17. Rep. Lagman v. ES Ochoa, G.R. No. 197422, Nov.

23, 2020

EN BANC

[ G.R. No. 197422, November 03, 2020 ]

REP. EDCEL C. LAGMAN, PETITIONER, VS. EXECUTIVE SECRETARY PAQUITO N.

OCHOA, JR. AND DEPARTMENT OF BUDGET AND MANAGEMENT SECRETARY
FLORENCIO B. ABAD, RESPONDENTS.

[G.R. No. 197950]

PROSPERO A. PICHAY, JR., PETITIONER, VS. GOVERNANCE COMMISSION FOR

GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS, EXECUTIVE
SECRETARY PAQUITO N. OCHOA, JR., AND DEPARTMENT OF BUDGET AND
MANAGEMENT SECRETARY FLORENCIO B. ABAD, RESPONDENTS.

DECISION

LEONEN, J.:

Congress may legislate changes to aspects of public offices which exist by virtue of the
same exercise of legislative power. These changes are valid when done in good faith
and pursuant to clear policy objectives.

This Court resolves the consolidated Petitions in G.R. No. 1974221 and G.R. No.
197950,2 which both assail Republic Act No. 10149 as unconstitutional. G.R. No.
197422 is a Petition for Certiorari and Prohibition under Rule 65 filed by Representative
Edcel C. Lagman on July 15, 2011. G.R. No. 197950 is a Petition for Certiorari and
Prohibition with prayer for temporary restraining order and preliminary injunction, filed
by Prospero A. Pichay, Jr. on August 22, 2011.

Petitioners allege, among others, that the statute violates the affected officials' right to
security of tenure, unduly delegates legislative powers, arrogates a constitutional
commission's jurisdiction, and breaches the equal protection clause.

Congressional inquiries into the activities of some government-owned or controlled

corporations (GOCCs) revealed several excesses and inefficiencies that drained
government finances. Some of the uncovered excesses and inefficiencies involved the
"obscene bonuses" received by the board of directors of some GOCCs, despite the
GOCCs poor financial condition.3 Certain GOCCs were also found to be implementing
"excessively generous retirement schemes,"4 most notably in the Manila Economic and
Cultural Office, where directors could retire after only two years of service, at the rate
₱600,000.00 per year of service.5

Inquiries in 2009 alone highlighted the GOCCs' mounting debt despite accounting for
28% of national expenditures. Moreover, GOCCs' assets were valued at ₱5.557 trillion,
exceeding the national government's assets of ₱2.879 trillion.6 Of the ₱475.296-billion
inter-agency receivables, 91% or ₱433.383 billion were due from GOCCs.7 Despite
these inefficiencies, GOCCs still declared approximately ₱14.6 billion in dividends, and
received subsidies worth around P7.6 billion, or greater than their tax liability of around
₱6.7 billion.8

To address these abuses, Republic Act No. 10149,9 or the GOCC Governance Act, was
signed into law on June 6, 2011.10

The law is primarily geared towards optimizing the State's "ownership rights in GOCCs
and to promote growth by ensuring that operations are consistent with national
development policies and programs."11

As such, the law created the Governance Commission for GOCCs (Governance
Commission), an agency attached to the Office of the President. It is empowered,
among others, to evaluate the performance and determine the relevance of GOCCs, and
to ascertain whether these GOCCs should be reorganized, merged, streamlined,
abolished, or privatized, in consultation with the department or agency to which they
are attached.12

On July 15 and August 22, 2011, Representative Edcel C. Lagman (Lagman) and
Prospero A. Pichay, Jr. (Pichay) filed their respective Petitions for Certiorari and
Prohibition assailing the constitutionality of Republic Act No. 10149. The Lagman
Petition13 was docketed as G.R. No. 197422, while the Pichay Petition14 was docketed
as G.R. No. 197950.

Impleaded as respondents for both petitions were the following: the Governance
Commission; former Executive Secretary Paquito N. Ochoa, Jr., who was directed to
execute Republic Act No. 10149; and former Finance Secretary Cesar V. Purisima and
former Budget and Management Secretary Florencio B. Abad, as ex-officio members
tasked with the release of funding and support for the initial operations of the
Governance Commission.

Respondents filed their separate Comments.15 Petitioner Lagman filed his Reply.16

On February 7, 2012, the cases were consolidated. Each petitioner filed his
Memorandum;17 and respondents, in turn, filed their Consolidated Memorandum.18

In G.R. No. 197422, petitioner Lagman submits that he has presented an actual case
and has legal standing to invoke judicial review.19

As to an actual case, he notes that the patent violations of the Constitution—violation of

the security of tenure of public officials, undue delegation of legislative powers, and
derogation of the Civil Service Commission's powers20—are actual controversies,21 and
not anticipatory, since the assailed law is already being implemented.22

As for legal standing, petitioner Lagman submits that he has substantial interest as a
legislator.23 Just the same, he contends that the Petition should be exempt from the
rule on hierarchy of courts, "in the interest of justice" and the case raising issues of
paramount public interest and transcendental importance.24
He adds that there is "no plain, speedy and adequate remedy available" to assail
Republic Act No. 10149.25 He claims that he filed the Petition out of urgency, due to
the impending removal of the GOCC officers.26

On substantive matters, petitioner Lagman assails Republic Act No. 10149 as

unconstitutional for violating the security of tenure27 of officials, trustees, and directors
of GOCCs with original charters. The law shortens the directors' terms to one year, and
provides in Section 17,28 paragraph 3 that the terms of incumbent chief executive
officers (CEOs) and appointive board members shall only be up to June 30,
2011.29 This pre-termination or shortening of term allegedly infringes on the security
of tenure of those with fixed terms under the GOCCs' special charters,30 and is "an
outright removal" of the affected incumbents "without cause and without due
process."31

Petitioner Lagman also assails Section 532 of Republic Act No. 1014933 as an undue
delegation of legislative powers.34 The law delegates to the Governance Commission
the power to "create, reorganize, streamline, merge, abolish and privatize"35 GOCCs
with original charters,36 and allows it "to recommend, for the President's sole approval,
the abolition and privatization of GOCCs chartered under special law."37 These powers,
he argues, transgress on exclusively legislative powers.38

Even if such power could be validly delegated, petitioner Lagman argues that Section 5
fails to provide sufficient guidelines or definitive standards. Thus, it is still an undue
delegation of legislative power.39

Petitioner Lagman further argues that other provisions of the law also form undue
delegation of legislative powers. Sections 5(h),40 8,41 9,42 and 2343 of Republic Act
No. 10149 give to the Governance Commission and the President Congress's
power44 to fix the salaries, emoluments, and allowances of officials of the GOCCs with
original charters,45 through the Compensation and Position Classification System that
the Governance Commission is authorized to develop.46

Petitioner Lagman insists that the Governance Commission diminishes,47 if not

supplants, the constitutional48 jurisdiction of the Civil Service Commission49 over
GOCCs with original charters.50 He points out that the law makes final the
qualifications and appointments in GOCCs, set by the Governance Commission, without
the approval of the Civil Service Commission.51

In G.R. No. 197950, petitioner Pichay seeks to declare Republic Act No. 10149
unconstitutional for being an undue delegation of legislative power, violating the
separation of powers, and going against the equal protection clause.52 Pichay is the
former chairperson of the Local Water Utilities Administration, a GOCC created under
Presidential Decree No. 198, as amended.53

Petitioner Pichay contends that Section 5 of Republic Act No. 10149 in validly delegates
legislative power by empowering the Governance Commission to abolish GOCCs.54 He
contends that the phrase "the best interest of the State" is not a sufficient standard for
the Governance Commission to abolish, reorganize, merge, streamline or privatize
GOCCs.55 This delegation, moreover, allegedly violates the principle of separation of
powers.56
Petitioner Pichay further alleges that there is no reasonable basis for excluding some
GOCCs from Republic Act No. 10149.57 He states that the law exempted a total of
13,968 GOCCs from its coverage.58 Among these, he notes the arbitrary exclusion of
local water districts and economic zones, saying that59 this does not rest on substantial
distinctions60 and is not germane to the purpose of the law.61 Hence, he claims that
the law violates the equal protection clause.62

Petitioner Pichay further contends that Republic Act No. 10149, as a general law,
cannot amend GOCC charters, which are special laws.63

Finally, petitioner Pichay submits that the issue is of transcendental importance,

meriting the locus standi requirement to be relaxed.64 Moreover, he claims that he
may sue as taxpayer, as the assailed law provides for appropriation of public funds,
found in Section 29.65

Respondents, through the Office of the Solicitor General, claim that the Petitions do not
show any actual case that calls for judicial review. They point out that the Petitions
were brought after Republic Act No. 10149's enactment and before any governmental
action prejudicial to the affected parties. They submit that this Court should refrain
from passing upon the constitutionality of Republic Act No. 10149 until an actual case
arises.66

Respondents further contend that the requisite of legal standing is lacking, as

petitioners were neither CEOs nor members of any GOCC board who have the legal
standing of an aggrieved party.67

They note that petitioner Lagman did not specify which powers of Congress were or
would be infringed upon;68 and contend that it is Lagman, rather, who undermines the
collective will and wisdom of Congress in enacting Republic Act No. 10149.69 Likewise,
petitioner Pichay supposedly failed to show direct injury, as he was no longer holding
any position in the Local Water Utilities Administration when he filed his Petition. In any
case, even without Republic Act No. 10149, the Local Water Utilities Administration is
an attached agency of the Office of the President, always subject to the President's
power to reorganize under the Administrative Code.70

Respondents also fault petitioners for failing to show that the cases raise issues of
transcendental importance.71 At any rate, they maintain that the assailed law is
presumed constitutional until a clear breach of the Constitution is shown.72

Respondents further argue that petitioners failed to show that there was no appeal or
any "plain, speedy, and adequate remedy" if Republic Act No. 10149 were to be
implemented.73 They also assert that the Petitions do not impute grave abuse of
discretion, even while seeking to declare the law unconstitutional, thus, making them
actions for declaratory relief, over which this Court has no original
jurisdiction.74 Further, the petitions filed directly before the Court violate the rule on
judicial hierarchy.75

Respondents submit that considering the "laudable purpose"76 of the law and the
government's good faith to restructure the GOCCs, Republic Act No. 10149 must prevail
over the unwarranted fear that the affected officials' security of tenure were violated.77
Respondents aver that Article IX-B, Section 2(3) of the Constitution and Book V, Title I-
A, Chapter 6, Section 46 of the Administrative Code give protection from removal,
dismissal, or suspension without lawful cause only to an "employee" or "officer"78—
which appointive members of the Board of GOCCs are not.79 Hence, they are not
covered by the law.80

Furthermore, respondents contend that the right to security of tenure is unavailing for
incumbent CEOs and appointive members of the Board of GOCCs whose terms of office
are fixed by law.81 They contend that Congress's power to create a public office
includes the power to abolish it and limit the terms of its officials.82 According to
respondents, by reducing the terms of office of all incumbent CEOs and appointive
members of the Board of GOCCs to June 30, 2011,83 Congress merely expressed its
will to supersede the GOCC charters which provide different terms.84 Incidentally,
respondents argue that "term" is different from "tenure," and the affected officials
would not be "removed" as they would hold their office until their new terms expire on
June 30, 2011.85

Even assuming that they were "removed," as argued by petitioner

Lagman,86 respondents submit that Republic Act No. 10149 constitutes "good cause,"
which justifies the alleged removal of affected GOCC officers.87 Respondents dismiss as
unfounded88 the concern that the law "lumped together both the errant and blameless
officials[.]"89 They point out that under the law, incumbent officials who have
satisfactory performance may be reappointed, or allowed to hold over until their
successors have been appointed.90 At any rate, respondents argue that the affected
officials have no vested right to their offices.91

Respondents contend that Section 5 of Republic Act No. 10149 merely delegated to the
Governance Commission the power to ascertain facts to determine if the reorganization,
abolition, merger, streamlining, or privatization of GOCCs would be proper. In other
words, they explain, the abolition or reorganization was already determined by
Congress, and the Governance Commission merely implements this decision based on
certain standards set in Section 5 and the legislative policy in Section 2.92

Similarly, respondents submit that the delegation to the Governance Commission of the
establishment of a Compensation and Position Classification System is valid. They argue
that sufficient guidelines and standards are provided in Section 9, and in other existing
compensation and position classification laws including Joint Resolution No. 4,93 series
of 2009. Furthermore, the Governance Commission is not tasked to classify GOCC
personnel as regards their ranks and privileges, but merely to determine the positions
or emoluments to which they are entitled considering the nature of their work vis-à-vis
that of the employees in the private sector and other government personnel covered by
the Salary Standardization Law.94

As such, respondents submit that any act of the Governance Commission or the
president under Republic Act No. 10149 that leads to the reorganization or abolition of
GOCCs would not violate the separation of powers between the executive and
legislative branches.95

At any rate, respondents submit that the delegation to the president of the power to
reorganize GOCCs is consistent with the president's continuing authority to reorganize
or abolish all units of the national government, including all GOCCs, pursuant to
Presidential Decree No. 1416, as amended by Presidential Decree No. 1772.96

Respondents argue that the Governance Commission has a separate mandate and
authority from the Civil Service Commission.97 For one, it was primarily tasked to
evaluate the performance and relevance of the GOCC as an institution, while the Civil
Service Commission, as the government's central personnel agency, determines
questions of qualifications of merit and fitness of those appointed to the civil
service.98 The Governance Commission's policy is to rationalize GOCCs' operations and
monitor them to ensure the efficient use of government assets and resources.99 On the
other hand, the Civil Service Commission establishes rules and regulations to promote
efficiency and professionalism in the civil service. Hence, the Governance Commission
neither duplicates nor supplants the Civil Service Commission.100

Disputing petitioner Pichay's argument, respondents aver that "equal protection is not
dictated by the number of subjects that would be governed by the law but by the
existence of a substantial distinction" between the covered subjects and those not
covered.101 Respondents then discuss the special circumstances of the exempted
GOCCs, which differentiate them from those covered by Republic Act No. 10149:

1. The Bangko Sentral ng Pilipinas was excluded to ensure its independence as

required by the 1987 Constitution. Its functions cover national economic
priorities such as money, banking, credit, and supervision over operations of
banks, which should not be hampered by the operation of Republic Act No.
10149;102

2. State universities and colleges are best regulated by the Commission on

Higher Education, given the constitutional right of all citizens to quality
education, and the sheer number of schools to be regulated;103

3. Cooperatives are meant to be "autonomous, self-help organizations controlled

by their members,"104 and were excluded in light of Republic Act No. 6938,
which specifically governs their registration and organization. Likewise, these
institutions are already regulated by the Cooperative Development Authority
under Republic Act No. 6939;105

4. Presidential Decree No. 198 lays down the administrative and organizational
requirements of local water districts, which are regulated by the Local Water
Utilities Administration, an agency attached to the Office of the President,
pursuant to the State policy that "local water utilities be locally-controlled and
managed";106

5. Special economic zones are administered and developed by the Philippine

Economic Zone Authority to create "decentralized, self-reliant and self-sustaining
industrial, commercial/trading, agro-industrial, tourist, banking, financial and
investment centers with minimum government intervention."107 The technical
aspects of their regulation, as well as the social and economic impact of their
creation, are governed by Republic Act No. 7916;108 and
 6. Finally, research institutions were created to assist the government in the
pursuit of national and economic development. These goals are of paramount
importance, and cannot be subjected to the "central monitoring and oversight" of
the Governance Commission.109

Respondents also fault petitioner Pichay's argument that Republic Act No. 10149, being
a general law, cannot supplant the special purposes in GOCC charters. They invoke a
settled rule in statutory construction that a subsequent general law does not repeal a
prior special law on the same subject matter unless there is a clear legislative intent to
do so. In this regard, they point out that Section 32 of Republic Act No. 10149
categorically declares GOCC charters inconsistent with the law shall be revoked,
repealed, or modified;110 Section 30 expressly provides for suppletory application only
of the GOCCs charters; and Sections 5(e), 12, 17 and 23 are explicitly made to govern
GOCCs notwithstanding the provisions in their charters.111

Finally, respondents contend that Republic Act No. 10149 can be considered more
specific inasmuch as it directly relates to the organizational aspect of the GOCCs.112

The issues for this Court's resolution are:

First, whether or not the Petitions raise justiciable issues that call for the Court's power
of judicial review;

Second, whether or not the filing of the Petitions directly with the Court violates the
rule on hierarchy of courts;

Third, whether or not Republic Act No. 10149 amounts to an undue delegation of
legislative power in view of the principal functions vested in the Governance
Commission;

Fourth, whether or not Republic Act No. 10149 violates the security of tenure of
officials, trustees, and directors of GOCCs;

Fifth, whether or not the Governance Commission duplicates and supplants the
constitutional authority and jurisdiction of the Civil Service Commission;

Sixth, whether or not the Republic Act No. 10149 violates the equal protection clause;
and

Finally, whether or not the repeal by Republic Act No. 10149, which is alleged to be a
general law, of the individual charters of the affected GOCCs is valid.

The Petitions are dismissed. The assailed provisions of Republic Act No. 10149 are
constitutional.

Petitioners invoke this Court's original jurisdiction over petitions for certiorari under
Article VIII, Section 5 of the Constitution. Petitioner Lagman alleged that his Petition is
exempted from the rule on hierarchy of courts for raising matters of transcendental
importance. Likewise, petitioner Pichay prayed that this Court take primary jurisdiction
over the case given the transcendental importance of the issues raised.

There is an apparent confusion between this Court's jurisdiction over the procedural
vehicle employed by petitioners and the justiciability of their claims. As discussed
in GIOS-SAMAR, Inc. v. Department of Transportation and Communications,113 issues
of jurisdiction are entirely different from issues of justiciability:

Related to jurisdiction is our application of the doctrine of granting the primary

administrative jurisdiction, when statutorily warranted, to the executive
department. This is different from the rule on exhaustion of administrative remedies or
the doctrine of respect for the hierarchy of courts, which are matters of
justiciability, not jurisdiction.114 (Emphasis supplied, citations omitted)

Jurisdiction is a court's competence "to hear, try and decide a case."115 It is granted
by law and requires courts to examine the remedies sought116 and issues raised by the
parties,117 the subject matter of the controversy,118 and the processes employed by
the parties in relation to laws granting competence.119 Once this Court determines that
the procedural vehicle employed by the parties raises issues on matters within its legal
competence, it may then decide whether to adjudicate the constitutional issues brought
before it.

Jurisdiction alone will not require this Court to pass upon the constitutionality of a
statute. As held in Angara v. Electoral Commission,120 the power of judicial review
remains subject to this Court's discretion in resolving actual controversies:

[W]hen the judiciary mediates to allocate constitutional boundaries, it does not assert
any superiority over the other departments; it does not in reality nullify or invalidate an
act of the legislature, but only asserts the solemn and sacred obligation assigned to it
by the Constitution to determine conflicting claims of authority under the Constitution
and to establish for the parties in an actual controversy the rights which that
instrument secures and guarantees to them. This is in truth all that is involved in what
is termed "judicial supremacy" which properly is the power of judicial review under the
Constitution. Even then, this power of judicial review is limited to actual cases and
controversies to be exercised after fall opportunity of argument by the parties, and
limited further to the constitutional question raised or the very lis mota presented. Any
attempt at abstraction could only lead to dialectics and barren legal questions and to
sterile conclusions of wisdom, justice or expediency of legislation.121 (Emphasis
supplied)

Thus, as a rule, this Court only passes upon the constitutionality of a statute if it is
"directly and necessarily involved in [a] justiciable controversy and is essential to the
protection of the rights of the parties concerned."122

Courts decide the constitutionality of a law or executive act only when the following
essential requisites are present: first, there must be an actual case or controversy;
second, petitioners must possess locus standi; third, the question of constitutionality
must be raised at the earliest opportunity;123 and fourth, the resolution of the question
is unavoidably necessary to the decision of the case itself.124 These requisites all relate
to the justiciability of the issues raised by the parties. If no justiciable controversy is
found, this Court may deny the petition as a matter of discretion.

This justiciability requirement is "intertwined with the principle of separation of

powers."125 It cautions the judiciary against unnecessary intrusion on matters
committed to the other branches of the government.126

Furthermore, the presumption that the legislature and the executive have passed laws
and executive acts within the bounds of the Constitution imposes a restraint on the
judiciary in rashly resolving questions of constitutionality. In People v. Vera:127

This court is not unmindful of the fundamental criteria in cases of this nature that all
reasonable doubts should be resolved in favor of the constitutionality of a statute. An
act of the legislature approved by the executive, is presumed to be within constitutional
limitations. The responsibility of upholding the Constitution rests not on the courts
alone but on the legislature as well. "The question of the validity of every statute is first
determined by the legislative department of the government itself." And a statute
finally comes before the courts sustained by the sanction of the executive. The
members of the Legislature and the Chief Executive have taken an oath to support the
Constitution and it must be presumed that they have been true to this oath and that in
enacting and sanctioning a particular law they did not intend to violate the Constitution.
The courts cannot but cautiously exercise its power to overturn the solemn declarations
of two of the three grand departments of the government. Then, there is that peculiar
political philosophy which bids the judiciary to reflect the wisdom of the people as
expressed through an elective Legislature and an elective Chief Executive. It follows,
therefore, that the courts will not set aside a law as violative of the Constitution except
in a clear case. This is a proposition too plain to require a citation of
authorities.128 (Emphasis supplied, citations omitted)

Again, jurisdiction in itself will not automatically merit a ruling on the constitutionality
of the assailed provisions. Invocations of "transcendental importance" will not affect
this Court's competence to decide the issues before it, and raising this Court's
competence to decide issues of constitutionality will not necessarily require it to do so.
Rather, this Court's exercise of its power of judicial review will depend on whether the
requirements for invoking such power have been adequately met.

I (A)

The requirement of justiciability, or the existence of an actual case or controversy, for

constitutional adjudication is explicit in the second paragraph of Article VIII, Section 1
of the Constitution:

SECTION 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or instrumentality of the Government.
An actual case or controversy exists when there is "a conflict of legal rights, an
assertion of opposite legal claims susceptible of judicial resolution."129 It requires the
existence of actual facts where there is real conflict of rights and duties.130

Hypothetical or anticipated threats are insufficient to uphold a constitutional challenge.

It is not this Court's function to render advisory opinions.131 Even its expanded
jurisdiction in Article VIII, Section 1—to determine whether any government branch or
instrumentality committed grave abuse of discretion—requires that an actual case
exists.132 Otherwise, any resolution would merely constitute an "attempt at abstraction
[that] could only lead to dialectics and barren legal questions and to sterile conclusions
unrelated to actualities."133

Closely related to the "actual case or controversy" requirement is the requirement of

"ripeness" for adjudication. A constitutional question is ripe for adjudication when the
governmental act being challenged has had a direct adverse effect on the individual
challenging it. These concepts were discussed in Province of North Cotabato v.
Government of the Republic of the Philippines Peace Panel on Ancestral Domain:.134

An actual case or controversy involves a conflict of legal rights, an assertion of opposite

legal claims, susceptible of judicial resolution as distinguished from a hypothetical or
abstract difference or dispute. There must be a contrariety of legal rights that can be
interpreted and enforced on the basis of existing law and jurisprudence. The Court can
decide the constitutionality of an act or treaty only when a proper case between
opposing parties is submitted for judicial determination.

Related to the requirement of an actual case or controversy is the requirement of

ripeness. A question is ripe for adjudication when the act being challenged has had a
direct adverse effect on the individual challenging it. For a case to be considered ripe
for adjudication, it is a prerequisite that something had then been accomplished or
performed by either branch before a court may come into the picture, and the
petitioner must allege the existence of an immediate or threatened injury to itself as a
result of the challenged action. He must show that he has sustained or is immediately
in danger of sustaining some direct injury as a result of the act complained
of.135 (Emphasis supplied, citations omitted)

In Atty. Lozano v. Speaker Nograles,136 this Court explained:

An aspect of the "case-or-controversy" requirement is the requisite of "ripeness." In the

United States, courts are centrally concerned with whether a case involves uncertain
contingent future events that may not occur as anticipated, or indeed may not occur at
all. Another approach is the evaluation of the twofold aspect of ripeness: first, the
fitness of the issues for judicial decision; and second, the hardship to the parties
entailed by withholding court consideration. In our jurisdiction, the issue of ripeness is
generally treated in terms of actual injury to the plaintiff. Hence, a question is ripe for
adjudication when the act being challenged has had a direct adverse effect on the
individual challenging it. An alternative road to review similarly taken would be to
determine whether an action has already been accomplished or performed by a branch
of government before the courts may step in.137 (Emphasis supplied, citations
omitted)
"In cases where the constitutionality of a law is being questioned, it is not enough that
the law has been passed or is in effect,"138 the party challenging the law must assert a
specific and concrete legal claim or show the law's direct adverse effect on them.139

The requirement of locus standi then pertains to a party's personal and substantial
interest in the case arising from the direct injury they sustained, or will sustain, as a
result of the challenged governmental action. In Anak Mindanao Party-List Group v. The
Executive Secretary:140

Locus standi or legal standing has been defined as a personal and substantial interest in
a case such that the party has sustained or will sustain direct injury as a result of the
governmental act that is being challenged. The gist of the question on standing is
whether a party alleges such personal stake in the outcome of the controversy as to
assure that concrete adverseness which sharpens the presentation of issues upon which
the court depends for illumination of difficult constitutional questions.

It has been held that a party who assails the constitutionality of a statute must have a
direct and personal interest. It must show not only that the law or any governmental
act is invalid, but also that it sustained or is in immediate danger of sustaining some
direct injury as a result of its enforcement, and not merely that it suffers thereby in
some indefinite way. It must show that it has been or is about to be denied some right
or privilege to which it is lawfully entitled or that it is about to be subjected to some
burdens or penalties by reason of the statute or act complained of.

For a concerned party to be allowed to raise a constitutional question, it must show that
(1) it has personally suffered some actual or threatened injury as a result of the
allegedly illegal conduct of the government, (2) the injury is fairly traceable to the
challenged action, and (3) the injury is likely to be redressed by a favorable
action.141 (Emphasis supplied, citations omitted)

Generalized grievance is not enough. The party must have a "material interest" affected
by the official action taken, as distinguished from mere incidental interest.142 Unless
one's constitutional rights are affected by the operation of a statute or governmental
act, they have no standing.143

Here, petitioners claim that Republic Act No. 10149 limits the tenure of affected officials
to June 30, 2011, notwithstanding their fixed terms in GOCC charters. However, this
seeming conflict does not present any direct adverse effect to either petitioner.

Petitioner Lagman anchored his Petition on the theory that Republic Act No. 10149
abdicates the legislative power of Congress, of which he is a member. Indeed, this
Court has taken cognizance of cases where governmental action is assailed for
infringing on a legislator's prerogatives, powers, and privileges.

In PHILCONSA v. Enriquez,144 this Court upheld a senator's legal standing to question

the validity of a presidential veto or a condition imposed on an item in an appropriation
bill. It ruled:
Where the veto is claimed to have been made without or in excess of the authority
vested on the President by the Constitution, the issue of an impermissible intrusion of
the Executive into the domain of the Legislature arises[.]

To the extent the power of Congress are impaired, so is the power of each member
thereof, since his office confers a right to participate in the exercise of the powers of
that institution[.]

An act of the Executive which injures the institution of Congress causes a derivative but
nonetheless substantial injury, which can be questioned by a member of Congress.... In
such a case, any member of Congress can have a resort to the courts.145 (Citations
omitted)

Similarly, in Pimentel, Jr. v. Office of the Executive Secretary,146 this Court held that
"legislators have the standing to maintain inviolate the prerogatives, powers and
privileges vested by the Constitution in their office and are allowed to sue to question
the validity of any official action which they claim infringes their prerogatives as
legislators."147 Senator Aquilino Pimentel, Jr. was held to possess the requisite legal
standing in a petition that invoked the Senate's power to grant or withhold its
concurrence to a treaty entered into by the executive branch. The petition sought to
order the executive branch to transmit the copy of the treaty to the Senate to allow it
to exercise such authority.

In Biraogo v. The Philippine Truth Commission of 2010,148 which involved the

president's creation of the Philippine Truth Commission, this Court upheld the
petitioners' legal standing in a suit directed at the executive department:

Evidently, their petition primarily invokes usurpation of the power of the Congress as a
body to which they belong as members. This certainly justifies their resolve to take the
cudgels for Congress as an institution and present the complaints on the usurpation of
their power and rights as members of the legislature before the Court. As held
in Philippine Constitution Association v. Enriquez,

To the extent the powers of Congress are impaired, so is the power of each member
thereof, since his office confers a right to participate in the exercise of the powers of
that institution.

An act of the Executive which injures the institution of Congress causes a derivative but
nonetheless substantial injury, which can be questioned by a member of Congress. In
such a case, any member of Congress can have a resort to the courts.

Indeed, legislators have a legal standing to see to it that the prerogative, powers and
privileges vested by the Constitution in their office remain inviolate. Thus, they are
allowed to question the validity of any official action which, to their mind, infringes on
their prerogatives as legislators.149 (Citation omitted)

In all those cases, however, the legislators questioned executive acts that allegedly
usurped congressional authority or legislative prerogatives. Here, petitioner Lagman did
not specify which prerogatives, powers, or privileges were or would be infringed upon
by the law.

Indeed, there is no encroachment of legislative power here because what is assailed is

itself an enactment of Congress. This contradicts any prima facie notion of usurpation of
legislative powers, since it was the legislature itself that made the questioned
delegation of powers to the executive.

Justice Conchita Carpio Morales' observations in her dissent in Biraogo are instructive:

No doubt, legislators are allowed to sue to question the validity of any official action
upon a claim of usurpation of legislative power. That is why, not every time that a
Senator or a Representative invokes the power of judicial review, the Court
automatically clothes them with locus standi. The Court examines first, as
the ponencia did, if the petitioner raises an issue pertaining to an injury to Congress as
an institution or a derivative injury to members thereof before proceeding to resolve
that particular issue.

The peculiarity of the locus standi of legislators necessarily confines the adjudication of
their petition only on matters that tend to impair the exercise of their official
functions.150 (Emphasis supplied, citations omitted)

Therefore, a member of Congress who merely invokes his or her status as a legislator
cannot be granted standing in a petition that does not involve any impairment of the
powers or prerogatives of Congress. Provincial Bus Operators Association of the
Philippines v. The Department of Labor and Employment151 warns against this Court
overstepping its role among its co-equal branches of government:

This Court is not a forum to appeal political and policy choices made by the Executive,
Legislative, and other constitutional agencies and organs. This Court dilutes its role in a
democracy if it is asked to substitute its political wisdom for the wisdom of accountable
and representative bodies where there is no unmistakable democratic deficit. It cannot
lose this place in the constitutional order. Petitioners' invocation of our jurisdiction and
the justiciability of their claims must be presented with rigor. Transcendental interest is
not a talisman to blur the lines of authority drawn by our most fundamental law.152

Since petitioner Lagman failed to raise any clear right or legislative prerogative
supposedly violated by Republic Act No. 10149, he has no standing to question the
constitutionality of its provisions.

Neither does petitioner Pichay have standing to question Republic Act No. 10149's
constitutionality.

Section 17, paragraph 3 of the law limits the tenure of affected officials to June 30,
2011, notwithstanding their fixed terms in their GOCC charters. This would have had a
direct bearing on incumbent public officials, including petitioner Pichay, had he
remained the chairperson of the Local Water Utilities Administration. Yet, as he has
revealed in his Petition, he was separated from the Local Water Utilities Administration
during the pendency of this case. This renders his contentions moot.
However, recognized exceptions to the mootness doctrine include:

(1) Grave constitutional violations;

(2) Exceptional character of the case;

(3) Paramount public interest;

(4) The case presents an opportunity to guide the bench, the bar, and the
public; or

(5) The case is capable of repetition yet evading review.153 (Citations omitted)

While petitioner Pichay is not the proper party to bring these issues before this Court,
Republic Act No. 10149's effects on the entities and public officers within the scope of
its provisions remain a possible subject of subsequent suits. Likewise, whether the law
would affect a public official's constitutionally guaranteed right to security of tenure is
not a hypothetical question, but places the constitutionality of its provisions squarely in
issue. Once implemented, its provisions would affect the terms of office of the public
officers despite them not being parties to these cases. Thus, for the sake of resolving
this issue, this Court will proceed to a discussion on the merits. For expediency and
considering the similarities in the arguments raised by both petitioners, petitioner
Lagman's arguments may also be considered despite his lack of standing.

I (B)

As regards the rule on hierarchy of courts, Article VIII, Section 5(1) of the Constitution
provides for this Court's "original jurisdiction over ... petitions for certiorari, prohibition,
mandamus, quo warranto, and habeas corpus." This original jurisdiction is concurrent
with the regional trial courts and the Court of Appeals in certain cases.154

Under the rule on hierarchy of courts, this Court will not entertain a direct resort to it
when relief may be obtained in the lower courts.155 The Diocese of Bacolod v.
Commission on Elections156 explained that the purpose of the rule is "to ensure that
every level of the judiciary performs its designated roles in an effective and efficient
manner":

The doctrine that requires respect for the hierarchy of courts was created by this court
to ensure that every level of the judiciary performs its designated roles in an effective
and efficient manner. Trial courts do not only determine the facts from the evaluation of
the evidence presented before them. They are likewise competent to determine issues
of law which may include the validity of an ordinance, statute, or even an executive
issuance in relation to the Constitution. To effectively perform these functions, they are
territorially organized into regions and then into branches. Their writs generally reach
within those territorial boundaries. Necessarily, they mostly perform the all-important
task of inferring the facts from the evidence as these are physically presented before
them. In many instances, the facts occur within their territorial jurisdiction, which
properly present the 'actual case' that makes ripe a determination of the
constitutionality of such action. The consequences, of course, would be national in
scope. There are, however, some cases where resort to courts at their level would not
be practical considering their decisions could still be appealed before the higher courts,
such as the Court of Appeals.

The Court of Appeals is primarily designed as an appellate court that reviews the
determination of facts and law made by the trial courts. It is collegiate in nature. This
nature ensures more standpoints in the review of the actions of the trial court. But the
Court of Appeals also has original jurisdiction over most special civil actions. Unlike the
trial courts, its writs can have a nationwide scope. It is competent to determine facts
and, ideally, should act on constitutional issues that may not necessarily be novel
unless there are factual questions to determine.

This court, on the other hand, leads the judiciary by breaking new ground or further
reiterating — in the light of new circumstances or in the light of some confusions of
bench or bar — existing precedents. Rather than a court of first instance or as a
repetition of the actions of the Court of Appeals, this court promulgates these doctrinal
devices in order that it truly performs that role.157 (Citations omitted)

The rule on hierarchy of courts "ensures that this Court remains a court of last resort so
that it is able to satisfactorily perform the functions assigned to it by the fundamental
charter and immemorial tradition."158

While GIOS-SAMAR attempted to streamline this rule by discussing that all Rule 65
petitions raising questions of fact will automatically be dismissed, this Court's discretion
in exercising judicial review requires a more deliberate approach. The rule on hierarchy
of courts relates to questions of justiciability, which in turn requires a nuanced exercise
of this Court's discretion. Even a claim of "transcendental importance," without due
substantiation, will not immediately merit a decision on the constitutionality of an
assailed law:

The elements supported by the facts of an actual case, and the imperatives of our role
as the Supreme Court within a specific cultural or historic context, must be made clear.
They should be properly pleaded by the petitioner so that whether there is any
transcendental importance to a case is made an issue. That a case has transcendental
importance, as applied, may have been too ambiguous and subjective that it
undermines the structural relationship that this Court has with the sovereign people
and other departments under the Constitution. Our rules on jurisdiction and our
interpretation of what is justiciable, refined with relevant cases, may be
enough.159 (Emphasis supplied, citation omitted)

However, even the rule on hierarchy of courts is not absolute. Direct recourse to this
Court may be allowed when there are special and important reasons clearly set forth in
the petition.160 The Diocese of Bacolod enumerates the following exceptions:

(1) "there are genuine issues of constitutionality that must be addressed at the
most immediate time";161

(2) "the issues involved are of transcendental importance, [such that] the
imminence and clarity of the threat to fundamental constitutional rights outweigh
the necessity for prudence";162
 (3) in "cases of first impression";163

(4) "the constitutional issues raised are better decided by the Court";164

(5) "the time element presented in the case cannot be ignored";165

(6) when the subject of review is an "act of a constitutional organ";166

(7) when petitioners rightly claim that they "had no other plain, speedy, and
adequate remedy in the ordinary course of law";167 and

(8) when the petition includes questions that are "dictated by public welfare and
the advancement of public policy, or demanded by the broader interest of
justice, or the orders complained of were found to be patent nullities, or the
appeal was considered as clearly an inappropriate remedy."168

These cases fall under the first and eighth exceptions.

In Buklod ng Kawaning EIIB v. Zamora,169 this Court disregarded the procedural flaws
in the petition and proceeded to resolve the issue on the constitutionality of an
executive order that reorganized the Economic Intelligence and Investigation Bureau,
holding that "[i]t is in the interest of the State that questions relating to the status and
existence of a public office be settled without delay."170

Dario v. Mison,171 the case cited in Buklod ng Kawaning EIIB, involved several
petitions filed by the officials and employees of the Bureau of Customs who had been
separated from service as a result of the reorganization under Proclamation No. 3. On
the procedural issues raised by the parties, this Court held:

The Court disregards the questions raised as to procedure, failure to exhaust

administrative remedies, the standing of certain parties to sue, for two
reasons, "[b]ecause of the demands of public interest, including the need for stability in
the public service," and because of the serious implications of these cases on the
administration of the Philippine civil service and the rights of public
servants.172 (Citations omitted)

These cases involve questions of similar import. Thus, this Court may exercise its full
discretionary powers and allow a direct resort to it.

II

Petitioner Lagman contends that Section 17 of Republic Act No. 10149, which shortens
the fixed terms of incumbent CEOs and appointive directors of GOCCs with original
charters, violates their constitutionally guaranteed right to security of tenure. Section
17 provides:

SECTION 17. Term of Office. — Any provision in the charters of each GOCC to the
contrary notwithstanding, the term of office of each Appointive Director shall be for one
(1) year, unless sooner removed for cause: Provided, however, That the Appointive
Director shall continue to hold office until the successor is appointed. An Appointive
Director may be nominated by the GCG for reappointment by the President only if one
obtains a performance score of above average or its equivalent or higher in the
immediately preceding year of tenure as Appointive Director based on the performance
criteria for Appointive Directors for the GOCC.

Appointment to any vacancy shall be only for the unexpired term of the predecessor.
The appointment of a director to fill such vacancy shall be in accordance with the
manner provided in Section 15 of this Act.

Any provision of law to the contrary notwithstanding, all incumbent CEOs and
appointive members of the Board of GOCCs shall, upon approval of this Act, have a
term of office until June 30, 2011, unless sooner replaced by the President: Provided,
however, That the incumbent CEOs and appointive members of the Board shall continue
in office until the successors have been appointed by the President. (Emphasis
supplied)

We disagree. The legislature may, in good faith, "change the qualifications for and
shorten the term of existing statutory offices"173 even if these changes would remove,
or shorten the term of, an incumbent.

Article IX-B, Section 2(3) of the Constitution provides the guarantee of security of
tenure for all officers or employees in the civil service:

(3) No officer or employee of the civil service shall be removed or suspended except for
cause provided by law.

This Court expounded on this security of tenure provision in Jocom v. Judge

Regalado:174

Regardless of the classification of the position held by a government employee covered

by civil service rules, be it a career or non-career position, such employee may not be
removed without just cause. An employee who belongs to the non-career service is
protected from removal or suspension without just cause and non-observance of due
process.

....

The constitutional and statutory guarantee of security of tenure is extended to both

those in the career and non-career service positions, and the cause under which an
employee may be removed or suspended must naturally have some relation to the
character or fitness of the officer or employee, for the discharge of the functions of his
office, or expiration of the project for which employment was extended.175 (Emphasis
supplied, citation omitted)

GOCCs with original charters are embraced under the civil service.176 Their officers and
employees are covered by Article IX-B, Section 2(3) of the Constitution and Book V,
Title I-A, Chapter 6, Section 46 of the Administrative Code on security of tenure. The
Administrative Code177 further classifies the positions in the civil service into career
service and non-career service, with corresponding aspects of security of tenure
inherent in each classification:

SECTION 7. Career Service. — The Career Service shall be characterized by (1)

entrance based on merit and fitness to be determined as far as practicable by
competitive examination, or based on highly technical qualifications; (2) opportunity for
advancement to higher career positions; and (3) security of tenure.

The Career Service shall include:

(1) Open Career positions for appointment to which prior

qualification in an appropriate examination is required;

(2) Closed Career positions which are scientific, or highly technical

in nature; these include the faculty and academic staff of state
colleges and universities, and scientific and technical positions in
scientific or research institutions which shall establish and maintain
their own merit systems;

(3) Positions in the Career Executive Service; namely,

Undersecretary, Assistant Secretary, Bureau Director, Assistant
Bureau Director, Regional Director, Assistant Regional Director,
Chief of Department Service and other officers of equivalent rank
as may be identified by the Career Executive Service Board, all of
whom are appointed by the President;

(4) Career officers, other than those in the Career Executive

Service, who are appointed by the President, such as the Foreign
Service Officers in the Department of Foreign Affairs;

(5) Commissioned officers and enlisted men of the Armed Forces

which shall maintain a separate merit system;

(6) Personnel of government-owned or controlled corporations,

whether performing governmental or proprietary functions, who do
not fall under the non-career service; and

(7) Permanent laborers, whether skilled, semi-skilled, or unskilled.

SECTION 8. Classes of Positions in the Career Service. — (1) Classes of positions in the
career service appointment to which requires examinations shall be grouped into three
major levels as follows:

(a) The first level shall include clerical, trades, crafts, and custodial
service positions which involve nonprofessional or subprofessional
work in a non- supervisory or supervisory capacity requiring less
than four years of collegiate studies;
 (b) The second level shall include professional, technical, and
scientific positions which involve professional, technical, or
scientific work in a non-supervisory or supervisory capacity
requiring at least four years of college work up to Division Chief
level; and

(c) The third level shall cover positions in the Career Executive
Service.

(2) Except as herein otherwise provided, entrance to the first two levels
shall be through competitive examinations, which shall be open to those
inside and outside the service who meet the minimum qualification
requirements. Entrance to a higher level does not require previous
qualification in the lower level. Entrance to the third level shall be
prescribed by the Career Executive Service Board.

(3) Within the same level, no civil service examination shall be required
for promotion to a higher position in one or more related occupational
groups. A candidate for promotion should, however, have previously
passed the examination for that level.

SECTION 9. The Non-Career Service shall be characterized by (1) entrance on bases

other than those of the usual tests of merit and fitness utilized for the career service;
and (2) tenure which is limited to a period specified by law, or which is coterminous
with that of the appointing authority or subject to his pleasure, or which is limited to
the duration of a particular project for which purpose employment was made.

The Non-Career Service shall include:

1. Elective officials and their personal or confidential staff;

2. Secretaries and other officials of Cabinet rank who hold their

positions at the pleasure of the President and their personal
confidential staff(s);

3. Chairman and members of Commissions and boards with fixed

terms of office and their personal or confidential staff;

4. Contractual personnel or those whose employment in the

government is in accordance with a special contract to undertake a
specific work or job requiring special or technical skills not available
in the employing agency, to be accomplished within a specific
period, which in no case shall exceed one year and performs or
accomplishes the specific work or job, under his own responsibility
with a minimum of direction and supervision from the hiring
agency;

5. Emergency and seasonal personnel. (Emphasis supplied)

Thus, while GOCC personnel are generally classified under the career service, provided
that they do not fall under the non-career service, both classifications enjoy security of
tenure in that they cannot be removed without legal cause and due process. This
requirement of legal cause was explained in Canonizado v. Aguirre:178

The phrase "except for cause provided by law" refers to "... reasons which the law and
sound public policy recognize as sufficient warrant for removal, that is, legal cause, and
not merely causes which the appointing power in the exercise of discretion may deem
sufficient."179 (Citation omitted)

In The Provincial Government of Camarines Norte v. Gonzales,180 this Court further

clarified:

[B]oth career and non-career service employees have a right to security of

tenure. All permanent officers and employees in the civil service, regardless of whether
they belong to the career or non-career service category, are entitled to this
guaranty; they cannot be removed from office except for cause provided by law and
after procedural due process. The concept of security of tenure, however, labors under
a variation for primarily confidential employees due to the basic concept of a "primarily
confidential" position. Serving at the confidence of the appointing authority, the
primarily confidential employee's term of office expires when the appointing authority
loses trust in the employee. When this happens, the confidential employee is not
"removed" or "dismissed" from office; his term merely "expires" and the loss of trust
and confidence is the "just cause" provided by law that results in the termination of
employment. In the present case where the trust and confidence has been irretrievably
eroded, we cannot fault Governor Pimentel's exercise of discretion when he decided
that he could no longer entrust his confidence in Gonzales.

Security of tenure in public office simply means that a public officer or employee shall
not be suspended or dismissed except for cause, as provided by law and after due
process. It cannot be expanded to grant a right to public office despite a change in the
nature of the office held. In other words, the CSC might have been legally correct when
it ruled that the petitioner violated Gonzales' right to security of tenure when she was
removed without sufficient just cause from her position, but the situation had since
then been changed. In fact, Gonzales was reinstated as ordered, but her services were
subsequently terminated under the law prevailing at the time of the termination of her
service; i.e., she was then already occupying a position that was primarily confidential
and had to be dismissed because she no longer enjoyed the trust and confidence of the
appointing authority. Thus, Gonzales' termination for lack of confidence was lawful. She
could no longer be reinstated as provincial administrator of Camarines Norte or to any
other comparable position. This conclusion, however, is without prejudice to Gonzales'
entitlement to retirement benefits, leave credits, and future employment in government
service.181 (Emphasis in the original, citations omitted)

Board members of GOCCs occupy non-career service positions and are appointed for a
definite term fixed in the GOCC charter. They may be removed before their terms
expire only for causes as may be provided in the GOCCs charter, the Administrative
Code, and other relevant laws. It is in this sense that directors and trustees enjoy
security of tenure.
Shortening the term of office is not the same as removing the officer from service, even
though both result in the termination of official relations. When an officer's term is
shortened, one is separated from service when the term expires.182 Unless an officer is
authorized by law to hold over in their position, their rights, duties, and authority as a
public officer must ipso facto cease upon expiration of their term. Removal, on the
other hand, entails the separation of the incumbent before their term expires. The
Constitution allows this only for causes provided by law.183

Here, Section 17 of Republic Act No. 10149 provides two changes: (1) each appointive
director's term of office shall be for one year, unless sooner removed for cause; and (2)
all incumbent CEOs and appointive board members of GOCCs shall have a term of office
until June 30, 2011, unless sooner replaced by the president.

These changes are constitutional.

Jurisprudence affirms Congress's power to create public offices, including the power to
abolish them and to modify their nature, qualifications, and terms. As discussed
in Provincial Government of Camarines Norte, these acts do not violate the security of
tenure when done in good faith:

The arguments presented by the parties and ruled upon by the CA reflect a conceptual
entanglement between the nature of the position and an employee's right to hold a
position. These two concepts are different. The nature of a position may change by law
according to the dictates of Congress. The right to hold a position, on the other hand, is
a right that enjoys constitutional and statutory guarantee, but may itself change
according to the nature of the position.

Congress has the power and prerogative to introduce substantial changes in the
provincial administrator position and to reclassify it as a primarily confidential, non-
career service position. Flowing from the legislative power to create public offices is the
power to abolish and modify them to meet the demands of society; Congress can
change the qualifications for and shorten the term of existing statutory offices. When
done in good faith, these acts would not violate a public officer's security of tenure,
even if they result in his removal from office or the shortening of his term.
Modifications in public office, such as changes in qualifications or shortening of its
tenure, are made in good faith so long as they are aimed at the office and not at the
incumbent.

In Salcedo and Ignacio v. Carpio and Carreon, for instance, Congress enacted a law
modifying the offices in the Board of Dental Examiners. The new law, RA 546, raised
the qualifications for the board members, and provided for a different appointment
process. Dr. Alfonso C. Salcedo and Dr. Pascual Ignacio, who were incumbent board
members at the time RA 546 took effect, filed a special civil action for quo
warranto against their replacements, arguing that their term of office under the old law
had not yet expired, and neither had they abandoned or been removed from office for
cause. We dismissed their petition, and held that Congress may, by law, terminate the
term of a public office at any time and even while it is occupied by the
incumbent. Thus, whether Dr. Salcedo and Dr. Ignacio were removed for cause or had
abandoned their office is immaterial.
....

In the current case, Congress, through RA 7160, did not abolish the provincial
administrator position but significantly modified many of its aspects. It is now a
primarily confidential position under the non-career service tranche of the civil
service.184 (Emphasis supplied, citations omitted)

Since the creation of a chartered GOCC is purely legislative, Congress has the power to
modify or abolish it, as well as to enact whatever restrictions it may deem fit for the
public good:

Since the creation of public offices involves an inherently legislative power, it

necessarily follows that the particular characteristics of the public office, including
eligibility requirements and the nature and length of the term in office, are also for
legislative determination. Hence, laws creating public offices generally prescribe the
necessary qualifications for appointment to the public office and the length of their
terms. The wisdom of such matters is left up to the legislative branch. At the same
time, the power of appointment is executive in character, and the choice of whom to
appoint is within the discretion of the executive branch of government. This setup
aligns with traditional notions of checks and balances — the choice whom to appoint
resting with the executive branch, but proscribed by the standards enacted by the
legislative. Persons to be appointed to a public office should possess the prescribed
qualifications as may be mandated by Congress.

The same setup governs the removal of officers from public office. The power to
remove a public officer is again executive in nature, but also subject to limitations as
may be provided by law. Ordinarily, where an office is created by statute, it is wholly
within the power of Congress, its legislative power extends to the subject of regulating
removals from the office.185 (Emphasis supplied, citation omitted)

As to good faith in the abolition of offices, Kapisanan ng mga Kawani ng Energy

Regulatory Board v. Barin186 teaches that:

[a]n 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. 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. Where one office is abolished and replaced with
another office vested with similar functions, the abolition is a legal nullity. When there
is a void abolition, the incumbent is deemed to have never ceased holding
office.187 (Emphasis supplied, citations omitted)

Likewise, "making the bureaucracy more efficient is also indicative of the exercise of
good faith in, and a valid purpose for, the abolition of an office."188 In Dario v.
Mison,189 this Court clarified:

Reorganizations in this jurisdiction have been regarded as valid provided they are
pursued in good faith. As a general rule, a reorganization is carried out in "good faith" if
it is for the purpose of economy or to make bureaucracy more efficient. In that event,
no dismissal (in case of a dismissal) or separation actually occurs because the position
itself ceases to exist. And in that case, security of tenure would not be a Chinese wall.
Be that as it may, if the "abolition," which is nothing else but a separation or removal,
is done for political reasons or purposely to defeat security of tenure, or otherwise not
in good faith, no valid "abolition" takes place and whatever "abolition' is done, is void
ab initio. There is an invalid "abolition" as where there is merely a change of
nomenclature of positions, or where claims of economy are belied by the existence of
ample funds.190 (Emphasis supplied, citations omitted)

"Good faith is presumed while bad faith must be proved."191 Here, petitioners failed to
substantiate their allegations that the shortening of terms was done to circumvent the
affected officials' security of tenure.

On the contrary, Section 17 of Republic Act No. 10149 is consistent with the objective
of the legislative and executive departments to "restructure the GOCCs to enable them
to respond to the exigencies of the service through fiscal discipline[.]"192

News leading up to Republic Act No. 10149's passage revealed the state of public
corporate governance in the country. In his first State of the Nation
Address,193 President Benigno Aquino III zeroed in on the lavish remuneration and
benefit packages of officers and employees in the Metropolitan Water and Sewerage
Authority, while people would line up for water and retirees' pensions would remain
unpaid.194

Senate inquiries also revealed that officials and board members of GOCCs and
government financial institutions (GFIs) were "granting themselves unwarranted
allowances, bonuses, incentives, stock options, and other benefits [as well as other]
irregular and abusive practices."195

In a September 9, 2010 press release regarding the possible purging of inefficient

GOCCs, Senator Ralph Recto indicated that while missionary GOCCs which were
established to deliver basic services are worth saving despite their underperforming
financials, "'fat cats' in these missionary GOCCs must shed their indecent bonuses and
perks 'to reduce the national guilt of exempting them from the purge.'" He cited the
National Food Authority, the National Electrification Administration, the Local Water
Utilities Administration, and the Philippine Postal Corporation as some of these
missionary GOCCs.196

Republic Act No. 10149 was enacted to address these reported abuses in the
remuneration scheme and inefficiencies in the operations of the GOCCs. It operates
under the principle that GOCCs have potential "as significant tools for economic
development." It was declared a State policy to promote the growth of GOCCs "by
ensuring that their operations are consistent with national development policies and
programs."197 Toward this end, the State set out to ensure that:

(a) The corporate form of organization through which government carries out
activities is utilized judiciously;

(b) The operations of GOCCs are rationalized and monitored centrally in order
that government assets and resources are used efficiently and the government
 exposure to all forms of liabilities including subsidies is warranted and incurred
through prudent means;

(c) GOCCs governance is carried out in a transparent, responsible and

accountable manner and with the utmost degree of professionalism and
effectiveness;

(d) A reporting system, which will require the periodic disclosure and
examination of the operations and management of the GOCCs, their assets and
finances, revenues and expenditures, is enforced;

(e) The governing board of every GOCC and its subsidiaries are competent to
carry out its functions, fully accountable to the State as its fiduciary, and acts in
the best interest of the State;

(f) Reasonable, justifiable and appropriate remuneration schemes are adopted

for the officers and employees of GOCCs to prevent or deter the granting of
unconscionable and excessive remuneration packages; and

(g) A clear separation between the regulatory and proprietary activities of

GOCCs, in order to achieve a level playing field with corporations in the private
sector performing similar commercial activities for the public.198 (Emphasis
supplied)

Public interest warrants the term reduction. Shortening the term of directors to one
year allows for a yearly evaluation of their performance and promotes accountability for
public funds. In this regard, the separate concurring and dissenting opinion of Chief
Justice Marcelo Fernan in Mendoza v. Hon. Quisumbing199 deserves a closer
examination. He wrote:

The security-of-tenure argument accorded merit by the majority would hold water
under ordinary circumstances, but not under the exceptional factual milieu obtaining in
the cases at bar. The removal from office of petitioners, respondents in some cases,
was the result of the reorganization of the various executive departments undertaken
immediately after the installation of the Aquino government, at which time, the people's
clamor to promote efficiency and effectiveness in the delivery of public service, rebuild
confidence in the entire governmental system and eradicate graft and corruption
therein was at its highest. The need was so grave and serious, so basic and urgent, that
nothing less than extra-ordinary measures were called for. In the balancing of
interests, as between the very essence of a government as a machinery for the
common good and the security of tenure guaranteed by the Constitution to those in
government service, one must prevail. Since in our form of government, public offices
are public trusts, and the officers are servants of the people and not their rulers, the
choice is evident.200 (Emphasis supplied)

Enacting Republic Act No. 10149, including the shortening of terms of appointive
directors to one year, fulfills what Congress had considered a great public need. It does
not adversely affect the tenure of any particular board member or public officer.
Public office is a public trust.201 The security of tenure guaranteed to public officers
must be viewed against the need to assure efficiency and independence in the
performance of their functions, "undeterred by any fear of reprisal or untoward
consequence" or "free from the corrupting influence of base or unworthy
motives."202 Strictly speaking, a public officer has no vested or absolute right to hold
public office.203 A public officer's right to security of tenure cannot be invoked against
a valid legislative act resulting in separation from office:204

The greater good of the greatest number and the right of the citizenry to a good
government, ... provide the justification for the said injury to the individual. In terms of
values, the interest of an employee to security of tenure must yield to the interest of
the entire populace and to an efficient and honest government.205

In Justice Juvenal K. Guerrero's concurring opinion in De La Llana v. Alba:206

[Public office] is created for the purpose of effecting the ends for which government has
been instituted, which are for the common good, and not the profit, honor or private
interest of any one man, family or class of men. In our form of government, it is
fundamental that public offices are public trust, and that the person to be appointed
should be selected solely with a view to the public welfare. In the last analysis, a public
office is a privilege in the gift of the State.

There is no such thing as a vested interest or an estate in an office, or even an

absolute right to hold office. Excepting constitutional offices, which provide for special
immunity as regards salary and tenure, no one can be said to have any vested right in
an office or its salary. When an office is created by the Constitution, it cannot be
abolished by the legislature, but when created by the State under the authority of the
Constitution, it may be abolished by statute and the incumbent deprived of his office....

The removal from office of the incumbent then is merely incidental to the valid act of
abolition of the office as demanded by the superior and paramount interest of the
people[.]207 (Citations omitted; Emphasis supplied)

The same reasoning applies to Section 17, paragraph 3 of Republic Act No. 10149,
which limits the tenure of incumbent CEOs and appointive directors until June 30, 2011.

In any event, the provision shortens the terms of incumbent GOCC officers, consistent
with the exercise of legislative prerogatives in good faith as discussed in Provincial
Government of Camarines Norte:

Congress has the power and prerogative to introduce substantial changes in the
provincial administrator position and to reclassify it as a primarily confidential, non-
career service position. Flowing from the legislative power to create public offices is the
power to abolish and modify them to meet the demands of society; Congress can
change the qualifications for and shorten the term of existing statutory offices. When
done in good faith, these acts would not violate a public officer s security of tenure,
even if they result in his removal from office or the shortening of his term. Modifications
in public office, such as changes in qualifications or shortening of its tenure, are made
in good faith so long as they are aimed at the office and not at the incumbent.
In Salcedo and Ignacio v. Carpio and Carreon, for instance, Congress enacted a law
modifying the offices in the Board of Dental Examiners. The new law, RA 546, raised
the qualifications for the board members, and provided for a different appointment
process. Dr. Alfonso C. Salcedo and Dr. Pascual Ignacio, who were incumbent board
members at the time RA 546 took effect, filed a special civil action for quo
warranto against their replacements, arguing that their term of office under the old law
had not yet expired, and neither had they abandoned or been removed from office for
cause. We dismissed their petition, and held that Congress may, by law, terminate the
term of a public office at any time and even while it is occupied by the
incumbent. Thus, whether Dr. Salcedo and Dr. Ignacio were removed for cause or had
abandoned their office is immaterial.208 (Emphasis supplied, citation omitted)

Clearly, Congress can, for legitimate purposes, reduce the terms of officers of GOCCs
with independent charters. Even the vested right to security of tenure is qualified by the
law that creates the office and provides for its appurtenances. While neither Congress
nor the president may simply declare a position vacant, Congress acted well within its
powers when it legislated a new term. Section 17 of Republic Act No. 10149 merely
shortened the terms of incumbent GOCC officers and did not, as petitioners alleged,
remove them from service without cause.

Thus, Section 17 does not violate the constitutional prohibition on unjustified

declarations of vacancy or terminations of public service without just cause. Again, it
merely modified the terms of incumbent GOCC officers and by providing for a new,
albeit shortened, term for these existing offices moving forward. This is consistent with
Congress's legislative prerogative to modify, through laws, the terms of public office.

III

Section 5 of Republic Act No. 10149 creates the Governance Commission and grants it
certain powers and functions. It states in part:

SECTION 5. Creation of the Governance Commission for Government-Owned or -

Controlled Corporations. — There is hereby created a central advisory, monitoring, and
oversight body with authority to formulate, implement and coordinate policies to be
known as the Governance Commission for Government-Owned or -Controlled
Corporations, hereinafter referred to as the GCG, which shall be attached to the Office
of the President. The GCG shall have the following powers and functions:

(a) Evaluate the performance and determine the relevance of the GOCC,
to ascertain whether such GOCC should be reorganized, merged,
streamlined, abolished or privatized, in consultation with the department
or agency to which a GOCC is attached. For this purpose, the GCG shall be
guided by any of the following standards:

(1) The functions or purposes for which the GOCC was created are
no longer relevant to the State or no longer consistent with the
national development policy of the State;
 (2) The GOCC's functions or purposes duplicate or unnecessarily
overlap with functions, programs, activities or projects already
provided by a Government Agency;

(3) The GOCC is not producing the desired outcomes, or no longer

achieving the objectives and purposes for which it was originally
designed and implemented, and/or not cost efficient and does not
generate the level of social, physical and economic returns vis-a-
vis the resource inputs;

(4) The GOCC is in fact dormant or nonoperational;

(5) The GOCC is involved in an activity best carried out by the

private sector; and

(6) The functions, purpose or nature of operations of any group of

GOCCs require consolidation under a holding company.

Upon determination by the GCG that it is to the best interest of the State
that a GOCC should be reorganized, merged, streamlined, abolished or
privatized, it shall:

(i) Implement the reorganization, merger or streamlining of the

GOCC, unless otherwise directed by the President; or

(ii) Recommend to the President the abolition or privatization of the

GOCC, and upon the approval of the President, implement such
abolition or privatization, unless the President designates another
agency to implement such abolition or privatization.

....

(h) Conduct compensation studies, develop and recommend to the President a

competitive compensation and remuneration system which shall attract and retain
talent, at the same time allowing the GOCC to be financially sound and sustainable;

....

(l) Review the functions of each of the GOCC and, upon determination that there is a
conflict between the regulatory and commercial functions of a GOCC, recommend to the
President in consultation with the Government Agency to which such GOCC is attached,
the privatization of the GOCCs commercial operations, or the transfer of the regulatory
functions to the appropriate government agency, or such other plan of action to ensure
that the commercial functions of the GOCC do not conflict with such regulatory
functions.

Petitioners contend that Republic Act No. 10149 invalidly delegates to the Governance
Commission the exclusive power of Congress to reorganize and abolish public offices.
They similarly claim that such power cannot be delegated, and even if it were so, the
law places no sufficient standard to guide the Governance Commission in exercising this
power. Petitioner Lagman further contends that the law unduly delegates legislative
power to fix GOCC officials' salaries, emoluments, and allowances. Petitioner Pichay
adds that the undue delegation violates the separation of powers.209

The rule on non-delegation of legislative power flows from the ethical principle that
such power, which the sovereign people have delegated through the Constitution,
"constitutes not only a right but a duty to be performed by [Congress] through the
instrumentality of [its] own judgment and not through the intervening mind of
another."210 Any undue delegation of legislative power is contrary to the principle of
separation of powers.

However, this Court has recognized two types of permissible delegation of legislative
power: contingent legislation and subordinate legislation.

Congress undertakes contingent legislation when it delegates to another body the

power to ascertain facts necessary to bring the law into actual operation.211 In Vera:

"The true distinction" . . . "is between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and conferring an authority or
discretion as to its execution, to be exercised under and in pursuance of the law. The
first cannot be done; to the latter no valid objection can be made."

....

It is contended, however, that a legislative act may be made to the effect as law after it
leaves the hands of the legislature. It is true that laws may be made effective on
certain contingencies, as by proclamation of the executive or the adoption by the
people of a particular community. In Wayman vs. Southard, the Supreme Court of the
United States ruled that the legislature may delegate a power not legislative which it
may itself rightfully exercise. The power to ascertain facts is such a power which may
he delegated. There is nothing essentially legislative in ascertaining the existence of
facts or conditions as the basis of the taking into effect of a law. That is a mental
process common to all branches of the government. . . . "The principle which permits
the legislature to provide that the administrative agent may determine when the
circumstances are such as require the application of a law is defended upon the ground
that at the time this authority is granted, the rule of public policy, which is the essence
of the legislative act, is determined by the legislature. In other words, the legislature,
as it is its duty to do, determines that, under given circumstances, certain executive or
administrative action is to be taken, and that, under other circumstances, different or
no action at all is to be taken. What is thus left to the administrative official is not the
legislative determination of what public policy demands, but simply the ascertainment
of what the facts of the case require to be done according to the terms of the law by
which he is governed."... " The efficiency of an Act as a declaration of legislative will
must, of course, come from Congress, but the ascertainment of the contingency upon
which the Act shall take effect may be left to such agencies as it may
designate." ... The legislature, then, may provide that a law shall take effect upon the
happening of future specified contingencies leaving to some other person or body the
power to determine when the specified contingency has arisen.212 (Emphasis supplied,
citations omitted)
Meanwhile, subordinate legislation entails delegating to administrative bodies the power
to "fill in" the details of a statute. Enacting subordinate legislation has become
necessary amid the "proliferation of specialized activities and their attendant peculiar
problems," which the legislature may not be able to competently address. In Eastern
Shipping Lines, Inc. v. Philippine Overseas Employment Administration:213

The principle of non-delegation of powers is applicable to all the three major powers of
the Government but is especially important in the case of the legislative power because
of the many instances when its delegation is permitted. The occasions are rare when
executive or judicial powers have to be delegated by the authorities to which they
legally pertain. In the case of the legislative power, however, such occasions have
become more and more frequent, if not necessary. This had led to the observation that
the delegation of legislative power has become the rule and its non-delegation the
exception.

The reason is the increasing complexity of the task of government and the growing
inability of the legislature to cope directly with the myriad problems demanding its
attention. The growth of society has ramified its activities and created peculiar and
sophisticated problems that the legislature cannot be expected reasonably to
comprehend. Specialization even in legislation has become necessary. To many of the
problems attendant upon present-day undertakings, the legislature may not have the
competence to provide the required direct and efficacious, not to say, specific solutions.
These solutions may, however, be expected from its delegates, who are supposed to be
experts in the particular fields assigned to them.

The reasons given above for the delegation of legislative powers in general are
particularly applicable to administrative bodies. With the proliferation of specialized
activities and their attendant peculiar problems, the national legislature has found it
more and more necessary to entrust to administrative agencies the authority to issue
rules to carry out the general provisions of the statute. This is called the "power of
subordinate legislation."

With this power, administrative bodies may implement the broad policies laid down in a
statute by "filling in" the details which the Congress may not have the opportunity or
competence to provide. This is effected by their promulgation of what are known as
supplementary regulations, such as the implementing rules issued by the Department
of Labor on the new Labor Code. These regulations have the force and effect of law.214

To avoid the taint of unlawful delegation, the statute delegating legislative power must:

(a) be complete in itself — it must set forth therein the policy to be executed, carried
out or implemented by the delegate — and (b) fix a standard — the limits of which are
sufficiently determinate or determinable — to which the delegate must conform in the
performance of his functions. Indeed, without a statutory declaration of policy, the
delegate would, in effect, make or formulate such policy, which is the essence of every
law; and, without the aforementioned standard, there would be no means to determine,
with reasonable certainty, whether the delegate has acted within or beyond the scope
of his authority. Hence, he could thereby arrogate upon himself the power, not only to
make the law, but, also — and this is worse — to unmake it, by adopting measures
inconsistent with the end sought to be attained by the Act of Congress[.]215 (Citations
omitted)

In Abakada Guro Party List v. Purisima:216

Two tests determine the validity of delegation of legislative power: (1) the
completeness test and (2) the sufficient standard test. A law is complete when it sets
forth therein the policy to be executed, carried out or implemented by the delegate. It
lays down a sufficient standard when it provides adequate guidelines or limitations in
the law to map out the boundaries of the delegate's authority and prevent the
delegation from running riot. To be sufficient, the standard must specify the limits of
the delegate's authority, announce the legislative policy and identify the conditions
under which it is to be implemented.217 (Citations omitted)

Republic Act No. 10149 complied with the completeness and sufficient standard tests.
The abolition or reorganization was already determined in the assailed law. The
Governance Commission will only determine whether it will take effect in accordance
with the policy and standards provided in the law. Section 5(a) mandates the abolition
or reorganization of GOCCs only when the following standards are met:

(1) The functions or purposes for which the GOCC was created are no longer
relevant to the State or no longer consistent with the national development
policy of the State;

(2) The GOCC's functions or purposes duplicate or unnecessarily overlap with

functions, programs, activities or projects already provided by a Government
Agency;

(3) The GOCC is not producing the desired outcomes, or no longer achieving the
objectives and purposes for which it was originally designed and implemented,
and/or not cost efficient and does not generate the level of social, physical and
economic returns vis-àvis the resource inputs;

(4) The GOCC is in fact dormant or nonoperational;

(5) The GOCC is involved in an activity best carried out by the private sector;
and

(6) The functions, purpose or nature of operations of any group of GOCCs

require consolidation under a holding company.218

In authorizing the Governance Commission to make reforms in the GOCCs, Section 2

lays down the following policies:

SECTION 2. Declaration of Policy. — The State recognizes the potential of government-

owned or -controlled corporations (GOCCs) as significant tools for economic
development. It is thus the policy of the State to actively exercise its ownership rights
in GOCCs and to promote growth by ensuring that operations are consistent with
national development policies and programs.
Towards this end, the State shall ensure that:

(a) The corporate form of organization through which government carries

out activities is utilized judiciously;

(b) The operations of GOCCs are rationalized and monitored centrally in

order that government assets and resources are used efficiently and the
government exposure to all forms of liabilities including subsidies is
warranted and incurred through prudent means[.]

Moreover, delegating the power to ascertain facts—in order to determine the propriety
of the reorganization, abolition, merger, streamlining or privatization of GOCCs—is not
an undue delegation of legislative powers. The standards were set; the policy, fixed.
The Governance Commission only needs to carry out the mandate. In ascertaining the
determinants for abolishing or reorganizing GOCCs, the Governance Commission only
acts as an investigative body on behalf of Congress.

In Cervantes v. Auditor General,219 the Control Committee disapproved the board

resolution of the National Abaca and Other Fibers Corporation granting quarters
allowance to the general manager. On appeal to this Court, it was argued that
Executive Order No. 93, which created the Control Committee, was invalid because it
was based on a law that is unconstitutional as an illegal delegation of legislative power
to the executive. The law referred to is Republic Act No. 51, which authorized the
president, among others, to make reforms in GOCCs in "promoting simplicity, economy
and efficiency in their operation."220

Upholding the constitutionality of Republic Act No. 51, this Court said:

[T]he rule is that so long as the Legislature "lays down a policy and a standard is
established by the statute" there is no undue delegation. Republic Act No. 51 in
authorizing the President of the Philippines, among others, to make reforms and
changes in government-controlled corporations, lays down a standard and policy that
the purpose shall be to meet the exigencies attendant upon the establishment of the
free and independent Government of the Philippines and to promote simplicity,
economy and efficiency in their operations. The standard was set and the policy fixed.
The President had to carry the mandate. This he did by promulgating the executive
order in question which, tested by the rule above cited, does not constitute an undue
delegation of legislative power.221 (Citation omitted)

Similarly, the delegation of the power to establish a Compensation and Position

Classification System, subject to the president's approval, is constitutional. Republic Act
No. 10149 amends the provisions in the GOCC charters empowering their board of
directors or trustees to determine their own compensation system, in favor of the grant
of authority to the president to perform this act.

Article IX-B, Section 5 of the 1987 Constitution mandates that "Congress shall provide
for the standardization of compensation of government officials and employees,
including those in government-owned or controlled corporations with original charters,
taking into account the nature of the responsibilities pertaining to, and the
qualifications required for their positions."
In line with this, Republic Act No. 6758,222 or the Compensation and Position
Classification Act of 1989, prescribes a revised compensation and position classification
system in government. Its coverage is comprehensive and applies to the entire
government without qualification.223

Republic Act No. 6758 provided, among others, a salary schedule for all government
positions, appointive or elective, including positions in GOCCs and other government
financial institutions (GFIs). It also recognized the continuing applicability of
Presidential Decree No. 985, as amended by Presidential Decree No. 1597.224 Section
6 of Presidential Decree No. 1597 states:

SECTION 6. Exemptions from OCPC Rules and Regulations. — Agencies positions, or

groups of officials and employees of the national government, including government
owned or controlled corporations, who are hereafter exempted by law from [Office of
Compensation and Position Classification] OCPC coverage, shall observe such guidelines
and policies as may be issued by the President governing position classification, salary
rates, levels of allowances, project and other honoraria, overtime rates, and other
forms of compensation and fringe benefits. Exemptions notwithstanding, agencies shall
report to the President, through the Budget Commission [now Department of Budget
and Management (DBM)], on their position classification and compensation plans,
policies, rates and other related details following such specifications as may be
prescribed by the President. (Emphasis supplied)

The thrust of Presidential Decree No. 1597 was to limit exceptions from the National
Compensation and Position Classification System established under Presidential Decree
No. 985. It was observed that "the proliferation of special salary laws [was] inimical to
sound public administration and complicates the process of salary adjustment due to
disparities and inflexibility in salary rates, pay ranges and/or other forms of
compensation[.]"225

Still, laws have subsequently been passed carving out exceptions to Republic Act No.
6758, as amended, particularly on chartered GOCCs and GFIs. These laws provided not
only the power to create the agency's or corporation's own compensation and position
classification systems, usually through its board of directors, but also exempted the
agency or corporation from the Salary Standardization Law.226

This notwithstanding, the president's authority to prescribe policies, parameters, and

guidelines to govern how exempt GOCCs and GFIs will determine their respective
compensation and position classification systems subsist.227

In 2009, the Senate and the House of Representatives issued Joint Resolution No. 4,
authorizing the president to modify the existing Compensation and Position
Classification System of civilian personnel in the government. It states:

(9) Exempt Entities — Government agencies which by specific provision/s of laws are
authorized to have their own compensation and position classification system shall not
be entitled to the salary adjustments provided herein. Exempt entities shall be
governed by their respective Compensation and Position Classification
Systems: Provided, That such entities shall observe the policies, parameters and
guidelines governing position classification, salary rates, categories and rates of
allowances, benefits and incentives, prescribed by the President: Provided, further,
That any increase in the existing salary rates as well as the grant of new allowances,
benefits and incentives, or an increase in the rates thereof shall be subject to the
approval by the President, upon recommendation of the DBM: Provided, finally, That
exempt entities which still follow the salary rates for positions covered by Republic Act
No. 6758, as amended, are entitled to the salary adjustments due to the
implementation of this Joint Resolution, until such time that they have implemented
their own compensation and position classification system. (Emphasis supplied)

In Intia, Jr. v. Commission on Audit,228 while this Court affirmed the Philippine Postal
Corporation's exemption from the Salary Standardization Law, it also held that the
corporation should report the details of its salary and compensation system to the
Department of Budget and Management.

In Philippine Retirement Authority v. Bunag,229 this Court held that while the Philippine
Retirement Authority could, under its charter, fix the compensation of its employees, it
"is still required to 1) observe the policies and guidelines issued by the President with
respect to position classification, salary rates, levels of allowances, project and other
honoraria, overtime rates, and other forms of compensation and fringe benefits and
2) report to the President, through the Budget Commission, on their position
classification and compensation plans, policies, rates and other related details following
such specifications as may be prescribed by the President."230 It was held:

Even prior to R.A. No. 6758, the declared policy of the national government is 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." To implement this policy, P.D. No. 985 provided for the standardized
compensation of government employees and officials, including those in government-
owned and controlled corporations. Subsequently, P.D. No. 1597 was enacted
prescribing the duties to be followed by agencies and offices exempt from coverage of
the rules and regulations of the Office of Compensation and Position Classification. The
intention, therefore, was to provide a compensation standardization scheme such that
notwithstanding any exemptions from the coverage of the Office of Compensation and
Position Classification, the exempt government entity or office is still required to
observe the policies and guidelines issued by the President and to submit a report to
the Budget Commission on matters concerning position classification and compensation
plans, policies, rates and other related details.231 (Emphasis supplied, citation omitted)

Such restriction on exempt government entities was held to indicate Congress's

recognition of the president's power of control over all executive departments, bureaus,
and offices.232 This precept is embodied in Article VII, Section 17 of the Constitution,
which provides:

SECTION 17. The President shall have control of all the executive departments, bureaus
and offices. He shall ensure that the laws be faithfully executed.

Republic Act No. 10149 is but a clear expression of the legislative intent to regulate and
rationalize the compensation frameworks of GOCCs by authorizing the president, upon
the recommendation of the Governance Commission, to establish a unified
Compensation and Position Classification System for GOCCs. The law is consistent with
the compensation standardization clause in the Constitution and the intended salary
standardization for GOCCs expressed in previous laws.

The Governance Commission was created to act as the central advisory, monitoring,
and oversight body attached to the Office of the President. Among its powers and
ℒαwρhi ৷

functions is to conduct compensation studies, develop, and recommend a competitive

compensation and remuneration system, which shall attract and retain talent but allow
the GOCC to be financially sound and sustainable.233 After conducting a compensation
study, it is tasked to develop a Compensation and Position Classification System, which
will apply to all GOCC officers.234 For this, the Governance Commission must comply
with certain governing principles and limitations:

SECTION 9. Position Titles and Salary Grades. — All positions in the Position
Classification System, as determined by the GCG and as approved by the President,
shall be allocated to their proper position titles and salary grades in accordance with an
Index of Occupational Services, Position Titles and Salary Grades of the Compensation
and Position Classification System, which shall be prepared by the GCG and approved
by the President.

The following principles shall govern the Compensation and Position Classification
System:

(a) All GOCC personnel shall be paid just and equitable wages in
accordance with the principle of equal pay for work of equal value.
Differences in pay shall be based on verifiable Compensation and Position
Classification factors in due regard to the financial capability of the GOCC;

(b) Basic compensation for all personnel in the GOCC shall generally be
comparable with those in the private sector doing comparable work, and
must be in accordance with prevailing laws on minimum wages. The total
compensation provided for GOCC personnel shall be maintained at a
reasonable level with due regard to the provisions of existing
compensation and position classification laws including Joint Resolution
No. 4, Series of 2009, and the GOCCs operating budget; and

(c) A review of the GOCC compensation rates, taking into account the
performance of the GOCC, its overall contribution to the national economy
and the possible erosion in purchasing power due to inflation and other
factors, shall be conducted periodically.

Any law to the contrary notwithstanding, no GOCC shall be exempt from the coverage
of the Compensation and Position Classification System developed by the GCG under
this Act.

....

SECTION 11. Non-Diminution of Salaries. — The Compensation and Position

Classification System to be developed and recommended by the GCG and as approved
by the President shall apply to all positions, on full or part-time basis, now existing or
hereafter created in the GOCC:

Provided, That in no case shall there be any diminution in the authorized salaries as of
December 31, 2010 of incumbent employees of GOCCs, including those exempt under
Republic Act No. 6758, as amended, upon the implementation of the Compensation and
Position Classification System for GOCCs.

....

SECTION 23. Limits to Compensation, Per Diems, Allowances and Incentives. — The
charters of each of the GOCCs to the contrary notwithstanding, the compensation, per
diems, allowances and incentives of the members of the Board of Directors/Trustees of
the GOCCs shall be determined by the GCG using as a reference, among others,
Executive Order No. 245 dated February 10, 2011: Provided, however, That
Directors/Trustees shall not be entitled to retirement benefits as such d
irectors/trustees.

In case of GOCCs organized solely for the promotion of social welfare and the common
good without regard to profit, the total yearly per diems and incentives in the
aggregate which the members of the Board of such GOCCs may receive shall be
determined by the President upon the recommendation of the GCG based on the
achievement by such GOCC of its performance targets.235

The Compensation and Position Classification System must also be aligned with the
State policy to ensure that "[r]easonable, justifiable and appropriate remuneration
schemes are adopted for the directors/trustees, officers and employees of GOCCs and
their subsidiaries to prevent or deter the granting of unconscionable and excessive
remuneration packages[.]"236

In De La Llana, this Court accepted the clause "along the guidelines set forth in letter of
Implementation No. 93 pursuant to Presidential Decree No. 985, as amended by
Presidential Decree No. 1597"237 as sufficient standard in granting the president the
power to fix the compensation and allowances of the justices and judges appointed
under Batas Pambansa Blg. 129. This Court stated:

. . . There are other objections raised but they pose no difficulty. 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 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, 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." 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: "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 repel. 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 legislative
command 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."238 (Citations
omitted)

Similarly, the standards provided in Republic Act No. 10149, and the policy framework
embodied in other existing compensation and position classification laws, including Joint
Resolution No. 4, series of 2009, are sufficient to map out the boundaries of the
Governance Commission's authority in establishing the compensation system for
GOCCs.

All told, we uphold the assailed powers and functions of the Governance Commission
considering that the completeness and sufficient standard tests were satisfied in the
law. We find no undue delegation of legislative power.

IV

Petitioner Lagman contends that the Governance Commission has supplanted the
constitutional mandate of the Civil Service Commission by removing the chartered
GOCCs from jurisdiction of the Civil Service Commission and placing them under the
Governance Commission.239 Furthermore, he claims that the Civil Service
Commission's constitutional powers over GOCCs were allegedly arrogated by the
Governance Commission, specifically:

[T]he prescription of qualifications by the Governance Commission is final without

submitting the same for the review and approval of the Civil Service Commission...
Moreover, appointments in GOCCs under the assailed law are not anymore submitted to
the Civil Service Commission for approval.240

This Court disagrees.

Contrary to petitioner Lagman's claims, the powers and functions of the Governance
Commission have neither duplicated nor supplanted the Civil Service Commission's
mandate.

The Governance Commission is the "central policy-making and regulatory body

mandated to safeguard the State's ownership rights and ensure that the operations of
GOCCs are transparent and responsive to the needs of the public."241 Its main thrust
is to assess GOCCs' performance as public institutions. Toward this end, it is
empowered to:
(a) Properly classify GOCCs into:

• Development/Social Corporations;

• Proprietary Commercial Corporations;

• Government Financial, Investment and Trusts Institutions;

• Corporations with Regulatory Functions; and

• Other as may be determined by GCG;

(b) Adopt within 180 days from its constitution (20 October 2011) an Ownership
and Operations Manual and the Government Corporate Standards governing
GOCCs, with shall be consistent with the Medium-Term Philippine Development
Plan of the NEDA;

(c) Establish the performance evaluation systems including performance

scorecards which shall apply to all GOCCs in general and to the various GOCC
classifications;

(d) Evaluate the performance and determination of the relevan[ce] of GOCCs, to

ascertain whether any of them should be reorganized, merged, streamlined,
abolished or privatized;

(e) Conduct periodic study, examination, evaluation and assessment of the

performance of the GOCCs, receive, and in appropriate cases, require reports on
the operations and management of GOCCs including, but not limited to, the
management of the assets and finances of the GOCCs;

(f) Coordinate and monitor the operations of GOCCs, ensuring alignment and
consistency with the national development policies and programs, and meeting
quarterly to review strategy maps and performance scorecards of all GOCCs;
review and assess existing performance-related policies, prepare performance
reports of the GOCCs for submission to the President;

(h) Review the functions of each of the GOCC and, upon determination that there
is a conflict between the regulatory and commercial functions of a GOCC,
recommend to the President in consultation with the government agency to
which the GOCC is attached, the privatization of the GOCCs commercial
operations, or the transfer of the regulatory functions to the appropriate
government agency, or such other plan of action to ensure that the commercial
functions of the GOCC do not conflict with such regulatory functions;

(i) Provide technical advice and assistance to the government agencies to which
the GOCCs are attached in setting performance objectives and targets for the
GOCCs and in monitoring GOCCs performance vis-a-vis established objectives
and targets; and
 (j) Coordinate and monitor the operations of GOCCs, ensuring alignment and
consistency with the national development policies and program, and shall meet
at least quarterly to:

• Review strategy maps and performance scorecards of all GOCCs;

• Review and assess existing performance-related policies inclu[di]ng the

compensation/remuneration of Board of Directors/Trustees and Officers
and recommend appropriate revisions and actions;

• Prepare performance reports of the GOCCs for submission to the

President;

(k) Prepare a semi-annual progress report to be submitted to the President and

the Congress, providing therein its performance assessment of the GOCCs and
recommend clear and specific actions; and [within] one- hundred-twenty (120)
days from the close of the year, shall prepare an annual report on the
performance of the GOCCs and submit it to the President and the Congress.242

On the other hand, the Civil Service Commission, as the government's central
personnel agency, is tasked under Article IX-B, Section 3 of the Constitution to do the
following:

a. Establish a career service;

b. Adopt measures to promote morale, efficiency, integrity, responsiveness,

progressiveness, and courtesy in the civil service;

c. Strengthen the merit and rewards system,

d. Integrate all human resources development programs for all levels and ranks;
and

e. Institutionalize a management climate conducive to public accountability.243

Book V, Title I-A, Chapter 3, Section 12 of the Administrative Code provides the Civil
Service Commission's powers and functions:

SECTION 12. Powers and Functions. — The Commission shall have the following powers
and functions:

1. Administer and enforce the constitutional and statutory provisions on

the merit system for all levels and ranks in the Civil Service;

2. Prescribe, amend and enforce rules and regulations for carrying into
effect the provisions of the Civil Service Law and other pertinent laws;
3. Promulgate policies, standards and guidelines for the Civil Service and
adopt plans and programs to promote economical, efficient and effective
personnel administration in the government;

4. Formulate policies and regulations for the administration, maintenance

and implementation of position classification and compensation and set
standards for the establishment, allocation and reallocation of pay scales,
classes and positions;

5. Render opinion and rulings on all personnel and other Civil Service
matters which shall be binding on all heads of departments, offices and
agencies and which may be brought to the Supreme Court on certiorari;

6. Appoint and discipline its officials and employees in accordance with

law and exercise control and supervision over the activities of the
Commission;

7. Control, supervise and coordinate Civil Service examinations. Any

entity or official in government may be called upon by the Commission to
assist in the preparation and conduct of said examinations including
security, use of buildings and facilities as well as personnel and
transportation of examination materials which shall be exempt from
inspection regulations;

8. Prescribe all forms for Civil Service examinations, appointments,

reports and such other forms as may be required by law, rules and
regulations;

9. Declare positions in the Civil Service as may properly be primarily

confidential, highly technical or policy determining;

10. Formulate, administer and evaluate programs relative to the

development and retention of qualified and competent work force in the
public service;

11. Hear and decide administrative cases instituted by or brought before it

directly or on appeal, including contested appointments, and review
decisions and actions of its offices and of the agencies attached to it.
Officials and employees who fail to comply with such decisions, orders, or
rulings shall be liable for contempt of the Commission. Its decisions,
orders, or rulings shall be final and executory. Such decisions, orders, or
rulings may be brought to the Supreme Court on certiorari by the
aggrieved party within thirty (30) days from receipt of a copy thereof;

12. Issue subpoena and subpoena duces tecum for the production of
documents and records pertinent to investigations and inquiries conducted
by it in accordance with its authority conferred by the Constitution and
pertinent laws;
 13. Advise the President on all matters involving personnel management
in the government service and submit to the President an annual report
on the personnel programs;

14. Take appropriate action on all appointments and other personnel

matters in the Civil Service including extension of Service beyond
retirement age;

15. Inspect and audit the personnel actions and programs of the
departments, agencies, bureaus, offices, local government units and other
instrumentalities of the government including government-owned or
controlled corporations; conduct periodic review of the decisions and
actions of offices or officials to whom authority has been delegated by the
Commission as well as the conduct of the officials and the employees in
these offices and apply appropriate sanctions whenever necessary;

16. Delegate authority for the performance of any function to

departments, agencies and offices where such function may be effectively
performed;

17. Administer the retirement program for government officials and

employees, and accredit government services and evaluate qualifications
for retirement;

18. Keep and maintain personnel records of all officials and employees in
the Civil Service; and

19. Perform all functions properly belonging to a central personnel agency

and such other functions as may be provided by law.

A closer look at the functions of the Governance Commission and the Civil Service
Commission reveals significant differences:

First, the Governance Commission is focused on GOCCs as public institutions. The Civil
ℒαwρhi ৷

Service Commission, on the other hand, is focused on the management of government

personnel.

Second, the Governance Commission's powers are limited to GOCCs and their boards of
directors and trustees. The Civil Service Commission is given the comprehensive
mandate to administer the civil service and to render opinions and rulings on all
personnel and other civil service matters.244

Third, the Governance Commission was created to act as a central advisory,

monitoring, and oversight body that formulates, implements, and coordinates policies
to evaluate the performance and determine the relevance of GOCCs. On the other
hand, the Civil Service Commission is the government's central personnel agency that
determines qualifications of merit and fitness of those appointed to the civil service.245
Fourth, the Governance Commission classifies GOCCs into categories and
institutionalizes transparency, accountability, financial viability, and responsiveness in
corporate performance by monitoring and evaluating GOCCs' performance. The Civil
Service Commission promulgates policies, standards, and guidelines for the civil
service; and supervises and disciplines, if needed, all government employees, including
those employed in GOCCs with original charters.246

Fifth, the Governance Commission's mandate is to ensure that government assets and
resources are used efficiently and the government exposure to all forms of liabilities is
warranted and incurred through prudent means. The Civil Service Commission's
mandate is to promote efficiency and professionalism in the civil service.

Apart from these differences, the Civil Service Commission remains empowered to take
appropriate action on all appointments and other personnel actions,247 regardless of
Republic Act No. 10149's enactment. While appointments to the civil service must
generally be approved by the Civil Service Commission, directors or trustees of GOCCs
are not subject to this requirement. Rather, their appointments are generally governed
by the GOCC charters or by-laws, as the case may be. Sections 15, 16, 17, and 18
merely authorize the Governance Commission to establish a fit and proper rule and
screen candidates for directors or trustees to ensure that those appointed by the
President are competent to take on the position.248

In any event, the Civil Service Commission's authority to approve appointments is

limited to determining whether the appointee is eligible and legally
qualified.249 Specifically, its task is to verify "whether or not the appointee possesses
the appropriate civil service eligibility or the required qualifications"250 and "whether or
not the appointing authority complied with the requirements of the law."251 In Civil
Service Commission v. Tinaya:252

To make it fully effective, an appointment to a civil service position must comply with
all legal requirements. Thus, the law requires the appointment to be submitted to the
CSC, which will ascertain, in the main, whether the proposed appointee is qualified to
hold the position and whether the rules pertinent to the process of appointment were
observed.

The appointing officer and the CSC acting together, though not concurrently but
consecutively, make an appointment complete. In acting on the appointment, the CSC
determines whether the appointee possesses the appropriate civil service eligibility or
the required qualifications. If the appointee is qualified, the appointment must be
approved; if not, it should be disapproved.253 (Emphasis supplied, citations omitted)

If the Civil Service Commission finds that the appointee is eligible, its attestation
becomes a ministerial duty.254 It has no authority to direct the appointment of its own
choice.255 Neither is it authorized to curtail the discretion of the appointing official on
the nature or kind of appointment to be extended.

Nothing in Republic Act No. 10149 would indicate the removal of the Civil Service
Commission's authority to act on appointments. Rather, it would be consistent with the
State policy of ensuring that "[t]he governing boards of every GOCC and its subsidiaries
are competent to carry out its functions, fully accountable to the State as its fiduciary,
and acts in the best interest of the State[.]"256 Republic Act No. 10149 merely added
an initial screening and selection process for GOCCs' directors and trustees. The
Governance Commission is tasked to "oversee the selection and nomination of directors
or trustees and maintain the quality of Board Governance."257 It is specifically
mandated to perform the following functions:

SECTION 5. Creation of the Governance Commission for Government-Owned or -

Controlled Corporations. — ... The GCG shall have the following powers and functions:

....

(d) Without prejudice to the filing of administrative and criminal charges, recommend to
the Board of Directors or Trustees the suspension of any member of the Board of
Directors or Trustees who participated by commission or omission in the approval of the
act giving rise to the violation or noncompliance with the ownership manual for a period
depending on the nature and extent of damage caused, during which period the director
or trustee shall not be entitled to any emolument;

(e) In addition to the qualifications required under the individual charter of the GOCCs
and in the bylaws of GOCCs without original charters, the GCG shall identify necessary
skills and qualifications required for Appointive Directors and recommend to the
President a shortlist of suitable and qualified candidates for Appointive Directors[.]

Pertinent provisions on the appointment of GOCCs' directors or trustees state:

SECTION 15. Appointment of the Board of Directors/Trustees of GOCCs. — An

Appointive Director shall be appointed by the President of the Philippines from a
shortlist prepared by the GCG.

The GCG shall formulate its rules and criteria in the selection and nomination of
prospective appointees and shall cause the creation of search committees to achieve
the same. All nominees included in the list submitted by the GCG to the President shall
meet the Fit and Proper Rule as defined under this Act and such other qualifications
which the GCG may determine taking into consideration the unique requirements of
each GOCC. The GCG shall ensure that the shortlist shall exceed by at least fifty
percent (50%) of the number of directors/trustees to be appointed. In the event that
the President does not see fit to appoint any of the nominees included in the shortlist,
the President shall ask the GCG to submit additional nominees.

SECTION 16. Fit and Proper. — All members of the Board, the CEO and other officers of
the GOCCs including appointive directors in subsidiaries and affiliate corporations shall
be qualified by the Fit and Proper Rule to be determined by the GCG in consultation and
coordination with the relevant government agencies to which the GOCC is attached and
approved by the President.

To maintain the quality of management of the GOCCs, the GCG, in coordination with
the relevant government agencies shall, subject to the approval of the
President, prescribe, pass upon and review the qualifications and disqualifications of
individuals appointed as officers, directors or elected CEO of the GOCC and shall
disqualify those found unfit.

In determining whether an individual is fit and proper to hold the position of an officer,
director or CEO of the GOCC, due regard shall be given to one's integrity, experience,
education, training and competence.

SECTION 17. Term of Office. — Any provision in the charters of each GOCC to the
contrary notwithstanding, the term of office of each Appointive Director shall be for one
(1) year, unless sooner removed for cause. Provided, however, That the Appointive
Director shall continue to hold office until the successor is appointed. An Appointive
Director may be nominated by the GCG for reappointment by the President only if one
obtains a performance score of above average or its equivalent or higher in the
immediately preceding year of tenure as Appointive Director based on the performance
criteria for Appointive Directors for the GOCC.

Appointment to any vacancy shall be only for the unexpired term of the predecessor.
The appointment of a director to fill such vacancy shall be in accordance with the
manner provided in Section 15 of this Act.

....

SECTION 18. The Chief Executive Officer of the GOCC. — The CEO or the highest-
ranking officer provided in the charters of the GOCCs, shall be elected annually by the
members of the Board from among its ranks. The CEO shall be subject to the
disciplinary powers of the Board and may be removed by the Board for
cause.258 (Emphasis supplied)

At any rate, "the [Civil Service Commission's] constitutional authority over the civil
service [did not] divest the Legislature of the power to enact laws providing exemptions
to civil service rules."259 In Trade and Investment Development Corporation v. Civil
Service Commission:260

The CSC's rule-making power, albeit constitutionally granted, is still limited to the
implementation and interpretation of the laws it is tasked to enforce.

The 1987 Constitution created the CSC as the central personnel agency of the
government mandated to establish a career service and promote morale, efficiency,
integrity, responsiveness, progressiveness, and courtesy in the civil service. It is a
constitutionally created administrative agency that possesses executive, quasi-judicial
and quasi-legislative or rule-making powers.

While not explicitly stated, the CSC's rule-making power is subsumed under its
designation as the government's "central personnel agency" in Section 3, Article IX-B of
the 1987 Constitution....

....
The 1987 Administrative Code then spelled out the CSC's rule-making power in
concrete terms in Section 12, Book V, Title I-A, which empowered the CSC to
implement the civil service law and other pertinent laws, and to promulgate policies,
standards and guidelines for the civil service.

The CSC's rule-making power as a constitutional grant is an aspect of its independence

as a constitutional commission. It places the grant of this power outside the reach of
Congress, which cannot withdraw the power at any time....

....

But while the grant of the CSC's rule-making power is untouchable by Congress, the
laws that the CSC interprets and enforces fall within the prerogative of Congress. As an
administrative agency, the CSC's quasi-legislative power is subject to the same
limitations applicable to other administrative bodies. The rules that the CSC formulates
must not override, but must be in harmony with, the law it seeks to apply and
implement.261 (Emphasis supplied, citations omitted)

All reasonable doubts should be resolved in favor of the constitutionality of a statute. A

legislative act, approved by the executive, is presumed to be within constitutional
limitations.262 To justify the nullification of a law, there must be a clear breach of the
Constitution:263

A law that advances a legitimate governmental interest will be sustained, even if

it "works to the disadvantage of a particular group, or ... the rationale for it seems
tenuous." ...

....

We cannot second-guess the mind of the legislature as the repository of the sovereign
will. For all we know, amidst the fiscal crisis and financial morass we are experiencing,
Congress may altogether remove the blanket exemption, put a salary cap on the
highest echelons, lower the salary grade scales subject to SSL exemption, adopt
performance-based compensation structures, or even amend or repeal the SSL itself
but within the constitutional mandate that "at the earliest possible time, the
Government shall increase the salary scales of.. . officials and employees of
the National Government." Legislative reforms of whatever nature or scope may be
taken one step at a time, addressing phases of problems that seem to the legislative
mind most acute. Rightly so, our legislators must have "flexibility and freedom from
judicial oversight in shaping and limiting their remedial efforts." Where there
are plausible reasons for their action, the Court's "inquiry is at an end."

Under the doctrine of separation of powers and the concomitant respect for coequal and
coordinate branches of government, the exercise of prudent restraint by this Court
would still be best under the present circumstances.264 (Emphasis in the original,
citations omitted)

V
Republic Act No. 10149 applies to all GOCCs, GFIs, as well as government
instrumentalities with corporate powers and government corporate entities. The law
defines these as follows:

Government-Owned or -Controlled Corporation (GOCC) refers to any agency organized

as a stock or nonstock corporation, vested with functions relating to public needs
whether governmental or proprietary in nature, and owned by the Government of the
Republic of the Philippines directly or through its instrumentalities either wholly or,
where applicable as in the case of stock corporations, to the extent of at least a
majority of its outstanding capital stock: Provided, however, That for purposes of this
Act, the term "GOCC" shall include GICP/GCE and GFI as defined herein.265

Government Financial Institutions (GFIs) refer to financial institutions or corporations in

which the government directly or indirectly owns majority of the capital stock and which
are either: (1) registered with or directly supervised by the Bangko Sentral ng Pilipinas;
or (2) collecting or transacting funds or contributions from the public and places them
in financial instruments or assets such as deposits, loans, bonds and equity including,
but not limited to, the Government Service Insurance System and the Social Security
System.266

Government Instrumentalities with Corporate Powers (GICP)/Government Corporate

Entities (GCE) refer to instrumentalities or agencies of the government, which are
neither corporations nor agencies integrated within the departmental framework, but
vested by law with special functions or jurisdiction, endowed with some if not all
corporate powers, administering special funds, and enjoying operational autonomy
usually through a charter including, but not limited to, the following: the Manila
International Airport Authority (MIAA), the Philippine Ports Authority (PPA), the
Philippine Deposit Insurance Corporation (PDIC), the Metropolitan Waterworks and
Sewerage System (MWSS), the Laguna Lake Development Authority (LLDA), the
Philippine Fisheries Development Authority (PFDA), the Bases Conversion and
Development Authority (BCDA), the Cebu Port Authority (CPA), the Cagayan de Oro
Port Authority, the San Fernando Port Authority, the Local Water Utilities Administration
(LWUA) and the Asian Productivity Organization (APO).267

Specifically excluded from the coverage of the law are the following: (a) the Bangko
Sentral ng Pilipinas; (b) state universities and colleges; (c) cooperatives; (d) local
water districts; and (e) economic zone authorities and research institutions, provided
that a third of their board members shall be appointed from the list submitted by
Governance Commission.268

Petitioner Pichay contends that the law violates the equal protection clause as it had no
reasonable basis for excluding some GOCCs from Republic Act No. 10149.269

The equal protection clause in the Constitution is not a guarantee of absolute equality in
the operation of laws.270 It applies only to persons or things that are identically
situated. It does not bar a reasonable classification of the subject of legislation:

The equal protection of the law clause in the Constitution is not absolute, but is subject
to reasonable classification. If the groupings are characterized by substantial
distinctions that make real differences, one class may be treated and regulated
differently from the other. The Court has explained the nature of the equal protection
guarantee in this manner:

The equal protection of the law clause is against undue favor and individual or class
privilege, as well as hostile discrimination or the oppression of inequality. It is not
intended to prohibit legislation which is limited either in the object to which it is
directed or by territory within which it is to operate. It does not demand absolute
equality among residents; it merely requires that all persons shall be treated
alike, under like circumstances and conditions both as to privileges conferred and
liabilities enforced. The equal protection clause is not infringed by legislation which
applies only to those persons falling within a specified class, if it applies alike to all
persons within such class, and reasonable grounds exist for making a distinction
between those who fall within such class and those who do not.271 (Emphasis in the
original, citations omitted)

A classification is reasonable where: (1) it is based on substantial distinctions which

make for real differences; (2) it is germane to the purpose of the law; (3) it is not
limited to existing conditions only; and (4) it applies equally to each member of the
same class.272 This Court has held:

The equal protection of the laws clause of the Constitution allows classification.
Classification in law, as in the other departments of knowledge or practice, is the
grouping of things in speculation or practice because they agree with one another in
certain particulars. A law is not invalid because of simple inequality. The very idea of
classification is that of inequality, so that it goes without saying that the mere fact of
inequality in no manner determines the matter of constitutionality. All that is required
of a valid classification is that it be reasonable, which means that the classification
should be based on substantial distinctions which make for real differences; that it
must be germane to the purpose of the law; that it must not be limited to existing
conditions only; and that it must apply equally to each member of the class. This Court
has held that the standard is satisfied if the classification or distinction is based on a
reasonable foundation or rational basis and is not palpably arbitrary.

In the exercise of its power to make classifications for the purpose of enacting laws
over matters within its jurisdiction, the state is recognized as enjoying a wide range of
discretion. It is not necessary that the classification be based on scientific or marked
differences of things or in their relation. Neither is it necessary that the classification be
made with mathematical nicety. Hence legislative classification may in many cases
properly rest on narrow distinctions, for the equal protection guaranty does not
preclude the legislature from recognizing degrees of evil or harm, and legislation is
addressed to evils as they may appear.273 (Emphasis supplied, citations omitted)

There are three types of standards to determine the reasonableness of legislative

classification:

The strict scrutiny test applies when a classification either (i) interferes with the
exercise of fundamental rights, including the basic liberties guaranteed under the
Constitution, or (ii) burdens suspect classes. The intermediate scrutiny test applies
when a classification does not involve suspect classes or fundamental rights, but
requires heightened scrutiny, such as in classifications based on gender and legitimacy.
Lastly, the rational basis test applies to all other subjects not covered by the first two
tests.274 (Emphasis supplied)

Since petitioners do not claim that Republic Act No. 10149's exclusion of certain entities
interfered with fundamental rights and liberties, nor is there any indication of a need for
heightened scrutiny, the rational basis test applies. This test requires only a reasonable
connection between a legitimate government interest and the classification made.275

Employing the rational basis test, this Court finds that Republic Act No. 10149 made
reasonable exclusions of certain entities from its coverage.

First, Bangko Sentral ng Pilipinai276 was created as an independent central monetary

authority pursuant to Article XII, Section 20 of the Constitution.277 It is both a GFI and
a regulatory agency exercising sovereign functions. For its unique functions concerning
money, banking, and credit, it enjoys fiscal and administrative autonomy.278

Second, state universities and colleges are supervised and regulated by the
Commission on Higher Education, a specialized body created under Republic Act No.
7722.279 The Commission on Higher Education has, among others, the following
powers and functions:

SECTION 8. Powers and Functions of the Commission. — The Commission shall have
the following powers and functions:

a) formulate and recommend development plans, policies, priorities, and

programs on higher education and research;

....

d) set minimum standards for programs and institutions of higher learning

recommended by panels of experts in the field and subject to public
hearing, and enforce the same;

e) monitor and evaluate the performance of programs and institutions of

higher learning for appropriate incentives as well as the imposition of
sanctions such as, but not limited to, diminution or withdrawal of subsidy,
recommendation on the downgrading or withdrawal of accreditation,
program termination or school closure;

....

g) recommend to the Department of Budget and Management the budgets

of public institutions of higher learning as well as general guidelines for
the use of their income;

h) rationalize programs and institutions of higher learning and set

standards, policies and guidelines for the creation of new ones as well as
the conversion or elevation of schools to institutions of higher learning,
subject to budgetary limitations and the number of institutions of higher
 learning in the province or region where creation, conversion or elevation
is sought to be made;

i) develop criteria for allocating additional resources such as research and

program development grants, scholarships, and other similar
programs: Provided, That these shall not detract from the fiscal autonomy
already enjoyed by colleges and universities;

....

k) devise and implement resource development schemes;

....

m) review the charters of institutions of higher learning and state

universities and colleges including the chairmanship and membership of
their governing bodies and recommend appropriate measures as basis for
necessary action[.]280

The Commission on Higher Education also takes the helm of governing boards of
chartered state universities and colleges.281 The governing boards, in turn, can appoint
vice presidents, deans, directors, department heads, professors, instructors, and
personnel; approve the curricula, school programs, and rules of discipline; set
admission and graduation policies; establish research and extension centers; fix tuition
fees and other school charges; fix salaries of faculty and administrative personnel; and
acquire equipment and real estate, among others.282 Governing boards must
promulgate and implement policies in accordance with the law's State policy,
constitutional provisions on education, science and technology, arts, culture, and
sports, and Republic Act No. 7722.283

Educational institutions are not businesses for profit; they provide formal
instruction.284 Under the principle of academic freedom, "institutions of higher learning
have the freedom to decide for themselves the best methods to achieve their aims and
objectives, free from outside coercion, except when the welfare of the general public
requires."285

Given the specific mandate of educational institutions, as well as the high priority given
by the Constitution to education, governmental regulation over state universities and
colleges are best undertaken by the Commission on Higher Education.

Third, cooperatives are "self-sufficient and independent"286 democratic organizations,

whose affairs are administered by persons elected or appointed by their
members.287 Their regulation and governing principles, including the registration and
organization, are governed by Republic Act No. 6938288 and Republic Act No. 6939.289

The internal affairs of cooperatives—such as their members' rights and privileges; the
rules and procedures for meetings of the general assembly, board of directors and
committees and for the election and qualifications of officers, directors, and committee
members; capitalization and investment of capital; allocation and distribution of
surpluses; dissolution and liquidation; and all other internal matters—are governed by
the Cooperative Code and the by-laws of the cooperative.

Special provisions in the Cooperative Code pertain to agrarian reform

cooperatives,290 public service cooperatives,291 cooperative banks,292 credit
cooperatives,293 and cooperative insurance societies.294 The operations of public
cooperatives, cooperative banks, and cooperative insurance societies are subject to the
supervision of appropriate government agencies, the Bangko Sentral ng Pilipinas, and
the Insurance Commission, respectively.

Republic Act No. 6939, the law creating the Cooperative Development Authority—the
primary government agency promoting and regulating the institutional development of
cooperatives295—provides the State's policy that:

Government assistance to cooperatives shall be free from any restriction and

conditionality that may in any manner infringe upon the objectives and character of
cooperatives as provided in this Act. The State shall, except as provided in this Act,
maintain the policy of non-interference in the management and operation of
cooperatives.296 (Emphasis supplied)

Thus, that cooperatives are "envisioned to be self-sufficient and independent

organizations with minimal government intervention or regulation[,]" provides
reasonable basis for their exclusion.297

Fourth, local water districts are regulated under Presidential Decree No. 198,298 which
declares that "local water utilities should be locally-controlled and managed, as well as
have support on the national level in the area of technical advisory services and
financing[.]"299 Local water districts are formed by the legislative body of any
province, city, or municipality.300 They are meant to provide and operate water supply
and distribution systems, as well as operate water collection, treatment, and disposal
facilities; other purposes.301 A board of directors, to be appointed by the mayor of the
city or municipality with a majority of water service connections in the area,302 creates
the policies to be implemented by the local water district.

Presidential Decree No. 198 created the Local Water Utilities Administration for these
purposes:

... (1) to establish minimum standards and regulations in order to assure acceptable
standards of construction materials and supplies, maintenance, operation, personnel,
training, accounting and fiscal practices for local water utilities; (2) to furnish technical
assistance and personnel training programs for local water utilities; (3) to monitor and
evaluate local water standards; (4) to effect system integration, joint investment and
operations district annexation and deannexation whenever economically warranted; and
(5) to provide a specialized lending institution with peculiar expertise in the financing of
local water utilities.303

The Local Water Utility Administration establishes standards for local water utilities in
terms of water quality, design, and construction of water facilities, equipment,
materials and supplies, operations and maintenance, and personnel, among others. It
also provides technical assistance and financing to local water utilities.
This, as well as the constitutional policy for local autonomy,304 provides reasonable
basis for excluding local water districts from the coverage of Republic Act No. 10149.

Fifth, an "economic zone authority"305 has the power to develop and operate special
economic zones as "decentralized, self-reliant and self-sustaining industrial,
commercial/trading, agro-industrial, tourist, banking, financial and investment
center[s.]"306 Special economic zones "may contain any or all of the following:
industrial estates[,] export processing zones[,] free trade zones, and
tourist/recreational centers."307

The Philippine Economic Zone Authority (PEZA) is one of the excluded entities under
Section 4 of Republic Act No. 10149. As the governing body for special economic zones,
PEZA is given the following powers and functions under Republic Act No. 7916:308

SECTION 13. General Powers and Functions of the Authority. — The PEZA shall have
the following powers and functions:

(a) To operate, administer, manage and develop the ECOZONE according

to the principles and provisions set forth in this Act;

(a) To register, regulate and supervise the enterprises in the ECOZONE in

an efficient and decentralized manner;

(b) To coordinate with local government units and exercise general

supervision over the development, plans, activities and operations of the
ECOZONES, industrial estates, export processing zones, free trade zones,
and the like;

(c) In coordination with local government units concerned and appropriate

agencies, to construct, acquire, own, lease, operate and maintain on its
own or through contract, franchise, license, bulk purchase from the
private sector and build-operate-transfer scheme or joint venture,
adequate facilities and infrastructure, such as light and power systems,
water supply and distribution systems, telecommunications and
transportation, buildings, structures, warehouses, roads, bridges, ports
and other facilities for the operation and development of the ECOZONE;

(d) To create, operate and/or contract to operate such agencies and

functional units or offices of the authority as it may deem necessary;

(e) To adopt, alter and use a corporate seal; make contracts, lease, own
or otherwise dispose of personal or real property; sue and be sued; and
otherwise carry out its duties and functions as provided for in this Act;

(f) To coordinate the formulation and preparation of the development

plans of the different entities mentioned above;

(g) To coordinate with the National Economic and Development Authority

(NEDA), the Department of Trade and Industry (DTI), the Department of
 Science and Technology (DOST), and the local government units and
appropriate government agencies for policy and program formulation and
implementation; and

(h) To monitor and evaluate the development and requirements of entities

in subsection (a) and recommend to the local government units or other
appropriate authorities the location, incentives, basic services, utilities and
infrastructure required or to be made available for said entities.

Under Republic Act No. 7916, the PEZA Board is authorized to "[s]et the general
policies on the establishment and operations of the [special economic zones], industrial
estates, export processing zones, free trade zones, and the like[.]"309 It reviews
proposals to establish special economic zones; facilitates and assists in organizing these
entities; and regulates the establishment, operation, and maintenance of utilities, other
services, and infrastructures in the economic zone.

These functions are vested in economic zone authorities to decentralize governmental

functions and authority, promoting an efficient and effective working relationship
among the special economic zone, the national government, and the local government
units.310 Further, Section 7 of Republic Act No. 7916 provides for the intended self-
reliance and independence of the special economic zones. It states in part:

SECTION 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial,

Commercial/Trading, Tourist, Investment and Financial Community. — Within the
framework of the Constitution, the interest of national sovereignty and territorial
integrity of the Republic, the ECOZONE shall be developed, as much as possible, into a
decentralized, self-reliant and self-sustaining industrial, commercial/trading, agro-
industrial, tourist, banking, financial and investment center with minimum government
intervention. Each ECOZONE shall be provided with transportation, telecommunications,
and other facilities needed to generate linkage with industries and employment
opportunities for its own inhabitants and those of nearby towns and cities.

The ECOZONE shall administer itself on economic, financial, industrial, tourism

development and such other matters within the exclusive competence of the national
government. (Emphasis supplied)

Petitioner Pichay cites the Authority of the Freeport Area of Bataan, the Aurora Pacific
Economic Zone and Freeport Authority, the Clark Development Corporation, the
Cagayan Economic Zone Authority, the Philippine Economic Zone Authority, the
Philippine Retirement Authority, the Phividec Industrial Authority, the Subic Bay
Metropolitan Authority, and the Zamboanga City Special Economic Zone Authority as
economic zone authorities unreasonably excluded from Republic Act No. 10149's
coverage. However, the enabling statutes of these cited entities311 all similarly indicate
their establishment as "decentralized," "self-reliant," or "self-sustaining" areas.312

In any event, petitioner Pichay's contention regarding the Clark Development

Corporation has been rendered moot by GCG Memorandum Circular No. 2014-01, which
explicitly included the corporation in the law's scope.313 Further, the enabling statutes
of the Philippine Retirement Authority and the PHIVIDEC Industrial Authority, which
petitioner Pichay also deems unreasonably excluded from the law's coverage, do not
indicate their primary purpose as economic zone authorities. His contentions regarding
these agencies are, thus, immaterial.

Sixth, research institutions,314 such as state universities and colleges, are not
organized for business or regulation, but primarily for scientific and educational
purposes to assist the government in the pursuit of economic and national
development.

For instance, the Philippine Institute for Development Studies was created to "perform
policy-oriented research on all aspects of the Philippine economy and assist the
government in formulating plans and policies for national development[.]"315 The
Philippine Rice Research Institute was created to "develop ... a national rice research
program ... and ultimately promote the general welfare of the people through self-
sufficiency in rice production."316

Republic Act No. 10149 aims to make GOCCs more accountable for their operations and
to enhance the State's objectives of public service. However, these objectives must be
harmonized with the independence required by certain entities to efficiently and
adequately perform their mandated functions, and should be read together with the
inherent functions of the other excluded entities. The enabling statutes of the excluded
entities, together with the State policy in the Constitution, make it clear that there is
reasonable basis for their exclusion.

Since Republic Act No. 10149's distinctions are based on good law, and cover "all
GOCCs, GICPs/GCEs, and government financial institutions, including their
subsidiaries,"317 except those subject to reasonable distinctions, the exclusions are not
limited to existing conditions and may be deemed to apply equally to all members of
the same class.

In any event, "Congress is allowed a wide leeway in providing for a valid

classification."318 This power is a matter of legislative discretion, which this Court
upholds barring any clear showing of arbitrariness.319 In Tolentino v. Board of
Accountancy,320 this Court discussed more on permissible legislative classification:

The general rule is well settled that legislation which, in carrying out a public purpose,
is limited in its application, if within the sphere of its operation it affects all persons
similarly situated, is not within the prohibition of the 14th Amendment. The mere fact
that legislation is based on a classification and is made to apply only to a certain limited
group of persons, and not to others, does not affect its validity, if it is so made that all
persons subject to its terms are treated alike under similar circumstances and
conditions.

The legislature may classify professions, occupations, and business, according to

natural and reasonable lines of distinction, and if a statute affects alike all persons of
the same class it is not invalid as class legislation; ...

Classification of businesses, occupations, and callings may be made according to

natural, reasonable, and well-recognized lines of distinction, and the mere fact that a
statute or ordinance applies only to a particular position or profession, or to a particular
trade occupation, or business, or discriminates between persons in different classes of
occupations or lines or business, does not render it unconstitutional as class legislation,
and such statutes are valid whenever the partial application or discrimination is based
on real and reasonable distinctions existing in the subject matter, and affects alike all
persons of the same class or pursuing the same business under the same
conditions[.]321 (Citations omitted)

Further, Victoriano v. Elizalde Rope Worker's Union322 provides guidance on the extent
of Congress's discretion in making valid legal classifications:

In the exercise of its power to make classifications for the purpose of enacting laws
over matters within its jurisdiction, the state is recognized as enjoying a wide range of
discretion. It is not necessary that the classification be based on scientific or marked
differences of things or in their relation. Neither is it necessary that the classification be
made with mathematical nicety. Hence legislative classification may in many cases
properly rest on narrow distinctions, for the equal protection guaranty does not
preclude the legislature from recognizing degrees of evil or harm, and legislation is
addressed to evils as they may appear.323 (Emphasis supplied, citations omitted)

In sum, excluding certain entities—the Bangko Sentral ng Pilipinas, state universities

and colleges, local water utility districts, cooperatives, economic zone authorities, and
research institutions—from the law's coverage does not violate the equal protection
clause, because there is reasonable basis to do so. Without a showing that the
exclusions under Section 4 of Republic Act No. 10149 created unreasonable distinctions
between classes of entities, this Court finds that the exclusions were valid.

VI

Finally, petitioners claim that Republic Act No. 10149 is a general law, and thus, cannot
supersede particular GOCC charters, which are specific laws.

As a rule, a general law does not repeal a prior special law on the same subject, unless
the legislative intent to modify or repeal the earlier special law through the general law
is manifest.324

Hospicio de San Jose de Barili Cebu City v. Department of Agrarian Reform325 provides
the standard for when a general law may be deemed to have manifested legislative
intent to repeal a specific law:

The crafters of P.D. No. 27 and the CARL were presumably aware of the radical scale of
the intended legislation, and the massive effects on property relations nationwide.
Considering the magnitude of the changes ordained in these laws, it would be foolhardy
to require or expect the legislature to denominate each and every law that would be
consequently or logically amended or repealed by the new laws. Hence, the viability of
general repealing clauses, which are existent in both P.D. No. 27 and the CARL, as a
means of repealing all previous enactments inconsistent with revolutionary new
laws. The presence of such general repealing clause in a later statute clearly indicates
the legislative intent to repeal all prior inconsistent laws on the subject matter, whether
the prior law is a general law or a special law, or as in this case, a special private
law. Without such clause, a later general law will ordinarily not repeal a prior special
law on the same subject. But with such clause contained in the subsequent general law,
the prior special law will be deemed repealed, as the clause is a clear legislative intent
to bring about that result.326 (Emphasis supplied, citations omitted)

In Republic Act No. 10149, Congress's intent to modify relevant portions of the GOCC
charters is clear. Section 32 expresses the law's intent to supersede all corresponding
charters of affected GOCCs:

SECTION 32. Repealing Clause. — The charters of the GOCCs under existing laws and
all other laws, executive orders including Executive Order No. 323, Series of 2000,
administrative orders, rules, regulations, decrees and other issuances or parts thereof
which are inconsistent with the provisions of this Act are hereby revoked, repealed or
modified accordingly.

Furthermore, specific provisions in Republic Act No. 10149 are explicitly mandated to
govern despite the GOCC charters. These are: (a) qualifications required for appointive
directors;327 (b) duties, obligations, responsibilities and standards of care required of
the members of the Board of Directors/Trustees and Officers of GOCCs;328 (c) term of
office;329 and (d) limits to compensation, per diems, allowances, and incentives.330

Section 30 also states that GOCC charters shall suppletorily apply insofar as they are
not inconsistent with Republic Act No. 10149:

SECTION 30. Suppletory Application of The Corporation Code and Charters of the
GOCCs. — The provisions of "The Corporation Code of the Philippines" and the
provisions of the charters of the relevant GOCC, insofar as they are not inconsistent
with the provisions of this Act, shall apply suppletorily to GOCCs.

Thus, there is no merit to petitioners' contentions regarding Republic Act No. 10149's
status as a general law.

Petitioners' lack of standing aside, this Court holds that Republic Act No. 10149
introduces valid changes to the terms and conditions for service in GOCCs. Congress
acted within its discretion when it modified, in good faith and in accordance with the
objectives and policies contained in valid laws, the aspects of public offices which exist
by virtue of the same exercise of legislative power.

Congress enacted Republic Act No. 10149 to address the reported abuses, poor
performance, and inefficiencies in the operations of GOCCs. The law, among others,
reduced the terms of incumbent GOCC officers and created a central policy-making and
regulatory body for GOCCs, tasked with reforming and developing a standardized
compensation and position classification system for GOCCs.

These actions were geared toward achieving what Congress perceived to be a great
public need. It is not for this Court to address questions of legislative policy or wisdom
lest it act as a third Congress and in excess of its duty as a co-equal branch of
government. Absent any clear showing of unconstitutionality, these provisions, duly
deliberated upon and approved by the legislature, are upheld.

WHEREFORE, the Petitions are DENIED.

 SO ORDERED.

Peralta, C.J., Perlas-Bernabe, Caguioa, Gesmundo, Hernando, Carandang, Lazaro-

Javier, Inting, Zalameda, Lopez, Delos Santos, Gaerlan, and Rosario, JJ., concur.

NOTICE OF JUDGMENT

Sirs/Mesdames:

Please take notice that on November 3, 2020 a Decision, copy attached herewith, was
rendered by the Supreme Court in the above-entitled case, the original of which was
received by this Office on July 14, 2021 at 11:40 a.m.

Very truly yours,

EDGAR O. ARICHETA
Clerk of Court

By:

(Sgd.) ANNA-LI R. PAPA-GOMBIO

Deputy Clerk of Court En Banc

Footnotes

1 Rollo (G.R. No. 197422), pp. 3-58.

2 Rollo (G.R. No. 197950), pp. 3-29.

3 Id. at 162, OSG Consolidated Memorandum.

4 Id.

5 Id.

6 Id. at 162.

7 Id. at 163.

8 Id. at 163.

9 An Act to Promote Financial Viability and Fiscal Discipline in Government

Owned or Controlled Corporations and to Strengthen the Role of the State in its
Governance and Management to Make Them More Responsive to the Needs of
Public Interest and for Other Purposes

10 Rollo (G.R. No. 197950), p. 260, Pichay Memorandum.

11 Republic Act No. 10149 (2011), sec. 2.

12 Republic Act No. 10149 (2011), sec. 5.

13 Rollo (G.R. No. 197422), pp. 3-58.

14 Rollo (G.R. No. 197950), pp. 3-29.

15 Rollo (G.R. No. 197422), pp. 79-130; and rollo (G.R. No. 197950), pp. 75-
127.

16 Rollo (G.R. No. 197422), p. 131.

17 Rollo (G.R. No. 197422), pp. 482-534, Lagman's Memorandum;

and rollo (G.R. No. 197950), pp. 259-284, Pichay's Memorandum.

18 Rollo (G.R. No. 197422), pp. 178-266; and rollo (G.R. No. 197950), pp. 161-
248.

19 Rollo (G.R. No. 197422), p. 490.

20 Id. at 492-493.

21 Id. at 491.

22 Id. at 493.

23 Id.

24 Id. at 487.

25 Id. at 490-491.

26 Id. at 494.

27 CONST., art. IX-B, sec. 2(1) and (3) provides:

SECTION 2. (1) The civil service embraces all branches, subdivisions,

instrumentalities, and agencies of the Government, including government-
owned or controlled corporations with original charters.

....
 (3) No officer or employee of the civil service shall be removed or
suspended except for cause provided by law. (Emphasis supplied)

28 SECTION 17. Term of Office. — Any provision in the charters of each GOCC to
the contrary notwithstanding, the term of office of each Appointive Director shall
be for one (1) year, unless sooner removed for cause: Provided, however, That
the Appointive Director shall continue to hold office until the successor is
appointed. An Appointive Director may be nominated by the GCG for
reappointment by the President only if one obtains a performance score of above
average or its equivalent or higher in the immediately preceding year of tenure
as Appointive Director based on the performance criteria for Appointive Directors
for the GOCC.

Appointment to any vacancy shall be only for the unexpired term of the
predecessor. The appointment of a director to fill such vacancy shall be in
accordance with the manner provided in Section 15 of this Act. Any provision of
law to the contrary notwithstanding, all incumbent CEOs and appointive
members of the Board of GOCCs shall, upon approval of this Act, have a term of
office until June 30, 2011, unless sooner replaced by the
President: Provided, however, That the incumbent CEOs and appointive
members of the Board shall continue in office until the successors have been
appointed by the President. (Emphasis supplied)

29 Rollo (G.R. No. 197422), pp. 497-498.

30 Id. at 496.

31 Id. at 498-500.

32 SECTION 5. Creation of the Governance Commission for Government-Owned

or -Controlled Corporations. — There is hereby created a central advisory,
monitoring, and oversight body with authority to formulate, implement and
coordinate policies to be known as the Governance Commission for Government-
Owned or -Controlled Corporations, hereinafter referred to as the GCG, which
shall be attached to the Office of the President. The GCG shall have the following
powers and functions:

(a) Evaluate the performance and determine the relevance of the GOCC,
to ascertain whether such GOCC should be reorganized, merged,
streamlined, abolished or privatized, in consultation with the department
or agency to which a GOCC is attached. For this purpose, the GCG shall be
guided by any of the following standards:

(1) The functions or purposes for which the GOCC was created are
no longer relevant to the State or no longer consistent with the
national development policy of the State;
 (2) The GOCC's functions or purposes duplicate or unnecessarily
overlap with functions, programs, activities or projects already
provided by a Government Agency;

(3) The GOCC is not producing the desired outcomes, or no longer

achieving the objectives and purposes for which it was originally
designed and implemented, and/or not cost efficient and does not
generate the level of social, physical and economic returns vis-à-vis
the resource inputs;

(4) The GOCC is in fact dormant or nonoperational;

(5) The GOCC is involved in an activity best carried out by the

private sector; and

(6) The functions, purpose or nature of operations of any group of

GOCCs require consolidation under a holding company.

Upon determination by the GCG that it is to the best interest of the Slate that a
GOCC should be reorganized, merged, streamlined, abolished or privatized, it
shall:

(i) Implement the reorganization, merger or streamlining of the GOCC,

unless otherwise directed by the President; or

(ii) Recommend to the President the abolition or privatization of the

GOCC, ancl upon the approval of the President, implement such abolition
or privatization, unless the President designates another agency to
implement such abolition or privatization.

....

(1) Review the functions of each of the GOCC and, upon determination
that there is a conflict between the regulatory and commercial functions of
a GOCC, recommend to the President in consultation with the Government
Agency to which such GOCC is attached, the privatization of the GOCCs
commercial operations, or the transfer of the regulatory functions to the
appropriate government agency, or such other plan of action to ensure
that the commercial functions of the GOCC do not conflict with such
regulatory functions. (Emphasis supplied)

33 Rollo (G.R. No. 197422), p. 509.

34 Id. at 505-506.

35 Id. at 506.

36 Id. at 507 and 513.

37 Id. at 508-509.

38 Id. at 509 and 513.

39 Id. at 519 and 521.

40 SECTION 5. Creation of the Governance Commission for Government-Owned

or -Controlled Corporations.

....

(h) Conduct compensation studies, develop and recommend to the

President a competitive compensation and remuneration system which
shall attract and retain talent, at the same time allowing the GOCC to be
financially sound and sustainable[.] (Emphasis supplied)

41 SECTION 8. Coverage of the Compensation and Position Classification

System. — The GCG, after conducting a compensation study, shall develop
a Compensation and Position Classification System which shall apply to all
officers and employees of the GOCCs whether under the Salary Standardization
Law or exempt therefrom and shall consist of classes of positions grouped into
such categories as the GCG may determine, subject to the approval of the
President. (Emphasis supplied)

42 SECTION 9. Position Titles and Salary Grades. — All positions in the Position
Classification System, as determined by the GCG and as approved by the
President, shall be allocated to their proper position titles and salary grades in
accordance with an Index of Occupational Services, Position Titles and Salary
Grades of the Compensation and Position Classification System, which shall be
prepared by the GCG and approved by the President....

Any law to the contrary notwithstanding, no GOCC shall be exempt from

the coverage of the Compensation and Position Classification System
developed by the GCG under this Act.

43 SECTION 23. Limits to Compensation, Per Diems, Allowances and Incentives.

— The charters of each of the GOCCs to the contrary notwithstanding, the
compensation, per diems, allowances and incentives of the members of the
Board of Directors/Trustees of the GOCCs shall be determined by the GCG using
as a reference, among others, Executive Order No. 24 dated February 10,
2011: Provided, however, That Directors/Trustees shall not be entitled to
retirement benefits as such directors/trustees.

In case of GOCCs organized solely for the promotion of social welfare and
the common good without regard to profit, the total yearly per diems and
incentives in the aggregate which the members of the Board of such
GOCCs may receive shall be determined by the President upon the
recommendation of the GCG based on the achievement by such GOCC of
its performance targets.
44 CONST., art. IX-B, sec. 5.

45 Id. at 523.

46 Id. at 524.

47 Id. at 531.

48 CONST., art. IX-B, secs. 2 and 3 provide:

SECTION 2. (1) The civil service embraces all branches, subdivisions,

instrumentalities, and agencies of the Government, including government-
owned or controlled corporations with original charters.

....

SECTION 3. The Civil Service Commission, as the central personnel

agency of the Government, shall establish a career service and adopt
measures to promote morale, efficiency, integrity, responsiveness,
progressiveness, and courtesy in the civil service. It shall strengthen the
merit and rewards system, integrate all human resources development
programs for all levels and ranks, and institutionalize a management
climate conducive to public accountability. It shall submit to the President
and the Congress an annual report on its personnel programs.

49 Rollo (G.R. No. 197422), p. 528.

50 Id. at 531.

51 Id. at 532.

52 Rollo (G.R. No. 197950), p. 260.

53 Id. at 7-8. Petitioner Pichay was dismissed on July 4, 2011 pursuant

to Rustico Tutol v. Prospero A. Pichay, Jr., docketed as OMB-C-A-10-0426-I with
the Office of the Ombudsman. This has not yet attained finality allegedly due to
a motion for reconsideration.

54 Id. at 261-265.

55 Id. at 267-268.

56 Id. at 270, Pichay Memorandum

57 Id. at 272.

Republic Act No. 10149 (2010), sec. 4 provides:

 SECTION 4. Coverage. — This Act shall be applicable to all GOCCs,
GICPs/GCEs, and government financial institutions, including their
subsidiaries, but excluding the Bangko Sentral ng Pilipinas, state
universities and colleges, cooperatives, local water districts, economic
zone authorities and research institutions: Provided, That in economic
zone authorities and research institutions, the President shall appoint one-
third (1/3) of the board members from the list submitted by the GCG.
(Emphasis supplied)

58 Rollo (G.R. No. 197950), p. 272.

59 Id. at 277.

60 Id. at 276.

61 Id. at 277.

62 Id. at 279.

63 Id.

64 Id. at 282-283.

65 Id. at 283.

66 Id. at 185, Consolidated Memorandum.

67 Id. at 189.

68 Id. at 176.

69 Id. at 179.

70 Id. at 180.

71 Id. at 182.

72 Id. at 185.

73 Id. at 186.

74 Id. at 193.

75 Id. at 189.

76 Id. at 204.

77 Id. at 195-196.
78 Id. at 197-198.

79 Id. at 198.

80 Id. at 197.

81 Id. at 199.

82 Id. at 199-200.

83 Id. at 201-202.

84 Id. at 202.

85 Id. at 202.

86 Id. at 203.

87 Id. at 206.

88 Id. at 204.

89 Id. at 202.

90 Id. at 204.

91 Id. at 205.

92 Id. at 219-220 citing Abakada Guro Party-List v. Ermita, 506 Phil. 1 (2005)
[Per J. Austria-Martinez, En Banc].

93 Joint Resolution Authorizing the President of the Philippines to Modify the

Compensation and Position Classification System of Civilian Personnel and the
Base Pay Schedule of Military and Uniformed Personnel in the Government, and
for Other Purposes.

94 Rollo, p. 224.

95 Id.

96 Id. at 227-228.

97 Rollo (G.R. No. 197950), p. 228.

98 Id. at 237-238.

99 Id. at 238.
100 Id.

101 Id. at 239.

102 Id. at 240.

103 Id. at 240-241.

104 Id. at 241.

105 Id.

106 Id.

107 Id. at 241-242.

108 Id. at 242.

109 Id.

110 Id. at 245 citing Republic Act No. 10149 (2010), sec. 32.

111 Id. at 243-245.

112 Id. at 246.

113 GR. No. 217158, March 12, 2019, <

https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64970 > [Per J.
Jardeleza, En Banc].

114 Id.

115 Land Bank of the Philippines v. Dalauta, 815 Phil. 740, 768 (2017) [Per J.
Mendoza, En Banc].

116 The City of Lapu-Lapu v. Philippine Economic Zone Authority, 748 Phil. 473,
517 (2014) [Per J. Leonen, Second Division].

117 Dy v. Yu, 763 Phil. 491, 518 (2015) [Per J. Perlas-Bernabe, First Division].

118 The City of Lapu-Lapu v. Philippine Economic Zone Authority, 748 Phil. 473,
515 (2014) [Per J. Leonen, Second Division].

119 Id. at 516.

120 63 Phil. 139 (1936) [Per J. Laurel, En Banc].

121 Id. at 158.

122 National Economic Protectionism Association v. Ongpin, 253 Phil. 643, 650
(1989) [Per J. Paras, En Banc]; Philippine Association of Colleges and
Universities v. Secretary of Education, 97 Phil 806, 809 (1955) [Per J. Bengzon,
First Division].

123 Southern Hemisphere Engagement Network, Inc. v. Anti-Terrorism Council,

646 Phil. 452 (2010 [Per J. Carpio Morales, En Banc].

124 Luz Farms v. Secretary of the Department of Agrarian Reform, 270 Phil. 151
(1990) [Per J. Paras, En Banc]; Macasiano v. National Housing Authority, 296
Phil. 56 (1993) [Per J. Davide, Jr., En Banc].

125 J. Corona, Concurring Opinion in Galicto v. Aquino III, 683 Phil. 141, 182
(2012) [Per J. Brion, En Banc].

126 Francisco, Jr. v. Toll Regulatory Board, 648 Phil. 54 (2010) [Per J. Velasco,
Jr., En Banc].

127 65 Phil. 56 (1937) [Per J. Laurel, First Division].

128 Id. at 95.

129 Provincial Bus Operators Association of the Philippines v. Department of

Labor and Employment, G.R. No. 202275, July 17, 2018, 872 SCRA 50, 98 [Per
J. Leonen, En Banc].

130 J. Leonen, Dissenting Opinion in Spouses Imbong v. Ochoa, Jr., 732 Phil. 1
(2014) [Per J. Mendoza, En Banc].

131 Guingona, Jr. v. Court of Appeals, 354 Phil. 415 (1998) [Per J. Panganiban,
En Banc].

132 See Provincial Bus Operators Association of the Philippines v. Department of

Labor and Employment, G.R. No. 202275, July 17, 2018, 872 SCRA 50 [Per J.
Leonen, En Banc].

133 Angara v. Electoral Commission, 63 Phil. 139, 158 (1936) [Per J. Laurel, En
Banc].

134 589 Phil. 387 (2008) [Per J. Carpio Morales, En Banc].

135 Id. at 481.

136 607 Phil. 334 (2009) [Per C.J. Puno, En Banc].

137 Id. at 341.

138 J. Leonen, Concurring Opinion in Private Hospitals Association of the

Philippines, Inc. v. Medialdea, G.R. No. 234448, November 6, 2018, <
https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64748 > [Per J.
Tijam, En Banc].

139 See Abakada Guro Party List v. Purisima, 584 Phil. 246 (2008) [Per J.
Corona, En Banc].

140 558 Phil. 338 (2007) [Per J. Carpio Morales, En Banc].

141 Id. at 350-351.

142 Pimentel, Jr. v. Office of the Executive Secretary, 501 Phil. 303 (2005) [Per
J. Puno, En Banc].

143 Chamber of Real Estate and Builders' Association, Inc. v. Energy Regulatory
Commission, 638 Phil. 542 (2010) [Per J. Brion, En Banc].

144 305 Phil. 546 (1994) [Per J. Quiason, En Banc].

145 Id. at 563.

146 501 Phil. 303 (2005) [Per J. Puno, En Banc].

147 Id. at 312-313.

148 651 Phil. 374 (2010) [Per J. Mendoza, En Banc].

149 Id. at 438-439.

150 J. Carpio Morales, Dissenting Opinion in Biraogo v. Philippine Truth

Commission of 2010, 651 Phil. 374, 695 (2010) [Per J. Mendoza, En Banc].

151 G.R. No. 202275, July 17, 2018, 872 SCRA 50 [Per J. Leonen, En Banc].

152 Id. at 112.

153 Republic v. Molclex Realty, Inc., 780 Phil. 553, 561 (2016) [Per J. Leonen,
Second Division].

154 De Castro v. Carlos, 709 Phil. 389 (2013) [Per C.J. Sereno, En
Banc]; Review Center Association of the Philippines v. Ermita, 602 Phil. 342
(2009) [Per J. Carpio, En Banc]; Gerochi v. Department of Energy, 554 Phil. 563
(2007) [Per J. Nachura, En Banc]; and People v. Cuaresma, 254 Phil. 418 (1989)
[Per J. Narvasa, First Division].

155 Santiago v. Vasquez, 282 Phil. 171 (1993) [Per J. Regalado, En Banc].

156 751 Phil. 301 (2015) [Per J. Leonen, En Banc].

157 Id. at 329-330.

158 Provincial Bus Operators Association of the Philippines v. Department of

Labor and Employment, G.R. No. 202275, July 17, 2018, 872 SCRA 50, 91-92
[Per J. Leonen, En Banc].

159 J. Leonen, Separate Opinion in GIOS-SAMAR, Inc. v. Department of

Transportation and Communication, G.R. No. 217158, March 12, 2019, <
https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64970 > [Per J.
Jardeleza, En Banc].

160 Provincial Bus Operators Association of the Philippines v. Department of

Labor and Employment, G.R. No. 202275, July 17, 2018, 872 SCRA 50 [Per J.
Leonen, En Banc].

161 The Diocese of Bacolod v. Commission on Elections, 751 Phil. 301, 331
(2015) [Per J. Leonen, En Banc].

162 Id. at 332.

163 Id

164 Id. 133.

165 Id.

166 Id. at 334.

167 Id.

168 Id. at 334-335.

169 413 Phil. 281 (2001) [Per J. Sandoval-Gutierrez, En Banc].

170 Id. at 289-290.

171 257 Phil. 84 (1989) [Per J. Sarmiento, En Banc].

172 Id. at 111.

173 Provincial Government of Camarines Norte v. Gonzalez, 714 Phil. 468, 486
(2013) [Per J. Brion, En Banc].

174 278 Phil. 83 (1991) [Per J. Padilla, Second Division].

175 Id. at 94.

176 CONST., art. IX-B, sec. 2(1).

177 ADM. CODE, Book V, Title I, Subtitle A, Ch. 2, sec. 6(1) provides:

SECTION 6. Scope of the Civil Service. — (1) The Civil Service embraces
all branches, subdivisions, instrumentalities, and agencies of the
Government, including government-owned or controlled corporations with
original charters.

178 380 Phil. 280 (2000) [Per J. Gonzaga-Reyes, En Banc].

179 Id. at 285.

180 714 Phil. 468 (2013) [Per J. Brion, En Banc].

181 Id. at 494-495.

182 Achacoso v. Macaraig, 272-A Phil. 200 (1991) [Per J. Cruz, En Banc].

183 Id; See also Ocampo v. Secretary of Justice, G.R. No. L-7910, January 18,
1955 [Per C.J. Paras, En Banc].

184 Provincial Government of Camarines Norte v. Gonzales, 714 Phil. 468, 485-
487 (2013) [Per J. Brion, En Banc].

185 J. Tinga, Dissenting Opinion in Rufino v. Endriga, 528 Phil. 473, 540 (2006)
[Per J. Carpio, En Banc].

186 553 Phil. 1 (2007) [Per J. Carpio, Second Division].

187 Id. at 8.

188 CAAP-Employees' Union v. Civil Aviation Authority of the Phil., 746 Phil. 503,
526 (2014) [Per J. Villarama, Jr., En Banc].

189 257 Phil. 84 (1989) [Per J. Sarmiento, En Banc].

190 Id. at 130.

191 C.J. Fernan, Concurring and Dissenting Opinion in Mendoza v. Quisumbing,

264 Phil. 471, 526 (1990) [Per J. Gutierrez, Jr., En Banc].

192 Rollo (G.R. No. 197950), p. 196.

193 Delivered on July 26, 2010.

194 President Benigno S. Aquino 111, State of the Nation Address, July 26,
2010, < https://www.officialgazette.gov.ph/2010/07/26/state-of-the-nation-
address-2010-en/ > (last accessed on March 13, 2019).
195 Galicto v. Aquino III, 683 Phil. 141, 161 (2012) [Per J. Brion, En Banc].

196 Id.

197 Republic Act No. 10149 (2010), sec. 2.

198 Republic Act No, 10149 (2010), sec. 2.

199 264 Phil. 471 (1990) [Per Gutierrez, Jr., En Banc].

200 Id. at 526-527.

201 CONST., art. XI, sec. 1.

202 De La Llana v. Alba, 198 Phil. 1, 64 (1982) [Per C.J. Fernando, En Banc].

203 Aparri v. Court of Appeals, 212 Phil. 215 (1984) [Per J. Makasiar, Second
Division].

204 CAAP-Employees' Union v. Civil Aviation Authority of the Phil., 746 Phil. 503,
526 (2014) [Per J. Villarama, Jr., En Banc].

205 J. Melencio-Herrera, Dissenting Opinion in Dario v. Mison, 257 Phil. 84, 161
(1989) [Per J. Sarmiento, En Banc].

206 198 Phil. 1 (1982) [Per C.J. Fernando, En Banc].

207 Id. at 85-86.

208 Provincial Government of Camarines Norte v. Gonzalez, 714 Phil. 468, 485-
486 (2013) [Per J. Brion, En Banc].

209 See rollo (G.R. No. 197422), pp. 505-506, 524, and rollo (G.R. No. 197950),
pp. 261-268.

210 Gerochi v. Department of Energy, 554 Phil. 563, 584 (2007) [Per J.
Nachura, En Banc]. See also People v. Vera, 65 Phil. 56 (1937) [Per J. Laurel,
First Division].

211 See Calalang v. Williams, 70 Phil. 726 (1940) [Per J. Laurel, First Division].

212 People v. Vera, 65 Phil. 56, 117-120 (1937) [Per J. Laurel, First Division].

213 248 Phil. 762 (1988) [Per J. Cruz, First Division].

214 Id. at 772-773.

215 Pelaez v. Auditor General, 122 Phil. 965, 974-975 (1965) [Per J.
Concepcion, En Banc].

216 584 Phil. 246 (2008) [Per J. Corona, En Banc].

217 Id. at 272.

218 Republic Act No. 10149 (2010), sec. 5(a).

219 91 Phil. 359 (1952) [Per J. Reyes, En Banc].

220 Id. at 362.

221 Cervantes v. Auditor General, 91 Phil. 359, 364 (1952) [Per J. Reyes, En
Banc].

222 An Act Prescribing a Revised Compensation and Position Classification

System in the Government and for Other Purposes, August 21, 1989.

223 Mendoza v. Commission on Audit, 717 Phil. 491 (2013) [Per J. Leonen, En
Banc].

224 Rationalizing the System of Compensation and Position Classification in the

National Government, dated June 11, 1978.

225 Presidential Decree No. 1597 (1978), third whereas clause.

226 Mendoza v. Commission on Audit, 717 Phil. 491 (2013) [Per J. Leonen, En
Banc].

227 J. Corona, Concurring Opinion in Galicto v. Aquino III, 683 Phil. 141 (2012)
[Per J. Brion, En Banc].

228 366 Phil. 273 (1999) [Per J. Romero, En Banc].

229 444 Phil. 859 (2003) [Per J. Puno, Third Division].

230 Id. at 869.

231 Id. at 870.

232 Philippine Economic Zone Authority v. Commission on Audit, 797 Phil. 117
(2016) [Per J. Peralta, En Banc].

233 Republic Act No. 10149 (2010), sec. 5(h).

234 Republic Act No. 10149 (2010), sec. 8 provides:

 SECTION 8. Coverage of the Compensation and Position Classification
System. — The GCG, after conducting a compensation study, shall
develop a Compensation and Position Classification System which shall
apply to all officers and employees of the GOCCs whether under the
Salary Standardization Law or exempt therefrom and shall consist of
classes of positions grouped into such categories as the GCG may
determine, subject to the approval of the President.

235 Republic Act No. 10149 (2012), sec. 9, 11, and 23.

236 Republic Act No. 10149 (2012), sec. 2(f).

237 De La Llana v. Alba, 198 Phil. 1, 59 (1982) [Per C.J. Fernando, En Banc].

238 Id. at 59-60.

239 Rollo (G.R. No. 197422), p. 531.

240 Id. at 532.

241 Governance Commission, About us, < https://gcg.gov.ph/about-us > (last

accessed on November 2, 2020).

242 Id.

243 See City Government of Makati City v. Civil Service Commission, 426 Phil.
631, 644 (2002) [Per J. Bellosillo, En Banc].

244 Career Executive Service Board v. Civil Service Commission, 806 Phil. 967
(2017) [Per C.J. Sereno, En Banc].

245 Civil Service Commission v. Gentallan, 497 Phil. 594 (2005) [Per J.
Quisumbing, En Banc].

246 Civil Service Commission v. Alfonso, 607 Phil. 60 (2009) [Per J. Nachura, En
Banc],

247 ADM. CODE, Book V, Title 1-A, Ch. 3, sec. 12.

248 Re: Eden Candelaria, 627 Phil. 473 (2010) [Per J. Abad, En Banc].
Presidential Decree No. 807 (1975), sec. 9, Civil Service Law of 1975 provides:

SECTION 9. Powers and Functions of the Commission. – The Commission

shall administer the Civil Service and shall have the following powers and
functions:

....
 Approve all appointments, whether original or promotional to positions in
the civil service, except those of presidential appointtees, members of the
Armed Forces of the Philippines, police forces, firemen, and jailguards,
and disapprove those where the appointees do not possess the
appropriate eligibility or required qualifications. An appointment shall take
effect immediately upon issue by the appointing authority if the appointee
assumes his duties immediately and shall remain effective until it is
disapproved by the Commission, if this should take place, without
prejudice to the liability of the appointing authority for appointments
issued in violation of existing laws or rules: Provided, finally, That the
Commission shall keep a record of appointments of all officers and
employees in the civil service. All appointments requiring the approval of
the Commission as herein provided, shall be submitted to it by the
appointing authority within thirty days from issuance, otherwise, the
appointment becomes ineffective thirty days thereafter. (Emphasis
supplied)

249 Lopez v. Civil Service Commission, 272 Phil. 97 (1991) [Per J. Gutierrez, Jr.,
En Banc]; Central Bank of the Philippines v. Civil Service Commission, 253 Phil.
717, 725 (1989) [Per J. Gancayco, En Banc].

250 Luego v. Civil Service Commission, 227 Phil. 303, 308 (1986) [Per J. Cruz,
En Banc].

251 Central Bank of the Philippines v. Civil Service Commission, 253 Phil. 717,
726 (1989) [Per J. Gancayco, En Banc].

252 491 Phil. 729 (2005) [Per J. Sandoval-Gutierrez, En Banc].

253 Id. at 736-737.

254 Buena, Jr. v. Benito, 745 Phil. 399 (2014) [Per J. Leonen, En Banc].

255 Lapinid v. Civil Service Commission, 274 Phil. 381 (1991) [Per J. Cruz, En
Banc].

256 Republic Act No. 10149 (2010), sec. 2(e).

257 Governance Commission, About us, < https://gcg.gov.ph/about-us/ > (Last

accessed on March 29, 2019).

258 Republic Act No. 10149 (2010), secs. 15-18.

259 Trade and Investment Development Corp. v. Civil Service Commission, 705
Phil. 357 (2013) [Per J. Brion, En Banc].

260 705 Phil. 357, 369 (2013) [Per J. Brion, En Banc].

261 Id. at 369-372.

262 Garcia v. Executive Secretary, 281 Phil. 572, 579-580 (1991) [Per J. Cruz,
En Banc]. ". . . We find that the constitutional challenge must be rejected for
failure to show that there is an indubitable ground for it, not to say even a
necessity to resolve it. The policy of the courts is to avoid ruling on constitutional
questions and to presume that the acts of the political departments are valid in
the absence of a clear and unmistakable showing to the contrary. To doubt is to
sustain. This presumption is based on the doctrine of separation of powers which
enjoins upon each department a becoming respect for the acts of the other
departments. The theory is that as the joint act of Congress and the President of
the Philippines, a law has been carefully studied and determined to be in
accordance with the fundamental law before it was finally enacted."

263 Central Bank Employees Association, Inc. v. Bangko Sentral ng Pilipinas,

487 Phil. 531 (2004) [Per J. Puno, En Banc].

264 J. Panganiban, Dissenting Opinion in Central Bank Employees Association,

Inc. v. Bangko Sentral ng Pilipinas, 487 Phil. 531, 624-626 (2004) [Per J. Puno,
En Banc].

265 Republic Act No. 10149 (2010), sec. 3(o).

266 Republic Act No. 10149 (2010), sec. 3(m).

267 Republic Act No. 10149 (2010), sec. 3(n).

268 Republic Act No. 10149 (2010), sec. 4.

269 Rollo (G.R. No. 197950), p. 272 and 279.

Republic Act No. 10149 (2010), sec. 4 provides:

SECTION 4. Coverage.— This Act shall be applicable to all GOCCs,

GICPs/GCEs, and government financial institutions, including their
subsidiaries, but excluding the Bangko Sentral ng Pilipinas, state
universities and colleges, cooperatives, local water districts, economic
zone authorities and research institutions: Provided, That in economic
zone authorities and research institutions, the President shall appoint one-
third (1/3) of the board members from the list submitted by the GCG.
(Emphasis supplied)

270 Central Bank Employees Association, Inc. v. Bangko Sentral ng Pilipinas,

487 Phil. 531 (2004) [Per J. Puno, En Banc] citing Victoriano v. Elizalde Rope
Workers' Union, 158 Phil. 60 (1974) [Per J. Zaldivar, En Banc].

271 Fariñas v. Executive Secretary, 463 Phil. 179, 206 (2003) [Per J. Callejo,
Sr., En Banc].

272 This rational basis test was first summarized in People v. Cayat, 68 Phil. 12
(1939) [Per J. Moran, First Division], See also Philippine Rural Electric
Cooperatives Association v. Secretary of Interior and Local Government, 451
Phil. 683 (2003) [Per J. Puno, En Banc].

273 Victoriano v. Elizalde Rope Workers' Union, 158 Phil. 60, 87-88 (1974) [Per
J. Zaldivar, En Banc].

274 Zomer Development Co., Inc. v. Special Twentieth Division of the Court of
Appeals, G.R. No. 194461, January 7, 2020, <
https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/66131 > [Per J.
Leonen, En Banc], citing Samahan ng mga Progresibong Kabataan v. Quezon
City, 815 Phil. 1067, 1113-1114 (2017) [Per J. Perlas-Bernabe, En Banc].

275 Id.

276 Republic Act No, 7653 (1993), secs. 1 and 2, par. 1 provide:

SECTION 1. Declaration of Policy. — The State shall maintain a central

monetary authority that shall function and operate as an independent and
accountable body corporate in the discharge of its mandated
responsibilities concerning money, banking and credit. In line with this
policy, and considering its unique functions and responsibilities, the
central monetary authority established under this Act, while being a
government-owned corporation, shall enjoy fiscal and administrative
autonomy.

SECTION 2. Creation of the Bangko Sentral. — There is hereby

established an independent central monetary authority, which shall be a
body corporate known as the Bangko Sentral ng Pilipinas, hereafter
referred to as the Bangko Sentral.

277 CONST., art. XII, sec. 20 provides:

SECTION 20. The Congress shall establish an independent central

monetary authority, the members of whose governing board must be
natural-born Filipino citizens, of known probity, integrity, and patriotism,
the majority of whom shall come from the private sector. They shall also
be subject to such other qualifications and disabilities as may be
prescribed by law. The authority shall provide policy direction in the areas
of money, banking, and credit. It shall have supervision over the
operations of banks and exercise such regulatory powers as may be
provided by law over the operations of finance companies and other
institutions performing similar functions.

Until the Congress otherwise provides, the Central Bank of the Philippines,
operating under existing laws, shall function as the central monetary
authority.

278 Republic Act No. 7653 (1993), sec. 1.

279 Republic Act No. 7722 (1994), Higher Education Act of 1994.

280 Republic Act No. 7722 (1994), sec. 8.

281 Republic Act No. 8292 (1997), sec. 3.

282 Republic Act No. 8292 (1997), sec. 4.

283 Republic Act No. 8292 (1997), sec. 5.

284 See University oj Mindanao, Inc. v. Bangko Sentral ng Pilipinas, 776 Phil.
401 (2016) [Per J. Leonen, Second Division].

285 Camacho v. Coresis, Jr., 436 Phil. 449 (2002) [Per J. Quisumbing, Second
Division].

286 Philippine Rural Electric Cooperatives Association v. Secretary of Interior and

Local Government, 451 Phil. 683, 696 (2003) [Per J. Puno, En Banc].

287 Barrameda v. Atienza, 421 Phil. 197 (2001) [Per J. Pardo, First Division].

288 Cooperative Code of the Philippines (1990).

289 An Act Creating the Cooperative Development Authority to Promote the

Viability and Growth of Cooperatives as Instruments of Equity, Social Justice and
Economic Development, Defining its Powers, Functions and Responsibilities,
Rationalizing Government Policies and Agencies with Cooperative Functions,
Supporting Cooperative Development, Transferring the Registration and
Regulation Functions of Existing Government Agencies on Cooperatives as such
and Consolidating the Same with the Authority, Appropriating Funds Therefor,
and for Other Purposes (1990).

290 Republic Act No 6938 (1990), Ch. XI.

291 Republic Act No. 6938 (1990), Ch. XII.

292 Republic Act No. 6938 (1990), Ch. XIII.

293 Republic Act No. 6938 (1990), Ch. XIV.

294 Republic Act No. 6938 (1990), Ch. XV.

295 Republic Act No. 6939 (1990), sec. 3 provides the powers and functions of
the Cooperative Development Authority.

SECTION 3. Powers, Functions and Responsibilities. — The Authority shall

have the following powers, functions and responsibilities:
(a) Formulate, adopt and implement integrated and comprehensive
plans and programs on cooperative development consistent with
the national policy on cooperatives and the overall socioeconomic
development plans of the Government;

(b) Develop and conduct management and training programs upon

request of cooperatives that will provide members of cooperatives
with the entrepreneurial capabilities, managerial expertise, and
technical skills required for the efficient operation of their
cooperatives and inculcate in them the true spirit of cooperativism
and provide, when necessary, technical and professional assistance
to ensure the viability and growth of cooperatives with special
concern for agrarian reform, fishery and economically depressed
sectors;

(c) Support the voluntary organization and consensual

development of activities that promote cooperative movements and
provide assistance towards upgrading managerial and technical
expertise upon request of the cooperatives concerned;

(d) Coordinate the efforts of the local government units and the
private sector in promotion, organization, and development of
cooperatives;

(e) Register all cooperatives and their federations and unions,

including their division, merger, consolidation, dissolution or
liquidation. It shall also register the transfer of all or substantially
all of their assets and liabilities and such other matters as may be
required by the Authority;

(f) Require all cooperatives, their federations and unions to submit

their annual financial statements, duly audited by certified public
accountants, and general information sheets;

(g) Order the cancellation after due notice and hearing of the
cooperative's certificate of registration for non-compliance with
administrative requirements and in cases of voluntary dissolution;

(h) Assist cooperatives in arranging for financial and other forms of

assistance under such terms and conditions as are calculated to
strengthen their viability and autonomy;

(i) Establish extension offices as may be necessary and financially

viable to implement this Act. Initially, there shall be extension
offices in the Cities of Dagupan, Manila, Naga, Iloilo, Cebu,
Cagayan de Oro and Davao;

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

with the registration of cooperatives;
 (k) Administer all grants and donations coursed through the
Government for cooperative development, without prejudice to the
right of cooperatives to directly receive and administer such grants
and donations upon agreement with the grantors and donors
thereof;

(l) Formulate and adopt continuing policy initiatives

consultationwith the cooperative sector through public hearing;

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

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

state of the cooperative movement; and

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

implement the provisions of cooperative laws and, in the
performance thereof, the Authority may summarily punish for
direct contempt any person guilty of misconduct in the presence of
the Authority which seriously interrupts any hearing or inquiry with
a fine of not more than Five hundred pesos (P500.00) or
imprisonment of not more than ten (10) days, or both. Acts
constituting indirect contempt as defined under Rule 71 of the
Rules of Court shall be punished in accordance with the said Rule.
(Emphasis supplied)

296 Republic Act No. 6939 (2010), sec. 1 (4).

297 Philippine Rural Electric Cooperatives Association v. Secretary of Interior and

Local Government, 451 Phil. 683, 696 (2003) [Per J. Puno, En Banc].

298 Provincial Water Utilities Act of 1973.

299 Presidential Decree No. 198 (1973), 5th whereas clause.

300 Presidential Decree No. 198 (1973), Title II.

301 Presidential Decree No. 198 (1973), sec. 5.

302 Presidential Decree No. 198 (1973), sec. 9 in relation to sec. 3(b) was
declared unconstitutional in Rama v. Moises, 802 Phil. 29 (2016) [Per J.
Bersamin, En Banc].

303 Presidential Decree No. 198 (1973), sec. 49.

304 CONST., art. II, sec. 25 provides:

Section 25. The State shall ensure the autonomy of local governments.
305 GCG Memorandum Circular No. 2012-04 (October 26, 2015), par. 2.1.4
clarifies that:

... The term "Economic Zone Authorities" ... shall cover only those having
a charter which provides the primary purpose of which is to act as an
economic zone authority, such as the Philippine Economic Zone Authority
(PEZA), Aurora Pacific Economic Zone and Freeport Authority (APECO),
Authority of the Freeport Area of Bataan (AFAB), Cagayan Economic Zone
Authority (CEZA), Subic Bay Metropolitan Authority (SBMA) and
Zamboanga City Special Economic Zone Authority (ZAMBOECOZONE).

All other chartered GOCCs where regulation of zone authorities is just an

additional function, such as the Bases Conversion and Development
Authority (BCDA), or nonchartered GOCCs organized and registered with
the Securities and Exchange Commission (SEC), which under their articles
of incorporation, are to engage in the regulation of economic zones, such
as the Clark Development Corporation (CDC), John Hay Management
Corporation (JHMC). and Poro Point Management Corporation (PPMC), are
within the full coverage of R.A. No. 10149, not falling within the technical
term of authorities. (Emphasis supplied)

306 See Republic Act No. 7916 (1995), sec. 7, Special Economic Zone Act of
1995; Republic Act No. 9728 (2009), sec. 4, Freeport Area of Bataan (FAB) Act
of 2009; Republic Act No. 10083 (2010), sec. 3, Aurora Pacific Economic Zone
and Freeport Act of 2010.

307 Republic Act No. 7916 (1995), sec. 4.

308 An Act Providing for the Legai Framework and Mechanisms for the Creation,
Operation, Administration, and Coordination of Special Economic Zones in the
Philippines, Creating for this Purpose, the Philippine Economic Zone Authority
(PEZA), and for Other Purposes.

309 Republic Act No. 7916, (1995), sec. 12.

310 Republic Act No. 7916, (1995), sec. 53.

311 Rollo (G.R. No. 197950), pp. 274-275.

312 Republic Act No. 9728 (2009), sec. 4; Republic Act No. 10083 (2010), sec.
3(a); Republic Act No 7227 (1992), sec. 12(a); Republic Act No. 7922 (1995),
sec. 4(a); and Republic Act No. 7903 (1995). sec. 4(a).

313 GCG Memorandum Circular No. 2014-01 (2014), par. 2.2.

314 GCG Memorandum Circular No. 2012-04 (2015), par. 2.1.5 clarifies that:

The term "Research Institutions" referred to in Section 4 of R.A. No.

10149 as being excluded from the coverage of the Act, shall cover only
 those having a charter which provides the primary purpose of which is to
act as a research institution, such as Philippine Rice Research Institute
(PRRI) and the Philippine Institute for Development Studies (PIDS).

All other chartered GOCCs where engaging in research constitutes merely

an additional function of the GOCC, such as the Development Academy of
the Philippines (DAP), or nonchartered GOCCs organized under their
articles of incorporation to engage into institutional research, are within
the full coverage of R.A. No. 10149. (Emphasis supplied)

315 Presidential Decree No. 1201 (1977), 4th whereas clause.

316 Executive Order No. 1061 (1985), sec. 2, Establishing the Philippine Rice
Research Institute (PRRI).

317 Republic Act No. 10149 (2010), sec. 4.

318 Central Bank Employees Association, Inc. v. Bangko Sentral ng Pilipinas,

487 Phil. 531, 560 (2004) [Per J. Puno, En Banc].

319 Ichong v. Hernandez, 101 Phil. 1155 (1957) [Per J. Labrador, En Banc].

320 90 Phil. 83 (1951) [Per J. Bautista Angelo, En Banc].

321 Id. at 89-90.

322 158 Phil. 60 (1974) [Per J. Zaldivar, En Banc].

323 Id. at 87-88.

324 See Hospicio de San Jose de Barili Cebu City v. Department of Agrarian
Reform, 507 Phil. 586 (2005) [Per J. Tinga, Second Division]; Fabella v. Court of
Appeals, 346 Phil. 940 (1997) [Per J. Panganiban, Third Division]; and Villegas v.
Subido, 148-B Phil. 668 (1971) [Per J. Fernando, En Banc].

325 507 Phil. 586 (2005) [Per J. Tinga, Second Division].

326 Id. at 602.

327 Republic Act No. 10149 (2010), sec. 5(e).

328 Republic Act No. 10149 (2010), sec. 12.

329 Republic Act No. 10149 (2010), sec. 17.

330 Republic Act No. 10149 (2010), sec. 17.