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Administrative and Election Laws (Prelims)

Case Digests
1. Leveriza vs. IAC, 157 SCRA 282 (1988)
This case involves three contracts of lease:
1) Contract A: executed between Civil Aeronautics Administration (lessor) and Rosario Leveriza (lessee)
2) Contract B: executed between Leveriza (lessor) and Mobil Oil (lessee)
3) Contract C: executed between CAA (lessor) and Mobil Oil (lessee)
When Leveriza subleased the property to Mobil Oil (Contract B) without permission from the lessor, CAA cancelled Contract A and
executed Contract C with Mobil Oil. Leveriza contended that Contract C was invalid not only because it was entered into by CAA
without approval by the Department Secretary but also because it was not executed by the President of the Philippines or officer
duly designated. According to Leveriza, the officer duly designated to cancel the contract is not the Airport General Manager but
the Secretary of Public Works and Communication or the Director of the CAA.
W/N Contract C was validly entered into
SC held that the Airport General Manager had authority to enter into contracts of lease. In executing Contract C, the Airport
General Manager signed for the Director of the CAA, who subsequently ratified the same.
Under sec. 567 of the RAC, a contract of lease may be executed by: (1) President; (2) officer duly designated by him; and (3)
officer expressly vested by law. Under sec. 32 (24) of RA 776, the Director of the CAA is one such officer vested by law.
LEVERIZA et al vs. IAC, Mobil oil and CAA
G.R. No. L-66614
January 25, 1988
FACTS: Around three contracts of lease resolve the basic issues in the instant case:

Contract A a lease contract of April 2, 1965 between the Republic of the Philippines, represented by Civil Aeronautics
Administration (CAA) and. Leveriza over a parcel of land containing an area of 4,502 square meters, for 25 years.

Contract B a lease contract (in effect a sublease) of May 21, 1965 between Leveriza and Mobil Oil Philippines, Inc.,
over the same parcel of land, but reduced to 3,000 square meters for 25 years; and

Contract C a lease contract of June 1, 1968 between defendant CAA and plaintiff Mobil Oil over the same parcel of
land, but reduced to 3,000 square meters, for 25 years.
There is no dispute among the parties that the subject matter of the three contracts of lease above mentioned, Contract A,
Contract B, and Contract C, is the same parcel of land, with the noted difference that while in Contract A, the area leased is 4,502
square meters, in Contract B and Contract C, the area has been reduced to 3,000 square meters.
It is important to note, for a clear understanding of the issues involved, that it appears that defendant CAA as LESSOR,
leased the same parcel of land, for durations of time that overlapped to two lessees, to wit: (1) Leveriza and Mobil Oil, and the
latter, as LESSEE, leased the same parcel of land from two lessors, to wit: (1) Leveriza and (2) CAA for durations of time that also
Leveriza, the lessee in Contract A and the lessor in Contract B, is now deceased. This is the reason why her successor-ininterest, her heirs, are sued. For purposes of brevity, these defendants shall be referred to hereinafter as Defendants Leveriza.
Mobil Oil seeks the rescission or cancellation of Contract A and Contract B on the ground that Contract A from which
Contract B is derived and depends has already been cancelled by the defendant CAA and maintains that Contract C with the
defendant CAA is the only valid and subsisting contract insofar as the parcel of land, subject to the present litigation is concerned.
Defendants Leverizas claim that Contract A which is their contract with CAA has never been legally cancelled and still
valid and subsisting; that it is Contract C between plaintiff and defendant CAA which should be declared void.
CAA asserts that Contract A is still valid and subsisting because its cancellation by Jurado was ineffective and asks the
court to annul Contract A because of the violation committed by Leveriza in leasing the parcel of land to plaintiff by virtue of
Contract B without the consent of CAA. CAA further asserts that Contract C not having been approved by the Director of Public
Works and Communications is not valid.
After trial, the lower courts rendered judgment:
1. Declaring Contract A as having been validly cancelled on June 28, 1966, and has therefore ceased to have any effect as of that
2. Declaring that Contract B has likewise ceased to have any effect as of June 28, 1966 because of the cancellation of Contract A;
3. Declaring that Contract C was validly entered into on June 1, 1968, and that it is still valid and subsisting;
CAA filed a Motion for Reconsideration, averring that because the lot lease was properly registered in the name of the Republic of
the Philippines, it was only the President of the Philippines or an officer duly designated by him who could execute the lease
contract pursuant to Sec. 567 of the Revised Administrative Code; that the Airport General Manager has no authority to cancel
Contract A, the contract entered into between the CAA and Leveriza, and that Contract C between the CAA and Mobil was void for
not having been approved by the Secretary of Public Works and Communications. Said motion was however denied.
On appeal, the IAC affirmed in toto the decision of the lower court. Hence this petition for Review on certiorari.
ISSUE: There is no dispute that Contract A at the time of its execution was a valid contract. The issue therefore is whether or not
said contract is still subsisting after its cancellation by CAA on the ground of a sublease executed by petitioners with Mobil Oil
(CONTRACT B) without the consent of CAA and the execution of another contract of lease between CAA and Mobil Oil (CONTRACT

The issue narrows down to: WON there is a valid ground for the cancellation of Contract A
HELD: The petition is DISMISSED for lack of merit and the decision of the Court of Appeals appealed from is AFFIRMED in toto.
YES. Contract A was entered into by CAA as the lessor and the Leverizas as the lessee specifically for the purpose of
operating and managing a gasoline station by the latter, to serve vehicles going in and out of the airport.
As regards prior consent of the lessor to the transfer of rights to the leased premises, the provision of paragraph 7 of said
Contract reads in full:
7. The Party of the Second part may transfer her rights to the leased premises but in such eventuality, the consent of the
Party of the First Part shall first be secured. In any event, such transfer of rights shall have to respect the terms and conditions of
this agreement.
Paragraph 8 provides the sanction for the violation of the above-mentioned terms and conditions of the contract. Said paragraph
8. Failure on the part of the Party of the Second Part to comply with the terms and conditions herein agreed upon shall be
sufficient for revocation of this contract by the Party of the First Part without need of judicial demand.
It is not disputed that the Leverizas (lessees) entered into a contract of sublease (Contract B) with Mobil Oil without the
consent of CAA (lessor). The cancellation of the contract was made in a letter by Jurado, Airport General Manager of CAA
addressed to Rosario Leveriza.
Respondent Leverizas and the CAA assailed the validity of such cancellation, claiming that the Airport General Manager
had no legal authority to make the cancellation. They maintain that it is only the (1)Secretary of Public Works and
Communications, acting for the President, or by delegation of power, the (2)Director of CCA who could validly cancel the contract.
Petitioners argue that cancelling or setting aside a contract approved by the Secretary is, in effect, repealing an act of the
Secretary which is beyond the authority of the Administrator.
Such argument is untenable. The terms and conditions under which such revocation or cancellation may be made, have
already been specifically provided for in Contract A which has already been approved by the Department Head, It is evident that
in the implementation of aforesaid contract, the approval of said Department Head is no longer necessary if not redundant.

249 SCRA 538
G.R. No. 102976
October 25 1995
Petitioner Iron and Steel Authority (ISA) was created by Presidential Decree No. 272 dated August 9, 1973 in order, to
develop and promote the iron and steel industry in the Philippines. P.D. No. 272 initially created petitioner ISA for a term of 5
years, and when ISAs original term expired on October 10, 1978, its term was extended for another 10 years.
The National Steel Corporation (NSC) then a wholly owned subsidiary of the National Development Corporation, which is itself an
entity wholly owned by the National Government, embarked on an expansion program embracing, among other things, the
construction of an integrated steel mill in Iligan City. Pursuant to the expansion program of the NSC, Proclamation No. 2239 was
issued by the President of the Philippines on November 16, 1982 withdrawing from sale or settlement a large tract of public land
located in Iligan City and reserving that land for the use and immediate occupancy of NSCs.
Since certain portions of the public land subject matter of Proclamation No. 2239 were occupied by a non-operational
chemical fertilizer plant owned by private respondent Maria Cristina Fertilizer Corporation (MCFC), LOI No. 1277, also dated 16
November 1982, was issued directing the NSC to negotiate with the owners of MCFC, for and on behalf of the Government, for
the compensation of MCFCs present occupancy rights on the subject land. LOI No. 1277 also directed that should NSC and
private respondent MCFC fail to reach an agreement within a period of 60 days from the date of the LOI, petitioner ISA was to
exercise its power of eminent domain under P.D. No. 272 and to initiate expropriation proceedings in respect of occupancy rights
of private respondent MCFC relating to the subject public land as well as the plant itself and related facilities and to cede the
same to the NSC.
Negotiations between NSC and private respondent MCFC did fail.
Whether or not the Republic of the Philippines is entitled to be substituted for ISA in view of the expiration of ISA's term.
Clearly, ISA was vested with some of the powers or attributes normally associated with juridical personality but did not
possess general or comprehensive juridical personality separate and distinct from that of the Government. The ISA in fact appears
to the Court to be a non-incorporated agency or instrumentality of the Government of the Republic of the Philippines. ISA may
thus be properly regarded as an agent or delegate of the Republic of the Philippines.
When the statutory term of a non-incorporated agency expires, the powers, duties and functions as well as the assets
and liabilities of that agency revert back to, and are re-assumed by, the Republic of the Philippines, in the absence of special
provisions of law specifying some other disposition thereof such as, e.g., devolution or transmission of such powers, duties,
functions, etc. to some other identified successor agency or instrumentality of the Republic of the Philippines. When the expiring
agency is an incorporated one, the consequences of such expiry must be looked for in the charter of that agency and, by way of
supplementation, in the provisions of the Corporation Code. Since, in the instant case, ISA is a non-incorporated agency or
instrumentality of the Republic, its powers, duties, functions, assets and liabilities are properly regarded as folded back into the
Government of the Republic of the Philippines and hence assumed once again by the Republic, no special statutory provision
having been shown to have mandated succession thereto by some other entity or agency of the Republic.
In the instant case, ISA instituted the expropriation proceedings in its capacity as an agent or delegate or representative
of the Republic of the Philippines pursuant to its authority under P.D. No. 272.
From the foregoing premises, it follows that the Republic of the Philippines is entitled to be substituted in the
expropriation proceedings as party-plaintiff in lieu of ISA, the statutory term of ISA having expired. Put a little differently, the
expiration of ISA's statutory term did not by itself require or justify the dismissal of the eminent domain proceedings.
3. G.R. No. 138200. February 27, 2002
vs. ROBERTO MABALOT, respondent.

19 February 1996: then DOTC Secretary Jesus B. Garcia, Jr., issued Memorandum Order No. 96-735 addressed to Land
Transportation Franchising Regulatory Board (LTFRB) Chairman Dante Lantin directing him to effect the transfer of regional
functions of that office to the DOTCCAR Regional Office, pending the creation of a regular Regional Franchising and Regulatory
Office thereat, pursuant to Section 7 of Executive Order No. 202.

13 March 1996: herein respondent Roberto Mabalot filed a petition for certiorari and prohibition praying that the
Memorandum Order No. 96-735 be declared illegal and without effect.

29 January 1997: Secretary Lagdameo issued the assailed Department Order No. 97-1025, establishing DOTC-CAR
Regional Office, created by virtue of Executive Order No. 220 dated July 15, 1987, as the Regional Office of the LTFRB.

Mabalot filed a Supplemental Petition assailing the validity of Department Order No. 97-1025

31 March 1999: the lower court rendered a decision declaring Memorandum Order Nos. 96-733 and 97-1025 of the
respondent DOTC Secretary null and void and without any legal effect as being violative of the provision of the Constitution
against encroachment on the powers of the legislative department and also of the provision enjoining appointive officials from
holding any other office or employment in the Government.

Instant petition where this Court is tasked in the main to resolve the issue of validity of the subject administrative
issuances by the DOTC Secretary.

WON the administrative issuances of the DOTC Secretary are valid.

WON the DOTC Sec encroached on the powers of the legislature.
WON the administrative issuances are violative of Sections 7 and 8, Article IX-B of the Constitution.

(1)YES. Memorandum Order No. 96-735 and Department Order No. 97-1025 are legal and valid administrative issuances by the
DOTC Secretary.

Section 17, Article VII of the Constitution mandates that The President shall have control of all executive departments,
bureaus and offices. He shall ensure that the laws be faithfully executed...

Section 62 of Republic Act 7645 (General Appropriations Act [G.A.A.] for FY 1993) shows that the President is authorized
to effect organizational changes including the creation of offices in the department or agency concerned.

The Administrative Code of 1987 also provides legal basis for the Chief Executives authority to reorganize the National
(2)NO, the office was created by authority of law, not by Congress. The President - through his duly constituted political agent
and alter ego, the DOTC Secretary in the present case - may legally and validly decree the reorganization of the Department,
particularly the establishment of DOTC-CAR as the LTFRB Regional Office at the Cordillera Administrative Region, with the
concomitant transfer and performance of public functions and responsibilities appurtenant to a regional office of the LTFRB.

By the Chief Executives unequivocal act of issuing Administrative Order No. 36 ordering his alter ego - the DOTC
Secretary in the present case - to effectuate the creation of Regional Offices in the CAR, it is as if the President himself carried out
the creation and establishment of LTFRB-CAR Regional Office, when in fact, the DOTC Secretary, as alter ego of the President,
directly and merely sought to implement the Chief Executives Administrative Order.

The personality of the heads of the various departments is in reality but the projection of that of the President. Thus,
their acts, performed and promulgated in the regular course of business, are, unless disapproved or reprobated by the Chief
Executive, presumptively the acts of the Chief Executive.

Elementary rule in administrative law and the law on public officers that a public office may be created through any of
the following modes: (1) by the Constitution (fundamental law), (2) by law (statute duly enacted by Congress), or (3) by authority
of law, thus, Congress can delegate the power to create positions.

The creation and establishment of LTFRB-CAR Regional Office was made pursuant to the third mode - by authority of law,
which could be decreed for instance, through an Executive Order (E.O.) issued by the President or an order of an administrative
agency such as the Civil Service Commission pursuant to Section 17, Book V of E.O. 292, otherwise known as The Administrative
Code of 1987. In this case, the DOTC Secretary issued the assailed Memorandum and Department Orders pursuant to
Administrative Order No. 36 of the President

Reorganization is regarded as valid provided it is pursued in good faith. As a general rule, a reorganization is carried out
in good faith if it is for the purpose of economy or to make bureaucracy more efficient. The reorganization in this case was
decreed in the interest of the service and for purposes of economy and more effective coordination of the DOTC functions in the
Cordillera Administrative Region, thus in good faith.
(3)NO. The assailed Orders of the DOTC Secretary do not violate Sections 7 and 8, Article IX-B of the Constitution. Considering
that in the case of Memorandum Order No. 96-735, the organic personnel of the DOTC-CAR were, in effect, merely designated to
perform the additional duties and functions while performing the functions of their permanent office. Also, an office or
employment held in the exercise of the primary functions of ones principal office is an exception to, or not within the
contemplation, of the prohibition embodied in Section 7, Article IX-B.

No evidence was adduced and presented to clearly establish that the appointive officials and employees of DOTC-CAR
shall receive any additional, double or indirect compensation, in violation of Section 8, Article IX-B of the Constitution.
4. SIMON V. CSC | Campos, 1992

Prior to the reorganization of the then Minister of Agriculture and Food (the "MAF"), Juana Banan was the incumbent
Municipal Agricultural Officer (MAO) of Cagayan, while EliseoSinon occupied the position of Fisheries Extension Specialist (FES) II in
the Bureau of Fisheries and Aquatic Resources (BFAR) in the same region.

However, the reorganization of the MAF into the Department of Agriculture (the "DA"), called for the evaluation of
employees by the Placement Committee which included Sinon but excluded Banan.Banan filed an appeal with the DARAB for reevaluation of the qualification.

In the re-evaluation of the DARAB, Sinon was displaced by Banan and this same resolution was duly approved by the
Secretary of the Department of Agriculture.

However, Sinon received an appointment as MAO for Cagayan as approved by Regional Director Gumersindo D. Lasam on
the basis of the first evaluation.Thus, Sinon filed an appeal with the CSC as to the DARAB re-evaluation. The CSC then set aside
the DARAB re-evaluation.

Banan filed an MR: to allow the findings of the Placement Committee to supersede the DARAB resolution would be
tantamount to giving precedence to the Placement Committee.

DARAB granted Banan's MR.

Sinon filed an MR.

CSC denied: The Placement Committee's function is recommendatory in nature. The decision of the agency RAB has the
imprimatur of the Secretary of that agency and is therefore controlling in matters of and is therefore controlling in matters of
Which agency has the last say with respect to appointments? DARAB or Placement Commission?

DARAB. The Office of the President created the agency RAB to address the problem of the employees affected by the
reorganizations.The foregoing legal measures spell out the remedies of aggrieved parties which make it impossible to give the
status of finality to any appointment until all protests or oppositions are duly heard.

Under R.A. 6656 the Placement Committee was created to assist the appointing authority in the judicious selection and
placement of personnel. To "assist" mean to lend an aid to, or to contribute effort in the complete accomplishment of an ultimate
purpose intended to be effected by those engaged. In contrast, to "recommend" is to present one's advice or choice as having
one's approval or to represent or urge as advisable or expedient. It involves the Idea that another has the final decision.

Hence, for as long as the re-evaluation of the qualification filed by Banan was pending, Sinon cannot claim that he had
been issued with a "complete" appointment. Neither is there any point in asserting that his appointment had "cured" whatever
changes was subsequently recommended by the DARAB.
Petition is DENIED.
GRIO-AQUINO, J., concurring:
In the result only for we ruled in Bustamante vs. Executive Secretary 186 SCRA 109 and Pari-an vs. Civil Service Commission, 202
SCRA 772 that the reorganization of the Department of Agriculture was null and void.
5. Larin vs. Executive Secretary
280 SCRA 713; GR. No. L- 112745;
October 16, 1997
The President issued E.O. No. 132 which mandates for the streamlining of the Bureau of Internal Revenue. Under said order, some
positions and functions are either abolished, renamed, decentralized or transferred to other offices, while other offices are also
created. The Excise Tax Service, of which the petitioner was the Assistant Commissioner, was one of those offices that was
abolished. Petitioner assailed the legality of EO No. 132 claiming that he was removed as a result of the reorganization made in
the BIR pursuant to E.O. No. 132. He claimed that there is yet no law enacted by Congress which authorizes there organization by
the Executive Department of executive agencies, particularly the BIR.
ISSUE: Whether or not the President has the power to reorganize the BIR or to issue the questioned EO No.132
YES. Section 48 of R.A. 7645 clearly mentions the acts of "scaling down, phasing out and abolition" of offices only and does not
cover the creation of offices or transfer of functions. Nevertheless, the act of creating and decentralizing is included in the
subsequent provision of Section 62 which shows that the President is authorized to effect organizational charges including the
creation of offices in the department or agency concerned.
Presidential Decree No. 1772
which amended Presidential Decree No. 1416 expressly grants the President of the Philippines the continuing authority to
reorganize the national government, which includes the power to group, consolidate bureaus and agencies, to abolish offices, to
transfer functions, to create and classify functions, services and activities and to standardize salaries and materials.

1977, Violeta Garcia, a Bachelor of Laws graduate and a first grade civil service eligible was appointed Deputy Register of
Deeds VII under permanent status.

Said position was later reclassified to Deputy Register of Deeds III pursuant to PD 1529, petitioner was also appointed
under permanent status up to September 1984

Executive Order No. 649 authorized the restructuring of the Land Registration Commission to National Land Titles and
Deeds Registration Administration and regionalized the Offices of the Registers therein. Garcia was issued an appointment as
Deputy Register of Deeds II under temporary status, for not being a member of the Philippine Barher temporary appointment as
such was renewed in 1985

October 30, 1986, the then Minister, now Secretary, of Justice notified petitioner Garcia of the termination of her services
as Deputy Register of Deeds II on the ground that she was "receiving bribe money". The Memorandum of Termination took effect
on February 9, 1987,

-The Merit Systems Protection Board (MSPB) dropped the appeal of petitioner Garcia on the ground that since the
termination of her services was due to the expiration of her temporary appointment, her separation is in order

June 30, 1988, the Civil Service Commission directed that private respondent Garcia be restored to her position as
Deputy Register of Deeds II or its equivalent in the NALTDRA. It held that "under the vested right theory the new requirement of
BAR membership to qualify for permanent appointment as Deputy Register of Deeds II or higher as mandated under E.O. 649,
would not apply to her but only to the filling up of vacant lawyer positions on or after February 9, 1981, the date said Executive
Order took effect. Since private respondent Garcia had been holding the position of Deputy Register of Deeds II from 1977 to
September 1984, she should not be affected by the operation on February 1, 1981 of Executive Order No. 649.

NALTDRA filed the present petition to assail the validity of the Resolution of the Civil Service Commission. It contends that
Sections 8 and 10 of Executive Order No. 649 abolished all existing positions in the LRC and transferred their functions to the
appropriate new offices created by said Executive Order, which newly created offices required the issuance of new appointments
to qualified office holders. Verily, Executive Order No. 649 applies to Garcia, and not being a member of the Bar, she cannot be
reinstated to her former position as Deputy Register of Deeds II


E.O. 649 abolished all existing positions in the LRC.

there was a valid reorganization.
Garcia may avail of security of tenure.
the qualification requirement of membership in the bar for the position of Deputy Register of Deeds applies to

(1)YES. The question of whether or not a law abolishes an office is one of legislative intent about which there can be no
controversy whatsoever if there is an explicit declaration in the law itself. Executive Order No. 649, in express terms, provided for
the abolition of existing positions. Thus, from the moment an implementing order is issued, all positions in the Land Registration
Commission are deemed non-existent.

However, abolition of a position does not involve or mean removal because removal implies that the post subsists and
that one is merely separated therefrom. After abolition, there is in law no occupant. Thus, there can be no tenure to speak of. It is
in this sense that from the standpoint of strict law, the question of any impairment of security of tenure does not arise.
(2)YES. The authority to carry out a valid reorganization is under Section 9, Article XVII of the 1973 Constitution, the applicable
law at that time:
Sec. 9. All officials and employees in the existing Government of the Republic of the Philippines shall continue in office until
otherwise provided by law or decreed by the incumbent President...

However, the power to reorganize is not absolute. Reorganizations have been regarded as valid provided they are
pursued in good faith. E.O. 649 was enacted to improve the services and better systematize the operation of the Land Registration
Commission. A reorganization is carried out in good faith if it is for the purpose of economy or to make bureaucracy more
efficient. To this end, the requirement of Bar membership to qualify for key positions in the NALTDRA was imposed to meet the
changing circumstances and new development of the times. Garcia who formerly held the position of Deputy Register of Deeds II
did not have such qualification. It is thus clear that she cannot hold any key position in the NALTDRA, The additional qualification
was not intended to remove her from office. Rather, it was a criterion imposed concomitant with a valid reorganization measure.
(3)NO. On the "vested right theory" advanced by respondent Civil Service Commission, There is no such thing as a vested
interest or an estate in an office, or even an absolute right to hold it. Except constitutional offices, which provide for special
immunity as regards salary and tenure, no one can be said to have any vested right in an office or its salary. None of the
exceptions to this rule are obtaining in this case.
(4)YES. The position, which private respondent Garcia would like to occupy anew, was abolished pursuant to Executive Order No.
649, a valid reorganization measure. There is no vested property right to be re employed in a reorganized office. Not being a
member of the Bar, the minimum requirement to qualify under the reorganization law for permanent appointment as Deputy
Register of Deeds II, she cannot be reinstated to her former position without violating the express mandate of the law.
7. G.R. NO. 104226,
AUGUST 12, 1993
Conchita Romualdez-Yap filed a petition for certiorari to question her separation from the Philippine National Bank. She was the
Senior Vice President of the Fund Trust Department of PNB. While she was on leave of absence for medical reasons (April 1, 1986
-February20, 1987), PNB underwent reorganization (December 3,1986 by virtue of the Revised Charter of PNB or Executive Order
No. 80) that caused the abolition of the Fund Trust Department. As a result of there organization, Romualdez-Yap was notified of
her separation from service (effective February 1987,though the letter erroneously stated 1986). She contested her separation in
the Civil Service Commission, arguing that her separation was made in bad faith because, among others: (1) it was based on her
close identification with the previous regime, being the sister of Imelda Marcos; (2) her separation was antedated on February 16,
1986, prior to the effectivity of Executive Order No. 80 on December 3, 1986; (3) the Fund Transfer Department has recently been
restored; and (4) she was not extended preference in appointment to the positions in the new staff. The CSC and the Supreme
Court upheld the validity of her separation.
Whether the separation arising fromreorganization was made in good faith
1. Requirements for a valid reorganization Reorganization is a management prerogative exercised pursuant to a business
judgment. While a distinction can be made between a government bureau or office performing constituent functions (e.g.
Customs) and a government-owned or controlled corporation performing ministrant functions (e.g. PNB), the common test for
their valid reorganizations is the test of good faith.
CONSTITUENT FUNCTIONS are those which constitute the very bonds of society and are compulsory in nature. These are
functions which our government is required to exercise to promote its objectives as expressed in our Constitution and which are
exercised by it as an attribute of sovereignty.
On the other hand, MINISTRANT FUNCTIONS are those undertaken by way of advancing the general interests of society,
and are merely optional functions of government. These are functions which it may exercise to promote merely the welfare,
progress and prosperity of the people. The option is exercised on the basis of the following are the principles: (1) that a
government should do for the public welfare those things which private capital would not naturally undertake; and (2)that a
government should do those things which by its very, nature it is better equipped to administer for the public welfare than is any
private individual or group of individuals (Malcolm, The Government of the Philippine Islands). Examples are commercial or
universal banking which is, not a governmental but, a private sector endeavor.
Reorganization in either case must be made in good faith. According to Dario v. Mison: Reorganizations in this jurisdiction
have been regarded as valid provided they are pursued in good faith. Reorganization is carried out in "good faith" if: (1) it is for
the purpose of economy, or (2) to make bureaucracy more efficient. In those events, no dismissal (in case of dismissal) or

separation actually occurs because the position itself ceases to exist. Otherwise, an "abolition" is void ab initio if it is nothing else
but a separation or removal, is done for political reasons or purposely to defeat security of tenure, or otherwise not in good faith.
2. The reorganization of PNB was done in goodfaith. The SC found the following circumstances as indicative of PNBs
good faith in pursuing reorganization:
it was by virtue of a valid law
it was pursued to achieve economy considering PNBs critical financial situation at the time
the year "1986" stated in the notice of her separation from the service was a typographical error where PNB had submitted
documents supporting its stand that the separation actually took effect on 16February 1987.
the later restoration of the Fund Transfer Department, which took effect after the lapse of over four years from the date it was
abolished in 1987,was primarily caused by the improved financial capability and present needs of PNB
the appointment of SVP Federico Pascual as head of the International Department, from among other officers including Yap, is
because his qualifications far exceeded those of the other candidates for the position, being a lawyer from the University of the
Philippines, a Bachelor of Arts degree holder from Ateneo de Manila, a Master of Laws graduate of Columbia Law School, and a
Masteral Arts in Public Administration graduate of the London School of Economics; he had also undergone extensive seminars at
the International Department and had been assigned in several foreign branches of PNB; he held the second highest position of
Executive Vice President and served as Acting President of PNB; while Yap only holds a Bachelor of Science in Commerce Degree
from Assumption Convent and has undergone only one seminar on Management and Leadership Training Program.
Assuming that her separation was made in bad faith, an action for a quo warranto proceeding prescribes 1 year from the
questioned termination. She was separated from PNB on February 16, 1987 and it was only in 1989or about 2 years after when
she brought the matter to the CSC. By her inaction in questioning her termination within a period of 1 year, she was considered to
have acquiesced to her separation from the service and abandoned her right to the position.
8. DARIO V. MISON | Sarmiento, 1989

On March 25, 1986, President Corazon Aquino promulgated Proclamation No. 3, "DECLARING A NATIONAL POLICY TO
IMPLEMENT THE REFORMS MANDATED BY THE PEOPLE..., the mandate of the people to Completely reorganize the government:

On May 28, 1986, the President enacted Executive Order No. 17, "PRESCRIBING RULES AND REGULATIONS FOR THE
"unnecessary anxiety and demoralization among the deserving officials and employees" the ongoing government reorganization
had generated...

January 30, 1987, the President promulgated Executive Order No. 127, "REORGANIZING THE MINISTRY OF FINANCE".
Among other offices, Executive Order No. 127 provided for the reorganization of the Bureau of Customs and prescribed a new
staffing pattern therefor.

February 2, 1987, 11 the Filipino people adopted the new Constitution

January 6, 1988, incumbent Commissioner of Customs Salvador Mison issued a Memorandum, in the nature of
"Guidelines on the Implementation of Reorganization Executive Orders," prescribing the procedure in personnel placement. It also
provided that by February 28, 1988, all employees covered by Executive Order 127 and the grace period extended to the Bureau
of Customs by the President of the Philippines on reorganization shall be: a) informed of their re-appointment, or b) offered
another position in the same department or agency, or c) informed of their termination.

On January 26, 1988, Commissioner Mison addressed several notices to various Customs officials stating that they shall
continue to perform their respective duties and responsibilities in a hold-over capacity, and that those incumbents whose
positions are not carried in the new reorganization pattern, or who are not re-appointed, shall be deemed separated from the
service. A total of 394 officials and employees of the Bureau of Customs were given individual notices of separation.

On June 30, 1988, the Civil Service Commission promulgated its ruling ordering the reinstatement of the 279 employees,
the 279 private respondents in G.R. No. 85310

Commissioner Mison, represented by the Solicitor General, filed a motion for reconsideration, which was denied.
Commissioner Mison instituted certiorari proceedings.

On November 16, 1988, the Civil Service Commission further disposed the appeal (from the resolution of the
Reorganization Appeals Board) of five more employees. Commissioner Mison challenged the Civil Service Commission's

employees who are found by the Civil Service Commission to have been separated in violation of the provisions of this Act, shall
be ordered reinstated or reappointed as the case may be without loss of seniority and shall be entitled to full pay for the period of
separation. Unless also separated for cause, all officers and employees, including casuals and temporary employees, who have
been separated pursuant to reorganization shall, if entitled thereto, be paid the appropriate separation pay and retirement and
other benefits...

On June 23, 1988, BenedictoAmasa and William Dionisio, customs examiners appointed by Commissioner Mison pursuant
to the ostensible reorganization subject of this controversy, petitioned the Court to contest the validity of the statute.

On October 21, 1988, thirty-five more Customs officials whom the Civil Service Commission had ordered reinstated by its
June 30, 1988 Resolution filed their own petition to compel the Commissioner of Customs to comply with the said Resolution.
Case for the Employees:

Cesar Dario was one of the Deputy Commissioners of the Bureau of Customs until his relief on orders of Commissioner
Mison on January 26, 1988. In essence, he questions the legality of his dismissal, which he alleges was upon the authority of
Section 59 of Executive Order No. 127 (SEC. 59. New Structure and Pattern. Upon approval of this Executive Order, the officers
and employees of the Ministry shall, in a holdover capacity, continue to perform their respective duties and responsibilities and
receive the corresponding salaries and benefits unless in the meantime they are separated from government service pursuant to
Executive Order No. 17 (1986) or Article III of the Freedom Constitution. Incumbents whose positions are not included therein or
who are not reappointed shall be deemed separated from the service. Those separated from the service shall receive the
retirement benefits to which they may be entitled)

A provision he claims the Commissioner could not have legally invoked. He avers that he could not have been legally
deemed to be an "incumbent whose position is not included therein or who is not reappointed to justify his separation from the
service. He contends that neither the Executive Order (under the second paragraph of the section) nor the staffing pattern
proposed by the Secretary of Finance abolished the office of Deputy Commissioner of Customs, but, rather, increased it to three.
Nor can it be said, so he further maintains, that he had not been "reappointed" (under the second paragraph of the section)
because "reappointment therein presupposes that the position to which it refers is a new one in lieu of that which has been
abolished or although an existing one, has absorbed that which has been abolished."
He claims, finally, that under the
Provisional Constitution, the power to dismiss public officials without cause ended on February 25, 1987, and that thereafter,
public officials enjoyed security of tenure under the provisions of the 1987 Constitution

- Like Dario, Vicente Feria asserts his security of tenure and that he cannot be said to be covered by Section 59 of
Executive Order No. 127, having been appointed on April 22, 1986 - during the effectivity of the Provisional Constitution. He adds
Commissioner of Customs has the power "to appoint all Bureau personnel, except those appointed by the President," and that
his position, which is that of a Presidential appointee, is beyond the control of Commissioner Mison for purposes of reorganization.

Case for Commissioner Mison:

Provisions of Section 16, Article XVIII (Transitory Provisions) explicitly authorize the removal of career civil service
employees "not for cause but as a result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and the
reorganization following the ratification of this Constitution. For this reason, Mison posits, claims of violation of security of tenure
are allegedly no defense. That contrary to the employees' argument, Section 59 of Executive Order No. 127 is applicable (in
particular, to Dario and Feria), in the sense that retention in the Bureau, under the Executive Order, depends on either retention of
the position in the new staffing pattern or reappointment of the incumbent, and since the dismissed employees had not been
reappointed, they had been considered legally separated. Moreover, Mison proffers that under Section 59 incumbents are
considered on holdover status, "which means that all those positions were considered vacant."

The Commissioner's twin petitions are direct challenges to three rulings of the Civil Service Commission: (1) the
Resolution, dated June 30, 1988, reinstating the 265 customs employees above-stated; (2) the Resolution, dated September 20,
1988, denying reconsideration; and (3) the Resolution, dated November 16, 1988, reinstating five employees

WON Section 16 of Article XVIII of the 1987 Constitution is a grant of a license upon the Government to remove career public
officials it could have validly done under an "automatic"-vacancy-authority and to remove them without rhyme or reason.
NO. Section 16 Article XVIII, of the 1987 Constitution:
Sec. 16. Career civil service employees separated from the service not for cause but as a result of the reorganization pursuant to
Proclamation No. 3 dated March 25, 1986 and the reorganization following the ratification of this Constitution shall be entitled to
appropriate separation pay and to retirement and other benefits accruing to them under the laws of general application in force at
the time of their separation. In lieu thereof, at the option of the employees, they may be considered for employment in the
Government or in any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations
and their subsidiaries. This provision also applies to career officers whose resignation, tendered in line with the existing policy
The above provision comes as a mere recognition of the right of the Government to reorganize its offices, bureaus, and
instrumentalities. Under Section 4, Article XVI, of the 1935 Constitution: Invariably, transition periods are characterized by
provisions for "automatic" vacancies. They are dictated by the need to hasten the passage from the old to the new Constitution
free from the "fetters" of due process and security of tenure.

As we have seen, since 1935, transition periods have been characterized by provisions for "automatic" vacancies. We
take the silence of the 1987 Constitution on this matter as a restraint upon the Government to dismiss public servants at a
moment's notice. If the present Charter envisioned an "automatic" vacancy, it should have said so in clearer terms. Plainly the
concern of Section 16 is to ensure compensation for "victims" of constitutional revamps - whether under the Freedom or existing
Constitution - and only secondarily and impliedly, to allow reorganization.

In order to be entitled to the benefits granted under Section 16 of Article XVIII of the Constitution of 1987, two requisites,
one negative and the other positive, must concur, to wit: 1. The separation must not be for cause, and 2. The separation must be
due to any of the three situations mentioned.

-By its terms, the authority to remove public officials under the Provisional Constitution ended on February 25, 1987,
advanced by jurisprudence to February 2, 1987. It can only mean, then, that whatever reorganization is taking place is upon the
authority of the present Charter, and necessarily, upon the mantle of its provisions and safeguards. Hence, it cannot be
legitimately stated that we are merely continuing what the revolutionary Constitution of the Revolutionary Government had
started. We are through with reorganization under the Freedom Constitution - the first stage. We are on the second stage - that
inferred from the provisions of Section 16 of Article XVIII of the permanent basic document.

After February 2, 1987, incumbent officials and employees have acquired security of tenure.

The present organic act requires that removals "not for cause" must be as a result of reorganization. As we observed, the
Constitution does not provide for "automatic" vacancies. It must also pass the test of good faith. As a general rule, a
reorganization is carried out in "good faith" if it is for the purpose of economy or to make bureaucracy more efficient. In that
event, no dismissal (in case of a dismissal) or separation actually occurs because the position itself ceases to exist. And in that
case, security of tenure would not be a Chinese wall. Be that as it may, if the "abolition," which is nothing else but a separation or
removal, is done for political reasons or purposely to defeat security of tenure, or otherwise not in good faith, no valid "abolition"
takes place and whatever "abolition" is done, is void ab initio. There is an invalid "abolition" as where there is merely a change of
nomenclature of positions, or where claims of economy are belied by the existence of ample funds.

The Court finds that Commissioner Mison did not act in good faith since after February 2, 1987 no perceptible
restructuring of the Customs hierarchy - except for the change of personnel - has occurred, which would have justified (all things
being equal) the contested dismissals. There is also no showing that legitimate structural changes have been made - or a
reorganization actually undertaken, for that matter - at the Bureau since Commissioner Mison assumed office, which would have
validly prompted him to hire and fire employees.

With respect to Executive Order No. 127, Commissioner Mison submits that under Section 59 thereof, "Those incumbents
whose positions are not included therein or who are not reappointed shall be deemed separated from the service." He submits
that because the 394 removed personnel have not been "reappointed," they are considered terminated. To begin with, the
Commissioner's appointing power is subject to the provisions of Executive Order No. 39. Under Executive Order No. 39, the
Commissioner of Customs may "appoint all Bureau personnels except those appointed by the President." Thus, with respect to
Deputy Commissioners Cesar Dario and Vicente Feria, Jr., Commissioner Mison could not have validly terminated them, they being
Presidential appointees.

That Customs employees, under Section 59 of Executive Order No. 127 had been on a mere holdover status cannot mean
that the positions held by them had become vacant. The occupancy of a position in a holdover capacity was conceived to
facilitate reorganization and would have lapsed on 25 February 1987 (under the Provisional Constitution), but advanced to
February 2, 1987 when the 1987 Constitution became effective. After the said date the provisions of the latter on security of
tenure govern
Main Points:
1. The President could have validly removed government employees, elected or appointed, without cause but only before the
effectivity of the 1987 Constitution on February 2, 1987. Section 59 (on non-reappointment of incumbents) of Executive Order No.
127 cannot be a basis for termination.

2. In such a case, dismissed employees shall be paid separation and retirement benefits or upon their option be given
reemployment opportunities
3. From February 2, 1987, the State does not lose the right to reorganize the Government resulting in the separation of career civil
service employees provided, that such a reorganization is made in good faith.
9. G.R. No. 90482
August 5, 1991
1986, Republic Planters Bank (hereafter referred to as RPB), Zosimo Maravilla, Rosendo de la Rama, Bibiano Sabino, Roberto
Mascufiana and Ernesto Kramer "for themselves and in representation of other sugar producers" filed a Complaint with RTC "For
Sum of Money and/or Delivery of Personal Property with Restraining Order and/or Preliminary Injunction" against the Philippine
Sugar Commission (PHILSUCOM) and the National Sugar Trading Corporation (NASUTRA) and preliminary injunction enjoining
and/or prohibiting the Defendants, their officers and/or agents from transferring, releasing or in any manner disposing of all U.S.
dollar deposits/accounts held in the name of Defendants, its subsidiaries, conduits agents and/or representatives in the different
banks, domestic and foreign, including the physical sugar corresponding to crop year 1984-85 presently remaining in the
warehouses of the different sugar mills all over the country
In the instant petition petitioners limit their grounds to only two errors allegedly committed by respondent Court of Appeals,
namely: (a) it erred in holding that neither the OGCC nor the SRA can represent the Government of the Philippines in the action
before it and (b) it deviated from the decision of the Ninth Division of said court in CAGR SP No. 11046 (Kramer, et al. vs. Hon.
Doroteo, Caeba, et al. promulgated on 16 March 1987), which declared that there was no valid class suit and the controversial
compromise agreement did not extend to the 40,000 unnamed sugar producers.
PHILSUCOM and NASUTRA entered into a Compromise Agreement
Private respondents assert that the SRA and RPB do not have the legal authority to sue for and in behalf of the Republic of the
They further argued that petitioners have no legal personality to initiate the instant petition for (a) SRA is not a party in the case
before the trial court; the only reason why it became involved was because of the contempt proceedings initiated by private
respondents against SRA's Arsenio Yulo, Carlos Ledesma and Bibiano Sabino; RPB was a signatory to the Compromise Agreement
as a Trustee and, as such, it regarded itself as only a nominal party and in a series of pleadings it recognized the final and
executory nature of the decision approving the compromise agreement.
RULING: The Court of Appeals correctly ruled that petitioner Sugar Regulatory Administration may not lawfully bring an action on
behalf of the Republic of the Philippines and that the Office of the Government Corporate Counsel does not have the authority to
represent said petitioner in this case.
PHILSUCOM was allowed to continue as a juridical entity for three (3) years for the purpose of prosecuting and defending suits by
or against it and enabling it to settle and close its affairs, to dispose of and convey its property and to distribute its assets, but not
for the purpose of continuing the functions for which it was established, under the supervision of the SRA. Said Executive Order
enumerates the powers and functions of the SRA; but it does not specifically include the power to represent the Republic of the
Philippines in suits filed by or against it, nor the power to sue and be sued.
It is apparent that its charter does not grant the SRA the power to represent the Republic of the Philippines in suits filed by or
against the latter.
It is a fundamental rule that an administrative agency has only such powers as are expressly granted to it by law and those that
are necessarily implied in the exercise thereof.
The SRA no doubt, is an administrative agency or body. An administrative agency is defined as "[a] government body charged
with administering and implementing particular legislation. Examples are workers' compensation commissions ... and the like. ...
The term 'agency' includes any department, independent establishment, commission, administration, authority board or
bureau ... 21
The power to represent the Republic of the Philippines in any suit by or against it having been withheld from SRA, it following that
the latter cannot institute the instant petition and the petition in C.A.-G.R. No. 17188 on behalf of the Republic of the Philippines.
Petition DENIED.