VFP - VFP v. Reyes

11/26/21, 11:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 483 11/26/21, 11:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME
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VOL. 483, FEBRUARY 28, 2006 527

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G.R. No. 155027. February 28, 2006.
Veterans Federation of the Philippines vs. Reyes
THE VETERANS FEDERATION OF THE PHILIPPINES

represented by Esmeraldo R. Acorda, petitioner, vs. Hon. ANGELO Same; Same; Same; Same; War Veterans; While the Court continues
T. REYES in his capacity as Secretary of National Defense; and to abhor the propensity of a number of litigants to disregard the principle
Hon. EDGARDO E. BATENGA in his capacity as Undersecretary of hierarchy of courts in our judicial system, it has resolved to take judicial
for Civil Relations and Administration of the Department of notice of the fact that the person who stands to lose in a possible
National Defense, respondents. protracted litigation in this case are war veterans, many of whom have
precious little time left to enjoy the benefits that can be conferred by
petitioner corporation.—The petition itself, in this case, does not
Actions; Certiorari; Courts; Hierarchy of Courts; A direct invocation specifically and sufficiently set forth the special and important reasons why
of this Court’s original jurisdiction to issue these writs should be allowed the Court should give due course to this petition in the first instance, hereby
only where there are special and important reasons therefor, specifically failing to fulfill the conditions set forth in Commissioner of Internal
and sufficiently set forth in the petition.—It is settled that the Regional Revenue v. Leal. While we reiterate the policies set forth in Leal and allied
Trial Court and the Court of Appeals also exercise original jurisdiction cases and continue to abhor the propensity of a number of litigants to
over petitions for certiorari and prohibition. As we have held in numerous disregard the principle of hierarchy of courts in our judicial system, we,
occasions, however, such concurrence of original jurisdiction does not however, resolve to take judicial notice of the fact that the persons who
mean that the party seeking extraordinary writs has the absolute freedom to stand to lose in a possible protracted litigation in this case are war veterans,
file his petition in the court of his choice. Thus, in Commissioner of many of whom have precious little time left to enjoy the benefits that can
Internal Revenue v. Leal, 392 SCRA 9 (2002), we held that: Such be conferred by petitioner corporation. This bickering for the power over
concurrence of original jurisdiction among the Regional Trial Court, the petitioner corporation, an entity created to represent and defend the
Court of Appeals and this Court, however, does not mean that the party interests of Filipino veterans, should be resolved as soon as possible in
seeking any of the extraordinary writs has the absolute freedom to file his order for it to once and for all direct its resources to its rightful
petition in the court of his choice. The hierarchy of courts in our judicial beneficiaries all over the country. All these said, we hereby resolve to give
system determines the appropriate forum for these petitions. Thus, petitions due course to this petition.
for the issuance of the said writs against the first level (inferior) courts
Administrative Law; Power of Control; Power of Supervision; Words
must be filed with the Regional Trial Court and those against the latter,
and Phrases; The power of control is the power of an officer to alter or
with the Court of Appeals. A direct invocation of this Court’s original
modify or nullify or set aside what a subordinate has done in the
jurisdiction to issue these writs should be allowed only where there are
performance of his duties and to substitute the judgment of the former to
special and important reasons therefor, specifically and sufficiently set
that of the latter, while the power of supervision, on the other hand, means
forth in the petition. This is the established policy to prevent inordinate
overseeing, or the power or authority of an officer to see that subordinate
demands upon the Court’s time and attention, which are better devoted to
officers perform their duties and if the latter fail or neglect to fulfill them,
matters within its exclusive jurisdiction, and to prevent further over-
the former may take such action or step as prescribed by law to make them
crowding of the Court’s docket. Thus, it was proper for petitioner to
perform their duties.—This Court has defined the power of control as “the
institute the special civil action for certiorari with the Court of Appeals
power of an officer to alter or modify or nullify or set aside what a
assailing the RTC order denying his motion to dismiss based on lack of
subordinate has done in the performance of his duties and to substitute the
jurisdiction.
judgment of the former to that of the latter.” The power of supervision, on
the other hand, means “overseeing, or the power or authority of an officer
_______________ to see that subordinate officers perform their duties. If the latter fail or
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11/26/21, 11:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 483 11/26/21, 11:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 483
neglect to fulfill them, the former may take such action or step as government, as it is merely an incarnation of the Veterans Federation of the
prescribed by law to make them perform their duties.” These defini- Philippines.”
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528 SUPREME COURT REPORTS ANNOTATED
Administrative Law; Public Officers; Functions of Government;
tions are synonymous with the definitions in the assailed Department Words and Phrases; Public office is “the right, authority and duty, created
Circular No. 04, while the other provisions of the assailed department and conferred by law, by which, for a given period, either fixed by law or
circular are mere consequences of control and supervision as defined. enduring at the pleasure of the creating power, an individual is invested
Constitutional Law; Corporations; Public Corporations; with some portion of the sovereign functions of the government, to be
Government-Owned or Controlled Corporations (GOCCs); Our exercised by him for the benefit of the public”; The most important
constitutions explicitly prohibit the regulation by special laws of private characteristic which distinguishes an office from an employment or
corporations, with the exception of government-owned or controlled contract is that the creation and conferring of an office involves a
corporations (GOCCs).—It is crystal clear that our constitutions explicitly delegation to the individual of some of the sovereign functions of the
prohibit the regulation by special laws of private corporations, with the government, to be exercised by him for the benefit of the public—that some
exception of government-owned or controlled corporations (GOCCs). portion of the sovereignty of the country, either legislative, executive or
Hence, it would be impermissible for the law to grant control of the VFP to judicial, attaches, for the time being, to be exercised for the public benefit.
a public official if it were neither a public corporation, an unincorporated —In Laurel v. Desierto, we adopted the definition of Mechem of a public
governmental entity, nor a GOCC. Said constitutional provisions can even office, that it is “the right, authority and duty, created and conferred by law,
be read to prohibit the creation itself of the VFP if it were neither of the by which, for a given period, either fixed by law or enduring at the pleasure
three mentioned above, but we cannot go into that in this case since there is of the creating power, an individual is invested with some portion of the
no challenge to the creation of the VFP in the petition as to permit this sovereign functions of the government, to be exercised by him for the
Court from considering its nullity. benefit of the public.” In the same case, we went on to adopt Mechem’s
view that the delegation to the individual of some of the sovereign
Same; Same; Same; The Veterans Federation of the Philippines is a functions of government is “[t]he most important characteristic” in
public corporation.—These arguments of petitioner notwithstanding, we determining whether a position is a public office or not. Such portion of the
are constrained to rule that petitioner is in fact a public corporation. Before sovereignty of the country, either legislative, executive or judicial, must
responding to petitioner’s allegations one by one, here are the more evident attach to the office for the time being, to be exercised for the public benefit.
reasons why the VFP is a public corporation: (1) Rep. Act No. 2640 is Unless the powers conferred are of this nature, the individual is not a
entitled “An Act to Create a Public Corporation to be Known as the public officer. The most important characteristic which distinguishes an
Veterans Federation of the Philippines, Defining its Powers, and for Other office from an employment or contract is that the creation and conferring of
Purposes.” (2) Any action or decision of the Federation or of the Supreme an office involves a delegation to the individual of some of the sovereign
Council shall be subject to the approval of the Secretary of Defense. (3) functions of government, to be exercised by him for the benefit of the
The VFP is required to submit annual reports of its proceedings for the past public;—that some portion of the sovereignty of the country, either
year, including a full, complete and itemized report of receipts and legislative, executive or judicial, attaches, for the time being, to be
expenditures of whatever kind, to the President of the Philippines or to the exercised for the public benefit. Unless the powers conferred are of this
Secretary of National Defense. (4) Under Executive Order No. 37 dated 2 nature, the individual is not a public officer. The issue, therefore, is whether
December 1992, the VFP was listed as among the government-owned and the VFA’s officers have been delegated some portion of the sovereignty of
controlled corporations that will not be privatized. (5) In Ang Bagong the country, to be exercised for the public benefit.
Bayani–OFW Labor Party v. COMELEC, this Court held in a minute
resolution that the “VFP [Veterans Federation Party] is an adjunct of the Same; Same; Same; War Veterans; The protection of the interests of
war veterans is not only meant to promote social justice, but is also

intended to reward patriotism; The functions of the VFP are executive important to note here that the membership dues collected from the
functions, designed to implement not just the provisions of individual members of VFP’s affiliate organiza-
530 531
530 SUPREME COURT REPORTS ANNOTATED VOL. 483, FEBRUARY 28, 2006 531
Veterans Federation of the Philippines vs. Reyes Veterans Federation of the Philippines vs. Reyes
Rep. Act No. 2640, but also, and more importantly, the Constitutional tions do not become public funds while they are still funds of the affiliate
mandate for the State to provide immediate and adequate care, benefits and organizations. A close reading of Section 1 of Rep. Act No. 2640 reveals
other forms of assistance to war veterans and veterans of military that what has been created as a body corporate is not the individual
campaigns, their surviving spouses and orphans.—In the case at bar, the membership of the affiliate organizations, but merely the aggregation of the
functions of petitioner corporation enshrined in Section 4 of Rep. Act No. heads of the affiliate organizations. Thus, only the money remitted by the
2640 should most certainly fall within the category of sovereign functions. affiliate organizations to the VFP partake in the public nature of the VFP
The protection of the interests of war veterans is not only meant to promote funds.
social justice, but is also intended to reward patriotism. All of the functions Same; Same; Same; Same; There is nothing wrong, whether legally or
in Section 4 concern the well-being of war veterans, our countrymen who morally, from raising revenues through non-traditional methods.—We also
risked their lives and lost their limbs in fighting for and defending our observed in the same COCOFED case that “(e)ven if the money is
nation. It would be injustice of catastrophic proportions to say that it is allocated for a special purpose and raised by special means, it is still public
beyond sovereignty’s power to reward the people who defended her. Like in character.” In the case at bar, some of the funds were raised by even
the holding of the National Centennial Celebrations, the functions of the more special means, as the contributions from affiliate organizations of the
VFP are executive functions, designed to implement not just the provisions VFP can hardly be regarded as enforced contributions as to be considered
of Rep. Act No. 2640, but also, and more importantly, the Constitutional taxes. They are more in the nature of donations which have always been
mandate for the State to provide immediate and adequate care, benefits and recognized as a source of public funding. Affiliate organizations of the
other forms of assistance to war veterans and veterans of military VFP cannot complain of their contributions becoming public funds upon
campaigns, their surviving spouses and orphans. the receipt by the VFP, since they are presumed aware of the provisions of
Same; Same; Public Corporations; The fact that no budgetary Rep. Act No. 2640 which not only specifies the exclusive purposes for
appropriations have been released to the VFP does not prove that it is a which VFP funds can be used, but also provides for the regulation of such
private corporation; The erroneous application of the law by public funds by the national government through the Secretary of National
officers does not bar a subsequent correct application of the law.—The fact Defense. There is nothing wrong, whether legally or morally, from raising
that no budgetary appropriations have been released to the VFP does not revenues through non-traditional methods. As remarked by Justice
prove that it is a private corporation. The DBM indeed did not see it fit to Florentino Feliciano in his concurring opinion in Kilosbayan, Incorporated
propose budgetary appropriations to the VFP, having itself believed that the v. Guingona, Jr. where he explained that the funds raised by the On-line
VFP is a private corporation. If the DBM, however, is mistaken as to its Lottery System were also public in nature, thus: x x x [T]he more
conclusion regarding the nature of VFP’s incorporation, its previous successful the government is in raising revenues by non-traditional
assertions will not prevent future budgetary appropriations to the VFP. The methods such as PAGCOR operations and privatization measures, the
erroneous application of the law by public officers does not bar a lesser will be the pressure upon the traditional sources of public revenues,
subsequent correct application of the law. Nevertheless, funds in the hands i.e., the pocket books of individual taxpayers and importers.
of the VFP from whatever source are public funds, and can be used only Same; Same; Same; Statutes; Laws are not repealed by disuse,
for public purposes. custom, or practice to the contrary.—Petitioner claims that the Secretary of
Same; Same; Same; Public Funds; Membership dues collected from National Defense “historically did not indulge in the direct or
the individual members of VFP’s affiliate organizations do not become ‘micromanagement’ of the VFP precisely because it is essentially a civilian
public funds while they are still funds of the affiliate organizations.—It is organization where membership is voluntary.” This reliance of petitioner
on what has “historically” been done is erroneous, since laws are not DBM is not a quasi-judicial agency. They aver that what we have said of
repealed by disuse, custom, or practice to the contrary. Furthermore, as the Bureau of Local Government Finance (BLGF) in Philippine Long
earlier stated, the erroneous application of the law Distance Telephone Com-
532 533
by public officers does not bar a subsequent correct application of the law. pany (PLDT) v. City of Davao can be applied to DBM: In any case, it is
Same; Same; Same; Civilian Authority Over the Military; The contended, the ruling of the Bureau of Local Government Finance (BLGF)
Constitution does not contain any prohibition, express or implied, against that petitioner’s exemption from local taxes has been restored is a
the grant of control and/or supervision to the Secretary of National contemporaneous construction of Section 23 [of R.A. No. 7925] and, as
Defense over a civilian organization—the Office of the Secretary of such, is entitled to great weight. The ruling of the BLGF has been
National Defense is itself a civilian office, its occupant being an alter ego considered in this case. But unlike the Court of Tax Appeals, which is a
of the civilian Commander-in-Chief, the manifestation of the constitutional special court created for the purpose of reviewing tax cases, the BLGF was
principle that civilian authority is, at all times, supreme over the military. created merely to provide consultative services and technical assistance to
—Neither is the civilian nature of VFP relevant in this case. The local governments and the general public on local taxation and other
Constitution does not contain any prohibition, express or implied, against related matters. Thus, the rule that the “Court will not set aside conclusions
the grant of control and/or supervision to the Secretary of National Defense rendered by the CTA, which is, by the very nature of its function, dedicated
over a civilian organization. The Office of the Secretary of National exclusively to the study and consideration of tax problems and has
Defense is itself a civilian office, its occupant being an alter ego of the necessarily developed an expertise on the subject, unless there has been an
civilian Commander-in-Chief. This set-up is the manifestation of the abuse or improvident exercise of authority” cannot apply in the case of the
constitutional principle that civilian authority is, at all times, supreme over BLGF. On this score, though, we disagree with respondents and hold that
the military. There being no such constitutional prohibition, the creation of the DBM’s appraisal is considered persuasive. Respondents misread the
a civilian public organization by Rep. Act No. 2640 is not rendered invalid PLDT case in asserting that only quasijudicial agencies’ determination can
by its being placed under the control and supervision of the Secretary of be considered persuasive. What the PLDT case points out is that, for an
National Defense. administrative agency’s opinion to be persuasive, the administrative agency
involved (whether it has quasi-judicial powers or not) must be an expert in
Same; Same; Same; Statutes; Statutory Construction; Administrative the field they are giving their opinion on. The DBM is indeed an expert on
Code; The Administrative Code could not be said to have repealed nor determining what the various government agencies and corporations are.
enormously modified Rep. Act No. 2640 by implication, as such repeal or The determination is necessary for the DBM to fulfill its mandate.
enormous modification by implication is not favored in statutory
construction.—The Administrative Code, by giving definitions of the Same; Same; Same; The Department of National Defense (DND) is
various entities covered by it, acknowledges that its enumeration is not clearly more of an expert than the Department of Budget and Management
exclusive. The Administrative Code could not be said to have repealed nor with respect to the determination of the entities under it, and its
enormously modified Rep. Act No. 2640 by implication, as such repeal or Administrative Rules and Regulations are entitled to great respect and have
enormous modification by implication is not favored in statutory in their favor the presumption of legality.—The persuasiveness of the DBM
construction. opinion has, however, been overcome by all the previous explanations we
have laid so far. It has also been eclipsed by another similarly persuasive
Same; Same; Same; For an administrative agency’s opinion to be opinion, that of the Department of National Defense embodied in
persuasive, the administrative agency involved (whether it has quasi- Department Circular No. 04. The DND is clearly more of an expert with
judicial powers or not) must be an expert in the field they are giving their respect to the determination of the entities under it, and its Administrative
opinion on.—Respondents claim that the supposed declaration of the DBM Rules and Regulations are entitled to great respect and have in their favor
that petitioner is a non-government organization is not persuasive, since
the presumption of legality. The DBM opinion furthermore suffers from its implement. Administrative rules and regulations are intended to carry out,
lack of explanation and justification in the “certification of neither to supplant nor to modify, the law.”
534 535
VOL. 483, FEBRUARY 28, 2006 535

Same; Same; Same; Same; The power to alter or modify or nullify or
non-receipt” where said opinion was given. The DBM has not furnished, in set aside what a subordinate has done in the performance of his duties, or
said certification or elsewhere, an explanation for its opinion that VFP is a to see to it that subordinate officers perform their duties in accordance with
non-government organization. law, necessarily requires the ability of the superior officer to monitor, as
Same; Same; Same; Control and Supervision; Words and Phrases; closely as it desires, the acts of the subordinate.—Section 3.2 of the
Supervision and control shall include the authority to act directly whenever assailed department circular, which authorizes the Secretary of National
a specific function is entrusted by law or regulation to a subordinate, direct Defense to “x x x personally or through a designated representative, require
the performance of duty, restrain the commission of acts; review, approve, the submission of reports, documents and other papers regarding any or all
reverse or modify acts and decisions of subordinate officials or units, of the Federation’s business functions, x x x.” as well as Section 3.3 which
determine priorities in the execution of plans and programs, and prescribe allows the Secretary of DND to x x x [F]rom time to time issue guidelines,
standards, guidelines, plans and programs; Considering that petitioner is a directives and other orders governing vital government activities including,
public corporation, the provisions of the assailed Department Circular No. but not limited to, the conduct of elections, the acquisition, management
04 did not supplant nor modify the provisions of Republic Act No. 2640, and dispositions of properties, the accounting of funds, financial interests,
thus not violating the settled rule that all such (administrative) issuances stocks and bonds, corporate investments, etc. and such other transactions
must not override, but must remain consistent and in harmony with the law which may affect the interests of the veterans, are merely consequences of
they seek to apply or implement.—As previously mentioned, this Court has both the power of control and supervision granted by Rep. Act No. 2640.
defined the power of control as “the power of an officer to alter or modify The power to alter or modify or nullify or set aside what a subordinate has
or nullify or set aside what a subordinate has done in the performance of done in the performance of his duties, or to see to it that subordinate
his duties and to substitute the judgment of the former to that of the latter.” officers perform their duties in accordance with law, necessarily requires
The power of supervision, on the other hand, means “overseeing, or the the ability of the superior officer to monitor, as closely as it desires, the acts
power or authority of an officer to see that subordinate officers perform of the subordinate. The same is true with respect to Sections 4 and 5 of the
their duties.” Under the Administrative Code of 1987: Supervision and assailed Department Circular No. 04, which requires the preservation of the
control shall include the authority to act directly whenever a specific records of the Federation and the submission to the Secretary of National
function is entrusted by law or regulation to a subordinate; direct the Defense of annual and periodic reports.
performance of duty; restrain the commission of acts; review, approve, Same; Same; Same; Publication of Laws and Administrative
reverse or modify acts and decisions of subordinate officials or units; Circulars; The validity of Department Circular No. 04 is not affected by its
determine priorities in the execution of plans and programs; and prescribe non-publication since it is merely an internal regulation, while Sections 2,
standards, guidelines, plans and programs. x x x The definition of the 3 and 6 thereof are interpretative in nature.—Even assuming that the
power of control and supervision under Section 2 of the assailed assailed circular was not published, its validity is not affected by such non-
Department Circular are synonymous with the foregoing definitions. publication for the reason that its provisions fall under two of the
Consequently, and considering that petitioner is a public corporation, the exceptions enumerated in Tañada. Department Circular No. 04 is an
provisions of the assailed Department Circular No. 04 did not supplant nor internal regulation. As we have ruled, they are meant to regulate a public
modify the provisions of Republic Act No. 2640, thus not violating the corporation under the control of DND, and not the public in general. As
settled rule that “all such (administrative) issuances must not override, but likewise discussed above, what has been created as a body corporate by
must remain consistent and in harmony with the law they seek to apply or Rep. Act No. 2640 is not the individual membership of the affiliate
organizations of the VFP, but merely the aggregation of the heads of the

affiliate organizations. Consequently, the individual members of the governing autonomous body with a Supreme Council as governing
affiliate authority, we find that the provisions of Rep. Act No. 2640
536 537
organizations, who are not public officers, are beyond the regulation of the concerning the control and supervision of the Secretary of National
circular. Sections 2, 3 and 6 of the assailed circular are additionally merely Defense clearly withholds from the VFP complete autonomy. To say,
interpretative in nature. They add nothing to the law. They do not affect the however, that such provisions render the VFP inutile is an exaggeration.
substantial rights of any person, whether party to the case at bar or not. In An office is not rendered inutile by the fact that it is placed under the
Sections 2 and 3, control and supervision are defined, mentioning actions control of a higher office. These subordinate offices, such as the executive
that can be performed as consequences of such control and supervision, but offices under the control of the President, exercise discretion at the first
without specifying the particular actions that shall be rendered to control instance. While their acts can be altered or even set aside by the superior,
and supervise the VFP. Section 6, in the same vein, merely state what the these acts are effective and are deemed the acts of the superior until they
drafters of the circular perceived to be consequences of being an attached are modified. Surely, we cannot say that the offices of all the Department
agency to a regular department of the government, enumerating sanctions Secretaries are worthless positions.
and remedies provided by law that may be availed of whenever desired.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari and
Same; Same; Same; Having in their possession public funds, the
Prohibition.
officers of the VFP, especially its fiscal officers, must indeed share in the
fiscal responsibility to the greatest extent.—Petitioner then objects to the The facts are stated in the opinion of the Court.
implementation of Sec. 3.4 of the assailed Department Circular, which Virgilio M. Pablo for petitioners.
provides that—3.4 Financial transactions of the Federation shall follow the Francisco B. Lose, Jr. co-counsel for petitioner.
provisions of the government auditing code (PD 1445) i.e. government The Solicitor General for respondents.
funds shall be spent or used for public purposes; trust funds shall be
available and may be spent only for the specific purpose for which the trust CHICO-NAZARIO, J.:
was created or the funds received; fiscal responsibility shall, to the greatest
extent, be shared by all those exercising authority over the financial affairs, This is a Petition for Certiorari with Prohibition under Rule 65 of
transactions, and operations of the federation; disbursements or the 1997 Rules of Civil Procedure, with a prayer to declare as void
dispositions of government funds or property shall invariably bear the Department Circular No. 04 of the Department of National Defense
approval of the proper officials. Since we have also previously determined (DND), dated 10 June 2002.
that VFP funds are public funds, there is likewise no reason to declare this Petitioner in this case is the Veterans Federation of the
provision invalid. Section 3.4 is correct in requiring the VFP funds to be Philippines (VFP), a corporate body organized under Republic Act
used for public purposes, but only insofar the term “public purposes” is No. 2640, dated 18 June 1960, as amended, and duly registered
construed to mean “public purposes enumerated in Rep. Act No. 2640.” with the Securities and Exchange Commission. Respondent Angelo
Having in their possession public funds, the officers of the VFP, especially T. Reyes was the Secretary of National Defense (DND Secretary)
its fiscal officers, must indeed share in the fiscal responsibility to the who issued the assailed Department Circular No. 04, dated 10 June
greatest extent. 2002. Respondent Edgardo E. Batenga was the DND
Undersecretary for Civil Relations and Administration who was
Same; Same; Same; Control and Supervision; An office is not
tasked by the respondent DND Sec-
rendered inutile by the fact that it is placed under the control of a higher
office.—As to petitioner’s allegation that VFP was intended as a self- 538

538 SUPREME COURT REPORTS ANNOTATED 539

VOL. 483, FEBRUARY 28, 2006 539
retary to conduct an extensive management audit of the records of Veterans Federation of the Philippines vs. Reyes
petitioner.
The factual and procedural antecedents of this case are as
3. Republic Act 3518 dated 18 June 1963 (An Act
follows: 1 Creating the Philippine Veterans Bank, and for Other
Petitioner VFP was created under Rep. Act No. 2640, a statute
Purposes) provides in Section 6 that . . . “the affairs
approved on 18 June 1960.
and business of the Philippine Veterans Bank shall be
On 15 April 2002, petitioner’s incumbent president received a
directed and its property managed, controlled and
letter dated 13 April 2002 which reads:
preserved, unless otherwise provided in this Act, by a
Col. Emmanuel V. De Ocampo (Ret.) Board of Directors consisting of eleven (11) members
President to be composed of three ex officio members to wit: the
Veterans Federation of the Philippines Philippine Veterans Administrator, the President of
Makati, Metro Manila the Veteran’s Federation of the Philippines and the
Dear Col. De Ocampo: Secretary of National Defense x x x.
Please be informed that during the preparation of my
briefing before the Cabinet and the President last March 9, It is therefore in the context of clarification and rectification
2002, we came across some legal bases which tended to show of what should have been done by the DND (Department of
that there is an organizational and management relationship National Defense) for and about the VFP and PVB that I am
between Veterans Federation of the Philippines and the requesting appropriate information and report about these two
Philippine Veterans Bank which for many years have been corporate bodies.
inadvertently overlooked. Therefore it may become necessary that a conference with
I refer to Republic Act 2640 creating the body corporate your staffs in these two bodies be set.
known as the VFP and Republic Act 3518 creating the Phil. Thank you and anticipating your action on this request.
Vets [sic] Bank. Very truly yours,
(SGD) ANGELO T. REYES
1. RA 2640 dated 18 June 60 Section 1 . . . “hereby [DND] Secretary
created a body corporate, under the control and
supervision of the Secretary of National Defense.” On 10 June 2002, respondent DND Secretary issued the assailed
DND Department Circular No. 04 entitled, “Further Implementing
2. RA 2640 Section 12 . . . “On or before the last day of 2
the Provisions of Sections 1 and
the month following the end of each fiscal year, the
Federation shall make and transmit to the President of
the Philippines or to the Secretary of National _______________
Defense, a report of its proceedings for the past year, 2 Sec. 1. The following persons, to wit: Emilio Aguinaldo, of Associacion de los
including a full, complete and itemized report of
Veteranos de la Revolucion; Margarito Torralba of the AFP Retired Veterans
receipts and expenditures of whatever kind.”
Association (AFREVA); Lorenzo B. Cabrera of the Confederation of the Filipino
Veterans (CONVETS); Teodoro V. Kalaw of the Defenders of Bataan and
_______________ Corregidor; Fausto S. Alberto of the ECLGA Veterans Association; Enrique C.
Rimando of the FAIT Veterans Legion; Francisco L. Gonzales of the Filipino
1 REPUBLIC ACT No. 2640: AN ACT TO CREATE A PUBLIC
Disabled Veterans Association; Basilia M. Baja of the Gold Star Mothers and United
CORPORATION TO BE KNOWN AS THE VETERANS FEDERATION OF
War Widows and Orphans Association of the Philippines; Simeon C. Medalla of the
THE PHILIPPINES, DEFINING ITS POWERS, AND FOR OTHER
Hunters ROTC Association; Antonio F. Garcia of the Magsaysay Veterans Legion;
PURPOSES.
Dionisio V. Ojeda Guaof the PEFTOK Veterans Association; Primitivo Lovina of the

Philippine National Guard Veterans Legion; Jose V. Andrada of the Philippine Naval VOL. 483, FEBRUARY 28, 2006 541
Veterans Legion; Jaime Piopongco of the Phil
540
540 SUPREME COURT REPORTS ANNOTATED Section 1

These rules shall govern and apply to the management and operations of
3
2 of Republic Act No. 2640,” the full text of which appears as the Veterans Federation of the Philippines (VFP) within the context
follows: provided by EO 292 s-1987.
Section 2—DEFINITION OF TERMS—for the purpose of these
Department of National Defense rules, the terms, phrases or words used herein shall, unless the context
Department Circular No. 04 indicates otherwise, mean or be understood as follows:
Supervision and Control—it shall include authority to act directly
Subject: Further Implementing the Provisions of Sections 1 whenever a specific function is entrusted by law or regulation to a
& 2 of Republic Act No. 2640 subordinate; direct the performance of a duty; restrain the commission of
acts; approve, reverse or modify acts and decisions of subordinate officials
Authority: Republic Act No. 2640
or units; determine priorities in the execution of plans and programs; and
Executive Order No. 292 dated July 25, 1987
prescribe standards, guidelines, plans and programs.
Power of Control—power to alter, modify, nullify or set aside what a
_______________ subordinate officer had done in the performance of his duties and to
ippine Veterans Legion; Sofia L. Prudenciado of the Philippine Association of
substitute the judgment of the former to that of the latter.
War Widows, Parents, and Orphans; Eugenio B. Recto of the United Disabled
Supervision—means overseeing or the power of an officer to see to it
Veterans Association of the Philippines; and Gaudencio Antonino of the USAFIP
that their subordinate officers perform their duties; it does not allow the
NL and their associates and successors are hereby created a body corporate, under
superior to annul the acts of the subordinate.
the control and supervision of the Secretary of National Defense, under the name,
Administrative Process—embraces matter concerning the procedure in
style and title of “Veterans Federation of the Philippines,” hereinafter referred to as
the disposition of both routine and contested matters, and the matter in
the Federation. The principal office of the Federation shall be in the City of Manila,
which determinations are made, enforced or reviewed.
Philippines.
Government Agency—as defined under PD 1445, a government agency
3 Sec. 2. The said Federation shall have perpetual succession, with power to sue
or agency of government or “agency” refers to any department, bureau or
and be sued; to hold such real and personal property as shall be necessary for its
office of the national government, or any of its branches or
purposes, and to receive real and personal property by gift, devise or bequest; to
instrumentalities, of any political subdivision, as well as any government
invest its funds for the exclusive benefit of the veterans of the Philippines; to extend,
owned or controlled corporation, including its subsidiaries, or other self-
within its capabilities, all necessary assistance, and operate such enterprises as may
governing board or commission of the government.
further the material or moral well-being of veterans; to adopt a seal, and to alter or
Government Owned and Controlled Corporation (GOCC)—refer to any
destroy the same at pleasure; to have offices and conduct its business and affairs in
agency organized as a stock or non-stock corporation, vested with
the City of Manila and/or provinces, cities, municipalities and barrios of the
functions relating to public needs whether governmental or proprietary in
Philippines and to amend said laws, regulations and rules; to establish and operate
nature, and owned by the government directly or through its
branches of its office anywhere in the Philippines; to publish a magazine and/or
instrumentalities wholly or, where applicable as in the case of stock
other publications; and generally, to do all such acts and things as may be necessary
corporations, to the extent of at least 50% of its capital stock.
to carry into effect the provisions of this Act and to promote the purposes of said
Fund—sum of money or other resources set aside for the purpose of
Federation. Any action or decision of the Federation or of the Supreme Council shall
carrying out specific activities or attaining certain objectives
be subject to the approval of the Secretary of National Defense.
542
541

542 SUPREME COURT REPORTS ANNOTATED 3.3 The Secretary shall from time to time issue guidelines, directives and
Veterans Federation of the Philippines vs. Reyes other orders governing vital government activities including, but not
limited to, the conduct of elections; the acquisition, management and
in accordance with special regulations, restrictions or limitations and dispositions of properties, the accounting of funds, financial interests,
constitutes an independent, fiscal and accounting entity. stocks and bonds, corporate investments, etc. and such other transactions
Government Fund—includes public monies of every sort and other which may affect the interests of the veterans.
resources pertaining to any agency of the government. 3.4 Financial transactions of the Federation shall follow the provisions
Veteran—any person who rendered military service in the land, sea or of the government auditing code (PD 1445) i.e. government funds shall be
air forces of the Philippines during the revolution against Spain, the spent or used for public purposes; trust funds shall be available and may be
Philippine American War, World War II, including Filipino citizens who spent only for the specific purpose for which the trust was created or the
served in Allied Forces in the Philippine territory and foreign nationals funds received; fiscal responsibility shall, to the greatest extent, be shared
who served in Philippine forces; the Korean campaign, the Vietnam by all those exercising authority over the financial affairs, transactions, and
campaign, the Anti-dissidence campaign, or other wars or military operations of the federation; disbursements or dispositions of government
campaigns; or who rendered military service in the Armed Forces of the funds or property shall invariably bear the approval of the proper officials.
Philippines and has been honorably discharged or separated after at least
Section 4—Records of the FEDERATION
six (6) years total cumulative active service or sooner separated due to the
death or disability arising from a wound or injury received or sickness or As a corporate body and in accordance with appropriate laws, it shall
disease incurred in line of duty while in the active service. keep and carefully preserve records of all business transactions, minutes of
meetings of stockholders/members of the board of directors reflecting all
Section 3—Relationship Between the DND and the VFP
details about such activity.
3.1 Sec 1 of RA 3140 provides “. . . the following persons (heads of All such records and minutes shall be open to directors, trustees,
various veterans associations and organizations in the Philippines) and stockholders, and other members for inspection and copies of which may
their associates and successors are hereby created a body corporate, under be requested.
the control and supervision of the Secretary of National Defense, under the As a body corporate, it shall submit the following: annual report;
name, style and title of “Veterans Federation of the Philippines . . .” proceedings of council meetings; report of operations together with
The Secretary of National Defense shall be charged with the duty of financial statement of its assets and liabilities and fund balance per year;
supervising the veterans and allied program under the jurisdiction of the statement of revenues and expenses per year; statement of cash flows per
Department. It shall also have the responsibility of overseeing and ensuring year as certified by the accountant; and other documents/reports as may be
the judicious and effective implementation of veterans assistance, benefits, necessary or required by the SND.
and utilization of VFP assets.
Section 5—Submission of Annual and Periodic Report
3.2 To effectively supervise and control the corporate affairs of the
Federation and to safeguard the interests and welfare of the veterans who As mandated under appropriate laws, the following reports shall be
are also wards of the State entrusted under the protection of the DND, the submitted to the SND, to wit:
Secretary may personally or through a designated representative, require a. Annual Report to be submitted not later than every Janu-ary 31 of the
the submission of reports, documents and other papers regarding any or all following year. Said report shall consist of the following:
of the Federation’s business transactions particularly those relating to the
VFP functions under Section 2 of RA 2640. 1. Financial Report of the Federation, signed by the Treasurer General and Auditor
The Secretary or his representative may attend conferences of the General;
supreme council of the VFP and such other activities he may deem
relevant. 544
543
VOL. 483, FEBRUARY 28, 2006 543
Veterans Federation of the Philippines vs. Reyes 2. Roster of Members of the Supreme Council;

Roster of Members of the Executive Board and National Officers; financial condition. The letter ended by stating that, after the
3.
and briefing, the support staff of the Audit Committee would begin their
4. Current listing of officers and management of VFP. work to meet the one-month target within which to submit a report.
A letter dated 28 August 2003 informed petitioner’s President
b. Report on the proceedings of each Supreme Council Meeting to be that the Management Audit Group headed by the Undersecretary
submitted not later than one month after the meeting; would be paying petitioner a visit on 30 August 2002 for an update
c. Report of the VFP President as may be required by SND or as on VFP’s different affiliates and the financial statement of the
may be found necessary by the President of the Federation; Federation.
Subsequently, the Secretary General of the VFP sent an undated
d. Resolutions passed by the Executive Board and the Supreme
letter to respondent DND Secretary, with notice to respondent
Council for confirmation to be submitted not later than one month
Undersecretary for Civil Relations and Administration,
after the approval of the resolution;
complaining about the alleged broadness of the scope of the
e. After Operation/Activity Reports to be submitted not later than
management audit and requesting the suspension thereof until such
one month after such operation or activity;
time that specific areas of the audit shall have been agreed upon.
The request was, however, denied by the Undersecretary in a
Section 6—Penal Sanctions
letter dated 4 September 2002 on the ground that a specific
As an attached agency to a regular department of the government, the
timeframe had been set for the activity.
VFP and all its instrumentalities, officials and personnel shall be subject to
Petitioner thus filed this Petition for Certiorari with Prohibition
the penal provisions of such laws, rules and regulations applicable to the
under Rule 65 of the 1997 Rules of Civil Procedure, praying for the
attached agencies of the government.
following reliefs:
In a letter dated 6 August 2002 addressed to the President of 1. For this Court to issue a temporary restraining order and a writ of
petitioner, respondent DND Secretary reiterated his instructions in preliminary prohibitory and mandatory injunction to enjoin
his earlier letter of 13 April 2002. respondent Secretary and all those acting under his discretion and
Thereafter, petitioner’s President received a letter dated 23 authority from: (a) implementing DND Department Circular No.
August 2002 from respondent Undersecretary, informing him that 04; and (b) continuing with the ongoing management audit of peti-
Department Order No. 129 dated 23 August 2002 directed “the tioner’s books of account;
conduct of a 4Management Audit of the Veterans Federation of the
2. After hearing the issues on notice—
Philippines.” The letter went on to state that respondent DND
Secretary “believes that the mandate given by said law can be
a. Declare DND Department Circular No. 04 as null and void for being
meaningfully exercised if this department can better appreciate the
ultra vires;
functions, responsibilities and situation on the ground and this
5
can
be done by undertaking a thorough study of the organization.” 546
_______________
4 Rollo, p. 53. Veterans Federation of the Philippines vs. Reyes
5 Id.
b. Convert the writ of prohibition, preliminary prohibitory and
545 mandatory injunction into a permanent one.
6
VOL. 483, FEBRUARY 28, 2006 545

Veterans Federation of the Philippines vs. Reyes GIVING DUE COURSE TO THE PETITION
Petitioner asserts that, although cases which question the

Respondent Undersecretary also requested both for a briefing and
constitutionality or validity of administrative issuances are
for documents on personnel, ongoing projects and petitioner’s
ordinarily filed with the lower courts, the urgency and substantive
importance of the question on hand and the public interest attendant give due course to this petition in the first instance, hereby failing to
to the subject matter of the petition justify its being filed with this fulfill the
10
conditions set forth in Commissioner of Internal Revenue
Court directly as an original action.7 v. Leal. While we reiterate the policies set forth in Leal and allied
It is settled that the Regional Trial Court and the Court of cases and continue to abhor the propensity of a number of litigants
Appeals also exercise original jurisdiction over petitions for to disregard the principle of hierarchy of courts in our judicial
certiorari and prohibition. As we have held in numerous occasions, system, we, however, resolve to take judicial notice of the fact that
however, such concurrence of original jurisdiction does not mean the persons who stand to lose in a possible protracted litigation in
that the party seeking extraordinary writs has the absolute8
freedom this case are war veterans, many of whom have precious little time
to file his petition in the court of 9 his choice. Thus, in left to enjoy the benefits that can be conferred by petitioner
Commissioner of Internal Revenue v. Leal, we held that: corporation. This bickering for the power over petitioner
corporation, an entity created to represent and defend the interests
“Such concurrence of original jurisdiction among the Regional Trial Court, of Filipino veterans, should be resolved as soon as possible in order
the Court of Appeals and this Court, however, does not mean that the party for it to once and for all direct its resources to its rightful
seeking any of the extraordinary writs has the absolute freedom to file his beneficiaries all over the country. All these said, we hereby resolve
petition in the court of his choice. The hierarchy of courts in our judicial to give due course to this petition.
system determines the appropriate forum for these petitions. Thus, petitions
for the issuance of the said writs against the first level (inferior) courts
must be filed with the Regional Trial Court and those against the latter, ISSUES
with the Court of Appeals. A direct invocation of this Court’s original
jurisdiction to issue these writs should be allowed only where there are Petitioner mainly alleges that the rules and guidelines laid down in
special and the assailed Department Circular No. 04 expanded the scope of
“control and supervision” beyond what has been
_______________
_______________
6 Id., p. 31.
7 Id., p. 74. 10 Id.
8 Commissioner of Internal Revenue v. Leal, 440 Phil. 477, 484; 392 SCRA 9, 14 (2002);
548
People v. Court of Appeals, 361 Phil. 492, 497; 308 SCRA 566, 570 (1999); Pearson v.
Intermediate Appellate Court, 356 Phil. 341, 355; 295 SCRA 27, 42 (1998); People v.
Cuaresma, G.R. No. 67787, 18 April 1989, 172 SCRA 415, 424. 548 SUPREME COURT REPORTS ANNOTATED
9 Id., pp. 484-485; p. 14.
547 11
laid down in Rep. Act No. 2640. Petitioner further submits the
following issues to this Court: 1. Was the challenged department
VOL. 483, FEBRUARY 28, 2006 547
circular passed in the valid exercise of the respondent Secretary’s
Veterans Federation of the Philippines vs. Reyes “control and supervision”? 2. Could the challenged department
circular validly lay standards classifying the VFP, an essentially
important reasons therefor, specifically and sufficiently set forth in the civilian organization, within the ambit of statutes only applying to
petition. This is the established policy to prevent inordinate demands upon government entities? 3. Does the department circular, which grants
the Court’s time and attention, which are better devoted to matters within respondent direct management control on the VFP, unduly encroach
its exclusive jurisdiction, and to prevent further over-crowding of the on the prerogatives of VFP’s governing body? At the heart of all
Court’s docket. Thus, it was proper for petitioner to institute the special these issues and all of petitioner’s prayers and assertions in this
civil action for certiorari with the Court of Appeals assailing the RTC case is petitioner’s claim that it is a private non-government
order denying his motion to dismiss based on lack of jurisdiction.” corporation.
The petition itself, in this case, does not specifically and sufficiently
set forth the special and important reasons why the Court should
Section 7. The Congress shall not, except by general law, provide for the
formation, organization, or regulation of private corporations, unless such
CENTRAL ISSUE:
corporations are owned and controlled by the Government or any
IS THE VFP A PRIVATE CORPORATION? 15
subdivision or instrumentality thereof.
Petitioner claims that it is not a public nor a governmental entity
On the other hand, its counterparts in the 1973 and 1987
but a private organization, and advances this claim to prove that the
constitutions are the following:
issuance of DND Department Circular No. 04 is an 12
invalid exercise
of respondent Secretary’s control and supervision. Section 4. The National Assembly shall not, except by gen-eral law,
This Court has defined the power of control as “the power of an provide for the formation, organization, or regulation of private
officer to alter or modify or nullify or set aside what a subordinate corporations, unless such corporations are owned or controlled by the
16
has done in the performance of his duties and 13to substitute the government or any subdivision or instrumentality thereof.
judgment of the former to that of the latter.” The power of Sec. 16. The Congress shall not, except by general law, provide for the
supervision, on the other hand, means “overseeing, or the power or formation, organization, or regulation of private corporations. Government-
authority of an officer to see that subordinate officers perform their owned and controlled corporations may be cre-
duties. If the latter fail or neglect to fulfill them, the former may
take such action or step as _______________
14 Id.
_______________
15 CONSTITUTION (1935), Art. XIII, Sec. 7.
11 Rollo, p. 84. 16 CONSTITUTION (1973), Art. XIV, Sec. 4.
12 Id., p. 85.
13 Mondano v. Silvosa, 97 Phil. 143, 148 (1955). 550
549
VOL. 483, FEBRUARY 28, 2006 549
Veterans Federation of the Philippines vs. Reyes ated or established by special charters in the interest of the common good
17
and subject to the test of economic viability.
14
prescribed by law to make them perform their duties.” These From the foregoing, it is crystal clear that our constitutions
definitions are synonymous with the definitions in the assailed explicitly prohibit the regulation by special laws of private
Department Circular No. 04, while the other provisions of the corporations, with the exception of government-owned or
assailed department circular are mere consequences of control and controlled corporations (GOCCs). Hence, it would be
supervision as defined. impermissible for the law to grant control of the VFP to a public
Thus, in order for petitioner’s premise to be able to support its official if it were neither a public 18corporation, an unincorporated
conclusion, petitioners should be deemed to imply either of the governmental entity, nor a GOCC. Said constitutional provisions
following: (1) that it is unconstitutional/impermissible for the law can even be read to prohibit the creation itself of the VFP if it were
(Rep. Act No. 2640) to grant control and/or supervision to the neither of the three mentioned above, but we cannot go into that in
Secretary of National Defense over a private organization, or (2) this case since there is no challenge to the creation of the VFP in
that the control and/or supervision that can be granted to the the petition as to permit this Court from considering its nullity.
Secretary of National Defense over a private organization is Petitioner vigorously argues that the VFP is a private non-
limited, and is not as strong as they are defined above. government organization, pressing on the following contentions:
The following provision of the 1935 Constitution, the organic
act controlling at the time of the creation of the VFP in 1960, is 1. The VFP does not possess the elements which would
relevant: qualify it as a public office, particularly the

possession/delegation of a portion of sovereign power of c. The VFP is governed, not by the Civil Service Law, the
government to be exercised for the benefit of the public; Articles of War nor the GSIS Law, but by the Labor Code
2. VFP funds are not public funds because— and the SSS Law;
d. The VFP has its own Constitution and By-Laws and is
a) No budgetary appropriations or government funds have governed by a Supreme Council who are elected from and
been released to the VFP directly or indirectly from the by the members themselves;
Department of Budget and Management (DBM);
b) VFP funds come from membership dues; 4. The Administrative Code of 1987 does not provide that the
VFP is an attached agency, nor does it provide that it is an
entity under the control and supervision of the DND in the
_______________
context of the provisions of said code.
17 CONSTITUTION, Art. XII, Sec. 16. 5. The DBM declared that the VFP is a non-government
18 “Control” being the “power of an officer to alter or modify or nullify or set organization and issued a certificate that the VFP has not
aside what a subordinate has done in the performance of his duties and to substitute been a direct recipient of any funds released by the DBM.
the judgment of the former to that of the latter” should not be confused with the
“control” in the term “government-owned or controlled corporation” (GOCC). Cf. These arguments of petitioner notwithstanding, we are constrained
E.O. No. 292 (Administrative Code) Introductory Provisions, Section 2(13) where to rule that petitioner is in fact a public corporation. Before
“control” is considered to be the ownership of “at least fifty-one (51) per cent of its responding to petitioner’s allegations one by one, here are the more
capital stock.” evident reasons why the VFP is a public corporation:
551 552
VOL. 483, FEBRUARY 28, 2006 551 552 SUPREME COURT REPORTS ANNOTATED
c) The lease rentals raised from the use of government lands (1) Rep. Act No. 2640 is entitled “An Act to Create a Public
reserved for the VFP are private in character and do not Corporation to be Known as the Veterans Federation of the
belong to the government. Said rentals are fruits of VFP’s Philippines, Defining its Powers, and for Other Purposes.”
labor and efforts in managing and administering the lands (2) Any action or decision of the Federation or of the Supreme
for VFP purposes and objectives. A close analogy would Council shall be subject to the approval of the Secretary of
19
be any Filipino citizen settling on government land and Defense.
who tills the land for his livelihood and sustenance. The (3) The VFP is required to submit annual reports of its
fruits of his labor belong to him and not to the owner of the proceedings for the past year, including a full, complete
land. Such fruits are not public funds. and itemized report of receipts and expenditures of
whatever kind, to the President20of the Philippines or to the
3. Although the juridical personality of the VFP emanates Secretary of National Defense.
from a statutory charter, the VFP retains its essential
(4) Under Executive Order No. 37 dated 2 December 1992,
character as a private, civilian federation of veterans
the VFP was listed as among the government-owned and
voluntarily formed by the veterans themselves to attain a
controlled corporations that will not be privatized.
unity of effort, purpose and objectives, e.g.— 21
(5) In Ang Bagong Bayani–OFW Labor Party v. COMELEC,
a. The members of the VFP are individual members and this Court held in a minute resolution that the “VFP
retirees from the public and military service; [Veterans Federation Party] is an adjunct of the
government, as it is merely an incarnation of the Veterans
b. Membership in the VFP is voluntary, not compulsory;
Federation of the Philippines.”

And now to answer petitioner’s reasons for insisting that it is a In several cases, we have dealt with the issue of whether certain
private corporation: specific activities can be classified as sovereign functions. These
cases, which deal with activities not immediately apparent to be
1. Petitioner claims that the VFP does not possess the elements sovereign functions, upheld the public sovereign nature of
25
which would qualify it as a public office, particularly the operations needed either to promote social justice or to stimulate
possession/delegation of a portion of sovereign power of patriotic sentiments and love of country.
26
government to be exercised for the benefit of the public; As regards the promotion of social justice as a sovereign
22
In Laurel v. Desierto, we adopted the definition of Mechem of a function, we held in Agricultural Credit and Cooperative Fi-
public office, that it is “the right, authority and duty, created and
conferred by law, by which, for a given period, either fixed by law _______________
or enduring at the pleasure of the creating power, an individual is
invested with some portion of the sovereign functions of the 23 Id.
government, to be exercised by him for the benefit of the public.” 24 Id.
In the same case, we went on to adopt Mechem’s view that the 25 Agricultural Credit and Cooperative Financing Administration (ACCFA) v.
delegation to the individual of some of the sovereign func- Confederation of Unions in Government Corporations and Offices (CUGCO), 141
Phil. 334, 349; 30 SCRA 649, 662 (1969); People’s Homesite and Housing
Corporation v. Court of Industrial Relations, G.R. No. L-31890, 29 May 1987, 150
_______________
SCRA 296, 310.
19 REPUBLIC ACT No. 2640, Section 2, par. 2. 26 Laurel v. Desierto, supra note 22, p. 678; p. 68.
20 REPUBLIC ACT No. 2640, Section 2.
554
21 G.R. No. 147589, 10 April 2002.
22 430 Phil. 658, 672; 381 SCRA 48, 61-62 (2002).
553
VOL. 483, FEBRUARY 28, 2006 553

nancing Administration (ACCFA) v. Confederation of27 Unions in
Veterans Federation of the Philippines vs. Reyes Government Corporations and Offices (CUGCO), that the
compelling urgency with which the Constitution speaks of social
tions of government is “[t]he most important characteristic” in justice does not leave any doubt that land reform is not an optional
23
determining whether a position is a public office or not. Such but a compulsory function of sovereignty. The same reason was
portion of the sovereignty of the country, either legislative, used in our declaration
28
that socialized housing is likewise a
executive or judicial, must attach to the office for the time being, to sovereign function. Highly significant here is the observation of
be exercised for the public benefit. Unless the powers conferred are former Chief Justice Querube Makalintal:
of this nature, the individual is not a public officer. The most
important characteristic which distinguishes an office from an “The growing complexities of modern society, however, have rendered this
employment or contract is that the creation and conferring of an traditional classification of the functions of government [into constituent
office involves a delegation to the individual of some of the and ministrant functions] quite unrealistic, not to say obsolete. The areas
sovereign functions of government, to be exercised by him for the which used to be left to private enterprise and initiative and which the
benefit of the public;—that some portion of the sovereignty of the government was called upon to enter optionally, and only “because it was
country, either legislative, executive or judicial, attaches, for the better equipped to administer for the public welfare than is any private
time being, to be exercised for the public benefit. Unless the powers individual or group of individuals,” continue to lose their well-defined
24
conferred are of this nature, the individual is not a public officer. boundaries and to be absorbed within activities that the government
The issue, therefore, is whether the VFA’s officers have been must undertake in its sovereign capacity if it is to meet the increasing
delegated some portion of the sovereignty of the country, to be social challenges of the times. Here[,] as almost everywhere else[,] the
exercised for the public benefit. tendency is undoubtedly towards a greater socialization of economic
forces. Here, of course, this development was envisioned, indeed adopted
as a national policy, by the Constitution itself in its declaration of principle _______________

29
concerning the promotion of social justice.” (Emphasis supplied.)
31 Sec. 4. The purposes of the Federation shall be to uphold and defend the
It was, on the other hand, the fact that the National Centennial democratic way of life as envisioned in the Constitution of the Republic of the
Celebrations was calculated to arouse and stimulate patriotic Philippines; to represent and to defend the interests of all Filipino veterans; to
sentiments and love of country30that it was considered as a sovereign coordinate the efforts of all different veterans of the Philippines in behalf of the
function in Laurel v. Desierto. In Laurel, interests of respective members; to promote mutual help among former comrades-in-
arms; to perpetuate their common experiences in war; to undertake acts of charity
and relief work; to preserve peace and order; to foster love of country and things
_______________
Filipino and inculcate individual civic consciousness. In general, the Federation shall
27 Supra note 25. exist solely for purposes of a benevolent character, and not for pecuniary profit of its
28 People’s Homesite and Housing Corporation v. Court of Industrial Relations, members.
supra note 25.
29 Agricultural Credit and Cooperative Financing Administration (ACCFA) v. 556
Confederation of Unions in Government Corporations and Offices (CUGCO), supra

note 25, p. 349; p. 662. 556 SUPREME COURT REPORTS ANNOTATED
30 Laurel v. Desierto, supra note 22.
555
and other forms of assistance to war veterans and veterans
32
of
military campaigns, their surviving spouses and orphans.
VOL. 483, FEBRUARY 28, 2006 555
Veterans Federation of the Philippines vs. Reyes 2. Petitioner claims that VFP funds are not public funds.
Petitioner claims that its funds are not public funds because no
the Court then took its cue from a similar case in the United States budgetary appropriations or government funds have been released
involving a Fourth of July fireworks display. The holding of the to the VFP directly or indirectly from the DBM, and because VFP
Centennial Celebrations was held to be an executive function, as it funds come from membership dues and lease rentals earned from
was intended to enforce Article XIV of the Constitution which administering government lands reserved for the VFP.
provides for the conservation, promotion and popularization of the The fact that no budgetary appropriations have been released to
nation’s historical and cultural heritage and resources, and artistic the VFP does not prove that it is a private corporation. The DBM
relations. indeed did not see it fit to propose budgetary appropriations to the
33
In the case at bar, the functions of 31petitioner corporation VFP, having itself believed that the VFP is a private corporation.
enshrined in Section 4 of Rep. Act No. 2640 should most certainly If the DBM, however, is mistaken as to its conclusion regarding the
fall within the category of sovereign functions. The protection of nature of VFP’s incorporation, its previous assertions will not
the interests of war veterans is not only meant to promote social prevent future budgetary appropriations to the VFP. The erroneous
justice, but is also intended to reward patriotism. All of the application of the law by public officers does not bar a subsequent
34
functions in Section 4 concern the well-being of war veterans, our correct application of the law.
countrymen who risked their lives and lost their limbs in fighting Nevertheless, funds in the hands of the VFP from whatever
for and defending our nation. It would be injustice of catastrophic source are public funds, and can be used only for public purposes.
proportions to say that it is beyond sovereignty’s power to reward This is mandated by the following provisions of Rep. Act No. 2640:
the people who defended her.
Like the holding of the National Centennial Celebrations, the (1) Section 2 provides that the VFP can only “invest its funds
functions of the VFP are executive functions, designed to for the exclusive benefit of the Veterans of the Philippines”;
implement not just the provisions of Rep. Act No. 2640, but also, (2) Section 2 likewise provides that “(a)ny action or decision
and more importantly, the Constitutional mandate for the State to of the Federation or of the Supreme Council shall be
provide immediate and adequate care, benefits subject to the approval of the Secretary of National
Defense.” Hence, all activities
_______________ Association (AFREVA); Lorenzo B. Cabrera of the Confederation of the Filipino

Veterans (CONVETS); Teodoro V. Kalaw of the Defenders of Bataan and
32 Constitution, Art. XVI, Sec. 7.
Corregidor; Fausto S. Alberto of the ECLGA Veterans Association; Enrique C.
33 Department of Budget and Management’s certification of non-receipt in favor
Rimando of the FAIT Veterans Legion; Francisco L. Gonzales of the Filipino
of Petitioner Corporation, Annex “O” of the Petition.
Disabled Veterans Association; Basilia M. Baja of the Gold Star Mothers and United
34 Manila Jockey Club v. Court of Appeals, 360 Phil. 367, 383; 300 SCRA 181,
War Widows and Orphans Association of the Philippines; Simeon C. Medalla of the
197 (1998).
Hunters ROTC Association; Antonio F. Garcia of the Magsaysay Veterans Legion;
Dionisio V. Ojeda Guaof the PEFTOK Veterans Association; Primitivo Lovina of the
557
Philippine National Guard Veterans Legion; Jose V. Andrada of the Philippine Naval
Veterans Legion; Jaime Piopongco of the Phil
VOL. 483, FEBRUARY 28, 2006 557
558
of the VFP to which the Supreme Council can apply its 558 SUPREME COURT REPORTS ANNOTATED
funds are subject to the approval of the Secretary of Veterans Federation of the Philippines vs. Reyes
National Defense;
(3) Section 4 provides that “the Federation shall exist solely Rep. Act No. 2640 reveals that what has been created as a body
for the purposes of a benevolent character, and not for the corporate is not the individual membership of the affiliate
pecuniary benefit of its members”; organizations, but merely the aggregation of the heads of the
(4) Section 6 provides that all funds of the VFP in excess of affiliate organizations. Thus, only the money remitted by the
operating expenses are “reserved for disbursement, as the affiliate organizations to the VFP partake in the public nature of the
Supreme Council may authorize, for the purposes stated in VFP funds. 36
Section two of this Act”; In Republic v. COCOFED, we held that the Coconut Levy
(5) Section 10 provides that “(a)ny donation or contribution Funds are public funds because, inter alia, (1) they were meant to
which from time to time may be made to the Federation by be for the benefit of the coconut industry, one of the major
the Government of the Philippines or any of its industries supporting the national economy, and its farmers; and (2)
subdivisions, branches, offices, agencies or the very laws governing coconut levies recognize their public
instrumentalities shall be expended by the Supreme character. The same is true with regard to the VFP funds. No less
Council only for the purposes mentioned in this Act.”; and public is the use for the VFP funds, as such use is limited to the
finally, purposes of the VFP which we have ruled to be sovereign
functions. Likewise, the law governing VFP funds (Rep. Act No.
(6) Section 12 requires the submission of annual reports of
2640) recognizes the public character of the funds as shown in the
VFP proceedings for the past year, including a full,
enumerated provisions above.
complete and itemized report of receipts and expenditures
We also observed in the same COCOFED case that “(e)ven if
of whatever kind, to the President of the Philippines or to
the money is allocated for a special purpose and raised by special
the Secretary of National Defense. 37
means, it is still public in character.” In the case at bar, some of
the funds were raised by even more special means, as the
It is important to note here that the membership dues collected from
contributions from affiliate organizations of the VFP can hardly be
the individual members of VFP’s affiliate organizations do not
regarded as enforced contributions as to be considered taxes. They
become public funds while they are still35 funds of the affiliate
are more in the nature of donations which have always been
organizations. A close reading of Section 1 of
recognized as a source of public fund-
_______________
_______________
35 Sec. 1. The following persons, to wit: Emilio Aguinaldo, of Associacion de los
ippine Veterans Legion; Sofia L. Prudenciado of the Philippine Association of
Veteranos de la Revolucion; Margarito Torralba of the AFP Retired Veterans
War Widows, Parents, and Orphans; Eugenio B. Recto of the United Disabled
Veterans Association of the Philippines; and Gaudencio Antonino of the USAFIP _______________
NL and their associates and successors are hereby created a body corporate, under
38 G.R. No. 113375, 5 May 1994, 232 SCRA 110, 156.
the control and supervision of the Secretary of National Defense, under the name,
39 Supra note 22.
style and title of “Veterans Federation of the Philippines,” hereinafter referred to as
the Federation. The principal office of the Federation shall be in the City of Manila,
560
Philippines.
36 423 Phil. 735, 762-763; 372 SCRA 462, 485 (2001).
37 Id. 560 SUPREME COURT REPORTS ANNOTATED
559
Under particular circumstances, “compensation” has been held to include

VOL. 483, FEBRUARY 28, 2006 559 allowance for personal expenses, commissions, expenses, fees, an
Veterans Federation of the Philippines vs. Reyes honorarium, mileage or traveling expenses, payments for services,
40
restitution or a balancing of accounts, salary, and wages.
ing. Affiliate organizations of the VFP cannot complain of their
contributions becoming public funds upon the receipt by the VFP, 3. Petitioner argues that it is a civilian federation where
since they are presumed aware of the provisions of Rep. Act No. membership is voluntary.
2640 which not only specifies the exclusive purposes for which
Petitioner claims that the Secretary of National Defense
VFP funds can be used, but also provides for the regulation of such
“historically did not indulge in the direct or ‘micromanagement’ of
funds by the national government through the Secretary of National
the VFP precisely because it is essentially a civilian organization
Defense. There is nothing wrong, whether legally or morally, from 41
where membership is voluntary.” This reliance of petitioner on
raising revenues through non-traditional methods. As remarked by
what has “historically” been done is erroneous, since laws are not
Justice Florentino Feliciano in his concurring opinion in 42
38 repealed by disuse, custom, or practice to the contrary.
Kilosbayan, Incorporated v. Guingona, Jr. where he explained
Furthermore, as earlier stated, the erroneous application of the law
that the funds raised by the On-line Lottery System were also
by public officers does not bar a subsequent correct application of
public in nature, thus: 43
the law.
x x x [T]he more successful the government is in raising revenues by non- Neither is the civilian nature of VFP relevant in this case. The
traditional methods such as PAGCOR operations and privatization Constitution does not contain any prohibition, express or implied,
measures, the lesser will be the pressure upon the traditional sources of against the grant of control and/or supervision to the Secretary of
public revenues, i.e., the pocket books of individual taxpayers and National Defense over a civilian organization. The Office of the
importers. Secretary of National Defense is itself a civilian office, its occupant
being an alter ego of the civilian Commander-in-Chief. This set-up
Petitioner additionally
39
harps on the inapplicability of the case of is the manifestation of the constitutional principle44 that civilian
Laurel v. Desierto which was cited by respondents. Petitioner authority is, at all times, supreme over the military. There being
claims that among the reasons National Centennial Commission no such constitutional prohibition, the creation of a civilian public
Chair Salvador Laurel was considered a public officer was the fact organization by Rep. Act No. 2640 is not rendered invalid by its
that his compensation was derived from public funds. Having ruled being placed under the control and supervision of the Secretary of
that VFP funds from whatever source are public funds, we can National Defense.
safely conclude that the Supreme Council’s compensation, taken as
they are from VFP funds under the term “operating expenses” in _______________
Section 6 of Rep. Act No. 2640, are derived from public funds. The
particular nomenclature of the compensation taken from VFP funds 40 Id., citing 15 C.J.S. Compensation, p. 654.
is not even of relevance here. As we said in Laurel concerning 41 Rollo, p. 76.
compensation as an element of public office: 42 Cf. CIVIL CODE, Article 7, par. 1: “Laws are repealed only by subsequent
ones, and their violation or nonobservance shall not be excused by disuse, custom, or

practice to the contrary.” 47 447 Phil. 571, 587-588; 399 SCRA 442, 455 (2003).
43 Manila Jockey Club v. Court of Appeals, supra note 34.
44 CONSTITUTION, Art. 2, Sec. 3. 562
561
VOL. 483, FEBRUARY 28, 2006 561
Veterans Federation of the Philippines vs. Reyes taxes has been restored is a contemporaneous construction of
Section 23 [of R.A. No. 7925] and, as such, is entitled to great
Petitioner’s stand that the VFP is a private corporation because weight.
membership thereto is voluntary is likewise erroneous. As stated
above, the membership of the VFP is not the individual The ruling of the BLGF has been considered in this case. But unlike the
membership of the affiliate organizations, but merely the Court of Tax Appeals, which is a special court created for the purpose of
aggregation of the heads of such affiliate organizations. These reviewing tax cases, the BLGF was created merely to provide consultative
heads forming45 the VFP then elect the Supreme Council and the services and technical assistance to local governments and the general
other officers, of this public corporation. public on local taxation and other related matters. Thus, the rule that the
“Court will not set aside conclusions rendered by the CTA, which is, by the
4. Petitioner claims that the Administrative Code of 1987 does not very nature of its function, dedicated exclusively to the study and
provide that the VFP is an attached agency, and nor does it provide consideration of tax problems and has necessarily developed an expertise
that it is an entity under the control and supervision of the DND in on the subject, unless there has been an abuse or improvident exercise of
the context of the provisions of said code. authority” cannot apply in the case of the BLGF.
The Administrative Code, by giving definitions of the various On this score, though, we disagree with respondents and hold that
entities covered by it, acknowledges that its enumeration is not the DBM’s appraisal is considered persuasive. Respondents
exclusive. The Administrative Code could not be said to have misread the PLDT case in asserting that only quasi-judicial
repealed nor enormously modified Rep. Act No. 2640 by agencies’ determination can be considered persuasive. What the
implication, as such repeal or enormous modification 46
by PLDT case points out is that, for an administrative agency’s opinion
implication is not favored in statutory construction. to be persuasive, the administrative agency involved (whether it has
5. Petitioner offers as evidence the DBM opinion that the VFP is a quasi-judicial powers or not) must be an expert in the field they are
non-government organization in its certification that the VFP “has giving their opinion on.
not been a direct recipient of any funds released by the DBM.” The DBM is indeed an expert on determining what the various
government agencies and corporations are. This determination is
Respondents claim that the supposed declaration of the DBM necessary for the DBM to fulfill its mandate:
that petitioner is a non-government organization is not persuasive,
since DBM is not a quasi-judicial agency. They aver that what we “Sec. 2. Mandate.—The Department shall be responsible for the
have said of the Bureau of Local Government Finance (BLGF) in formulation and implementation of the National Budget with the goal of
Philippine
47
Long Distance Telephone Company (PLDT) v. City of attaining our national socio-economic plans and objectives.
Davao can be applied to DBM: In any case, it is contended, the The Department shall be responsible for the efficient and sound
ruling of the Bureau of Local Government Finance (BLGF) that utilization of government funds and revenues to effectively achieve our
48
petitioner’s exemption from local country’s development objectives.”
The persuasiveness of the DBM opinion has, however, been

_______________
overcome by all the previous explanations we have laid so far.
45 Republic Act No. 2640, Sec. 7.
46 See United States v. Palacio, 33 Phil. 208, 216 (1916); Lichauco v. Apostol, 44 _______________
Phil. 138, 149 (1922).

48 Executive Order No. 292, ADMINISTRATIVE CODE of 1987, Title XVII,

Chapter 1, Sec. 2.
563 Veterans Federation of the Philippines vs. Reyes
51
VOL. 483, FEBRUARY 28, 2006 563 veterans’ own determination.” Petitioner says that the circu-lar’s
provisions practically render the Supreme Council inutile, despite
Veterans Federation of the Philippines vs. Reyes 52
its being the statutory governing body of the VFP.
As previously mentioned, this Court has defined the power of
It has also been eclipsed by another similarly persuasive opinion, control as “the power of an officer to alter or modify or nullify or
that of the Department of National Defense embodied in set aside what a subordinate has done in the performance of his
Department Circular No. 04. The DND is clearly more of an expert duties 53and to substitute the judgment of the former to that of the
with respect to the determination of the entities under it, and its latter.” The power of supervision, on the other hand, means
Administrative Rules and Regulations are entitled49to great respect “overseeing, or the power or authority of an officer to see that
54
and have in their favor the presumption of legality. subordinate officers perform their duties.” Under the
55
The DBM opinion furthermore suffers from its lack of Administrative Code of 1987:
explanation and justification in the “certification of non-receipt”
where said opinion was given. The DBM has not furnished, in said Supervision and control shall include the authority to act directly whenever
certification or elsewhere, an explanation for its opinion that VFP is a specific function is entrusted by law or regulation to a subordinate; direct
a non-government organization. the performance of duty; restrain the commission of acts; review, approve,
reverse or modify acts and decisions of subordinate officials or units;
determine priorities in the execution of plans and programs; and prescribe
THE FATE OF DEPARTMENT CIRCULAR NO. 04 standards, guidelines, plans and programs. x x x
Our ruling that petitioner is a public corporation is determinative of The definition of the power of control and supervision under
whether or not we should grant petitioner’s prayer to declare Section 2 of the assailed Department Circular are synonymous with
Department Circular No. 04 void. the foregoing definitions. Consequently, and considering that
Petitioner assails Department Circular No. 04 on the ground that petitioner is a public corporation, the provisions of the assailed
it expanded the scope of control and supervision beyond what has Department Circular No. 04 did not supplant nor modify the
been laid down in Rep. Act No. 2640. Petitioner alleges that “(t)he provisions of Republic Act No. 2640, thus not violating the settled
equation of the meaning of ‘control’ and ‘supervision’ of the rule that “all such (administrative) issuances must not override, but
Administrative Code of 1987 as the same ‘control and supervision’ must remain consistent and in harmony with the law they seek to
under Rep. Act No. 2640, takes out the context of the original apply or implement.
legislative intent from the peculiar surrounding circumstances and
50
conditions that brought about the creation of the VFP.” Petitioner
_______________
claims that the VFP “was intended as a self-governing autonomous
body with a Supreme Council as governing authority,” and that the 51 Id., pp. 81-82.
assailed circular “pre-empts VFP’s original self-governance and 52 Id., p. 89.
autonomy (in) representing veterans organizations, and substitutes 53 Mondano v. Silvosa, supra note 13.
government discretion and decisions to that of the 54 Id.
55 E.O. No. 292, Book 4, Chapter 7, Section 38 (1).
_______________
565
49 Gonzales v. Land Bank of the Phils., G.R. No. 76759, 22 March 1990, 183
SCRA 520, 526.
VOL. 483, FEBRUARY 28, 2006 565
50 Rollo, p. 81.
564
Administrative rules and regulations are56 intended to carry out, “x x x Administrative rules and regulations must also be published if their
neither to supplant nor to modify, the law.” purpose is to enforce or implement existing law pursuant also to a valid
Section 3.2 of the assailed department circular, which authorizes delegation.
the Secretary of National Defense to “x x x personally or through a Interpretative regulations and those merely internal in nature, that is,
designated representative, require the submission of reports, regulating only the personnel of the administrative agency and not the
documents and other papers regarding any or all of the Federation’s public, need not be published. Neither is publication required of the so-
business functions, x x x.” called letters of instructions issued by administrative superiors concerning
as well as Section 3.3 which allows the Secretary of DND to the rules on guidelines to be followed by their subordinates in the
performance of their duties.”
x x x [F]rom time to time issue guidelines, directives and other orders
governing vital government activities including, but not limited to, the Even assuming that the assailed circular was not published, its
conduct of elections, the acquisition, management and dispositions of validity is not affected by such non-publication for the reason that
properties, the accounting of funds, financial interests, stocks and bonds, its provisions fall under two of the exceptions enumerated in
corporate investments, etc. and such other transactions which may affect Tañada.
the interests of the veterans. Department Circular No. 04 is an internal regulation. As we
have ruled, they are meant to regulate a public corporation under
are merely consequences of both the power of control and the control of DND, and not the public in general. As likewise
supervision granted by Rep. Act No. 2640. The power to alter or discussed above, what has been created as a body corporate by Rep.
modify or nullify or set aside what a subordinate has done in the Act No. 2640 is not the individual membership of the affiliate
performance of his duties, or to see to it that subordinate officers organizations of the VFP, but merely the aggregation of the heads
perform their duties in accordance with law, necessarily requires of the affiliate organizations. Consequently, the individual members
the ability of the superior officer to monitor, as closely as it desires, of the affiliate organizations, who are not public officers, are
the acts of the subordinate. beyond the regulation of the circular.
The same is true with respect to Sections 4 and 5 of the assailed Sections 2, 3 and 6 of the assailed circular are additionally
Department Circular No. 04, which requires the preservation of the merely interpretative in nature. They add nothing to the law. They
records of the Federation and the submission to the Secretary of do not affect the substantial rights of any person, whether party to
National Defense of annual and periodic reports. the case at bar or not. In Sections 2 and 3, control and supervision
Petitioner likewise claims that the assailed DND Department 57 are defined, mentioning actions that can be performed as
Circular No. 04 was never published, 58
and hence void. consequences of such control and supervision, but without
Respondents deny such non-publication. specifying the particular actions that shall
_______________ _______________
56 Commissioner of Internal Revenue v. Court of Appeals, 310 Phil. 392, 397; 240 59 G.R. No. L-63915, 29 December 1986, 146 SCRA 446, 454.
SCRA 368, 372 (1995).
57 Rollo, p. 244. 567
58 Respondents’ Comment, 18 November 2003.
566 VOL. 483, FEBRUARY 28, 2006 567

be rendered to control and supervise the VFP. Section 6, in the
same vein, merely state what the drafters of the circular perceived
to be consequences of being an attached agency to a regular
We have put forth both the rule and the exception on the publication department of the government, enumerating sanctions and remedies
of administrative
59
rules and regulations in the case of Tañada v. provided by law that may be availed of whenever desired.
Tuvera:
Petitioner then objects to the implementation of Sec. 3.4 of the Secretary of National Defense, who consequently has the power to
assailed Department Circular, which provides that— conduct an extensive management audit of petitioner corporation.
WHEREFORE, the Petition is hereby DISMISSED for lack of
3.4 Financial transactions of the Federation shall follow the provisions of merit. The validity of the Department of National Defense
the government auditing code (PD 1445) i.e. government funds shall be Department Circular No. 04 is AFFIRMED.
spent or used for public purposes; trust funds shall be available and may be SO ORDERED.
spent only for the specific purpose for which the trust was created or the
funds received; fiscal responsibility shall, to the greatest extent, be shared Panganiban (C.J.), Puno, Ynares-Santiago, Sandoval-
by all those exercising authority over the financial affairs, transactions, and Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales,
operations of the federation; disbursements or dispositions of government Callejo, Sr., Azcuna, Tinga and Garcia, JJ., concur.
funds or property shall invariably bear the approval of the proper officials. Quisumbing, J., No Part—Former USND.
Since we have also previously determined that VFP funds are Petition dismissed, validity of Department of National Defense
public funds, there is likewise no reason to declare this provision Department Circular No. 04 affirmed.
invalid. Section 3.4 is correct in requiring the VFP funds to be used
for public purposes, but only insofar the term “public purposes” is Notes.—Any agency organized as a stock or non-stock
construed to mean “public purposes enumerated in Rep. Act No. corporation vested with functions relating to public needs whether
2640.” governmental or proprietary in nature, and owned by the
Having in their possession public funds, the officers of the VFP, government directly or through its instrumentalities either wholly,
especially its fiscal officers, must indeed share in the fiscal or, where applicable as in the case of stock corporations, to the
responsibility to the greatest extent. extent of at least fifty-one (51%) percent of its capital stock, is a
As to petitioner’s allegation that VFP was intended as a self- GOCC. (Leyson, Jr. vs. Office of the Ombudsman, 331 SCRA 227
governing autonomous body with a Supreme Council as governing [2000])
authority, we find that the provisions of Rep. Act No. 2640 The laws on GOCC’s and disposition of their assets
concerning the control and supervision of the Secretary of National unmistakably show the policy of the government to allow flexibility
Defense clearly withholds from the VFP complete autonomy. To to GOCCs and to promote disposition of non-performing as-
say, however, that such provisions render the VFP inutile is an
569
exaggeration. An office is not rendered inutile by the fact that it is
placed under the control of a higher office. These subordinate
offices, such as the executive offices under the control of the VOL. 483, FEBRUARY 28, 2006 569
President, exercise discretion
Nicanor T. Santos Development Corporation vs. Secretary,
568 Department of Agrarian Reform
sets. (Vda. de Urbano vs. Government Service Insurance System,

367 SCRA 672 [2001])
Veterans Federation of the Philippines vs. Reyes An adviser to a GOCC does not exercise supervisory powers
over the employees nor does he issue written instructions to them.
at the first instance. While their acts can be altered or even set aside (Brion, Jr. vs. Brillantes, Jr., 399 SCRA 243 [2003])
by the superior, these acts are effective and are deemed the acts of
the superior until they are modified. Surely, we cannot say that the ——o0o——
offices of all the Department Secretaries are worthless positions.
In sum, the assailed DND Department Circular No. 04 does not
supplant nor modify and is, on the contrary, perfectly in consonance
with Rep. Act No. 2640. Petitioner VFP is a public corporation. As
such, it can be placed under the control and supervision of the

11/26/21, 11:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 483
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11/26/21, 11:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 483 11/26/21, 11:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME

/21, 11:13 AM SUPREME COURT REPORTS ANNOTATED VOLUME 483

VOL. 483, FEBRUARY 28, 2006 527

THE VETERANS FEDERATION OF THE PHILIPPINES

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VOL. 483, FEBRUARY 28, 2006 535

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538 SUPREME COURT REPORTS ANNOTATED 539

Veterans Federation of the Philippines vs. Reyes

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540 SUPREME COURT REPORTS ANNOTATED Section 1

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VOL. 483, FEBRUARY 28, 2006 545

Petitioner asserts that, although cases which question the

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VOL. 483, FEBRUARY 28, 2006 553

as a national policy, by the Constitution itself in its declaration of principle _______________

Confederation of Unions in Government Corporations and Offices (CUGCO), supra

_______________ Association (AFREVA); Lorenzo B. Cabrera of the Confederation of the Filipino

Under particular circumstances, “compensation” has been held to include

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The persuasiveness of the DBM opinion has, however, been

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48 Executive Order No. 292, ADMINISTRATIVE CODE of 1987, Title XVII,

566 VOL. 483, FEBRUARY 28, 2006 567

sets. (Vda. de Urbano vs. Government Service Insurance System,

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