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SECOND DIVISION

[G.R. No. 106296. July 5, 1996]

ISABELO T. CRISOSTOMO, petitioner, vs. THE COURT OF APPEALS and the

PEOPLE OF THE PHILIPPINES, respondents.*

D E C I S I O N

MENDOZA, J.:

This is a petition to review the decision of the Court of Appeals dated July

15, 1992, the dispositive portion of which reads:

WHEREFORE, the present petition is partially granted. The questioned Orders

and writs directing (1) “reinstatement” of respondent Isabelo T. Crisostomo to

the position of “President of the Polytechnic University of the Philippines,” and

(2) payment of “salaries and benefits” which said respondent failed to re ceive

during his suspension insofar as such payment includes those accruing after the

abolition of the PCC and its transfer to the PUP, are hereby set

aside. Accordingly, further proceedings consistent with this decision may be

taken by the court a quo to determine the correct amounts due and payable to

said respondent by the said university.

The background of this case is as follows:

Petitioner Isabelo Crisostomo was President of the Philippine College of

Commerce (PCC), having been appointed to that position by the President of the

Philippines on July 17, 1974.

During his incumbency as president of the PCC, two administrative cases

were filed against petitioner for illegal use of government vehicles,

misappropriation of construction materials belonging to the college, oppression

and harassment, grave misconduct, nepotis m and dishonesty. The

administrative cases, which were filed with the Office of the President, were

subsequently referred to the Office of the Solicitor General for investigation.

Charges of violations of R.A. No. 3019, § 3 (e) and R.A. No. 992, § 20-21 and

R.A. No. 733, § 14 were likewise filed against him with the Office of Tanodbayan.

On June 14, 1976, three (3) informations for violation of Sec. 3 (e) of the

Anti-Graft and Corrupt Practices Act (R.A. No. 3019, as amended) were filed

against him. The informations alleged that he appropriated for himself a bahay

kubo, which was intended for the College, and construction materials worth

P250,000.00, more or less. Petitioner was also accused of using a driver of the

College as his personal and family driver.[1]

On October 22, 1976, petitioner was preventively suspended from office

pursuant to R.A. No. 3019, § 13, as amended. In his place Dr. Pablo T. Mateo, Jr.

was designated as officer-in-charge on November 10, 1976, and then as Acting

President on May 13, 1977.

On April 1, 1978, P.D. No. 1341 was issued by then President Ferdinand E.

Marcos, CONVERTING THE PHILIPPINE COLLEGE OF COMMERCE INTO A

POLYTECHNIC UNIVERSITY, DEFINING ITS OBJECTIVES, ORGANIZATIONAL

STRUCTURE AND FUNCTIONS, AND EXPANDING ITS CURRICULAR OFFERINGS.

Mateo continued as the head of the new University. On April 3, 1979, he

was appointed Acting President and on March 28, 1980, as President for a term

of six (6) years.

On July 11, 1980, the Circuit Criminal Court of Manila rendered judgment

acquitting petitioner of the charges against him. The dispositive portion of the

decision reads:

WHEREFORE, the Court finds the accused, Isabelo T. Crisostomo, not guilty of theviolations charged in all these three cases and hereby acquits him therefrom,

with costs de oficio. The bail bonds filed by said accused for his provisional

liberty are hereby cancelled and released.

Pursuant to the provisions of Section 13, R.A. No. 3019, as amended, otherwise

known as The Anti-Graft and Corrupt Practices Act, and under which the accused

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has been suspended by this Court in an Order dated October 22, 1976, said

accused is hereby ordered reinstated to the position of President of the

Philippine College of Commerce, now known as the Polytechnic University of the

Philippines, from which he has been suspended. By virtue of said reinstatement,

he is entitled to receive the salaries and other benefits which he failed to receive

during suspension, unless in the meantime administrative proceedings have been

filed against him.

The bail bonds filed by the accused for his provisional liberty in these cases are

hereby cancelled and released.

SO ORDERED.

The cases filed before the Tanodbayan (now the Ombudsman) were

likewise dismissed on August 8, 1991 on the ground that they had become moot

and academic. On the other hand, the administrative cases were dismissed for

failure of the complainants to prosecute them.

On February 12, 1992, petitioner filed with the Regional Trial Court amotion for execution of the judgment, particularly the part ordering his

reinstatement to the position of president of the PUP and the payment of his

salaries and other benefits during the period of suspension.

The motion was granted and a partial writ of execution was issued by the

trial court on March 6, 1992. On March 26, 1992, however, President Corazon C.

Aquino appointed Dr. Jaime Gellor as acting president of the PUP, following the

expiration of the term of office of Dr. Nemesio Prudente, who had succeeded Dr.

Mateo. Petitioner was one of the five nominees considered by the President of

the Philippines for the position.

On April 24, 1992, the Regional Trial Court, through respondent Judge

Teresita Dy-Liaco Flores, issued another order, reiterating her earlier order for

the reinstatement of petitioner to the position of PUP president. A writ of

execution, ordering the sheriff to implement the order of reinstatement, was

issued.

In his return dated April 28, 1992, the sheriff stated that he had executed

the writ by installing petitioner as President of the PUP, although Dr. Gellor did

not vacate the office as he wanted to consult with the President of the

Philippines first. This led to a contempt citation against Dr. Gellor. A hearing was

set on May 7, 1992. On May 5, 1992, petitioner also moved to cite Department

of Education, Culture and Sports Secretary Isidro Cariño in contempt of

court. Petitioner assumed the office of president of the PUP.

On May 18, 1992, therefore, the People of the Philippines filed a petitionfor certiorari and prohibition (CA G.R. No. 27931), assailing the two orders and

the writs of execution issued by the trial court. It also asked for a temporary

restraining order.

On June 25, 1992, the Court of Appeals issued a temporary restraining

order, enjoining petitioner to cease and desist from acting as president of the

PUP pursuant to the reinstatement orders of the trial court, and enjoining further

proceedings in Criminal Cases Nos. VI-2329-2331.

On July 15, 1992, the Seventh Division of the Court of Appeals rendered a

decision,[2]

the dispositive portion of which is set forth at the beginning of this

opinion. Said decision set aside the orders and writ of reinstatement issued by

the trial court. The payment of salaries and benefits to petitioner accruing afterthe conversion of the PCC to the PUP was disallowed. Recovery of salaries and

benefits was limited to those accruing from the time of petitioner’s suspension

until the conversion of the PCC to the PUP. The case was remanded to the trial

court for a determination of the amounts due and payable to petitioner.

Hence this petition. Petitioner argues that P.D. No. 1341, which converted

the PCC into the PUP, did not abolish the PCC. He contends that if the law had

intended the PCC to lose its existence, it would have specified that the PCC was

being “abolished” rather than “converted” and that if the PUP was intended to

be a new institution, the law would have said it was being “created.” Petitioner

claims that the PUP is merely a continuation of the existence of the PCC, and,

hence, he could be reinstated to his former position as president.

In part the contention is well taken, but, as will presently be explained,

reinstatement is no longer possible because of the promulgation of P.D. No. 1437

by the President of the Philippines on June 10, 1978.

P.D. No. 1341 did not abolish, but only changed, the former Philippine

College of Commerce into what is now the Polytechnic University of the







Philippines, in the same way that earlier in 1952, R.A. No. 778 had converted

what was then the Philippine School of Commerce into the Philippine College of

Commerce. What took place was a change in academic status of the educational

institution, not in its corporate life. Hence the change in its name, the expansion

of its curricular offerings, and the changes in its structure and organization.

As petitioner correctly points out, when the purpose is to abolish adepartment or an office or an organization and to replace it with another one,

the lawmaking authority says so. He cites the following examples:

E.O. No. 709:

§ 1. There is hereby created a Ministry of Trade and Industry, hereinafter

referred to as the Ministry. The existing Ministry of Trade established pursuant

to Presidential Decree No. 721 as amended, and the existing Ministry established

pursuant to Presidential Decree No. 488 as amended, are abolished together

with their services, bureaus and similar agencies, regional offices, and all other

entities under their supervision and control. . . .

E.O. No. 710:

§ 1. There is hereby created a Ministry of Public Works and Highways,

hereinafter referred to as the Ministry. The existing Ministry of Public Works

established pursuant to Executive Order No. 546 as amended, and the existing

Ministry of Public Highways established pursuant to Presidential Decree No. 458

as amended, are abolished together with their services, bureaus and similar

agencies, regional offices, and all other entities within their supervision and

control. . . .

R.A. No. 6975:

§ 13. Creation and Composition. - A National Police Commission, hereinafter

referred to as the Commission, is hereby created for the purpose of effectively

discharging the functions prescribed in the Constitution and provided in this

Act. The Commission shall be a collegial body within the Department. It shall be

composed of a Chairman and four (4) regular commissioners, one (1) of whom

shall be designated as Vice-Chairman by the President. The Secretary of the

Department shall be the ex-officio Chairman of the Commission, while the Vice-

Chairman shall act as the executive officer of the Commission.

xxx xxx xxx

§ 90. Status of Present NAPOLCOM, PC-INP. - Upon the effectivity of this Act, the

present National Police Commission, and the Philippine Constabulary-Integrated

National Police shall cease to exist. The Philippine Constabulary, which is the

nucleus of the integrated Philippine Constabulary-Integrated National Police,

shall cease to be a major service of the Armed Forces of the Philippines. The

Integrated National Police, which is the civilian component of the Philippine

Constabulary-Integrated National Police, shall cease to be the national police

force and in lieu thereof, a new police force shall be established and constituted

pursuant to this Act.

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

§ 1. The present Philippine College of Commerce is hereby converted into a

university to be known as the “Polytechnic University of the Philippines,”

hereinafter referred to in this Decree as the University.

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

§ 1. The present Philippine School of Commerce, located in the City of Manila,

Philippines, is hereby granted full college status and converted into the Philippine

College of Commerce, which will offer not only its present one-year and two-year

vocational commercial curricula, the latter leading to the titles of Associate in

Business Education and/or Associate in Commerce, but also four-year courses

leading to the degrees of Bachelor of Science in Business in Education andBachelor of Science in Commerce, and five-year courses leading to the degrees of

Master of Arts in Business Education and Master of Arts in Commerce,

respectively.



The appellate court ruled, however, that the PUP and the PCC are not “one

and the same institution” but “two different entities” and that since petitioner

Crisostomo’s term was coterminous with the legal existence of the PCC,

petitioner’s term expired upon the abolition of the PCC. In reaching this

conclusion, the Court of Appeals took into account the following:

a) After respondent Crisostomo’s suspension, P.D. No. 1341 (entitled

“CONVERTING THE PHILIPPINE COLLEGE OF COMMERCE INTO A POLYTECHNIC

UNIVERSITY, DEFINING ITS OBJECTIVES, ORGANIZATIONAL STRUCTURE AND

FUNCTIONS, AND EXPANDING ITS CURRICULAR OFFERINGS”) was issued on April

1, 1978. This decree explicitly provides that PUP’s objectives and purposes cover

not only PCC’s offering of programs “in the field of commerce and business

administration” but also “programs in other polytechnic areas” and “in other

fields such as agriculture, arts and trades and fisheries . . .” (section 2). Being a

university, PUP was conceived as a bigger institution absorbing, merging and

integrating the entire PCC and other “national schools” as may be “transferred”

to this new state university.

b) The manner of selection and appointment of the university head is

substantially different from that provided by the PCC Charter. The PUP President

“shall be appointed by the President of the Philippines upon recommendation of

the Secretary of Education and Culture after consultation with the University

Board of Regents” (section 4, P.D. 1341). The President of PCC, on the other

hand, was appointed “by the President of the Philippines upon

recommendation of the Board of Trustees” (Section 4, R.A. 778).

c) The composition of the new university’s Board of Regents is likewise different

from that of the PCC Board of Trustees (which included the chairman of the

Senate Committee on Education and the chairman of the House Committee on

Education, the President of the PCC Alumni Association as well as the President

of the Chamber of Commerce of the Philippines). Whereas, among others, the

NEDA Director-General, the Secretary of Industry and the Secretary of Labor are

members of the PUP Board of Regents. (Section 6, P.D. 1341).

d) The decree moreover transferred to the new university all the properties

including “equipment and facilities”:

“. . . owned by the Philippine College of Commerce and such other National

Schools as may be integrated . . . including their obligations and appropriations . .

.” (Sec. 12; Italics supplied).[3]

But these are hardly indicia of an intent to abolish an existing institution

and to create a new one. New course offerings can be added to the curriculum

of a school without affecting its legal existence. Nor will changes in its existing

structure and organization bring about its abolition and the creation of a new

one. Only an express declaration to that effect by the lawmaking authority will.

The Court of Appeals also cites the provision of P.D. No. 1341 as allegedly

implying the abolition of the PCC and the creation of a new one — the PUP — in

its stead:

§ 12. All parcels of land, buildings, equipment and facilities owned by the

Philippine College of Commerce and such other national schools as may be

integrated by virtue of this decree, including their obligations and appropriations

thereof, shall stand transferred to the Polytechnic University of the Philippines,

provided, however, that said national schools shall continue to receive theircorresponding shares from the special education fund of the

municipal/provincial/city government concerned as are now enjoyed by them in

accordance with existing laws and/or decrees.

The law does not state that the lands, buildings and equipment owned by

the PCC were being “transferred” to the PUP but only that they “stand

transferred” to it. “Stand transferred” simply means, for example, that lands

transferred to the PCC were to be understood as transferred to the PUP as the

new name of the institution.

But the reinstatement of petitioner to the position of president of the PUP

could not be ordered by the trial court because on June 10, 1978, P.D. No. 1437had been promulgated fixing the term of office of presidents of state universities

and colleges at six (6) years, renewable for another term of six (6) years, and

authorizing the President of the Philippines to terminate the terms of

incumbents who were not reappointed. P.D. No. 1437 provides:







§ 6. The head of the university or college shall be known as the President of the

university or college. He shall be qualified for the position and appointed for a

term of six (6) years by the President of the Philippines upon recommendation of

the Secretary of Education and Culture after consulting with the Board which

may be renewed for another term upon recommendation of the Secretary of

Education and Culture after consulting the Board. In case of vacancy by reason

of death, absence or resignation, the Secretary of Education and Culture shall

have the authority to designate an officer in charge of the college or university

pending the appointment of the President.

The powers and duties of the President of the university or college, in addition to

those specifically provided for in this Decree shall be those usually pertaining to

the office of the president of a university or college.

§ 7. The incumbent president of a chartered state college or university whose

term may be terminated according to this Decree, shall be entitled to full

retirement benefits: provided that he has served the government for at least

twenty (20) years; and provided, further that in case the number of years served

is less than 20 years, he shall be entitled to one month pay for every year of

service.

In this case, Dr. Pablo T. Mateo Jr., who had been acting president of the

university since April 3, 1979, was appointed president of PUP for a term of six

(6) years on March 28, 1980, with the result that petitioner’s term was cut

short. In accordance with § 7 of the law, therefore, petitioner became entitled

only to retirement benefits or the payment of separation pay. Petitioner must

have recognized this fact, that is why in 1992 he asked then President Aquino to

consider him for appointment to the same position after it had become vacant in

consequence of the retirement of Dr. Prudente.

WHEREFORE, the decision of the Court of Appeals is MODIFIED by SETTINGASIDE the questioned orders of the Regional Trial Court directing the

reinstatement of the petitioner Isabelo T. Crisostomo to the position of president

of the Polytechnic University of the Philippines and the payment to him of

salaries and benefits which he failed to receive during his suspension in so far as

such payment would include salaries accruing after March 28, 1980 when

petitioner Crisostomo’s term was terminated. Further proceedings in

accordance with this decision may be taken by the trial court to determine the

amount due and payable to petitioner by the university up to March 28, 1980.

SECOND DIVISION

KAPISANAN NG MGA KAWANI NG ENERGY

REGULATORY BOARD,

Petitioner,

- versus -

COMMISSIONER FE B. BARIN, DEPUTY

COMMISSIONERS CARLOS R. ALINDADA,

LETICIA V. IBAY, OLIVER B. BUTALID, and

MARY ANNE B. COLAYCO, of the ENERGY

REGULATORY COMMISSION,

Respondents.

G.R. No. 150974

Present:

QUISUMBING,* J.,

Chairperson,

CARPIO,**

CARPIO MORALES,

TINGA, and

VELASCO, JR., JJ.

Promulgated:

June 29, 2007

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

D E C I S I O N

CARPIO, J.:

The Case

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This is a special civil action for certiorari and

prohibition[1]

of the selection and appointment of employees of the Energy

Regulatory Commission (ERC) by the ERC Board of Commissioners.

Petitioner Kapisanan ng mga Kawani ng Energy Regulatory Board (KERB)

seeks to declare Section 38 of Republic Act No. 9136 (RA 9136), which abolished

the Energy Regulatory Board (ERB) and created the ERC, as unconstitutional and

to prohibit the ERC Commissioners from filling up the ERC’s plantilla.

The Facts

RA 9136, popularly known as EPIRA (for Electric Power Industry Reform Act

of 2001), was enacted on 8 June 2001 and took effect on 26 June 2001. Section

38 of RA 9136 provides for the abolition of the ERB and the creation of the

ERC. The pertinent portions of Section 38 read:

Creation of the Energy Regulatory Commission. — Thereis hereby created an independent, quasi-judicial regulatory

board to be named the Energy Regulatory Commission

(ERC). For this purpose, the existing Energy Regulatory Board

(ERB) created under Executive Order No. 172, as amended, is

hereby abolished.

The Commission shall be composed of a Chairman and

four (4) members to be appointed by the President of

the Philippines. x x x

Within three (3) months from the creation of the ERC,

the Chairman shall submit for the approval of the President of

the Philippines the new organizational structure

and plantilla positions necessary to carry out the powers and

functions of the ERC.

x x x x

The Chairman and members of the Commission shall

assume office at the beginning of their terms: Provided, That, if

upon the effectivity of this Act, the Commission has not been

constituted and the new staffing pattern and plantilla positions

have not been approved and filled-up, the current Board and

existing personnel of ERB shall continue to hold office.

The existing personnel of the ERB, if qualified, shall be

given preference in the filling up of plantilla positions created in

the ERC, subject to existing civil service rules and regulations.

At the time of the filing of this petition, the ERC was composed of

Commissioner Fe B. Barin and Deputy Commissioners Carlos R. Alindada, Leticia

V. Ibay, Oliver B.Butalid, and Mary Anne B. Colayco (collectively,

Commissioners). The Commissioners assumed office on 15 August2001. Pursuant to Section 38 of RA 9136, the Commissioners issued the

proposed Table of Organizat ion, Staffing Pattern, and Salary Structure on 25

September 2001 which the President of the Philippines approved on 13

November 2001. Meanwhile, KERB submitted to the Commissioners

its Resolution No. 2001-02 on 13 September 2001. Resolution No. 2001-02

requested the Commissioners for an opportunity to be informed on the

proposed plantilla positions with their equivalent qualification standards.

On 17 October 2001, the Commissioners issued the guidelines for the

selection and hiring of ERC employees. A portion of the guidelines reflects the

Commissioners’ view on the selection and hiring of the ERC employees vis-a-

vis Civil Service rules, thus:

Since R.A. 9136 has abolished the Energy Regulatory

Board (ERB), it is the view of the Commission that the

provisions of Republic Act No. 6656 (An Act to Protect the

Security of [Tenure of] Civil Service Officers and Employees in

the Implementation of Government Reorganization) will not






directly apply to ERC’s current efforts to establish a new

organization. Civil Service laws, rules and regulations, however,

will have suppletory application to the extent possible in regard

to the selection and placement of employees in the

ERC.[2]

(Emphasis supplied)

On 5 November 2005, KERB sent a letter to the Commissioners stating the

KERB members’ objection to the Commissioners’ stand that Civil Service laws,

rules and regulations have suppletory application in the selection and placement

of the ERC employees. KERB asserted that RA 9136 did not abolish the ERB or

change the ERB’scharacter as an economic regulator of the electric power

industry. KERB insisted that RA 9136 merely changed the ERB’s name to the ERC

and expanded the ERB’s functions and objectives. KERB sent the Commissioners

yet another letter on 13 November 2001. KERB made a number of requests: (1)

the issuance of a formal letter related to the date of filing of job applications,

including the use of Civil Service application form no. 212; (2) the creation of a

placement/recruitment committee and setting guidelines relative to its

functions, without prejudice to existing Civil Service rules and regulations; and (3)

copies of the plantilla positions and their corresponding qualification standards

duly approved by either the President of the Philippines or the Civil Service

Commission (CSC).

Commissioner Barin replied to KERB’s letter on 15 November 2001. She

stated that Civil Service application form no. 212 and the ERC-prescribed

application format are substantially the same. Furthermore, the creation of a

placement/recruitment committee is no longer necessary because there is

already a prescribed set of guidelines for the recruitment of personnel. The ERC

hired an independent consultant to administer the necessary tests for the

technical and managerial levels. Finally, the ERC already posted

theplantilla positions, which prescribe higher standards, as approved by theDepartment of Budget and Management. Commissioner Barin stated that

positions in the ERC do not need the prior approval of the CSC, as the ERC is only

required to submit the qualification standards to the CSC.

On 5 December 2001, the ERC published a classified advertisement in the

Philippine Star. Two days later, the CSC received a list of vacancies and

qualification standards from the ERC. The ERC formed a Selection Committee to

process all applications.

KERB, fearful of the uncertainty of the employment status of its members,

filed the present petition on 20 December 2001. KERB later filed an UrgentEx Parte Motion to Enjoin Termination of Petitioner ERB Employees on 2 January

2002. However, before the ERC received KERB’s pleadings, the Selection

Committee already presented its list of proposed appointees to the

Commissioners.

In their Comment, the Commissioners describe the status of the ERB

employees’ appointment in the ERC as follows:

As of February 1, 2002, of the two hundred twelve (212)

ERB employees, one hundred thirty eighty [sic] (138) were

rehired and appointed to ERC plantilla positions and sixty six

(66) opted to retire or be separated from the service. Thosewho were rehired and those who opted to retire or be

separated constituted about ninety six (96%) percent of the

entire ERB employees. The list of the ERB employees

appointed to new positions in the ERC is attached hereto as

Annex 1. Only eight (8) ERB employees could not be appointed

to new positions due to the reduction of the ERC plantilla and

the absence of positions appropriate to their respective

qualifications and skills. The appropriate notice was issued to

each of them informing them of their separation from the

service and assuring them of their entitlement to “separation

pay and other benefits in accordance with existing laws.”[3]

The Issues

KERB raises the following issues before this Court:











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

constitutional; and

2. Whether the Commissioners of the ERC were correct

in disregarding and considering merely suppletory in

character the protective mantle of RA 6656 as to the

ERB employees or petitioner in this case.[4]

The Ruling of the Court

The petition has no merit.

We disregard the procedural defects in the petition, such

as KERB’s personality to file the petition on behalf of its alleged members

and Elmar Agir’s authority to institute the action, because of the demands of

public interest.[5]

Constitutionality of the ERB’s Abolition and the ERC’s Creation

All laws enjoy the presumption of constitutionality. To justify the

nullification of a law, there must be a clear and unequivocal breach of the

Constitution. KERB failed to show any breach of the Constitution.

A public office is created by the Constitution or by law or by an officer or

tribunal to which the power to create the office has been delegated by the

legislature.[6]

The power to create an office carries with it the power to

abolish. President Corazon C. Aquino, then exercising her legislative powers,

created the ERB by issuing Executive Order No. 172 on 8 May 1987.

The question of whether a law abolishes an office is a question of legislative

intent. There should not be any controversy if there is an explicit declaration of

abolition in the law itself .[7]

Section 38 of RA 9136 explicitly abolished the

ERB. However, abolition of an office and its related positions is different from

removal of an incumbent from his office. Abolition and removal are mutually

exclusive concepts. From a legal standpoint, there is no occupant in an abolished

office. Where there is no occupant, there is no tenure to speak of. Thus,

impairment of the constitutional guarantee of security of tenure does not arise in

the abolition of an office. On the other hand, removal implies that the office and

its related positions subsist and that the occupants are merely separated from

their positions.[8]

A valid order of abolition must not only come from a legitimate body, it

must also be made in good faith. An abolition is made in good faith when it is

not made for political or personal reasons, or when it does not circumvent the

constitutional security of tenure of civil service employees.[9]

Abolition of an

office may be brought about by reasons of economy, or to remove redundancy of

functions, or a clear and explicit constitutional mandate for such termination of

employment.[10]

Where one office is abolished and replaced with another office

vested with similar functions, the abolition is a legal nullity .[11]

When there is a

void abolition, the incumbent is deemed to have never ceased holding office.

KERB asserts that there was no valid abolition of the ERB but there was

merely a reorganization done in bad faith. Evidences of bad faith areenumerated in Section 2 of Republic Act No. 6656 (RA 6656),

[12] Section 2 of RA

6656 reads:

No officer or employee in the career service shall be

removed except for a valid cause and after due notice and

hearing. A valid cause for removal exists when, pursuant to

a bona fidereorganization, 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 removalsmade as a result of reorganization, giving rise to a claim for

reinstatement or reappointment by an aggrieved party:







































(a) Where there is a significant increase in the

number of positions in the new staffing pattern of the

department or agency concerned;

(b) Where an office is abolished and another

performing substantially the same functions is created;

(c) Where incumbents are replaced by those less

qualified in terms of status of appointment, performance and

merit;

(d) Where there is a reclassification of offices in the

department or agency concerned and the reclassified offices

perform substantially the same function as the original offices;

(e) Where the removal violates the order of

separation provided in Section 3 hereof.

KERB claims that the present case falls under the situation described in

Section 2(b) of RA 6656. We thus need to compare the provisions enumerating

the powers and functions of the ERB and the ERC to see whether they have

substantially the same functions. Under Executive Order No. 172, the ERB has

the following powers and functions:

SEC. 3. Jurisdiction, Powers and Functions of the

Board. ― When warranted and only when public necessity

requires, the Board may regulate the business of importing,

exporting, re-exporting, shipping, transporting, processing,refining, marketing and distributing energy resources. Energy

resource means any substance or phenomenon which by itself

or in combination with others, or after processing or refining or

the application to it of technology, emanates, generates or

causes the emanation or generation of energy, such as but not

limited to, petroleum or petroleum products, coal, marsh gas,

methane gas, geothermal and hydroelectric sources of energy,

uranium and other similar radioactive minerals, solar energy,

tidal power, as well as non-conventional existing and potential

sources.

The Board shall, upon proper notice and hearing,

exercise the following, among other powers and functions:

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

(b) Fix and regulate the rate schedule or prices of piped

gas to be charged by duly franchised gas companies which

distribute gas by means of underground pipe system;

(c) Fix and regulate the rates of pipeline concessionaires

under the provisions of Republic Act No. 387, as amended,

otherwise known as the “Petroleum Act of 1949,” as amended

by Presidential Decree No. 1700;

(d) Regulate the capacities of new refineries or

additional capacities of existing refineries and license refineries

that may be organized after the issuance of this Executive

Order, under such terms and conditions as are consistent with

the national interest;

(e) Whenever the Board has determined that there is a

shortage of any petroleum product, or when public interest so

requires, it may take such steps as it may consider necessary,

including the temporary adjustment of the levels of prices of

petroleum products and the payment to the Oil PriceStabilization Fund created under Presidential Decree No. 1956

by persons or entities engaged in the petroleum industry of

such amounts as may be determined by the Board, which will

enable the importer to recover its cost of importation.



SEC. 4. Reorganized or Abolished Agency. ― (a) The

Board of Energy is hereby reconstituted into the Energy

Regulatory Board, and the former’s powers and functions

under Republic Act No. 6173, as amended by Presidential

Decree No. 1208, as amended, are transferred to the latter.

(b) The regulatory and adjudicatory powers and

functions exercised by the Bureau of Energy Utilization under

Presidential Decree No. 1206, as amended, are transferred to

the Board, the provisions of Executive Order No. 131

notwithstanding.

SEC. 5. Other Transferred Powers and Functions. ― The

power of the Land Transportation Commission to determine, fix

and/or prescribe rates or charges pertaining to the hauling of

petroleum products are transferred to the Board. The power to

fix and regulate the rates or charges pertinent to shipping or

transporting of petroleum products shall also be exercised by

the Board.

The foregoing transfer of powers and functions shall

include applicable funds and appropriations, records,

equipment, property and such personnel as may be

necessary; Provided , That with reference to paragraph (b) of

Section 4 hereof, only such amount of funds and appropriations

of the Bureau of Energy Utilization, as well as only the

personnel thereof who are completely or primarily involved in

the exercise by said Bureau of its regulatory and adjudicatory

powers and functions, shall be affected by such

transfer: Provided, further , That the funds and appropriations

as well as the records, equipment, property and all personnel

of the reorganized Board of Energy shall be transferred to the

Energy Regulatory Board.

SEC. 6. Power to Promulgate Rules and Perform Other

Acts. ― The Board shall have the power to promulgate rules

and regulations relevant to procedures governing hearings

before it and enforce compliance with any rule, regulation,

order or other requirements: Provided, That said rules and

regulations shall take effect fifteen (15) days after publication

in the Official Gazette. It shall also perform such other acts as

may be necessary or conducive to the exercise of its powers

and functions, and the attainment of the purposes of thisOrder.

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

of the ERC.

SEC. 43. Functions of the ERC. ― The ERC shall promote

competition, encourage market development, ensure customer

choice and discourage/penalize abuse of market power in the

restructured electricity industry. In appropriate cases, the ERC

is authorized to issue cease and desist order after due notice

and hearing. Towards this end, it shall be responsible for the

following key functions in the restructured industry:

(a) Enforce the implementing rules and regulations of

this Act;

(b) Within six (6) months from the effectivity of this Act,

promulgate and enforce, in accordance with law, a National

Grid Code and a Distribution Code which shall include, but not

limited to, the following:

(i) Performance standards for TRANSCO O & M

Concessionaire, distribution utilities and

suppliers: Provided , That in the establishment of the

performance standards, the nature and function of the

entities shall be considered; and



(ii) Financial capability standards for the generating

companies, the TRANSCO, distribution utilities and

suppliers: Provided , That in the formulation of the

financial capability standards, the nature and function

of the entity shall be considered: Provided, further ,

That such standards are set to ensure that the electric

power industry participants meet the minimumfinancial standards to protect the public interest.

Determine, fix, and approve, after due notice and

public hearings the universal charge, to be imposed on

all electricity end-users pursuant to Section 34 hereof;

(c) Enforce the rules and regulations governing the

operations of the electricity spot market and the activities of

the spot market operator and other participants in the spot

market, for the purpose of ensuring a greater supply and

rational pricing of electricity;

(d) Determine the level of cross subsidies in the existing

retail rate until the same is removed pursuant to Section 73

hereof;

(e) Amend or revoke, after due notice and hearing, the

authority to operate of any person or entity which fails to

comply with the provisions hereof, the IRR or any order or

resolution of the ERC. In the event a divestment is required, the

ERC shall allow the affected party sufficient time to remedy the

infraction or for an orderly disposal, but shall in no case exceed

twelve (12) months from the issuance of the order;

(f) In the public interest, establish and enforce a

methodology for setting transmission and distribution wheeling

rates and retail rates for the captive market of a distribution

utility, taking into account all relevant considerations, including

the efficiency or inefficiency of the regulated entities. The rates

must be such as to allow the recovery of just and reasonable

costs and a reasonable return on rate base (RORB) to enable

the entity to operate viably. The ERC may adopt alternative

forms of internationally-accepted rate setting methodology as

it may deem appropriate. The rate-setting methodology so

adopted and applied must ensure a reasonable price of

electricity. The rates prescribed shall be non-discriminatory. To

achieve this objective and to ensure the complete removal of cross subsidies, the cap on the recoverable rate of system

losses prescribed in Section 10 of Republic Act No. 7832, is

hereby amended and shall be replaced by caps which shall be

determined by the ERC based on load density, sales mix, cost of

service, delivery voltage and other technical considerations it

may promulgate. The ERC shall determine such form of rate-

setting methodology, which shall promote efficiency. In case

the rate setting methodology used is RORB, it shall be subject

to the following guidelines:

(i) For purposes of determining the rate base,

the TRANSCO or any distribution utility may beallowed to revalue its eligible assets not more than

once every three (3) years by an independent

appraisal company: Provided, however , That ERC may

give an exemption in case of unusual

devaluation: Provided, further , That the ERC shall exert

efforts to minimize price shocks in order to protect the

consumers;

(ii) Interest expenses are not allowable

deductions from permissible return on rate base;

(iii) In determining eligible cost of services that

will be passed on to the end-users, the ERC shall

establish minimum efficiency performance standards

for the TRANSCO and distribution utilities including

systems losses, interruption frequency rates, and

collection efficiency;



(iv) Further, in determining rate base, the

TRANSCO or any distribution utility shall not be

allowed to include management inefficiencies like cost

of project delays not excused by forcemajeure,

penalties and related interest during construction

applicable to these unexcused delays; and

(v) Any significant operating costs or project

investments of TRANSCO and distribution utilities

which shall become part of the rate base shall be

subject to the verification of the ERC to ensure that

the contracting and procurement of the equipment,

assets and services have been subjected to

transparent and accepted industry procurement and

purchasing practices to protect the public interest.

(g) Three (3) years after the imposition of the universal

charge, ensure that the charges of the TRANSCO or any

distribution utility shall bear no cross subsidies between grids,

within grids, or between classes of customers, except as

provided herein;

(h) Review and approve any changes on the terms and

conditions of service of the TRANSCO or any distribution utility;

(i) Allow the TRANSCO to charge user fees for ancillaryservices to all electric power industry participants or self-

generating entities connected to the grid. Such fees shall be

fixed by the ERC after due notice and public hearing;

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

(k) Monitor and take measures in accordance with this

Act to penalize abuse of market power, cartelization, and anti-

competitive or discriminatory behavior by any electric power

industry participant;

(l) Impose fines or penalties for any non-compliance with

or breach of this Act, the IRR of this Act and the rules and

regulations which it promulgates or administers;

(m) Take any other action delegated to it pursuant to

this Act;

(n) Before the end of April of each year, submit to the

Office of the President of the Philippines and Congress, copy

furnished the DOE, an annual report containing such matters or

cases which have been filed before or referred to it during the

preceding year, the actions and proceedings undertaken and its

decision or resolution in each case. The ERC shall make copies

of such reports available to any interested party upon payment

of a charge which reflects the printing costs. The ERC shall

publish all its decisions involving rates and anticompetitive

cases in at least one (1) newspaper of general circulation,

and/or post electronically and circulate to all interested electric

power industry participants copies of its resolutions to ensure

fair and impartial treatment;

(o) Monitor the activities of the generation and supply of

the electric power industry with the end in view of promoting

free market competition and ensuring that the allocation or

pass through of bulk purchase cost by distributors is

transparent, non-discriminatory and that any existing subsidies

shall be divided pro rata among all retail suppliers;



(p) Act on applications for or modifications of

certificates of public convenience and/or necessity, licenses or

permits of franchised electric utilities in accordance with law

and revoke, review and modify such certificates, licenses or

permits in appropriate cases, such as in cases of violations of

the Grid Code, Distribution Code and other rules and

regulations issued by the ERC in accordance with law;

(q) Act on applications for cost recovery and return on

demand side management projects;

(r) In the exercise of its investigative and quasi-judicial

powers, act against any participant or player in the energy

sector for violations of any law, rule and regulation governing

the same, including the rules on cross ownership,

anticompetitive practices, abuse of market positions and

similar or related acts by any participant in the energy sector,

or by any person as may be provided by law, and require any

person or entity to submit any report or data relative to any

investigation or hearing conducted pursuant to this Act;

(s) Inspect, on its own or through duly authorized

representatives, the premises, books of accounts and records

of any person or entity at any time, in the exercise of its quasi-

judicial power for purposes of determining the existence of any

anticompetitive behavior and/or market power abuse and any

violation of rules and regulations issued by the ERC;

(t) Perform such other regulatory functions as are

appropriate and necessary in order to ensure the successful

restructuring and modernization of the electric power industry,

such as, but not limited to, the rules and guidelines under

which generation companies, distribution utilities which are

not publicly listed shall offer and sell to the public a portion not

less than fifteen percent (15%) of their common shares of

stocks: Provided, however , That generation companies,

distribution utilities or their respective holding companies that

are already listed in the PSE are deemed in compliance. For

existing companies, such public offering shall be implemented

not later than five (5) years from the effectivity of this Act. New

companies shall implement their respective public offerings not

later than five (5) years from the issuance of their certificate of

compliance; and

(u) The ERC shall have the original and exclusive

jurisdiction over all cases contesting rates, fees, fines and

penalties imposed by the ERC in the exercise of the

abovementioned powers, functions and responsibilities and

over all cases involving disputes between and among

participants or players in the energy sector.

All notices of hearings to be conducted by the ERC for

the purpose of fixing rates or fees shall be published at least

twice for two successive weeks in two (2) newspapers of

nationwide circulation.

Aside from Section 43, additional functions of the ERC are scattered

throughout RA 9136:

1. SEC. 6. Generation Sector. ― Generation of electric

power, a business affected with public interest, shall

be competitive and open.

Upon the effectivity of this Act, any new generation

company shall, before it operates, secure from the

Energy Regulatory Commission (ERC) a certificate of

compliance pursuant to the standards set forth in this

Act, as well as health, safety and environmental

clearances from the appropriate government agencies

under existing laws.



x x x x

2. SEC. 8. Creation of the National Transmission

Company. ― x x x

That the subtransmission assets shall be operated and

maintained by TRANSCO until their disposal to

qualified distribution utilities which are in a position

to take over the responsibility for operating,

maintaining, upgrading, and expanding said

assets. x x x

In case of disagreement in valuation, procedures,

ownership participation and other issues, the ERC

shall resolve such issues.

x x x x

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

Distribution utilities shall submit to the ERC a

statement of their compliance with the technical

specifications prescribed in the Distribution Code and

the performance standards prescribed in the IRR of

this Act. Distribution utilities which do not comply

with any of the prescribed technical specifications and

performance standards shall submit to the ERC a plan

to comply, within three (3) years, with said prescribed

technical specifications and performance standards.

The ERC shall, within sixty (60) days upon receipt of such plan, evaluate the same and notify the

distribution utility concerned of its action. Failure to

submit a feasible and credible plan and/or failure to

implement the same shall serve as grounds for the

imposition of appropriate sanctions, fines or

penalties.

x x x x

4. SEC. 28. De-monopolization and Shareholding

Dispersal. ― In compliance with the constitutional

mandate for dispersal of ownership and de-

monopolization of public utilities, the holdings of

persons, natural or juridical, including directors,

officers, stockholders and related interests, in a

distribution utility and their respective holding

companies shall not exceed twenty-five (25%) percent

of the voting shares of stock unless the utility or the

company holding the shares or its controlling

stockholders are already listed in the Philippine Stock

Exchange (PSE): Provided , That controlling

stockholders of small distribution utilities are hereby

required to list in the PSE within five (5) years from the

enactment of this Act if they already own the stocks.

New controlling stockholders shall undertake such

listing within five (5) years from the time they acquireownership and control. A small distribution company

is one whose peak demand is equal to Ten megawatts

(10MW).

The ERC shall, within sixty (60) days from

the effectivity of this Act, promulgate the rules and

regulations to implement and effect this provision.

x x x x

5. SEC. 29. Supply Sector. ― x x x all suppliers of

electricity to the contestable market shall require a

license from the ERC.

For this purpose, the ERC shall promulgate rules and

regulations prescribing the qualifications of electricity

suppliers which shall include, among other



requirements, a demonstration of their technical

capability, financial capability, and

creditworthiness: Provided , That the ERC shall have

authority to require electricity suppliers to furnish a

bond or other evidence of the ability of a supplier to

withstand market disturbances or other events that

may increase the cost of providing service.

x x x x

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

Subject to the compliance with the membership

criteria, all generating companies, distribution

utilities, suppliers, bulk consumers/end-users and

other similar entities authorized by the ERC shall be

eligible to become members of the wholesale

electricity spot market.

The ERC may authorize other similar entities to

become eligible as members, either directly or

indirectly, of the wholesale electricity spot market.

x x x x

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

Upon the initial implementation of open access, the

ERC shall allow all electricity end-users with a monthly

average peak demand of at least one megawatt(1MW) for the preceding twelve (12) months to be the

contestable market. xxx Subsequently and every year

thereafter, the ERC shall evaluate the performance of

the market. x x x

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

Recovery. ― x x x

The ERC shall verify the reasonable amounts and

determine the manner and duration for the full

recovery of stranded debt and stranded contract costs

as defined herein x x x x

9. SEC. 34. Universal Charge. ― Within one (1) year

from the effectivity of this Act, a universal charge to

be determined, fixed and approved by the ERC, shall

be imposed on all electricity end-users x x x x

10. SEC. 35. Royalties, Returns and Tax Rates for

Indigenous Energy Resources. ― x x x

To ensure lower rates for end-users, the ERC shall

forthwith reduce the rates of power from allindigenous sources of energy.

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

each distribution utility shall file its revised rates for

the approval by the ERC. x x x x

12. SEC. 40. Enhancement of Technical

Competence. ― The ERC shall establish rigorous

training programs for its staff for the purpose of

enhancing the technical competence of the ERC in the

following areas: evaluation of technical performanceand monitoring of compliance with service and

performance standards, performance-based rate-

setting reform, environmental standards and such

other areas as will enable the ERC to adequately

perform its duties and functions.



13. SEC. 41. Promotion of Consumer Interests. ― The ERC

shall handle consumer complaints and ensure the

adequate promotion of consumer interests.

14. SEC. 45. Cross Ownership, Market Power Abuse and

Anti-Competitive Behavior. ― No participant in the

electricity industry may engage in any anti-competitive

behavior including, but not limited to, cross-

subsidization, price or market manipulation, or other

unfair trade practices detrimental to the

encouragement and protection of contestable

markets.

x x x x

(c) x x x The ERC shall, within one (1) year from

the effectivity of this Act, promulgate rules and

regulations to promote competition, encourage

market development and customer choice and

discourage/penalize abuse of market power,

cartelization and any anticompetitive or

discriminatory behavior, in order to further the intent

of this Act and protect the public interest. Such rules

and regulations shall define the following:

(a) the relevant markets for purposes of establishing

abuse or misuse of monopoly or market position;

(b) areas of isolated grids; and

(c) the periodic reportorial requirements of electric

power industry participants as may be necessary to

enforce the provisions of this Section.

The ERC shall, motu proprio, monitor and penalize any

market power abuse or anticompetitive or

discriminatory act or behavior by any participant in the

electric power industry.

15. SEC. 51. Powers. ― The PSALM Corp. shall, in the

performance of its functions and for the attainment of

its objective, have the following powers: x x x

(e) To liquidate the NPC stranded contract costs

utilizing proceeds from sales and other property

contributed to it, including the proceeds from the

universal charge;

x x x x

16. SEC. 60. Debts of Electric

Cooperatives. ― x x x The ERC shall ensure areduction in the rates of electric cooperatives

commensurate with the resulting savings due to the

removal of the amortization payments of their loans.

x x x x

17. SEC. 62. Joint Congressional Power

Commission. ― x x x

x x x the Power Commission is hereby empowered to

require the DOE, ERC, NEA, TRANSCO, generation

companies, distribution utilities, suppliers and other

electric power industry participants to submit reportsand all pertinent data and information relating to the

performance of their respective functions in the

industry. xxx

x x x x



18. SEC. 65. Environmental Protection. ― Participants in

the generation, distribution and transmission sub-

sectors of the industry shall comply with all

environmental laws, rules, regulations and standards

promulgated by the Department of Environment and

Natural Resources including, in appropriate cases, the

establishment of an environmental guarantee fund.

19. SEC. 67. NPC Offer of Transition Supply

Contracts. ― Within six (6) months from

the effectivity of this Act, NPC shall file with the ERC

for its approval a transition supply contract duly

negotiated with the distribution utilities containing the

terms and conditions of supply and a corresponding

schedule of rates, consistent with the provisions

hereof, including adjustments and/or indexation

formulas which shall apply to the term of such

contracts.

x x x x

20. SEC. 69. Renegotiation of Power Purchase and Energy

Conversion Agreements between Government

Entities. ― Within three (3) months from

the effectivity of this Act, al l power purchase and

energy conversion agreements between the PNOC-

Energy Development Corporation (PNOC-EDC) and

NPC, including but not limited to

the Palimpinon, Tongonan and Mt. Apo Geothermal

complexes, shall be reviewed by the ERC and the

terms thereof amended to remove any hidden costs or

extraordinary mark-ups in the cost of power or steam

above their true costs. All amended contracts shall be

submitted to the Joint Congressional Power

Commission for approval. The ERC shall ensure that all

savings realized from the reduction of said mark-ups

shall be passed on to all end-users.

After comparing the functions of the ERB and the ERC, we find that the

ERC indeed assumed the functions of the ERB. However, the overlap in the

functions of the ERB and of the ERC does not mean that there is no valid

abolition of the ERB. The ERC has new and expanded functions which are

intended to meet the specific needs of a deregulated power

industry. Indeed, National Land Titles and Deeds Registration Administration v.

Civil Service Commission stated that:

[I]f the newly created office has substantially new, different or

additional functions, duties or powers, so that it may be said in

fact to create an office different from the one abolished, even

though it embraces all or some of the duties of the old office it

will be considered as an abolition of one office and the creation

of a new or different one. The same is true if one office is

abolished and its duties, for reasons of economy are given to

an existing officer or office.[13]

KERB argues that “RA 9136 did not abolish the ERB nor did it alter its

essential character as an economic regulator of the electric power

industry. x x x RA 9136 rather changed merely ERB’s name and title to that of the

ERC even as it expanded its functions and objectives to keep pace with the

times.” To uphold KERB’s argument regarding the invalidity of

the ERB’s abolition is to ignore the developments in the history of energy

regulation.

The regulation of public services started way back in

1902 with the enactment of Act No. 520 which created the

Coastwise Rate Commission. In 1906, Act No. 1507 was passed







creating the Supervising Railway Expert. The following year, Act

No. 1779 was enacted creating the Board of Rate Regulation.

Then, Act No 2307, which was patterned after the Public

Service Law of the State of New Jersey, was approved by the

Philippine Commission in 1914, creating the Board of Public

Utility Commissioners, composed of three members, which

absorbed all the functions of the Coastwise Rate Commission,the Supervising Railway Expert, and the Board of Rate

Regulation.

Thereafter, several laws were enacted on public utility

regulation. On November 7, 1936, Commonwealth Act No. 146,

otherwise known as the Public Service Law, was enacted by the

National Assembly. The Public Service Commission (PSC) had

jurisdiction, supervision, and control over all public services,

including the electric power service.

After almost four decades, significant developments in

the energy sector changed the landscape of economic

regulation in the country.

April 30, 1971 ― R.A. No. 6173 was passed creating

the Oil Industry Commission (OIC), which was tasked

to regulate the oil industry and to ensure the adequate

supply of petroleum products at reasonable prices.

September 24, 1972 ― then President Ferdinand E.

Marcos issued Presidential Decree No. 1 which

ordered the preparation of the Integrated

Reorganization Plan by the Commission on

Reorganization. The Plan abolished the PSC and

transferred the regulatory and adjudicatory functions

pertaining to the electricity industry and water

resources to then Board of Power and Waterworks

(BOPW).

October 6, 1977 ― the government created the

Department of Energy (DOE) and consequently

abolished the OIC, which was replaced by the creation

of the Board of Energy (BOE) through Presidential

Decree No. 1206. The BOE, in addition, assumed the

powers and functions of the BOPW over the electric

power industry.

May 8, 1987 ― the BOE was reconstituted into the

Energy Regulatory Board (ERB), pursuant to Executive

Order No. 172 issued by then President Corazon

C. Aquino as part of her government’s reorganization

program. The rationale was to consolidate and entrust

into a single body all the regulatory and adjudicatory

functions pertaining to the energy sector. Thus, the

power to regulate the power rates and services of

private electric utilities was transferred to the ERB.

December 28, 1992 ― Republic Act No. 7638 signed,

where the power to fix the rates of the National Power

Corporation (NPC) and the rural electric cooperatives

(RECs) was passed on to the ERB. Non-pricing

functions of the ERB with respect to the petroleum

industry were transferred to the DOE, i.e., regulating

the capacities of new refineries.

February 10, 1998 ― enactment of Republic Act

8479: Downstream Oil Industry Deregulation Act of

1998, which prescribed a five-month transition period,

before full deregulation of the oil industry, during

which ERB would implement an automatic pricing

mechanism (APM) for petroleum products every

month.



June 12, 1998 ― the Philippine oil industry was fully

deregulated, thus, ERB’s focus of responsibility

centered on the electric industry.

June 8, 2001 ― enactment of Republic Act No. 9136,

otherwise known as the Electric Power Industry

Reform Act (EPIRA) of 2001. The Act abolished the ERBand created in its place the Energy Regulatory

Commission (ERC) which is a purely independent

regulatory body performing the combined quasi-

judicial, quasi-legislative and administrative functions

in the electric industry.[14]

Throughout the years, the scope of the regulation has gradually narrowed

from that of public services in 1902 to the electricity industry and water

resources in 1972 to the electric power industry and oil industry in 1977 to the

electric industry alone in 1998. The ERC retains the ERB’s traditional rate and

service regulation functions. However, the ERC now also has to promote

competitive operations in the electricity market. RA 9136 expanded

the ERC’s concerns to encompass both the consumers and the utility investors.

Thus, the EPIRA provides a framework for the

restructuring of the industry, including the privatization of the

assets of the National Power Corporation (NPC), the transition

to a competitive structure, and the delineation of the roles of

various government agencies and the private entities. The law

ordains the division of the industry into four (4) distinct sectors,

namely: generation, transmission, distribution and

supply. Corollarily, the NPC generating plants have

to privatized and its transmission business spun off and

privatized thereafter.

In tandem with the restructuring of the industry is the

establishment of “a strong and purely independent regulatory

body.” Thus, the law created the ERC in place of the Energy

Regulatory Board (ERB).

To achieve its aforestated goal, the law has reconfigured

the organization of the regulatory body. x x x[15]

There is no question in our minds that, because of the expansion of

the ERC’s functions and concerns, there was a valid abolition of the ERB. Thus,

there is no merit toKERB’s allegation that there is an impairment of the securityof tenure of the ERB’s employees.

WHEREFORE, we DISMISS the petition. No costs.

SO ORDERED.

SECOND DIVISION

[G.R. No. 155336. November 25, 2004]

COMMISSION ON HUMAN RIGHTS EMPLOYEES’ ASSOCIATION (CHREA)

Represented by its President, MARCIAL A. SANCHEZ, JR., petitioner,

vs.COMMISSION ON HUMAN RIGHTS, respondent .

D E C I S I O N

CHICO-NAZARIO, J .:

Can the Commission on Human Rights lawfully implement an upgrading and

reclassification of personnel positions without the prior approval of the

Department of Budget and Management?

Before this Court is a petition for review filed by petitioner Commission on

Human Rights Employees’ Association (CHREA) challenging the Decision[1]

dated







http://sc.judiciary.gov.ph/jurisprudence/2004/nov2004/155336.htm#_ftn1







29 November 2001 of the Court of Appeals in CA-G.R. SP No. 59678 affirming the

Resolutions[2]

dated 16 December 1999 and 09 June 2000 of the Civil Service

Commission (CSC), which sustained the validity of the upgrading and

reclassification of certain personnel positions in the Commission on Human

Rights (CHR) despite the disapproval thereof by the Department of Budget and

Management (DBM). Also assailed is the resolution dated 11 September 2002 of

the Court of Appeals denying the motion for reconsideration filed by petitioner.

The antecedent facts which spawned the present controversy are as

follows:

On 14 February 1998, Congress passed Republic Act No. 8522, otherwise

known as the General Appropriations Act of 1998. It provided for Special

Provisions Applicable to All Constitutional Offices Enjoying Fiscal Autonomy . The

last portion of Article XXXIII covers the appropriations of the CHR. These special

provisions state:

1. Organizational Structure. Any provision of law to the contrary notwithstanding

and within the limits of their respective appropriations as authorized in this

Act, the Constitutional Commissions and Offices enjoying fiscal autonomy are

authorized to formulate and implement the organizational structures of their

respective offices, to fix and determine the salaries, allowances, and other

benefits of their personnel, and whenever public interest so requires, make

adjustments in their personal services itemization including, but not limited to,

the transfer of item or creation of new positions in their respective

offices:PROVIDED, That officers and employees whose positions are affected by

such reorganization or adjustments shall be granted retirement gratuities and

separation pay in accordance with existing laws, which shall be payable from any

unexpended balance of, or savings in the appropriations of their respective

offices: PROVIDED, FURTHER, That the implementation hereof shall be in

accordance with salary rates, allowances and other benefits authorized under

compensation standardization laws.

2. Use of Savings. The Constitutional Commissions and Offices enjoying fiscal

autonomy are hereby authorized to use savings in their respective appropriations

for: (a) printing and/or publication of decisions, resolutions, and training

information materials; (b) repair, maintenance and improvement of central and

regional offices, facilities and equipment; (c) purchase of books, journals,

periodicals and equipment; (d) necessary expenses for the employment of

temporary, contractual and casual employees; (e) payment of extraordinary and

miscellaneous expenses, commutable representation and transportation

allowances, and fringe benefits for their officials and employees as may be

authorized by law; and (f) other official purposes, subject to accounting and

auditing rules and regulations. (Emphases supplied)

On the strength of these special provisions, the CHR, through its then

Chairperson Aurora P. Navarette-Reciña and Commissioners Nasser A.

Marohomsalic, Mercedes V. Contreras, Vicente P. Sibulo, and Jorge R. Coquia,

promulgated Resolution No. A98-047 on 04 September 1998, adopting an

upgrading and reclassification scheme among selected positions in the

Commission, to wit:

WHEREAS, the General Appropriations Act, FY 1998, R.A. No. 8522 has provided

special provisions applicable to all Constitutional Offices enjoying Fiscal

Autonomy, particularly on organizational structures and authorizes the same to

formulate and implement the organizational structures of their respective officesto fix and determine the salaries, allowances and other benefits of their

personnel and whenever public interest so requires, make adjustments in the

personnel services itemization including, but not limited to, the transfer of item

or creation of new positions in their respective offices: PROVIDED, That officers

and employees whose positions are affected by such reorganization or

adjustments shall be granted retirement gratuities and separation pay in

accordance with existing laws, which shall be payable from any unexpanded

balance of, or savings in the appropriations of their respective offices;

WHEREAS, the Commission on Human Rights is a member of the Constitutional

Fiscal Autonomy Group (CFAG) and on July 24, 1998, CFAG passed an approved

Joint Resolution No. 49 adopting internal rules implementing the special

provisions heretoforth mentioned;

NOW THEREFORE, the Commission by virtue of its fiscal autonomy hereby

approves and authorizes the upgrading and augmentation of the commensurate







amount generated from savings under Personal Services to support the

implementation of this resolution effective Calendar Year 1998;

Let the Human Resources Development Division (HRDD) prepare the necessary

Notice of Salary Adjustment and other appropriate documents to implement this

resolution; . . . .[3]

(Emphasis supplied)

Annexed to said resolution is the proposed creation of ten

additional plantilla positions, namely: one Director IV position, with Salary Grade

28 for the Caraga Regional Office, four Security Officer II with Salary Grade 15,

and five Process Servers, with Salary Grade 5 under the Office of the

Commissioners.[4]

On 19 October 1998, CHR issued Resolution No. A98-055[5]

providing for the

upgrading or raising of salary grades of the following positions in the

Commission:

Number of

Positions

Position

Title

Salary GradeTotal Salary

Requirements

From To From To

12 Attorney VI (In

the Regional Field

Offices)

Director IV 26 28 P229,104.00

4 Director IIIDirector IV

27 28 38,928.00

1Financial &

Management

Officer II

Director IV24 28 36,744.00

1Budget Officer

III

Budget Officer

IV

18 24 51,756.00

1Accountant III Chief

18 24 51,756.00

Accountant

1Cashier III Cashier V

18 24 51,756.00

1Information

Officer V

Director IV24 28 36,744.00

[6]

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

positions:

A. Creation

Number of

Positions

Position Title Salary Grade Total Salary

Requirements

4Security Officer II

(Coterminous)

15 684,780.00

B. Upgrading

Number of

Positions

Position Title Salary Grade Total

Require

From To From To

1 Attorney V Director IV 25 28 P28,092

2 Security Officer

ISecurity

Officer II

11 15 57,456.

-----------

Total 3 P 85,54



















To support the implementation of such scheme, the CHR, in the same

resolution, authorized the augmentation of a commensurate amount generated

from savings under Personnel Services.

By virtue of Resolution No. A98-062 dated 17 November 1998, the CHR

“collapsed” the vacant positions in the body to provide additional source of

funding for said staffing modification. Among the positions collapsed were: oneAttorney III, four Attorney IV, one Chemist III, three Special Investigator I, one

Clerk III, and one Accounting Clerk II.[8]

The CHR forwarded said staffing modification and upgrading scheme to the

DBM with a request for its approval, but the then DBM secretary Benjamin

Diokno denied the request on the following justification:

… Based on the evaluations made the request was not favorably considered as it

effectively involved the elevation of the field units from divisions to services.

The present proposal seeks further to upgrade the twelve (12) positions of

Attorney VI, SG-26 to Director IV, SG-28. This would elevate the field units to a

bureau or regional office, a level even higher than the one previously denied.

The request to upgrade the three (3) positions of Director III, SG-27 to Director

IV, SG-28, in the Central Office in effect would elevate the services to Office and

change the context from support to substantive without actual change in

functions.

In the absence of a specific provision of law which may be used as a legal basis to

elevate the level of divisions to a bureau or regional office, and the services to

offices, we reiterate our previous stand denying the upgrading of the twelve (12)

positions of Attorney VI, SG-26 to Director III, SG-27 or Director IV, SG-28, in the

Field Operations Office (FOO) and three (3) Director III, SG-27 to Director IV, SG-

28 in the Central Office.

As represented, President Ramos then issued a Memorandum to the DBM

Secretary dated 10 December 1997, directing the latter to increase the number

of Plantilla positions in the CHR both Central and Regional Offices to implement

the Philippine Decade Plan on Human Rights Education, the Philippine Human

Rights Plan and Barangay Rights Actions Center in accordance with existing laws.

(Emphasis in the original)

Pursuant to Section 78 of the General Provisions of the General Appropriations

Act (GAA) FY 1998, no organizational unit or changes in key positions shall be

authorized unless provided by law or directed by the President, thus, the

creation of a Finance Management Office and a Public Affairs Office cannot begiven favorable recommendation.

Moreover, as provided under Section 2 of RA No. 6758, otherwise known as the

Compensation Standardization Law, the Department of Budget and Management

is directed to establish and administer a unified compensation and position

classification system in the government. The Supreme Court ruled in the case of

Victorina Cruz vs. Court of Appeals, G.R. No. 119155, dated January 30, 1996,

that this Department has the sole power and discretion to administer the

compensation and position classification system of the National Government.

Being a member of the fiscal autonomy group does not vest the agency with the

authority to reclassify, upgrade, and create positions without approval of the

DBM. While the members of the Group are authorized to formulate and

implement the organizational structures of their respective offices and determine

the compensation of their personnel, such authority is not absolute and must be

exercised within the parameters of the Unified Position Classification and

Compensation System established under RA 6758 more popularly known as the

Compensation Standardization Law. We therefore reiterate our previous stand

on the matter .[9]

(Emphases supplied)

In light of the DBM’s disapproval of the proposed personnel modification

scheme, the CSC-National Capital Region Office, through a memorandum dated

29 March 1999, recommended to the CSC-Central Office that the subject

appointments be rejected owing to the DBM’s disapproval of

the plantilla reclassification.

Meanwhile, the officers of petitioner CHREA, in representation of the rank

and file employees of the CHR, requested the CSC-Central Office to affirm the

recommendation of the CSC-Regional Office. CHREA stood its ground in saying











that the DBM is the only agency with appropriate authority mandated by law to

evaluate and approve matters of reclassification and upgrading, as well as

creation of positions.

The CSC-Central Office denied CHREA’s request in a Re solution dated 16

December 1999, and reversed the recommendation of the CSC-Regional Office

that the upgrading scheme be censured. The decretal portion of which reads:

WHEREFORE, the request of Ronnie N. Rosero, Hubert V. Ruiz, Flordeliza A.

Briones, George Q. Dumlao [and], Corazon A. Santos-Tiu, is hereby denied.[10]

CHREA filed a motion for reconsideration, but the CSC-Central Office denied

the same on 09 June 2000.

Given the cacophony of judgments between the DBM and the CSC,

petitioner CHREA elevated the matter to the Court of Appeals. The Court of

Appeals affirmed the pronouncement of the CSC-Central Office and upheld the

validity of the upgrading, retitling, and reclassification scheme in the CHR on the

justification that such action is within the ambit of CHR’s fiscal autonomy.

The fallo of the Court of Appeals decision provides:

IN VIEW OF ALL THE FOREGOING, the instant petition is ordered DISMISSED and

the questioned Civil Service Commission Resolution No. 99-2800 dated

December 16, 1999 as well as No. 001354 dated June 9, 2000, are hereby

AFFIRMED. No cost.[11]

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

A.

…THE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT UNDER THE

1987 CONSTITUTION, THE COMMISSION ON HUMAN RIGHTS ENJOYS FISCAL

AUTONOMY.

B.

…THE COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING THE CONSTRUCTION

OF THE COMMISSION ON HUMAN RIGHTS OF REPUBLIC ACT NO. 8522 (THE

GENERAL APPROPRIATIONS ACT FOR THE FISCAL YEAR 1998) DESPITE ITS BEING

IN SHARP CONFLICT WITH THE 1987 CONSTITUTION AND THE STATUTE ITSELF.

C.

…THE COURT OF APPEALS SERIOUSLY AND GRAVELY ERRED IN AFFIRMING THE

VALIDITY OF THE CIVIL SERVICE COMMISSION RESOLUTION NOS. 992800 AND

001354 AS WELL AS THAT OF THE OPINION OF THE DEPARTMENT OF JUSTICE IN

STATING THAT THE COMMISSION ON HUMAN RIGHTS ENJOYS FISCAL

AUTONOMY UNDER THE 1987 CONSTITUTION AND THAT THIS FISCAL

AUTONOMY INCLUDES THE ACTION TAKEN BY IT IN COLLAPSING, UPGRADING

AND RECLASSIFICATION OF POSITIONS THEREIN.[12]

The central question we must answer in order to resolve this case is: Can

the Commission on Human Rights validly implement an upgrading,

reclassification, creation, and collapsing of plantilla positions in the Commission

without the prior approval of the Department of Budget and Management?

Petitioner CHREA grouses that the Court of Appeals and the CSC-Central

Office both erred in sanctioning the CHR’s alleged blanket authority to upgrade,

reclassify, and create positions inasmuch as the approval of the DBM relative to

such scheme is still indispensable. Petitioner bewails that the CSC and the Court

of Appeals erroneously assumed that CHR enjoys fiscal autonomy insofar as

financial matters are concerned, particularly with regard to the upgrading and

reclassification of positions therein.

Respondent CHR sharply retorts that petitioner has no locus

standi considering that there exists no official written record in the Commission

recognizing petitioner as a bona fideorganization of its employees nor is there

anything in the records to show that its president, Marcial A. Sanchez, Jr., has the

authority to sue the CHR. The CHR contends that it has the authority to cause

the upgrading, reclassification, plantilla creation, and collapsing scheme sans the

approval of the DBM because it enjoys fiscal autonomy.















After a thorough consideration of the arguments of both parties and an

assiduous scrutiny of the records in the case at bar, it is the Court’s opinion that

the present petition is imbued with merit.

On petitioner’s personality to bring this suit, we held in a multitude of cases

that a proper party is one who has sustained or is in immediate danger of

sustaining an injury as a result of the act complained of .[13]

Here, petitioner,

which consists of rank and file employees of respondent CHR, protests that the

upgrading and collapsing of positions benefited only a select few in the upper

level positions in the Commission resulting to the demoralization of the rank and

file employees. This sufficiently meets the injury test. Indeed, the CHR’s

upgrading scheme, if found to be valid, potentially entails eating up the

Commission’s savings or that portion of its budgetary pie otherwise allocated for

Personnel Services, from which the benefits of the employees, including those in

the rank and file, are derived.

Further, the personality of petitioner to file this case was recognized by the

CSC when it took cognizance of the CHREA’s request to affirm the

recommendation of the CSC-National Capital Region Office. CHREA’s personality

to bring the suit was a non-issue in the Court of Appeals when it passed upon themerits of this case. Thus, neither should our hands be tied by this technical

concern. Indeed, it is settled jurisprudence that an issue that was neither raised

in the complaint nor in the court below cannot be raised for the first time on

appeal, as to do so would be offensive to the basic rules of fair play, justice, and

due process.[14]

We now delve into the main issue of whether or not the approval by the

DBM is a condition precedent to the enactment of an upgrading, reclassification,

creation and collapsing of plantillapositions in the CHR.

Germane to our discussion is Rep. Act No. 6758, An Act Prescribing a

Revised Compensation and Position Classification System in the Government and

For Other Purposes, or theSalary Standardization Law , dated 01 July 1989, whichprovides in Sections 2 and 4 thereof that it is the DBM that

shall establish and administer a unified Compensation and Position Classification

System. Thus:

SEC. 2. Statement of Policy . -- It is hereby declared the policy of the State to

provide equal pay for substantially equal work and to base differences in pay

upon substantive differences in duties and responsibilities, and qualification

requirements of the positions. In determining rates of pay, due regard shall be

given to, among others, prevailing rates in the private sector for comparable

work. For this purpose, the Department of Budget and Management (DBM) is

hereby directed to establish and administer a unified Compensation and PositionClassification System, hereinafter referred to as the System as provided for in

Presidential Decree No. 985, as amended, that shall be applied for all government

entities, as mandated by the Constitution. (Emphasis supplied.)

SEC. 4. Coverage. – The Compensation and Position Classification System herein

provided shall apply to all positions, appointive or elective, on full or part-time

basis, now existing or hereafter created in the government, including

government-owned or controlled corporations and government financial

institutions.

The term “government” refers to the Executive, the Legislative and the Judicial

Branches and the Constitutional Commissions and shall include all, but shall notbe limited to, departments, bureaus, offices, boards, commissions, courts,

tribunals, councils, authorities, administrations, centers, institutes, state colleges

and universities, local government units, and the armed forces. The term

“government-owned or controlled corporations and financial institutions” shall

include all corporations and financial institutions owned or controlled by the

National Government, whether such corporations and financial institutions

perform governmental or proprietary functions. (Emphasis supplied.)

The disputation of the Court of Appeals that the CHR is exempt from the

long arm of the Salary Standardization Law is flawed considering that the

coverage thereof, as defined above, encompasses the entire gamut of

government offices, sans qualification.

This power to “administer” is not purely ministerial in character as

erroneously held by the Court of Appeals. The word to administer means to

control or regulate in behalf of others; to direct or superintend the execution,











application or conduct of; and to manage or conduct public affairs, as to

administer the government of the state.[15]

The regulatory power of the DBM on matters of compensation is encrypted

not only in law, but in jurisprudence as well. In the recent case

of Philippine Retirement Authority (PRA) v. Jesusito L. Buñag,[16]

this Court,

speaking through Mr. Justice Reynato Puno, ruled that compensation,

allowances, and other benefits received by PRA officials and employees without

the requisite approval or authority of the DBM are unauthorized and irregular . In

the words of the Court –

Despite the power granted to the Board of Directors of PRA to establish and fix a

compensation and benefits scheme for its employees, the same is subject to the

review of the Department of Budget and Management. However, in view of the

express powers granted to PRA under its charter, the extent of the review

authority of the Department of Budget and Management is limited. As stated

in Intia, the task of the Department of Budget and Management is simply to

review the compensation and benefits plan of the government agency or entity

concerned and determine if the same complies with the prescribed policies and

guidelines issued in this regard. The role of the Department of Budget and

Management is supervisorial in nature, its main duty being to ascertain that the

proposed compensation, benefits and other incentives to be given to PRA

officials and employees adhere to the policies and guidelines issued in

accordance with applicable laws.

In Victorina Cruz v. Court of Appeals,[17]

we held that the DBM has the sole

power and discretion to administer the compensation and position classification

system of the national government.

In Intia, Jr. v. Commission on Audit ,[18]

the Court held that although the

charter[19]

of the Philippine Postal Corporation (PPC) grants it the power to fix the

compensation and benefits of its employees and exempts PPC from the coverageof the rules and regulations of the Compensation and Position Classification

Office, by virtue of Section 6 of P.D. No. 1597, the compensation system

established by the PPC is, nonetheless, subject to the review of the DBM. This

Court intoned:

It should be emphasized that the review by the DBM of any PPC resolution

affecting the compensation structure of its personnel should not be interpreted

to mean that the DBM can dictate upon the PPC Board of Directors and deprive

the latter of its discretion on the matter. Rather, the DBM’s function is merely to

ensure that the action taken by the Board of Directors complies with the

requirements of the law, specifically, that PPC’s compensation system “conforms

as closely as possible with that provided for under R.A. No. 6758.” (Emphasissupplied.)

As measured by the foregoing legal and jurisprudential yardsticks, the

imprimatur of the DBM must first be sought prior to implementation

of any reclassification or upgrading of positions in government. This is consonant

to the mandate of the DBM under the Revised Administrative Code of 1987,

Section 3, Chapter 1, Title XVII, to wit:

SEC. 3. Powers and Functions. – The Department of Budget and Management

shall assist the President in the preparation of a national resources and

expenditures budget, preparation, execution and control of the National Budget,

preparation and maintenance of accounting systems essential to the budgetaryprocess, achievement of more economy and efficiency in the management of

government operations, administration of compensation and position

classification systems, assessment of organizational effectiveness and review and

evaluation of legislative proposals having budgetary or organizational

implications. (Emphasis supplied.)

Irrefragably, it is within the turf of the DBM Secretary to disallow the

upgrading, reclassification, and creation of additional plantilla positions in the

CHR based on its finding that such scheme lacks legal justification.

Notably, the CHR itself recognizes the authority of the DBM to deny or

approve the proposed reclassification of positions as evidenced by its threeletters to the DBM requesting approval thereof. As such, it is now estopped from

now claiming that the nod of approval it has previously sought from the DBM is a

superfluity.




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http://sc.judiciary.gov.ph/jurisprudence/1996/jan1996/119155.htm





http://sc.judiciary.gov.ph/jurisprudence/1999/apr99/131529.htm


















The Court of Appeals incorrectly relied on the pronouncement of the CSC-

Central Office that the CHR is a constitutional commission, and as such enjoys

fiscal autonomy.[20]

Palpably, the Court of Appeals’ Decision was based on the mistaken premise

that the CHR belongs to the species of constitutional commissions. But, Article IX

of the Constitution states in no uncertain terms that only the CSC, the

Commission on Elections, and the Commission on Audit shall be tagged as

Constitutional Commissions with the appurtenant right to fiscal autonomy. Thus:

Sec. 1. The Constitutional Commissions, which shall be independent, are the Civil

Service Commission, the Commission on Elections, and the Commission on Audit.

Sec. 5. The Commission shall enjoy fiscal autonomy. Their approved annual

appropriations shall be automatically and regularly released.

Along the same vein, the Administrative Code, in Chapter 5, Sections 24 and

26 of Book II on Distribution of Powers of Government, the constitutional

commissions shall include only the Civil Service Commission, the Commission onElections, and the Commission on Audit, which are granted independence and

fiscal autonomy. In contrast, Chapter 5, Section 29 thereof, is silent on the grant

of similar powers to the other bodies including the CHR. Thus:

SEC. 24. Constitutional Commissions. – The Constitutional Commissions, which

shall be independent, are the Civil Service Commission, the Commission on

Elections, and the Commission on Audit.

SEC. 26. Fiscal Autonomy. – The Constitutional Commissions shall enjoy fiscal

autonomy. The approved annual appropriations shall be automatically and

regularly released.

SEC. 29. Other Bodies. – There shall be in accordance with the Constitution, an

Office of the Ombudsman, a Commission on Human Rights, and independent

central monetary authority, and a national police commission. Likewise, as

provided in the Constitution, Congress may establish an independent economic

and planning agency. (Emphasis ours.)

From the 1987 Constitution and the Administrative Code, it is abundantly

clear that the CHR is not among the class of Constitutional Commissions. As

expressed in the oft-repeated maxim e xpressio unius est exclusio alterius, the

express mention of one person, thing, act or consequence excludes all others .

Stated otherwise, expressium facit cessare tacitum – what is expressed puts an

end to what is implied.[21]

Nor is there any legal basis to support the contention that the CHR enjoys

fiscal autonomy. In essence, fiscal autonomy entails freedom from outside

control and limitations, other than those provided by law. It is the freedom to

allocate and utilize funds granted by law, in accordance with law, and pursuant

to the wisdom and dispatch its needs may require from time to

time.[22]

InBlaquera v. Alcala and Bengzon v. Drilon,[23]

it is understood that it is

only the Judiciary, the Civil Service Commission, the Commission on Audit, the

Commission on Elections, and the Office of the Ombudsman, which enjoy fiscal

autonomy. Thus, in Bengzon,[24]

we explained:

As envisioned in the Constitution, the fiscal autonomy enjoyed by the Judiciary,

the Civil Service Commission, the Commission on Audit, the Commission on

Elections, and the Office of the Ombudsman contemplates a guarantee of full

flexibility to allocate and utilize their resources with the wisdom and dispatch

that their needs require. It recognizes the power and authority to levy, assess

and collect fees, fix rates of compensation not exceeding the highest rates

authorized by law for compensation and pay plans of the government and

allocate and disburse such sums as may be provided by law or prescribed by

them in the course of the d ischarge of their functions.

. . .

The Judiciary, the Constitutional Commissions, and the Ombudsman must have

the independence and flexibility needed in the discharge of their constitutionalduties. The imposition of restrictions and constraints on the manner the

independent constitutional offices allocate and utilize the funds appropriated for

their operations is anathema to fiscal autonomy and violative not only of the

express mandate of the Constitution but especially as regards the Supreme

Court, of the independence and separation of powers upon which the entire























fabric of our constitutional system is based. In the interest of comity and

cooperation, the Supreme Court, [the] Constitutional Commissions, and the

Ombudsman have so far limited their objections to constant reminders. We now

agree with the petitioners that this grant of autonomy should cease to be a

meaningless provision. (Emphasis supplied.)

Neither does the fact that the CHR was admitted as a member by theConstitutional Fiscal Autonomy Group (CFAG) ipso facto clothed it with fiscal

autonomy. Fiscal autonomy is a constitutional grant, not a tag obtainable by

membership.

We note with interest that the special provision under Rep. Act No. 8522,

while cited under the heading of the CHR, did not specifically mention CHR as

among those offices to which the special provision to formulate and implement

organizational structures apply, but merely states its coverage to

include Constitutional Commissions and Offices enjoying fiscal autonomy . In

contrast, the Special Provision Applicable to the Judiciary under Article XXVIII of

the General Appropriations Act of 1998 specifically mentions that such special

provision applies to the judiciary and had categorically authorized the Chief

Justice of the Supreme Court to formulate and implement the organizational

structure of the Judiciary, to wit:

1. Organizational Structure. Any provision of law to the contrary notwithstanding

and within the limits of their respective appropriations authorized in this Act, the

Chief Justice of the Supreme Court is authorized to formulate and implement

organizational structure of the Judiciary, to fix and determine the salaries,

allowances, and other benefits of their personnel, and whenever public interest

so requires, make adjustments in the personal services itemization including, but

not limited to, the transfer of item or creation of new positions in the Judiciary;

PROVIDED, That officers and employees whose positions are affected by such

reorganization or adjustments shall be granted retirement gratuities and

separation pay in accordance with existing law, which shall be payable from any

unexpended balance of, or savings in the appropriations of their respective

offices: PROVIDED, FURTHER, That the implementation hereof shall be in


compensation standardization laws. (Emphasis supplied.)

All told, the CHR, although admittedly a constitutional creation is,

nonetheless, not included in the genus of offices accorded fiscal autonomy by

constitutional or legislative fiat.

Even assuming en arguendo that the CHR enjoys fiscal autonomy, we share

the stance of the DBM that the grant of fiscal autonomy notwithstanding, all

government offices must, all the same, kowtow to the Salary Standardization

Law. We are of the same mind with the DBM on its standpoint, thus-

Being a member of the fiscal autonomy group does not vest the agency with the

authority to reclassify, upgrade, and create positions without approval of the

DBM. While the members of the Group are authorized to formulate and

implement the organizational structures of their respective offices and

determine the compensation of their personnel, such authority is not absolute

and must be exercised within the parameters of the Unified Position Classification

and Compensation System established under RA 6758 more popularly known as

the Compensation Standardization Law .[25]

(Emphasis supplied.)

The most lucid argument against the stand of respondent, however, is theprovision of Rep. Act No. 8522 “that the implementation hereof shall be in


compensation standardization laws.”[26]

Indeed, the law upon which respondent heavily anchors its case upon has

expressly provided that any form of adjustment in the organizational structure

must be within the parameters of the Salary Standardization Law.

The Salary Standardization Law has gained impetus in addressing one of the

basic causes of discontent of many civil servants.[27]

For this purpose, Congress

has delegated to the DBM the power to administer the Salary Standardization

Law and to ensure that the spirit behind it is observed. This power is part of the

system of checks and balances or system of restraints in our government. TheDBM’s exercise of such author ity is not in itself an arrogation inasmuch as it is

pursuant to the paramount law of the land, the Salary Standardization Law and

the Administrative Code.

In line with its role to breathe life into the policy behind the Salary

Standardization Law of “providing equal pay for substantially equal work and to















base differences in pay upon substantive differences in duties and

responsibilities, and qualification requirements of the positions,” the DBM, in the

case under review, made a determination, after a thorough evaluation, that the

reclassification and upgrading scheme proposed by the CHR lacks legal

rationalization.

The DBM expounded that Section 78 of the general provisions of the

General Appropriations Act FY 1998, which the CHR heavily relies upon to justify

its reclassification scheme, explicitly provides that “ no organizational unit or

changes in key positions shall be authorized unless provided by law or directed by

the President .” Here, the DBM discerned that there is no law authorizing the

creation of a Finance Management Office and a Public Affairs Office in the CHR.

Anent CHR’s proposal to upgrade twelve positions of Attorney VI, SG -26 to

Director IV, SG-28, and four positions of Director III, SG-27 to Director IV, SG-28,

in the Central Office, the DBM denied the same as this would change the context

from support to substantive without actual change in functions.

This view of the DBM, as the law’s designated body to implement and

administer a unified compensation system, is beyond cavil. The interpretation of

an administrative government agency, which is tasked to implement a statute isaccorded great respect and ordinarily controls the construction of the courts.

In Energy Regulatory Board v. Court of Appeals ,[28]

we echoed the basic rule that

the courts will not interfere in matters which are addressed to the sound

discretion of government agencies entrusted with the regulation of activities

coming under the special technical knowledge and training of such agencies.

To be sure, considering his expertise on matters affecting the nation’s

coffers, the Secretary of the DBM, as the President’s alter ego, knows from

where he speaks inasmuch as he has the front seat view of the adverse effects of

an unwarranted upgrading or creation of positions in the CHR in particular and in

the entire government in general.

WHEREFORE, the petition is GRANTED, the Decision dated 29 November2001 of the Court of Appeals in CA-G.R. SP No. 59678 and its Resolution dated 11

September 2002 are hereby REVERSED and SET ASIDE. The ruling dated 29

March 1999 of the Civil Service Commision-National Capital Region is

REINSTATED. The Commission on Human Rights Resolution No. A98-047 dated

04 September 1998, Resolution No. A98-055 dated 19 October 1998 and

Resolution No. A98-062 dated 17 November 1998 without the approval of the

Department of Budget and Management are disallowed. No pronouncement as

to costs.

SO ORDERED.

Puno








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