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8/18/2019 Admin April 7

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ANICETO MATEO et a l. v. CA and EDGAR STA. MARIA A August 14, 1995| Puno, J. | Jurisdiction

Digester: Roa, Annamhel Monique

SUMMARY: Sta. Maria, previously a General Manager of the Morong Water District was dismissed from his position by the corporation’s Board of Directors following acomplaint of some of its employees. He filed an action for Quo Warranto andMandamus with Preliminary Injunction in the RTC Rizal asking to restrain thecommission and continuance of the acts of the Board. The Board filed a MTD,contending that the RTC has no jurisdiction over the subject matter of the case. TheCourt upheld this contention.DOCTRINE: The hiring and firing of employees of goverment-owned and controlledcorporations are governed by the provisions of the Civil Service Law and Rules andRegulations. The party aggrieved by a decision, ruling, order, or action of an agency ofthe government involving termination of services may appeal to the Commission withinfifteen (15) days.

FACTS:

• Petitioners, all Board Members of Morong Water District (MOWAD), conductedan investigation on Edgar Sta. Maria (Sta. Maria), then General Manager, followingcomplaint of some MOWAD employees. Sta. Maria was preventively suspendedand a San Diego designated in his place as Acting General Manager. Later, he wasdismissed (January 7, 1993).

• Following this dismissal, Sta. Maria filed a Special Civil Action for Quo Warrantoand Mandamus with Preliminary Injunction before the RTC Rizal. His petition hasthree causes of action:

1)

He’s been the General Manager since August 1984 with security of tenure.Hence, he cannot be removed either temporarily or permanently exceptfor cause and only after compliance with the elementary rules of dueprocess. However, contrary to justice and fairness and without dueprocess, the MOWAD BOD barred him from performing his functions. While he was away on travel, they, in conspiracy, destroyed his door andlocked it with a different door knob thereby making his attempts to gain

access futile.2)

He was terminated, despite his having a clear right to the Office ofGeneral Manager, which is now being usurped and unlawfully held by SanDiego.

3)

He is entitled to the relief mandated, which consists in restraining thecommission or continuance of the acts complained of.

• Petitioners filed an MTD, arguing: (1) the court had no jurisdiction over

disciplinary actions of government employees, which is vested exclusively in the

Civil Service Commission; and (2) quo warranto was not the proper remedy.

• MTD denied.

• Petitioners elevated the matter to the SC, which remanded it to the CA.

• CA – Dismissed. MFR denied.

RULING: Petition is GRANTED and the decision of respondent Court of Appealsand its Resolution are ANNULLED and SET ASIDE.

Whether the RTC of Rizal has jurisdict ion over the case involving dismissal of aemployee of quasi-public corporation – NO.

• There is no question that MOWAD is a quasi-public corporation created pursuantto Presidential Decree (P.D.) No. 198, known as the provincial Water Utilities Actof 1973, as amended.

•

Davao City Water District v . Civil Service Commissions - Employees of government-owned or controlled corporations with original charter fall under the jurisdiction othe Civil Service Commission.

• The established rule is that the hiring and firing of employees of goverment-owneand controlled corporations are governed by the provisions of the Civil ServiceLaw and Rules and Regulations.

• PD No. 807, EO No. 292, and Rule II section 1 of Memorandum Circular No. 44series of 1990 of the Civil Service Commission spell out the initial remedy of Sta.Maria against illegal dismissal.

o

The party aggrieved by a decision, ruling, order, or action of anagency of the government involving termination of services may appeal tthe Commission within fifteen (15) days. Thereafter, he could goon certiorari to this Court [SC] under Rule 65 of the Rules of Court ifhe still feels aggrieved by the ruling of the Civil Service Commission.

• [Just to add,] Under the present rule, Revised Circular No. 1-91 as amended byRevised Administrative Circular No. 1-95, which took effect on June 1, 1995, finalresolutions of the Civil Service Commission shall be appealable to the Court of Appeals. This overturned the ruling in Mancita v. Barc inas.

• Mancita v . Barcinas - No appeal lies from the decision of the Service Commission.Parties aggrieved thereby may proceed to the SC alone on certiorari under Rule 65 othe Rules of Court, within thirty (30) days from receipt of a copy thereof, pursuantto section 7, Article IX of the 1987 Constitution.

PHILIPPINE AIRLINES v. CIVIL AERONAUTICS BOARD

March 26, 1997| Torres, Jr., J. |Digester: Valena, Maria Patricia

SUMMARY: GrandAir filed an application for a Certificate of Public Convenience anNecessity with the CAB. They were granted a Temporary Operating Permit. PALchallenged this application and the TOP on the ground that GrandAir could not begranted this certificate, since it did not yet have a legislative franchise. The Court heldthat pursuant to Act No. 776, the CAB is authorized to hear and grant the applicationeven if GrandAir did not yet have a legislative franchise, pursuant to a valid delegationunder RA 776.DOCTRINE: The power to authorize and control the operat ion of a public utility isadmittedly a prerogative of the legislature, since Congress is that branch of government


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vested with plenary powers of legislation. However, it is generally recognized that afranchise may be derived indirectly from the state through a duly designated agency, andto this extent, the power to grant franchises has frequently been delegated, even toagencies other than those of a legislative nature.

FACTS:

• On November 24, 1994, private respondent GrandAir applied for a Certificate ofPublic Convenience and Necessity with the Board. The Chief Hearing Officer of

the CAB issued a Notice of Hearing setting the application for initial hearing onDecember 16, 1994, and directing GrandAir to serve a copy of the application andcorresponding notice to all scheduled Philippine Domestic operators. OnDecember 14, 1994, GrandAir filed its Compliance, and requested for the issuanceof a Temporary Operating Permit. Petitioner, itself the holder of a legislativefranchise to operate air transport services, filed an Opposition to the applicationfor a Certificate of Public Convenience and Necessity, principally on the groundthat they had no franchise to operate from Congress. This opposition was deniedby the Chief Hearing Officer of the CAB, who ruled as follows: “The Civil Aeronautics Board has jurisdict ion to hear and resolve the application. In AviaFilipina vs. CAB, CA G.R. No. 23365, it has been ruled that under Section 10 (c)(1)of R.A. 776, the Board possesses this specific power and duty.”

• The CAB promulgated Resolution No. 119(92) approving the issuance of a Temporary Operating Permit in favor of GrandAir for a period of three months,i.e., from December 22, 1994 to March 22, 1994. Opposition of petitioner wasdenied. The CAB justified its assumption of jurisdiction over GrandAir’sapplication under Act No. 776, in the same Resolution No. 119(92).

• On March 21, 1995, upon motion by private respondent, the temporary permit wasextended for a period of six (6) months or up to September 22, 1995.

PETITIONER:

• CAB acted beyond its powers and jurisdiction in taking cognizance of GrandAir’sapplication for the issuance of a Certificate of Public Convenience and Necessity,and in issuing a temporary operating permit in the meantime, since GrandAir hasnot been granted and does not possess a legislative franchise to engage in scheduled

domestic air transportation. A legislative franchise is necessary before anyone mayengage in air transport services, and a franchise may only be granted by Congress,pursuant to Section 11, Article XII, and Section 1, Article VI, of the Constitution.

• DOJ Opinion No. 163, S. 1989: “….[A] franchise is the legislative authorization toengage in a business activity or enterprise of a public nature, whereas a certificate ofpublic convenience and necessity is a regulatory measure which constitutes thefranchise’s authority to commence operations. It is thus logical that the grant of theformer should precede the latter.”

RESPONDENT:

• Avia Filipinas vs. Civil Aeronautics Board, and Silangan Airways, Inc. vs. GrandInternational Airways - In both cases, the issue resolved was whether or not the

Civil Aeronautical Board can issue the Certificate of Public Convenience andNecessity or Temporary Operating Permit to a prospective domestic air transportoperator who does not possess a legislative franchise to operate as such. Following Albano vs. Reyes, the Court of Appeals upheld the authority of the Board to issuesuch authority, even in the absence of a legislative franchise, which authority isderived from Section 10 of Republic Act No. 776, as amended by P.D. No. 1462.

RULING: ACCORDINGLY, in view of the foregoing considerations, the CourtRESOLVED to DISMISS the instant petition for lack of merit. The respondent Civil Aeronautics Board is hereby DIRECTED to CONTINUE hearing the application ofrespondent Grand International Airways, Inc. for the issuance of a Certificate of PublicConvenience and Necessity.

Whether the CAB has jurisdiction over GrandAir’s application – YES.

• The Civil Aeronautics Board has jurisdiction over GrandAir’ s Application for a Temporary Operating Permit. This rule has been established in the case ofPhilippine Air Lines Inc. vs. Civil Aeronautics Board, 1968. The Board is expresslyauthorized by Republic Act No. 776 to issue a temporary operating permit orCertificate of Public Convenience and Necessity, and nothing contained in the sailaw negates the power to issue said permit before the completion of the applicant’sevidence and that of the oppositor thereto on the main petition.

•

The CAB’s authority to gran t a temporary permit “upon its own initiative” stronglsuggests the power to exercise said authority, even before the presentation of saidevidence has begun. Assuming arguendo that a legislative franchise is prerequisiteto the issuance of a permit, the absence of the same does not affect the jurisdictioof the Board to hear the application, but only the issuance of the requested permit.

• The power to authorize and control the operation of a public utility is admit tedly aprerogative of the legislature, since Congress is that branch of government vested with plenary powers of legislation. The question then is - whether or not Congress,in enacting Republic Act No. 776, has delegated the authority to authorize theoperation of domestic air transport services to the respondent Board, such thatCongressional mandate for the approval of such authority is no longer necessary.

• It is generally recognized that a franchise may be derived indirectly from the state

through a duly designated agency, and to this extent, the power to grant franchiseshas frequently been delegated, even to agencies other than those of a legislativenature. In pursuance of this, it has been held that privileges conferred by grant bylocal authorities as agents for the state constitute as much a legislative franchise asthough the grant had been made by an act of the Legislature.

• The trend of modern legislation is to vest the Public Service Commissioner withthe power to regulate and control the operation of public services under reasonablrules and regulations, and as a general rule, courts will not interfere with theexercise of that discretion when it is just and reasonable and founded upon a legalright.


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• A reading of Section 10 of Act No. 776 of the same reveals the c lear intent ofCongress to delegate the authority to regulate the issuance of a license to operatedomestic air transport services.1

• Congress, by giving the respondent Board the power to issue permits for theoperation of domestic transport services, has delegated to the said body theauthority to determine the capability and competence of a prospective domestic airtransport operator to engage in such venture.

• No undue delegation – RA 776 provides for the limitations on the power of the

CAB.2 It also contains the requirements to determine the competency of aprospective operator to engage in the public service of air transportation.3

• The procedure for the processing of the application of a Certificate of PublicConvenience and Necessity had been established to ensure the weeding out ofthose entities that are not deserving of public service.

Eristingcol v CA

20 March 2009|Nachura, J.| JurisdictionDigester: Melliza, F.S.L.

SUMMARY: Eristingcol filed an action with the RTC phrased as one for thedeclaration of nullity of UVAI’s Construction Rules and Regulations. The RTC ruled in

favor of Eristingcol. Limjoco, the President of UVAI, elevated the dispute to the CA onthe grounds that the RTC acted without jurisdiction in the assailed decision since it wasthe HLURB who has jurisdiction over the dispute. The Court, upon scrutinizing theallegations in her complaint, found that said action is not one of nullification, which would have been in the RTC’s jurisdiction, but instead goes into the properinterpretation of said Rules over the house and lot of its members, which is under the

1. SECTION 10. Powers and Duties of the Board.—(A) Except as otherwise provided herein, theBoard shall have the power to regulate the economic aspect of air transportation, and shall havegeneral supervision and regulation of, the jurisdiction and control over air carriers, general salesagents, cargo sales agents, and air freight forwarders as well as their property rights, equipment,facilities and franchise, insofar as may be necessary for the purpose of carrying out the provision

of this Act.(c) The Board shall have the following specific powers and duties: (1) In accordance with theprovisions of Chapter IV of this Act, to issue, deny, amend, revise, alter, modify, cancel, suspendor revoke in whole or in part upon petition or complaint or upon its own initiative any TemporaryOperating Permit or Certificate of Public Convenience and Necessity: Provided,, however, Thatin the case of foreign air carriers, the permit shall be issued with the approval of the President ofthe Republic of the Philippines.2. SECTION 4. Declaration of policies.—In the exercise and performance of its powers andduties under this Act, the Civil Aeronautics Board and the Civil Aeronautics Administrator shallconsider the following, among other things, as being in the public interest, and in accordance withthe public convenience and necessity:(a) The development and utilization of the air potential of the Philippines;(b) The encouragement and development of an air transportation system properly adapted to thepresent and future of foreign and domestic commerce of the Philippines, of the Postal Service

and of the National Defense;

jurisdiction of the HLURB. The Court ruled in favor of Limjoco, stating thatjurisdiction is determined by the allegations of the complaint.DOCTRINE: Abejo v. De la Cruz : under the “sense-making and expeditious doctrineof primary jurisdiction” the courts cannot or will not determine a controversy involvina question which is within the jurisdiction of an administrative tribunal, where thequestion demands the exercise of sound administrative discretion requiring thespecial knowledge, experience, and services of the administrative tribunal to determinetechnical and intricate matters of fact, and a uniformity of ruling is essential to comply with the purposes of the regulatory statute administered.

FACTS:

• Eristingcol owned a residential lot in Urdaneta Village, Makati.

• She built her house with a “concrete canopy directly above the main door andhighway”.

• Urdaneta Village Assoc. Inc. (UVAI) fined Eristingcol PHP400,000 since herhouse’s concrete canopy violated the canopy easement in its Construction Rulesand Regulations (RCC).

o UVAI also barred her construction workers and contractors access fromher lot.

• Eristingcol filed an action, which she phrased as one for nullification of UVAI’s

RCCs for being contrary to law, with the RTC against UVAI and Limjoco.• RTC ruled in favor of Eristingcol.

o

Limjoco appeals to the CA, which reversed the RTC’s Decision for thelatter’s lack of jurisdiction over the dispute.

o

Eristingcol elevates the case to the SC.

• Limjoco argues that it is the HLURB that has jurisdiction over the case.

(c) The regulation of air transportation in such manner as to recognize and preserve the inherentadvantages of, assure the highest degree of safety in, and foster sound economic condition in,such transportation, and to improve the relations between, and coordinate transportation by, aircarriers;(d) The promotion of adequate, economical and efficient service by air carriers at reasonable

charges, without unjust discriminations, undue preferences or advantages, or unfair or destructivecompetitive practices;(e) Competition between air carriers to the extent necessary to assure the sound development ofan air transportation system properly adapted to the need of the foreign and domestic commerceof the Philippines, of the Postal Service, and of the National Defense;(f) To promote safety of flight in air commerce in the Philippines; and,(g) The encouragement and development of civil aeronautics.3. Citizenship requirement under Sec. 12;SECTION 21. Issuance of permit.—The Board shall issue a permit authorizing the whole or anypart of the service covered by the application, if it finds: (1) that the applicant is fit, willing andable to perform such service properly in conformity with the provisions of this Act and the rules,regulations, and requirements issued thereunder; and (2) that such service is required by the publiconvenience and necessity; otherwise the applicationshall be denied.


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• Eristingcol, on the other hand, asserts that her complaint was properly filed withthe RTC since it prayed for the nullification of UVAI’s CRR for being contrary tolaw.

• The Court held that the case should be outright dismissed on procedural groundsfor Eristingcol’s failure to implead all the respondents.

o

But it went on to discuss the issue on jurisdiction anyway to serve as aguide for the bench and the bar.

RULING: WHEREFORE, premises considered, the petition is DENIED. TheDecision of the Court of Appeals in CA-G.R. SP. No. 64642 is hereby AFFIRMED.Costs against petitioner.

Which of the two has jurisdiction: the HLURB or the RTC?—HLURB.

• Jurisdiction is determined by the allegat ions in the complaint.

• Although the complaint was meticulously phrased as one of nullification, a scrutinyof the allegations contained in Eristingcols complaint reveals that the nature of thequestion subject of this controversy only superficially delves into the validity ofUVAIs Construction Rules.

• The complaint actually goes into the proper interpretation and applica tion ofUVAIs by-laws, specifically its construction rules.

o

Essentially, the conflict between the parties arose as Eristingcol,admittedly a member of UVAI, now wishes to be exempt from theapplication of the canopy requirement set forth in UVAIs ConstructionRules.

o Significantly, Eristingcol does not assail the height restriction of UVAIsConstruction Rules, as she has readily complied therewith.

• The Court cited China Banking Corp. v. CA:o An important consideration, moreover, is the nature of the controversy

between petitioner and private respondent corporation.o VGCCI claims a prior right over the subject share anchored mainly on

Sec. 3, Art. VIII of its by-laws which provides that after a member shallhave been posted as delinquent, the Board may order his/her/its sharesold to satisfy the claims of the Club It is pursuant to this provision that VGCCI also sold the subject share at public auction, of which it was thehighest bidder. VGCCI caps its argument by asserting that its corporateby-laws should prevail. The bone of contention, thus, is the properinterpretation and application of VGCCIs aforequoted by-laws, a subject which irrefutably calls for the special competence of the SEC.

o

We reiterate herein the sound policy enunciated by the Court in Abejo v.De la Cruz:

! 6. In the fifties, the Court taking cognizance of the move to vestjurisdiction in administrative commissions and boards the powerto resolve specialized disputes in the field of labor (as incorporations, public transportation and public utilities) ruled thatCongress in requiring the Industrial Courts intervention in the

resolution of labor-management controversies likely to cause

strikes or lockouts meant such jurisdiction to be exclusive,although it did not so expressly state in the law.

! The Court held that under the sense-making and expeditiousdoctrine of primary jurisdiction the courts cannot or will notdetermine a controversy involving a question which is within thjurisdiction of an administrative tribunal, where the questiondemands the exercise of sound administrative discretionrequiring the special knowledge, experience, and services of theadministrative tribunal to determine technical and intricatematters of fact, and a uniformity of ruling is essential to comply with the purposes of the regulatory statute administered.

o In this case, the need for the [Administrative Agency’s] technical

expertise cannot be over-emphasized involving as it does themeticulous analysis and correct interpretation of a corporations by-laws as well as the applicable provisions of the Corporation Code inorder to determine the validity of VGCCIs claims. The SEC,therefore, took proper cognizance of the instant case.

DELTRAVENTURES RESOURCES INC v. CABATO

March 9, 2000 | Quisimbing, J. | Jurisdiction

Digester: Magtanong, Patch

SUMMARY: In a previous labor case, the NLRC held Green Mountain Farm, Ongpinand Alabe to be guilty of illegal dismissal and unfair labor practices, and held them liablto pay the complainants solidary. Finding them to have insufficient personal propertiesto satisfy the monetary award, the NLRC sheriff levied real property of Ongpin.Deltaventures then filed a third-party complaint against the NLRC asserting ownershipover the property levied. It also filed a complaint for injunction and damages with aprayer for a TRO against the sheriff with the RTC. RTC Judge Cabato dismissed thecase for lack of jurisdiction because the NLRC retains authority over all proceedingsanent the execution of its decision. The Court affirmed the dismissal and held that thecomplaint was in effect a motion to quash the writ of execution of a decision rendered

on a case properly within the jurisdiction of the Labor Arbiter, to wit: Illegal Dismissaland Unfair Labor Practice. It is then logical to conclude that the subject matter of thethird party claim is but an incident of the labor case, a matter beyond the jurisdiction oregional trial courts.DOCTRINE: Regional Trial Courts have no jurisdiction to act on labor cases or various incidents arising therefrom, including the execution of dec isions, awards ororders. Jurisdiction to try and adjudicate such cases pertains exclusively to the properlabor official concerned under the Department of Labor and Employment. Whateverirregularities attended the issuance and execution of the alias writ of execution should breferred to the same administrative tribunal which rendered the decision

FACTS:


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• A Decision was rendered by Executive Labor Arbiter Norma Olegario of theNLRC-CAR, holding Green Mountain Farm, Roberto Ongpin and Almus Alabeguilty of Illegal Dismissal and Unfair Labor Practice and ordering them to pay thecomplainants (laborers), in solidum.

• The complainants in the abovementioned labor case, filed before the Commission amotion for the issuance of a writ of execution as respondent’s appeal to theCommission and this Court were respectively denied.

• Executive Labor Arbiter Gelacio C. Rivera, Jr. to whom the case was reassigned in

view of Labor Arbiter Olegario’s transfer, issued a writ of execution directingNLRC Deputy Sheriff Adam Ventura to execute the judgment against respondents.

• Finding that said judgment debtors do not have sufficient personal properties tosatisfy the monetary award, Sheriff Ventura proceeded to levy upon a real property,registered in the name of Ongpin, one of the respondents in the labor case. Thereafter, Sherif f Ventura caused the publication of the date of the public auctionof said real property.

• Deltaventures Resources Inc., petitioner, filed before the Commission a third-partyclaim asserting ownership over the property levied upon and subject of the Sheriffsnotice of sale. Labor Arbiter Rivera thus issued an order directing the suspension ofthe auction sale until the merits of petitioner’s claim has been resolved.

• However, petitioner filed with the Regional Trial Court of La Trinidad, Benguet a

complaint for injunction and damages, with a prayer for the issuance of atemporary restraining order against Sheriff Ventura, reiterating the same allegationsit raised in the third party claim it filed with the Commission.

• Judge Cabato issued a temporary restraining order, enjoining respondents in thecivil case before him to hold in abeyance any action relative to the enforcement ofthe decision in the labor case.

• Respondent court rendered its assailed decision which dismissed the complaint ofDeltaventures premised on the following grounds:o This Court is of equal rank with the NLRC, hence, has no jurisdiction to issue

an injunction against the execution of the NLRC decisiono

The NLRC retains authority over all proceedings anent the execution of itsdecision. This power carries with it the right to determine every question which

may be involved in the execution of its decision.o

Deltaventures Resources, Inc. should rely on and comply with the Rules of theNLRC because it is the principal procedure to be followed, the Rules of Courtbeing merely suppletory in application.

o

The plaintiff, having in the first place addressed to the jurisdiction of the NLRCby filing with it a Third Party Claim may not at the same time pursue thepresent amended Complaint under the forum shopping rule.

RULING: Petition denied.

Whether the trial court may take cognizance of the complaint filed by petit ionerand consequently provide the injunctive relief sought– NO.

Whether the acts complained of are related to, connected or interwoven with thecases falling under the exclusive jurisdiction of the Labor Arbiter or of theNLRC—YES.

• Petitioner: court a quo erred in dismissing the third-party claim on the ground oflack of jurisdiction. The NLRC-CAR did not acquire jurisdiction over the claim foit (Delta) did not impugn the decision of the NLRC-CAR but merely questionedthe propriety of the levy made by Sheriff Ventura. The instant case does notinvolve a labor dispute, as no employer-employee relationship exists between theparties. Nor is the petitioner’s case related in any way to either parties’ case beforethe NLRC-CAR hence, not within the jurisdiction of the Commission.

• Jurisdiction over the subject matter of a case is conferred by law and determined bthe allegations in the complaint which comprise a concise statement of the ultimatfacts constituting the petitioner’s cause of action

• Petitioner filed the third-party claim before the court a quo by reason of a writ ofexecution issued by the NLRC-CAR Sheriff against a property to which it claimsownership. The writ was issued to enforce and execute the Commission’s decisionin the Illegal Dismissal and Unfair Labor Practice case against Green MountainFarm, Ongpin and Alabe.

• Ostensibly the complaint before the trial court was for the recovery of possessionand injunction, but in essence it was an action challenging the legality or proprietyof the levy vis-a !-vis the alias writ of execution, including the acts performed by theLabor Arbiter and the Deputy Sheriff implementing the writ.

• The complaint was in effect a motion to quash the writ of execution of adecision rendered on a case properly within the jurisdiction of the Labor Arbiter, to wit : Illegal Dismissal and Unfair Labor Practice. It is then logica

to conclude that the subject matter of the third party claim is but an incidenof the labor case, a matter beyond the jurisdiction of regional trial courts.

• Precedent abound confirming the rule that said courts have no jurisdiction to acton labor cases or various incidents arising therefrom, including the execution ofdecisions, awards or orders. Jurisdiction to try and adjudicate such cases pertainsexclusively to the proper labor official concerned under the Department of Laborand Employment. To hold otherwise is to sanction split jurisdiction which isobnoxious to the orderly administration of justice.

•

Petitioner failed to realize that by filing its third-party claim with the deputy sheriffit submitted itself to the jurisdiction of the Commission acting through the Labor Arbiter. It failed to perceive the fact that what it is really controvert ing is thedecision of the Labor Arbiter and not the act of the deputy sheriff in executing saiorder issued as a consequence of said decision rendered.

• Jurisdiction once acquired is not lost upon the instance of the parties but continuesuntil the case is terminated. Whatever irregularities attended the issuance andexecution of the alias writ of execution should be referred to the sameadministrative tribunal which rendered the decision. This is because any court which issued a writ of execution has the inherent power, for the advancement ofjustice, to correct errors of its ministerial officers and to control its own processes.


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Jesus Lim Arranza et al. v B.F. Homes, Inc. et al. June 19, 2000|Davide, Jr., C. J.| Administrative Procedure; Jurisdiction

Digester: Anna Mickaella Lingat

SUMMARY: Respondent BF Homes, Inc (BFHI), is a domestic corporation engagedin developing subdivision and selling residential lots. With the withdrawal of substantialinvestments in BFHI, respondent filed with the SEC a petition for rehabilitation. AttyFlorencio Orendain was appointed as receiver. He was later relieved by the SEC of hisduties as a Receiver. The new Board of Receivers revoked the authority given byOrendain to use the open spaces at Concha Cruz Drive and to collect communityassessment funds; deferred the purchase of new pumps ; recognized BF ParanaqueHomeowners Association (BFPHAI) as the representative of all homeowners; took overthe management of the Clubhouse and deployed its own guards. Petitioners filed withthe HLURB a class suit “for and in behalf of the more than 7,000 homeowners” againstrespondent BFHI et al to enforce the rights of purchasers of lots in BF HomesParanaque 3. Respondents asserts that the SEC, not the HLURB, has jurisdictionarguing that the SEC, being the appointing authority should be the one to takecognizance of controversies arising from the performance of the receiver’s duties. TheCourt held that it is HLURB that has jurisdiction over the case, and not the SEC.DOCTRINE: The SEC has authority over the operation of all kinds of corporations,partnerships or associations with the end in view of protecting the interests of the

investing public and creditors. The HLURB has jurisdiction over matters relating toobservance of laws governing corporations engaged in the specific business ofdevelopment of subdivisions and condominiums.

FACTS:

• BF Homes, Inc. (BFHI) is domestic corporation engaged in developingsubdivisions and selling residential lots. One of the subdivisions that BFHIdeveloped was the BF Homes Parañaque Subd.

• When Central Bank ordered the closure of Banco Filipino, which had substantialinvestments in BFHI, BFHI filed with the SEC a petition for rehabilitation and adeclaration that it was in a state of suspension of payment. SEC placed BFHI undera management committee, appointed Atty. Florencio B. Orendain as a Receiver,and approved a Revised Rehabilitation Plan.

•

Orendain instituted a central security system and unified the 65 homeowner’sassociations into an umbrella homeowners association called “United BFHomeowners Associations (UBFHAI).

• BFHI turned over to UBFHAI control and administration of security in thesubdivision, clubhouse and open spaces.

• Orendain was relieved by the SEC of his duties as a Receiver, and a new Board ofReceivers was appointed. The new Board revoked Orendain’s authority to use theopen spaces and to collect community assessment funds; deferred the purchase ofnew pumps; recognized BF Parañaque Homeowners Association, Inc (BFPHAI) as


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the representative of all homeowners in the subdivision; took over the managementof the Clubhouse; and deployed its own security guard in the subdivision.

• Petitioners filed with HLURB a class suit “for and in behalf of the more than 7,000homeowners in the subdivision” against BFHI, et al “to enforce the rights ofpurchasers of lots in BF Homes Parañaque.

• In BFHI’s answer, it claimed that:o It complied with its contractual obligations relative to the subdivisions

developmento

It could not be compelled to abide by agreements resulting from Orendain’sultra vires acts

o Petitioners were precluded from instituting the instant action because of thesuspension of all actions for claims against a corporation under receivership.

HLURB

• Ruled in favor of the petitioners

• Enjoined BFHI:o From taking over/administering Concha Garden Rowo

From issuing stickers to residents and non-residents alike for free or with feeso

From preventing necessary improvements and repairs of infrastructures withinthe authority and administration of UBFHAI

o From taking over security in the exit points of the subdivisionCA

• Reversed; set aside the writ of preliminary injuction issued by HLURB

• Petitioner’s action should be regarded as a “claim” within the contemplation of PDNo 902-A, which should be placed on equal footing with those of petitioners othercreditor or creditors and which should be filed with the Committee of Receivers.

• Petitioner’s action against BFHI, which is under receivership, should be suspended.

RULING: Decision of the Court of Appeals is hereby REVERSED and SET ASIDE. This case is REMANDED to the Housing and Land Use Regulatory Board forcontinuation of proceedings with dispatch as the Securities and Exchange Commissionproceeds with the rehabilitation of respondent BF Homes, Inc., through the Board ofReceivers. Thereafter, any and all monetary claims duly established before the HLURBshall be referred to the Board of Receivers for proper disposition and thereafter, to theSEC, if necessary. No costs.

Whether the HLRUB has the jurisdict ion over the petitioner’s claims? – YES,not the SEC.

• PETITIONER’S ARGUMENTS:o The issues are within the jurisdiction of HLURB.o

Their complaint refers to rights of way, water, open spaces, road and perimeter wall repairs, security and BFHI’s interlocking corporations that facilitated thecircumvention of its obligation involves unsound real estate practices.

o

The action is for specific performance of a real estate deve lopers obligationsunder PD No 957 and the relief sought is revocation of the subdivisionprojects registration certificate and license to sell.

o Even if BFHI is under receivership, its obligations as a real estate developerare not suspended.

o Suspension of all actions for claims refers solely to monetary claims which arebut incidental to their complaints against BFHI. If filed elsewhere thanHLURB, it would result to splitting of causes of action

o Acts enjoined by HLURB are not related to the disposition of BFHI’s a ssets a

a corporation undergoing its final phase of rehabilitation.• RESPONDENT’S ARGUMENTS:

o SEC has the jurisdiction over petitioner’s complaint based on the contractsentered into by the former receiver.

o SEC, being the appointing authority, should be he one tot take cognizance ofcontroversies arising from the performance of the receiver’s duties.

o

Since BFHI’s properties are under SEC’s custodial egis, they are exempt fromany court processes.

COURT:

• PD No 957 (The Subdivision and Condominium Buyers Protective Decree) wasissued to answer to the popular call for correction of pernicious practices ofsubdivision owners and/or developers that adversely affected the interests of

subdivision lot buyers.• Sec 3 of PD No 957 empowered the National Housing Authority (NHA) with the

exclusive jurisdiction to regulate the real estate trade and business.

• Thereafter, the regulatory and quasi-judicial funct ions of the NHA were transferreto the Human Settlements Regulatory Commission (HSRC) by virtue of EO No.648. Sec 8 of said EO transferred NHA’s authority to hear and decide “cases onunsound real estate business practices, claims involving refund filed against projectowners, developers, dealers, brokers or salesmen and cases of specificperformance” to HSRC.

• The boom in the real estate business all over the country resulted in more litigatiobetween subdivision owners/developers and lot buyers with the issue of thejurisdiction of the NHA or the HLURB over such controversies as against that of

the regular courts.• The Court has consistently ruled that NHA or the HLURB has jurisdiction over

complaints arising from contracts between the subdivision developer and the lotbuyer or those aimed at compelling the subdivision developer to comply with itscontractual and statutory obligations to make the subdivision in a better place tolive in.

• In the present petition, petitioner’s complaint is for specific performance to enforctheir rights as purchasers of subdivision lots as regards rights of way, water, openspaces, road and perimeter wall repairs, and security. The HLURB, then, hasjurisdiction over the complaint.


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Assuming HLURB has jurisdiction, may the proceedings be suspended pendingthe outcome of receivership before the SEC? - NO

• The fact that BFHI is under receivership does not divest the HLURB of thatjurisdiction.

• A receiver is a person appointed by the court, or in this instance, by a quasi-judicialadministrative agency, in behalf of all the parties for the purpose of preserving andconserving the property and preventing its possible destruction or dissipation, if it were left in the possession of any of the part ies.o

It is the duty of the receiver to administer the assets of the receivership estate;and in the management and disposition of the property committed to hispossession, he acts in a fiduciary capacity and with impartiality towards all interested persons .

o The appointment of a receiver does not d issolve a corporation, nor does itinterfere with the exercise of its corporate rights.

• In this case where there appears to be no restraints imposed upon respondent as itundergoes rehabilitation receivership, respondent continues to exist as acorporation and hence, continues or should continue to perform its contractual andstatutory responsibilities to petitioners as homeowners.

• No violation of the SEC order suspending payments to creditors would result as faras petitioners complaint before the HLURB is concerned. To reiterate, whatpetitioners seek to enforce are respondents obligations as a subdivision developer.Such claims are basically not pecuniary in nature although it could incidentally involvemonetary considerations.

• All that petitioners claims entail is the exercise of proper subdivision managementon the part of the SEC-appointed Board of Receivers towards the end thathomeowners shall enjoy the ideal community living that respondent portrayed they would have when they bought real estate from it.

• In this case, under the complaint for specific performance before the HLURB,petitioners do not aim to enforce a pecuniary demand. Their claim forreimbursement should be viewed in the light of respondents alleged failure toobserve its statutory and contractual obligations to provide petitioners a "decenthuman settlement" and "ample opportunities for improving their quality of life." The HLURB, not the SEC, is equipped with the expertise to deal with that matter.

•

For the SEC to acquire jurisdiction over any controversy under these provisions,two elements must be considered:o (1) the status or relationship of the parties; ando

(2) the nature of the question that is the subject of their controversy.

• The first element requires that the controversy must arise "out o f intra~corporateor partnership relations between and among stockholders, members or associates;between any or all of them and the corporation, partnership or association of whichthey are stockholders, members or associates, respectively; and between suchcorporation, partnership or association and the State in so far as it concerns theirindividual franchises."

• In this case, petitioners are not stockholders, members or associates of respondent. They are lot buyers and now homeowners in the subdivision developed by therespondent.

• The second element requires that the dispute among the parties be intrinsicallyconnected with the regulation or the internal affairs of the corporation, partnershior association. The controversy in this case is remotely related to the "regulation"of respondent corporation or to respondents "internal affairs."

• The main concern in this case is the issue of jurisdiction over petitioners complain

against respondent for specific performance. P.D. No. 902~A, as amended, definethe jurisdiction of the SEC; while P.D. No. 957, as amended, delineates that of theHLURB.

• These two quasi~judicial agencies exercise functions that are distinct from eachother.o

The SEC has authority over the operation of all kinds of corporations,partnerships or associations with the end in view of protecting the interests othe investing public and creditors.

o The HLURB has jurisdiction over matters relating to observance of lawsgoverning corporations engaged in the specific business of development ofsubdivisions and condominiums.

• The HLURB and the SEC being bestowed w ith distinct powers and functions, theexercise of those functions by one shall not abate the performance by the other ofits own functions. There is no contradiction between P.D. No. 902~A and P.D.No. 957.

COOPERATIVE DEVELOPMENT AUTHORITY v. DOLEFIL AGRARIANREFORM BENEFICIARIES COOPERATIVE INC

May 29, 2002 | De Leon, Jr., J. | Adjudication of Cases - JurisdictionDigester: Fausto, Jaime Manuel A.

SUMMARY: Some members of DARBCI, a cooperative, complained to the CDA. They alleged mismanagement and/or misappropriation of DARBCI funds between theincumbent officers and members of its BOD. CDA froze DARBCI’s funds and createa committee to manage its affairs. The respondents, DARBCI and its former officers,questioned the jurisidiction of the CDA to resolve cooperative complaints. Due to a TRO, the CDA was able to continue its functions and initiated proceedings ordering thholding of a special general assembly of DARBCI to elect new officers. Two TROs were filed against CDA. Still, DARBCI, on its own initiative , held elections that oustedthe private respondents in this case. The private respondents then file twin motions forcontempt and to nullify the election proceedings for violation of the TRO enjoining thelections. CA held that the elections were void and compelled DARBCI to explain whythey should not be held in contempt. The SC held that CDA was not vested with quasijudicial authority to adjudicate cooperative disputes. RA 6939, which enumerates CDA’powers, clearly shows that its authority is to discharge purely administrative functionsthat consist of policy making, registration, fiscal and technical assistance tocooperatives and implementation of cooperative laws. Based on Congress deliberations


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the clear intent was not to vest CDA with quasi-judicial powers, as doing so could leadto the stifling or prevention of cooperative autonomy.DOCTRINE: The CDA was created to promote the viability and growth ofcooperatives, in recognition of the latter as instruments of national development. The clear legislative intent shows that the CDA is devoid of any quasi-judicial authorityto adjudicate intra cooperative disputes. The authority to conduct hearings or inquiriesand the power to hold any person in contempt may be exercised by the CDA only inthe performance of its administrative functions under R.A. No. 6939.

FACTS:

• Petitioner - CDA; respondent - DARBCI; private respondents - officers ofDARBCI.

• CDA received from certain members of DARBCI, an agrarian reform cooperative,complaints alleging mismanagement and/or misappropriation of funds of DARBCIby the then incumbent officers and members of the board of directors of thecooperative, some of whom are herein private respondents.

• Before respondents filed their answer, the CDA administrator issued an orderfreezing the funds of DARBCI and creating a management committee to managethe affairs of the cooperative.

• Respondents filed a Petition for Certiorari with a prayer for preliminary injunctionand damages against CDA, questioning the jurisdiction of the CDA to resolvethe complaints against the private respondents, specifically with respect to theauthority of the CDA to issue the “freeze order” and to create a managementcommittee that would run the affairs of DARBCI.

• RTC issued a TRO directing the parties to restore status quo ante, enabling privaterespondents to reassume management of DARCBI.

• CDA questioned the TRO via petition for certiorari to the CA. CA issued a TROenjoining the RTC from enforcing the mentioned restraining order.

• Thus, CDA continued w ith the proceed ings in a case where the CDA administratorissued a resolution directing the holding of a special general assembly of DARBCImembers and the creation of an ad hoc election committee to supervise election ofofficers and members of the BOD of DARBCI.

•

This resolution prompted respondents to file a petit ion for prohibition with theCA. The CA issued a resolution restraining CDA, its administrator and the ad hocelection committee from proceeding with the election of officers and members ofDARBCI’s BOD.

• On the same date, the RTC in another case with Investa Land Corp., issued a TROenjoining respondents from proceeding with a scheduled general assembly andelections of officers of DARBCI’s BOD.

• There was now a total of 2 TROs against CDA. Nevertheless, DARBCI on theirown initiative, convened a general assembly and held elections, thereby replacingthe private respondents as officers.

• Thus the private respondents in this case, filed Twin Motions for Contempt ofCourt and to Nullify Proceedings with the CA.

• The CA granted the petition and held that CDA’s order granting the elections, andthe elections themselves were null and void. Also, the DARBCI officers were madto explain why they should not be held in contempt for disregarding the TRO byproceeding with the elections.

CDA’s Arguments

• Petitioner CDA claims that it is vested with quasi judicial authority to adjudicatecooperative disputes in view of its powers, functions and responsibilities underSection 3 of RA 6939.

•

This was confirmed by the DOJ in DOJ Opinion 1-, where it was said that theexpress powers of CDA to cancel certificates of registration of cooperatives fornoncompliance with administrative requirements and to mandate and conciliatedisputes within or between cooperatives under RA 6939 were deemed quasi-judiciin nature, the reason being there is an indispensible need to hold hearings andinvestigate facts to constitute any violations. Thus it would be CDA’s discretion whether or not to cancel the certif icates or registration. I t is a conciliatory body thafunctions as an arbitrator and is thus, quasi-judicial.

• The Office of the President shared the same view, reasoning that the assumption ojurisdiction by the CDA on matters which partake of cooperative disputes is alogical, necessary and direct consequence of its authority to register cooperatives.

• The grant of this power impliedly carries with it the visitorial power to entertaincooperative conflicts, a lesser power compared to its authority to cancel registratiocertificates when, in its opinion, the cooperative fails to comply with someadministrative requirements

• The petitioner avers that when an administrat ive agency is conferred withquasi judicial powers and functions, such as the CDA, all controversies relating tothe subject matter pertaining to its specialization are deemed to be covered withinthe jurisdiction of said administrative agency.

Respondents’ Arguments

• Respondents claim that CDA was merely granted regulatory or supervisory powersover cooperatives in addition to its authority to mediate and conciliate betweenparties involving the settlement of cooperative disputes.

RULING: Petition denied. Whether the petition is dismissble for lack of the requisite imprimatur from theOSG – YES, (OSG only deputized CDA’s counsel to appear in only civil cases in

the lower courts wherein CDA was a party litigant), BUT due to the novelty ofthe main issue, the Court has decided to act on and determine the merits of the petition.

Whether CDA is vested with quasi-judicial authority to adjudicate intra-cooperative disputes – NO.

• RA 6939, Sec. 3 (see notes) enumerates the powers, functions and responsibilitiesof the CDA.


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• It is clear that this provision that CDA’s authority is to discharge purelyadministrat ive functions which consist of policy making, registration, fiscaland technical assistance to cooperatives and implementation of cooperative

laws. Nowhere in the said law can it be found any express grant to the CDA ofauthority to adjudicate cooperative disputes.

• At most, it can mediate and conciliate disputes with or between cooperat ives, withthe limitation that a certificate of non resolution shall be issued by thecommission prior to the filing of appropriate action before the proper courts.”

•

Being an administrative agency, the CDA has only such powers as are expresslygranted to it by law and those which are necessarily implied in the exercise thereof.

• CDA argued that its authority to conduct hearings and inquiries, as well ascontempt powers necessarily vests upon the quasi-judicial authority to adjudicatecooperative disputes.

• HOWEVER, in the records of deliberations by both chambers of Congressprior to the enactment of RA 6939, it was clear that they did not intend to vestquasi-judicial authority to CDA.

• Congress clarified that the parties must resort to the courts to adjudicate issuesconcerning cooperatives.

• The provincial fiscal still files the case, while the CDA only recommends thefiling of legal charges, which is after the preliminary investigation conducted by

the fiscal.• The amendment giving the CDA the power to conduct inquiries, studies

hearings and investigations was rejected in the Senate deliberations becausesuch power would interfere in the autonomous character of cooperatives.

• The decision to withhold quasi judicial powers from the CDA is in accordance with the policy of the government granting autonomy to cooperatives.Cooperatives failed to flourish in the Philippines die to the stifling attitude of thegovernment towards them.

• The CDA was created to promote the viability and growth of cooperatives, inrecognition of the latter as instruments of national development.

• Thus, given the clear legislative intent underlying RA 6939, the Court holds that theCDA is devoid of any quasi-judicial authority to adjudicate intra cooperative

disputes and more particularly disputes as regards the election of the members ofthe Board of Directors and officers of cooperatives.

• The authority to conduct hearings or inquiries and the power to hold any person incontempt may be exercised by the CDA only in the performance of itsadministrative functions under R.A. No. 6939.

Whether respondents committed forum shopping – NO.

• There was neither identity of parties nor issues in the cases filed in the differentcourts.

• The case that Investa filed against DARBCI, the latter has a separate and distinctpersonality from the private respondents in this case.

• The fact that the different cases was held by the same counsel does not constituteforum shopping.

Whether the CA in invalidating the elect ion of officers and members ofDARBCI’s BOD was void for affecting the substantial rights and due process

rights of DARBCI’s officers - YES.

• The validity of the general assembly which held the elections was never questionedNeither were the concerned officers made to comment on the filed “twin motionsfor contempt and to nullify proceedings.”

•

The TRO prevented the original elect ion scheduled. Then, DARBCI at their owninitiative, held a general assembly and elected new officers that ousted the formerofficers (private respondents in this case). This prompted private respondents tofile the twin motions for contempt.

• The CA, in invalidating the elections violated the new officers’ constitutional rightto due process because the CA failed to require the officers to file their commentor opposition to the twin motions. The CA rendered judgment against the newofficers/ DARBCI without due notice and opportunity to be heard. The election(out of DARBCI’s own initiative) was never raised as an issue before anyway.

NOTES:SEC. 3. Powers, Functions and Responsibilities .—The Authority shall have the followingpowers, functions and responsibilities:

.

(a) Formulate, adopt and implement integrated and comprehensive plans andprograms on cooperative development consistent with the national policy oncooperatives and the overall socio economic development plan of the

Government;.

(b) Develop and conduct management and training programs upon request ocooperatives that will provide members of cooperatives with theentrepreneurial capabilities, managerial expertise, and technical skills requiredfor the efficient operation of their cooperatives and inculcate in them the truespirit of cooperativism and provide, when necessary, technical and professionassistance to ensure the viability and growth of cooperatives with special

concern for agrarian reform, fishery and economically depressed sectors;

.

(c) Support the voluntary organization and consensual development ofactivities that promote cooperative movements and provide assistance to wards upgrading managerial and technical expertise upon request of the

cooperatives concerned;.

(d) Coordinate the effects of the local government units and the private secto

in the promotion, organization, and development of cooperatives;.

(e) Register all cooperatives and their federations and unions, including theirdivision, merger, consolidation, dissolution or liquidation. It shall also registerthe transfer of all or substantially all of their assets and liabilities and such

other matters as may be required by the Authority;


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.

(f) Require all cooperatives, their federations and unions to submit theirannual financial statements, duly audited by certified public accountants, and

general information sheets;.

(g) Order the cancellation after due notice and hearing of the cooperative’scertificate of registration for non compliance with administrative

requirements and in cases of voluntary dissolution;.

(h) Assist cooperatives in arranging for financial and other forms of assistanceunder such terms and conditions as are calculated to strengthen their viability

and autonomy;.

(i) Establish extension offices as may be necessary and financially viable toimplement this Act. Initially, there shall be extension offices in the Cities of

Dagupan, Manila, Naga, Iloilo, Cebu, Cagayan de Oro and Davao;.

(j) Impose and collect reasonable fees and charges in connection with the

registration of cooperatives;.

(k) Administer all grants and donations coursed through the Government forcooperative development, without prejudice to the right of cooperatives todirectly receive and administer such grants and donations upon agreement with

the grantors and donors thereof;.

(l) Formulate and adopt continuing policy initiatives consultation with the

cooperative sector through public hearing;

.

(m) Adopt rules and regulations for the conduct of its internal operations;.

(n) Submit an annual report to the President and Congress on the state of the

cooperative movement;.

(o) Exercise such other functions as may be necessary to implement the

provisions of the cooperative laws and, in the performance thereof, the Authority may summarily punish for direct contempt any person guilty ofmisconduct in the presence of the Authority which seriously interrupts anyhearing or inquiry with a fine of not more than five hundred pesos (P500.00)or imprisonment of not more than ten (10) days, or both. Acts constitutingindirect contempt as defined under Rule 71 of the Rules of Court shall bepunished in accordance with the said Rule.

De Jesus v COA June 10, 2003 | Carpio., J. |

Digester: Endaya, Ana Kristina R.

SUMMARY: An auditing team from COA audited the accounts of the Catbalogan Water District (CWD) and found that the members of CWD’s board of directors(petitioners) received benefits under Resolution No. 313 promulgated by the Local Water Utilities Administration (LWUA) which COA found to be against PD 198. Theyappealed but COA denied their petition. Petitioners argue that COA had no jurisdictionas it is within the power of the LWUA and the DBM.

The SC held that it is within COA’s jurisdiction.

DOCTRINE: The Constitution and existing laws mandate the COA to audit all government agencies,including GOOCs with original charters. Constitution specifically vests in the COA theauthority to determine whether government entities comply with laws and regulations idisbursing government funds, and to disallow illegal or irregular disbursements ofgovernment funds. This independent constitutional body is tasked to be vigilant andconscientious in safeguarding the proper use of the governments, and ultimately, the

peoples property.

The Court already ruled in several cases that a water district is a GOOC with a specialcharter since it is created pursuant to a special law, PD 198. The COA has the authorityto investigate whether directors, officials or employees of GOOC, receiving additionalallowances and bonuses, are entitled to such benefits under applicable laws. Waterdistricts are subject to the jurisdiction of the COA

FACTS:

Petitioners: 5 members of the CWD’s board the board’s secretary

• An auditing team from the COA Leyte audited the accounts of the Catbalogan Water District (CWD). The auditing team found that:

o

That between May to December 1997 and April to June 1998, members ofCWD’s interim Board of Directors (Board) granted themselves the followingbenefits:

! Representation and Transportation Allowance (RATA)

! Rice Allowance

! Productivity Incentive Bonus! Anniversary Bonus

! Year-End Bonus

! Cash gifts.o These benefits were authorized under Resolution No. 313 of the Local Water

Utilities Administration (LWUA).

• During the audit, the COA audit team issued 2 notices of disallowance disallowing

payment of the allowances and bonuses received by the 6.o Ground of disallowance: They run counter to Section 13 of PD 198.

• Petitioners appealed to the COA Regional Office but COA Regional DirectorDominador T. Tersol denied the appeal.

• Petitioners filed a petition for review with the COA which denied the petition.

• MR was also denied.

• Hence, the instant petition.

COA’s reasoning: Members of the CWD Board cannot receive compensation andother benefits in addition to the per diems allowed by Section 13 of PD 198.

-

Resolution No. 313 as amended, which grants compensation and otherbenefits to the members of the Board of Directors of CWD is not in harmon


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with the provisions of Sec. 13, PD 198, which speaks only of per diems, theamount of which is subject to approval by the administrator if more than P50each for every meeting.

-

It is a fundamental rule in statutory construction that if a statute is clear, plainand free from ambiguity, it must be given literal meaning and applied withoutattempted interpretation. Thus, any resolution granting allowances to directorsof Water Districts other than that authorized in Sec. 13 of PD 198 is null and void. A statutorily proscribed benefit may not be amended by a mereadministrative fiat

RULING: Petition granted. RTC’s decision reversed. Case Remanded for further proceedings in accordance with our ruling.

• The Catbalogan Water District was created pursuant to PD 198 (Provincial WaterUtilities Act of 1973).

• What did PD 198 authorize?o Authorized the local legislative bodies, th rough an enabling resolution, to

create their respective water districts, subject to the guidelines and regulationsunder PD 198.

o

Created the Local Water Utilities Administration (LWUA), a national agency,

and granted LWUA regulatory powers necessary to optimize public servicefrom water districts.

Ruling: COA’s decision AFFIRMED WITH MODIFICATION that petitionersneed not refund the Representation and Transportation Allowance, Rice Allowance, Productivity Incentive Bonus, Anniversary Bonus, Year-End Bonusand cash gifts, received per Resolution No. 313, series of 1995, of the Local WaterUtilities Administration, between May to December 1997 and April to June 1998.

Whether COA erred in motu proprio exercising jurisdiction to declare LWUABoard Resolution No. 313 not in conformity with Section 13 of PD 198? – NO,COA had jurisdiction.

Petitioner’s Argument: COA has no jurisdiction

• LWUA Resolution No. 131, series of 1995(Policy Guidelines on Compensation andOther Benefits to WD Board of Directors)o LWUA is the government agency tasked to regulate and control water districts

created pursuant to PD 198 and that LWUA has the power to issue regulationsto implement effectively PD 198.

• COA has no jurisdiction to construe any provision of PD 198 on thecompensation and other benefits granted to LWUA-designated members ofthe board of water districts.

o

By exercising motu proprio plenary jurisdiction to construe and applySection 13 of PD 198, the COA encroached on the powers of the LWUA.

• COA also violated the presumption of legality and regularity generally accorded topolicy circulars issued by the administrative agency entrusted to enforce the law.

• It is the Department of Budget and Management (DBM), not the COA, that hasthe power to administer the compensation and classification system of thegovernment service and to revise it as necessary.

• Eslao v. COA – The COA can do no less than to faithfully observe and carry intoeffect the mandate of LWUA Board Resolution No. 313, until it is declared void ithe proper forum.

Supreme Court

• Section 2, Subdivision D, Article IX of the 1987 Constitution expressly provides:Sec. 2(1). The Commission on Audit shall have the power, authority, and dutto examine, audit, and settle all accounts pertaining to the revenue andreceipts of, and expenditures or uses of funds and property, owned or held itrust by, or pertaining to the Government…

• The Constitution and existing laws mandate the COA to audit all governmentagencies, including GOOCs with original charters.o

Constitution specifically vests in the COA the authority to determine whethergovernment entities comply with laws and regulations in disbursinggovernment funds, and to disallow illegal or irregular disbursements ofgovernment funds.

o

This independent const itutional body is tasked to be vigilant and consc ientiouin safeguarding the proper use of the governments, and ultimately, the peopleproperty.

• The Court already ruled in several cases that a water district is a GOOC with aspecial charter since it is created pursuant to a special law, PD 198.o

The COA has the authority to investigate whether directors, officials oremployees of GOOC, receiving additional allowances and bonuses, are entitleto such benefits under applicable laws.

o Water districts are subject to the jurisdiction of the COA

• We cannot sustain petitioners claim that the COA usurped the functions of theLWUA in construing PD 198 and disallowing payment of the additional allowanceand bonuses.o

Such a theory leads to the absurd situation where the board of anadministrative agency, by the mere act of issuing a resolution, can put tonaught the broad and extensive powers granted to the COA by theConstitution. This will prevent the COA from discharging its constitutionalduty as an effective, efficient and independent watchdog of the financialoperations of the government.

Case of Eslao is inapplicable

• Facts in Eslao:o The DENR and Pangasinan State University entered into an agreement to

evaluate government reforestation programs. The Asian Development Bank


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granted a loan to fund the implementation of the agreement. The personnelinvolved in the project were paid under the DBM-issued NationalCompensation Circular No. 53, which dealt with foreign-assisted projects.

o COA disallowed the payment on the ground that the compensation should fallunder the DBM-issued Compensation Policy Guidelines No. 80-4, whichgoverns all projects and provides for lower compensation rates.

• Ruling:o SC held that National Compensation Circular No. 53 amended

Compensation Policy Guidelines No. 80-4 by excepting from the latters

scope foreign-assisted projects.o

The Court declared that the COA cannot substitute its own judgment for anyapplicable administrative regulation with the wisdom or propriety of which,however, it does not agree, at least not before such regulation is set aside bythe courts.

• Clearly, Eslao is not in pointo Difference is that in Eslao:

! The COA accepted the wisdom of Compensation Policy Guidelines No.80-4 but refused to accept the propriety of the exception to the circularembodied in National Compensation Circular No. 53. The DBM issuedboth compensation regulations under its legislative authority to classify

positions and determine appropriate salaries for specific position classesand. review appropriate salaries for specific position classes and review thecompensation benefits programs of agencies. Clearly, the COA had amplelegislative authority to issue both compensation regulations.

o In this case: The COA was simply exercising its constitutional duty to examineand audit disbursements of public funds that are patently beyond what the lawallows.

• Petitioners confuse the COA which is an independent constitutional body with theDBM which is under the executive branch of the government.o The DBM is responsible for formulating and implementing the national

budget. It is tasked to - assist the President in the preparation of a nationalresources and expenditures budget, preparation, execution and control of the

National budget, preparation and maintenance of accounting systems essentialto the budgetary process, achievement of more economy and efficiency in themanagement of government operations, administration of compensation andposition classification systems, assessment of organization effectiveness andreview and evaluation of legislative proposals having budgetary ororganizational implications.

o While the DBM is the government agency tasked to release governmentfunds, the duty to examine and audit government accounts and expenditureproperly pertains to the COA

Whether PD 198 prohibits the Grant of RATA, EME, and Bonuses to Membersof the Board of Water Districts? – YES, PD 198 expressly prohibits such grant.

Petitioners’ argument: The term compensation in Section 13 of PD 198 does notinclude RATA, EME, bonuses and other similar benefits disallowed in this case .

Supreme Court

• Section 13 of PD 198, as amended, reads as follows: Compensation. - Each directoshall receive a per diem, to be determined by the board, for each meeting of theboard actually attended by him, but no director shall receive per diems in any givemonth in excess of the equivalent of the total per diems of four meetings in any

given month. No director shall receive other compensation for services to thedistrict. Any per diem in excess of P50 shall be subject to approval of the Administration.

• This issue is similar to a case already decided – BayBay Water District v. COA o Facts of Baybay: Members of the board of Baybay Water District also

questioned the disallowance by the COA of payment of RATA, rice allowanceand excessive per diems.

o Ruling in Baybay:

! The Court ruled that PD 198 governs the compensation of members ofthe board of water districts. Thus, members of the board of water districtcannot receive allowances and benefits more than those allowed by PD198.

!

Construing Section 13 of PD 198, per diem is precisely intended to be thcompensation of members of board of directors of water districts. Indee words and phrases in a statute must be given the ir natural, ordinary, andcommonly-accepted meaning, due regard being given to the context in which the words and phrases are used. By specify ing the compensation which a director is entitled to receive and by limiting the amount he/sheallowed to receive in a month, and, in the same paragraph, providing Nodirector shall receive other compensation than the amount provided forper diems, the law quite clearly indicates that directors of water districtsare authorized to receive only the per diem authorized by law and noother compensation or allowance in whatever form.

! Section 13 of PD 198 is clear enough that it needs no interpretation. It

expressly prohibits the grant of compensation other than the payment ofper diems, thus preempting the exercise of any discretion by waterdistricts in paying other allowances and bonuses.

Whether petitioners must refund the allowances they received in good faith? Nbecause of the ruling in Blaquera v. Alcala not Civil Liberties union which petitioners used.Petitioner’s Argument:

• COA grossly erred in requiring them to refund the allowances and bonuses theyreceived in good faith. Basis is Civil Liberties Union v. Executive Secretary .


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o

Civil Liberties Union : the Court declared Executive Order No. 284unconstitutional as it allows Cabinet members, undersecretaries or assistantsecretaries to hold multiple positions in violation of the express prohibition inSection 13, Article VII of the 1987 Constitution.

o

HOWEVER, In cases were there is no de jure officer, a de facto officer, whoin good faith has had possession of the office and has discharged the dutiespertaining thereto, is legally entitled to the emoluments of the office, and mayin an appropriate action recover the salary, fees and other compensationsattached to the office.

o

It is unjust that the public should benefit from the services of a de facto officerand then be freed from all liability to pay for such, services. Thus, the Courtruled that any per diem, allowances or other emoluments received by therespondents in Civil Liberties Union for actual services rendered in thequestioned positions may be retained by them.

Supreme Court

• Scenario with the instant case is different from Civil Liberties Union.o The CWD Board appointed petitioners pursuant to PD 198. Petitioners

received allowances and bonuses other than those granted to their office byPD 198.

o Petitioners cannot claim any compensation other than the per diem provided

by PD 198 precisely because no other compensation is attached to their office.

• BUT petitioners will not refund what they received based on Blaquera v. Alcala o

Facts of Blaquera : The officials and employees of several governmentdepartments and agencies were paid incentive benefits which the COAdisallowed on the ground that Administrative Order No. 29 prohibitedpayment of these benefits.

o Ruling in Blaquera: While the Court sustained the COA on the d isallowance, itnevertheless declared that: Considering, however, that all the parties here actedin good faith, we cannot countenance the refund of subject incentive benefits which amounts the petitioners have already received. Indeed, no indicia of bad

faith can be detected under the attendant facts and circumstances. The officialsand chiefs of offices concerned disbursed such incentive benefits in the honestbelief that the amounts given were due to the recipients and the latter acceptedthe same with gratitude, confident that they richly deserve such benefits.

• Ruling in Blaquera applies to the instant case.o Petitioners here received the additional allowances and bonuses in good faith

under the honest belief that LWUA Board Resolution No. 313 authorizedsuch payment.

o

At the time petitioners received the additional allowances and bonuses, theCourt had not yet decided Baybay Water District . Petitioners had no knowledgethat such payment was without legal basis. Thus, being in good faith,petitioners need not refund the allowances and bonuses they received butdisallowed by the COA.

CSC v ALFONSO June 11, 2009 |Nachura, J. | Jurisdict ion

Digester: de Vera, Clarissa M.

SUMMARY: Dr. Zenaida Pia and Emmanuel Bautista filed an Affidavit Complaint with the CSC against Larry Alfonso for violation of RA6713. He was charged with gravmisconduct, conduct prejudicial to the best interest of the Service and violation of CivilService Law, rules and regulation. It was alleged that Alfonso repeatedly abused hisauthority as head of PUP’s personnel department by preparing and including his namein the Special Order for overnight services, thus making himself earn a considerable

amount of money. Alfonso submitted his counter affidavit but the CSC found hisexplanation wanting and ordered his preventive suspension. He filed an MR but wasdenied. He then filed a motion to admit his supplemental answer assailing thejurisdiction of the CSC alleging that the case should have been filed with the BOR ofPUP. His motion was not acted upon and an order for the enforcement of the order ohis preventive suspension was issued. He then filed a petition for certiorari andprohibition which the CA granted. The CA reasoned that the jurisdiction of the CSC was only with case filed by private c itizens against public officia ls and can only entertaisuch cases in its appellate jurisdiction. The SC ruled that the CSC has jurisdiction.DOCTRINE:

Section 2(1) and Section 3 of Article IX-B of the Constitution provides that the CSC, athe central personnel agency of the government has jurisdiction to supervise the

performance of and discipline all government employees, including those employed ingovernment-owned or controlled corporations with original charters Although there are certain special laws tha t allow the creat ion of disciplinary committeeand governing bodies in different branches, subdivisions, agencies and instrumentalitiesof the government, the Court said that it cannot interpret the creation of suchbodies as having divesting the CSC of its inherent power to supervise anddiscipline government employees, including those in the academe . To declarethat the CSC has no jurisdiction would negate the very purpose for which theCSC was established (to instill professionalism, integrity and accountability in our civiservice. Moreover, it would also impliedly amend the Constitution itself

FACTS:

•

On July 6, 2006, Dr. Zenaida Pia (Professor IV in PUP Sta.Mesa) and EmmanuelBautista (President of Union ng mga Kawani sa PUP) filed an Affidavit-Complaint with the Civil Serv ice Commission (CSC) against Larry Alfonso (respondent), theDirector of the Human Resources Management Department of PUP for violationof RA6713. He was charged with grave misconduct, conduct prejudicial to the besinterest of the Service and violation of Civil Service Law, rules and regulation.

o

It was alleged that Alfonso repeatedly abused his authority as head oPUP’s personnel department by preparing and including his name inthe Special Order for overnight services

o Such Order allows him to work for 24 hrs straight from:

! May 16 to 20

! May 22 to 27!

May 29 to June 2, 2006


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o

Thus, he made a considerable earnings for alleged ly working inhumanly impossible conditions 24 hours straight daily, for 3consecutive weeks

• To substantiate their c laim, Dr. Pia and Bautista submitted several documentaryevidence (see notes)

• As ordered by the Office of Legal Affairs of the CSC, Alfonso submitted aCounter-Affidavit wherein he averred that:

o He only worked overnight on May 17, 19, 22, 24, 26, 29 and 31, 2006o

His daily time record explicitly indicates that it covers overnightservices pursuant to SO No.1004 , series of 2006

o An entry such as “Day 17, arrival 8:00 PM; Day 18, departure 8:00 AM” connoted only a day of overnight work and not continuous 2days of rendition of work

• The CSC found Alfonso’s explanation wanting thus, it issued a Resolution formallycharging him with grave misconduct and conduct prejudicial to the best interest ofthe Service. He was likewise preventively suspended for 90 days.

• Alfonso then filed an omnibus motion for reconsidera tion of the prevent ivesuspension order and requested a change of venue from the CSC-Central Office tothe CSC NCR. He argued that it is the CSC Regional Office that has jurisdictionover the matter. However, his motion was denied

• Alfonso then filed another motion for reconsideration accompanied by a motion toadmit his supplemental answer arguing that it is the PUP Board of Regents that hasthe exclusive authority to appoint and remove PUP employees pursuant to RA8292 (An Act Providing for the Uniform Composition and Powers of theGoverning Boards, the Manner of Appointment and Term of Office of thePresident of Chartered State Universities and Colleges) in relation to RA4670(Magna Carta for Public School Teachers)

• Without ruling on the motion, the head of the CSC-NCR issued an orderimplementing the preventive suspension order. Thus, Alfonso filed a Petition forCertiorari and Prohibition with the Court of Appeals

• The CA rendered a decision in favor of Alfonso holding that:o

The CSC does not have original jurisdiction over the case filedbecause the CSC may only take cognizance of an administrative case

in 2 ways:! Through a complaint filed by a private citizen against a

government official or employee

! Appealed cases from the decisions rendered by Secretariesor heads of agencies, instrumentalities, provinces, cities andmunicipalities in cases filed against officers and employeesunder their jurisdiction

o

In the case at bar, the case was not filed by a private citizen butemployees of PUP nor was it rendered in the CSC’s appellatejurisdiction

o Even assuming the CSC may directly entertain such complaints, it violated the doctrine of exhaustion of administrative remedies, thus,

the complaint should have been lodges with the PUP Board ofRegents

o The power of the BOR to hire carries with it the power to d isciplinePUP personnel pursuant to Section 7(c) of PD1341 and that this issubstantially in accord with Section 4(h) of RA8292

RULING:

Whether or not the CSC has jurisdiction to hear and decide the complaint filed

against Alfonso – YES, the CSC has jurisdiction.• Section 2(1) and Section 3 of Article IX-B of the Constitution provides that the

CSC, as the central personnel agency of the government has jurisdiction tosupervise the performance of and discipline all government employees, includingthose employed in government-owned or controlled corporations with originalcharters.

• Accordingly, PUP off icers and employees, whether they be classified as teachers oprofessors, are deemed civil servants accountable to the people and answerable tothe CSC in cases of complaints lodged by a citizen against tem as public servants

• The CSC has appellate jurisdict ion over cases decided by the governmentdepartments, agencies and instrumentalities. However, a complaint may be fileddirectly with the CSC as provided in Sections 9(j) and 37(a) of PD807 (Civil Servic

Law of 1975) • Although there are certain special laws that allow the creation of disciplinary

committees and governing bodies in different branches, subdivisions, agencies andinstrumentalities of the government, the Court said that it cannot interpret thecreation of such bodies as having divesting the CSC of its inherent power tosupervise and discipline government employees, including those in the academe.

• The Court said that to declare that the CSC has no jurisdiction would negate the very purpose for which the CSC was established ( to instill professionalism, integritand accountability in our civil service. Moreover, it would also impliedly amend theConstitution itself.

• It is error to contend that RA4670 conferred exclusive disciplinary authority on thDECS over public school teachers and to have prescribed procedure in

administrative investigations involving them (Office of the Ombudsman v Masing) o Applying it to the case at bar, it is thus equally erroneous to argue

that the PUP Charter and RA8292 confer upon the BOR of PUP thexclusive jurisdiction to hear disciplinary cases against universityprofessors and personnel

• the power of the BOR over the university is not exclusive in the matter ofdisciplining and removing its employee and officials (Civil Service Commission vSojor)

• Moreover, Alfonso already submitted himself to the jurisdiction of the CSC whenhe participated actively in the proceeding when he filed his counter affidavit and himotion for reconsideration and even requested for a change of venue. It was only when his motion was denied that he assailed the question of proper jurisdiction,


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thus, by principle of estoppels by laches, he is barred from impugning the authorityof the CSC

• Indeed, the CSC may choose to deputize any department or agency or group ofofficials to conduct the investigation, or to delegate the investigation to the properregional office but the same is merely permissive and not mandatory upon theCommission

Whether or not the prevention suspension was proper – YES, the Court affirmedthe order of preventive suspension

•

There are 2 kinds of preventive suspension of government employees charged w ithoffenses punishable by removal or suspension:

o Preventive suspension pending investigationo Preventive suspension pending appeal if the penalty imposed by the

disciplining authority is suspension or dismissal, and after review, therespondent is exonerated

• Preventive suspension pending investigation is not a penalty. It is a measureintended to enable the disciplining authority to investigate charges againstrespondent by preventing the respondent from intimidating or in any wayinfluencing witnesses against him. If the investigation was not finished and adecision was not rendered within the period, the suspension will be lifted andrespondent will automatically be reinstated. If he was found to be innocent, he

must be reinstated. (Section 51 to 52 of the Revised Administrative Code of 1987)• In the case at bar, Alfonso was charged with grave misconduct and conduct

prejudicial to the best interest of the service. These are classified as a grave offense.Moreover, Alfonso is in the position to exert undue influence or pressure on thepotential witnesses that the complainants may produce, or to tamper with thedocumentary evidence that may be used against him. Thus, the necessity of hissuspension in order to prevent compromise of the integrity and impartiality of theentire proceedings.

NOTES:Documentary evidence presented by the complainants:“1. Special Order No. 1004, s. 2006;

2. Special Order No. 0960, s. 2006;3. Daily time records of Saturday and Overnight Services of Alfonso;4. PUP PermOT overnight May 2006 payroll register;5. Xerox copy of check no. 162833 dated May 31, 2006;6. Summary of Alfonso’s Saturday, overnight and overtime schedule;7. Computation of the number of hours, days and weeks that Alfonso allegedly served8. Explanation of official time, night service, Saturday overtime and overnight servicesrendered by Alfonso for the month of May.”

Section 7(c) of P.D.1341:“Section 7. The Board of Regents shall have the following powers and duties in additionto his general powers of administration and the exercise of all the powers of a

corporation as provided in Section 13 of Act Numbered fourteen hundred fifty nine asamended, otherwise known as the Philippine Corporation Law:(c) To appoint, on the recommendation of the President of the University, professors,instructors, lecturers and other members of the faculty, and other officials andemployees of the University; to fix their compensation, hours

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