protection clause cannot sanction. Such discriminating
differentiation clearly reverberates to label the commission as a vehicle for vindictiveness and selective
retribution.

Though the OSG enumerates several differences between the Arroyo administration and other past
administrations, these distinctions are not substantial enough to merit the restriction of the investigation
to the "previous administration" only. The reports of widespread corruption in the Arroyo administration
cannot be taken as basis for distinguishing said administration from earlier administrations which were also
blemished by similar widespread reports of impropriety. They are not inherent in, and do not inure solely
to, the Arroyo administration. As Justice Isagani Cruz put it, "Superficial differences do not make for a valid
classification."88

The public needs to be enlightened why Executive Order No. 1 chooses to limit the scope of the intended
investigation to the previous administration only. The OSG ventures to opine that "to include other past
administrations, at this point, may unnecessarily overburden the commission and lead it to lose its
effectiveness."89 The reason given is specious. It is without doubt irrelevant to the legitimate and noble
objective of the PTC to stamp out or "end corruption and the evil it breeds." 90

The probability that there would be difficulty in unearthing evidence or that the earlier reports involving
the earlier administrations were already inquired into is beside the point. Obviously, deceased presidents
and cases which have already prescribed can no longer be the subjects of inquiry by the PTC. Neither is the
PTC expected to conduct simultaneous investigations of previous administrations, given the bodys limited
time and resources. "The law does not require the impossible" (Lex non cogit ad impossibilia).91

Given the foregoing physical and legal impossibility, the Court logically recognizes the unfeasibility of
investigating almost a centurys worth of graft cases. However, the fact remains that Executive Order No. 1
suffers from arbitrary classification. The PTC, to be true to its mandate of searching for the truth, must not
exclude the other past administrations. The PTC must, at least, have the authority to investigate all past
administrations. While reasonable prioritization is permitted, it should not be arbitrary lest it be struck
down for being unconstitutional. In the often quoted language of Yick Wo v. Hopkins, 92

Though the law itself be fair on its face and impartial in appearance, yet, if applied and administered by
public authority with an evil eye and an unequal hand, so as practically to make unjust and illegal
discriminations between persons in similar circumstances, material to their rights, the denial of equal
justice is still within the prohibition of the constitution. [Emphasis supplied]

It could be argued that considering that the PTC is an ad hoc body, its scope is limited. The Court, however,
is of the considered view that although its focus is restricted, the constitutional guarantee of equal
protection under the laws should not in any way be circumvented. The Constitution is the fundamental and
paramount law of the nation to which all other laws must conform and in accordance with which all private
rights determined and all public authority administered. 93 Laws that do not conform to the Constitution
should be stricken down for being unconstitutional. 94 While the thrust of the PTC is specific, that is, for
investigation of acts of graft and corruption, Executive Order No. 1, to survive, must be read together with
the provisions of the Constitution. To exclude the earlier administrations in the guise of "substantial
distinctions" would only confirm the petitioners lament that the subject executive order is only an
"adventure in partisan hostility." In the case of US v. Cyprian,95 it was written: "A rather limited number of
such classifications have routinely been held or assumed to be arbitrary; those include: race, national
origin, gender, political activity or membership in a political party, union activity or membership in a labor
union, or more generally the exercise of first amendment rights."

To reiterate, in order for a classification to meet the requirements of constitutionality, it must include or
embrace all persons who naturally belong to the class. 96 "Such a classification must not be based on
existing circumstances only, or so constituted as to preclude additions to the number included within a
class, but must be of such a nature as to embrace all those who may thereafter be in similar circumstances
and conditions. Furthermore, all who are in situations and circumstances which are relative to the
discriminatory legislation and which are indistinguishable from those of the members of the class must be
brought under the influence of the law and treated by it in the same way as are the members of the
class."97

The Court is not unaware that "mere underinclusiveness is not fatal to the validity of a law under the equal
protection clause."98 "Legislation is not unconstitutional merely because it is not all-embracing and does
not include all the evils within its reach." 99 It has been written that a regulation challenged under the equal
protection clause is not devoid of a rational predicate simply because it happens to be incomplete. 100 In
several instances, the underinclusiveness was not considered a valid reason to strike down a law or
regulation where the purpose can be attained in future legislations or regulations. These cases refer to the
"step by step" process.101 "With regard to equal protection claims, a legislature does not run the risk of
losing the entire remedial scheme simply because it fails, through inadvertence or otherwise, to cover
every evil that might conceivably have been attacked." 102

In Executive Order No. 1, however, there is no inadvertence. That the previous administration was picked
out was deliberate and intentional as can be gleaned from the fact that it was underscored at least three
times in the assailed executive order. It must be noted that Executive Order No. 1 does not even mention
any particular act, event or report to be focused on unlike the investigative commissions created in the
past. "The equal protection clause is violated by purposeful and intentional discrimination." 103

To disprove petitioners contention that there is deliberate discrimination, the OSG clarifies that the
commission does not only confine itself to cases of large scale graft and corruption committed during the
previous administration. 104 The OSG points to Section 17 of Executive Order No. 1, which provides:

SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the President there is a
need to expand the mandate of the Commission as defined in Section 1 hereof to include the investigation
of cases and instances of graft and corruption during the prior administrations, such mandate may be so
extended accordingly by way of a supplemental Executive Order.

The Court is not convinced. Although Section 17 allows the President the discretion to expand the scope of
investigations of the PTC so as to include the acts of graft and corruption committed in other past
administrations, it does not guarantee that they would be covered in the future. Such expanded mandate
of the commission will still depend on the whim and caprice of the President. If he would decide not to
include them, the section would then be meaningless. This will only fortify the fears of the petitioners that
the Executive Order No. 1 was "crafted to tailor-fit the prosecution of officials and personalities of the
Arroyo administration."105

The Court tried to seek guidance from the pronouncement in the case of Virata v. Sandiganbayan,106 that
the "PCGG Charter (composed of Executive Orders Nos. 1, 2 and 14) does not violate the equal protection
clause." The decision, however, was devoid of any discussion on how such conclusory statement was
arrived at, the principal issue in said case being only the sufficiency of a cause of action.

A final word

The issue that seems to take center stage at present is - whether or not the Supreme Court, in the exercise
of its constitutionally mandated power of Judicial Review with respect to recent initiatives of the legislature
and the executive department, is exercising undue interference. Is the Highest Tribunal, which is expected
to be the protector of the Constitution, itself guilty of violating fundamental tenets like the doctrine of
separation of powers? Time and again, this issue has been addressed by the Court, but it seems that the
present political situation calls for it to once again explain the legal basis of its action lest it continually be
accused of being a hindrance to the nations thrust to progress.

The Philippine Supreme Court, according to Article VIII, Section 1 of the 1987 Constitution, is vested with
Judicial Power that "includes the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or not there has been a grave of
abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality
of the government."

Furthermore, in Section 4(2) thereof, it is vested with the power of judicial review which is the power to
declare a treaty, international or executive agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation unconstitutional. This power also includes the duty to rule on the
constitutionality of the application, or operation of presidential decrees, proclamations, orders,
instructions, ordinances, and other regulations. These provisions, however, have been fertile grounds of
conflict between the Supreme Court, on one hand, and the two co-equal bodies of government, on the
other. Many times the Court has been accused of asserting superiority over the other departments.

To answer this accusation, the words of Justice Laurel would be a good source of enlightenment, to wit:
"And when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority
over the other departments; it does not in reality nullify or invalidate an act of the legislature, but only
asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims
of authority under the Constitution and to establish for the parties in an actual controversy the rights which
that instrument secures and guarantees to them."107

Thus, the Court, in exercising its power of judicial review, is not imposing its own will upon a co-equal body
but rather simply making sure that any act of government is done in consonance with the authorities and
rights allocated to it by the Constitution. And, if after said review, the Court finds no constitutional
violations of any sort, then, it has no more authority of proscribing the actions under review. Otherwise, the
Court will not be deterred to pronounce said act as void and unconstitutional.

It cannot be denied that most government actions are inspired with noble intentions, all geared towards
the betterment of the nation and its people. But then again, it is important to remember this ethical
principle: "The end does not justify the means." No matter how noble and worthy of admiration the
purpose of an act, but if the means to be employed in accomplishing it is simply irreconcilable with
constitutional parameters, then it cannot still be allowed. 108 The Court cannot just turn a blind eye and
simply let it pass. It will continue to uphold the Constitution and its enshrined principles.

"The Constitution must ever remain supreme. All must bow to the mandate of this law. Expediency must
not be allowed to sap its strength nor greed for power debase its rectitude." 109

Lest it be misunderstood, this is not the death knell for a truth commission as nobly envisioned by the
present administration. Perhaps a revision of the executive issuance so as to include the earlier past
administrations would allow it to pass the test of reasonableness and not be an affront to the Constitution.
Of all the branches of the government, it is the judiciary which is the most interested in knowing the truth
and so it will not allow itself to be a hindrance or obstacle to its attainment. It must, however, be
emphasized that the search for the truth must be within constitutional bounds for "ours is still a
government of laws and not of men."110

WHEREFORE, the petitions are GRANTED. Executive Order No. 1 is hereby declared UNCONSTITUTIONAL
insofar as it is violative of the equal protection clause of the Constitution.

As also prayed for, the respondents are hereby ordered to cease and desist from carrying out the
provisions of Executive Order No. 1.

SO ORDERED.
G.R. No. 150974 June 29, 2007

KAPISANAN NG MGA KAWANI NG ENERGY REGULATORY BOARD, petitioner,

vs.
COMMISSIONER FE B. BARIN, DEPUTY COMMISSIONERS CARLOS R. ALINDADA, LETICIA V. IBAY,
OLIVER B. BUTALID, and MARY ANNE B. COLAYCO, of the ENERGY REGULATORY
COMMISSION, respondent.

DECISION

CARPIO, J.:

The Case

This is a special civil action for certiorari and prohibition 1 of the selection and appointment of employees of
the Energy Regulatory Commission (ERC) by the ERC Board of Commissioners.

Petitioner Kapisanan ng mga Kawani ng Energy Regulatory Board (KERB) seeks to declare Section 38 of
Republic Act No. 9136 (RA 9136), which abolished the Energy Regulatory Board (ERB) and created the ERC,
as unconstitutional and to prohibit the ERC Commissioners from filling up the ERCs plantilla.

The Facts

RA 9136, popularly known as EPIRA (for Electric Power Industry Reform Act of 2001), was enacted on 8 June
2001 and took effect on 26 June 2001. Section 38 of RA 9136 provides for the abolition of the ERB and the
creation of the ERC. The pertinent portions of Section 38 read:

Creation of the Energy Regulatory Commission. There is hereby created an independent,

quasi-judicial regulatory board to be named the Energy Regulatory Commission (ERC). For this
purpose, the existing Energy Regulatory Board (ERB) created under Executive Order No. 172,
as amended, is hereby abolished.

The Commission shall be composed of a Chairman and four (4) members to be appointed by the President
of the Philippines. x x x

Within three (3) months from the creation of the ERC, the Chairman shall submit for the approval of the
President of the Philippines the new organizational structure and plantilla positions necessary to carry out
the powers and functions of the ERC.

xxxx

The Chairman and members of the Commission shall assume office at the beginning of their
terms: Provided, That, if upon the effectivity of this Act, the Commission has not been constituted and the
new staffing pattern and plantilla positions have not been approved and filled-up, the current Board and
existing personnel of ERB shall continue to hold office.

The existing personnel of the ERB, if qualified, shall be given preference in the filling up of plantilla
positions created in the ERC, subject to existing civil service rules and regulations.

At the time of the filing of this petition, the ERC was composed of Commissioner Fe B. Barin and Deputy
Commissioners Carlos R. Alindada, Leticia V. Ibay, Oliver B. Butalid, and Mary Anne B. Colayco (collectively,
Commissioners). The Commissioners assumed office on 15 August 2001. Pursuant to Section 38 of RA
9136, the Commissioners issued the proposed Table of Organization, Staffing Pattern, and Salary Structure
on 25 September 2001 which the President of the Philippines approved on 13 November 2001. Meanwhile,
KERB submitted to the Commissioners its Resolution No. 2001-02 on 13 September 2001. Resolution No.
2001-02 requested the Commissioners for an opportunity to be informed on the proposed plantilla
positions with their equivalent qualification standards.

On 17 October 2001, the Commissioners issued the guidelines for the selection and hiring of ERC
employees. A portion of the guidelines reflects the Commissioners view on the selection and hiring of the
ERC employees vis-a-vis Civil Service rules, thus:

Since R.A. 9136 has abolished the Energy Regulatory Board (ERB), it is the view of the
Commission that the provisions of Republic Act No. 6656 (An Act to Protect the Security of
[Tenure of] Civil Service Officers and Employees in the Implementation of Government
Reorganization) will not directly apply to ERCs current efforts to establish a new organization.
Civil Service laws, rules and regulations, however, will have suppletory application to the
extent possible in regard to the selection and placement of employees in the ERC. 2 (Emphasis
supplied)
On 5 November 2005, KERB sent a letter to the Commissioners stating the KERB members objection to
the Commissioners stand that Civil Service laws, rules and regulations have suppletory application in the
selection and placement of the ERC employees. KERB asserted that RA 9136 did not abolish the ERB or
change the ERBs character as an economic regulator of the electric power industry. KERB insisted that RA
9136 merely changed the ERBs name to the ERC and expanded the ERBs functions and objectives. KERB
sent the Commissioners yet another letter on 13 November 2001. KERB made a number of requests: (1)
the issuance of a formal letter related to the date of filing of job applications, including the use of Civil
Service application form no. 212; (2) the creation of a placement/recruitment committee and setting
guidelines relative to its functions, without prejudice to existing Civil Service rules and regulations; and (3)
copies of the plantilla positions and their corresponding qualification standards duly approved by either the
President of the Philippines or the Civil Service Commission (CSC).

Commissioner Barin replied to KERBs letter on 15 November 2001. She stated that Civil Service
application form no. 212 and the ERC-prescribed application format are substantially the same.
Furthermore, the creation of a placement/recruitment committee is no longer necessary because there is
already a prescribed set of guidelines for the recruitment of personnel. The ERC hired an independent
consultant to administer the necessary tests for the technical and managerial levels. Finally, the ERC
already posted the plantilla positions, which prescribe higher standards, as approved by the Department of
Budget and Management. Commissioner Barin stated that positions in the ERC do not need the prior
approval of the CSC, as the ERC is only required to submit the qualification standards to the CSC.

On 5 December 2001, the ERC published a classified advertisement in the Philippine Star. Two days later,
the CSC received a list of vacancies and qualification standards from the ERC. The ERC formed a Selection
Committee to process all applications.

KERB, fearful of the uncertainty of the employment status of its members, filed the present petition on 20
December 2001. KERB later filed an Urgent Ex Parte Motion to Enjoin Termination of Petitioner ERB
Employees on 2 January 2002. However, before the ERC received KERBs pleadings, the Selection
Committee already presented its list of proposed appointees to the Commissioners.

In their Comment, the Commissioners describe the status of the ERB employees appointment in the ERC
as follows:

As of February 1, 2002, of the two hundred twelve (212) ERB employees, one hundred thirty
eighty [sic] (138) were rehired and appointed to ERC plantilla positions and sixty six (66)
opted to retire or be separated from the service. Those who were rehired and those who opted
to retire or be separated constituted about ninety six (96%) percent of the entire ERB
employees. The list of the ERB employees appointed to new positions in the ERC is attached hereto as
Annex 1. Only eight (8) ERB employees could not be appointed to new positions due to the
reduction of the ERC plantilla and the absence of positions appropriate to their respective
qualifications and skills. The appropriate notice was issued to each of them informing them of
their separation from the service and assuring them of their entitlement to "separation pay
and other benefits in accordance with existing laws." 3

The Issues

KERB raises the following issues before this Court:

1. Whether Section 38 of RA 9136 abolishing the ERB is constitutional; and

2. Whether the Commissioners of the ERC were correct in disregarding and considering merely suppletory
in character the protective mantle of RA 6656 as to the ERB employees or petitioner in this case. 4

The Ruling of the Court

The petition has no merit.

We disregard the procedural defects in the petition, such as KERBs personality to file the petition on behalf
of its alleged members and Elmar Agirs authority to institute the action, because of the demands of public
interest.5

Constitutionality of the ERBs Abolition and the ERCs Creation

All laws enjoy the presumption of constitutionality. To justify the nullification of a law, there must be a clear
and unequivocal breach of the Constitution. KERB failed to show any breach of the Constitution.

A public office is created by the Constitution or by law or by an officer or tribunal to which the power to
create the office has been delegated by the legislature.6 The power to create an office carries with it
the power to abolish. President Corazon C. Aquino, then exercising her legislative powers, created the
ERB by issuing Executive Order No. 172 on 8 May 1987.
***The question of whether a law abolishes an office is a question of legislative intent. There
should not be any controversy if there is an explicit declaration of abolition in the law itself. 7 Section 38 of
RA 9136 explicitly abolished the ERB. However, abolition of an office and its related positions
is different from removal of an incumbent from his office. Abolition and removal are mutually
exclusive concepts. From a legal standpoint, there is no occupant in an abolished office. Where there is no
occupant, there is no tenure to speak of. Thus, impairment of the constitutional guarantee of
security of tenure does not arise in the abolition of an office. On the other hand, removal implies
that the office and its related positions subsist and that the occupants are merely separated
from their positions.8

***A valid order of abolition must not only come from a legitimate body, it must also be made in good
faith. An abolition is made in good faith when it is not made for political or personal reasons, or when it
does not circumvent the constitutional security of tenure of civil service employees.9 Abolition of an
office may be brought about by reasons of economy, or to remove redundancy of functions, or
a clear and explicit constitutional mandate for such termination of employment. 10 Where one
office is abolished and replaced with another office vested with similar functions, the abolition
is a legal nullity.11 When there is a void abolition, the incumbent is deemed to have never ceased holding
office.

KERB asserts that there was no valid abolition of the ERB but there was merely a reorganization done in
bad faith. Evidences of bad faith are enumerated in Section 2 of Republic Act No. 6656 (RA 6656), 12 Section
2 of RA 6656 reads:

No officer or employee in the career service shall be removed except for a valid cause and after due notice
and hearing. A valid cause for removal exists when, pursuant to a bona fide reorganization, a
position has been abolished or rendered redundant or there is a need to merge, divide, or
consolidate positions in order to meet the exigencies of the service, or other lawful causes
allowed by the Civil Service Law. The existence of any or some of the following circumstances may be
considered as evidence of bad faith in the removals made as a result of reorganization, giving rise to a
claim for reinstatement or reappointment by an aggrieved party:

(a) Where there is a significant increase in the number of positions in the new staffing pattern of the
department or agency concerned;

(b) Where an office is abolished and another performing substantially the same functions is created;

(c) Where incumbents are replaced by those less qualified in terms of status of appointment, performance
and merit;

(d) Where there is a reclassification of offices in the department or agency concerned and the reclassified
offices perform substantially the same function as the original offices;

(e) Where the removal violates the order of separation provided in Section 3 hereof.

KERB claims that the present case falls under the situation described in Section 2(b) of RA 6656. We thus
need to compare the provisions enumerating the powers and functions of the ERB and the ERC to see
whether they have substantially the same functions. Under Executive Order No. 172, the ERB has the
following powers and functions:

SEC. 3. Jurisdiction, Powers and Functions of the Board. When warranted and only when public necessity
requires, the Board may regulate the business of importing, exporting, re-exporting, shipping, transporting,
processing, refining, marketing and distributing energy resources. Energy resource means any substance
or phenomenon which by itself or in combination with others, or after processing or refining or the
application to it of technology, emanates, generates or causes the emanation or generation of energy,
such as but not limited to, petroleum or petroleum products, coal, marsh gas, methane gas, geothermal
and hydroelectric sources of energy, uranium and other similar radioactive minerals, solar energy, tidal
power, as well as non-conventional existing and potential sources.

The Board shall, upon proper notice and hearing, exercise the following, among other powers and
functions:

(a) Fix and regulate the prices of petroleum products;

(b) Fix and regulate the rate schedule or prices of piped gas to be charged by duly franchised gas
companies which distribute gas by means of underground pipe system;

(c) Fix and regulate the rates of pipeline concessionaires under the provisions of Republic Act No. 387, as
amended, otherwise known as the "Petroleum Act of 1949," as amended by Presidential Decree No. 1700;
(d) Regulate the capacities of new refineries or additional capacities of existing refineries and license
refineries that may be organized after the issuance of this Executive Order, under such terms and
conditions as are consistent with the national interest;

(e) Whenever the Board has determined that there is a shortage of any petroleum product, or when public
interest so requires, it may take such steps as it may consider necessary, including the temporary
adjustment of the levels of prices of petroleum products and the payment to the Oil Price Stabilization
Fund created under Presidential Decree No. 1956 by persons or entities engaged in the petroleum industry
of such amounts as may be determined by the Board, which will enable the importer to recover its cost of
importation.

SEC. 4. Reorganized or Abolished Agency. (a) The Board of Energy is hereby reconstituted into the
Energy Regulatory Board, and the formers powers and functions under Republic Act No. 6173, as amended
by Presidential Decree No. 1208, as amended, are transferred to the latter.

(b) The regulatory and adjudicatory powers and functions exercised by the Bureau of Energy Utilization
under Presidential Decree No. 1206, as amended, are transferred to the Board, the provisions of Executive
Order No. 131 notwithstanding.

SEC. 5. Other Transferred Powers and Functions. The power of the Land Transportation Commission to
determine, fix and/or prescribe rates or charges pertaining to the hauling of petroleum products are
transferred to the Board. The power to fix and regulate the rates or charges pertinent to shipping or
transporting of petroleum products shall also be exercised by the Board.

The foregoing transfer of powers and functions shall include applicable funds and appropriations, records,
equipment, property and such personnel as may be necessary; Provided, That with reference to paragraph
(b) of Section 4 hereof, only such amount of funds and appropriations of the Bureau of Energy Utilization,
as well as only the personnel thereof who are completely or primarily involved in the exercise by said
Bureau of its regulatory and adjudicatory powers and functions, shall be affected by such
transfer: Provided, further, That the funds and appropriations as well as the records, equipment, property
and all personnel of the reorganized Board of Energy shall be transferred to the Energy Regulatory Board.

SEC. 6. Power to Promulgate Rules and Perform Other Acts. The Board shall have the power to
promulgate rules and regulations relevant to procedures governing hearings before it and enforce
compliance with any rule, regulation, order or other requirements: Provided, That said rules and
regulations shall take effect fifteen (15) days after publication in the Official Gazette. It shall also perform
such other acts as may be necessary or conducive to the exercise of its powers and functions, and the
attainment of the purposes of this Order.

On the other hand, Section 43 of RA 9136 enumerates the basic functions of the ERC.

SEC. 43. Functions of the ERC. The ERC shall promote competition, encourage market development,
ensure customer choice and discourage/penalize abuse of market power in the restructured electricity
industry. In appropriate cases, the ERC is authorized to issue cease and desist order after due notice and
hearing. Towards this end, it shall be responsible for the following key functions in the restructured
industry:

(a) Enforce the implementing rules and regulations of this Act;

(b) Within six (6) months from the effectivity of this Act, promulgate and enforce, in accordance with law, a
National Grid Code and a Distribution Code which shall include, but not limited to, the following:

(i) Performance standards for TRANSCO O & M Concessionaire, distribution utilities and suppliers: Provided,
That in the establishment of the performance standards, the nature and function of the entities shall be
considered; and

(ii) Financial capability standards for the generating companies, the TRANSCO, distribution utilities and
suppliers: Provided, That in the formulation of the financial capability standards, the nature and function of
the entity shall be considered: Provided, further, That such standards are set to ensure that the electric
power industry participants meet the minimum financial standards to protect the public interest.
Determine, fix, and approve, after due notice and public hearings the universal charge, to be imposed on
all electricity end-users pursuant to Section 34 hereof;

(c) Enforce the rules and regulations governing the operations of the electricity spot market and the
activities of the spot market operator and other participants in the spot market, for the purpose of ensuring
a greater supply and rational pricing of electricity;

(d) Determine the level of cross subsidies in the existing retail rate until the same is removed pursuant to
Section 73 hereof;
(e) Amend or revoke, after due notice and hearing, the authority to operate of any person or entity which
fails to comply with the provisions hereof, the IRR or any order or resolution of the ERC. In the event a
divestment is required, the ERC shall allow the affected party sufficient time to remedy the infraction or for
an orderly disposal, but shall in no case exceed twelve (12) months from the issuance of the order;

(f) In the public interest, establish and enforce a methodology for setting transmission and distribution
wheeling rates and retail rates for the captive market of a distribution utility, taking into account all
relevant considerations, including the efficiency or inefficiency of the regulated entities. The rates must be
such as to allow the recovery of just and reasonable costs and a reasonable return on rate base (RORB) to
enable the entity to operate viably. The ERC may adopt alternative forms of internationally-accepted rate
setting methodology as it may deem appropriate. The rate-setting methodology so adopted and applied
must ensure a reasonable price of electricity. The rates prescribed shall be non-discriminatory. To achieve
this objective and to ensure the complete removal of cross subsidies, the cap on the recoverable rate of
system losses prescribed in Section 10 of Republic Act No. 7832, is hereby amended and shall be replaced
by caps which shall be determined by the ERC based on load density, sales mix, cost of service, delivery
voltage and other technical considerations it may promulgate. The ERC shall determine such form of rate-
setting methodology, which shall promote efficiency. In case the rate setting methodology used is RORB, it
shall be subject to the following guidelines:

(i) For purposes of determining the rate base, the TRANSCO or any distribution utility may be allowed to
revalue its eligible assets not more than once every three (3) years by an independent appraisal
company: Provided, however, That ERC may give an exemption in case of unusual devaluation: Provided,
further, That the ERC shall exert efforts to minimize price shocks in order to protect the consumers;

(ii) Interest expenses are not allowable deductions from permissible return on rate base;

(iii) In determining eligible cost of services that will be passed on to the end-users, the ERC shall establish
minimum efficiency performance standards for the TRANSCO and distribution utilities including systems
losses, interruption frequency rates, and collection efficiency;

(iv) Further, in determining rate base, the TRANSCO or any distribution utility shall not be allowed to
include management inefficiencies like cost of project delays not excused by force majeure, penalties and
related interest during construction applicable to these unexcused delays; and

(v) Any significant operating costs or project investments of TRANSCO and distribution utilities which shall
become part of the rate base shall be subject to the verification of the ERC to ensure that the contracting
and procurement of the equipment, assets and services have been subjected to transparent and accepted
industry procurement and purchasing practices to protect the public interest.

(g) Three (3) years after the imposition of the universal charge, ensure that the charges of the TRANSCO or
any distribution utility shall bear no cross subsidies between grids, within grids, or between classes of
customers, except as provided herein;

(h) Review and approve any changes on the terms and conditions of service of the TRANSCO or any
distribution utility;

(i) Allow the TRANSCO to charge user fees for ancillary services to all electric power industry participants
or self-generating entities connected to the grid. Such fees shall be fixed by the ERC after due notice and
public hearing;

(j) Set a lifeline rate for the marginalized end-users;

(k) Monitor and take measures in accordance with this Act to penalize abuse of market power,
cartelization, and anti-competitive or discriminatory behavior by any electric power industry participant;

(l) Impose fines or penalties for any non-compliance with or breach of this Act, the IRR of this Act and the
rules and regulations which it promulgates or administers;

(m) Take any other action delegated to it pursuant to this Act;

(n) Before the end of April of each year, submit to the Office of the President of the Philippines and
Congress, copy furnished the DOE, an annual report containing such matters or cases which have been
filed before or referred to it during the preceding year, the actions and proceedings undertaken and its
decision or resolution in each case. The ERC shall make copies of such reports available to any interested
party upon payment of a charge which reflects the printing costs. The ERC shall publish all its decisions
involving rates and anticompetitive cases in at least one (1) newspaper of general circulation, and/or post
electronically and circulate to all interested electric power industry participants copies of its resolutions to
ensure fair and impartial treatment;

(o) Monitor the activities of the generation and supply of the electric power industry with the end in view of
promoting free market competition and ensuring that the allocation or pass through of bulk purchase cost
by distributors is transparent, non-discriminatory and that any existing subsidies shall be divided pro rata
among all retail suppliers;

(p) Act on applications for or modifications of certificates of public convenience and/or necessity, licenses
or permits of franchised electric utilities in accordance with law and revoke, review and modify such
certificates, licenses or permits in appropriate cases, such as in cases of violations of the Grid Code,
Distribution Code and other rules and regulations issued by the ERC in accordance with law;

(q) Act on applications for cost recovery and return on demand side management projects;

(r) In the exercise of its investigative and quasi-judicial powers, act against any participant or player in the
energy sector for violations of any law, rule and regulation governing the same, including the rules on
cross ownership, anticompetitive practices, abuse of market positions and similar or related acts by any
participant in the energy sector, or by any person as may be provided by law, and require any person or
entity to submit any report or data relative to any investigation or hearing conducted pursuant to this Act;

(s) Inspect, on its own or through duly authorized representatives, the premises, books of accounts and
records of any person or entity at any time, in the exercise of its quasi-judicial power for purposes of
determining the existence of any anticompetitive behavior and/or market power abuse and any violation of
rules and regulations issued by the ERC;

(t) Perform such other regulatory functions as are appropriate and necessary in order to ensure the
successful restructuring and modernization of the electric power industry, such as, but not limited to, the
rules and guidelines under which generation companies, distribution utilities which are not publicly listed
shall offer and sell to the public a portion not less than fifteen percent (15%) of their common shares of
stocks: Provided, however, That generation companies, distribution utilities or their respective holding
companies that are already listed in the PSE are deemed in compliance. For existing companies, such
public offering shall be implemented not later than five (5) years from the effectivity of this Act. New
companies shall implement their respective public offerings not later than five (5) years from the issuance
of their certificate of compliance; and

(u) The ERC shall have the original and exclusive jurisdiction over all cases contesting rates, fees, fines and
penalties imposed by the ERC in the exercise of the abovementioned powers, functions and responsibilities
and over all cases involving disputes between and among participants or players in the energy sector.

All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fees shall be published
at least twice for two successive weeks in two (2) newspapers of nationwide circulation.

Aside from Section 43, additional functions of the ERC are scattered throughout RA 9136:

1. SEC. 6. Generation Sector. Generation of electric power, a business affected with public interest, shall
be competitive and open.

Upon the effectivity of this Act, any new generation company shall, before it operates, secure from the
Energy Regulatory Commission (ERC) a certificate of compliance pursuant to the standards set forth in this
Act, as well as health, safety and environmental clearances from the appropriate government agencies
under existing laws.

2. SEC. 8. Creation of the National Transmission Company. x x x

That the subtransmission assets shall be operated and maintained by TRANSCO until their disposal to
qualified distribution utilities which are in a position to take over the responsibility for operating,
maintaining, upgrading, and expanding said assets. x x x

In case of disagreement in valuation, procedures, ownership participation and other issues, the ERC shall
resolve such issues.

3. SEC. 23. Functions of Distribution Utilities. x x x

Distribution utilities shall submit to the ERC a statement of their compliance with the technical
specifications prescribed in the Distribution Code and the performance standards prescribed in the IRR of
this Act. Distribution utilities which do not comply with any of the prescribed technical specifications and
performance standards shall submit to the ERC a plan to comply, within three (3) years, with said
prescribed technical specifications and performance standards. The ERC shall, within sixty (60) days upon
receipt of such plan, evaluate the same and notify the distribution utility concerned of its action. Failure to
submit a feasible and credible plan and/or failure to implement the same shall serve as grounds for the
imposition of appropriate sanctions, fines or penalties.

4. SEC. 28. De-monopolization and Shareholding Dispersal. In compliance with the constitutional
mandate for dispersal of ownership and de-monopolization of public utilities, the holdings of persons,
natural or juridical, including directors, officers, stockholders and related interests, in a distribution utility
and their respective holding companies shall not exceed twenty-five (25%) percent of the voting shares of
stock unless the utility or the company holding the shares or its controlling stockholders are already listed
in the Philippine Stock Exchange (PSE): Provided, That controlling stockholders of small distribution utilities
are hereby required to list in the PSE within five (5) years from the enactment of this Act if they already
own the stocks. New controlling stockholders shall undertake such listing within five (5) years from the
time they acquire ownership and control. A small distribution company is one whose peak demand is equal
to Ten megawatts (10MW).

The ERC shall, within sixty (60) days from the effectivity of this Act, promulgate the rules and regulations
to implement and effect this provision.

5. SEC. 29. Supply Sector. x x x all suppliers of electricity to the contestable market shall require a
license from the ERC.

For this purpose, the ERC shall promulgate rules and regulations prescribing the qualifications of electricity
suppliers which shall include, among other requirements, a demonstration of their technical capability,
financial capability, and creditworthiness: Provided, That the ERC shall have authority to require electricity
suppliers to furnish a bond or other evidence of the ability of a supplier to withstand market disturbances
or other events that may increase the cost of providing service.

xxxx

6. SEC. 30. Wholesale Electricity Spot Market. x x x

Subject to the compliance with the membership criteria, all generating companies, distribution utilities,
suppliers, bulk consumers/end-users and other similar entities authorized by the ERC shall be eligible to
become members of the wholesale electricity spot market.

The ERC may authorize other similar entities to become eligible as members, either directly or indirectly, of
the wholesale electricity spot market.

xxxx

7. SEC. 31. Retail Competition and Open Access. x x x

Upon the initial implementation of open access, the ERC shall allow all electricity end-users with a monthly
average peak demand of at least one megawatt (1MW) for the preceding twelve (12) months to be the
contestable market. xxx Subsequently and every year thereafter, the ERC shall evaluate the performance
of the market. x x x

8. SEC. 32. NPC Stranded Debt and Contract Cost Recovery. x x x

The ERC shall verify the reasonable amounts and determine the manner and duration for the full recovery
of stranded debt and stranded contract costs as defined herein x x x x

9. SEC. 34. Universal Charge. Within one (1) year from the effectivity of this Act, a universal charge to be
determined, fixed and approved by the ERC, shall be imposed on all electricity end-users x x x x

10. SEC. 35. Royalties, Returns and Tax Rates for Indigenous Energy Resources. x x x

To ensure lower rates for end-users, the ERC shall forthwith reduce the rates of power from all indigenous
sources of energy.

11. SEC. 36. Unbundling of Rates and Functions. x x x

each distribution utility shall file its revised rates for the approval by the ERC. x x x x

12. SEC. 40. Enhancement of Technical Competence. The ERC shall establish rigorous training programs
for its staff for the purpose of enhancing the technical competence of the ERC in the following areas:
evaluation of technical performance and monitoring of compliance with service and performance
standards, performance-based rate-setting reform, environmental standards and such other areas as will
enable the ERC to adequately perform its duties and functions.

13. SEC. 41. Promotion of Consumer Interests. The ERC shall handle consumer complaints and ensure
the adequate promotion of consumer interests.

14. SEC. 45. Cross Ownership, Market Power Abuse and Anti-Competitive Behavior. No participant in the
electricity industry may engage in any anti-competitive behavior including, but not limited to, cross-
subsidization, price or market manipulation, or other unfair trade practices detrimental to the
encouragement and protection of contestable markets.

xxxx

(c) x x x The ERC shall, within one (1) year from the effectivity of this Act, promulgate rules and regulations
to promote competition, encourage market development and customer choice and discourage/penalize
abuse of market power, cartelization and any anticompetitive or discriminatory behavior, in order to
further the intent of this Act and protect the public interest. Such rules and regulations shall define the
following:

(a) the relevant markets for purposes of establishing abuse or misuse of monopoly or market position;

(b) areas of isolated grids; and

(c) the periodic reportorial requirements of electric power industry participants as may be necessary to
enforce the provisions of this Section.

The ERC shall, motu proprio, monitor and penalize any market power abuse or anticompetitive or
discriminatory act or behavior by any participant in the electric power industry.

15. SEC. 51. Powers. The PSALM Corp. shall, in the performance of its functions and for the attainment
of its objective, have the following powers: x x x

(e) To liquidate the NPC stranded contract costs utilizing proceeds from sales and other property
contributed to it, including the proceeds from the universal charge;

xxxx

16. SEC. 60. Debts of Electric Cooperatives. x x x The ERC shall ensure a reduction in the rates of
electric cooperatives commensurate with the resulting savings due to the removal of the amortization
payments of their loans. x x x x

17. SEC. 62. Joint Congressional Power Commission. x x x

x x x the Power Commission is hereby empowered to require the DOE, ERC, NEA, TRANSCO, generation
companies, distribution utilities, suppliers and other electric power industry participants to submit reports
and all pertinent data and information relating to the performance of their respective functions in the
industry. xxx

xxxx

18. SEC. 65. Environmental Protection. Participants in the generation, distribution and transmission sub-
sectors of the industry shall comply with all environmental laws, rules, regulations and standards
promulgated by the Department of Environment and Natural Resources including, in appropriate cases, the
establishment of an environmental guarantee fund.

19. SEC. 67. NPC Offer of Transition Supply Contracts. Within six (6) months from the effectivity of this
Act, NPC shall file with the ERC for its approval a transition supply contract duly negotiated with the
distribution utilities containing the terms and conditions of supply and a corresponding schedule of rates,
consistent with the provisions hereof, including adjustments and/or indexation formulas which shall apply
to the term of such contracts.

xxxx

20. SEC. 69. Renegotiation of Power Purchase and Energy Conversion Agreements between Government
Entities. Within three (3) months from the effectivity of this Act, all power purchase and energy
conversion agreements between the PNOC-Energy Development Corporation (PNOC-EDC) and NPC,
including but not limited to the Palimpinon, Tongonan and Mt. Apo Geothermal complexes, shall be
reviewed by the ERC and the terms thereof amended to remove any hidden costs or extraordinary mark-
ups in the cost of power or steam above their true costs. All amended contracts shall be submitted to the
Joint Congressional Power Commission for approval. The ERC shall ensure that all savings realized from the
reduction of said mark-ups shall be passed on to all end-users.

After comparing the functions of the ERB and the ERC, we find that the ERC indeed assumed the functions
of the ERB. However, the overlap in the functions of the ERB and of the ERC does not mean that there is no
valid abolition of the ERB. The ERC has new and expanded functions which are intended to meet the
specific needs of a deregulated power industry. Indeed, National Land Titles and Deeds Registration
Administration v. Civil Service Commission stated that:
[I]f the newly created office has substantially new, different or additional functions, duties or powers, so
that it may be said in fact to create an office different from the one abolished, even though it embraces all
or some of the duties of the old office it will be considered as an abolition of one office and the creation of
a new or different one. The same is true if one office is abolished and its duties, for reasons of economy are
given to an existing officer or office.13

KERB argues that "RA 9136 did not abolish the ERB nor did it alter its essential character as an economic
regulator of the electric power industry. x x x RA 9136 rather changed merely ERBs name and title to that
of the ERC even as it expanded its functions and objectives to keep pace with the times." To uphold KERBs
argument regarding the invalidity of the ERBs abolition is to ignore the developments in the history of
energy regulation.

The regulation of public services started way back in 1902 with the enactment of Act No. 520 which
created the Coastwise Rate Commission. In 1906, Act No. 1507 was passed creating the Supervising
Railway Expert. The following year, Act No. 1779 was enacted creating the Board of Rate Regulation. Then,
Act No 2307, which was patterned after the Public Service Law of the State of New Jersey, was approved by
the Philippine Commission in 1914, creating the Board of Public Utility Commissioners, composed of three
members, which absorbed all the functions of the Coastwise Rate Commission, the Supervising Railway
Expert, and the Board of Rate Regulation.

Thereafter, several laws were enacted on public utility regulation. On November 7, 1936, Commonwealth
Act No. 146, otherwise known as the Public Service Law, was enacted by the National Assembly. The Public
Service Commission (PSC) had jurisdiction, supervision, and control over all public services, including the
electric power service.

After almost four decades, significant developments in the energy sector changed the landscape of
economic regulation in the country.

April 30, 1971 R.A. No. 6173 was passed creating the Oil Industry Commission (OIC), which was
tasked to regulate the oil industry and to ensure the adequate supply of petroleum products at reasonable
prices.

September 24, 1972 then President Ferdinand E. Marcos issued Presidential Decree No. 1 which
ordered the preparation of the Integrated Reorganization Plan by the Commission on Reorganization. The
Plan abolished the PSC and transferred the regulatory and adjudicatory functions pertaining to the
electricity industry and water resources to then Board of Power and Waterworks (BOPW).

October 6, 1977 the government created the Department of Energy (DOE) and consequently
abolished the OIC, which was replaced by the creation of the Board of Energy (BOE) through Presidential
Decree No. 1206. The BOE, in addition, assumed the powers and functions of the BOPW over the electric
power industry.

May 8, 1987 the BOE was reconstituted into the Energy Regulatory Board (ERB), pursuant to
Executive Order No. 172 issued by then President Corazon C. Aquino as part of her governments
reorganization program. The rationale was to consolidate and entrust into a single body all the regulatory
and adjudicatory functions pertaining to the energy sector. Thus, the power to regulate the power rates
and services of private electric utilities was transferred to the ERB.

December 28, 1992 Republic Act No. 7638 signed, where the power to fix the rates of the National
Power Corporation (NPC) and the rural electric cooperatives (RECs) was passed on to the ERB . Non-pricing
functions of the ERB with respect to the petroleum industry were transferred to the DOE, i.e., regulating
the capacities of new refineries.

February 10, 1998 enactment of Republic Act 8479: Downstream Oil Industry Deregulation Act of
1998, which prescribed a five-month transition period, before full deregulation of the oil industry, during
which ERB would implement an automatic pricing mechanism (APM) for petroleum products every month.

June 12, 1998 the Philippine oil industry was fully deregulated, thus, ERBs focus of responsibility
centered on the electric industry.

June 8, 2001 enactment of Republic Act No. 9136, otherwise known as the Electric Power Industry
Reform Act (EPIRA) of 2001. The Act abolished the ERB and created in its place the Energy
Regulatory Commission (ERC) which is a purely independent regulatory body performing the
combined quasi-judicial, quasi-legislative and administrative functions in the electric
industry.14

Throughout the years, the scope of the regulation has gradually narrowed from that of public services in
1902 to the electricity industry and water resources in 1972 to the electric power industry and oil industry
in 1977 to the electric industry alone in 1998. The ERC retains the ERBs traditional rate and service
regulation functions. However, the ERC now also has to promote competitive operations in the
electricity market. RA 9136 expanded the ERCs concerns to encompass both the consumers
and the utility investors.

****Thus, the EPIRA provides a framework for the restructuring of the industry, including the
privatization of the assets of the National Power Corporation (NPC), the transition to a
competitive structure, and the delineation of the roles of various government agencies and
the private entities. The law ordains the division of the industry into four (4) distinct sectors, namely:
generation, transmission, distribution and supply. Corollarily, the NPC generating plants have to privatized
and its transmission business spun off and privatized thereafter.

In tandem with the restructuring of the industry is the establishment of "a strong and purely
independent regulatory body." Thus, the law created the ERC in place of the Energy Regulatory
Board (ERB).

To achieve its aforestated goal, the law has reconfigured the organization of the regulatory
body. x x x15

There is no question in our minds that, because of the expansion of the ERCs functions and concerns,
there was a valid abolition of the ERB. Thus, there is no merit to KERBs allegation that there is an
impairment of the security of tenure of the ERBs employees.

WHEREFORE, we DISMISS the petition. No costs.

SO ORDERED.
G.R. No. 155336 November 25, 2004

COMMISSION ON HUMAN RIGHTS EMPLOYEES' ASSOCIATION (CHREA) Represented by its

President, MARCIAL A. SANCHEZ, JR., petitioner,
vs.
COMMISSION ON HUMAN RIGHTS, respondent.

CHICO-NAZARIO, J.:

Can the Commission on Human Rights lawfully implement an upgrading and reclassification of
personnel positions without the prior approval of the Department of Budget and Management?

Before this Court is a petition for review filed by petitioner Commission on Human Rights Employees'
Association (CHREA) challenging the Decision 1 dated 29 November 2001 of the Court of Appeals in CA-G.R.
SP No. 59678 affirming the Resolutions2 dated 16 December 1999 and 09 June 2000 of the Civil Service
Commission (CSC), which sustained the validity of the upgrading and reclassification of certain personnel
positions in the Commission on Human Rights (CHR) despite the disapproval thereof by the Department of
Budget and Management (DBM). Also assailed is the resolution dated 11 September 2002 of the Court of
Appeals denying the motion for reconsideration filed by petitioner.

The antecedent facts which spawned the present controversy are as follows:

On 14 February 1998, Congress passed Republic Act No. 8522, otherwise known as the General
Appropriations Act of 1998. It provided for Special Provisions Applicable to All Constitutional Offices
Enjoying Fiscal Autonomy. The last portion of Article XXXIII covers the appropriations of the CHR. These
special provisions state:

1. Organizational Structure. Any provision of law to the contrary notwithstanding and within the limits of
their respective appropriations as authorized in this Act, the Constitutional Commissions and Offices
enjoying fiscal autonomy are authorized to formulate and implement the organizational structures of
their respective offices, to fix and determine the salaries, allowances, and other benefits of their
personnel, and whenever public interest so requires, make adjustments in their personal services
itemization including, but not limited to, the transfer of item or creation of new positions in their respective
offices: PROVIDED, That officers and employees whose positions are affected by such
reorganization or adjustments shall be granted retirement gratuities and separation pay in
accordance with existing laws, which shall be payable from any unexpended balance of, or
savings in the appropriations of their respective offices: PROVIDED, FURTHER, That the
implementation hereof shall be in accordance with salary rates, allowances and other benefits authorized
under compensation standardization laws.

2. Use of Savings. The Constitutional Commissions and Offices enjoying fiscal autonomy are hereby
authorized to use savings in their respective appropriations for: (a) printing and/or publication of decisions,
resolutions, and training information materials; (b) repair, maintenance and improvement of central and
regional offices, facilities and equipment; (c) purchase of books, journals, periodicals and equipment; (d)
necessary expenses for the employment of temporary, contractual and casual employees; (e) payment of
extraordinary and miscellaneous expenses, commutable representation and transportation allowances,
and fringe benefits for their officials and employees as may be authorized by law; and (f) other official
purposes, subject to accounting and auditing rules and regulations. (Emphases supplied)

on the strength of these special provisions, the CHR, through its then Chairperson Aurora P.
Navarette-Recia and Commissioners Nasser A. Marohomsalic, Mercedes V. Contreras, Vicente P. Sibulo,
and Jorge R. Coquia, promulgated Resolution No. A98-047 on 04 September 1998, adopting an
upgrading and reclassification scheme among selected positions in the Commission, to wit:

WHEREAS, the General Appropriations Act, FY 1998, R.A. No. 8522 has provided special provisions
applicable to all Constitutional Offices enjoying Fiscal Autonomy, particularly on organizational structures
and authorizes the same to formulate and implement the organizational structures of their respective
offices to fix and determine the salaries, allowances and other benefits of their personnel and whenever
public interest so requires, make adjustments in the personnel services itemization including, but not
limited to, the transfer of item or creation of new positions in their respective offices: PROVIDED, That
officers and employees whose positions are affected by such reorganization or adjustments shall be
granted retirement gratuities and separation pay in accordance with existing laws, which shall be payable
from any unexpanded balance of, or savings in the appropriations of their respective offices;

Whereas, the Commission on Human Rights is a member of the Constitutional Fiscal Autonomy Group
(CFAG) and on July 24, 1998, CFAG passed an approved Joint Resolution No. 49 adopting internal rules
implementing the special provisions heretoforth mentioned;

****NOW THEREFORE, the Commission by virtue of its fiscal autonomy hereby approves and
authorizes the upgrading and augmentation of the commensurate amount generated from
savings under Personal Services to support the implementation of this resolution effective
Calendar Year 1998;

Let the Human Resources Development Division (HRDD) prepare the necessary Notice of Salary
Adjustment and other appropriate documents to implement this resolution; . . . .3 (Emphasis
supplied)

Annexed to said resolution is the proposed creation of ten additional plantilla positions,
namely: one Director IV position, with Salary Grade 28 for the Caraga Regional Office, four Security Officer
II with Salary Grade 15, and five Process Servers, with Salary Grade 5 under the Office of the
Commissioners. 4

On 19 October 1998, CHR issued Resolution No. A98-0555 providing for the upgrading or raising
of salary grades of the following positions in the Commission:

Number Position Salary Grade Total Salary

of Requirement
Positions Title s
From To From To
12 Attorney VI Director IV 26 28 P229,104.00
(In the
Regional
Field Offices)
4 Director III Director IV 27 28 38,928.00
1 Financial & Director IV 24 28 36,744.00
Managemen
t Officer II
1 Budget Budget 18 24 51,756.00
Officer III Officer IV
1 Accountant Chief 18 24 51,756.00
III Accountant
1 Cashier III Cashier V 18 24 51,756.00
1 Information Director IV 24 28 36,744.006
Officer V

It, likewise, provided for the creation and upgrading of the following positions:

A. Creation

Number of Position Title Salary Grade Total Salary

Positions Requirements
4 Security Officer II 15 684,780.00
(Coterminous)

B. Upgrading

Number of Position Title Salary Grade Total Salary

Positions Requirements
From To From To
1 Attorney V Director IV 25 28 P28,092.00
2 Security Security 11 15 57,456.00
Officer I Officer II
----------------
Total 3 P 85,548.007

To support the implementation of such scheme, the CHR, in the same resolution, authorized the
augmentation of a commensurate amount generated from savings under Personnel Services.

By virtue of Resolution No. A98-062 dated 17 November 1998, the CHR "collapsed" the vacant positions in
the body to provide additional source of funding for said staffing modification. Among the positions
collapsed were: one Attorney III, four Attorney IV, one Chemist III, three Special Investigator I, one Clerk III,
and one Accounting Clerk II.8
The CHR forwarded said staffing modification and upgrading scheme to the DBM with a
request for its approval, but the then DBM secretary Benjamin Diokno denied the request on
the following justification:

Based on the evaluations made the request was not favorably considered as it effectively involved the
elevation of the field units from divisions to services.

The present proposal seeks further to upgrade the twelve (12) positions of Attorney VI, SG-26 to Director
IV, SG-28. This would elevate the field units to a bureau or regional office, a level even higher
than the one previously denied.

The request to upgrade the three (3) positions of Director III, SG-27 to Director IV, SG-28, in the Central
Office in effect would elevate the services to Office and change the context from support to substantive
without actual change in functions.

In the absence of a specific provision of law which may be used as a legal basis to elevate the
level of divisions to a bureau or regional office, and the services to offices, we reiterate our
previous stand denying the upgrading of the twelve (12) positions of Attorney VI, SG-26 to
Director III, SG-27 or Director IV, SG-28, in the Field Operations Office (FOO) and three (3)
Director III, SG-27 to Director IV, SG-28 in the Central Office.

As represented, President Ramos then issued a Memorandum to the DBM Secretary dated 10 December
1997, directing the latter to increase the number of Plantilla positions in the CHR both Central and Regional
Offices to implement the Philippine Decade Plan on Human Rights Education, the Philippine Human Rights
Plan and Barangay Rights Actions Center in accordance with existing laws. (Emphasis in the original)

Pursuant to Section 78 of the General Provisions of the General Appropriations Act (GAA) FY 1998, no
organizational unit or changes in key positions shall be authorized unless provided by law or directed by
the President, thus, the creation of a Finance Management Office and a Public Affairs Office cannot be
given favorable recommendation.

****Moreover, as provided under Section 2 of RA No. 6758, otherwise known as the Compensation
Standardization Law, the Department of Budget and Management is directed to establish and
administer a unified compensation and position classification system in the government. The
Supreme Court ruled in the case of Victorina Cruz vs. Court of Appeals, G.R. No. 119155, dated January 30,
1996, that this Department has the sole power and discretion to administer the compensation
and position classification system of the National Government.

Being a member of the fiscal autonomy group does not vest the agency with the authority to
reclassify, upgrade, and create positions without approval of the DBM. While the members of
the Group are authorized to formulate and implement the organizational structures of their
respective offices and determine the compensation of their personnel, such authority is not
absolute and must be exercised within the parameters of the Unified Position Classification
and Compensation System established under RA 6758 more popularly known as the
Compensation Standardization Law. We therefore reiterate our previous stand on the
matter.9 (Emphases supplied)

In light of the DBM's disapproval of the proposed personnel modification scheme, the CSC-National Capital
Region Office, through a memorandum dated 29 March 1999, recommended to the CSC-Central Office that
the subject appointments be rejected owing to the DBM's disapproval of the plantilla reclassification.

Meanwhile, the officers of petitioner CHREA, in representation of the rank and file employees of the CHR,
requested the CSC-Central Office to affirm the recommendation of the CSC-Regional Office.
CHREA stood its ground in saying that the DBM is the only agency with appropriate authority mandated by
law to evaluate and approve matters of reclassification and upgrading, as well as creation of positions.

The CSC-Central Office denied CHREA's request in a Resolution dated 16 December 1999, and reversed the
recommendation of the CSC-Regional Office that the upgrading scheme be censured. The decretal portion
of which reads:

WHEREFORE, the request of Ronnie N. Rosero, Hubert V. Ruiz, Flordeliza A. Briones, George Q. Dumlao
[and], Corazon A. Santos-Tiu, is hereby denied. 10

CHREA filed a motion for reconsideration, but the CSC-Central Office denied the same on 09 June 2000.

Given the cacophony of judgments between the DBM and the CSC, petitioner CHREA elevated the matter
to the Court of Appeals. The Court of Appeals affirmed the pronouncement of the CSC-Central Office and
upheld the validity of the upgrading, retitling, and reclassification scheme in the CHR on the justification
that such action is within the ambit of CHR's fiscal autonomy. The fallo of the Court of Appeals decision
provides:
IN VIEW OF ALL THE FOREGOING, the instant petition is ordered DISMISSED and the questioned Civil
Service Commission Resolution No. 99-2800 dated December 16, 1999 as well as No. 001354 dated June 9,
2000, are hereby AFFIRMED. No cost.11

Unperturbed, petitioner filed this petition in this Court contending that:

A.THE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT UNDER THE 1987 CONSTITUTION, THE
COMMISSION ON HUMAN RIGHTS ENJOYS FISCAL AUTONOMY.

B.THE COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING THE CONSTRUCTION OF THE COMMISSION
ON HUMAN RIGHTS OF REPUBLIC ACT NO. 8522 (THE GENERAL APPROPRIATIONS ACT FOR THE FISCAL
YEAR 1998) DESPITE ITS BEING IN SHARP CONFLICT WITH THE 1987 CONSTITUTION AND THE STATUTE
ITSELF.

C.THE COURT OF APPEALS SERIOUSLY AND GRAVELY ERRED IN AFFIRMING THE VALIDITY OF THE CIVIL
SERVICE COMMISSION RESOLUTION NOS. 992800 AND 001354 AS WELL AS THAT OF THE OPINION OF THE
DEPARTMENT OF JUSTICE IN STATING THAT THE COMMISSION ON HUMAN RIGHTS ENJOYS FISCAL
AUTONOMY UNDER THE 1987 CONSTITUTION AND THAT THIS FISCAL AUTONOMY INCLUDES THE ACTION
TAKEN BY IT IN COLLAPSING, UPGRADING AND RECLASSIFICATION OF POSITIONS THEREIN. 12

The central question we must answer in order to resolve this case is: Can the Commission on
Human Rights validly implement an upgrading, reclassification, creation, and collapsing of plantilla
positions in the Commission without the prior approval of the Department of Budget and Management?

Petitioner CHREA grouses that the Court of Appeals and the CSC-Central Office both erred in sanctioning
the CHR's alleged blanket authority to upgrade, reclassify, and create positions inasmuch as the approval
of the DBM relative to such scheme is still indispensable. Petitioner bewails that the CSC and the Court of
Appeals erroneously assumed that CHR enjoys fiscal autonomy insofar as financial matters are concerned,
particularly with regard to the upgrading and reclassification of positions therein.

Respondent CHR sharply retorts that petitioner has no locus standi considering that there exists no official
written record in the Commission recognizing petitioner as a bona fide organization of its employees nor is
there anything in the records to show that its president, Marcial A. Sanchez, Jr., has the authority to sue the
CHR. The CHR contends that it has the authority to cause the upgrading, reclassification, plantilla creation,
and collapsing scheme sans the approval of the DBM because it enjoys fiscal autonomy.

After a thorough consideration of the arguments of both parties and an assiduous scrutiny of the records in
the case at bar, it is the Court's opinion that the present petition is imbued with merit.

On petitioner's personality to bring this suit, we held in a multitude of cases that a proper party is one who
has sustained or is in immediate danger of sustaining an injury as a result of the act complained of. 13 Here,
petitioner, which consists of rank and file employees of respondent CHR, protests that the upgrading and
collapsing of positions benefited only a select few in the upper level positions in the Commission resulting
to the demoralization of the rank and file employees. This sufficiently meets the injury test. Indeed,
the CHR's upgrading scheme, if found to be valid, potentially entails eating up the
Commission's savings or that portion of its budgetary pie otherwise allocated for Personnel
Services, from which the benefits of the employees, including those in the rank and file, are
derived.

Further, the personality of petitioner to file this case was recognized by the CSC when it took cognizance of
the CHREA's request to affirm the recommendation of the CSC-National Capital Region Office. CHREA's
personality to bring the suit was a non-issue in the Court of Appeals when it passed upon the merits of this
case. Thus, neither should our hands be tied by this technical concern. Indeed, it is settled jurisprudence
that an issue that was neither raised in the complaint nor in the court below cannot be raised for the first
time on appeal, as to do so would be offensive to the basic rules of fair play, justice, and due process. 14

We now delve into the main issue of whether or not the approval by the DBM is a condition precedent to
the enactment of an upgrading, reclassification, creation and collapsing of plantilla positions in the CHR.

Germane to our discussion is Rep. Act No. 6758, An Act Prescribing a Revised Compensation and
Position Classification System in the Government and For Other Purposes, or the Salary
Standardization Law, dated 01 July 1989, which provides in Sections 2 and 4 thereof that it is the DBM
that shall establish and administer a unified Compensation and Position Classification System. Thus:

SEC. 2. Statement of Policy. -- It is hereby declared the policy of the State to provide equal pay
for substantially equal work and to base differences in pay upon substantive differences in
duties and responsibilities, and qualification requirements of the positions. In determining
rates of pay, due regard shall be given to, among others, prevailing rates in the private sector
for comparable work. For this purpose, the Department of Budget and Management (DBM) is hereby
directed to establish and administer a unified Compensation and Position Classification System,
hereinafter referred to as the System as provided for in Presidential Decree No. 985, as amended, that
shall be applied for all government entities, as mandated by the Constitution. (Emphasis supplied.)

SEC. 4. Coverage. The Compensation and Position Classification System herein provided shall apply to all
positions, appointive or elective, on full or part-time basis, now existing or hereafter created in the
government, including government-owned or controlled corporations and government financial
institutions.

****The term "government" refers to the Executive, the Legislative and the Judicial Branches and the
Constitutional Commissions and shall include all, but shall not be limited to, departments, bureaus, offices,
boards, commissions, courts, tribunals, councils, authorities, administrations, centers, institutes, state
colleges and universities, local government units, and the armed forces. The term "government-owned
or controlled corporations and financial institutions" shall include all corporations and financial
institutions owned or controlled by the National Government, whether such corporations and financial
institutions perform governmental or proprietary functions. (Emphasis supplied.)

The disputation of the Court of Appeals that the CHR is exempt from the long arm of the Salary
Standardization Law is flawed considering that the coverage thereof, as defined above, encompasses the
entire gamut of government offices, sans qualification.

***This power to "administer" is not purely ministerial in character as erroneously held by the Court of
Appeals. The word to administer means to control or regulate in behalf of others; to direct or
superintend the execution, application or conduct of; and to manage or conduct public affairs,
as to administer the government of the state.15

The regulatory power of the DBM on matters of compensation is encrypted not only in law, but in
jurisprudence as well. In the recent case of Philippine Retirement Authority (PRA) v. Jesusito L. Buag,16 this
Court, speaking through Mr. Justice Reynato Puno, ruled that compensation, allowances, and other benefits
received by PRA officials and employees without the requisite approval or authority of the DBM are
unauthorized and irregular. In the words of the Court

Despite the power granted to the Board of Directors of PRA to establish and fix a compensation and
benefits scheme for its employees, the same is subject to the review of the Department of Budget and
Management. However, in view of the express powers granted to PRA under its charter, the extent of the
review authority of the Department of Budget and Management is limited. As stated in Intia, the task of the
Department of Budget and Management is simply to review the compensation and benefits plan of the
government agency or entity concerned and determine if the same complies with the prescribed policies
and guidelines issued in this regard. The role of the Department of Budget and Management is
supervisorial in nature, its main duty being to ascertain that the proposed compensation, benefits and
other incentives to be given to PRA officials and employees adhere to the policies and guidelines issued in
accordance with applicable laws.

In Victorina Cruz v. Court of Appeals,17 we held that the DBM has the sole power and discretion to
administer the compensation and position classification system of the national government.

In Intia, Jr. v. Commission on Audit,18 the Court held that although the charter 19 of the Philippine Postal
Corporation (PPC) grants it the power to fix the compensation and benefits of its employees and exempts
PPC from the coverage of the rules and regulations of the Compensation and Position Classification Office,
by virtue of Section 6 of P.D. No. 1597, the compensation system established by the PPC is, nonetheless,
subject to the review of the DBM. This Court intoned:

It should be emphasized that the review by the DBM of any PPC resolution affecting the compensation
structure of its personnel should not be interpreted to mean that the DBM can dictate upon the PPC Board
of Directors and deprive the latter of its discretion on the matter. Rather, the DBM's function is merely to
ensure that the action taken by the Board of Directors complies with the requirements of the law ,
specifically, that PPC's compensation system "conforms as closely as possible with that provided for under
R.A. No. 6758." (Emphasis supplied.)

As measured by the foregoing legal and jurisprudential yardsticks, the imprimatur of the DBM must first be
sought prior to implementation of any reclassification or upgrading of positions in government. This is
consonant to the mandate of the DBM under the Revised Administrative Code of 1987, Section 3,
Chapter 1, Title XVII, to wit:

SEC. 3. Powers and Functions. The Department of Budget and Management shall assist the
President in the preparation of a national resources and expenditures budget, preparation,
execution and control of the National Budget, preparation and maintenance of accounting
systems essential to the budgetary process, achievement of more economy and efficiency in
the management of government operations, administration of compensation and position
classification systems, assessment of organizational effectiveness and review and evaluation
of legislative proposals having budgetary or organizational implications. (Emphasis supplied.)
Irrefragably, it is within the turf of the DBM Secretary to disallow the upgrading, reclassification, and
creation of additional plantilla positions in the CHR based on its finding that such scheme lacks legal
justification.

Notably, the CHR itself recognizes the authority of the DBM to deny or approve the proposed
reclassification of positions as evidenced by its three letters to the DBM requesting approval thereof . As
such, it is now estopped from now claiming that the nod of approval it has previously sought from the DBM
is a superfluity.

The Court of Appeals incorrectly relied on the pronouncement of the CSC-Central Office that the CHR is a
constitutional commission, and as such enjoys fiscal autonomy. 20

Palpably, the Court of Appeals' Decision was based on the mistaken premise that the CHR belongs to the
species of constitutional commissions. But, Article IX of the Constitution states in no uncertain terms that
only the CSC, the Commission on Elections, and the Commission on Audit shall be tagged as Constitutional
Commissions with the appurtenant right to fiscal autonomy. Thus:

Sec. 1. The Constitutional Commissions, which shall be independent, are the Civil Service
Commission, the Commission on Elections, and the Commission on Audit.

Sec. 5. The Commission shall enjoy fiscal autonomy. Their approved annual appropriations
shall be automatically and regularly released.

Along the same vein, the Administrative Code, in Chapter 5, Sections 24 and 26 of Book II on
Distribution of Powers of Government, the constitutional commissions shall include only the
Civil Service Commission, the Commission on Elections, and the Commission on Audit, which
are granted independence and fiscal autonomy. In contrast, Chapter 5, Section 29 thereof, is silent
on the grant of similar powers to the other bodies including the CHR. Thus:

SEC. 24. Constitutional Commissions. The Constitutional Commissions, which shall be independent, are
the Civil Service Commission, the Commission on Elections, and the Commission on Audit.

SEC. 26. Fiscal Autonomy. The Constitutional Commissions shall enjoy fiscal autonomy. The approved
annual appropriations shall be automatically and regularly released.

SEC. 29. Other Bodies. There shall be in accordance with the Constitution, an Office of the
Ombudsman, a Commission on Human Rights, and independent central monetary authority,
and a national police commission. Likewise, as provided in the Constitution, Congress may
establish an independent economic and planning agency. (Emphasis ours.)

From the 1987 Constitution and the Administrative Code, it is abundantly clear that the CHR is
not among the class of Constitutional Commissions. As expressed in the oft-repeated maxim
expressio unius est exclusio alterius, the express mention of one person, thing, act or consequence
excludes all others. Stated otherwise, expressium facit cessare tacitum what is expressed puts an end to
what is implied.21

Nor is there any legal basis to support the contention that the CHR enjoys fiscal autonomy. In essence,
fiscal autonomy entails freedom from outside control and limitations, other than those
provided by law. It is the freedom to allocate and utilize funds granted by law, in accordance
with law, and pursuant to the wisdom and dispatch its needs may require from time to
time.22 In Blaquera v. Alcala and Bengzon v. Drilon,23 it is understood that it is only the Judiciary,
the Civil Service Commission, the Commission on Audit, the Commission on Elections, and the
Office of the Ombudsman, which enjoy fiscal autonomy. Thus, in Bengzon,24 we explained:

As envisioned in the Constitution, the fiscal autonomy enjoyed by the Judiciary, the Civil Service
Commission, the Commission on Audit, the Commission on Elections, and the Office of the Ombudsman
contemplates a guarantee of full flexibility to allocate and utilize their resources with the wisdom and
dispatch that their needs require. It recognizes the power and authority to levy, assess and collect fees, fix
rates of compensation not exceeding the highest rates authorized by law for compensation and pay plans
of the government and allocate and disburse such sums as may be provided by law or prescribed by them
in the course of the discharge of their functions.

The Judiciary, the Constitutional Commissions, and the Ombudsman must have the independence and
flexibility needed in the discharge of their constitutional duties. The imposition of restrictions and
constraints on the manner the independent constitutional offices allocate and utilize the funds
appropriated for their operations is anathema to fiscal autonomy and violative not only of the express
mandate of the Constitution but especially as regards the Supreme Court, of the independence and
separation of powers upon which the entire fabric of our constitutional system is based. In the interest of
comity and cooperation, the Supreme Court, [the] Constitutional Commissions, and the Ombudsman have
so far limited their objections to constant reminders. We now agree with the petitioners that this grant of
autonomy should cease to be a meaningless provision. (Emphasis supplied.)
Neither does the fact that the CHR was admitted as a member by the Constitutional Fiscal Autonomy
Group (CFAG) ipso facto clothed it with fiscal autonomy. Fiscal autonomy is a constitutional grant, not
a tag obtainable by membership.

We note with interest that the special provision under Rep. Act No. 8522, while cited under the heading of
the CHR, did not specifically mention CHR as among those offices to which the special provision to
formulate and implement organizational structures apply, but merely states its coverage to include
Constitutional Commissions and Offices enjoying fiscal autonomy. In contrast, the Special Provision
Applicable to the Judiciary under Article XXVIII of the General Appropriations Act of 1998 specifically
mentions that such special provision applies to the judiciary and had categorically authorized the Chief
Justice of the Supreme Court to formulate and implement the organizational structure of the Judiciary, to
wit:

1. Organizational Structure. Any provision of law to the contrary notwithstanding and within the limits of
their respective appropriations authorized in this Act, the Chief Justice of the Supreme Court is authorized
to formulate and implement organizational structure of the Judiciary, to fix and determine the salaries,
allowances, and other benefits of their personnel, and whenever public interest so requires, make
adjustments in the personal services itemization including, but not limited to, the transfer of item or
creation of new positions in the Judiciary; PROVIDED, That officers and employees whose positions are
affected by such reorganization or adjustments shall be granted retirement gratuities and separation pay
in accordance with existing law, which shall be payable from any unexpended balance of, or savings in the
appropriations of their respective offices: PROVIDED, FURTHER, That the implementation hereof shall be in
accordance with salary rates, allowances and other benefits authorized under compensation
standardization laws. (Emphasis supplied.)

All told, the CHR, although admittedly a constitutional creation is, nonetheless, not included in
the genus of offices accorded fiscal autonomy by constitutional or legislative fiat .

Even assuming en arguendo that the CHR enjoys fiscal autonomy, we share the stance of the DBM that the
grant of fiscal autonomy notwithstanding, all government offices must, all the same, kowtow to the Salary
Standardization Law. We are of the same mind with the DBM on its standpoint, thus-

Being a member of the fiscal autonomy group does not vest the agency with the authority to
reclassify, upgrade, and create positions without approval of the DBM. While the members of the
Group are authorized to formulate and implement the organizational structures of their respective offices
and determine the compensation of their personnel, such authority is not absolute and must be exercised
within the parameters of the Unified Position Classification and Compensation System established under
RA 6758 more popularly known as the Compensation Standardization Law. 25 (Emphasis supplied.)

The most lucid argument against the stand of respondent, however, is the provision of Rep. Act No. 8522
"that the implementation hereof shall be in accordance with salary rates, allowances and other benefits
authorized under compensation standardization laws."26

Indeed, the law upon which respondent heavily anchors its case upon has expressly provided that any form
of adjustment in the organizational structure must be within the parameters of the Salary Standardization
Law.

The Salary Standardization Law has gained impetus in addressing one of the basic causes of discontent of
many civil servants. 27 For this purpose, Congress has delegated to the DBM the power to
administer the Salary Standardization Law and to ensure that the spirit behind it is observed .
This power is part of the system of checks and balances or system of restraints in our
government. The DBM's exercise of such authority is not in itself an arrogation inasmuch as it is pursuant
to the paramount law of the land, the Salary Standardization Law and the Administrative Code.

In line with its role to breathe life into the policy behind the Salary Standardization Law of
"providing equal pay for substantially equal work and to base differences in pay upon
substantive differences in duties and responsibilities, and qualification requirements of the
positions," the DBM, in the case under review, made a determination, after a thorough evaluation, that
the reclassification and upgrading scheme proposed by the CHR lacks legal rationalization.

The DBM expounded that Section 78 of the general provisions of the General Appropriations Act FY 1998,
which the CHR heavily relies upon to justify its reclassification scheme, explicitly provides that "no
organizational unit or changes in key positions shall be authorized unless provided by law or directed by
the President." Here, the DBM discerned that there is no law authorizing the creation of a Finance
Management Office and a Public Affairs Office in the CHR. Anent CHR's proposal to upgrade twelve
positions of Attorney VI, SG-26 to Director IV, SG-28, and four positions of Director III, SG-27 to Director IV,
SG-28, in the Central Office, the DBM denied the same as this would change the context from support to
substantive without actual change in functions.

This view of the DBM, as the law's designated body to implement and administer a unified compensation
system, is beyond cavil. The interpretation of an administrative government agency, which is tasked to
implement a statute is accorded great respect and ordinarily controls the construction of the courts. In
Energy Regulatory Board v. Court of Appeals,28 we echoed the basic rule that the courts will not interfere in
matters which are addressed to the sound discretion of government agencies entrusted with the
regulation of activities coming under the special technical knowledge and training of such agencies.

To be sure, considering his expertise on matters affecting the nation's coffers, the Secretary of the DBM, as
the President's alter ego, knows from where he speaks inasmuch as he has the front seat view of the
adverse effects of an unwarranted upgrading or creation of positions in the CHR in particular and in the
entire government in general.

WHEREFORE, the petition is GRANTED, the Decision dated 29 November 2001 of the Court of Appeals
in CA-G.R. SP No. 59678 and its Resolution dated 11 September 2002 are hereby REVERSED and SET
ASIDE. The ruling dated 29 March 1999 of the Civil Service Commision-National Capital Region is
REINSTATED. The Commission on Human Rights Resolution No. A98-047 dated 04 September
1998, Resolution No. A98-055 dated 19 October 1998 and Resolution No. A98-062 dated 17
November 1998 without the approval of the Department of Budget and Management are
disallowed. No pronouncement as to costs.

SO ORDERED.