Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-12859 November 18, 1959

CEBU UNITED ENTERPRISES, plaintiff-appellee,

vs.
JOSE GALLOFIN, Collector of Customs, Cebu Port, defendant-appellant.

Manuel A. Zoza for appellee.

First Assistant Solicitor General Guillermo E. Torres and Solicitors Frine C. Zaballero and Pedro
Ocampo for appellant.

REYES, J.B.L., J.:

This suit for mandatory injunction was instituted in the Court of First Instance of Cebu United
Enterprise to compel Jose Gallofin, as collector of Customs, Cebu Port, to release and deliver to
the plaintiff two imported shipments of 7,834 bales of over issue newspapers purchased by the
latter from the United States. As ancillary relief during the pendency of the action, the plaintiff
prayed for the issuance of a writ of preliminary mandatory injunction, which was granted by the
court after the plaintiff posted a bond in the amount of P60,000.00 in favor of the defendant.
Thereafter, the goods were released to the plaintiff, it appearing further that the advance sales
tax due on the same had been duly paid upon arrival of the merchandise at port.

The importation of the aforesaid shipments was made under and by virtue of an Import Control
Commission License No. 1225, issued by the defunct Import Control Commission. Under the
terms of the license, the plaintiff could import, on a no-dollar remittance basis, over issue
newspapers up to the amount or value of $118,000.00.

The refusal of the defendant to deliver the imported items is premised on his contention that
while the five bills of lading covering the two shipments of the over issue newspapers were all
dated at Los Angeles, U.S.A. December 17, 1953, or one day before the expiration of the import
license in question, the vessels M/S VENTURA and M/S BATAAN, carrying on board the said
merchandise, actually left the ports of embarkation, Los Angeles, and San Francisco, on January
12 and January 16, 1954 respectively. Hence, according to the defendant, the importation must
be considered as having been made without a valid import license, because under the
regulations issued by the Central Bank and the Monetary Board, "all shipments that left the port
of origin after June 30, 1953, and are covered by ICC licenses, may be released by the Bureau of
Customs without the need of a Central Bank release certificate; provided they left the port of
origin within the period of validity of the licenses". No Central Bank certificate for the release of
the goods having been shown or presented to the defendant, the latter refused to make the
delivery.

The lower court was thus conformed with the issue of determining whether the valid period of
the license in question should be counted up to the time when the vessels carrying the imported
items left the ports of origin on January 12 and January 16, 1954, or when the corresponding bills
of lading were dated, or December 17, 1953. The court chose the latter date, and held:

In view therefore, this Court pronounces judgment making writ of preliminary mandatory
injunction issued against defendant permanent, with orders for the cancellation of
plaintiff's bond, this after whatever advance sales tax or any taxes, surcharges and so
forth might be due on the goods shall have been paid, without costs.

The defendant appealed to the Court of Appeals. The question raised, however, being purely one
of law, the appeal was certified to us pursuant to a resolution of said court dated July 19, 1957.
The appeal has no merit.
The authority of the appellee to import was contained in the Import Control Commission License
No. 17225, validated on June 18, 1953, and under Resolution 70 of the Commission (adopted
March 27, 1952), the same had a six-month period of validity counted from the said date June 18,
1953. This license states, among other conditions, that

Commodities covered by this license must be shipped from the country of origin before the
expiry date of the license, and are subject to sec. 13 of Republic Act. No. 650.

Although Republic Act No. 650, creating the Import Control Commission, expired on July 31, 1953,
it is to be conceded that its duly executed acts can have valid effects even beyond the life span
of said governmental agency.

What is important to consider only is the legal connotation of the word "shipped" as the term was
used in the license. Defendant maintains that it is when the vessel leaves the port of
embarkation, while plaintiff holds that it is the dates of the bills of lading, which are usually
issued after the cargo is placed on board the vessel. The date of the shipment is the date when
the goods for dispatch are loaded on board the vessel, and not necessarily when the ship puts to
sea, is clearly implied from our ruling in the case of U.S Tobacco Corporation vs. Rufino Luna, et
al., (87 Phil., 4), wherein we said:

By section 6 of Act No. 426, all goods including leaf tobacco have been placed under
control. Petitioner's merchandise left the port of departure before the passage of that Act
but arrived in Manila after its approval. For the purpose of enforcing or applying said
section 6, there can only be one date of importation. Which was the date? The date the
goods were ordered, the date they were put on board vessel, or the date they reached the
port of destination? We are of the opinion that the date of importation is the date of
shipment and not the date of Arrival in Manila. (Emphasis supplied)

The issuance of the bill of lading, furthermore, presupposes or carries the presumption that the
goods were delivered to the carrier for immediate shipment (13 C.J.S. sec. 123 (2), p. 235, and
cases cited therein). It does not appear here that the bill of lading specified any designated day
on which the vessel were to lift anchor, nor was it shown that plaintiff had any knowledge that
the vessel M/S VENTURA and M/S BATAAN were not to depart soon after he placed his cargo on
board and the corresponding bills of lading issued to him. From this latter time, the goods in
contemplation of law, are deemed already in transit (New Civil Code, Arts. 1531 and 1736).

It should also be considered that it is entirely outside the shipper's hands to fix the dates of
departure, route or arrival of a vessel (unless he charters the whole ship [see Art. 656, Code of
Commerce]).

Defendant's reliance upon Central Bank regulations that the shipment licensed must have "left
the port of origin within the period of validity of the "license" is not maintainable in the present
case, because the regulations came onto effect only on July 1, 1953 already after issuance of the
appellee' license and cannot be read into the same.

The Solicitor General's contention that, assuming the six months are counted up to the date the
imports goods were placed on board the vessels for shipment the period of validity had likewise
already elapsed because, legally six months mean 180 days, which in this case expired on
December 15, cannot now be entertained because the defendant-appellant, under paragraph 3
of his answer to the Complaint, expressly admitted that the date appearing on the bills of lading
(December 17, 1953) as the date of loading on board the vessels "is one day before the
expiration of the validity of the import license". What he only questioned in the court below is the
legal connotation of the word "shipped" under the import license.

In the light of the resolution we have taken on the main issue, it becomes unnecessary for us to
dwell further upon the other questions raised by the parties.

Wherefore, the appeal should be dismissed and the judgment of the lower court affirmed. So
rendered.
Cebu United Enterprises v. Gallofin, 106 Phil 491 (1959)

FACTS:

Cebu United Enterprises has import license to purchase over issue newspaper from the US.
However, this license expired on Dec. 16, or one day before the date of the importation of the
items. Gallofin, the collector of customs, refused to deliver the imported items on the ground that
Cebu United Enterprises was importing goods without a valid license.

ISSUE:

W/N duly executed acts of a governmental agency can have valid effects even beyond the life
span of said agency

HELD:

Although RA 650 creating the Import Control Commission (ICC) expired on July 31, it is to be
conceded that its duly executed acts can have valid effects even beyond the life span of said
government agency. The ICC who issued the license was abolished yet, the LICENSE was
extended, the latter has still its valid effects.
FIRST DIVISION

[G.R. No. 138334. August 25, 2003]

ESTELA L. CRISOSTOMO, petitioner, vs. THE COURT OF APPEALS and CARAVAN TRAVEL
& TOURS INTERNATIONAL, INC., respondents.

DECISION

YNARES-SANTIAGO, J.:

In May 1991, petitioner Estela L. Crisostomo contracted the services of respondent Caravan
Travel and Tours International, Inc. to arrange and facilitate her booking, ticketing and
accommodation in a tour dubbed Jewels of Europe. The package tour included the countries of
England, Holland, Germany, Austria, Liechstenstein, Switzerland and France at a total cost of
P74,322.70. Petitioner was given a 5% discount on the amount, which included airfare, and the
booking fee was also waived because petitioners niece, Meriam Menor, was respondent
companys ticketing manager.

Pursuant to said contract, Menor went to her aunts residence on June 12, 1991 a Wednesday
to deliver petitioners travel documents and plane tickets. Petitioner, in turn, gave Menor the full
payment for the package tour. Menor then told her to be at the Ninoy Aquino International Airport
(NAIA) on Saturday, two hours before her flight on board British Airways.

Without checking her travel documents, petitioner went to NAIA on Saturday, June 15, 1991,
to take the flight for the first leg of her journey from Manila to Hongkong. To petitioners dismay,
she discovered that the flight she was supposed to take had already departed the previous
day. She learned that her plane ticket was for the flight scheduled on June 14, 1991. She thus
called up Menor to complain.

Subsequently, Menor prevailed upon petitioner to take another tour the British Pageant which
included England, Scotland and Wales in its itinerary. For this tour package, petitioner was asked
anew to pay US$785.00 or P20,881.00 (at the then prevailing exchange rate of P26.60). She
gave respondent US$300 or P7,980.00 as partial payment and commenced the trip in July 1991.
 Upon petitioners return from Europe, she demanded from respondent the reimbursement of
P61,421.70, representing the difference between the sum she paid for Jewels of Europe and the
amount she owed respondent for the British Pageant tour. Despite several demands, respondent
company refused to reimburse the amount, contending that the same was non-refundable.
[1]
Petitioner was thus constrained to file a complaint against respondent for breach of contract of
carriage and damages, which was docketed as Civil Case No. 92-133 and raffled to Branch 59 of
the Regional Trial Court of Makati City.

In her complaint,[2] petitioner alleged that her failure to join Jewels of Europe was due to
respondents fault since it did not clearly indicate the departure date on the plane
ticket.Respondent was also negligent in informing her of the wrong flight schedule through its
employee Menor. She insisted that the British Pageant was merely a substitute for the Jewels of
Europe tour, such that the cost of the former should be properly set-off against the sum paid for
the latter.

For its part, respondent company, through its Operations Manager, Concepcion Chipeco,
denied responsibility for petitioners failure to join the first tour. Chipeco insisted that petitioner
was informed of the correct departure date, which was clearly and legibly printed on the plane
ticket. The travel documents were given to petitioner two days ahead of the scheduled
trip.Petitioner had only herself to blame for missing the flight, as she did not bother to read or
confirm her flight schedule as printed on the ticket.

Respondent explained that it can no longer reimburse the amount paid for Jewels of Europe,
considering that the same had already been remitted to its principal in Singapore, Lotus Travel
Ltd., which had already billed the same even if petitioner did not join the tour. Lotus European
tour organizer, Insight International Tours Ltd., determines the cost of a package tour based on a
minimum number of projected participants. For this reason, it is accepted industry practice to
disallow refund for individuals who failed to take a booked tour. [3]

Lastly, respondent maintained that the British Pageant was not a substitute for the package
tour that petitioner missed. This tour was independently procured by petitioner after realizing
that she made a mistake in missing her flight for Jewels of Europe. Petitioner was allowed to
make a partial payment of only US$300.00 for the second tour because her niece was then an
employee of the travel agency. Consequently, respondent prayed that petitioner be ordered to
pay the balance of P12,901.00 for the British Pageant package tour.

After due proceedings, the trial court rendered a decision, [4] the dispositive part of which
reads:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Ordering the defendant to return and/or refund to the plaintiff the amount of Fifty
Three Thousand Nine Hundred Eighty Nine Pesos and Forty Three Centavos
(P53,989.43) with legal interest thereon at the rate of twelve percent (12%) per
annum starting January 16, 1992, the date when the complaint was filed;

2. Ordering the defendant to pay the plaintiff the amount of Five Thousand (P5,000.00)
Pesos as and for reasonable attorneys fees;

3. Dismissing the defendants counterclaim, for lack of merit; and

4. With costs against the defendant.

SO ORDERED.[5]

The trial court held that respondent was negligent in erroneously advising petitioner of her
departure date through its employee, Menor, who was not presented as witness to rebut
petitioners testimony. However, petitioner should have verified the exact date and time of
departure by looking at her ticket and should have simply not relied on Menors verbal
representation. The trial court thus declared that petitioner was guilty of contributory negligence
and accordingly, deducted 10% from the amount being claimed as refund.

Respondent appealed to the Court of Appeals, which likewise found both parties to be at
fault. However, the appellate court held that petitioner is more negligent than respondent
because as a lawyer and well-traveled person, she should have known better than to simply rely
on what was told to her. This being so, she is not entitled to any form of damages. Petitioner also
forfeited her right to the Jewels of Europe tour and must therefore pay respondent the balance of
the price for the British Pageant tour. The dispositive portion of the judgment appealed from
reads as follows:

WHEREFORE, premises considered, the decision of the Regional Trial Court dated October 26,
1995 is hereby REVERSED and SET ASIDE. A new judgment is hereby ENTERED requiring the
plaintiff-appellee to pay to the defendant-appellant the amount of P12,901.00, representing the
balance of the price of the British Pageant Package Tour, the same to earn legal interest at the
rate of SIX PERCENT (6%) per annum, to be computed from the time the counterclaim was filed
until the finality of this decision. After this decision becomes final and executory, the rate of
TWELVE PERCENT (12%) interest per annum shall be additionally imposed on the total obligation
until payment thereof is satisfied. The award of attorneys fees is DELETED. Costs against the
plaintiff-appellee.

SO ORDERED.[6]

Upon denial of her motion for reconsideration, [7] petitioner filed the instant petition under
Rule 45 on the following grounds:

It is respectfully submitted that the Honorable Court of Appeals committed a reversible error in
reversing and setting aside the decision of the trial court by ruling that the petitioner is not
entitled to a refund of the cost of unavailed Jewels of Europe tour she being equally, if not more,
negligent than the private respondent, for in the contract of carriage the common carrier is
obliged to observe utmost care and extra-ordinary diligence which is higher in degree than the
ordinary diligence required of the passenger. Thus, even if the petitioner and private respondent
were both negligent, the petitioner cannot be considered to be equally, or worse, more guilty
than the private respondent. At best, petitioners negligence is only contributory while the private
respondent [is guilty] of gross negligence making the principle of pari delicto inapplicable in the
case;

II

The Honorable Court of Appeals also erred in not ruling that the Jewels of Europe tour was not
indivisible and the amount paid therefor refundable;

III

The Honorable Court erred in not granting to the petitioner the consequential damages due her
as a result of breach of contract of carriage. [8]

Petitioner contends that respondent did not observe the standard of care required of a
common carrier when it informed her wrongly of the flight schedule. She could not be deemed
more negligent than respondent since the latter is required by law to exercise extraordinary
diligence in the fulfillment of its obligation. If she were negligent at all, the same is merely
contributory and not the proximate cause of the damage she suffered. Her loss could only be
attributed to respondent as it was the direct consequence of its employees gross negligence.

Petitioners contention has no merit.

 By definition, a contract of carriage or transportation is one whereby a certain person or
association of persons obligate themselves to transport persons, things, or news from one place
to another for a fixed price.[9] Such person or association of persons are regarded as carriers and
are classified as private or special carriers and common or public carriers. [10] A common carrier is
defined under Article 1732 of the Civil Code as persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both, by land, water
or air, for compensation, offering their services to the public.

It is obvious from the above definition that respondent is not an entity engaged in the
business of transporting either passengers or goods and is therefore, neither a private nor a
common carrier. Respondent did not undertake to transport petitioner from one place to another
since its covenant with its customers is simply to make travel arrangements in their behalf.
Respondents services as a travel agency include procuring tickets and facilitating travel permits
or visas as well as booking customers for tours.

While petitioner concededly bought her plane ticket through the efforts of respondent
company, this does not mean that the latter ipso facto is a common carrier. At most, respondent
acted merely as an agent of the airline, with whom petitioner ultimately contracted for her
carriage to Europe. Respondents obligation to petitioner in this regard was simply to see to it that
petitioner was properly booked with the airline for the appointed date and time. Her transport to
the place of destination, meanwhile, pertained directly to the airline.

The object of petitioners contractual relation with respondent is the latters service
of arranging and facilitating petitioners booking, ticketing and accommodation in the package
tour. In contrast, the object of a contract of carriage is the transportation of passengers or
goods. It is in this sense that the contract between the parties in this case was an ordinary one
for services and not one of carriage. Petitioners submission is premised on a wrong assumption.

The nature of the contractual relation between petitioner and respondent is determinative of
the degree of care required in the performance of the latters obligation under the contract. For
reasons of public policy, a common carrier in a contract of carriage is bound by law to carry
passengers as far as human care and foresight can provide using the utmost diligence of very
cautious persons and with due regard for all the circumstances. [11] As earlier stated, however,
respondent is not a common carrier but a travel agency. It is thus not bound under the law to
observe extraordinary diligence in the performance of its obligation, as petitioner claims.

Since the contract between the parties is an ordinary one for services, the standard of care
required of respondent is that of a good father of a family under Article 1173 of the Civil Code.
[12]
This connotes reasonable care consistent with that which an ordinarily prudent person would
have observed when confronted with a similar situation. The test to determine whether
negligence attended the performance of an obligation is: did the defendant in doing the alleged
negligent act use that reasonable care and caution which an ordinarily prudent person would
have used in the same situation? If not, then he is guilty of negligence. [13]

In the case at bar, the lower court found Menor negligent when she allegedly informed
petitioner of the wrong day of departure. Petitioners testimony was accepted as indubitable
evidence of Menors alleged negligent act since respondent did not call Menor to the witness
stand to refute the allegation. The lower court applied the presumption under Rule 131, Section 3
(e)[14] of the Rules of Court that evidence willfully suppressed would be adverse if produced and
thus considered petitioners uncontradicted testimony to be sufficient proof of her claim.

On the other hand, respondent has consistently denied that Menor was negligent and
maintains that petitioners assertion is belied by the evidence on record. The date and time of
departure was legibly written on the plane ticket and the travel papers were delivered two days
in advance precisely so that petitioner could prepare for the trip. It performed all its obligations
to enable petitioner to join the tour and exercised due diligence in its dealings with the latter.

We agree with respondent.

 Respondents failure to present Menor as witness to rebut petitioners testimony could not
give rise to an inference unfavorable to the former. Menor was already working in France at the
time of the filing of the complaint,[15] thereby making it physically impossible for respondent to
present her as a witness. Then too, even if it were possible for respondent to secure Menors
testimony, the presumption under Rule 131, Section 3(e) would still not apply. The opportunity
and possibility for obtaining Menors testimony belonged to both parties, considering that Menor
was not just respondents employee, but also petitioners niece. It was thus error for the lower
court to invoke the presumption that respondent willfully suppressed evidence under Rule 131,
Section 3(e). Said presumption would logically be inoperative if the evidence is not intentionally
omitted but is simply unavailable, or when the same could have been obtained by both parties.
[16]

In sum, we do not agree with the finding of the lower court that Menors negligence concurred
with the negligence of petitioner and resultantly caused damage to the latter. Menors negligence
was not sufficiently proved, considering that the only evidence presented on this score was
petitioners uncorroborated narration of the events. It is well-settled that the party alleging a fact
has the burden of proving it and a mere allegation cannot take the place of evidence. [17] If the
plaintiff, upon whom rests the burden of proving his cause of action, fails to show in a
satisfactory manner facts upon which he bases his claim, the defendant is under no obligation to
prove his exception or defense.[18]

Contrary to petitioners claim, the evidence on record shows that respondent exercised due
diligence in performing its obligations under the contract and followed standard procedure in
rendering its services to petitioner. As correctly observed by the lower court, the plane
ticket[19] issued to petitioner clearly reflected the departure date and time, contrary to petitioners
contention. The travel documents, consisting of the tour itinerary, vouchers and instructions,
were likewise delivered to petitioner two days prior to the trip. Respondent also properly booked
petitioner for the tour, prepared the necessary documents and procured the plane tickets. It
arranged petitioners hotel accommodation as well as food, land transfers and sightseeing
excursions, in accordance with its avowed undertaking.

Therefore, it is clear that respondent performed its prestation under the contract as well as
everything else that was essential to book petitioner for the tour. Had petitioner exercised due
diligence in the conduct of her affairs, there would have been no reason for her to miss the flight.
Needless to say, after the travel papers were delivered to petitioner, it became incumbent upon
her to take ordinary care of her concerns. This undoubtedly would require that she at least read
the documents in order to assure herself of the important details regarding the trip.

The negligence of the obligor in the performance of the obligation renders him liable for
damages for the resulting loss suffered by the obligee. Fault or negligence of the obligor consists
in his failure to exercise due care and prudence in the performance of the obligation as the
nature of the obligation so demands. [20] There is no fixed standard of diligence applicable to each
and every contractual obligation and each case must be determined upon its particular facts. The
degree of diligence required depends on the circumstances of the specific obligation and whether
one has been negligent is a question of fact that is to be determined after taking into account
the particulars of each case.[21]

The lower court declared that respondents employee was negligent. This factual finding,
however, is not supported by the evidence on record. While factual findings below are generally
conclusive upon this court, the rule is subject to certain exceptions, as when the trial court
overlooked, misunderstood, or misapplied some facts or circumstances of weight and substance
which will affect the result of the case. [22]

In the case at bar, the evidence on record shows that respondent company performed its
duty diligently and did not commit any contractual breach. Hence, petitioner cannot recover and
must bear her own damage.

WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of
Appeals in CA-G.R. CV No. 51932 is AFFIRMED. Accordingly, petitioner is ordered to pay
respondent the amount of P12,901.00 representing the balance of the price of the British
Pageant Package Tour, with legal interest thereon at the rate of 6% per annum, to be computed
from the time the counterclaim was filed until the finality of this Decision. After this Decision
becomes final and executory, the rate of 12% per annum shall be imposed until the obligation is
fully settled, this interim period being deemed to be by then an equivalent to a forbearance of
credit.[23]

SO ORDERED.

Crisostomo vs. CA, 258 SCRA 134 (1996)

FACTS:

Crisostomo was appointed the President of the Philippine College of Commerce (PCC) by the
President of the Philippines. During his incumbency, two administrative charges were filed
against him for illegal use of government vehicles, misappropriation of construction materials,
oppression and harassment, grave misconduct, nepotism and dishonesty before the Office of the
President. Likewise, he was also charged with violation of Anti-Grant and Corrupt Practices Act
with the Tanodbayan. As such, he was preventively suspended and Dr. Mateo was designated as
the officer-in-charge in his place. Meanwhile, Pres. Marcos passed PD 1341 converting PCC into
PUP with Mateo as President. Crisostomo was later acquitted and his administrative charges were
dismissed.

ISSUE:

Did PD 1314 abolish PCC?

HELD:

PD 1314 did not abolish, but only changed the PCC into what is now PUP. What took place was a
change in the academic status of the educational institution, not in its corporate life. Hence, the
change in its name, the expansion of its curriculum offerings and changes in its structure and
organization.
As a general rule, when the purpose of the lawmaking authority is to abolish the office and
create a new one, he says so. In the instant case, PD 1314 merely states that PCC is converted
into the PUP. In addition, the law does not state that the lands, buildings and equipment owned
by the PCC were being transferred to the PUP but only that they stand transferred to it.
Stand transferred simply means, for example, that lands transferred to the PCC were to be
understood as transferred to the PUP as the new name of the institution.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 115863 March 31, 1995

AIDA D. EUGENIO, petitioner,

vs.
CIVIL SERVICE COMMISSION, HON. TEOFISTO T. GUINGONA, JR. & HON. SALVADOR
ENRIQUEZ, JR., respondents.

PUNO, J.:

The power of the Civil Service Commission to abolish the Career Executive Service Board is
challenged in this petition for certiorari and prohibition.

First the facts. Petitioner is the Deputy Director of the Philippine Nuclear Research Institute. She
applied for a Career Executive Service (CES) Eligibility and a CESO rank on August 2, 1993, she
was given a CES eligibility. On September 15, 1993, she was recommended to the President for a
CESO rank by the Career Executive Service Board. 1
All was not to turn well for petitioner. On October 1, 1993, respondent Civil Service
Commission 2 passed Resolution No. 93-4359, viz:

RESOLUTION NO. 93-4359

WHEREAS, Section 1(1) of Article IX-B provides that Civil Service shall be
administered by the Civil Service Commission, . . .;

WHEREAS, Section 3, Article IX-B of the 1987 Philippine Constitution provides that
"The Civil Service Commission, as the central personnel agency of the government,
is mandated to establish a career service and adopt measures to promote morale,
efficiency, integrity, responsiveness, progresiveness and courtesy in the civil
service, . . .";

WHEREAS, Section 12 (1), Title I, Subtitle A, Book V of the Administrative Code of

1987 grants the Commission the power, among others, to administer and enforce
the constitutional and statutory provisions on the merit system for all levels and
ranks in the Civil Service;

WHEREAS, Section 7, Title I, Subtitle A, Book V of the Administrative Code of 1987

Provides, among others, that The Career Service shall be characterized by (1)
entrance based on merit and fitness to be determined as far as practicable by
competitive examination, or based highly technical qualifications; (2) opportunity
for advancement to higher career positions; and (3) security of tenure;

WHEREAS, Section 8 (c), Title I, Subtitle A, Book V of the administrative Code of

1987 provides that "The third level shall cover Positions in the Career Executive
Service";

WHEREAS, the Commission recognizes the imperative need to consolidate, integrate

and unify the administration of all levels of positions in the career service.

WHEREAS, the provisions of Section 17, Title I, Subtitle A. Book V of the

Administrative Code of 1987 confers on the Commission the power and authority to
effect changes in its organization as the need arises.

WHEREAS, Section 5, Article IX-A of the Constitution provides that the Civil Service
Commission shall enjoy fiscal autonomy and the necessary implications thereof;

NOW THEREFORE, foregoing premises considered, the Civil Service Commission

hereby resolves to streamline reorganize and effect changes in its organizational
structure. Pursuant thereto, the Career Executive Service Board, shall now be known
as the Office for Career Executive Service of the Civil Service Commission.
Accordingly, the existing personnel, budget, properties and equipment of the Career
Executive Service Board shall now form part of the Office for Career Executive
Service.

The above resolution became an impediment. to the appointment of petitioner as Civil Service
Officer, Rank IV. In a letter to petitioner, dated June 7, 1994, the Honorable Antonio T. Carpio,
Chief Presidential legal Counsel, stated:

xxx xxx xxx

On 1 October 1993 the Civil Service Commission issued CSC Resolution No. 93-4359
which abolished the Career Executive Service Board.

Several legal issues have arisen as a result of the issuance of CSC Resolution No.
93-4359, including whether the Civil Service Commission has authority to abolish
the Career Executive Service Board. Because these issues remain unresolved, the
 Office of the President has refrained from considering appointments of career
service eligibles to career executive ranks.

xxx xxx xxx

You may, however, bring a case before the appropriate court to settle the legal
issues arising from issuance by the Civil Service Commission of CSC Resolution No.
93-4359, for guidance of all concerned.

Thank You.

Finding herself bereft of further administrative relief as the Career Executive Service Board which
recommended her CESO Rank IV has been abolished, petitioner filed the petition at bench to
annul, among others, resolution No. 93-4359. The petition is anchored on the following
arguments:

A.

IN VIOLATION OF THE CONSTITUTION, RESPONDENT COMMISSION USURPED THE

LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT ABOLISHED THE CESB, AN OFFICE
CREATED BY LAW, THROUGH THE ISSUANCE OF CSC: RESOLUTION NO. 93-4359;

B.

ALSO IN VIOLATION OF THE CONSTITUTION, RESPONDENT CSC USURPED THE

LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT ILLEGALLY AUTHORIZED THE
TRANSFER OF PUBLIC MONEY, THROUGH THE ISSUANCE OF CSC RESOLUTION NO.
93-4359.

Required to file its Comment, the Solicitor General agreed with the contentions of petitioner.
Respondent Commission, however, chose to defend its ground. It posited the following position:

ARGUMENTS FOR PUBLIC RESPONDENT-CSC

I. THE INSTANT PETITION STATES NO CAUSE OF ACTION AGAINST THE PUBLIC

RESPONDENT-CSC.

II. THE RECOMMENDATION SUBMITTED TO THE PRESIDENT FOR APPOINTMENT TO A

CESO RANK OF PETITIONER EUGENIO WAS A VALID ACT OF THE CAREER EXECUTIVE
SERVICE BOARD OF THE CIVIL SERVICE COMMISSION AND IT DOES NOT HAVE ANY
DEFECT.

III. THE OFFICE OF THE PRESIDENT IS ESTOPPED FROM QUESTIONING THE VALIDITY
OF THE RECOMMENDATION OF THE CESB IN FAVOR OF PETITIONER EUGENIO SINCE
THE PRESIDENT HAS PREVIOUSLY APPOINTED TO CESO RANK FOUR (4) OFFICIALS
SIMILARLY SITUATED AS SAID PETITIONER. FURTHERMORE, LACK OF MEMBERS TO
CONSTITUTE A QUORUM. ASSUMING THERE WAS NO QUORUM, IS NOT THE FAULT OF
PUBLIC RESPONDENT CIVIL SERVICE COMMISSION BUT OF THE PRESIDENT WHO
HAS THE POWER TO APPOINT THE OTHER MEMBERS OF THE CESB.

IV. THE INTEGRATION OF THE CESB INTO THE COMMISSION IS AUTHORIZED BY LAW
(Sec. 12 (1), Title I, Subtitle A, Book V of the Administrative Code of the 1987). THIS
PARTICULAR ISSUE HAD ALREADY BEEN SETTLED WHEN THE HONORABLE COURT
DISMISSED THE PETITION FILED BY THE HONORABLE MEMBERS OF THE HOUSE OF
REPRESENTATIVES, NAMELY: SIMEON A. DATUMANONG, FELICIANO R. BELMONTE, JR.,
RENATO V. DIAZ, AND MANUEL M. GARCIA IN G.R. NO. 114380. THE
AFOREMENTIONED PETITIONERS ALSO QUESTIONED THE INTEGRATION OF THE
CESB WITH THE COMMISSION.
We find merit in the petition. 3

The controlling fact is that the Career Executive Service Board (CESB) was created in the
Presidential Decree (P.D.) No. 1 on September 1, 1974 4 which adopted the Integrated Plan.
Article IV, Chapter I, Part of the III of the said Plan provides:

Article IV Career Executive Service

1. A Career Executive Service is created to form a continuing pool of well-selected

and development oriented career administrators who shall provide competent and
faithful service.

2. A Career Executive Service hereinafter referred to in this Chapter as the Board, is

created to serve as the governing body of the Career Executive Service. The Board
shall consist of the Chairman of the Civil Service Commission as presiding officer,
the Executive Secretary and the Commissioner of the Budget as ex-officio members
and two other members from the private sector and/or the academic community
who are familiar with the principles and methods of personnel administration.

xxx xxx xxx

5. The Board shall promulgate rules, standards and procedures on the selection,
classification, compensation and career development of members of the Career
Executive Service. The Board shall set up the organization and operation of the
service. (Emphasis supplied)

It cannot be disputed, therefore, that as the CESB was created by law, it can only be abolished by
the legislature. This follows an unbroken stream of rulings that the creation and abolition of
public offices is primarily a legislative function. As aptly summed up in AM JUR 2d on Public
Officers and
5
Employees, viz:

Except for such offices as are created by the Constitution, the creation of public
offices is primarily a legislative function. In so far as the legislative power in this
respect is not restricted by constitutional provisions, it supreme, and the legislature
may decide for itself what offices are suitable, necessary, or convenient. When in
the exigencies of government it is necessary to create and define duties, the
legislative department has the discretion to determine whether additional offices
shall be created, or whether these duties shall be attached to and become ex-
officio duties of existing offices. An office created by the legislature is wholly within
the power of that body, and it may prescribe the mode of filling the office and the
powers and duties of the incumbent, and if it sees fit, abolish the office.

In the petition at bench, the legislature has not enacted any law authorizing the abolition of the
CESB. On the contrary, in all the General Appropriations Acts from 1975 to 1993, the legislature
has set aside funds for the operation of CESB. Respondent Commission, however, invokes
Section 17, Chapter 3, Subtitle A. Title I, Book V of the Administrative Code of 1987 as the source
of its power to abolish the CESB. Section 17 provides:

Sec. 17. Organizational Structure. Each office of the Commission shall be headed
by a Director with at least one Assistant Director, and may have such divisions as
are necessary independent constitutional body, the Commission may effect changes
in the organization as the need arises.

But as well pointed out by petitioner and the Solicitor General, Section 17 must be read together
with Section 16 of the said Code which enumerates the offices under the respondent
Commission, viz:
Sec. 16. Offices in the Commission. The Commission shall have the following
offices:

(1) The Office of the Executive Director headed by an Executive Director, with a
Deputy Executive Director shall implement policies, standards, rules and regulations
promulgated by the Commission; coordinate the programs of the offices of the
Commission and render periodic reports on their operations, and perform such other
functions as may be assigned by the Commission.

(2) The Merit System Protection Board composed of a Chairman and two (2)
members shall have the following functions:

xxx xxx xxx

(3) The Office of Legal Affairs shall provide the Chairman with legal advice and
assistance; render counselling services; undertake legal studies and researches;
prepare opinions and ruling in the interpretation and application of the Civil Service
law, rules and regulations; prosecute violations of such law, rules and regulations;
and represent the Commission before any court or tribunal.

(4) The Office of Planning and Management shall formulate development plans,
programs and projects; undertake research and studies on the different aspects of
public personnel management; administer management improvement programs;
and provide fiscal and budgetary services.

(5) The Central Administrative Office shall provide the Commission with personnel,
financial, logistics and other basic support services.

(6) The Office of Central Personnel Records shall formulate and implement policies,
standards, rules and regulations pertaining to personnel records maintenance,
security, control and disposal; provide storage and extension services; and provide
and maintain library services.

(7) The Office of Position Classification and Compensation shall formulate and
implement policies, standards, rules and regulations relative to the administration of
position classification and compensation.

(8) The Office of Recruitment, Examination and Placement shall provide leadership
and assistance in developing and implementing the overall Commission programs
relating to recruitment, execution and placement, and formulate policies, standards,
rules and regulations for the proper implementation of the Commission's
examination and placement programs.

(9) The Office of Career Systems and Standards shall provide leadership and
assistance in the formulation and evaluation of personnel systems and standards
relative to performance appraisal, merit promotion, and employee incentive benefit
and awards.

(10) The Office of Human Resource Development shall provide leadership and
assistance in the development and retention of qualified and efficient work force in
the Civil Service; formulate standards for training and staff development; administer
service-wide scholarship programs; develop training literature and materials;
coordinate and integrate all training activities and evaluate training programs.

(11) The Office of Personnel Inspection and Audit shall develop policies, standards,
rules and regulations for the effective conduct or inspection and audit personnel
and personnel management programs and the exercise of delegated authority;
provide technical and advisory services to Civil Service Regional Offices and
 government agencies in the implementation of their personnel programs and
evaluation systems.

(12) The Office of Personnel Relations shall provide leadership and assistance in the
development and implementation of policies, standards, rules and regulations in the
accreditation of employee associations or organizations and in the adjustment and
settlement of employee grievances and management of employee disputes.

(13) The Office of Corporate Affairs shall formulate and implement policies,
standards, rules and regulations governing corporate officials and employees in the
areas of recruitment, examination, placement, career development, merit and
awards systems, position classification and compensation, performing appraisal,
employee welfare and benefit, discipline and other aspects of personnel
management on the basis of comparable industry practices.

(14) The Office of Retirement Administration shall be responsible for the

enforcement of the constitutional and statutory provisions, relative to retirement
and the regulation for the effective implementation of the retirement of government
officials and employees.

(15) The Regional and Field Offices. The Commission shall have not less than
thirteen (13) Regional offices each to be headed by a Director, and such field offices
as may be needed, each to be headed by an official with at least the rank of an
Assistant Director.

As read together, the inescapable conclusion is that respondent Commission's power to

reorganize is limited to offices under its control as enumerated in Section 16, supra. From
its inception, the CESB was intended to be an autonomous entity, albeit administratively
attached to respondent Commission. As conceptualized by the Reorganization Committee
"the CESB shall be autonomous. It is expected to view the problem of building up
executive manpower in the government with a broad and positive outlook." 6 The essential
autonomous character of the CESB is not negated by its attachment to respondent
Commission. By said attachment, CESB was not made to fall within the control of
respondent Commission. Under the Administrative Code of 1987, the purpose of attaching
one functionally inter-related government agency to another is to attain "policy and
program coordination." This is clearly etched out in Section 38(3), Chapter 7, Book IV of
the aforecited Code, to wit:

(3) Attachment. (a) This refers to the lateral relationship between the department
or its equivalent and attached agency or corporation for purposes of policy and
program coordination. The coordination may be accomplished by having the
department represented in the governing board of the attached agency or
corporation, either as chairman or as a member, with or without voting rights, if this
is permitted by the charter; having the attached corporation or agency comply with
a system of periodic reporting which shall reflect the progress of programs and
projects; and having the department or its equivalent provide general policies
through its representative in the board, which shall serve as the framework for the
internal policies of the attached corporation or agency.

Respondent Commission also relies on the case of Datumanong, et al., vs. Civil Service
Commission, G. R. No. 114380 where the petition assailing the abolition of the CESB was
dismissed for lack of cause of action. Suffice to state that the reliance is misplaced considering
that the cited case was dismissed for lack of standing of the petitioner, hence, the lack of cause
of action.

IN VIEW WHEREOF, the petition is granted and Resolution No. 93-4359 of the respondent
Commission is hereby annulled and set aside. No costs.

SO ORDERED.
Eugenio vs. CSC, 243 SCRA 196 (1995)

FACTS:

Eugenio, the Deputy Director of Philippine Nuclear Research Institute, applied for a Career
Executive Service (CES) Eligibility and a CESO rank. But before she got the rank, the CSC passed
Resolution No. 93-459, reorganizing itself and changing the CES Board (CESB) to Office for Career
Executive Service of the Civil Service Commission (OCES).

ISSUE:

W/N CSC usurped legislative function of Congress by abolishing the CESB and transferring its
budget to OCES

HELD:

CESB was created by PD 1. It cannot be disputed, therefore, that as CESB was created by law, it
can only be abolished by the legislature. While CSC has the power to reorganize under Sec. 17,
Chap. 3, Subtitle A, Title I, Bk. V. of the Administrative Code of 1987, this must be read with sec.
16, which enumerates the offices under the control of the CSC. CESB is not one of such offices.

CESB was intended to be an autonomous entity, albeit administratively attached to CSC. This
essential autonomous character of the CESB is not negated by its attachment to respondent
Commission. By said attachment, CESB was not made to fall within the control of respondent
Commission. Under the Administrative Code of 1987, the purpose of attaching one functionally
inter-related government agency to another is to attain policy and program coordination.

EN BANC

[G.R. No. 112745. October 16, 1997]

AQUILINO T. LARIN, petitioner, vs. THE EXECUTIVE SECRETARY, SECRETARY OF

FINANCE, COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE AND THE
COMMITTEE CREATED TO INVESTIGATE THE ADMINISTRATIVE COMPLAINT
AGAINST AQUILINO T. LARIN, COMPOSED OF FRUMENCIO A. LAGUSTAN, JOSE B.
ALEJANDRINO and JAIME M. MAZA, respondents.
DECISION

TORRES, JR., J.:

Challenge in this petition is the validity of petitioners removal from service as Assistant
Commissioner of the Excise Tax Service of the Bureau of Internal Revenue. Incidentally, he
questions Memorandum order no. 164 issued by the Office of the President, which provides for
the creation of A Committee to Investigate the Administrative Complaint Against Aquilino T. Larin,
Assistant Commissioner, Bureau of Internal Revenue as well as the investigation made in
pursuance thereto and Administrative Order No. 101 dated December 2, 1993 which found him
guilty of grave misconduct in the administrative charge and imposed upon him the penalty of
dismissal from office.

Likewise, petitioner seeks to assail the legality of Executive Order No. 132, issued by
President Ramos on October 26, 1993, which provides for the Streamlining of the Bureau of
Internal Revenue, and of its implementing rules issued by the Bureau of Internal Revenue,
namely: a) Administrative Order No. 4-93, which provides for the Organizational Structure and
Statement of General Functions of Offices in the National Office and b) Administrative Order No.
5-93, which provides for Redefining the Areas of Jurisdiction and Renumbering of Regional And
District Offices.

The antecedent facts of the instant case as succinctly related by the Solicitor General are as
follows:

On September 18, 1992, [1] a decision was rendered by the Sandiganbayan convicting herein
petitioner Aquilino T. Larin, Revenue Specific Tax Officer, then Assistant Commisioner of the
Bureau of Internal Revenue and his co-accused (except Justino E. Galban, Jr.) of the crimes of
violation of Section 268 (4) of the National Internal Revenue Code and Section 3 (e) of R.A. 3019
in Criminal Cases Nos. 14208-14209, entitled People of the Philippines, Plaintiff vs. Aquilino T.
Larin, Teodoro T. Pareno, Justino E. Galban, Jr. and Potenciana N. Evangelista, Accused, the
dispositive portion of the judgment reads:

"WHEREFORE, judgment is now rendered in Criminal Cases Nos. 14208 and

14209 convicting accused Assistant Commissioner for Specific Tax Aquilino T.
Larin, Chief of the Alcohol tax Division TEODORO P. PARENO, and Chief of the
Revenue accounting Division POTENCIANA M. EVANGELISTA:

xxx

SO ORDERED.

The fact of petitioners conviction was reported to the President of the Philippines by the then
Acting Finance Secretary Leong through a memorandum dated June 4, 1993. The memorandum
states, inter alia:

This is a report in the case of Assistant Commissioner AQUILINO T. LARIN of the Excise tax
Service, Bureau of Internal Revenue, a presidential appointee, one of those convicted in
the Criminal Case Nos. 14208-14209, entitled People of the Philippines vs. Aquilino T.
Larin, et. al. Referred to the Department of Finace by the Commissioner of Internal
Revenue.

The cases against Pareno and Evangelista are being acted upon by the Bureau of Internal
revenue as they non-presidential appointees.

xxx

It is clear from the foregoing that Mr. Larin has found beyond reasonable doubt to have
committed acts constituting grave misconduct. Under the Civil Service Laws and Rules
 which require only preponderance of evidence, grave misconduct is punishable by
dismissal.

Acting by authority of the President, Sr. Deputy Executive Secretary Leonardo A. Quisumbing
issued Memorandum Order No. 164 dated August 25, 1993 which provides for the creation of an
Executive Committee to investigate the administrative charge against herein petitioner Aquilino
T. Larin. It states thus:

A Committee is hereby created to investigate the administrative complaint filed against

Aquilino T. Larin, Assistant Commissioner, Bureau of Internal Revenue, to be composed of:

Atty. Frumencio A. Lagustan Chairman

Assistant Executive Secretary for Legislation

Mr. Jose B. Alejandro Member

Presidential Assistant

Atty. Jaime M. Maza Member

Assistant commissioner of Inspector services

Bureau of Internal Revenue

The Committee shall have the powers and prerogatives of (an) investigating committee
under the administrative Code of 1987 including the power to summon witnesses,
administer oath or take testimony or evidence relevant to the investigation by subpoena
ad testificandum and subpoena duces tecum:

xxx

The Committee shall convene immediately, conduct the investigation in the most
expeditious manner, and terminate the same as soon as practicable from its first
scheduled date of hearing.

xxx

Consequently, the Committee directed the petitioner to respond to the administrative charge
leveled against him through a letter dated September 17, 1993, thus:

Presidential Memorandum Order No. 164 dated August 25, 1993, a xerox copy of which is
hereto attached for your ready reference, created an Investigation Committee to look into
the charges against you which are also the subject of the Criminal Cases No. 14208 and
14209 entitled People of the Philippines vs. Aquilino T. Larin, et. al.

The committee has its possession a certified true copy of the Decision of the
Sandiganbayan in the above-mentioned cases.

Pursuant to Presidential Memorandum Order No. 164, you are hereby directed to file your
position paper on the aforementioned charges within seven (7) days from receipt hereof
xxx.

Failure to file the required position paper shall be considered as a waiver on your part to
submit such paper or to be heard, in which case, the Committee shall deem the case
submitted on the basis of the documents and records at hand.
 In compliance, petitioner submitted a letter dated September 30, 1993 which was addressed
to Atty. Frumencio A. Lagustan , the Chairman of the Investigating Committee. In said latter, he
asserts that,

The case being sub-judice, I may not , therefore, comment on the merits of issues involved
for fear of being cited in contempt of Court. This position paper is thus limited to
furnishing the Committee pertinent documents submitted with the Supreme Court and
other tribunal which took cognizance of the case in the past, as follows:

xxx

The foregoing documents readily show that I am not administratively liable or criminally
culpable of the charges leveled against me, and that the aforesaid cases are mere
prosecutions caused to be filed and are being orchestrated by taxpayers who were
prejudiced by multi-million peso assessments I caused to be issued against them in my
official capacity as Assistant Commissioner, Excise Tax office of Bureau of Internal
Revenue.

In the same letter, petitioner claims that the administrative complaint against him is already
barred: a) on jurisdictional ground as the Office of the Ombudsman had already taken cognizance
of the case and had caused the filing only of the criminal charges against him, b) by res judicata,
c) double jeopardy, and d) because to proceed with the case would be redundant, oppressive and
a plain persecution against him.

Meanwhile, the President issued the challenged Executive order No. 132 dated October 26,
1993 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 or the Specific Tax Service, of
which petitioner was the Assistant Commissioner, was one of those offices that was abolished by
said executive order.

The corresponding implementing rules of Executive Order No. 132, namely, revenue
Administrative Orders Nos. 4-93 and 5-93, were subsequently issued .by the Bureau of Internal
Revenue.

On October 27, 1993, or one day after the promulgation of Executive Order No.132, the
President appointed the following as BIR Assistant Commissioners:

1. Bernardo A. Frianeza

2. Dominador L. Galura

3. Jaime D. Gonzales

4. Lilia C. Guillermo

5. Rizalina S. Magalona

6. Victorino C. Mamalateo

7. Jaime M. Masa

8. Antonio N. Pangilinan

9. Melchor S. Ramos

10. Joel L. Tan-Torres

 Consequently, the president, in the assailed Administrative Order No. 101 dated December 2,
1993, found petitioner guilty of grave misconduct in the administrative charge and imposed upon
him the penalty of dismissal with forfeiture of his leave credits and retirement benefits including
disqualification for reappointment in the government service.

Aggrieved, petitioner filed directly with this Court the instant petition on December 13, 1993
to question basically his alleged unlawful removal from office.

On April 17, 1996 and while the instant petition is pending, this Court set aside the conviction
of the petitioner in Criminal Case Nos. 14208 and 14209.

In his petition, petitioner challenged the authority of the President to dismiss him from office.
He argued that in so far as presidential appointees who are Career Executive Service Officers are
concerned, the President exercises only the power of control not the power to remove. He also
averred that the administrative investigation conducted under Memorandum Order No. 164 is
void as it violated his right to due process. According to him, the letter of the Committee dated
September 17, 1993 and his position paper dated September 30, 1993 are not sufficient for
purposes of complying with the requirements of due process. He alleged that he was not
informed of the administrative charges leveled against him nor was he given official notice of his
dismissal.

Petitioner likewise claimed that he was removed as a result of the reorganization made by
the Executive Department in the BIR pursuant to Executive Order No. 132. Thus, he assailed said
Executive Order No. 132 and its implementing rules, namely, Revenue Administrative Orders 4-
93 and 5-93 for being ultra vires. He claimed that there is yet no law enacted by Congress which
authorizes the reorganization by the Executive Department of executive agencies, particularly
the Bureau of Internal revenue. He said that the reorganization sought to be effected by the
Executive Department on the basis of E.O. No. 132 is tainted with bad faith in apparent violation
of Section 2 of R.A. 6656, otherwise known as the Act Protecting the Security of Tenure of Civil
Service Officers and Employees in the Implementation of Government Reorganization.

On the other hand, respondents contended that since petitioner is the presidential appointee,
he falls under the disciplining authority of the President. They also contended that E.O. No. 132
and its implementing rules were validly issued pursuant to Sections 48 and 62 of Republic Act
No. 7645. Apart from this, the other legal bases of E.O. No. 132 as stated in its preamble are
Section 63 of E.O No.127 (Reorganizing the Ministry of Finance), and Section 20, Book III of E.O.
No. 292, otherwise known as the Administrative Code of 1987. In addition, it is clear that in
Section 11 of R.A No.6656 future reorganization is expressly contemplated and nothing in said
law that prohibits subsequent reorganization through an executive order. Significantly,
respondents clarified that petitioner was not dismissed by virtue of EO 132. Respondents claimed
that he was removed from office because he was found guilty of grave misconduct in the
administrative cases filed against him.

The ultimate issue to be resolved in the instant case falls on the determination of the validity
of petitioners dismissal from office. Incidentally, in order to resolve this matter, it is imperative
that We consider these questions : a) Who has the power to discipline the petitioner?, b) Were
the proceedings taken pursuant to Memorandum Order No. 164 in accord with due process?, c)
What is the effect of petitioners acquittal in the criminal case to his administrative charge? d)
Does the President have the power to reorganize the BIR or to issue the questioned E.O. NO.
132?, e) Is the reorganization of BIR pursuant to E.O. No. 132 tainted with bad faith?

At the outset, it is worthy to note that the position of the Assistant Commissioner of the BIR is
part of the Career Executive Service. [2] Under the law,[3] Career Executive Service officers, namely
Undersecretary, Assistant Secretary, Bureau director, Assistant Bureau Director, Regional
Director, Assistant Regional Director, Chief of Department Service and other officers of
equivalent rank as may be identified by the Career Executive Service Board, are all appointed by
the President. Concededly, petitioner was appointed as Assistant Commissioner in January, 1987
by then President Aquino. Thus, petitioner is a presidential appointee who belongs to career
service of the Civil Service. Being a presidential appointee, he comes under the direct diciplining
authority of the President. This is in line with the well settled principle that the power to remove
is inherent in the power to appoint conferred to the President by Section 16, Article VII of the
Constitution. Thus, it is ineluctably clear that Memorandum Order No. 164, which created a
committee to investigate the administrative charge against petitioner, was issued pursuant to
the power of removal of the President. This power of removal, however, is not an absolute one
which accepts no reservation. It must be pointed out that petitioner is a career service officer.
Under the Administrative Code of 1987, career service is characterized by the existence of
security of tenure, as contra-distinguished from non-career service whose tenure is co-terminus
with that of the appointing or subject to his pleasure, or limited to a period specified by law or to
the duration of a particular project for which purpose the employment was made. As a career
service officer, petitioner enjoys the right to security of tenure. No less than the 1987
Constitution guarantees the right of security of tenure of the employees of the civil service.
Specifically, Section 36 of P.D. No. 807, as amended, otherwise known as Civil Service Decree of
the Philippines, is emphatic that career service officers and employees who enjoy security of
tenure may be removed only for any of the causes enumerated in said law. In other words, the
fact that the petitioner is a presidential appointee does not give the appointing authority the
license to remove him at will or at his pleasure for it is an admitted fact that he is likewise a
career service officer who under the law is the recipient of tenurialprotection, thus, may only be
removed for a cause and in accordance with procedural due process.

Was petitioner then removed from office for a legal cause under a valid proceeding?

Although the proceedings taken complied with the requirements of procedural due process,
this Court, however, considers that petitioner was not dismissed for a valid cause.

It should be noted that what precipitated the creation of the investigative committee to look
into the administrative charge against petitioner is his conviction by the Sandiganbayan in
criminal Case Nos. 14208 and 14209. As admitted by the respondents, the administrative case
against petitioner is based on the Sandiganbayan Decision of September 18, 1992. Thus, in the
Administrative Order No. 101 issued by Senior Deputy Executive Secretary Quisumbing which
found petitioner guilty of grave misconduct, it clearly states that:

"This pertains to the administrative charge against Assistant Commissioner Aquilino T.

Larin of the Bureau of Internal Revenue, for grave misconduct by virtue of a Memorandum
signed by Acting Secretary Leong of the Department of Finance, on the basis of
decision handed down by the Hon. Sandiganbayan convicting Larin, et. al. in Criminal
Cases No. 14208 and 14209."[4]

In a nutshell, the criminal cases against petitioner refer to his alleged violation of Section 268
(4) of the National Internal Revenue Code and of section 3(e) of R.A. No.3019 as a consequence
of his act of favorably recommending the grant of tax credit to Tanduay Distillery, Inc.. The
pertinent portion of the judgment of the Sandiganbayan reads:

"As above pointed out, the accused had conspired in knowingly preparing false
memoranda and certification in order to effect a fraud upon taxes due to the government.
By their separate acts which had resulted in an appropriate tax credit of P180,701,682.00
in favor of Tanduay. The government had been defrauded of a tax revenue - for the full
amount, if one is to look at the availments or utilization thereof (Exhibits 'AA' to 'AA-31-a'),
or for a substantial portion thereof (P73,000,000.00) if we are to rely on the letter of
Deputy Commissioner Eufracio D. Santos (Exhibits '21' for all the accused).

As pointed out above, the confluence of acts and omissions committed by accused Larin,
Pareno and Evangelista adequately prove conspiracy among them for no other purpose
than to bring about a tax credit which Tanduay did not deserve. These misrepresentations
as to how much Tanduay had paid in ad valorem taxes obviously constituted a fraud of tax
revenue of the government xxx.'[5]

However, it must be stressed at this juncture that the conviction of petitioner by the
Sandiganbayan was set aside by this court in our decision promulgated on April 17, 1996 in G.R.
Nos. 108037-38 and 107119-20. We specifically ruled in no uncertain terms that : a) petitioner
cannot be held negligent in relying on the certification of a co-equal unit in the BIR, b) it is not
incumbent upon Larin to go beyond the certification made by the Revenue Accounting Division
that Tanduay Distillery, Inc. had paid the ad valorem taxes, c) there is nothing irregular or
anything false in Larin's marginal note on the memorandum addressed to Pareno, the Chief of
Alcohol Tax Division who was also one of the accused, but eventually acquitted, in the said
criminal cases, and d) there is no proof of actual agreement between the accused, including
petitioner, to commit the illegal acts charged. We are emphatic in our resolution in said cases
that there is nothing "illegal with the acts committed by the petitioner(s)." We also declare that
"there is no showing that petitioner(s) had acted irregularly, or performed acts outside of his
(their) official functions." Significantly, these acts which We categorically declare to be not
unlawful and improper in G.R. Nos. 108037-38 and G.R. Nos. 107119-20 are the very same acts
for which petitioner is held to be administratively responsible. Any charge of malfeasance or
misfeasance on the part of the petitioner is clearly belied by our conclusion in said cases. In the
light of this decisive pronouncement, We see no reason for the administrative charge to continue
- it must, thus, be dismissed.

We are not unaware of the rule that since administrative cases are independent from criminal
actions for the same act or omission, the dismissal or acquittal of the criminal charge does not
foreclose the institution of administrative action nor carry with it the relief from administrative
liability.[6] However, the circumstantial setting of the instant case sets it miles apart from the
foregoing rule and placed it well within the exception. Corollarily, where the very basis of the
administrative case against petitioner is his conviction in the criminal action which was later on
set aside by this court upon a categorical and clear findings that the acts for which he was
administratively held liable are not unlawful and irregular, the acquittal of the petitioner in the
criminal case necessarily entails the dismissal of the administrative action against him, because
in such a case, there is no basis nor justifiable reason to maintain the administrative suit.

On the aspect of procedural due process, suffice it to say that petitioner was given every
chance to present his side. The rule is well settled that the essence of due process in
administrative proceedings is that a party be afforded a reasonable opportunity to be heard and
to submit any evidence he may have in support of his defense. [7] The records clearly show that
on October 1, 1993 petitioner submitted his letter-response dated September 30, 1993 to the
administrative charged filed against him. Aside from his letter, he also submitted various
documents attached as annexes to his letter, all of which are evidences supporting his defense.
Prior to this, he received a letter dated September 17, 1993 from the Investigation Committee
requiring him to explain his side concerning the charge. It cannot therefore be argued that
petitioner was denied of due process.

Let us now examine Executive Order No. 132.

As stated earlier, with the issuance of Executive Order No. 132, some of the positions and
offices, including the office of Excise Tax Services of which petitioner was the Assistant
Commissioner, were abolished or otherwise decentralized. Consequently, the President released
the list of appointed Assistant Commissioners of the BIR. Apparently, petitioner was not included.

Initially, it is argued that there is no law yet which empowers the President to issue E.O. No.
132 or to reorganize the BIR.

We do not agree.

Under its Preamble, E.O. No. 132 lays down the legal basis of its issuance, namely: a) Section
48 and 62 of R.A. No. 7645, b) Section 63 of E.O. No. 127, and c) Section 20, Book III of E.O. No.
292.

Section 48 of R.A. 7645 provides that:

"Sec. 48. Scaling Down and Phase Out of Activities of Agencies Within the Executive
Branch. -- The heads of departments, bureaus and offices and agencies are hereby
 directed to identify their respective activities which are no longer essential in the delivery
of public services and which may be scaled down, phased out or abolished, subject to
civil rules and regulations. xxx. Actual scaling down, phasing out or abolition of the
activities shall be effective pursuant to Circulars or Orders issued for the purpose by the
Office of the President." (italics ours)

Said provision 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
provides that:

"Sec. 62, Unauthorized Organizational Charges. -- Unless otherwise created by law or

directed by the President of the Philippines, no organizational unit or changes in key
positions in any department or agency shall be authorized in their respective organization
structures and be funded from appropriations by this Act." (italics ours)

The foregoing provision evidently shows that the President is authorized to effect
organizational changes including the creation of offices in the department or agency concerned.

The contention of petitioner that the two provisions are riders deserves scant consideration.
Well settled is the rule that every law has in its favor the presumption of constitutionality. [8]Unless
and until a specific provision of the law is declared invalid and unconstitutional, the same is valid
and binding for all intents and purposes.

Another legal basis of E.O. No. 132 is Section 20, Book III of E.O. No. 292 which states:

"Sec.20. Residual Powers. -- Unless Congress provides otherwise, the President shall
exercise such other powers and functions vested in the President which are
provided for under the laws and which are not specifically enumerated above or which
are not delegated by the President in accordance with law." (italics ours)

This provision speaks of such other powers vested in the President under the law. What law
then which gives him the power to reorganize? It is Presidential Decree No. 1772 [9] which
amended Presidential Decree No. 1416. These decrees expressly grant 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.
The validity of these two decrees are unquestionable. The 1987 Constitution clearly provides that
"all laws, decrees, executive orders, proclamations, letters of instructions and other executive
issuances not inconsistent with this Constitution shall remain operative until amended, repealed
or revoked."[10] So far, there is yet no law amending or repealing said decrees. Significantly, the
Constitution itself recognizes future reorganizations in the government as what is revealed in
Section 16 of Article XVIII, thus:

"Sec. 16. Career civil service employees separated from service not for cause but as a
result of the xxx reorganization following the ratification of this Constitution shall be
entitled to appropriate separation pay xxx."

However, We can not consider E.O. No. 127 signed on January 30, 1987 as a legal basis for
the reorganization of the BIR. E.O. No. 127 should be related to the second paragraph of Section
11 of Republic Act No. 6656.

Section 11 provides inter alia:

"xxx

In the case of the 1987 reorganization of the executive branch, all departments and
agencies which are authorized by executive orders promulgated by the President to
reorganize shall have ninety days from the approval of this act within which to
 implement their respective reorganization plans in accordance with the provisions of this
Act." (italics ours)

Executive Order No. 127 was part of the 1987 reorganization contemplated under said
provision. Obviously, it had become stale by virtue of the expiration of the ninety day deadline
period. It can not thus be used as a proper basis for the reorganization of the BIR. Nevertheless,
as shown earlier, there are other legal bases to sustain the authority of the President to issue the
questioned E.O. No. 132.

While the President's power to reorganize can not be denied, this does not mean however
that the reorganization itself is properly made in accordance with law. Well-settled is the rule that
reorganization is regarded as valid provided it is pursued in good faith. Thus, in Dario vs. Mison,
this court has had the occasion to clarify that:

"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 or separation
actually occurs because the position itself ceases to exist. And in that case the 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."[11]

In this regard, it is worth mentioning that Section 2 of R.A. No. 6656 lists down the
circumstances evidencing bad faith in the removal of employees as a result of the reorganization,
thus:

Sec. 2. No officer or employee in the career service shall be removed except for a valid
cause and after due notice and hearing. A valid cause for removal exist when, pursuant to
a bona fide reorganization, a position has been abolished or rendered redundant or there
is a need to merge, divide, or consolidate positions in order to meet the exigencies of the
service, or other lawful causes allowed by the Civil Service Law. The existence of any or
some of the following circumstances may be considered as evidence of bad faith in the
removals made as a result of the reorganization, giving rise to a claim for reinstatement or
reappointment by an aggrieved party:

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

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

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

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

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

A reading of some of the provisions of the questioned E.O. No. 132 clearly leads us to an
inescapable conclusion that there are circumstances considered as evidences of bad faith in the
reorganization of the BIR.

Section 1.1.2 of said executive order provides that:

 "1.1.2 The Intelligence and Investigation Office and the Inspection Service are abolished.
An Intelligence and Investigation Service is hereby created to absorb the same
functions of the abolished office and service. xxx" (italics ours)

This provision is a clear illustration of the circumstance mentioned in Section 2 (b) of R.A. No.
6656 that an office is abolished and another one performing substantially the same function is
created.

Another circumstance is the creation of services and divisions in the BIR resulting to a
significant increase in the number of positions in the said bureau as contemplated in paragraph
(a) of section 2 of R.A. No. 6656. Under Section 1.3 of E.O. No. 132, the Information Systems
Group has two newly created Systems Services. Aside from this, six new divisions are also
created. Under Section 1.2.1, three more divisions of the Assessment Service are formed. With
this newly created offices, there is no doubt that a significant increase of positions will
correspondingly follow.

Furthermore, it is perceivable that the non-reappointment of the petitioner as Assistant

Commissioner violates Section 4 of R.A. No. 6656. Under said provision, officers holding
permanent appointments are given preference for appointment to the new positions in the
approved staffing pattern comparable to their former position or in case there are not enough
comparable positions to positions next lower in rank. It is undeniable that petitioner is a career
executive officer who is holding a permanent position. Hence, he should have given preference
for appointment in the position of Assistant Commissioner. As claimed by petitioner, Antonio
Pangilinan who was one of those appointed as Assistant Commissioner, "is an outsider of sorts to
the bureau, not having been an incumbent officer of the bureau at the time of the
reorganization." We should not lose sight of the second paragraph of Section 4 of R.A. No. 6656
which explicitly states that no new employees shall be taken in until all permanent officers shall
have been appointed for permanent position.

IN VIEW OF THE FOREGOING, the petition is granted, and petitioner is hereby reinstated to
his position as Assistant Commissioner without loss of seniority rights and shall be entitled to full
backwages from the time of his separation from service until actual reinstatement unless, in the
meanwhile, he would have reached the compulsory retirement age of sixty-five years in which
case, he shall be deemed to have retired at such age and entitled thereafter to the
corresponding retirement benefits.

SO ORDERED.
Larin vs. Executive Secretary, 280 SCRA 713 (1997)

FACTS:

Larin, a Revenue Specific Tax Officer under the Assistant Commissioner of the BIR, is convicted of
crimes of violation of sec. 268 (4) NIRC and sec. 3 (e) RA 3019 (grave misconduct). Acting by
authority of the president, Sr. Deputy Executive Secretary Quisumbing issued a memorandum
order, creating an Executive Committee to investigate Larins administrative charge. While the
investigation was going on, the President issued E.O. 132, streamlining the BIR and abolishing
the office of the Specific Tax Service. Afterwards, Larin was found guilty and was subsequently
dismissed. However, in the appealed case, SC set aside the conviction of Larin

ISSUE:

W/N Larin was unlawfully removed from office

(1) Does the President have the power to dismiss him? Reorganize the BIR?
(2) Was reorganization valid, considering that there was no law enacted by Congress authorizing
reorganization by the Executive

HELD:

SC held that removal as a result of reorganization was done in bad faith.

Does the President have the power to dismiss him?

Larin is a presidential appointee. As such, he comes under the direct disciplining authority of the
President for the power to remove is inherent in the power to appoint. However, Larin is a
career service officer, therefore, he enjoys security of tenure. Under the Civil Service Decree,
career service officers and employees who enjoy security of tenure may be removed only for any
of the causes enumerated in said law. In other words, the fact that the petitioner is a presidential
appointee does not give the appointing authority the license to remove him at will or at his
pleasure for it is an admitted fact that he is likewise a career service officer who under the law is
the recipient of tenurial protection, thus, may only be removed for a cause and in accordance
with procedural due process.

Was the removal for a legal cause under a valid proceeding?

SC held that the removal complied with the requirements for procedural due process but that the
dismissal was not for a valid cause. The basis used in Larins removal is the criminal conviction
against him, but this conviction was later set aside by the Supreme Court upon appeal. Where
the very basis of the administrative case against petitioner is his conviction in the criminal action
which was later on set aside by this court upon a categorical and clear findings that the acts for
which he was administratively held liable are not unlawful and irregular, the acquittal of the
petitioner in the criminal case necessarily entails the dismissal of the administrative action
against him, because in sch a case, there is no basis nor justifiable reason to maintain the
administrative suit.

Does the President have the power to reorganize the BIR?

Yes, under sec. 48 and 62 of RA 7645, sec. 20, Bk. III of EO 292 (Residual Powers), and PD 1772
which amended PD 1416. But while the Presidents power to reorganize can not be denied, this
does not mean however that the reorganization itself is properly made in accordance with law.
Well-settled is the rule that reorganization is regarded as valid provided it is pursued in good
faith.

When is there reorganization made in good faith?

The general rule is that 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 or separation actually
occurs because the position itself ceases to exist. And in that case the 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.

What are the marks of bad faith in removal as a result of reorganization?

Sec. 2, RA 6656 enumerates the circumstances evidencing bad faith in the removal of employees
as a result of reorganization:

(1) Where there is a significant increase in the number of positions in the new staffing pattern of
the department or agency concerned;
(2) Where an office is abolished and another performing substantially the same functions is
created;
(3) Where incumbents are replaced by those less qualified in terms of status of appointment,
performance and merit;
(4) Where there is a reclassification of offices in the department or agency concerned and the
reclassified offices perform substantially the same functions as the original offices;
(5) Where the removal violates the order of separation provided in sec. 3 hereof.