01. introduction and general considerations.pdf

8/9/2019 01. Introduction and General Considerations.pdf

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FIRST DIVISION

[G.R. No. 86695. September 3, 1992.]

MARIA ELENA MALAGA, doing business under the name B.E.CONSTRUCTION; JOSIELEEN NAJARRO, doing business underthe name BEST BUILT CONSTRUCTION; JOSE N. OCCEÑA,doing business under the name THE FIRM OF JOSE N. OCCEÑA;and the ILOILO BUILDERS CORPORATION, petitioners, vs. MANUEL R. PENACHOS, JR., ALFREDO MATANGGA, ENRICOTICAR AND TERESITA VILLANUEVA, in their respectivecapacities as Chairman and Members of the Pre-qualification Bidsand Awards Committee (PBAC)-BENIGNO PANISTANTE, in his

capacity as President of Iloilo State College of Fisheries, as well as intheir respective personal capacities; and HON. LODRIGIO L.LEBAQUIN, respondents.

Salas, Villareal & Velasco for petitioners.

Virgilio A. Sindico for respondents.

SYLLABUS

1. ADMINISTRATIVE LAW; GOVERNMENT INSTRUMENTALITY, DEFINED. —

The 1987 Administrative Code defines a government instrumentality as follows:

Instrumentality refers to any agency of the National Government, not integrated within

the department framework, vested with special functions or jurisdiction by law, endowed

with some if not all corporate powers, administering special funds, and enjoying

operational autonomy, usually through a charter. This term includes regulatory agencies,

chartered institutions, and government-owned or controlled corporations. (Sec. 2 (5)

Introductory Provisions).

2. ID.; CHARTERED INSTITUTION; DEFINED; APPLICATION IN CASE AT BAR. — The 1987 Administrative Code describes a chartered institution thus: Chartered

institution — refers to any agency organized or operating under a special charter, and

vested by law with functions relating to specific constitutional policies or objectives. This

term includes the state universities and colleges, and the monetary authority of the state.

(Sec. 2 (12) Introductory Provisions). It is clear from the above definitions that ISCOF is

a chartered institution and is therefore covered by P.D. 1818. There are also indications in

its charter that ISCOF is a government instrumentality. First, it was created in pursuance


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of the integrated fisheries development policy of the State, a priority program of the

government to effect the socio-economic life of the nation. Second, the Treasurer of the

Republic of the Philippines shall also be the ex-officio Treasurer of the state college with

its accounts and expenses to be audited by the Commission on Audit or its duly

authorized representative. Third, heads of bureaus and offices of the National

Government are authorized to loan or transfer to it, upon request of the president of thestate college, such apparatus, equipment, or supplies and even the services of such

employees as can be spared without serious detriment to public service. Lastly, an

additional amount of P1.5M had been appropriated out of the funds of the National

Treasury and it was also decreed in its charter that the funds and maintenance of the state

college would henceforth be included in the General Appropriations Law. (Presidential

Decree No. 1523)

3. ID.; PROHIBITION OF ANY COURT FROM ISSUING INJUNCTION IN CASES

INVOLVING INFRASTRUCTURE PROJECTS OF GOVERNMENT (P.D. 1818);

POWER OF THE COURTS TO RESTRAIN APPLICATION. —

In the case of Datilesand Co. vs. Sucaldito, (186 SCRA 704) this Court interpreted a similar prohibition

contained in P.D. 605, the law after which P.D. 1818 was patterned. It was there declared

that the prohibition pertained to the issuance of injunctions or restraining orders by courts

against administrative acts in controversies involving facts or the exercise of discretion in

technical cases. The Court observed that to allow the courts to judge these matters would

disturb the smooth functioning of the administrative machinery. Justice Teodoro Padilla

made it clear, however, that on issues definitely outside of this dimension and involving

questions of law, courts could not be prevented by P.D. No. 605 from exercising their

power to restrain or prohibit administrative acts. We see no reason why the above ruling

should not apply to P.D. 1818. There are at least two irregularities committed by PBACthat justified injunction of the bidding and the award of the project.

4. ID.; POLICIES AND GUIDELINES PRESCRIBED FOR GOVERNMENT

INFRASTRUCTURE (PD 1594); RULES IMPLEMENTING THEREOF, NOT

SUFFICIENTLY COMPLIED WITH IN CASE AT BAR. — Under the Rules

Implementing P.D. 1594, prescribing policies and guidelines for government

infrastructure contracts, PBAC shall provide prospective bidders with the Notice to Pre-

qualification and other relevant information regarding the proposed work. Prospective

contractors shall be required to file their ARC-Contractors Confidential Application for

Registration & Classifications & the PRE-C2 Confidential Pre-qualification Statement

for the Project (prior to the amendment of the rules, this was referred to as Pre-C1) not

later than the deadline set in the published Invitation to Bid, after which date no PRE-C2

shall be submitted and received. Invitations to Bid shall be advertised for at least three

times within a reasonable period but in no case less than two weeks in at least two

newspapers of general circulations. (IB 13 1.2-19, Implementing Rules and Regulations

of P.D. 1594 as amended) PBAC advertised the pre-qualification deadline as December

2, 1988, without stating the hour thereof, and announced that the opening of bids would


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be at 3 o'clock in the afternoon of December 12, 1988. This scheduled was changed and a

notice of such change was merely posted at the ISCOF bulletin board. The notice

advanced the cut-off time for the submission of pre-qualification documents to 10 o'clock

in the morning of December 2, 1988, and the opening of bids to 1 o'clock in the afternoon

of December 12, 1988. The new schedule caused the pre-disqualification of the

petitioners as recorded in the minutes of the PBAC meeting held on December 6, 1988.While it may be true that there were fourteen contractors who were pre-qualified despite

the change in schedule, this fact did not cure the defect of the irregular notice. Notably,

the petitioners were disqualified because they failed to meet the new deadline and not

because of their expired licenses. (B.E. & Best Built's licenses were valid until June 30,

1989. [Ex. P & O respectively: both were marked on December 28, 1988]) We have held

that where the law requires a previous advertisement before government contracts can be

awarded, non-compliance with the requirement will, as a general rule, render the same

void and of no effect. (Caltex Phil. v. Delgado Bros., 96 Phil. 368) The fact that an

invitation for bids has been communicated to a number of possible bidders is not

necessarily sufficient to establish compliance with the requirements of the law if it isshown that other possible bidders have not been similarly notified.

5. ID.; ID.; ID.; PURPOSE THEREOF; CASE AT BAR. — The purpose of the rules

implementing P.D. 1594 is to secure competitive bidding and to prevent favoritism,

collusion and fraud in the award of these contracts to the detriment of the public. This

purpose was defeated by the irregularities committed by PBAC. It has been held that the

three principles in public bidding are the offer to the public, an opportunity for

competition and a basis for exact comparison of bids. A regulation of the matter which

excludes any of these factors destroys the distinctive character of the system and thwarts

the purpose of its adoption. (Hannan v. Board of Education, 25 Okla. 372) In the case at bar, it was the lack of proper notice regarding the pre-qualification requirement and the

bidding that caused the elimination of petitioners B.E. and Best Built. It was not because

of their expired licenses, as private respondents now claim. Moreover, the plans and

specifications which are the contractors' guide to an intelligent bid, were not issued on

time, thus defeating the guaranty that contractors be placed on equal footing when they

submit their bids. The purpose of competitive bidding is negated if some contractors are

informed ahead of their rivals of the plans and specifications that are to be the subject of

their bids.

6. ID.; ID.; ID.; EFFECT OF NON-COMPLIANCE THEREOF. — It has been held in a

long line of cases that a contract granted without the competitive bidding required by law

is void, and the party to whom it is awarded cannot benefit from it. It has not been shown

that the irregularities committed by PBAC were induced by or participated in by any of

the contractors. Hence, liability shall attach only to the private respondents for the

prejudice sustained by the petitioners as a result of the anomalies described above.


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7. CIVIL LAW; NOMINAL DAMAGES; AWARD THEREOF, WHEN AVAILABLE.

— As there is no evidence of the actual loss suffered by the petitioners, compensatory

damage may not be awarded to them. Moral damages do not appear to be due either.

Even so, the Court cannot close its eyes to the evident bad faith that characterized the

conduct of the private respondents, including the irregularities in the announcement of

the bidding and their efforts to persuade the ISCOF president to award the project aftertwo days from receipt of the restraining order and before they moved to lift such order.

For such questionable acts, they are liable in nominal damages at least in accordance with

Article 2221 of the Civil Code, which states: Art. 2221. Nominal damages are

adjudicated in order that a right of the plaintiff, which has been violated or invaded by the

defendant may be vindicated or, recognized, and not for the purpose of indemnifying the

plaintiff for any loss suffered by him. These damages are to be assessed against the

private respondents in the amount of P10,000.00 each, to be paid separately for each of

petitioners B.E. Construction and Best Built Construction.

D E C I S I O N

CRUZ, J p:

This controversy involves the extent and applicability of P.D. 1818, which prohibits any

court from issuing injunctions in cases involving infrastructure projects of the

government. prLL

The facts are not disputed.

The Iloilo State College of Fisheries (henceforth ISCOF) through its Pre-qualification,

Bids and Awards Committee (henceforth PBAC) caused the publication in the November

25, 26, 28, 1988 issues of the Western Visayas Daily an Invitation to Bid for the

construction of the Micro Laboratory Building at ISCOF. The notice announced that the

last day for the submission of pre-qualification requirements (PRE C-1) ** was

December 2, 1988, and that the bids would be received and opened on December 12,

1988, 3 o'clock in the afternoon. 1

Petitioners Maria Elena Malaga and Josieleen Najarro, respectively doing business under

the name of the B.E. Construction and Best Built Construction, submitted their pre-

qualification documents at two o'clock in the afternoon of December 2, 1988. Petitioner

Jose Occeña submitted his own PRE-C1 on December 5, 1988. All three of them were

not allowed to participate in the bidding because their documents were considered late,

having been submitted after the cut-off time of ten o'clock in the morning of December 2,

1988.

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On December 12, 1988, the petitioners filed a complaint with the Regional Trial Court of

Iloilo against the chairman and members of PBAC in their official and personal

capacities. The plaintiffs claimed that although they had submitted their PRE-C1 on time,

the PBAC refused without just cause to accept them. As a result, they were not included

in the list of pre-qualified bidders, could not secure the needed plans and other

documents, and were unable to participate in the scheduled bidding.

In their prayer, they sought the resetting of the December 12, 1988 bidding and the

acceptance of their PRE-C1 documents. They also asked that if the bidding had already

been conducted, the defendants be directed not to award the project pending resolution of

their complaint.

On the same date, Judge Lodrigio L. Lebaquin issued a restraining order prohibiting

PBAC from conducting the bidding and awarding the project. 2

On December 16, 1988, the defendants filed a motion to lift the restraining order on theground that the Court was prohibited from issuing restraining orders, preliminary

injunctions and preliminary mandatory injunctions by P.D. 1818. cdll

The decree reads pertinently as follows:

Section 1. No Court in the Philippines shall have jurisdiction to issue any

restraining order, preliminary injunction, or preliminary infrastructure project,or a mining, fishery, forest or other natural resource development project of the

government, or any public utility operated by the government, including amongothers public utilities for the transport of the goods and commodities,

stevedoring and arrastre contracts, to prohibit any person or persons, entity orgovernment official from proceeding with, or continuing the execution or

implementation of any such project, or the operation of such public utility, or pursuing any lawful activity necessary for such execution, implementation or

operation.

The movants also contended that the question of the propriety of a preliminary injunction

had become moot and academic because the restraining order was received late, at 2

o'clock in the afternoon of December 12, 1988, after the bidding had been conducted and

closed at eleven thirty in the morning of that date.

In their opposition of the motion, the plaintiffs argued against the applicability of P.D.1818, pointing out that while ISCOF was a state college, it had its own charter and

separate existence and was not part of the national government or of any local political

subdivision. Even if P.D. 1818 were applicable, the prohibition presumed a valid and

legal government project, not one tainted with anomalies like the project at bar.

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They also cited Filipinas Marble Corp. vs. IAC, 3 where the Court allowed the issuance

of a writ of preliminary injunction despite a similar prohibition found in P.D. 385. The

Court therein stated that:

The government, however, is bound by basic principles of fairness and decency

under the due process clauses of the Bill of Rights. P.D. 385 was never meant to protect officials of government-lending institutions who take over the

management of a borrower corporation, lead that corporation to bankruptcythrough mismanagement or misappropriation of its funds, and who, after

ruining it, use the mandatory provisions of the decree to avoid the consequencesof their misleads (p. 188, emphasis supplied).

On January 2, 1989, the trial court lifted the restraining order and denied the petition for

preliminary injunction. It declared that the building sought to be construed at the ISCOF

was an infrastructure project of the government falling within the coverage of P.D. 1818.

Even if it were not, the petition for the issuance of a writ of preliminary injunction would

still fail because the sheriff's return showed that PBAC was served a copy of therestraining order after the bidding sought to be restrained had already been held.

Furthermore, the members of the PBAC could not be restrained from awarding the

project because the authority to do so was lodged in the President of the ISCOF, who was

not a party to the case. 4

In the petition now before us, it is reiterated that P.D. 1818 does not cover the ISCOF

because of its separate and distinct corporate personality. It is also stressed again that the

prohibition under P.D. 1818 could not apply to the present controversy because the

project was vitiated with irregularities, to wit: prcd

1. The invitation to bid as published fixed the deadline of submission of pre-

qualification document on December 2, 1988 without indicating any time, yetafter 10:00 o'clock of the given late, the PBAC already refused to accept

petitioners' documents.

2. The time and date of bidding was published as December 12, 1988 at 3:00 p.m. yet it was held at 10:00 o'clock in the morning.

3. Private respondents, for the purpose of inviting bidders to participate, issued a

mimeographed "Invitation to Bid" form, which by law (P.D. 1594 and

Implementing Rules, Exh. B-1) is to contain the particulars of the projectsubject of bidding for the purpose of.

(i) enabling bidders to make an intelligent and accurate bids;

(ii) for PBAC to have a uniform basis for evaluating the bids;

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(iii) to prevent collusion between a bidder and the PBAC, byopening to all the particulars of a project.

Additionally, the Invitation to Bid prepared by the respondents and the Itemized Bill of

Quantities therein were left blank. 5 And although the project in question was a

"Construction," the private respondents used an Invitation to Bid form for "Materials." 6

The petitioners also point out that the validity of the writ of preliminary injunction had

not yet become moot and academic because even if the bids had been opened before the

restraining order was issued, the project itself had not yet been awarded. The ISCOF

president was not an indispensable party because the signing of the award was merely a

ministerial function which he could perform only upon the recommendation of the Award

Committee. At any rate, the complaint had already been duly amended to include him as

a party defendant.

In their Comment, the private respondents maintain that since the members of the boardof trustees of the ISCOF are all government officials under Section 7 of P.D. 1523 and

since the operations and maintenance of the ISCOF are provided for in the General

Appropriations Law, it is should be considered a government institution whose

infrastructure project is covered by P.D. 1818.

Regarding the schedule for pre-qualification, the private respondents insist that PBAC

posted on the ISCOF bulletin board an announcement that the deadline for the

submission of pre-qualifications documents was at 10 o'clock of December 2, 1988, and

the opening of bids would be held at 1 o'clock in the afternoon of December 12, 1988. As

of ten o'clock in the morning of December 2, 1988, B.E. construction and Best Built

construction had filed only their letters of intent. At two o'clock in the afternoon, B.E.,and Best Built filed through their common representative, Nenette Garuello, their pre-

qualification documents which were admitted but stamped "submitted late." The

petitioners were informed of their disqualification on the same date, and the

disqualification became final on December 6, 1988. Having failed to take immediate

action to compel PBAC to pre-qualify them despite their notice of disqualification, they

cannot now come to this Court to question the binding proper in which they had not

participated.

In the petitioners' Reply, they raise as an additional irregularity the violation of the rule

that where the estimate project cost is from P1M to P5M, the issuance of plans,specifications and proposal book forms should made thirty days before the date of

bidding. 7 They point out that these forms were issued only on December 2, 1988, and

not at the latest on November 12, 1988, the beginning of the 30-day period prior to the

scheduled bidding.

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In their Rejoinder, the private respondents aver that the documents of B.E. and Best Built

were received although filed late and were reviewed by the Award Committee, which

discovered that the contractors had expired licenses. B.E.'s temporary certificate of

Renewal of Contractor's License was valid only until September 30, 1988, while Best

Built's license was valid only up to June 30, 1988. llcd

The Court has considered the arguments of the parties in light of their testimonial and

documentary evidence and the applicable laws and jurisprudence. It finds for the

petitioners.

The 1987 Administrative Code defines a government instrumentality as follows:

Instrumentality refers to any agency of the National Government, not integratedwithin the department framework, vested with special functions or jurisdiction

by law, endowed with some if not all corporate powers, administering specialfunds, and enjoying operational autonomy, usually through a charter. This term

includes regulatory agencies, chartered institutions, and government-owned orcontrolled corporations. (Sec. 2 (5) Introductory Provisions).

The same Code describes a chartered institution thus:

Chartered institution — refers to any agency organized or operating under a

special charter, and vested by law with functions relating to specificconstitutional policies or objectives. This term includes the state universities and

colleges, and the monetary authority of the state. (Sec. 2 (12) IntroductoryProvisions).

It is clear from the above definitions that ISCOF is a chartered institution and is therefore

covered by P.D. 1818.

There are also indications in its charter that ISCOF is a government instrumentality. First,

it was created in pursuance of the integrated fisheries development policy of the State, a

priority program of the government to effect the socio-economic life of the nation.

Second, the Treasurer of the Republic of the Philippines also be the ex-officio Treasurer

of the state college with its accounts and expenses to be audited by the Commission on

Audit or its duly authorized representative. Third, heads of bureaus and offices of the National Government are authorized to loan or transfer to it, upon request of the president

of the state college, such apparatus, equipment, or supplies and even the services of such

employees as can be spared without serious detriment to public service. Lastly, an

additional amount of P1.5M had been appropriated out of the funds of the National

Treasury and it was also decreed in its charter that the funds and maintenance of the state

college would henceforth be included in the General Appropriations Law. 8



9/97

Nevertheless, it does not automatically follow that ISCOF is covered by the prohibition in

the said decree.

In the case of Datiles and Co. vs. Sucaldito, 9 this Court interpreted a similar prohibition

contained in P.D. 605, the law after which P.D. 1818 was patterned. It was there declared

that the prohibition pertained to the issuance of injunctions or restraining orders by courtsagainst administrative acts in controversies involving facts or the exercise of discretion in

technical cases. The Court observed that to allow the courts to judge these matters would

disturb the smooth functioning of the administrative machinery. Justice Teodoro Padilla

made it clear, however, that on issues definitely outside of this dimension and involving

questions of law, courts could not be prevented by P.D. No. 605 from exercising their

power to restrain or prohibit administrative acts.

We see no reason why the above ruling should not apply to P.D. 1818.

There are at least two irregularities committed by PBAC that justified injunction of the bidding and the award of the project. LLjur

First, PBAC set deadlines for the filing of the PRE-C1 and the opening of bids and then

changed these deadlines without prior notice to prospective participants.

Under the Rules Implementing P.D. 1594, prescribing policies and guidelines for

government infrastructure contracts, PBAC shall provide prospective bidders with the

Notice of Pre-qualification and other relevant information regarding the proposed work.

Prospective contractors shall be required to file their ARC-Contractors Confidential

Application for Registration & Classifications & the PRE-C2 Confidential Pre-

qualification Statement for the Project (prior to the amendment of the rules, this was

referred to as PRE-C1) not later than the deadline set in the published Invitation to Bid,

after which date no PRE-C2 shall be submitted and received. Invitations to Bid shall be

advertised for at least three times within a reasonable period but in no case less than two

weeks in at least two newspapers of general circulations. 10

PBAC advertised the pre-qualification deadline as December 2, 1988, without stating the

hour thereof, and announced that the opening of bids would be at 3 o'clock in the

afternoon of December 12, 1988. This schedule was changed and a notice of such change

was merely posted at the ISCOF bulletin board. The notice advanced the cut-off time for

the submission of pre-qualification documents to 10 o'clock in the morning of December2, 1988, and the opening of bids to 1 o'clock in the afternoon of December 12, 1988.

The new schedule caused the pre-disqualification of the petitioners as recorded in the

minutes of the PBAC meeting held on December 6, 1988. While it may be true that there

were fourteen contractors who were pre-qualified despite the change in schedule, this fact

did not cure the defect of the irregular notice. Notably, the petitioners were disqualified

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10/97

because they failed to meet the new deadline and not because of their expired licenses.

***

We have held that where the law requires a previous advertisement before government

contracts can be awarded, non-compliance with the requirement will, as a general rule,

render the same void and of no effect. 11 The facts that an invitation for bids has beencommunicated to a number of possible bidders is not necessarily sufficient to establish

compliance with the requirements of the law if it is shown that other public bidders have

not been similarly notified. 12

Second, PBAC was required to issue to pre-qualified applicants the plans, specifications

and proposal book forms for the project to be bid thirty days before the date of bidding if

the estimate project cost was between P1M and P5M. PBAC has not denied that these

forms were issued only on December 2, 1988, or only ten days before the bidding

scheduled for December 12, 1988. At the very latest, PBAC should have issued them on

November 12, 1988, or 30 days before the scheduled bidding.

It is apparent that the present controversy did not arise from the discretionary acts of the

administrative body nor does it involve merely technical matters. What is involved here is

non-compliance with the procedural rules on bidding which required strict observance.

The purpose of the rules implementing P.D. 1594 is to secure competitive bidding and to

prevent favoritism, collusion and fraud in the award of these contracts to the detriment of

the public. This purpose was defeated by the irregularities committed by PBAC. LLpr

It has been held that the three principles in public bidding are the offer to the public, an

opportunity for competition and a basis for exact comparison of bids. A regulation of the

matter which excludes any of these factors destroys the distinctive character of the

system and thwarts the purpose of its adoption. 13

In the case at bar, it was the lack of proper notice regarding the pre-qualification

requirement and the bidding that caused the elimination of petitioners B.E. and Best

Built. It was not because of their expired licenses, as private respondents now claim.

Moreover, the plans and specifications which are the contractors' guide to an intelligent

bid, were not issued on time, thus defeating the guaranty that contractors be placed on

equal footing when they submit their bids. The purpose of competitive bidding is negated

if some contractors are informed ahead of their rivals of the plans and specifications that

are to be the subject of their bids.

P.D. 1818 was not intended to shield from judicial scrutiny irregularities committed by

administrative agencies such as the anomalies above described. Hence, the challenged

restraining order was not improperly issued by the respondent judge and the writ of

preliminary injunction should not have been denied. We note from Annex Q of the

private respondent's memorandum, however, that the subject project has already been

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"100% completed as to the Engineering Standard." This fait accompli has made the

petition for a writ of preliminary injunction moot and academic.

We come now to the liabilities of the private respondents.

It has been held in a long line of cases that a contract granted without the competitive bidding required by law is void, and the party to whom it is awarded cannot benefit from

it. 14 It has not been shown that the irregularities committed by PBAC were induced by

or participated in by any of the contractors. Hence, liability shall attach only to the

private respondents for the prejudice sustained by the petitioners as a result of the

anomalies described above.

As there is no evidence of the actual loss suffered by the petitioners, compensatory

damage may not be awarded to them. Moral damages do not appear to be due either.

Even so, the Court cannot close its eyes to the evident bad faith that characterized the

conduct of the private respondents, including the irregularities in the announcement ofthe bidding and their efforts to persuade the ISCOF president to award the project after

two days from receipt of the restraining order and before they moved to lift such order.

For such questionable acts, they are liable in nominal damages at least in accordance with

Article 2221 of the Civil Code, which states:

"Art. 2221. Nominal damages are adjudicated in order that a right of the

plaintiff, which has been violated or invaded by the defendant may bevindicated or, recognized, and not for the purpose of indemnifying the plaintiff

for any loss suffered by him.

These damages are to assessed against the private respondents in the amount ofP10,000.00 each, to be paid separately for each of petitioners B.E. Construction and Best

Built Construction. The other petitioner, Occeña Builders, is not entitled to relief because

it admittedly submitted its pre-qualification documents on December 5, 1988, or three

days after the deadline. Cdpr

WHEREFORE, judgment is hereby rendered: a) upholding the restraining order dated

December 12, 1988, as not covered by the prohibition in P.D. 1818; b) ordering the

chairman and the members of the PBAC board of trustees, namely Manuel R. Penachos,

Jr., Alfredo Matangga, Enrico Ticar, and Teresita Villanueva, to each pay separately to

petitioners Maria Elena Malaga and Josieleen Najarro nominal damages P10,000.00 each;and c) removing the said chairman and members from the PBAC board of trustees, or

whoever among them is still incumbent therein, for their malfeasance in office. Costs

against PBAC.

Let a copy of this decision be sent to the Office of the Ombudsman.



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SO ORDERED.

Griño-Aquino, Medialdea and Bellosillo, JJ . , concur.

||| (Malaga v. Penachos, Jr., G.R. No. 86695, September 03, 1992)


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EN BANC

[G.R. No. 57883. March 12, 1982.]

GUALBERTO J. DE LA LLANA, Presiding Judge, Branch II of theCity Court of Olongapo, ESTANISLAO L. CESA, JR., FIDELA Y.VARGAS, BENJAMIN C. ESCOLANGO, JUANITO C. ATIENZA,MANUEL REYES ROSAPAPAN, JR., VIRGILIO E. ACIERTO,and PORFIRIO AGUILLON AGUILA, petitioners, vs . MANUELALBA, Minister of Budget, FRANCISCO TANTUITCO, Chairman,Commission on Audit, and RICARDO PUNO, Minister of Justice,respondents.

Fidela Vargas, Leonardo S . Gonzales and Raul Gonzales for petitioners.

Solicitor General Estelito Mendoza and Assistant Solicitor General Reynato S . Puno for

respondents.

SYNOPSIS

Petitioners assailed the constitutionality of Batas Pambansa Blg. 129 entitled "An Act

Reorganizing the Judiciary, Appropriating Funds Therefore and for other Purposes," the

same being contrary to the security of tenure provision of the Constitution as it separates

from the judiciary Justices and judges of inferior courts from the Court of Appeals to

municipal circuit courts except the occupants of the Sandiganbayan and the Court of Tax

Appeals, unless appointed to the inferior courts established by such Act. They likewise

impute lack of good faith in its enactment and characterize as undue delegation of

legislative power to the President his authority to fix the compensation and allowances of

the Justices and judges thereafter appointed and the determination of the date when the

reorganization shall be deemed completed. The Solicitor General maintains that there is

no valid justification for the attack on the constitutionality of the statute, it being a

legitimate exercise of the power vested in the Batasang Pambansa to reorganize the

judiciary, the allegations of absence of good faith as well as the attack on the

independence of the judiciary being unwarranted and devoid of any support in law.

After an intensive and rigorous study of all the legal aspects of the case, the

Supreme Court dismissed the petition, the unconstitutionality of Batas Pambansa Blg.

129 not having been shown. It held that the enactment thereof was in answer to a

pressing and urgent need for a major reorganization of the judiciary; that the attendant

abolition of the inferior courts which shall cause their incumbents to cease from

holding office does not impair the independence of the judiciary and the security of


14/97

tenure guarantee as incumbent justices and judges with good performance and clean

records can be named anew in legal contemplation without interruption in the

continuity of their service; that the provision granting the President authority to fix the

compensation and allowances of the Justices and judges survives the test of undue

delegation of legislative power, a standard having been clearly adopted therefor; that

the reorganization provided by the challenged Act will be carried out in accordancewith the President's constitutional duty to take care that the laws be faithfully

executed, and the judiciary's commitment to guard constitutional rights.

The petition was dismissed. Associate Justice Claudio Teehankee dissented in

a separate opinion; Justices Felix V. Makasiar and Venicio Escolin concurred with the

main opinion; Justice Hermogenes Concepcion concurred in the result; Justices

Antonio P. Barredo, Ramon C. Aquino, Ramon C. Fernandez, Juvenal K Guerrero,

Ameurfina Melencio-Herrera and Vicente G. Ericta concurred in separate opinions;

Justices Vicente Abad-Santos and Efren I. Plana submitted separate concurring and

dissenting opinions.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS; PARTIES; CAPACITY TO

SUE; PETITIONERS' LEGAL STANDING DEMONSTRATED. — The argument as to

the lack of standing of petitioners is easily resolved. As far as Judge de Ia Llana is

concerned, he certainly falls within the principle set forth in Justice Laurel's opinion in

People vs. Vera, 65 Phil. 56 (1937). Thus: "The unchallenged rule is that the person who

impugns the validity of a statute must have a personal and substantial interest in the case

such that he has sustained, or will sustain, direct injury as a result of its enforcement."The other petitioners as members of the bar and officers of the court cannot be considered

as devoid of "any personal and substantial interest" on the matter. There is relevance to

this excerpt from a separate opinion in Aquino, Jr. v. Commission on Elections, L-40004,

Jan. 31, 1975; "Then there is the attack on the standing of petitioners, as vindicating at

most what they consider a public right and not protecting their rights as individuals. This

is to conjure the specter of the public right dogma at an inhibition to parties intent on

keeping public officials staying on the path of constitutionalism. As was so well put by

Jaffe: `The protection of private right is an essential constituent of public interest and,

conversely, without a well-ordered state there could be no enforcement of private rights.

Private and public interests are, both in a substantive and procedural sense, aspects of the

totality of the legal order.' Moreover, petitioners have convincingly shown that in their

capacity as taxpayers, their standing to sue has been amply demonstrated.

2. CONSTITUTIONAL LAW; JUDICIARY; JUDICIARY REORGANIZATION ACT

OF 1980; ENACTMENT THEREOF IN ANSWER TO A PRESSING AND URGENT

NEED; GOOD FAITH OBSERVED IN ITS ENACTMENT. — The enactment of Batas

Pambansa Blg. 129 would firstly, result in the attainment "of more efficiency in the


15/97

disposal of cases. Secondly, the improvement in the quality of justice dispensed by the

courts is expected as a necessary consequence of the easing of the court's dockets.

Thirdly, the structural changes introduced in the bill, together with the reallocation of

jurisdiction and the revision of the rules of procedure, are designated to suit the court

system to the exigencies of the present day Philippine society, and hopefully, of the

foreseeable future." It may be observed that the volume containing the minutes of the proceedings of the Batasang Pambansa show that 590 pages were devoted to its

discussion. It is quite obvious that it took considerable time and effort as well as

exhaustive study before the act was signed by the President on August 14, 1981. With

such a background, it become quite manifest how lacking in factual basis is the allegation

that its enactment is tainted by the vice of arbitrariness. What appears undoubted and

undeniable is the good faith that characterized its enactment from its inception to the

affixing of the Presidential signature. cdasia

3. ID.; ID.; ID.; RESULTING ABOLITION OF COURTS IN GOOD FAITH, WITH

DUE RECOGNITION OF THE SECURITY OF TENURE GUARANTEE; VALIDITYOF ABOLITION OF AN OFFICE, SETTLED RULE. — Nothing is better settled in our

law than that the abolition of an office within the competence of a legitimate body if done

in good faith suffers from no infirmity. The ponencia of Justice J.B.L. Reyes in Cruz v.

Primicias, Jr., L-28573, June 13, 1968, reiterated such a doctrine: "We find this point

urged by respondents, to be without merit. No removal or separation of petitioners from

the service is here involved, but the validity of the abolition of their offices. This is a

legal issue that is for the Courts to decide. It is well-known rule also that valid abolition

of offices is neither removal nor separation of the incumbents. . . . And, of course, if the

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

preliminary question laid at rest, we pass to the merits of the case. As well-settled as therule that the abolition of an office does not amount to an illegal removal of its incumbent

is the principle that, in order to be valid, the abolition must be made in good faith." The

above excerpt was quoted with approval in Bendanillo, Sr. vs. Provincial Governor, L-

28614, Jan. 17, 1974, two earlier cases enunciating a similar doctrine having preceded it.

As with the offices in the other branches of the government, so it is with the Judiciary.

The test remains whether the abolition is in good faith. As that element is conspicuously

present in the enactment of Batas Pambansa Blg. 129, then the lack of merit of this

petition becomes even more apparent.

4. ID.; ID; ID.; ENACTMENT THEREOF MAINTAINS UNIMPAIRED

THE INDEPENDENCE OF THE JUDICIARY; TERMINATION BY VIRTUE OF

THE ABOLITION OF THE OFFICE DOES NOT IMPAIR SECURITY OF

TENURE; SUPREME COURT TO BE CONSULTED IN THE

IMPLEMENTATION OF THE REORGANIZATION OF THE JUDICIARY. —

Petitioners contend that the abolition of the existing Inferior Courts collides with the

security of tenure enjoyed by incumbent Justices and judges under Article X, Section

7 of the Constitution. There was a similar provision the 1935 Constitution. It did not,


16/97

however, go as far as conferring on this Tribunal the power to supervise

administratively inferior courts. Moreover, this Court is empowered "to discipline

judges of inferior courts and, by a vote of at least eight members, order their

dismissal. "Thus it possesses the competence to remove judges. Under the Judiciary

Act, it was the President who was vested with such power. Removal is, of course, to

be, distinguished from termination by virtue of the abolition of the office. After theabolition, there is in law no occupant. In case of removal, there is an office with an

occupant who would thereby lose his position. It is in that sense that from the stand-

point of strict law, the question of any impairment of security of tenure does not arise.

Nonetheless, for the incumbents of 'Inferior Courts abolished, the effect is one of

separation. As to its effect, no distinction exists between removal and the abolition of

the office. Realistically, it is devoid of significance. He ceases to be a member of the

Judiciary. In the implementation of the assailed legislation, therefore, it would be in

accordance with accepted principles of constitutional construction that as far as

incumbent justices and judges are concerned, this Court be consulted and that its view

be accorded, the fullest consideration. No fear need be entertained that there is afailure to accord respect to the basic principle that this Court does not render advisory

opinions. No question of law is involved. If such were the case, certainly this Court

could not have its say prior to the action taken by either of the two departments. Even

then, it could do so but only by way of deciding a case where the matter has been put

in issue. Neither is there any intrusion into who shall be appointed to the vacant

positions created by the reorganization. That remains in the hands of the Executive to

whom it properly belongs. There is no departure therefore from the tried and tested

ways of judicial power. Rather what is sought to be achieved by this liberal

interpretation is to preclude any plausibility to the charge that in the exercise of the

conceded power of reorganizing the Inferior Courts, the power of removal of the present incumbents vested in this Tribunal is ignored or disregarded. The challenged

Act would thus be free from any unconstitutional taint, even one not readily

discernible except to those predisposed to view it with distrust. Moreover, such a

construction would be in accordance with the basic principle that in the choice of

alternatives between one which would save and another which would invalidate a

statute, the former is to be preferred. There is an obvious way to do so. The principle

that the Constitution enters into and forms part of every act to avoid any

unconstitutional taint must be applied.

5. ID.; ID.; ID.; AUTHORITY OF THE PRESIDENT TO FIX THE COMPENSATION

AND ALLOWANCES OF JUSTICES AND JUDGES NOT AN UNDUE

DELEGATION OF LEGISLATIVE POWER; EXISTENCE OF A STANDARD TO

AVOID THE TAINT OF UNDUE DELEGATION CLEAR. — Petitioners would

characterize as an undue delegation of legislative power to the President the grant of

authority to fix the compensation and the allowances of the Justices and judges thereafter

appointed. A more careful reading of the challenged Batas Pambansa Blg. 129 ought to


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have cautioned them against raising such an issue. The language of the statute is quite

clear. The questioned provision reads as follows: "Intermediate Appellate Justices,

Regional Trial Judges, Metropolitan Trial Judges, Municipal Trial Judges, and Municipal

Circuit Trial Judges shall receive such compensation and allowances as may be

authorized by the President along the guidelines set forth in Letter of Implementation No.

93 pursuant to Presidential Decree No. 985, as amended by Presidential Decree No.1597." (Chapter IV, Sec. 41 of Batas Pambansa Blg. 129) The existence of a standard is

thus clear. The basic postulate that underlies the doctrine of non-delegation is that it is the

legislative body which is entrusted with the competence to make laws and to alter and

repeal them, the test being the completeness of the statute in all its terms and provisions

when enacted. As pointed out in Edu v. Ericta, L-32096, Oct. 24, 1970, "To avoid the

taint of unlawful delegation, there must be a standard, which implies at the very least that

the legislature itself determines matters of principle and lays down fundamental policy.

Otherwise, the charge of complete abdication may be hard to repeal. A standard thus

defines legislative policy, marks its limits, maps out its boundaries and specifies the

public agency to apply it. It indicates the circumstances under which the legislativecommand is to be effected. It is the criterion by which legislative purpose may be carried

out. Thereafter, the executive or administrative office designated may in pursuance of the

above guidelines promulgate supplemental rules and regulations. The standard may be

either express or implied. If the former, the non-delegation objection is easily met. The

standard though does not have to be spelled out specifically. It could be implied from the

policy and purpose of the act considered as a whole."

6. ID.; ID.; ID.; NO AMBIGUITY EXISTS IN THE EXECUTION OF THE

REORGANIZATION LAW. — Another objection based on the absence in the statute of

what petitioners refer to as a "definite time frame limitation" is equally bereft of merit.They ignore the categorical language of this provision: "The Supreme Court shall submit

to the President, within thirty (30) days from the date of the effectivity of this Act, a

staffing pattern for all courts constituted pursuant to this Act which shall be the basis of

the implementing order to be issued by the President in accordance with the immediately

succeeding section." (Sec. 43, Batas Pambansa Blg. 129) The first sentence of the next

Section is even more categorical: "The provisions of this Act shall be immediately carried

out in accordance with an Executive Order to be issued by the President." (Sec. 44, Batas

Pambansa Blg. 129) Certainly petitioners cannot be heard to argue that the President is

insensible to his constitutional duty to take care that the laws be faithfully executed. In

the meanwhile, the existing Inferior Courts affected continue functioning as before, "until

the completion of the reorganization provided in this Act as declared by the President.

Upon such declaration, the said courts shall be deemed automatically abolished and the

incumbents thereof shall cease to hold office. "There is no ambiguity. The incumbents of

the courts thus automatically abolished "shall cease to hold office." No fear need be

entertained by incumbents whose length of service, quality of performance, and clean

record justify their being named anew, in legal contemplation without any interruption in

the continuity of their service. It is equally reasonable to assume that from the ranks of


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XIII, Sec. I) That is more than a moral adjuration. It is a legal imperative. The law may

vest in a public official certain rights. It does so to enable them to perform his functions

and fulfill his responsibilities more efficiently. It is from that standpoint that the security

of tenure provision to assure judicial independence is to be viewed. It is an added

guarantee that justices and judges can administer justice undeterred by any fear of

reprisal or untoward consequence. Their judgments then are even more likely to beinspired solely by their knowledge of the law and the dictates of their conscience, free

from the corrupting influence of base or unworthy motives. The independence of which

they are assured is impressed with a significance transcending that of a purely personal

right. As thus viewed, it is not solely for their welfare. The challenged legislation was

thus subjected to the most rigorous scrutiny by this Tribunal, lest by lack of due care and

circumspection, it allows the erosi

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