Secretary of the Department of Transportation and Communications (DOTC) vs. Roberto Mabalot

The President, acting through the DOTC Secretary as his alter ego, may validly decree the reorganization of the Department, including the establishment of DOTC-CAR as the LTFRB Regional Office and the concomitant transfer of LTFRB regional functions, pursuant to the continuing authority to reorganize the National Government under P.D. No. 1416 as amended by P.D. No. 1772 and Administrative Order No. 36, without need of a new statute; such reorganization does not violate Sections 7 and 8, Article IX-B, absent evidence of additional or double compensation.

The petitioner is the Secretary of the Department of Transportation and Communications (DOTC), while respondent Roberto Mabalot was the private party who initiated the action below. The LTFRB, created by Executive Order No. 202, is under the administrative supervision and control of the DOTC Secretary. The DOTC-CAR Regional Office was created by Executive Order No. 220, and Administrative Order No. 36 directed national departments and agencies to establish their respective regional offices in the Cordillera Administrative Region.

On February 19, 1996, then DOTC Secretary Jesus B. Garcia, Jr. issued Memorandum Order No. 96-735 addressed to LTFRB Chairman Dante Lantin. The order directed the transfer of the regional functions of the LTFRB to the DOTC-CAR Regional Office, pending the creation of a regular Regional Franchising and Regulatory Office thereat, pursuant to Section 7 of Executive Order No. 202. It further provided that the organic personnel of DOTC-CAR shall perform the LTFRB functions on a concurrent capacity, subject to the direct supervision and control of the LTFRB Central Office.

On March 13, 1996, Roberto Mabalot filed a petition for certiorari and prohibition with prayer for preliminary injunction and/or restraining order against the DOTC Secretary and LTFRB Chairman Lantin before the Regional Trial Court of Quezon City, Branch 81, praying that Memorandum Order No. 96-735 be declared illegal and without effect. The lower court issued a temporary restraining order on March 20, 1996, enjoining the DOTC Secretary from implementing the order, and on April 8, 1996, upon respondent's filing of a bond, issued a writ of preliminary injunction. On April 25, 1996, then DOTC Secretary Amado Lagdameo, Jr. filed his answer to the petition.

Thereafter, on January 29, 1997, Secretary Lagdameo issued Department Order No. 97-1025. Pursuant to Administrative Order No. 36 dated September 23, 1987, and for purposes of economy and more effective coordination of DOTC functions in the Cordillera Administrative Region, the DOTC-CAR Regional Office, created by Executive Order No. 220 dated July 15, 1987, was established as the Regional Office of the LTFRB and was to exercise the regional functions of the LTFRB in the CAR, subject to the direct supervision and control of the LTFRB Central Office. The budgetary requirement for this purpose was to come from the Department until such time that its appropriate budget was included in the General Appropriations Act.

After trial, the Office of the Solicitor General moved to reopen the hearing in the lower court to enable petitioner to present Department Order No. 97-1025. In an Order dated February 18, 1997, the lower court granted the motion. On April 3, 1997, respondent filed a Motion for Leave to File Supplemental Petition assailing the validity of Department Order No. 97-1025. On May 14, 1997, the OSG presented Department Order No. 97-1025, after which petitioner filed a formal offer of exhibits. In an Order dated June 9, 1997, the lower court admitted petitioner's documentary exhibits over respondent's objection and admitted respondent's supplemental petition, to which petitioner filed an answer.

The facts are uncontested. The controversy centered on the validity of the two administrative issuances.

• Economy and Efficiency: Petitioner pointed out that tapping the DOTC-CAR pending the eventual creation of the LTFRB Regional Office is economical in terms of manpower and resource requirements, thereby reducing expenses from the limited resources of the government.

• Undue Exercise of Legislative Power: Respondent Mabalot principally argued that a transfer of the powers and functions of the LTFRB Regional Office to a DOTC Regional Office, or the establishment of the latter as an LTFRB Regional Office, is unconstitutional for being an undue exercise of legislative power.
• Quasi-Judicial Powers Require Legislative Fiat: Respondent quoted the lower court's rationale that, with the restoration of Congress as the legislative body, the transfer of powers and functions, especially those quasi-judicial in nature, could only be effected through legislative fiat; not even the President could do so, much less the DOTC Secretary, who is only a mere extension of the Presidency.
• LTFRB Powers Cannot Be Transferred Without Congressional Approval: Among the powers of the LTFRB are to issue injunctions, whether prohibitory or mandatory, punish for contempt, and issue subpoena and subpoena duces tecum; these powers devolve by extension on the LTFRB regional offices and cannot be transferred to another agency without congressional approval embodied in a duly enacted law.

• Validity of Administrative Issuances / Encroachment on Legislative Power: Whether Memorandum Order No. 96-735 and Department Order No. 97-1025 issued by the DOTC Secretary are valid administrative issuances or constitute an unconstitutional encroachment on the legislative power of Congress.
• Constitutional Prohibition on Multiple Offices and Additional Compensation: Whether the challenged orders violate Sections 7 and 8, Article IX-B of the 1987 Constitution on appointive officials holding another office or employment and receiving additional, double, or indirect compensation.

• Validity of Administrative Issuances / Encroachment on Legislative Power: Yes. The President, through the DOTC Secretary as alter ego, may validly decree the reorganization of the Department, including the establishment of DOTC-CAR as the LTFRB Regional Office and the transfer of functions, by authority of law under the continuing reorganization authority of the President; no patent or latent constitutional or statutory infirmity attends the challenged orders.
• Constitutional Prohibition on Multiple Offices and Additional Compensation: No. The personnel were merely designated to perform additional duties in a concurrent capacity, and no evidence showed additional, double, or indirect compensation in violation of Sections 7 and 8, Article IX-B.

• Validity of Administrative Issuances / Encroachment on Legislative Power: A public office may be created by the Constitution, by law, or by authority of law, and Congress may delegate the power to create positions. The creation and establishment of the LTFRB-CAR Regional Office was made pursuant to the third mode—by authority of law—through the DOTC Secretary's issuances implementing Administrative Order No. 36, which directed departments and agencies to establish their regional offices in the CAR. The President, through his alter ego the DOTC Secretary, may decree the reorganization of the Department, including the establishment of DOTC-CAR as the LTFRB Regional Office and the transfer of functions. Section 17, Article VII of the Constitution gives the President control over all executive departments, bureaus, and offices; control includes the authority to order a subordinate to do an act, undo it, or assume a power vested in him by law. Cabinet members are alter egos of the President, and their acts in the regular course of business are presumptively the acts of the Chief Executive unless disapproved. The Court relied on Larin vs. Executive Secretary, which upheld the President's continuing authority to reorganize the National Government under P.D. No. 1416 as amended by P.D. No. 1772, and on Section 20, Book III of E.O. No. 292. The reorganization was pursued in good faith because it was for economy and more effective coordination, and the DOTC Secretary had administrative supervision and control over the LTFRB. The appeal mechanism from Regional Franchising and Regulatory Offices to the Board and then to the DOTC Secretary avoided any conflict.
• Constitutional Prohibition on Multiple Offices and Additional Compensation: The orders did not violate Sections 7 and 8, Article IX-B. Under Memorandum Order No. 96-735, the organic personnel of DOTC-CAR were merely designated to perform additional duties and functions of an LTFRB Regional Office subject to the direct supervision and control of the LTFRB Central Office, pending the creation of a regular LTFRB Regional Office. Citing Triste vs. Leyte State College Board of Trustees, designation to another position may mean vesting additional duties while the officer performs the functions of his permanent office, or an acting capacity. Even assuming that appointive officials and employees would hold more than one office or employment as a result of Department Order No. 97-1025, this would not violate Section 7, Article IX-B, because an office or employment held in the exercise of the primary functions of one's principal office is an exception to, or not within the contemplation of, the prohibition. No evidence was adduced to show that the officials or employees would receive additional, double, or indirect compensation in violation of Section 8, Article IX-B. Absent clear and convincing evidence, there was no reason to invalidate the orders.

• Alter Ego Doctrine — Cabinet members are merely the alter egos of the President; their personality is a projection of the President's, and their acts performed and promulgated in the regular course of business are presumptively the acts of the Chief Executive unless disapproved or reprobated. The Court applied this to treat the DOTC Secretary's challenged orders as acts implementing the President's Administrative Order No. 36.
• Modes of Creating a Public Office — A public office may be created (1) by the Constitution, (2) by law, or (3) by authority of law. Congress may delegate the power to create positions. The Court applied the third mode, holding that the LTFRB-CAR Regional Office was validly created by authority of law through the DOTC Secretary's issuances implementing the President's directive.
• Continuing Authority of the President to Reorganize — Under P.D. No. 1416, as amended by P.D. No. 1772, the President has continuing authority to reorganize the National Government, including the power to create, abolish, group, consolidate, or merge offices, transfer functions, and create or abolish positions. The Court upheld the reorganization of the DOTC and the establishment of DOTC-CAR as the LTFRB Regional Office under this authority.
• Good Faith in Reorganization — Reorganization is valid if pursued in good faith; as a general rule, it is carried out in good faith if it is for the purpose of economy or to make the bureaucracy more efficient. The Court found the reorganization bore the earmark of good faith because it was for economy and more effective coordination.
• Designation to Another Position — To designate a public officer to another position may mean to vest him with additional duties while he performs the functions of his permanent office, or to designate him to a position in an acting capacity. The Court used this to characterize the DOTC-CAR personnel's concurrent performance of LTFRB functions.
• Exception to Prohibition on Multiple Offices — Under Section 7, Article IX-B of the Constitution, an office or employment held in the exercise of the primary functions of one's principal office is an exception to, or not within the contemplation of, the prohibition against holding another office or employment. The Court applied this to find no constitutional violation even assuming the personnel held more than one office.

• "Contrary to the opinion of the lower court, the President - through his duly constituted political agent and alter ego, the DOTC Secretary in the present case - may legally and validly decree the reorganization of the Department, particularly the establishment of DOTC-CAR as the LTFRB Regional Office at the Cordillera Administrative Region, with the concomitant transfer and performance of public functions and responsibilities appurtenant to a regional office of the LTFRB." — This passage states the ratio decidendi: the President may act through the DOTC Secretary as alter ego to reorganize the Department and transfer LTFRB regional functions.
• "a public office may be created through any of the following modes, to wit, either (1) by the Constitution (fundamental law), (2) by law (statute duly enacted by Congress), or (3) by authority of law." — This defines the modes of creating a public office and supports the Court's holding that the LTFRB-CAR Regional Office was validly created by authority of law.
• "In this jurisdiction, reorganization is regarded as valid provided it is 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." — This articulates the good-faith standard for reorganization and was applied to uphold the challenged orders.
• "under the aforementioned constitutional provision, an office or employment held in the exercise of the primary functions of one’s principal office is an exception to, or not within the contemplation, of the prohibition embodied in Section 7, Article IX-B." — This states the exception to the constitutional prohibition on multiple offices, which the Court applied to the DOTC-CAR personnel.

• Villena vs. Secretary of the Interior, 67 Phil. 451 (1939) — Cited for the alter ego doctrine: cabinet members' personality is a projection of the President's, and their acts in the regular course of business are presumptively the acts of the Chief Executive unless disapproved. The Court used this to treat the DOTC Secretary's orders as implementing the President's directive.
• Larin vs. Executive Secretary, 280 SCRA 713 (1997) — The principal precedent on the President's continuing authority to reorganize the National Government, including creation, alteration, or abolition of public offices; the Court relied on it to uphold the challenged orders and to cite Section 62 of R.A. 7645 and P.D. No. 1416 as amended by P.D. No. 1772.
• Triste vs. Leyte State College Board of Trustees, 192 SCRA 326 (1990) — Cited for the rule that designating a public officer to another position may mean vesting additional duties while he performs the functions of his permanent office, or an acting capacity; applied to the DOTC-CAR personnel.
• Dario vs. Mison, 176 SCRA 84 (1989) — Cited for the rule that reorganization is valid if pursued in good faith, generally shown when it is for economy or to make bureaucracy more efficient; applied to uphold the reorganization.
• Mondano vs. Silvosa, 97 Phil. 143 (1955) — Cited for the definition of control as the power to alter, modify, nullify, or set aside a subordinate's acts and substitute the officer's judgment; used to explain the President's control over the DOTC Secretary.
• Viola vs. Alunan III, 277 SCRA 409 (1997) — Cited, with Larin, as authority upholding reorganization statutes authorizing the President to create, abolish, or merge offices in the executive department.
• Rubenecia vs. Civil Service Commission, 244 SCRA 640 (1995) — Cited for the proposition that creation of a public office may be made by authority of law through an order of an administrative agency such as the Civil Service Commission under Section 17, Book V of E.O. 292.

• Section 17, Article VII, 1987 Constitution — Provides that the President shall have control of all executive departments, bureaus and offices and shall ensure that laws be faithfully executed. The Court used it to uphold the DOTC Secretary's orders as acts of the President through his alter ego.
• Sections 7 and 8, Article IX-B, 1987 Constitution — Prohibit appointive officials from holding any other office or employment and from receiving additional, double, or indirect compensation. The Court found no violation because the personnel were merely designated to perform additional duties in the exercise of their primary functions and no additional compensation was shown.
• Section 3, Article XVIII, 1987 Constitution — Provides that laws, decrees, executive orders, proclamations, letters of instructions, and other executive issuances not inconsistent with the Constitution remain operative until amended, repealed, or revoked. The Court used it to sustain the continuing effect of P.D. No. 1416 as amended by P.D. No. 1772.
• Section 20, Book III, E.O. No. 292 (Administrative Code of 1987) — Provides the President's residual powers to exercise other powers and functions vested under the laws not specifically enumerated or delegated. The Court cited it as a legal basis for the Chief Executive's authority to reorganize the National Government.
• Section 17, Book V, E.O. No. 292 — Cited as authority for creation of a public office by authority of law through an order of an administrative agency such as the Civil Service Commission.
• Section 18, Chapter 5, Title XV, Book IV, E.O. No. 292 and Section 4, E.O. No. 202 — Provide that the DOTC Secretary, through his duly designated Undersecretary, exercises administrative supervision and control over the LTFRB. The Court cited them to support the Secretary's authority over the LTFRB.
• Section 38, paragraph (1), Chapter 7, Book IV, E.O. No. 292 — Defines supervision and control. The Court cited it in relation to the DOTC Secretary's administrative supervision and control over the LTFRB.
• Sections 20 and 22, Chapter 5, Title XV, Book IV, E.O. No. 292; Sections 6 and 8, E.O. No. 202 — Establish the appeal mechanism: decisions, orders, or resolutions of Regional Franchising and Regulatory Offices are appealable to the Board within 30 days, and the Board's decisions are appealable to the DOTC Secretary. The Court used this to show no conflict would arise from the arrangement.
• Administrative Order No. 36, dated September 23, 1987, Section 1 — Directed various departments and agencies of the National Government to establish forthwith their respective regional offices in the Cordillera Administrative Region. The Court held this was the President's clear directive that the DOTC Secretary implemented.
• Presidential Decree No. 1416, as amended by Presidential Decree No. 1772 — Grants the President continuing authority to reorganize the National Government, including the power to abolish or create offices, transfer functions, and create, classify, combine, split, and abolish positions. The Court relied on it as the law authorizing the reorganization.
• Section 62, R.A. No. 7645 (GAA FY 1993); Sections 72 and 73, R.A. No. 8174 (GAA FY 1996); Sections 76 and 77, R.A. No. 8250 (GAA FY 1997) — General Appropriations Act provisions on organizational changes and implementation of reorganization. The Court cited them as similar legislative recognitions of the President's authority to effect organizational changes.
• Executive Order No. 202 — Created the LTFRB in the DOTC. The Court cited its provisions on supervision and appeal.
• Executive Order No. 220, dated July 15, 1987 — Created the DOTC-CAR Regional Office. The Court noted it as the office established as the LTFRB Regional Office.

Davide, Jr., C.J., Bellosillo, Melo, Puno, Kapunan, Mendoza, Panganiban, Quisumbing, Ynares-Santiago, De Leon, Jr., Sandoval-Gutierrez, and Carpio, JJ., concurred. Vitug, J., concurred in the result.