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G.R. No. 125296 July 20, 2006

ISMAEL G. KHAN, JR. and WENCESLAO L. MALABANAN, petitioners, vs.OFFICE OF THE OMBUDSMAN, DEPUTY OMBUDSMAN (VISAYAS), ROSAURO F. TORRALBA * and CELESTINOBANDALA **, respondents.

D E C I S I O N

CORONA, J .:

This petition for certiorari under Rule 65 of the Rules of Court addresses the issue of whether public respondents Deputy Ombudsman(Visayas) and the Ombudsman have jurisdiction over petitioners Ismael G. Khan, Jr. and Wenceslao L. Malabanan, former officers ofPhilippine Airlines (PAL), for violation of Republic Act No. (RA) 30191(the Anti-Graft and Corrupt Practices Act).

In February 1989, private respondents Rosauro Torralba and Celestino Bandala charged petitioners before the Deputy Ombudsman (Visayas)for violation of RA 3019. In their complaint, private respondents accused petitioners of using their positions in PAL to secure a contract forSynergy Services Corporation, a corporation engaged in hauling and janitorial services in which they were shareholders.

Petitioners filed an omnibus motion to dismiss the complaint on the following grounds: (1) the Ombudsman had no jurisdiction over themsince PAL was a private entity and (2) they were not public officers, hence, outside the application of RA 3019.

In a resolution dated July 13, 1989,2 the Deputy Ombudsman3 denied petitioners' omnibus motion to dismiss.

On petitioners' first argument, he ruled that, although PAL was originally organized as a private corporation, its controlling stock was later

acquired by the government through the Government Service Insurance System (GSIS).4 Therefore, it became a government-owned ocontrolled corporation (GOCC) as enunciated in Quimpo v. Tanodbayan.5

On the second argument, the Deputy Ombudsman held that petitioners were public officers within the definition of RA 3019, Section 2 (b).Under that provision, public officers included "elective, appointive officials and employees, permanent or temporary, whether in the classifiedor unclassified or exempt service receiving compensation, even nominal, from the Government."

The dispositive portion of the Deputy Ombudsman's order read:

 WHEREFORE, finding no merit to [petitioners'] OMNIBUS MOTION TO DISMISS, the same is hereby DENIED and petitioners arehereby ordered to submit their answer within ten (10) days from receipt hereof.6

xxx xxx xxx

Petitioners appealed the order to the Ombudsman. There, they raised the same issues. Treating the appeal as a motion for reconsideration, theOmbudsman dismissed it on February 22, 1996. He held that petitioners were officers of a GOCC, hence, he had jurisdiction over them. 7 Healso affirmed the Deputy Ombudsman's ruling thatQuimpo was applicable to petitioners' case.

In this petition for certiorari, with prayer for issuance of a temporary restraining order, petitioners assail the orders dated July 13, 1989 andFebruary 22, 1996 of the Deputy Ombudsman (Visayas) and the Ombudsman, respectively. They claim that public respondents acted without jurisdiction and/or grave abuse of discretion in proceeding with the investigation of the case against them although they were officers of aprivate corporation and not "public officers."8

In support of their petition, petitioners argue that: (1) the Ombudsman's jurisdiction only covers GOCCs with original charters and these donot include PAL, a private entity created under the general corporation law; (2) Quimpo does not apply to the case at bar and (3) RA 3019 onlyconcerns "public officers," thus, they cannot be investigated or prosecuted under that law.

 We find merit in petitioners' arguments and hold that public respondents do not have the authority to prosecute them for violation of RA 3019

JURISDICTION OF THE OMBUDSMAN OVER GOCCSIS CONFINED ONLY TO THOSE WITH ORIGINALCHARTERS

The 1987 Constitution states the powers and functions of the Office of the Ombudsman. Specifically, Article XI, Section 13(2) provides:

Sec. 13. The Office of the Ombudsman shall have the following powers, functions, and duties:

xxx xxx xxx

(2) Direct, upon complaint or at its own instance, any public official or employee of the Government, or any subdivision,agency or instrumentality thereof, as well as any government-owned or controlled corporation with original charter, to

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perform and expedite any act or duty required by law, or to stop, prevent, and correct any abuse or impropriety in theperformance of duties. (italics supplied)

xxx xxx xxx

Based on the foregoing provision, the Office of the Ombudsman exercises jurisdiction over public officials/ employees of GOCCs with originacharters. This being so, it can only investigate and prosecute acts or omissions of the officials/employees of government corporations.Therefore, although the government later on acquired the controlling interest in PAL, the fact remains that the latter did not have an "originalcharter" and its officers/employees could not be investigated and/or prosecuted by the Ombudsman.

In Juco v. National Labor Relations Commission,9 we ruled that the phrase "with original charter" means "chartered by special law asdistinguished from corporations organized under the Corporation Code." PAL, being originally a private corporation seeded by private capitaland created under the general corporation law, does not fall within the jurisdictional powers of the Ombudsman under Article XI, Section13(2) of the Constitution. Consequently, the latter is devoid of authority to investigate or prosecute petitioners.

Quimpo Not Applicableto the Case at Bar

Quimpo10 is not applicable to the case at bar. In that case, Felicito Quimpo charged in 1984 two officers of PETROPHIL in the Tanodbayan(now Ombudsman) for violation of RA 3019. These officers sought the dismissal of the case on the ground that the Tanodbayan had no jurisdiction over them as officers/employees of a private company. The Court declared that the Tanodbayan had jurisdiction over them because PETROPHIL ceased to be a private entity when Philippine National Oil Corporation (PNOC) acquired its shares.

In hindsight, although Quimpo appears, on first impression, relevant to this case (like PETROPHIL, PAL's shares were also acquired by thegovernment), closer scrutiny reveals that it is not actually on all fours with the facts here.

In Quimpo, the government acquired PETROPHIL to "perform functions related to government programs and policies on oil." 11 The fact thathe purpose in acquiring PETROPHIL was for it to undertake governmental functions related to oil was decisive in sustaining theTanodbayan's jurisdiction over it. This was certainly not the case with PAL. The records indicate that the government acquired the controllinginterest in the airline as a result of the conversion into equity of its unpaid loans in GSIS. No governmental functions at all were involved.

Furthermore, Quimpo was decided prior to the 1987 Constitution. In fact, it was the 1973 Constitution which the Court relied on in concludingthat the Tanodbayan had jurisdiction over PETROPHIL's accused officers. Particularly, the Court cited Article XIII, Section 6:

SEC. 6. The Batasang Pambansa shall create an office of the Ombudsman, to be known as the Tanodbayan, which shall receive andinvestigate complaints relative to public office, including those in government-owned or controlled corporations, make appropriaterecommendations, and in case of failure of justice as defined by law, file and prosecute the corresponding criminal, civil, oradministrative case before the proper court or body. (italics supplied)

The term "government-owned or controlled corporations" in the 1973 Constitution was qualified by the 1987 Constitution to refer only tothose with original charters.12

Petitioners, as then Officers of PAL, were not Public Officers

Neither the 1987 Constitution nor RA 6670 (The Ombudsman Act of 1989) defines who "public officers" are. Instead, its varied definitions andconcepts are found in different statutes13 and jurisprudence.14 Usually quoted in our decisions is Mechem, a recognized authority on thesubject. In the 2002 case of  Laurel v. Desierto,15 the Court extensively quoted his exposition on the term "public officers":

 A public office is the right, authority and duty, created and conferred by law, by which, for a given period, either fixed by law orenduring at the pleasure of the creating power, an individual is invested with some portion of the sovereign functions of thegovernment, to be exercised by him for the benefit of the public. The individual so invested is a public officer.

The characteristics of a public office, according to Mechem, include the delegation of sovereign functions, its creation by law and not by contract, an oath, salary, continuance of the position, scope of duties, and the designation of the position as an office.

xxx xxx xxx

Mechem describes the delegation to the individual of the sovereign functions of government as "[t]he most important characteristic"in determining whether a position is a public office or not.

The most important characteristic which distinguishes an office from an employment or contract is that the creation andconferring of an office involves a delegation to the individual of some of the sovereign functions of government to be exercised byhim for the benefit of the public; − that some portion of the sovereignty of the country, either legislative, executive, or judicial,attaches, for the time being, to be exercised for the public benefit. Unless the powers conferred are of this nature, the individual isnot a public officer.16 (italics supplied)

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From the foregoing, it can be reasonably inferred that "public officers" are those endowed with the exercise of sovereign executive, legislativeor judicial functions.17 The explication of the term is also consistent with the Court's pronouncement in Quimpo that, in the case oofficers/employees in GOCCs, they are deemed "public officers" if their corporations are tasked to carry out governmental functions.

In any event, PAL has since reverted to private ownership and we find it pointless to scrutinize the implications of a legal issue that technicallyno longer exists.

 WHEREFORE, the petition is hereby GRANTED. Public respondents Deputy Ombudsman (Visayas) and Office of the Ombudsman arerestrained from proceeding with the investigation or prosecution of the complaint against petitioners for violation of RA 3019. Accordingly,their assailed orders of July 13, 1989 and February 22, 1996, respectively, are SET ASIDE and ANNULLED.

SO ORDERED.

G.R. Nos. 147706-07 February 16, 2005PEOPLE OF THE PHILIPPINES, petitioner, vs.THE HONORABLE SANDIGANBAYAN (Fifth Division) and EFREN L. ALAS, respondents.D E C I S I O NCORONA, J.:

Does the Sandiganbayan have jurisdiction over presidents, directors or trustees, or managers of government-owned or controlled corporationsorganized and incorporated under the Corporation Code for purposes of the provisions of RA 3019, otherwise known as the Anti-Graft andCorrupt Practices Act? The petitioner, represented by the Office of the Special Prosecutor (OSP), takes the affirmative position in this petitionfor certiorari under Rule 65 of the Rules of Court. Respondent Efren L. Alas contends otherwise, together with the respondent court.

Pursuant to a resolution dated September 30, 1999 of the Office of the Ombudsman, two separate informations 1f or violation of Section 3(e) o

RA 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, were filed with the Sandiganbayan on November 17, 1999 against EfrenL. Alas. The charges emanated from the alleged anomalous advertising contracts entered into by Alas, in his capacity as President and ChiefOperating Officer of the Philippine Postal Savings Bank (PPSB), with Bagong Buhay Publishing Company which purportedly caused damageand prejudice to the government.

On October 30, 2002, Alas filed a motion to quash the informations for lack of jurisdiction, which motion was vehemently opposed by theprosecution. After considering the arguments of both parties, the respondent court ruled that PPSB was a private corporation and that itsofficers, particularly herein respondent Alas, did not fall under Sandiganbayan jurisdiction. According to the Sandiganbayan:

 After a careful consideration of the arguments of the accused-movant as well as of that of the prosecution, we are of the considered opinionthat the instant motion of the accused is well taken. Indeed, it is the basic thrust of Republic Act as well as (sic) Presidential Decree No. 1606 asamended by President Decree No. 1486 and Republic Act No. 7975 and Republic Act No. 8249 that the Sandiganbayan has jurisdiction only over public officers unless private persons are charged with them in the commission of the offenses.

The records disclosed that while Philippine Postal Savings Bank is a subsidiary of the Philippine Postal Corporation which is a government

owned corporation, the same is not created by a special law. It was organized and incorporated under the Corporation Code which is BatasPambansa Blg. 68. It was registered with the Securities and Exchange Commission under SEC No. AS094-005593 on June 22, 1994 with alifetime of fifty (50) years. Under its Articles of Incorporation the purpose for which said entity is formed was primarily for business, xxx

Likewise, a scrutiny of the seven (7) secondary purposes of the corporation points to the conclusion that it exists for business.l^vvphi1.net Obviously, it is not involved in the performance of a particular function in the exercise of government power. Thus, itsofficers and employees are not covered by the GSIS and are under the SSS law, and actions for reinstatement and backwages are not within the jurisdiction of the Civil Service Commission but by the National Labor Relations Commission (NLRC).

The Supreme Court, in the case of Trade Unions of the Philippines and Allied Services vs. National Housing Corp., 173 SCRA 33, held that theCivil Service now covers only government owned or controlled corporations with original or legislative charters, those created by an act ofCongress or by special law, and not those incorporated under and pursuant to a general legislation. The Highest Court categorically ruled thatthe Civil Service does not include government-owned or controlled corporation which are organized as subsidiaries of government-owned orcontrolled corporation under the general corporation law.

In Philippine National Oil Company – Energy Development Corporation vs. Leogardo, 175 SCRA 26, the Supreme Court emphasized that:

The test in determining whether a government-owned or controlled corporation is subject to the Civil Service Law is the manner of its creationsuch that government corporation created by special charter are subject to its provision while those incorporated under the generacorporation law are not within its coverage.

Likewise in Davao City Water District vs. Civil Service Commission, 201 SCRA 601 it was held that "by government-owned or controlledcorporation with original charter we mean government-owned or controlled corporation created by a special law and not under theCorporation Code of the Philippines" while in Llenes vs. Dicdican, et al., 260 SCRA 207, a public officer has been ruled, as a person whoseduties involve the exercise of discretion in the performance of the function of government.

Clearly, on the basis of the foregoing pronouncements of the Supreme Court, the accused herein cannot be considered a public officer. Thus,this Court may not exercise jurisdiction over his act.2

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Dissatisfied, the People, through the Office of the Special Prosecutor (OSP), filed this petition3 arguing, in essence, that the PPSB was agovernment-owned or controlled corporation as the term was defined under Section 2(13) of the Administrative Code of 1987. 4 Likewise, infurther defining the jurisdiction of the Sandiganbayan, RA 8249 did not make a distinction as to the manner of creation of the government-owned or controlled corporations for their officers to fall under its jurisdiction. Hence, being President and Chief Operating Officer of thePPSB at the time of commission of the crimes charged, respondent Alas came under the jurisdiction of the Sandiganbayan.1awphi1.nét 

Quoting at length from the assailed resolution dated February 15, 2001, respondent Alas, on the other hand, practically reiterated thepronouncements made by the respondent court in support of his conclusion that the PPSB was not created by special law, hence, its officersdid not fall within the jurisdiction of the Sandiganbayan.5

 We find merit in the petition.

Section 2(13) of EO 2926 defines government-owned or controlled corporations as follows:

Sec. 2. General Terms Defined – Unless the specific words of the text or the context as a whole or a particular statute, shall require a differentmeaning:

xxx xxx xxx

(13) government owned or controlled corporations refer to any agency organized as a stock or non-stock corporation vested with functionsrelating to public needs whether governmental or proprietary in nature, and owned by the government directly or indirectly or through itsinstrumentalities either wholly, or where applicable as in the case of stock corporations to the extent of at least 51% of its capital stock:provided, that government owned or controlled corporations maybe further categorized by the department of the budget, the civil servicecommission and the commission on audit for the purpose of the exercise and discharge of their respective powers, functions andresponsibilities with respect to such corporations.

From the foregoing, PPSB fits the bill as a government-owned or controlled corporation, and organized and incorporated under theCorporation Code as a subsidiary of the Philippine Postal Corporation (PHILPOST). More than 99% of the authorized capital stock of PPSB belongs to the government while the rest is nominally held by its incorporators who are/were themselves officers of PHILPOST. The creationof PPSB was expressly sanctioned by Section 32 of RA 7354, otherwise known as the Postal Service Act of 1992, for purposes of, among others"to encourage and promote the virtue of thrift and the habit of savings among the general public, especially the youth and the marginalizedsector in the countryside xxx" and to facilitate postal service by "receiving collections and making payments, including postal money orders."7

It is not disputed that the Sandiganbayan has jurisdiction over presidents, directors or trustees, or managers of government-owned orcontrolled corporations with original charters whenever charges of graft and corruption are involved. However, a question arises whether theSandiganbayan has jurisdiction over the same officers in government-owned or controlled corporations organized and incorporated under theCorporation Code in view of the delimitation provided for in Article IX-B Section 2(1) of the 1987 Constitution which states that:

SEC. 2. (1) The Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of the government, including government-owned or controlled corporations with original charters.

It should be pointed out however, that the jurisdiction of the Sandiganbayan is separate and distinct from the Civil Service Commission. Thesame is governed by Article XI, Section 4 of the 1987 Constitution which provides that "the present anti-graft court known as theSandiganbayan shall continue to function and exercise its jurisdiction as now or hereafter may be provided by law." This provision, in effectretained the jurisdiction of the anti-graft court as defined under Article XIII, Section 5 of the 1973 Constitution which mandated its creation,thus:

Sec. 5. The Batasang Pambansa shall create a special court, to be known as Sandiganbayan, which shall have jurisdiction over criminal andcivil cases involving graft and corrupt practices and such other offense committed by public officers and employees, including those ingovernment-owned or controlled corporations, in relation to their office as may be determined by law. (Italics ours)

On March 30, 1995, Congress, pursuant to its authority vested under the 1987 Constitution, enacted RA 7975 8maintaining the jurisdiction othe Sandiganbayan over presidents, directors or trustees, or managers of government-owned or controlled corporations without anydistinction whatsoever. Thereafter, on February 5, 1997, Congress enacted RA 82499  which preserved the subject provision:

Section 4, Jurisdiction. The Sandiganbayan shall exercise exclusive original jurisdiction in all cases involving:

a. Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, andChapter II, Section, Title VII, Book II of the Revised Penal Code, where one or more of the accused are officials occupying the followingpositions in the government, whether in a permanent, acting or interim capacity, at the time of the commission of the offense,

(1) Officials of the executive branch occupying the positions of regional director, and higher, otherwise classified as grade "27" and higher, ofthe Compensation and Position Classification Act of 1989 (Republic Act No. 6758) specifically including:

xxx xxx xxx

(g) Presidents, directors or trustees, or managers of government-owned or controlled corporations, state universities or educationainstitutions or foundations. (Italics ours)

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The legislature, in mandating the inclusion of "presidents, directors or trustees, or managers of government-owned or controlled corporations" within the jurisdiction of the Sandiganbayan, has consistently refrained from making any distinction with respect to the manner of theircreation.

The deliberate omission, in our view, clearly reveals the intention of the legislature to include the presidents, directors or trustees, or managersof both types of corporations within the jurisdiction of the Sandiganbayan whenever they are involved in graft and corruption. Had it beenotherwise, it could have simply made the necessary distinction. But it did not.

It is a basic principle of statutory construction that when the law does not distinguish, we should not distinguish.Ubi lex non distinguit nec nosdistinguere debemos. Corollarily, Article XI Section 12 of the 1987 Constitution, on the jurisdiction of the Ombudsman (the government’sprosecutory arm against persons charged with graft and corruption), includes officers and employees of government-owned or controlled

corporations, likewise without any distinction.1awphi1.nét 

In Quimpo v. Tanodbayan,10 this Court, already mindful of the pertinent provisions of the 1987 Constitution, ruled that the concerned officersof government-owned or controlled corporations, whether created by special law or formed under the Corporation Code, come under the jurisdiction of the Sandiganbayan for purposes of the provisions of the Anti-Graft and Corrupt Practices Act. Otherwise, as we emphasizedtherein, a major policy of Government, which is to eradicate, or at the very least minimize, the graft and corruption that has permeated thefabric of the public service like a malignant social cancer, would be seriously undermined. In fact, Section 1 of the Anti-Graft and CorruptPractices Act embodies this policy of the government, that is, to repress certain acts not only of public officers but also of private personsconstituting graft or corrupt practices or which may lead thereto.

The foregoing pronouncement has not outlived its usefulness. On the contrary, it has become even more relevant today due to the rampantcases of graft and corruption that erode the people’s faith in government. For indeed, a government-owned or controlled corporation canconceivably create as many subsidiary corporations under the Corporation Code as it might wish, use public funds, disclaim publicaccountability and escape the liabilities and responsibilities provided by law. By including the concerned officers of government-owned orcontrolled corporations organized and incorporated under the Corporation Code within the jurisdiction of the Sandiganbayan, the legislatureevidently seeks to avoid just that.

 WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the assailed resolution dated February 15, 2001 of therespondent court is hereby REVERSED and SET ASIDE.

SO ORDERED.

G.R. No. 72553 December 2, 1986FELICITO R. QUIMPO, petitioner, vs.TANODBAYAN (OMBUDSMAN), GREG DIMAANO and DANNY F. REMO, respondents.Quimpo & Dingayan-Quimpo Law Office for petitioner. Medel Arnaldo Belen for private respondents. MELENCIO-HERRERA,  J.:

This Petition for certiorari address itself to the pivotal issue of whether or not PETROPHIL Corporation, a subsidiary of the PhilippineNational Oil Company (PNOC), is a government-owned or controlled corporation, whose employees fall under Tanodbayan jurisdiction.

The former Tanodbayan, in a Decision dated March 15, 1985, in TBP Case No. 84-01422 entitled "Felicito R. Quimpo vs. Greg Dimaano and Danny F. Remo" disowned its jurisdiction, a view shared by private respondents.

However, the incumbent Solicitor General, concurred in by the present Tanodbayan, and by petitioner, uphold the Tanodbayan jurisdiction.

The factual antecedents are aptly summarized as follows:

On July 17, 1984, petitioner filed with respondent Tanodbayan a complaint against private respondents for violation oRepublic Act No. 3091 (Anti- Graft and Corrupt Practices Act) approved on August 17, 1960.

Petitioner alleged that Admiral Adjusters and Surveyors, Inc. (AASI), of which he was the president, was engaged byPetrophil Corporation to render survey services for one (1) year from March 1, 1982 to February 28, 1983; that upon theexpiration of the contract, it was renewed for another period of one (1) year, from March 1, 1983 to February 2, 1984; thatsometime in October, 1983, private respondents Greg Dimaano and Danny Remo, as manager and analyst, respectively, ofthe Bulk Distribution Department and MPED of Petrophil Corporation, caused the withholding of the fees due AASI andrequired AASI to submit an explanation of the losses caused by leaking valves as reflected in ASSI's survey reports; thatdespite AASI's explanation, private respondents still refused to release the payments and even threatened to forfeit AASI'sperformance bond and claim damages and losses from AASI; that despite AASI's submission of several explanations,private respondents refused to release the fees amounting to P147,300.00.

Petitioner further alleged that private respondents favored Greater Marine Cargo Surveyors to enable it to win the biddingin January 1984. 1

Private respondents moved to dismiss the Complaint alleging lack of jurisdiction of the Tanodbayan, which Motion was opposed by thepetitioner.

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On March 15, 1985, the Tanodbayan issued his questioned Decision maintaining that he had no jurisdiction over government-owned orcontrolled corporations created under the Corporation Law. He relied on Opinion No. 62, Series of 1976 of then Secretary of Justice, Vicente Abad Santos, holding that when Section 6, Article XIII of the 1973 Constitution mentions "government-owned or controlled corporations,""the intent is only to those created by special law."

Petitioner's Motion for Reconsideration of said Decision was denied by the Tanodbayan on October 7, 1985, hence, this Petition for Certiorarito which we gave due course.

Sections 5 and 6, Article XIII of the 1975 Constitution, on the Sandiganbayan and Tanodbayan, adopted in the so-called Freedom Constitutionprovide:

SEC. 5. The Batasang Pambansa shall create a special court, to be known as Sandiganbayan, which shall have jurisdictionover criminal and civil case involving graft and corrupt practices and such other offenses committed by public officers andemployees, including those in government-owned or controlled corporations, in relation to their office as may bedetermined by law.

SEC. 6. The Batasang Pambansa shall create an office of the Ombudsman, to be known as Tanodbayan, which shall receiveand investigate complaints relative to public office, including those in government-owned or controlled corporationsmake appropriate recommendations, and in case of failure of justice as defined by law, file and prosecute thecorresponding criminal civil or administrative case before the proper court or body. (emphasis supplied).

Sections 10(a) and (f) of Presidential Decree No. 1630 also enumerate the powers of the Tanodbayan thus:

SEC. 10. Powers. — The Tanod bayan shall have the following powers:

(a) He may investigate, on complaint by any person or on his own motion or initiative, any administrative act whetheramounting to any criminal offense or not of any administrative agency including any government owned or controlledcorporation;

xxx xxx xxx

(f) He may file and prosecute civil and administrative cases involving graft and corrupt practices and such other offensescommitted by public officers and employees, including those in govemment-owned or controlled corporations, in relationto their office; (Emphasis supplied).<äre||anº•1àw>

So does the definition of "Government" in Section 2(a) of the Anti-Graft and Corrupt Practices Act include government corporations:

Sec. 2. Definition of terms. — (a) 'Government' includes the national government, the local governments, the govemment-owned and controlled corporations, and an other instrumentalities or agencies of the Republic of the Philippines andtheir branches. (Emphasis supplied)

Evident is the intent to include employees of government-owned or controlled corporations within the jurisdiction of the Tanodbayan and theSandiganbayan.

Is PETROPHIL a government-owned or controlled corporation whose employees fall within the jurisdictional purview of the Tanodbayan forpurposes of the Anti-Graft and Corrupt Practices Act?

 We uphold the Tanodbayan jurisdiction.

It has to be conceded that PETROPHIL was not created by special law. As the incumbent Solicitor General has pointed out, it was originally created as a private corporation under the Corporation Law with the name Standard Vacuum Oil Company (STANVAC). STANVAC was takenover by Esso Philippines, which was, in turn bought by Esso Eastern Standard. Eventually, Esso Eastern Standard was purchased by thePhilippine National Oil Corporation (PNOC), and its corporate name was changed to Petrophil Corporation.

 While it may be that PETROPHIL was not originally "created" as a government-owned or controlled corporation, after it was acquired byPNOC, which is a government-owned or controlled corporation, PETROPHIL became a subsidiary of PNOC and thus shed-off its privatestatus. It is now funded and owned by the government as, in fact, it was acquired to perform functions related to government programs andpolicies on oil a vital commodity in the economic life of the nation. It was acquired not temporarily but as a permanent adjunct to performessential government or government-related functions, as the marketing arm of PNOC to assist the latter in selling and distributing oil andpetroleum products to assure and maintain an adequate and stable domestic supply.

lt should make no substantial difference that it was not originally "created" as a government-owned or controlled corporation. What is decisiveis that it has since been acquired by the Government to perform functions related to government programs and policies on oil.

Opinion No. 62, Series of 1976 of the then Secretary of Justice must be deemed superseded by the doctrine laid down by this Court en banc, inthe case of  National Housing vs. Juco, 2 in pari materia to the case at bar, which held that

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for purposes of coverage in the Civil Service, employees of government-owned or controlled corporation whether created by special law or formed as subsidiaries are covered by the Civil Service Law, not the Labor Code, and the fact that privatecorporations owned or controlled by the government may be created by special charter does not mean that suchcorporation not created by special law are not covered by the Civil Service.

The meaning thus given to "government-owned or controlled corporations" for purposes of the civil service provision should likewise apply forpurposes of the Tanodbayan and Sandiganbayan provisions, otherwise, incongruity would result, and a government-owned corporation couldcreate as many subsidiary corporations under the Corporation Code as it wishes, which would then be free from strict accountability and couldescape the liabilities and responsibilities provided for by law. This device was liberally made use of during the past regime to the detriment of budgetary restraints and of fiscal accountability by "private" corporations thus created. As well explained in the National Housing case:

The infirmity of the respondents' position lies in its permitting a circumvention or emasculation of Section I, Article XII-Bof the Constitution. It would be possible for a regular ministry of government to create a host of subsidiary corporationsunder the Corporation Code funded by a willing legislature. A government-owned corporation could create severasubsidiary corporations. These subsidiary corporations would enjoy the best of two worlds. Their officials and employees would be privileged individuals, free from the strict accountability required by the Civil Service Decree and the regulationsof the Commission on Audit. Their income would not be subject to the competitive restraints of the open market not to theterms and conditions of civil service employment. Conceivably, all government-owned or controlled corporations could becreated, no longer by special charters, but through incorporation under the general law. The constitutional amendmentincluding such corporations in the embrace of the civil service would cease to have application Certainly, such a situationcannot be allowed to exist. (NHC vs. NLRC, p. 8)

It is true that the National Housing case held that the Decision therein "refers to a corporation created as a government-owned or controlledentity and does not cover cases involving private firms taken over by the government in foreclosure or similar proceedings" judgment on whichis reserved "until the appropriate controversy is brought to the Court." In the case of PETROPHIL, however, it is clear that it was acquired by purchase precisely, as explained above, to assist a government-owned or controlled corporation, the PNOC, in the performance of itsgovernment-related functions. the acquisition was not simply to recover the government's financial exposure as in "foreclosure or similarproceedings."

Private respondents allege, however, that PETROPHII, is possessed of unique characteristics that endow it with all the vestiges of a privatecorporation, such as (1) its employees are not members of the Government Service Insurance System but of the Social Security System, whichcovers private corporations; (2) they are covered by the Labor Code and other labor laws and not by civil service rules; (3) PETROPHIL wasnever created pursuant to the express provisions of the PNOC charter; and (4) it is engaged in the highly competitive business of petroleumdistribution/retail and its operation is profit-oriented. Assuming these to be so, they are internal matters not determinative of its realcorporate classification. Besides, its exclusion from GSIS coverage is not by virtue of its private character but by operation of law pursuant toSection 15 of P.D. No. 405, amending the PNOC charter, specifically providing that, "PNOC subsidiaries organized to undertake purely business ventures shall not, as a matter of right, be subject to the provisions of the Government Service Insurance System, as provided forunder R.A. No. 186, as amended, as well as to any law, executive orders and decrees relating to leave of absences, retirement privileges, regular working hours, and other government employee benefits." And even granting that it is profit-oriented, the fact remains that it was acquired with capital belonging to the Government and Govern ment money is utilized in its operations.

In other words, there can be no gainsaying that as of the date of its acquisition by the Government utilizing public funds, PETROPHIL, whileretaining its own corporate existence, became a government-owned or controlled corporation within the Constitutional precept. Its employees

therefore, are public servants falling within the investigatory and prosecutory jurisdiction of the Tanodbayan for purposes of the Anti-Graft &Corrupt Practices Act.

Otherwise, a major policy of Government, which is to eradicate, or at the very least minimize, the graft and corruption that has permeated thefabric of the public service, like a malignant social cancer, would be seriously undermined. In fact, section 1 of the Anti-Graft and CorruptPractices Act seeks to repress not only certain acts of public officers but also of " private persons alike, which constitute graft or corruptpractices or which may lead thereto,

 WHEREFORE, judgment is hereby rendered setting aside the Tanodbayan Decision, dated March 15, 1985, and its Order of October 7, 1985,and requiring the incumbent Tanodbayan to investigate and act on petitioner's complaint against private respondents Greg Dimaano andDanny Remo. No costs.

SO ORDERED.