NATIONAL MARKETING CORPORATION, CORNELIO BALMACEDA, JOSE CAL­DERON, ANTONIO ARAMBULO, PEDRO BALINGIT, CIPRIANO MALONZO AND ROSENDO TOMAS, PETITIONERS, VS. HON. FRANCISCO ARCA, P…

This is an original action for certiorari and pro­hibition with
prayer for a writ of preliminary injunction to enjoin respondent Judge
Francisco Arca from enforcing his Order dated January
12, 1966, directing petitioners to reinstate respondent Juan T. Arive to his former posi­tion in the National Marketing
Corporation (hereinafter referred to as NAMARCO) and the writ of preliminary
man­datory injunction issued pursuant thereto on January 14, 1966.

Respondent Juan T. Arive was the
Manager of the Traf­fic-Storage Department of the NAMARCO receiving an annual
compensation of P7,200.00. Pursuant to the General
Mana­ger’s Administrative Order No. 118 dated February 24, 1960, he was
investigated by a committee for violating Manage­ment Memorandum Order dated
February 1, 1960, directing “that the allocation and deliveries of
merchandise import­ed under the so-called Trade Assistance Program to its
designated beneficiaries be stopped;” and causing the im­proper release of
shipments intended for delivery upon full payment thereof by the Federation of
United NAMARCO Distributors (FUND), which were covered by certain domes­tic
letters of credit for the total sum of P361,053.85.  After due hearing, the investigating
committee found Arive guilty of the charges but left
the imposition of the penalty to the discretion of the General Manager and the
Board of Directors.  Subsequently, the
General Manager issued Administrative Order No. 137, series of 1960, hold­ing Arive guilty of the charges and dismissing him from the
service.  On November 4, 1960, the Board of Directors adopted
Resolution No. 584-60 dismissing Arive from the
service effective as of the date of his suspension, with prejudice to his
reinstatement in the NAMARCO and to all benefits to which he would otherwise
have been entitled, Arive filed a motion for
reconsideration, which was denied on January
24, 1961.

On March 2, 1961,
Arive appealed from the decision of the NAMARCO to
the President of the Philippines.  The NAMARCO was advised by the Office of the
President of the appeal, and was asked to forward the records of the admi­nistrative
case.  On January 26, 1965, then Executive Sec­retary Ramon A. Diaz,
presumably acting for the President, handed down a decision setting aside
Resolution No. 584-60 of the NAMARCO and reinstating Juan T. Arive to his former position.  In the decision it was pointed out that the
order of the NAMARCO stopping the further delivery of com­modities imported
under the trade assistance program to the designated beneficiaries had been
subsequently declared ille­gal by the Supreme Court in the case of Federation
of United NAMARCO Distributors vs. NAMARCO, G. R. No. L-17819, March 31, 1962,
on the ground that said order was a violation of the contract of sale; hence,
it would not be proper to hold Arive administratively
liable for his failure to comply with said order; and that the Pasig RiverBodegas being private warehouses
over which Arive did not have supervi­sion, much less
control, the release of the commodities therefrom
could have been effected even had Arive tried to
block it. In the meantime, another person was appointed to, the position
formerly occupied by Juan T. Arive.

On April 6, 1965,
the NAMARCO, through its General Manager, in a letter addressed to the
President, asked for a reconsideration of the decision ordering Arive’s reinstatement. In that letter it was contended that
the Office of the President had no jurisdiction to review any decision of the
NAMARCO Board of Directors removing, sus­pending, or otherwise disciplining any
of its subordinate employees, because Republic Act No. 1345 (the NAMARCO Char­ter),
which grants that power to the General Manager and to the Board of Directors,
does not provide for an appeal to any governmental body.  In a letter to the NAMARCO dated June 8, 1965, then Executive Secretary
Ramon A. Diaz, this time expressly acting “[b]y authority of the
President,” refused to reconsider the decision, stating that the Presi­dent
had jurisdiction under his constitutional power of con­trol over all executive
departments, bureaus and offices, and directing that the decision be
implemented.  The NAMARCO filed a second
motion for reconsideration; and on November
17, 1965, the President, through Salvador Mariño
as Acting Executive Secretary, denied the motion and again directed im­mediate
compliance with the order of reinstatement. 
On December 9, 1965, the Office of the President, acting on complaints
of Arive that he had not been reinstated in spite of
the denial of the NAMARCO’s two motions for
reconsider­ation, sent a telegram to the General Manager requesting him to act
on the case and to comment within forty-eight hours; but the said General
Manager neither acted on the case nor commented.

On December 23, 1965,
respondent Juan T. Arive filed a complaint (Civil
Case No. 63720) with the Court of First Instance of Manila against the NAMARCO
and the members of its Board of Directors for reinstatement and damages, with
prayer for a writ of preliminary mandatory injunction.  Hearing was held on the petition for issuance
of the writ; and after the parties had submitted their respective memo­randa,
respondent Judge issued an order dated January
12, 1966, the pertinent portion of which reads:

“x x x The
Court is, however, of the view that the President of the Philippines does not
only exercise supervision but also control over all government-owned and
controlled corporations including the NAMARCO; hence, he may review, re­vise,
alter, modify or nullify the decision or action of the Board of Directors of
any govern­ment-owned and controlled corporation and sub­stitute his judgment
for that of the latter.  Plaintiffs right
to reinstatement, therefore, appears to be very clear; and considering that the
effect of the issuance of the writ prayed for is rather to re-establish and
maintain a pre-existing continuing relation between the parties; and
considering further that there is an invasion of plaintiff’s rights and the
injury is a continuing one, the Court hereby grants plaintiffs prayer and
hereby orders the issuance of a writ of preliminary mandatory injunction
directing the defendants to immediately reinstate the plaintiff to his position
as Manager of the Traffic-Storage Department of the National Marketing
Corporation upon filing a bond in the amount of P5,000.00.”

Defendants filed a motion for
reconsideration; and when the motion was denied, they filed the present
petition with this Court, which on March
15, 1966, issued a writ of preliminary injunction.

The pivotal point at issue is whether the President of the Philippines
had authority to reverse the decision of the Board of Directors of the NAMARCO
and to order the re­instatement of Juan T. Arive.
Respondents maintain that he had, and they anchor their stand on Section 10(1),
Art­icle VII, of the Constitution, which reads:

“The President shall have control of all executive
departments, bureaus, or offices, exercise general supervision over all local
governments as may be provided by law, and take care that the laws be
faithfully executed.”

Petitioners, however, disagree, and
contend that the word “offices,” interpreted in the light of the
preceding words “executive departments,” and “bureaus,” refers
to Offices performing governmental functions which have no juridical,
personality, and, therefore, does not include government-owned and controlled
corporations.  They claim that the
above-quoted constitutional provision is not applicable and that what should
apply is Section 13(d) of Republic Act No. 1345, (NAMARCO Charter) which vests
in the General Manager the power and/or duty, with the approval of the Board of
Directors, to remove, suspend or otherwise disci­pline for cause any
subordinate employee of the NAMARCO. They contend that in reversing the order
of the NAMARCO Board of Directors dismissing Juan T. Arive
from the ser­vice, and in ordering his reinstatement, the President of the
Philippines arrogated unto himself a power not author­ized either by the
Constitution or by law, hence his act­uations were legally ineffective and
certainly could not be a basis for issuance of the writ of preliminary injunc­tion.

We hold that the President of the Philippines’
author­ity to review and reverse the decision of the NAMARCO Board of Directors
dismissing Juan T. Arive from his posi­tion in the
NAMARCO and to order his reinstatement falls within the constitutional power of
the President over all executive departments, bureaus and offices.  Under our governmental setup, corporations
owned or controlled by the government, such as the NAMARCO, partake of the
nature of government bureaus or offices, which are administratively supervised
by the Administrator of the Office of Economic Coordination, “whose compensation,
and rank shall be that of a head of an Executive Department” and who
“shall be responsible to the President of the Philippines under whose
control his functions . . shall be
exercised.”  (Executive
Order No. 386 of December 22, 1950, section 1, issued under the Reorganization
Act of 1950).

The fact that section 13(d) of Republic Act No. 1345 (the NAMARCO
Charter), and likewise section 11(d) of the Uniform Charter for Government
Owned or Controlled Corpor­ations (Ex. Order No. 399 of January 5, 1951, which
author­ize the general manager of such corporations, with the ap­proval of the
Board of Directors, to remove for cause any subordinate employee of the
Corporation do not provide for an appeal from the general manager’s decision of
removal to any superior officer, body or agency, does not mean that no appeal
lies from such decision to the President. 
In Lacson-Magallanes Co., Inc. vs. Paño, (21 SCRA 895, 899), where the Court upheld the
President’s action through his Executive Secretary of reversing a decision of
the Director of Lands which had been affirmed by the Secretary of Agri­culture
and Natural Resources, notwithstanding the provi­sion of Section 4 of
Commonwealth Act No. 141 that such decisions “as to questions of fact
shall be conclusive”, we stated that “the right to appeal to the
President reposes upon the President’s power of control over the exe­cutive
departments.  And control simply means
“the power of an officer to alter or modify or nullify or set aside what a
subordinate officer had done in the performance of his duties and to substitute
the judgment of the former for the latter.” As enunciated through Justice
Laurel in Planes vs. Gil (69 PHIL. 52, 76), “under the presidential type
of government which we have adopted x x x all executive and administrative organizations are
adjuncts of the Exe­cutive Department, the heads of the various executive de­partments
are assistants and agents of the Chief Executive.”

We find the President’s action through his Executive Secretary of
reversing the NAMARCO Board decision and or­dering the reinstatement of
respondent Arive to be an act of justice due
respondent.  In the decision of January, 20, 1965, then Executive
Secretary Diaz stated:

“Moreover, it is an established fact that the Pasig River Bodegas is a private warehouse.  Arive did not have
the supervision, much less the control, of said warehouse.  Under this circums­tance, the release of the
commodities in question could have been effected even
if Arive tried to do his best to block it.  To paraphrase Arive,
and in this regard there is no evidence that contradicts him, his only duty in
connection with shipments imported by the NAMARCO for the FUND under the trade
assistance program was to undertake the proper clearance therefor
with the Bureau of Customs.  Clearly,
therefore, Arive should not be made to suffer for the
release of commodities in violation of the NAMARCO order of February 1, 1960,
even if it were lawful, which it is not according to the Supreme Court, because
the custody and release thereof were not within his control and
supervision.”  (Annex “A”
of Complaint, Annex “C” of Petition)

Executive Secretary Diaz further pointed out in the first denial
on June 8, 1965 of
petitioners’ motion for reconsideration that:

“It cannot be said therefore that it was an act of
insubordination on Arive’s part not to stop the
release of the shipments in question in favor of the FUND. Had he done so, in
total dis­regard of a contract between NAMARCO and FUND which that memorandum
order violates, and of an injunction issued by the Court of First Instance
hearing the complaint filed by the FUND against the NAMARCO for specific
performance of that con­tract, he would have been held liable therefor, especially considering that the shipments
intended for the FUND mere stored in a private warehouse.  The shipments could not have been stopped at
all even if Arive did not ‘okay for release’ from the
Bureau of Customs those shipments. 
Furthermore, the memorandum order allegedly not obeyed by him was
declared illegal by no less an authority than the
Supreme Court.

x                      x                      x

“The primary question is whether Arive
was illegally dismissed or not. Whether his reinstate­ment would entail the
alleged adversed effects is of secondary importance
and legal significance.  This Office
having found, in effect, that Arive was not lawfully
dismissed for cause, he was entitled to reinstatement and to the benefits
incidental thereto, inasmuch as his temporary cessation from work was not of
his own doing nor within his con­trol. The fact that one has replaced him
already is immaterial because legally speaking his posi­tion never became
vacant, hence there was no va­cancy to which a new incumbent could be permanent­ly
appointed; in other words, the new incumbent’s occupancy of, or tenure in, said
post is tem­porary and precarious and does not come within the contemplation of
the Constitutional prohibition.  (Batungbakal vs. National Development
Company et al., 49 0.G. 2290).” (Annex “B” of Complaint,
Annex “D” of Petition)

Implementation of the President’s decision has been delayed all
these long years by the NAMARCO, notwithstanding the Government Corporate
Counsel’s advice and opinion that ‘may not legally refuse to implement the
decision of the Office of the President in the performance of the exer­cise of
his supervision and control over said government owned and controlled
corporations” (Op. No. 175, Series of 1963).  Yet, in the case of a co-employee of
respondent Arive, Victor Macaraig,
who was similarly dismissed by the Board, the NAMARCO Board promptly reinstated
him on December 4, 1962, in
implementation of the President’s deci­sion of August 30, 1962, ordering his reinstatement.  (Annexes 2 and 3,
Respondents’ Answer).  Arive’s right to reinstatement by virtue of the President’s
decision, which was reiterated twice in denying the petitioners’ persis­tent
motions for reconsideration was therefore clearly established, and which is now
final and binding upon peti­tioners, and respondent judge did not act without
juris­diction or with grave abuse of discretion in issuing the writ of
preliminary mandatory injunction for his immediate reinstatement.  We deem it unnecessary to pass upon the other
issues raised by the parties, which are, after all, merely incidental to the
main issue of the President’s authority to review and reverse Resolution No.
584-60 of the NAMARCO Board of Directors.

WHEREFORE, the petition is dismissed, with costs against
petitioners.  The writ of preliminary
injunc­tion issued on March 15, 1966
against the enforcement of respondent judge’s order dated January 12, 1966 and writ of preliminary
mandatory injunction dated January 14,
1966 in Civil Case No. 63720 of the Court of First Instance of
Manila is hereby dissolved effective immediately.

Concepcion, C.J., Dizon,
Makalintal, Zaldivar,
Sanchez, Ruiz Castro, Fernando, Teehankee, and Barredo, JJ., concur.

Reyes, JBL, J., on official
leave.