QUASI-LEGISLATIVE POWERS (Case Digests)

A. In General
1. THE PEOPLE OF THE PHILIPPINES vs. HON. MAXIMO A.
MACEREN CFI, Sta. Cruz, Laguna, JOSE BUENAVENTURA,
GODOFREDO REYES, BENJAMIN REYES, NAZARIO AQUINO
and CARLO DEL ROSARIO, G.R. No. L-32166, October 18,
1977
Parties:
Plaintiff-appellant: THE PEOPLE OF THE PHILIPPINES
Accused-appellees: HON. MAXIMO A. MACEREN CFI, Sta.
Cruz, Laguna, JOSE BUENAVENTURA, GODOFREDO REYES,
BENJAMIN REYES, NAZARIO AQUINO and CARLO DEL
ROSARIO
Ponente: AQUINO, J.
Facts:
On June 28, 1967 the Secretary of Agriculture and Natural
Resources, upon the recommendation of the Fisheries Commission,
issued Fisheries Administrative Order No. 84-1, amending section 2
of Administrative Order No. 84, by restricting the ban against
electro fishing to fresh water fisheries. Thus, the phrase "in any
portion of the Philippine waters" found in section 2, was changed by
the amendatory order to read as follows: "in fresh water fisheries in
the Philippines, such as rivers, lakes, swamps, dams, irrigation
canals and other bodies of fresh water."
On March 7, 1969 Jose Buenaventura, Godofredo Reyes, Benjamin
Reyes, Nazario Aquino and Carlito del Rosario were charged by a
Constabulary investigator in the municipal court of Sta. Cruz,
Laguna with having violated Fisheries Administrative Order No. 841. It was alleged in the complaint that the five accused in the
morning of March 1, 1969 resorted to electro fishing in the waters
of Barrio San Pablo Norte, Sta. Cruz.
Upon motion of the accused, the municipal court quashed the
complaint. The prosecution appealed. The Court of First Instance of
Laguna affirmed the order of dismissal. The case is now before this
Court on appeal by the prosecution under Republic Act No. 5440.
The lower court held that electro fishing cannot be penalize
because electric current is not an obnoxious or poisonous

substance as contemplated in section I of the Fisheries Law and

that it is not a substance at all but a form of energy conducted or
transmitted by substances. The lower court further held that, since
the law does not clearly prohibit electro fishing, the executive and
judicial departments cannot consider it unlawful.
It is noteworthy that the Fisheries Law does not expressly punish
electro fishing" Notwithstanding the silence of the law, the
Secretary of Agriculture and Natural Resources, upon the
recommendation of the Commissioner of Fisheries, promulgated
Fisheries Administrative Order No. 84 prohibiting electro fishing in
all Philippine waters.
In this appeal, the prosecution cites as the legal sanctions for the
prohibition against electro fishing in fresh water fisheries (1) the
rule-making power of the Department Secretary under section 4 of
the Fisheries Law; (2) the function of the Commissioner of Fisheries
to enforce the provisions of the Fisheries Law and the regulations
Promulgated thereunder and to execute the rules and regulations
consistent with the purpose for the creation of the Fisheries
Commission and for the development of fisheries; (3) the declared
national policy to encourage, Promote and conserve our fishing
resources, and (4) section 83 of the Fisheries Law which provides
that "any other violation of" the Fisheries Law or of any rules and
regulations promulgated thereunder "shall subject the offender to a
fine of not more than two hundred pesos, or imprisonment for not
more than six months, or both, in the discretion of the court."
Issue:
WON the Fisheries Administrative Order promulgated by the
Secretary of Agriculture and Natural Resources was valid.
Ruling:
We are of the opinion that the Secretary of Agriculture and Natural
Resources and the Commissioner of Fisheries exceeded their
authority in issuing Fisheries Administrative Orders Nos. 84 and 841 and that those orders are not warranted under the Fisheries
Commission, Republic Act No. 3512.
The reason is that the Fisheries Law does not expressly prohibit
electro fishing. As electro fishing is not banned under that law, the
Secretary of Agriculture and Natural Resources and the
Commissioner of Fisheries are powerless to penalize it. In other

words, Administrative Orders Nos. 84 and 84-1, in penalizing

electro fishing, are devoid of any legal basis.
That law punishes (1) the use of obnoxious or poisonous substance,
or explosive in fishing; (2) unlawful fishing in deepsea fisheries; (3)
unlawful taking of marine molusca, (4) illegal taking of sponges; (5)
failure of licensed fishermen to report the kind and quantity of fish
caught, and (6) other violations.
Nowhere in that law is electro fishing specifically punished.
Administrative Order No. 84, in punishing electro fishing, does not
contemplate that such an offense fails within the category of "other
violations" because, the penalty for electro fishing is the penalty
next lower to the penalty for fishing with the use of obnoxious or
poisonous substances, fixed in section 76, and is not the same as
the penalty for "other violations" of the law and regulations fixed in
section 83 of the Fisheries Law.
However, at present, there is no more doubt that electro fishing is
punishable under the Fisheries Law and that it cannot be penalized
merely by executive revolution because Presidential Decree No.
704, which is a revision and consolidation of all laws and decrees
affecting fishing and fisheries and which was promulgated on May
16, 1975, expressly punishes electro fishing in fresh water and salt
water areas.
The rule-making power must be confined to details for regulating
the mode or proceeding to carry into effect the law as it his been
enacted. The power cannot be extended to amending or expanding
the statutory requirements or to embrace matters not covered by
the statute. Rules that subvert the statute cannot be sanctioned.
Administrative regulations issued by a Department Head in
conformity with law have the force of law As he exercises the rulemaking power by delegation of the lawmaking body, it is a requisite
that he should not transcend the bound demarcated by the statute
for the exercise of that power; otherwise, he would be improperly
exercising legislative power in his own right and not as a surrogate
of the lawmaking body.
A penal statute is strictly construed. While an administrative
agency has the right to make ranks and regulations to carry into
effect a law already enacted, that power should not be confused
with the power to enact a criminal statute. An administrative
agency can have only the administrative or policing powers
expressly or by necessary implication conferred upon it.

WHEREFORE, the lower court's decision of June 9, 1970 is set aside

for lack of appellate jurisdiction and the order of dismissal rendered
by the municipal court of Sta. Cruz.
Principle involved:
Limitations of Rule-Making authority for Quasi-legislative Agencies

2. SMART COMMUNICATIONS, INC. (SMART) and PILIPINO

TELEPHONE
CORPORATION
(PILTEL)
vs.
NATIONAL
TELECOMMUNICATIONS COMMISSION (NTC), G.R. No.
151908, August 12, 2003
Parties:
Petitioners: SMART COMMUNICATIONS, INC. (SMART) and
PILIPINO TELEPHONE CORPORATION (PILTEL)
Respondent:
NATIONAL
TELECOMMUNICATIONS
COMMISSION (NTC)
Ponente: YNARES-SANTIAGO, J.
Facts:
Pursuant to its rule-making and regulatory powers, the National
Telecommunications Commission (NTC) issued Memorandum
Circular No. 13-6-2000, promulgating rules and regulations on the
billing of telecommunications services. On August 30, 2000, the
NTC issued a Memorandum to all cellular mobile telephone service
(CMTS) operators which contained measures to minimize if not
totally eliminate the incidence of stealing of cellular phone units.
This was followed by another Memorandum dated October 6, 2000
addressed to all public telecommunications entities, which reads:
This is to remind you that the validity of all prepaid cards
sold on 07 October 2000 and beyond shall be valid for at
least two (2) years from date of first use pursuant to MC 136-2000.
In addition, all CMTS operators are reminded that all SIM
packs used by subscribers of prepaid cards sold on 07
October 2000 and beyond shall be valid for at least two (2)
years from date of first use. Also, the billing unit shall be on

a six (6) seconds pulse effective 07 October 2000. For strict

compliance.
On October 20, 2000, petitioners ISLACOM and PILTEL filed against
the NTC, Commissioner Joseph A. Santiago, Deputy Commissioner
Aurelio M. Umali and Deputy Commissioner Nestor C. Dacanay, an
action for declaration of nullity of NTC Memorandum Circular No.
13-6-2000 (the Billing Circular) and the NTC Memorandum dated
October 6, 2000, with prayer for the issuance of a writ of
preliminary injunction and temporary restraining order at the
Regional Trial Court of Quezon City, Branch 77.
Petitioners Islacom and Piltel alleged, that the NTC has no
jurisdiction to regulate the sale of consumer goods such as the
prepaid call cards since such jurisdiction belongs to the Department
of Trade and Industry under the Consumer Act of the Philippines;
that the Billing Circular is oppressive, confiscatory and violative of
the constitutional prohibition against deprivation of property
without due process of law; that the Circular will result in the
impairment of the viability of the prepaid cellular service by unduly
prolonging the validity and expiration of the prepaid SIM and call
cards; and that the requirements of identification of prepaid card
buyers and call balance announcement are unreasonable. Hence,
they prayed that the Billing Circular be declared null and void ab
initio. Globe Telecom and Smart filed a joint Motion for Leave to
Intervene which was granted by the trial court. On October 27,
2000, the trial court issued a temporary restraining order enjoining
the NTC from implementing Memorandum Circular No. 13-6-2000
and the Memorandum dated October 6, 2000.
In the meantime, respondent NTC and its co-defendants filed a
motion to dismiss the case on the ground of petitioners' failure to
exhaust administrative remedies. Subsequently, the trial court
denied the defendants motion to dismiss. Defendants filed a
motion for reconsideration, which was denied in an Order dated
February 1, 2001.
Respondent NTC thus filed a special civil action for certiorari and
prohibition with the Court of Appeals, which was granted and
annulled the injunction issued by the lower court.
Petitioners' motions for reconsideration were denied in a Resolution
dated January 10, 2002 for lack of merit. Hence, the instant petition
for review filed by Smart and Piltel.
Issues:

1. WON Respondent court erred in holding respondents failed to

exhaust administrative remedy.
2. WON NTC has Jurisdiction over the case.
3. WON the Billing Circular issued by NTC is unconstitutional.
Ruling:
1ST ISSSUE Administrative agencies possess quasi-legislative or
rule-making
powers
and
quasi-judicial
or
administrative
adjudicatory powers. Quasi-legislative or rule-making power is the
power to make rules and regulations which results in delegated
legislation that is within the confines of the granting statute and
the doctrine of non-delegability and separability of powers.
The rules and regulations should be within the scope of the
statutory authority granted by the legislature to the administrative
agency. It is required that the regulation be germane to the objects
and purposes of the law, and be not in contradiction to, but in
conformity with, the standards prescribed by law.17 They must
conform to and be consistent with the provisions of the enabling
statute in order for such rule or regulation to be valid. The
administrative body exercises its quasi-judicial power when it
performs in a judicial manner an act which is essentially of an
executive or administrative nature, where the power to act in such
manner is incidental to or reasonably necessary for the
performance of the executive or administrative duty entrusted to it.
In questioning the validity or constitutionality of a rule or regulation
issued by an administrative agency, a party need not exhaust
administrative remedies before going to court. This principle
applies only where the act of the administrative agency concerned
was performed pursuant to its quasi-judicial function, and not when
the assailed act pertained to its rule-making or quasi-legislative
power.
Even assuming that the principle of exhaustion of administrative
remedies applies in this case, the records reveal that petitioners
sufficiently complied with this requirement. Petitioners were able to
register their protests to the proposed billing guidelines. They
submitted their respective position papers setting forth their
objections and submitting proposed schemes for the billing
circular. After the same was issued, petitioners wrote successive
letters dated July 3, 2000 and July 5, 2000, asking for the
suspension and reconsideration of the so-called Billing Circular. This

was taken by petitioners as a clear denial of the requests contained

in their previous letters, thus prompting them to seek judicial relief.
2ND ISSSUE In like manner, the doctrine of primary jurisdiction
applies only where the administrative agency exercises its quasijudicial or adjudicatory function. The objective of the doctrine of
primary jurisdiction is to guide a court in determining whether it
should refrain from exercising its jurisdiction until after an
administrative agency has determined some question or some
aspect of some question arising in the proceeding before the court.
However, where what is assailed is the validity or constitutionality
of a rule or regulation issued by the administrative agency in the
performance of its quasi-legislative function, the regular courts
have jurisdiction to pass upon the same. The determination of
whether a specific rule or set of rules issued by an administrative
agency contravenes the law or the constitution is within the
jurisdiction of the regular courts.
3RD ISSSUE In the case at bar, the issuance by the NTC of
Memorandum Circular No. 13-6-2000 and its Memorandum dated
October 6, 2000 was pursuant to its quasi-legislative or rule-making
power. As such, petitioners were justified in invoking the judicial
power of the Regional Trial Court to assail the constitutionality and
validity of the said issuances. Hence, the Regional Trial Court has
jurisdiction to hear and decide the case. The Court of Appeals erred
in setting aside the orders of the trial court and in dismissing the
case.
WHEREFORE, in view of the foregoing, the consolidated petitions
are GRANTED. The decision of the Court of Appeals is REVERSED
and SET ASIDE.
Principle Involved: Doctrine of Administrative Exhaustion
B. Delegation of Legislative Power
1. COMPANIA GENERAL DE TABACOS DE FILIPINAS vs. THE
BOARD OF PUBLIC UTILITY COMMISSIONERS, G.R. No. L11216, March 6, 1916
Parties:
Petitioner: COMPANIA GENERAL DE TABACOS DE FILIPINAS
Respondent:
THE
BOARD
OF
PUBLIC
UTILITY
COMMISSIONERS

Ponente: MORELAND, J.
Facts:
COMPANIA GENERAL DE TABACOS DE FILIPINAS is a foreign
corporation organized under the laws of Spain and engaged in
business in the Philippine Islands as a common carrier of
passengers and merchandise by water: On June 7, 1915, the Board
of Public Utility Commissioners issued and caused to be served an
order to show cause why they should not be required to present
detailed annual reports respecting its finances and operations
respecting the vessels owned and operated by it, in the form and
containing the matters indicated by the model attached to the
petition.
They are ordered to present annually on or before March first of
each year a detailed report of finances and operations of such
vessels as are operated by it as a common carrier within the
Philippine Islands, in the form and containing the matters indicated
in the model of annual report which accompanied the order to show
cause herein.
COMPANIA GENERAL DE TABACOS DE FILIPINAS denied the
authority of the board to require the report asked for on the ground
that the provision of Act No. 2307 relied on by said board as
authority for such requirement was, if construed as conferring such
power, invalid as constituting an unlawful attempt on the part of
the Legislature to delegate legislative power to the board. It is
cumbersome and unnecessarily prolix and that the preparation of
the same would entail an immense amount of clerical work."
Issue:
1. Whether or not it is constitutional to require COMPANIA GENERAL
DE TABACOS DE FILIPINAS to pass a detailed report to the Board of
Public Utility Commissioners of the Philippine Islands.
2. Whether the power to require the detailed report is strictly
legislative, or administrative, or merely relates to the execution of
the law.
Ruling:
The section of Act No. 2307 under which the Board of Public Utility
Commissioners relies for its authority, so far as pertinent to the
case at hand, reads as follows:

Sec. 16. The Board shall have power, after hearing, upon
notice, by order in writing, to require every public utility as
herein defined: (e) To furnish annually a detailed report of
finances and operations, in such form and containing such
matters as the Board may from time to time by order
prescribe.
The statute which authorizes a Board of Public Utility
Commissioners to require detailed reports from public utilities,
leaving the nature of the report, the contents thereof, the general
lines which it shall follow, the principle upon which it shall proceed,
indeed, all other matters whatsoever, to the exclusive discretion of
the board, is not expressing its own will or the will of the State with
respect to the public utilities to which it refers.
Such a provision does not declare, or set out, or indicate what
information the State requires, what is valuable to it, what it needs
in order to impose correct and just taxation, supervision or control,
or the facts which the State must have in order to deal justly and
equitably with such public utilities and to require them to deal justly
and equitably with the State. The Legislature seems simply to have
authorized the Board of Public Utility Commissioners to require
what information the board wants. It would seem that the
Legislature, by the provision in question, delegated to the Board of
Public Utility Commissioners all of its powers over a given subjectmatter in a manner almost absolute, and without laying down a
rule or even making a suggestion by which that power is to be
directed, guided or applied.
The true distinction is between the delegation of power to make the
law, which necessarily involves a discretion as to what shall be, and
conferring authority or discretion as to its execution, to be
exercised under and in pursuance of the law. The first cannot be
done; to the latter no valid objection can be made.
The Supreme Court held that there was no delegation of legislative
power, it said:
The Congress may not delegate its purely legislative powers to a
commission, but, having laid down the general rules of action under
which a commission shall proceed, it may require of that
commission the application of such rules to particular situations
and the investigation of facts, with a view to making orders in a
particular matter within the rules laid down by the Congress.
In section 20 (of the Commerce Act), Congress has authorized the
commission to require annual reports. The act itself prescribes in

detail what those reports shall contain. In other words, Congress

has laid down general rules for the guidance of the Commission,
leaving to it merely the carrying out of details in the exercise of the
power so conferred. This, we think, is not a delegation of legislative
authority.
In the case at bar the provision complained of does not law "down
the general rules of action under which the commission shall
proceed." nor does it itself prescribe in detail what those reports
shall contain. Practically everything is left to the judgment and
discretion of the Board of Public Utility Commissioners, which is
unrestrained as to when it shall act, why it shall act, how it shall
act, to what extent it shall act, or what it shall act upon.
The Legislature, by the provision in question, has abdicated its
powers and functions in favor of the Board of Public Utility
Commissioners with respect to the matters therein referred to, and
that such Act is in violation of the Act of Congress of July 1, 1902.
The Legislature, by the provision referred to, has not asked for the
information which the State wants but has authorized and board to
obtain the information which the board wants.
The order appealed from is set aside and the cause is returned to
the Board of Public Utility Commissioners with instructions to
dismiss the proceeding.
2. THE PEOPLE OF THE PHILIPPINE ISLANDS and HONGKONG
& SHANGHAI BANKING CORPORATION vs. JOSE O. VERA,
Judge of the Court of First Instance of Manila, and MARIANO
CU UNJIENG, G.R. No. L-45685, November 16, 1937
Parties:
Petitioners: THE PEOPLE OF THE PHILIPPINE ISLANDS and
HONGKONG & SHANGHAI BANKING CORPORATION
Respondents: JOSE O. VERA, Judge of the Court of First
Instance of Manila, and MARIANO CU UNJIENG
Ponente: LAUREL, J.
Facts:
Cu Unjieng was convicted by the trial court in Manila. He filed for
reconsideration which was elevated to the SC and the SC remanded
the appeal to the lower court for a new trial. While awaiting new
trial, he appealed for probation alleging that the he is innocent of
the crime he was convicted of. Judge Tuason of the Manila CFI

directed the appeal to the Insular Probation Office. The IPO denied
the application. However, Judge Vera upon another request by
petitioner allowed the petition to be set for hearing. The City
Prosecutor countered alleging that Vera has no power to place Cu
Unjieng under probation because it is in violation of Sec. 11 Act No.
4221 which provides that the act of Legislature granting provincial
boards the power to provide a system of probation to convicted
person. Nowhere in the law is stated that the law is applicable to a
city like Manila because it is only indicated therein that only
provinces are covered. And even if Manila is covered by the law it is
unconstitutional because Sec 1 Art 3 of the Constitution provides
equal protection of laws. The said law provides absolute discretion
to provincial boards and this also constitutes undue delegation of
power. Further, the said probation law may be an encroachment of
the power of the executive to provide pardon because providing
probation, in effect, is granting freedom, as in pardon.

BUREAU OF ANIMAL INDUSTRY, REGION IV, ILOILO CITY, G.R.

No. 74457, March 20, 1987

Issue:

Ynot transported six carabaos in a pump boat from Masbate to Iloilo

on January 13, 1984, when they were confiscated by the police
station commander of Barotac Nuevo, Iloilo, for violation of the
above measure. The petitioner sued for recovery, and the Regional
Trial Court of Iloilo City issued a writ of replevin upon his filing of a
supersedeas bond of P12,000.00. After considering the merits of
the case, the court sustained the confiscation of the carabaos and,
since they could no longer be produced, ordered the confiscation of
the bond. The court also declined to rule on the constitutionality of
the executive order, as raise by the petitioner, for lack of authority
and also for its presumed validity. Ynot appealed to the IAC which
upheld the decision of the RTC. Ynot appealed to the SC with the
following contentions:

Whether or not there is undue delegation of power.

Ruling:
The act of granting probation is not the same as pardon. In fact it is
limited and is in a way an imposition of penalty. There is undue
delegation of power because there is no set standard provided by
Congress on how provincial boards must act in carrying out a
system of probation. The provincial boards are given absolute
discretion which is violative of the constitution and the doctrine of
the non delegability of power. Further, it is a violation of equity so
protected by the constitution. The challenged section of Act No.
4221 in section 11 which reads as follows: This Act shall apply only
in those provinces in which the respective provincial boards have
provided for the salary of a probation officer at rates not lower than
those now provided for provincial fiscals. Said probation officer shall
be appointed by the Secretary of Justice and shall be subject to the
direction of the Probation Office. This only means that only
provinces that can provide appropriation for a probation officer may
have a system of probation within their locality. This would mean to
say that convicts in provinces where no probation officer is
instituted may not avail of their right to probation.
3. RESTITUTO YNOT vs. INTERMEDIATE APPELLATE COURT,
THE STATION COMMANDER, INTEGRATED NATIONAL POLICE,
BAROTAC NUEVO, ILOILO and THE REGIONAL DIRECTOR,

Parties:
Petitioner: Restituto Ynot
Respondents: INTERMEDIATE APPELLATE COURT, THE
STATION COMMANDER, INTEGRATED NATIONAL POLICE,
BAROTAC NUEVO, ILOILO and THE REGIONAL DIRECTOR,
BUREAU OF ANIMAL INDUSTRY, REGION IV, ILOILO CITY
Ponente: CRUZ, J.
Facts:
In 1980, President Ferdinand Marcos issued Executive Order No.
626-A prohibiting the transportation and slaughtering of carabaos.

1. EO 626-A is unconstitutional as it authorizes outright confiscation

of the carabao or carabeef being transported across provincial
boundaries;
2. Penalty is invalid because it is imposed without according the
owner a right to be heard before a competent and impartial court
guaranteed by due process;
3. The measure should not have been presumed and so sustained,
as constitutional;
4. There is an improper exercise of legislative power.
Issue:
Whether or not E.O. 626-A is unconstitutional.
Ruling:

Yes. The challenged measure is an invalid exercise of the police

power because the method employed to conserve the carabaos is
not reasonably necessary to the purpose of the law and, worse, is
unduly oppressive. Due process is violated because the owner of
the property confiscated is denied the right to be heard in his
defense and is immediately condemned and punished. The
conferment on the administrative authorities of the power to
adjudge the guilt of the supposed offender is a clear encroachment
on judicial functions and militates against the doctrine of
separation of powers. There is, finally, also an invalid delegation of
legislative powers to the officers mentioned therein who are
granted unlimited discretion in the distribution of the properties
arbitrarily taken.

Principles:
Police power: To justify the State in thus interposing its authority
in behalf of the public, it must appear, first, that the interests of the
public generally, as distinguished from those of a particular class,
require such interference; and second, that the means are
reasonably necessary for the accomplishment of the purpose, and
not unduly oppressive upon individuals.
But while conceding that the amendatory measure has the same
lawful subject as the original executive order, we cannot say with
equal certainty that it complies with the second requirement, viz.,
that there be a lawful method. We note that to strengthen the
original measure, Executive Order No. 626-A imposes an absolute
ban not on the slaughter of the carabaos but on their movement,
providing that "no carabao regardless of age, sex, physical
condition or purpose (sic) and no carabeef shall be transported
from one province to another." The object of the prohibition
escapes us. The reasonable connection between the means
employed and the purpose sought to be achieved by the
questioned measure is missing.
We do not see how the prohibition of the inter-provincial transport
of carabaos can prevent their indiscriminate slaughter, considering
that they can be killed anywhere, with no less difficulty in one
province than in another. Obviously, retaining the carabaos in one
province will not prevent their slaughter there, any more than
moving them to another province will make it easier to kill them

there. As for the carabeef, the prohibition is made to apply to it as

otherwise, so says executive order, it could be easily circumvented
by simply killing the animal. Perhaps so. However, if the movement
of the live animals for the purpose of preventing their slaughter
cannot be prohibited, it should follow that there is no reason either
to prohibit their transfer as, not to be flippant dead meat.
Due process: The executive order defined the prohibition,
convicted the petitioner and immediately imposed punishment,
which was carried out forthright. The measure struck at once and
pounced upon the petitioner without giving him a chance to be
heard, thus denying him the centuries-old guaranty of elementary
fair play. It has already been remarked that there are occasions
when notice and hearing may be validly dispensed with
notwithstanding the usual requirement for these minimum
guarantees of due process. It is also conceded that summary action
may be validly taken in administrative proceedings as procedural
due process is not necessarily judicial only. In the exceptional cases
accepted, however. there is a justification for the omission of the
right to a previous hearing, to wit, the immediacy of the problem
sought to be corrected and the urgency of the need to correct it.
In the case before us, there was no such pressure of time or action
calling for the petitioner's peremptory treatment. The properties
involved were not even inimical per se as to require their instant
destruction. There certainly was no reason why the offense
prohibited by the executive order should not have been proved first
in a court of justice, with the accused being accorded all the rights
safeguarded to him under the Constitution
Encroachment of judicial functions: Executive Order No. 626-A
is penal in nature, the violation thereof should have been
pronounced not by the police only but by a court of justice, which
alone would have had the authority to impose the prescribed
penalty, and only after trial and conviction of the accused.
Invalid delegation of legislative power: We also mark, on top
of all this, the questionable manner of the disposition of the
confiscated property as prescribed in the questioned executive
order. It is there authorized that the seized property shall "be
distributed to charitable institutions and other similar
institutions as the Chairman of the National Meat
Inspection Commission may see fit, in the case of carabeef,
and to deserving farmers through dispersal as the Director
of Animal Industry may see fit, in the case of carabaos." The
phrase "may see fit" is an extremely generous and dangerous

condition, if condition it is. It is laden with perilous opportunities for

partiality and abuse, and even corruption. One searches in vain for
the usual standard and the reasonable guidelines, or better still,
the limitations that the said officers must observe when they make
their distribution. There is none. Their options are apparently
boundless. Who shall be the fortunate beneficiaries of their
generosity and by what criteria shall they be chosen? Only the
officers named can supply the answer, they and they alone may
choose the grantee as they see fit, and in their own exclusive
discretion. Definitely, there is here a "roving commission," a wide
and sweeping authority that is not "canalized within banks that
keep it from overflowing," in short, a clearly profligate and
therefore invalid delegation of legislative powers.
4. EMMANUEL PELAEZ vs. THE AUDITOR GENERAL, G.R. No.
L-23825, December 24, 1965
Parties:
Petitioner: EMMANUEL PELAEZ
Respondent: THE AUDITOR GENERAL
Ponente: CONCEPCION, J.
Facts:
From Sept 04 to Oct 29, 1964, the President (Marcos) issued
executive orders creating 33 municipalities this is purportedly in
pursuant to Sec 68 of the Revised Administrative Code which
provides that the President of the Philippines may by executive
order define the boundary, or boundaries, of any province, subprovince, municipality, [township] municipal district or other
political subdivision, and increase or diminish the territory
comprised therein, may divide any province into one or more
subprovinces. The VP Emmanuel Pelaez and a taxpayer filed a
special civil action to prohibit the auditor general from disbursing
funds to be appropriated for the said municipalities. Pelaez claims
that the EOs are unconstitutional. He said that Sec 68 of the RAC
has been impliedly repealed by Sec 3 of RA 2370 which provides
that barrios may not be created or their boundaries altered nor
their names changed except by Act of Congress or of the
corresponding provincial board upon petition of a majority of the
voters in the areas affected and the recommendation of the
council of the municipality or municipalities in which the proposed
barrio is situated. Pelaez argues, accordingly: If the President,
under this new law, cannot even create a barrio, can he create a
municipality which is composed of several barrios, since barrios are

units of municipalities? The Auditor General countered that only

barrios are barred from being created by the President.
Municipalities are exempt from the bar and that t a municipality
can be created without creating barrios. Existing barrios can just be
placed into the new municipality. This theory overlooks, however,
the main import of Pelaez argument, which is that the statutory
denial of the presidential authority to create a new barrio implies a
negation of the bigger power to create municipalities, each of
which consists of several barrios.
Issue:
Whether or not Congress has delegated the power to create barrios
to the President by virtue of Sec 68 of the RAC.
Ruling:
Although
Congress may delegate to another branch of the
government the power to fill in the details in the execution,
enforcement or administration of a law, it is essential, to forestall a
violation of the principle of separation of powers, that said law: (a)
be complete in itself it must set forth therein the policy to be
executed, carried out or implemented by the delegate and (b)
fix a standard the limits of which are sufficiently determinate or
determinable to which the delegate must conform in the
performance of his functions.
Indeed, without a statutory
declaration of policy, the delegate would, in effect, make or
formulate such policy, which is the essence of every law; and,
without the aforementioned standard, there would be no means to
determine, with reasonable certainty, whether the delegate has
acted within or beyond the scope of his authority.
In the case at bar, the power to create municipalities is eminently
legislative in character not administrative.
5. EASTERN SHIPPING LINES, INC. vs. PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATION (POEA), MINISTER OF
LABOR AND EMPLOYMENT, HEARING OFFICER ABDUL BASAR
and KATHLEEN D. SACO, G.R. No. 76633, October 18, 1988
Parties:
Petitioner: EASTERN SHIPPING LINES, INC.
Respondents:
PHILIPPINE
OVERSEAS
EMPLOYMENT
ADMINISTRATION (POEA), MINISTER OF LABOR AND
EMPLOYMENT, HEARING OFFICER ABDUL BASAR and
KATHLEEN D. SACO

Ponente: CRUZ, J.
Facts:
Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he
was killed in an accident in Tokyo, Japan, March 15, 1985. His widow
sued for damages under Executive Order No. 797 and
Memorandum Circular No. 2 of the POEA. The petitioner, as owner
of the vessel, argued that the complaint was cognizable not by the
POEA but by the Social Security System and should have been filed
against the State Insurance Fund. The POEA nevertheless assumed
jurisdiction and after considering the position papers of the parties
ruled in favor of the complainant. The award consisted of
P180,000.00 as death benefits and P12,000.00 for burial expenses.
The private respondent in this case was awarded the sum of
P192,000.00
by
the
Philippine
Overseas
Employment
Administration (POEA) for the death of her husband. The decision is
challenged by the petitioner on the principal ground that the POEA
had no jurisdiction over the case as the husband was not an
overseas worker.
The petitioner, as owner of the vessel, argued that the complaint
was cognizable not by the POEA but by the Social Security System
and should have been filed against the State Fund Insurance. The
POEA nevertheless assumed jurisdiction and after considering the
position papers of the parties ruled in favour of the complainant.
Issue:
Whether or not the validity of Memorandum Circular No. 2 itself as
violative of the principle of non-delegation of legislative power.
Ruling:
No. Memorandum Circular No. 2 is an administrative regulation. The
model contract prescribed thereby has been applied in a significant
number of the cases without challenge by the employer. The power
of the POEA (and before it the National Seamen Board) in requiring
the model contract is not unlimited as there is a sufficient standard
guiding the delegate in the exercise of the said authority. That
standard is discoverable in the executive order itself which, in
creating the Philippine Overseas Employment Administration,
mandated it to protect the rights of overseas Filipino workers to
"fair and equitable employment practices."

GENERAL RULE: Non-delegation of powers; exception: It is true that

legislative discretion as to the substantive contents of the law
cannot be delegated. What can be delegated is the discretion to
determine how the law may be enforced, not what the law shall be.
The ascertainment of the latter subject is a prerogative of the
legislature. This prerogative cannot be abdicated or surrendered by
the legislature to the delegate.
Two Tests of Valid Delegation of Legislative Power There are two
accepted tests to determine whether or not there is a valid
delegation of legislative power, viz, the completeness test and the
sufficient standard test. Under the first test, the law must be
complete in all its terms and conditions when it leaves the
legislature such that when it reaches the delegate the only thing he
will have to do is to enforce it. Under the sufficient standard test,
there must be adequate guidelines or stations in the law to map
out the boundaries of the delegates authority and prevent the
delegation from running riot. Both tests are intended to prevent a
total transference of legislative authority to the delegate, who is
not allowed to step into the shoes of the legislature and exercise a
power essentially legislative. The delegation of legislative power
has become the rule and its non-delegation the exception.
Rationale for Delegation of Legislative Power:
The reason is the increasing complexity of the task of government
and the growing inability of the legislature to cope directly with the
myriad problems demanding its attention. The growth of society
has ramified its activities and created peculiar and sophisticated
problems that the legislature cannot be expected to reasonably
comprehend. Specialization even in legislation has become
necessary. Too many of the problems attendant upon present-day
undertakings, the legislature may not have the competence to
provide the required direct and efficacious, not tosay, specific
solutions. These solutions may, however, be expected from its
delegates, who are supposed to be experts in the particular fields.
Power of Subordinate Legislation:
The reasons given above for the delegation of legislative powers in
general are particularly applicable to administrative bodies. With
the proliferation of specialized activities and their attendant
peculiar problems, the national legislature has found it more and
more necessary to entrust to administrative agencies the authority
to issue rules to carry out the general provisions of the statute. This
is called the power of subordinate legislation. With this power,
administrative bodies may implement the broad policies laid down
in statute by filling in the details which the Congress may not

have the opportunity or competence to provide. Memorandum

Circular No. 2 is one such administrative regulation. Administrative
agencies are vested with two basic powers, the quasi-legislative
and quasi- judicial. The first enables them to promulgate
implementing rules and regulations, and the second enables them
to interpret and apply such regulations.

painted in front and those in the rear end of the body

thereof. The color required of each reflectors, whether builtin, commercial glass, reflectorized tape or reflectorized paint
placed in the front part of any motor vehicle shall be amber
or yellow and those placed on the sides and in the rear shall
all be red.

6. ROMEO F. EDU, in his capacity as Land Transportation

Commissioner vs. HON. VICENTE G. ERICTA in his capacity
as Judge of the Court of First Instance of Rizal, Br. XVIII,
Quezon City, and TEDDY C. GALO, G.R. No. L-32096, October
24, 1970

Non compliance with the requirements contained in this

Order shall be sufficient cause to refuse registration of the
motor vehicle affected and if already registered, its
registration maybe suspended in pursuance of the
provisions of Section 16 or RA 4136; Provided, however, that
in the case of the violation of Section 1(a) and (b) and
paragraph (8) Section 3 hereof, a fine of not less than ten
nor more than fifty pesos shall be imposed. It is not be lost
sight of that under Republic Act no. 4136, of which the
Reflector Law is an amendment, petitioner, as the Land
Transportation Commissioner, may, with the approval of the
Secretary of Public Works and Communication, issue rules
and regulations for its implementation for as long as they do
not conflict with its provision. It is likewise an express
provision of the above statute that for a violation of any of
its provisions or regulations promulgated pursuant thereto a
fine of not less than P10 nor less than P50 could be
imposed.

Parties:
Petitioner: ROMEO F. EDU, in his capacity as Land
Transportation Commissioner
Respondents: HON. VICENTE G. ERICTA in his capacity as
Judge of the Court of First Instance of Rizal, Br. XVIII, Quezon
City, and TEDDY C. GALO
Ponente: FERNANDO, J.
Facts:
Petitioner Romeo Edu, the Land Transportation Commissioner
issued Administrative Order No. 2, which took effect on April 17,
1990, which provides as follows:
No motor vehicles of whatever style, kind, make, class or
denomination shall be registered if not equipped with
reflectors. Such reflectors shall either be factory built-inreflector commercial glass reflectors, reflection tape or
luminous paint. The luminosity shall have an intensity to be
maintained visible and clean at all times such that if struck
by a beam of light shall be visible 100 meters away at
night. Then came a section on dimensions, placement and
color. As to dimensions the following is provided for: Glass
reflectors- not less than 3 inches in diameter or not less
than 3 inches square; Reflectorized tape- at least 3 inches
wide and 12 inches long. The painted or taped area may be
bigger at the discretion of the vehicle owner. Provision is
then made as to how such reflectors are to be placed,
installed, pasted or painted.
There is the further
requirement that in addition to such reflectors there shall be
installed, pasted or painted four reflectors on each side of
the motor vehicle parallel to those installed, pasted or

Respondent Galo on his behalf and that of other motorist filed on

May 20, 1970 a suit for certiorari and prohibition with preliminary
injunction assailing the validity of the challenged Act as an invalid
exercise of the police power, for being violative of the due process
clause. This he followed on May 28, 1970 with a manifestation
wherein he sought as an alternative remedy that, in the event that
respondent Judge Ericta would hold said statute constitutional,
Administrative Order No. 2 of the Land Transportation
Commissioner, now petitioner, implementing such legislation be
nullified as an undue exercise of legislative power. There was a
hearing on the plea for the issuance of writ of preliminary injunction
held on May 27, 1970 where both parties were duly represented,
but no evidence was presented. The next day, on May 28, 1970,
respondent Judge ordered the issuance of preliminary injunction
directed against the enforcement of such administrative order.
Issue:

WON there has been undue delegation of legislative power which

as a result of such Administrative Order issued in furtherance of the
delegated power is null and void.
Ruling:
It is a fundamental principle flowing from the doctrine of separation
of powers that Congress may not delegate its legislative power to
the two other branches of government, subject to the exception
that local governments may over local affairs participate in its
exercise. What cannot be delegated is the authority under the
Constitution to make laws and to alter and repeal them; the test is
the completeness of the statute in all its terms and provisions when
it leaves the hands of the legislature. To determine whether or not
there is an undue delegation of legislative power the inquiry must
be directed to the scope and definiteness of the measure enacted.
The legislature does not abdicate its functions when it describes
what job must be done, who is to do it, and what is the scope of his
authority. For a complex economy, that may indeed be the only
way in which the legislative process can go forward. A distinction
has rightfully been made between delegation of power to make the
laws which necessarily involves a discretion as to what it shall be,
which constitutionally may not be done, and delegation of authority
or discretion as to its execution to exercised under and in
pursuance of the law, to which no valid objection call be made. The
Constitution is thus not to be regarded as denying the legislature
the necessary resources of flexibility and practicability.
To avoid the taint of unlawful delegation, there must be a standard,
which implies at the very least that the legislature itself determines
matters of principle and lay down fundamental policy. Otherwise,
the charge of complete abdication may be hard to repel. A standard
thus defines legislative policy, marks its limits, its maps out its
boundaries and specifies the public agency to apply it. It indicates
the circumstances under which the legislative command is to be
effected. It is the criterion by which legislative purpose may be
carried out. Thereafter, the executive or administrative office
designated may in pursuance of the above guidelines promulgate
supplemental rules and regulations.
This is to adhere to the recognition given expression by Justice
Laurel in a decision announced not long after the Constitution came
into force and effect that the principle of non-delegation "has been
made to adapt itself the complexities of modern governments,
giving rise to the adoption, within certain limits, of the principle of
"subordinate legislation" not only in the United States and England

but in practically all modern governments." 44 He continued:

"Accordingly, with the growing complexity of modern life, the
multiplication of the subjects of governmental regulation, and the
increased difficulty of administering the laws, there is a constantly
growing tendency toward the delegation of greater powers by the
legislature and toward the approval of the practice by the
courts." 45 Consistency with the conceptual approach requires the
reminder that what is delegated is authority non-legislative in
character, the completeness of the statute when it leaves the
hands of Congress being assumed
WHEREFORE, the writs of certiorari and prohibition prayed for are
granted, the orders of May 28, 1970 of respondent Judge for the
issuance of a writ of preliminary injunction, the writ of preliminary
injunction of June 1, 1970 and his order of June 9, 1970 denying
reconsideration are annulled and set aside. Respondent Judge is
likewise directed to dismiss the petition for certiorari and
prohibition filed by respondent Teddy C. Galo, there being no cause
of action as the Reflector Law and Administrative Order No. 2 of
petitioner have not been shown to be tainted by invalidity. Without
pronouncement as to costs.
7. RODOLFO S. BELTRAN, doing business under the name
and style, OUR LADY OF FATIMA BLOOD BANK, FELY G.
MOSALE, doing business under the name and style,
MOTHER SEATON BLOOD BANK; PEOPLES BLOOD BANK,
INC.; MARIA VICTORIA T. VITO, M.D., doing business under
the name and style, AVENUE BLOOD BANK; JESUS M.
GARCIA, M.D., doing business under the name and style,
HOLY REDEEMER BLOOD BANK, ALBERT L. LAPITAN, doing
business under the name and style, BLUE CROSS BLOOD
TRANSFUSION SERVICES; EDGARDO R. RODAS, M.D., doing
business under the name and style, RECORD BLOOD BANK,
in their individual capacities and for and in behalf of
PHILIPPINE ASSOCIATION OF BLOOD BANKS vs. THE
SECRETARY OF HEALTH, G.R. No. 133640, November 25,
2005
Parties:
Petitioners: RODOLFO S. BELTRAN, FELY G. MOSALE,
PEOPLES BLOOD BANK, INC., MARIA VICTORIA T. VITO, M.D.,
JESUS M. GARCIA, M.D., ALBERT L. LAPITAN, EDGARDO R.
RODAS, M.D.,
Respondent: THE SECRETARY OF HEALTH
Ponente: AZCUNA, J.

Facts:
In January of 1994, the New Tropical Medicine Foundation, with the
assistance of the U.S. Agency for International Development
(USAID) released its final report of a study on the Philippine blood
banking system entitled Project to Evaluate the Safety of the
Philippine Blood Banking System. It was revealed that of the blood
units collected in 1992, 64.4% were supplied by commercial blood
banks, 14.5% by the PNRC, 13.7% by government hospital-based
blood banks, and 7.4% by private hospital-based blood banks;
showing that the Philippines heavily relied on commercial sources
of blood. It was further found, among other things, that blood sold
by persons to blood commercial banks are three times more likely
to have any of the four (4) tested infections or blood transfusion
transmissible diseases, namely, malaria, syphilis, Hepatitis B and
Acquired Immune Deficiency Syndrome(AIDS) than those donated
to PNRC.
Republic Act No. 7719 or the National Blood Services Act of 1994
was then enacted into law on April 2, 1994. The Act seeks to
provide an adequate supply of safe blood by promoting voluntary
blood donation and by regulating blood banks in the country. One
of the provisions of the said act was the phasing out of commercial
blood banks within 2 years from its effectivity.
Petitioners, comprising the majority of the Board of Directors of the
Philippine Association of Blood Banks assail the constitutionality of
RA 7719 on the ground among others that it violates the equal
protection clause for irrationally discriminating against free
standing blood banks in a manner which is not germane to the
purpose of the law.
Issue:
WON R.A. 7719 violates the petitioners right to equal protection of
the law.
Ruling:
No. Class legislation, discriminating against some and favoring
others is prohibited but classification on a reasonable basis and not
made arbitrarily or capriciously is permitted. The classification,
however, to be reasonable: a) must be based on substantial
distinctions which make real differences; b) must be germane to
the purpose of the law; c) must not be limited to existing conditions
only; and d) must apply equally to each member of the class.

We deem the classification to be valid and reasonable for the

following:
One, it was based on substantial distinctions. The former operates
for purely humanitarian reasons and as a medical service while the
latter is motivated by profit.
Also, while the former wholly
encourages voluntary blood donation, the latter treats blood as sale
of commodity.
Two, the classification, and the consequent phase out of
commercial blood banks is germane to the purpose of the law, that
is, to provide the nation with an adequate supply of safe blood by
promoting voluntary blood donation and treating blood transfusion
as a humanitarian or medical service rather than a commodity.
This necessarily involves the phase out of commercial blood banks
based on the fact that they operate as a business enterprise, and
they source their blood supply from paid blood donors who are
considered unsafe compared to voluntary blood donors as shown
by USAID-sponsored study on the Philippine blood banking system.
Three, the legislature intended for the general application of the
law.
Its enactment was not solely to address the peculiar
circumstances of the situation nor was it intended to apply only to
the existing conditions.
Lastly, the law applies equally to all commercial blood banks
without exception.
8. SERGIO I. CARBONILLA, EMILIO Y. LEGASPI IV, and
ADONAIS
Y.
REJUSO
vs.
BOARD
OF
AIRLINES
REPRESENTATIVES (MEMBER AIRLINES: ASIANA AIRLINES,
CATHAY PACIFIC AIRWAYS, CHINA AIRLINES, CEBU PACIFIC
AIRLINES, CHINA SOUTHERN AIRLINES, CONTINENTAL
MICRONESIA AIRLINES, EMIRATES, ETIHAD AIRWAYS, EVA
AIR AIRWAYS, FEDERAL EXPRESS CORPORATION, GULF AIR,
JAPAN AIRLINES, AIR FRANCE-KLM ROYAL DUTCH AIRLINES,
KOREAN AIR, KUWAIT AIRWAYS CORPORATION, LUFTHANSA
GERMAN AIRLINES, MALAYSIA AIRLINES, NORTHWEST
AIRLINES, PHILIPPINE AIRLINES, INC., QANTAS AIRWAYS,
LTD., QATAR AIRLINES, ROYAL BRUNEI AIRLINES, SINGAPORE
AIRLINES, SWISS INTERNATIONAL AIRLINES, LTD., SAUDI
ARABIAN AIRLINES, and THAI INTERNATIONAL AIRWAYS,
G.R. No. 193247, September 14, 2011
Parties:

Petitioners: SERGIO I. CARBONILLA, EMILIO Y. LEGASPI IV,

and ADONAIS Y. REJUSO
Respondents: BOARD OF AIRLINES REPRESENTATIVES
(MEMBER AIRLINES: ASIANA AIRLINES, CATHAY PACIFIC
AIRWAYS, CHINA AIRLINES, CEBU PACIFIC AIRLINES, CHINA
SOUTHERN AIRLINES, CONTINENTAL MICRONESIA AIRLINES,
EMIRATES, ETIHAD AIRWAYS, EVA AIR AIRWAYS, FEDERAL
EXPRESS CORPORATION, GULF AIR, JAPAN AIRLINES, AIR
FRANCE-KLM ROYAL DUTCH AIRLINES, KOREAN AIR, KUWAIT
AIRWAYS CORPORATION, LUFTHANSA GERMAN AIRLINES,
MALAYSIA AIRLINES, NORTHWEST AIRLINES, PHILIPPINE
AIRLINES, INC., QANTAS AIRWAYS, LTD., QATAR AIRLINES,
ROYAL BRUNEI AIRLINES, SINGAPORE AIRLINES, SWISS
INTERNATIONAL AIRLINES, LTD., SAUDI ARABIAN AIRLINES,
and THAI INTERNATIONAL AIRWAYS
Ponente: CARPIO, J.
Facts:
The Bureau of Customs issued Customs Administrative Order No. 12005 (CAO 1-2005) amending CAO 7-92.6 The Department of
Finance approved CAO 1-2005 on 9 February 2006. CAO 7-92 and
CAO 1-2005 were promulgated pursuant to Section 3506 in relation
to Section 608 of the Tariff and Customs Code of the Philippines
(TCCP)Petitioners Office of the President, et al. alleged that prior to
the amendment of CAO 7-92, the BOC created on 23 April 2002 a
committee to review the overtime pay of Customs personnel in
Ninoy Aquino International Airport (NAIA) and to propose its
adjustment from the exchange rate of P25 to US$1 to the then
exchange rate of P55 to US$1. The Office of the President, et al.
alleged that for a period of more than two years from the creation
of the committee, several meetings were conducted with the
agencies concerned, including respondent Board of Airlines
Representatives (BAR), to discuss the proposed rate adjustment
that would be embodied in an Amendatory Customs Administrative
Order. On the other hand, BAR alleged that it learned of the
proposed increase in the overtime rates only sometime in 2004 and
only through unofficial reports.
On 23 August 2004, BAR wrote a letter addressed to Edgardo L. De
Leon, Chief, Bonded Warehouse Division, BOC-NAIA, informing the
latter of its objection to the proposed increase in the overtime
rates. BAR further requested for a meeting to discuss the matter.
BAR wrote the Secretary of Finance on 31 January 2005 and 21
February 2005 reiterating its concerns against the issuance of CAO

1-2005. In a letter dated 3 March 2005, the Acting District Collector

of BOC informed BAR that the Secretary of Finance already
approved CAO 1-2005 on 9 February 2005. As such, the increase in
the overtime rates became effective on 16 March 2005. BAR still
requested for an audience with the Secretary of Finance which was
granted on 12 October 2005. The BOC then sent a letter to BARs
member airlines demanding payment of overtime services to BOC
personnel in compliance with CAO 1-2005. The BARs member
airlines refused and manifested their intention to file a petition with
the Commissioner of Customs and/or the Secretary of Finance to
suspend the implementation of CAO 1-2005. In a letter dated 31
August 2006, Undersecretary Gaudencio A. Mendoza, Jr. (Usec.
Mendoza), Legal and Revenue Operations Group, Department of
Finance informed BAR, through its Chairman Felix J. Cruz (Cruz),
that they find no valid ground to disturb the validity of CAO 12005, much less to suspend its implementation or effectivity and
that its implementation effective 16 March 2005 is legally proper. In
separate letters both dated 4 December 2006, Cruz requested the
Office of the President and the Office of the Executive Secretary to
review the decision of Usec. Mendoza. Cruz manifested the
objection of the International Airlines operating in the Philippines to
CAO 1-2005. On 13 December 2006, Deputy Executive Secretary
Manuel B. Gaite (Deputy Exec. Sec. Gaite) issued an Order requiring
BAR to pay its appeal fee and submit an appeal memorandum
within 15 days from notice. BAR paid the appeal fee and submitted
its appeal memorandum on 19 January 2007. The Court of Appeals
ruled that Section 8, Article IX(B) of the Constitution prohibits an
appointive public officer or employee from receiving additional,
double or indirect compensation, unless specifically authorized by
law. The Court of Appeals ruled that Section 3506 of the TCCP only
authorized payment of additional compensation for overtime work,
and thus, the payment of traveling and meal allowances under CAO
7-92 and CAO 1-2005 are unconstitutional and could not be
enforced against BAR members.
Issue:
Whether the Court of Appeals committed a reversible error in
declaring Section 3506 of the TCCP, CAO 7-92, and CAO 1-2005
unenforceable against BAR.
Ruling:
BARs argument has no merit.

We do not agree with the Court of Appeals in excluding airline

companies, aircraft owners, and operators from the coverage of
Section 3506 of the TCCP. The term other persons served refers to
all other persons served by the BOC employees. Airline companies,
aircraft owners, and operators are among other persons served by
the BOC employees. As pointed out by the OSG, the processing of
embarking and disembarking from aircrafts of passengers, as well
as their baggages and cargoes, forms part of the BOC functions.
BOC employees who serve beyond the regular office hours are
entitled to overtime pay for the services they render. The Court of
Appeals ruled that, applying the principle of ejusdem generis,
airline companies, aircraft owners, and operators are not in the
same category as importers and shippers because an importer
brings goods to the country from a foreign country and pays
custom duties while a shipper is one who ships goods to another;
one who engages the services of a carrier of goods; one who
tenders goods to a carrier for transportation. However, airline
passengers pass through the BOC to declare whether they are
bringing goods that need to be taxed. The passengers cannot leave
the airport of entry without going through the BOC. Clearly, airline
companies, aircraft owners, and operators are among the persons
served by the BOC under Section 3506 of the TCCP. The overtime
pay of BOC employees may be paid by any of the following: (1) all
the taxpayers in the country; (2) the airline passengers; and (3) the
airline companies which are expected to pass on the overtime pay
to passengers. If the overtime pay is taken from all taxpayers, even
those who do not travel abroad will shoulder the payment of the
overtime pay. If the overtime pay is taken directly from the
passengers or from the airline companies, only those who benefit
from the overtime services will pay for the services rendered. Here,
Congress deemed it proper that the payment of overtime services
shall be shouldered by the other persons served by the BOC, that
is, the airline companies. This is a policy decision on the part of
Congress that is within its discretion to determine. Such
determination by Congress is not subject to judicial review. We do
not agree with the Court of Appeals that Section 3506 of the TCCP
failed the completeness and sufficient standard tests. Under the
first test, the law must be complete in all its terms and conditions
when it leaves the legislature such that when it reaches the
delegate, the only thing he will have to do is to enforce it. The
second test requires adequate guidelines or limitations in the law to
determine the boundaries of the delegates authority and prevent
the delegation from running riot. Contrary to the ruling of the Court
of Appeals, Section 3506 of the TCCP complied with these
requirements. The law is complete in itself that it leaves nothing
more for the BOC to do: it gives authority to the Collector to assign

customs employees to do overtime work; the Commissioner of

Customs fixes the rates; and it provides that the payments shall be
made by the importers, shippers or other persons served. Section
3506 also fixed the standard to be followed by the Commissioner of
Customs when it provides that the rates shall not be less than that
prescribed by law to be paid to employees of private enterprise.
Contrary to the ruling of the Court of Appeals, BOC employees
rendering overtime services are not receiving double compensation
for the overtime pay, travel and meal allowances provided for
under CAO 7-92 and CAO 1-2005. Section 3506 provides that the
rates shall not be less than that prescribed by law to be paid to
employees of private enterprise. The overtime pay, travel and meal
allowances are payment for additional work rendered after regular
office hours and do not constitute double compensation prohibited
under Section 8, Article IX(B) of the 1987 Constitution as they are in
fact authorized by law or Section 3506 of the TCCP. BAR raises the
alleged failure of BOC to publish the required notice of public
hearing and to conduct public hearings to give all parties the
opportunity to be heard prior to the issuance of CAO 1-2005 as
required under Section 9(2), Chapter I, Book VII of the
Administrative Code of the Philippines. Section 9(2) provides:
Sec. 9. Public Participation. - (1) If not otherwise required by law, an
agency shall, as far as practicable, publish or circulate notices of
proposed rules and afford interested parties the opportunity to
submit their views prior to the adoption of any rule. (2) In the fixing
of rates, no rule or final order shall be valid unless the proposed
rates shall have been published in a newspaper of general
circulation at least 2 weeks before the first hearing thereon.(3) In
cases of opposition, the rules on contested cases shall be observed.
The BOC created a committee to re-evaluate the proposed increase
in the rate of overtime pay and for two years, several meetings
were conducted with the agencies concerned to discuss the
proposal. BAR and the Airline Operators Council participated in
these meetings and discussions.
Hence, BAR cannot claim that it was denied due process in the
imposition of the increase of the overtime rate. CAO 1-2005 was
published in the Manila Standard, a newspaper of general
circulation in the Philippines on 18 February 2005 and while it was
supposed to take effect on 5 March 2005, or 15 days after its
publication, the BOC-NAIA still deferred BARs compliance until 16
March 2005.

WHEREFORE, we DENY the petition in G.R. No. 193247. We GRANT

the petition in G.R. No. 194276 and SET ASIDE the 9 July 2009
Decision and 26 October 2010 Resolution of the Court of Appeals in
CA-G.R. SP No. 103250. Petitioner Bureau of Customs is DIRECTED
to implement CAO 1-2005 immediately.
C. Kinds of Administrative Rules and Regulations
1. BPI LEASING CORPORATION vs. THE HONORABLE COURT
OF APPEALS, COURT OF TAX APPEAL AND COMMISSIONER
OF INTERNAL REVENUE, G.R. No. 127624, November 18,
2003
Parties:
Petitioner: BPI LEASING CORPORATION
Respondents: THE HONORABLE COURT OF APPEALS,
COURT OF TAX APPEAL AND COMMISSIONER OF INTERNAL
REVENUE
Ponente: AZCUNA, J.

Facts:
For the calendar year 1986, BPI Leasing Corporation, Inc. (BLC) paid
the Commissioner of Internal Revenue (CIR) a total of
P1,139,041.49 representing 4% "contractors percentage tax" then
imposed by Section 205 of the National Internal Revenue Code
(NIRC), based on its gross rentals from equipment leasing for the
said year amounting to P27,783,725.42.
On November 10, 1986, the CIR issued RR 19-86. Section 6.2
thereof provided that finance and leasing companies registered
under Republic Act 5980 shall be subject to gross receipt tax of 5%3%-1% on actual income earned. This means that companies
registered under Republic Act 5980, such as BLC, are not liable for
"contractors percentage tax" under Section 205 but are, instead,
subject to "gross receipts tax" under Section 260 (now Section 122)
of the NIRC. Since BLC had earlier paid the aforementioned
"contractors percentage tax," it re-computed its tax liabilities
under the "gross receipts tax" and arrived at the amount of
P361,924.44. BLC filed a claim for a refund with the CIR for the
amount of P777,117.05, representing the difference between the

P1,139,041.49 it had paid as "contractors percentage tax" and

P361,924.44 it should have paid for "gross receipts tax."
The CTA dismissed the petition and denied BLCs claim of refund
and held that RR 19-86, may only be applied prospectively such
that it only covers all leases written on or after January 1, 1987.
The CTA ruled that, since BLCs rental income was all received prior
to 1986, it follows that this was derived from lease transactions
prior to January 1, 1987, and hence, not covered by the RR.
A motion for reconsideration of the CTAs decision was filed, but
was denied. BLC then appealed the case to the Court of Appeals.
BLC submits that the Court of Appeals and the CTA erred in not
ruling that RR 19-86 may be applied retroactively so as to allow
BLCs claim for a refund of P777,117.05.
Respondents, on the other hand, maintain that the provision on the
date of effectivity of RR 19-86 is clear and unequivocal, leaving no
room for interpretation on its prospective application.
Issues:
1. WON RR 19-86 is legislative or interpretative in nature.
2. WON RR 19-86 is prospective or retroactive in nature.
3. WON BPI failed to meet the quantum of evidence required in
refund cases.
RULE:
1ST ISSUE BLC attempts to convince the Court that RR 19-86 is
legislative rather than interpretative in character and hence, should
retroact to the date of effectivity of the law it seeks to interpret. A
legislative rule is in the matter of subordinate legislation, designed
to implement a primary legislation by providing the details thereof.
An interpretative rule, on the other hand, is designed to provide
guidelines to the law which the administrative agency is in charge
of enforcing. The Court finds the questioned RR to be legislative in
nature. Section 1 of RR 19-86 plainly states that it was promulgated
pursuant to Section 277 of the NIRC (now Section 244), an express
grant of authority to the Secretary of Finance to promulgate all
needful rules and regulations for the effective enforcement of the
provisions of the NIRC. Verily, it cannot be disputed that RR 19-86
was issued pursuant to the rule-making power of the Secretary of
Finance, thus making it legislative, and not interpretative as alleged
by BLC.

BLC further posits that, it is invalid for want of due process as no

prior notice, publication and public hearing attended the issuance
thereof. To support its view, BLC cited CIR v. Fortune Tobacco, et
al., wherein the Court nullified a revenue memorandum circular
which reclassified certain cigarettes and subjected them to a higher
tax rate, holding it invalid for lack of notice, publication and public
hearing. In this case, RR 19-86 would be beneficial to the taxpayers
as they are subjected to lesser taxes. Petitioner, in fact, is invoking
RR 19-86 as the very basis of its claim for refund. If it were invalid,
then petitioner all the more has no right to a refund.
2ND ISSUE The Court now resolves whether its application should
be prospective or retroactive. Statutes, including administrative
rules and regulations, operate prospectively only, unless the
legislative intent to the contrary is manifest by express terms or by
necessary implication. In the present case, there is no indication
that the RR may operate retroactively. Furthermore, there is an
express provision stating that it "shall take effect on January 1,
1987," and that it "shall be applicable to all leases written on or
after the said date." Thus, BLC is not in a position to invoke the
provisions of RR 19-86 for lease rentals it received prior to January
1, 1987.
3RD ISSUE Tax refunds are in the nature of tax exemptions. As
such, these are to be strictly construed against the person or entity
claiming the exemption. The burden of proof is upon him who
claims the exemption and he must be able to justify his claim by
the clearest grant under Constitutional or statutory law, and he
cannot be permitted to rely upon vague implications. Nothing that
BLC has raised justifies a tax refund.
WHEREFORE, the petition for review is hereby DENIED, and the
assailed decision and resolution of the Court of Appeals
are AFFIRMED. No pronouncement as to costs. SO ORDERED.
Principles involved: Legislative or Interpretative nature of
Statute; Prospective or Retroactive effect of Ordinances
2. COMMISSIONER OF INTERNAL REVENUE vs. HON. COURT
OF APPEALS, HON. COURT OF TAX APPEALS and FORTUNE
TOBACCO CORPORATION, (Bellosillos Separate Opinion),
G.R. No. 119761 August 29, 1996
Parties:
Petitioner: COMMISSIONER OF INTERNAL REVENUE

Respondents: HON. COURT OF APPEALS, HON. COURT OF

TAX APPEALS and FORTUNE TOBACCO CORPORATION
Ponente: VITUG, J.
Facts:
The Commissioner of Internal Revenue ("CIR") disputes the
decision, dated 31 March 1995, of respondent Court of Appeals 1
affirming the 10th August 1994 decision and the 11th October 1994
resolution of the Court of Tax Appeals 2 ("CTA") in C.T.A. Case No.
5015, entitled "Fortune Tobacco Corporation vs. Liwayway VinzonsChato in her capacity as Commissioner of Internal Revenue.
Fortune Tobacco Corporation ("Fortune Tobacco") is engaged in the
manufacture of different brands of cigarettes.
On various dates, the Philippine Patent Office issued to the
corporation separate certificates of trademark registration over
"Champion," "Hope," and "More" cigarettes. In a letter, dated 06
January 1987, of then Commissioner of Internal Revenue
Bienvenido A. Tan, Jr., to Deputy Minister Ramon Diaz of the
Presidential Commission on Good Government, "the initial position
of the Commission was to classify 'Champion,' 'Hope,' and 'More' as
foreign brands since they were listed in the World Tobacco Directory
as belonging to foreign companies. However, Fortune Tobacco
changed the names of 'Hope' to 'Hope Luxury' and 'More' to
'Premium More,' thereby removing the said brands from the foreign
brand category. Proof was also submitted to the Bureau (of Internal
Revenue ['BIR']) that 'Champion' was an original Fortune Tobacco
Corporation register and therefore a local brand.
A bill, which later became Republic Act ("RA") No. 7654, 6 was
enacted, on 10 June 1993, by the legislature and signed into law,
on 14 June 1993, by the President of the Philippines. The new law
became effective on 03 July 1993. It amended Section 142(c)(1) of
the National Internal Revenue Code ("NIRC"):
(1) On locally manufactured cigarettes which are currently
classified and taxed at fifty-five percent (55%) or the exportation of
which is not authorized by contract or otherwise, fifty-five (55%)
provided that the minimum tax shall not be less than Five Pesos
(P5.00) per pack.
(2) On other locally manufactured cigarettes, forty-five percent
(45%) provided that the minimum tax shall not be less than Three
Pesos (P3.00) per pack.

About a month after the enactment and two (2) days before the
effectivity of RA 7654, Revenue Memorandum Circular No. 37-93
("RMC 37-93"), was issued by the BIR.
Under the foregoing, the test for imposition of the 55% ad valorem
tax on cigarettes is that the locally manufactured cigarettes bear a
foreign brand regardless of whether or not the right to use or title
to the foreign brand was sold or transferred by its owner to the
local manufacturer. The brand must be originally owned by a
foreign manufacturer or producer. If ownership of the cigarette
brand is, however, not definitely determinable, ". . . the listing of
brands manufactured in foreign countries appearing in the current
World Tobacco Directory shall govern. . . ."
In view of the foregoing, the aforesaid brands of cigarettes, viz:
"HOPE," "MORE" and "CHAMPION" being manufactured by Fortune
Tobacco Corporation are hereby considered locally manufactured
cigarettes bearing a foreign brand subject to the 55% ad valorem
tax on cigarettes.
On 02 July 1993, at about 17:50 hours, BIR Deputy Commissioner
Victor A. Deoferio, Jr., sent via telefax a copy of RMC 37-93 to
Fortune Tobacco but it was addressed to no one in particular. On 15
July 1993, Fortune Tobacco received, by ordinary mail, a certified
xerox copy of RMC 37-93.
In a letter, dated 19 July 1993, addressed to the appellate division
of the BIR, Fortune Tobacco requested for a review, reconsideration
and recall of RMC 37-93. The request was denied on 29 July 1993.
The following day, or on 30 July 1993, the CIR assessed Fortune
Tobacco for ad valorem tax deficiency amounting to P9,598,334.00.
On 10 August 1994, the CTA upheld the position of Fortune Tobacco
and adjudged:
WHEREFORE,
Revenue
Memorandum
Circular
No.
37-93
reclassifying the brands of cigarettes, viz: "HOPE," "MORE" and
"CHAMPION" being manufactured by Fortune Tobacco Corporation
as locally manufactured cigarettes bearing a foreign brand subject
to the 55% ad valorem tax on cigarettes is found to be defective,
invalid and unenforceable, such that when R.A. No. 7654 took effect
on July 3, 1993, the brands in question were not CURRENTLY
CLASSIFIED AND TAXED at 55% pursuant to Section 1142(c)(1) of
the Tax Code, as amended by R.A. No. 7654 and were therefore still
classified as other locally manufactured cigarettes and taxed at
45% or 20% as the case may be.

CA affirmed CTA decision.

Issue:
Whether or not BIR RMC 37-93 is valid.
Ruling:
The Court must sustain both the appellate court and the tax court.
Petitioner stresses on the wide and ample authority of the BIR in
the issuance of rulings for the effective implementation of the
provisions of the National Internal Revenue Code. Let it be made
clear that such authority of the Commissioner is not here doubted.
Like any other government agency, however, the CIR may not
disregard legal requirements or applicable principles in the exercise
of its quasi-legislative powers.
It should be understandable that when an administrative rule is
merely interpretative in nature, its applicability needs nothing
further than its bare issuance for it gives no real consequence more
than what the law itself has already prescribed. When, upon the
other hand, the administrative rule goes beyond merely providing
for the means that can facilitate or render least cumbersome the
implementation of the law but substantially adds to or increases
the burden of those governed, it behooves the agency to accord at
least to those directly affected a chance to be heard, and thereafter
to be duly informed, before that new issuance is given the force
and effect of law.
A reading of RMC 37-93, particularly considering the circumstances
under which it has been issued, convinces us that the circular
cannot be viewed simply as a corrective measure (revoking in the
process the previous holdings of past Commissioners) or merely as
construing Section 142(c)(1) of the NIRC, as amended, but has, in
fact and most importantly, been made in order to place "Hope
Luxury," "Premium More" and "Champion" within the classification
of locally manufactured cigarettes bearing foreign brands and to
thereby have them covered by RA 7654. Specifically, the new law
would have its amendatory provisions applied to locally
manufactured cigarettes which at the time of its effectivity were
not so classified as bearing foreign brands. Prior to the issuance of
the questioned circular, "Hope Luxury," "Premium More," and
"Champion" cigarettes were in the category of locally manufactured

cigarettes not bearing foreign brand subject to 45% ad valorem tax.

Hence, without RMC 37-93, the enactment of RA 7654, would have
had no new tax rate consequence on private respondent's
products. Evidently, in order to place "Hope Luxury," "Premium
More," and "Champion"cigarettes within the scope of the
amendatory law and subject them to an increased tax rate, the now
disputed RMC 37-93 had to be issued. In so doing, the BIR not
simply intrepreted the law; verily, it legislated under its quasilegislative authority. The due observance of the requirements of
notice, of hearing, and of publication should not have been then
ignored.
D. Requisites for Validity
1. HON. EXECUTIVE SECRETARY, HON. SECRETARY OF THE
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS
(DOTC),
COMMISSIONER
OF
CUSTOMS,
ASSISTANT
SECRETARY,
LAND
TRANSPORTATION
OFFICE
(LTO),
COLLECTOR OF CUSTOMS, SUBIC BAY FREE PORT ZONE, AND
CHIEF OF LTO, SUBIC BAY FREE PORT ZONE vs. SOUTHWING
HEAVY INDUSTRIES, INC., represented by its President JOSE
T. DIZON, UNITED AUCTIONEERS, INC., represented by its
President
DOMINIC
SYTIN,
and
MICROVAN,
INC.,
represented by its President MARIANO C. SONON, G.R. No.
164171, February 20, 2006
Parties:
Petitioners:
HON.
EXECUTIVE
SECRETARY,
HON.
SECRETARY OF THE DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS (DOTC), COMMISSIONER OF CUSTOMS,
ASSISTANT SECRETARY, LAND TRANSPORTATION OFFICE
(LTO), COLLECTOR OF CUSTOMS, SUBIC BAY FREE PORT
ZONE, AND CHIEF OF LTO, SUBIC BAY FREE PORT ZONE
Respondents: SOUTHWING HEAVY INDUSTRIES, INC.,
represented by its President JOSE T. DIZON, UNITED
AUCTIONEERS, INC., represented by its President DOMINIC
SYTIN, and MICROVAN, INC., represented by its President
MARIANO C. SONON
Ponente: YNARES-SANTIAGO, J.
Facts:
On December 12, 2002, President Gloria Macapagal-Arroyo, through
Executive Secretary Alberto G. Romulo, issued EO 156, entitled
"Providing for a comprehensive industrial policy and directions for

the motor vehicle development program and its implementing

guidelines." The challenged provision states:
3.1 The importation into the country, inclusive of the
Freeport, of all types of used motor vehicles is prohibited,
except for the following: (See full text case.)
Consequently, three actions for declaratory relief were filed by
Southwing Heavy Industries, Inc., Subic Integrated Macro Ventures
Corp. and Motor Vehicle Importers Association of Subic Bay
Freeport, Inc. praying that judgment be rendered declaring Article
2, Section 3.1 of EO 156 unconstitutional and illegal.
The RTC rendered Summary Judgment declaring that Article 2,
Section 3.1 of EO 156 constitutes unlawful usurpation of legislative
power vested by the Constitution with the Congress and that the
proviso is contrary to the mandate of Republic Act 7227 or the
Bases Conversion and Development Act of 1992 which allows the
free flow of goods and capital within the Freeport.
The petitioner appealed in the CA but was denied on the ground of
lack of statutory basis for the President to issue the same. It held
that the prohibition on the importation of use of motor vehicles is
an exercise of police power vested on the legislature and absent
any enabling law, the exercise thereof by the President through an
executive issuance is void.
Issue:
WON Article 2, Section 3.1 of EO 156 is a valid exercise of the
Presidents quasi-legislative power.
Ruling:
YES. SC ruled that Police power is inherent in a government to
enact laws, within constitutional limits, to promote the order,
safety, health, morals, and general welfare of society. It is lodged
primarily with the legislature. By virtue of a valid delegation of
legislative power, it may also be exercised by the President and
administrative boards, as well as the lawmaking bodies on all
municipal levels, including the barangay. Such delegation confers
upon the President quasi-legislative power which may be defined as
the authority delegated by the law-making body to the
administrative body to adopt rules and regulations intended to
carry out the provisions of the law and implement legislative policy.

To be valid, an administrative issuance, such as an executive order,

must comply with the following requisites:
(1) Its promulgation must be authorized by the legislature;
(2) It must be promulgated in accordance with the prescribed
procedure;
(3) It must be within the scope of the authority given by the
legislature; and
(4) It must be reasonable.
Contrary to the conclusion of the Court of Appeals, EO 156 actually
satisfied the first requisite of a valid administrative order. It has
both constitutional and statutory bases.
Anent the second requisite, that is, that the order must be issued or
promulgated in accordance with the prescribed procedure, it is
necessary that the nature of the administrative issuance is properly
determined. As in the enactment of laws, the general rule is that,
the promulgation of administrative issuances requires previous
notice and hearing, the only exception being where the legislature
itself requires it and mandates that the regulation shall be based on
certain facts as determined at an appropriate investigation.23 This
exception pertains to the issuance of legislative rules as
distinguished from interpretative rules which give no real
consequence more than what the law itself has already
prescribed;24 and are designed merely to provide guidelines to the
law which the administrative agency is in charge of enforcing.25 A
legislative rule, on the other hand, is in the nature of subordinate
legislation, crafted to implement a primary legislation.
In the instant case, EO 156 is obviously a legislative rule as it seeks
to implement or execute primary legislative enactments intended
to protect the domestic industry by imposing a ban on the
importation of a specified product not previously subject to such
prohibition.

is the domestic industry. EO 156, however, exceeded the scope of

its application by extending the prohibition on the importation of
used cars to the Freeport, which RA 7227, considers to some
extent, a foreign territory. The domestic industry which the EO
seeks to protect is actually the "customs territory" which is defined
under the Rules and Regulations Implementing RA 7227, as follows:
"the portion of the Philippines outside the Subic Bay Freeport where
the Tariff and Customs Code of the Philippines and other national
tariff and customs laws are in force and effect."
The prohibition is an invalid modification of RA 7227. Indeed, when
the application of an administrative issuance modifies existing laws
or exceeds the intended scope, as in the instant case, the issuance
becomes void, not only for being ultra vires, but also for being
unreasonable.
This brings us to the fourth requisite. It is an axiom in
administrative law that administrative authorities should not act
arbitrarily and capriciously in the issuance of rules and regulations.
To be valid, such rules and regulations must be reasonable and
fairly adapted to secure the end in view. If shown to bear no
reasonable relation to the purposes for which they were authorized
to be issued, then they must be held to be invalid.
There is no doubt that the issuance of the ban to protect the
domestic industry is a reasonable exercise of police power. The
deterioration of the local motor manufacturing firms due to the
influx of imported used motor vehicles is an urgent national
concern that needs to be swiftly addressed by the President. In the
exercise of delegated police power, the executive can therefore
validly proscribe the importation of these vehicles.

Taking our bearings from the foregoing discussions, we hold that

the importation ban runs afoul the third requisite for a valid
administrative order. To be valid, an administrative issuance must
not be ultra vires or beyond the limits of the authority conferred. It
must not supplant or modify the Constitution, its enabling statute
and other existing laws, for such is the sole function of the
legislature which the other branches of the government cannot
usurp.

The problem, however, lies with respect to the application of the

importation ban to the Freeport. The Court finds no logic in the all
encompassing application of the assailed provision to the Freeport
which is outside the customs territory. As long as the used motor
vehicles do not enter the customs territory, the injury or harm
sought to be prevented or remedied will not arise. The application
of the law should be consistent with the purpose of and reason for
the law. Ratione cessat lex, et cessat lex. When the reason for the
law ceases, the law ceases. It is not the letter alone but the spirit of
the law also that gives it life.

In the instant case, the subject matter of the laws authorizing the
President to regulate or forbid importation of used motor vehicles,

In sum, the Court finds that Article 2, Section 3.1 of EO 156 is void
insofar as it is made applicable to the presently secured fenced-in

former Subic Naval Base area. Pursuant to the separability clause of

EO 156, Section 3.1 is declared valid insofar as it applies to the
customs territory or the Philippine territory outside the presently
secured fenced-in former Subic Naval Base area, used motor
vehicles that come into the Philippine territory via the secured
fenced-in former Subic Naval Base area may be stored, used or
traded therein, or exported out of the Philippine territory, but they
cannot be imported into the Philippine territory outside of the
secured fenced-in former Subic Naval Base area.
2. WILLIAM C. DAGAN, CARLOS H. REYES, NARCISO
MORALES, BONIFACIO MANTILLA, CESAR AZURIN, WEITONG
LIM, MA. TERESA TRINIDAD, MA. CARMELITA FLORENTINO
vs. PHILIPPINE RACING COMMISSION, MANILA JOCKEY CLUB,
INC., and PHILIPPINE RACING CLUB, INC., G.R. No. 175220,
February 12, 2009
Parties:
Petitioners: WILLIAM C. DAGAN, CARLOS H. REYES,
NARCISO MORALES, BONIFACIO MANTILLA, CESAR AZURIN,
WEITONG LIM, MA. TERESA TRINIDAD, MA. CARMELITA
FLORENTINO
Respondents: PHILIPPINE RACING COMMISSION, MANILA
JOCKEY CLUB, INC., and PHILIPPINE RACING CLUB, INC.
Ponente: TINGA, J.
Facts:
PHILRACOM issued a directive requiring MJCI and PRCI to come up
with their Clubs House Rule to address the Equine Infectious
Anemia (EIA) problem and to rid their facilities of horses infected it.
Said directive was issued pursuant to Administrative Order No. 55
by the Department of Agriculture declaring it unlawful for any
person, firm or corporation to ship, drive, or transport horses from
any locality or place except when accompanied by a certificate
issued by the authority of the Director of the Bureau of Animal
Industry (BAI). Thus, MJCI and PRCI ordered the owners of
racehorses stable in their establishments to submit the horses to
blood sampling and administration of the Coggins Test to determine
if they are infected. Subsequently, Philracom issued copies of the
guidelines for the monitoring and eradication of EIA. Despite
resistance from petitioners, the blood testing proceeded. The
horses, whose owners refused to comply were banned from the
races, were removed from the actual day of race, prohibited from
renewing their licenses or evicted from their stables.

Issue:
Whether or not PHILRACOM had unconstitutionally delegated its
rule-making power to PRCI and MJCI in issuing the directive for
them to come up with club rules.
Ruling:
No. PETITION is DISMISSED. The court finds no grave abuse of
discretion on the part of Philracom in issuing the contested
guidelines and on the part MJCI and PRCI in complying with
Philracoms directive.
The validity of an administrative issuance, such as the assailed
guidelines, hinges on compliance with the following requisites:
1. Its promulgation must be authorized by the legislature;
2. It must be promulgated in accordance with the prescribed
procedure;
3. It must be within the scope of the authority given by the
legislature;
4. It must be reasonable.
All the prescribed requisites are met as regards the questioned
issuances. Philracoms authority is drawn from P.D. No. 420. The
delegation made in the presidential decree is valid. Philracom did
not exceed its authority. And the issuances are fair and reasonable.
The rule is that what has been delegated cannot be delegated, or
as expressed in the Latin maxim: potestas delegate non delegare
potest. This rule is based upon the ethical principle that such
delegated power constitutes not only a right but a duty to be
performed by the delegate by the instrumentality of his own
judgment acting immediately upon the matter of legislation and not
through the intervening mind of another. This rule however admits
of recognized exceptions such as the grant of rule-making power to
administrative agencies. They have been granted by Congress with
the authority to issue rules to regulate the implementation of a law
entrusted to them. Delegated rule-making has become a practical
necessity in modern governance due to the increasing complexity
and variety of public functions.
However, in every case of permissible delegation, there must be a
showing that the delegation itself is valid. It is valid only if the law
(a) is complete in itself, setting forth therein the policy to be
executed, carried out, or implemented by the delegate; and (b)

fixes a standardthe limits of which are sufficiently determinate

and determinableto which the delegate must conform in the
performance of his functions. A sufficient standard is one which
defines legislative policy, marks its limits, maps out its boundaries
and specifies the public agency to apply it. It indicates the
circumstances under which the legislative command is to be
effected.
Philracom was created for the purpose of carrying out the declared
policy in Section 1 which is "to promote and direct the accelerated
development and continued growth of horse racing not only in
pursuance of the sports development program but also in order to
insure the full exploitation of the sport as a source of revenue and
employment." Furthermore, Philracom was granted exclusive
jurisdiction and control over every aspect of the conduct of horse
racing, including the framing and scheduling of races, the
construction and safety of race tracks, and the security of racing.
P.D. No. 420 is already complete in itself.
Section 9 of the law fixes the standards and limitations to which
Philracom must conform in the performance of its functions.
Clearly, there is a proper legislative delegation of rule-making
power to Philracom. Clearly too, for its part Philracom has exercised
its rule-making power in a proper and reasonable manner. More
specifically, its discretion to rid the facilities of MJCI and PRCI of
horses afflicted with EIA is aimed at preserving the security and
integrity of horse races
As to the supposed delegation by Philracom of its rule-making
powers to MJCI and PRCI, there is no delegation of power to speak
of between Philracom, as the delegator and MJCI and PRCI as
delegates. The Philracom directive is merely instructive in
character. Philracom had instructed PRCI and MJCI to "immediately
come up with Clubs House Rule to address the problem and rid
their facilities of horses infected with EIA." PRCI and MJCI followedup when they ordered the racehorse owners to submit blood
samples and subject their race horses to blood testing. Compliance
with the Philracoms directive is part of the mandate of PRCI and
MJCI under Sections 1 of R.A. No. 7953 and Sections 1 and 2 of
8407.
As correctly proferred by MJCI, its duty is not derived from the
delegated authority of Philracom but arises from the franchise
granted to them by Congress allowing MJCI "to do and carry out all
such acts, deeds and things as may be necessary to give effect to
the foregoing."As justified by PRCI, "obeying the terms of the

franchise and abiding by whatever rules enacted by Philracom is its

duty.
As to the second requisite, petitioners raise some infirmities
relating to Philracoms guidelines. They question the supposed
belated issuance of the guidelines, that is, only after the collection
of blood samples for the Coggins Test was ordered. While it is
conceded that the guidelines were issued a month after Philracoms
directive, this circumstance does not render the directive nor the
guidelines void. The directives validity and effectivity are not
dependent on any supplemental guidelines. Philracom has every
right to issue directives to MJCI and PRCI with respect to the
conduct of horse racing, with or without implementing guidelines.
As a rule, the issuance of rules and regulations in the exercise of an
administrative agency of its quasi-legislative power does not
require notice and hearing. In Abella, Jr. v. Civil Service Commission,
this Court had the occasion to rule that prior notice and hearing are
not essential to the validity of rules or regulations issued in the
exercise of quasi-legislative powers since there is no determination
of past events or facts that have to be established or ascertained.
The third requisite for the validity of an administrative issuance is
that it must be within the limits of the powers granted to it. The
administrative body may not make rules and regulations which are
inconsistent with the provisions of the Constitution or a statute,
particularly the statute it is administering or which created it, or
which are in derogation of, or defeat, the purpose of a statute.
The assailed guidelines prescribe the procedure for monitoring and
eradicating EIA. These guidelines are in accord with Philracoms
mandate under the law to regulate the conduct of horse racing in
the country.
Anent the fourth requisite, the assailed guidelines do not appear to
be unreasonable or discriminatory. In fact, all horses stabled at the
MJCI and PRCIs premises underwent the same procedure. The
guidelines implemented were undoubtedly reasonable as they bear
a reasonable relation to the purpose sought to be accomplished,
i.e., the complete riddance of horses infected with EIA.
It also appears from the records that MJCI properly notified the
racehorse owners before the test was conducted. Those who failed
to comply were repeatedly warned of certain consequences and
sanctions.

Furthermore, extant from the records are circumstances which

allow respondents to determine from time to time the eligibility of
horses as race entries. The lease contract executed between
petitioner and MJC contains a proviso reserving the right of the
lessor, MJCI in this case, the right to determine whether a particular
horse is a qualified horse. In addition, Philracoms rules and
regulations on horse racing provide that horses must be free from
any contagious disease or illness in order to be eligible as race
entries.

unappealable authority to pass upon the issues of whether a river

or stream is public and navigable, whether a dam encroaches upon
such waters and is constitutive as a public nuisance, and whether
the law applies to the state of facts, thereby Constituting an alleged
unlawful delegation of judicial power to the Secretary of Public
Works and Communications.
Issue:
Whether or not there is an unlawful delegation of judicial power.
Ruling:

E. Fact-finding and Rate-Fixing

1. PRIMITIVO LOVINA, and NELLY MONTILLA vs. HON.
FLORENCIO MORENO, as Secretary of Public Works and
Communications, and BENJAMIN YONZON, G.R. No. L-17821,
November 29, 1963
Parties:
Petitioners: PRIMITIVO LOVINA, and NELLY MONTILLA
Respondents: HON. FLORENCIO MORENO, as Secretary of
Public Works and Communications, and BENJAMIN YONZON
Ponente: REYES, J.B.L., J.
Facts:
Numerous residents of Macabebe, Pampanga complained that
appellees had blocked the "Sapang Bulati", a navigable river in the
same municipality and asked that the obstructions be ordered
removed, under the provisions of Republic Act No. 2056. After
notice and hearing to the parties, the said Secretary of Public Works
and Communications found the constructions to be a public
nuisance in navigable waters, and ordered the land owners,
spouses Lovina, to remove five (5) closures of Sapang Bulati. After
receipt of the decision, the appellees filed a petition in CFI of Manila
to restrain the Secretary from enforcing his decision. The trial court,
after due hearing, granted a permanent injunction. It held that
Republic Act No. 2056 is unconstitutional and that Sapang Bulati is
not a navigable river but a private stream.
The appellees contention is that Republic Act No. 2056 is
unconstitutional because it invests the Secretary of Public Works
and Communications with sweeping, unrestrained, final and

The contentions of the appellees are not tenable. R.A. 2056 merely
empowers the Secretary to remove unauthorized obstructions or
encroachments upon public streams, constructions that no private
person was anyway entitled to make, because the bed of navigable
streams is public property, and ownership thereof is not acquirable
by adverse possession. It is true that the exercise of the Secretary's
power under the Act necessarily involves the determination of
some questions of fact, such as the existence of the stream and its
previous navigable character; but these functions, whether judicial
or quasi-judicial, are merely incidental to the exercise of the power
granted by law to clear navigable streams of unauthorized
obstructions or encroachments, and authorities are clear that they
are, validly conferable upon executive officials provided the party
affected is given opportunity to be heard, as is expressly required
by Republic Act No. 2056, section 2.The mere fact that an officer is
required by law to inquire the existence of certain facts and to
apply the law thereto in order to determine what his official conduct
shall be and the fact that these acts may affect private, rights do
not constitute an exercise of judicial powers. Accordingly, a statute
may give to non-judicial officers the power to declare the existence
of facts which call into operation its provisions, and similarly may
grant to commissioners and other subordinate officer, power to
ascertain and determine appropriate facts as a basis for procedure
in the enforcement of particular laws. It is noteworthy that Republic
Act 2605 authorizes removal of the unauthorized dikes either as
"public nuisances or as prohibited constructions" on public
navigable streams, and those of appellees clearly are in the latter
class. In fine, it is held that Republic Act No. 2056 does not
constitute an unlawful delegation of judicial power to the Secretary
of Public Works; that the findings of fact of the Secretary of Public
Works under Republic Act No. 2056should be respected in the
absence of illegality, error of law, fraud, or imposition, so long as
the said, findings are supported by substantial evidence submitted

to him. The decision appealed from is reversed, and the writs of

injunction issued therein are annulled and set aside.
2. VIGAN ELECTRIC LIGHT COMPANY, INC. vs. THE PUBLIC
SERVICE COMMISSION, G.R. No. L-19850, January 30, 1964
Parties:
Petitioner: VIGAN ELECTRIC LIGHT COMPANY, INC.
Respondent: THE PUBLIC SERVICE COMMISSION
Ponente: CONCEPCION, J.
Facts:
This is an original action for certiorari to annul an order of
respondent Public Service Commission ordering the reduction of
rates of Vigan Electric Light Co. PSC averred that Vigan Electric
making a net operating profit in excess of the allowable return of
12% on its invested capital, and that it is in the public interest and
in consonance with Section 3of Republic Act No. 3043 that
reduction of its rates to the extent of its excess revenue be put into
effect immediately. Vigan Electric contended that the reduction of
rate is unconstitutional because it has been ordered without notice
and hearing, thus issued without due process of law. In defense,
PSC maintains that rate-fixing is a legislative function; that
legislative or rule-making powers may constitutionally be exercised
without previous notice of hearing; and that the decision in Ang
Tibay vs. Court of Industrial Relations(69 Phil., 635) in which we
held that such notice and hearing are essential to the validity of a
decision of the Public Service Commission is not in point
because, unlike the order complained of which respondent
claims to be legislative in nature the Ang Tibay case referred to a
proceeding involving the exercise of judicial functions.
Issue:
Whether or not the Congress validly delegated legislative power to
the PSC.
Ruling:
No. Congress has not delegated, and cannot delegate legislative
powers to the Public Service Commission. Consistently with the
principle of separation of powers, which underlies our constitutional
system, legislative powers may not be delegated except to local
governments, and only to matters purely of local concern. However,

Congress may delegate to administrative agencies of the

government the power to supply the details in the execution or
enforcement of a policy laid down by it which is complete in itself.
Such law is not deemed complete unless it lays down a standard or
pattern sufficiently fixed or determinate, or, at least, determinable
without requiring another legislation, to guide the administrative
body concerned in the performance of its duty to implement or
enforce said Policy. Otherwise, there would be no reasonable means
to ascertain whether or not said body has acted within the scope of
its authority, and, as a consequence, the power of legislation would
eventually be exercised by a branch of the Government other than
that in which it is lodged by the Constitution, in violation, not only
of the allocation of powers therein made, but, also, of the principle
of separation of powers. Although the rule-making power and even
the power to fix rates when such rules and/or rates are meant to
apply to all enterprises of a given kind throughout the Philippines
may partake of a legislative character, such is not the nature of the
order complained of. Indeed, the same applies exclusively to
petitioner herein. What is more, it is predicated upon the finding of
fact based upon a report submitted by the General Auditing
Office that petitioner is making a profit of more than 12% of its
invested capital, which is denied by petitioner. Obviously, the latter
is entitled to cross-examine the maker of said report, and to
introduce evidence to disprove the contents thereof and/or explain
or complement the same, as well as to refute the conclusion drawn
therefrom by the respondent. In other words, in making said finding
of fact, respondent performed a function partaking of a quasijudicial character the valid exercise of which demands previous
notice and hearing.
3. PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION
vs. JOSE LUIS A. ALCUAZ, as NTC Commissioner, and
NATIONAL TELECOMMUNICATIONS COMMISSION, G.R. No.
84818, December 18, 1989
Parties:
Petitioner:
PHILIPPINE
COMMUNICATIONS
SATELLITE
CORPORATION
Respondents: JOSE LUIS A. ALCUAZ, as NTC Commissioner,
and NATIONAL TELECOMMUNICATIONS COMMISSION
Ponente: REGALADO, J.
Facts:

PHILCOMSAT was granted "a franchise to establish, construct,

maintain and operate in the Philippines, at such places as the
grantee may select, station or stations and associated equipment
and facilities for international satellite communications." Under this
franchise, it was likewise granted the authority to "construct and
operate
such
ground
facilities
as
needed
to
deliver
telecommunications services from the communications satellite
system and ground terminal or terminals.

The NTC order now in controversy had further extended the

provisional authority of the petitioner for another six (6) months,
counted from September 16, 1988, but it directed the petitioner to
charge modified reduced rates through a reduction of fifteen
percent (15%) on the present authorized rates. Respondent
Commissioner ordered said reduction on the following ground:
The Commission in its on-going review of present service
rates takes note that after an initial evaluation by the Rates
Regulation Division of the Common Carriers Authorization
Department of the financial statements of applicant, there is
merit in a REDUCTION in some of applicant's rates, subject
to further reductions, should the Commission finds (sic) in its
further evaluation that more reduction should be effected
either on the basis of a provisional authorization or in the
final consideration of the case.

The satellite services thus provided by petitioner enable said

international carriers to serve the public with indispensable
communication services, such as overseas telephone, telex,
facsimile, telegrams, high speed data, live television in full color,
and television standard conversion from European to American or
vice versa.
Under Section 5 of Republic Act No. 5514, petitioner was exempt
from the jurisdiction of the then Public Service Commission, now
respondent NTC. However, pursuant to Executive Order No. 196
issued on June 17, 1987, petitioner was placed under the
jurisdiction, control and regulation of respondent NTC, including all
its facilities and services and the fixing of rates. Implementing said
Executive Order No. 196, respondents required petitioner to apply
for the requisite certificate of public convenience and necessity
covering its facilities and the services it renders, as well as the
corresponding authority to charge rates therefor.
Consequently, under date of September 9, 1987, petitioner filed
with respondent NTC an application 4 for authority to continue
operating and maintaining the same facilities it has been
continuously operating and maintaining since 1967, to continue
providing the international satellite communications services it has
likewise been providing since 1967, and to charge the current rates
applied for in rendering such services. Pending hearing, it also
applied for a provisional authority so that it can continue to operate
and maintain the above mentioned facilities, provide the services
and charge therefor the aforesaid rates therein applied for.
On September 16, 1987, petitioner was granted a provisional
authority to continue operating its existing facilities, to render the
services it was then offering, and to charge the rates it was then
charging. This authority was valid for six (6) months from the date
of said order. 5 When said provisional authority expired on March
17, 1988, it was extended for another six (6) months, or up to
September 16, 1988.

Issue:
Petitioner is in effect questioning the constitutionality of Executive
Orders Nos. 546 and 196 on the ground that the same do not fix a
standard for the exercise of the power therein conferred.
Ruling:
The order in question which was issued by respondent Alcuaz no
doubt contains all the attributes of a quasi-judicial adjudication.
Foremost is the fact that said order pertains exclusively to
petitioner and to no other. Further, it is premised on a finding of
fact, although patently superficial, that there is merit in a reduction
of some of the rates charged- based on an initial evaluation of
petitioner's financial statements-without affording petitioner the
benefit of an explanation as to what particular aspect or aspects of
the financial statements warranted a corresponding rate reduction.
No rationalization was offered nor were the attending
contingencies, if any, discussed, which prompted respondents to
impose as much as a fifteen percent (15%) rate reduction. It is not
far-fetched to assume that petitioner could be in a better position
to rationalize its rates vis-a-vis the viability of its business
requirements. The rates it charges result from an exhaustive and
detailed study it conducts of the multi-faceted intricacies attendant
to a public service undertaking of such nature and magnitude. We
are, therefore, inclined to lend greater credence to petitioner's
ratiocination that an immediate reduction in its rates would
adversely affect its operations and the quality of its service to the
public considering the maintenance requirements, the projects it

still has to undertake and the financial outlay involved. Notably,

petitioner was not even afforded the opportunity to cross-examine
the inspector who issued the report on which respondent NTC
based its questioned order.
At any rate, there remains the categorical admission made by
respondent NTC that the questioned order was issued pursuant to
its quasi-judicial functions. It, however, insists that notice and
hearing are not necessary since the assailed order is merely
incidental to the entire proceedings and, therefore, temporary in
nature. This postulate is bereft of merit.
While respondents may fix a temporary rate pending final
determination of the application of petitioner, such rate-fixing
order, temporary though it may be, is not exempt from the
statutory procedural requirements of notice and hearing, as well as
the requirement of reasonableness. Assuming that such power is
vested in NTC, it may not exercise the same in an arbitrary and
confiscatory manner. Categorizing such an order as temporary in
nature does not perforce entail the applicability of a different rule of
statutory procedure than would otherwise be applied to any other
order on the same matter unless otherwise provided by the
applicable law
The applicable statutory provision is Section 16(c) of the Public
Service Act which provides:
Section 16. Proceedings of the Commission, upon notice and
hearing the Commission shall have power, upon proper
notice and hearing in accordance with the rules and
provisions of this Act, subject to the limitations and
exceptions mentioned and saving provisions to the contrary.
4. PHILIPPINE INTERISLAND SHIPPING ASSOCIATION OF THE
PHILIPPINES, CONFERENCE OF INTERISLAND SHIPOWNERS
AND OPERATORS, UNITED PETROLEUM TANKER OPERATORS
ASSOCIATION
OF
THE
PHILIPPINES,
LIGHTERAGE
ASSOCIATION
OF
THE
PHILIPPINES
and
PILOTAGE
INTEGRATED SERVICES CORPORATION vs. COURT OF
APPEALS, UNITED HARBOR PILOTS' ASSOCIATION OF THE
PHILIPPINES, INC. and MANILA PILOTS' ASSOCIATION, G.R.
No. 100481, January 22, 1997
Parties:
Petitioners:
ASSOCIATION
INTERISLAND

PHILIPPINE
INTERISLAND
SHIPPING
OF THE PHILIPPINES, CONFERENCE OF
SHIPOWNERS AND OPERATORS, UNITED

PETROLEUM TANKER OPERATORS ASSOCIATION OF THE

PHILIPPINES, LIGHTERAGE ASSOCIATION OF THE PHILIPPINES
and PILOTAGE INTEGRATED SERVICES CORPORATION
Respondents: COURT OF APPEALS, UNITED HARBOR
PILOTS' ASSOCIATION OF THE PHILIPPINES, INC. and MANILA
PILOTS' ASSOCIATION
Ponente: MENDOZA, J.
Facts:
Private respondent United Harbor Pilots' Association of the
Philippines, Inc. (UHPAP) is the umbrella organization of various
groups rendering pilotage service in different ports of the
Philippines. The service consists of navigating a vessel from a
specific point, usually about two (2) miles off shore, to an assigned
area at the pier and vice versa. When a vessel arrives, a harbor
pilot takes over the ship from its captain to maneuver it to a berth
in the port, and when it departs, the harbor pilot also maneuvers it
up to a specific point off shore. The setup is required by the fact
that each port has peculiar topography with which a harbor pilot is
presumed to be more familiar than a ship captain.
The Philippine Ports Authority (PPA) is the government agency
which regulates pilotage.
On February 3, 1986, shortly before the presidential elections,
President Ferdinand E. Marcos, responding to the clamor of harbor
pilots for an increase in pilotage rates, issued Executive Order No.
1088, PROVIDING FOR UNIFORM AND MODIFIED RATES FOR
PILOTAGE SERVICES RENDERED TO FOREIGN AND COASTWISE
VESSELS IN ALL PRIVATE AND PUBLIC PORTS. The executive order
increased substantially the rates of the existing pilotage fees
previously fixed by the PPA.
However, the PPA refused to enforce the executive order on the
ground that it had been drawn hastily and without prior
consultation: that its enforcement would create disorder in the
ports as the operators and owners of the maritime vessels had
expressed opposition to its implementation; and that the increase
in pilotage, as mandated by it, was exorbitant and detrimental to
port operations.
The UHPAP then announced its intention to implement E.O. No.
1088 effective November 16, 1986. This in turn drew a warning
from the PPA that disciplinary sanctions would be applied to those

who would charge rates under E.O. No. 1088. The PPA instead
issued Memorandum Circular No. 43-86, fixing pilotage fees at
rates lower than those provided in E.O. No. 1088.
On February 26, 1988, the PPA issued Administrative Order No. 0288, entitled IMPLEMENTING GUIDELINES ON OPEN PILOTAGE
SERVICE. The PPA announced in its order that it was leaving to the
contracting parties, i.e., the shipping lines and the pilots, the fixing
of mutually acceptable rates for pilotage services, thus abandoning
the rates fixed by it (PPA) under Memorandum Circular No. 43-86,
as well as those provided in E.O. No. 1088. The administrative order
provided:
Sec. 3. Terms/Conditions on Pilotage Service. The shipping line or
vessel's agent/representative and the harbor pilot/firm chosen by
the former shall agree between themselves, among others, on what
pilotage service shall be performed, the use of tugs and their rates,
taking into consideration the circumstances stated in Section 12 of
PPA AO No. 03-85, and such other conditions designed to ensure
the safe movement of the vessel in pilotage areas/grounds.
Issue:
Whether Executive Order No. 1088 is valid and petitioners are
bound to obey it.
Ruling:

Petitioners contend that E.O. No. 1088 was merely an

administrative issuance of then President Ferdinand E. Marcos and,
as such, it could be superseded by an order of the PPA. They argue
that to consider E.O. No. 1088 a statute would be to deprive the
PPA of its power under its charter to fix pilotage rates.

The contention has no merit. The fixing of rates is essentially a

legislative power. 10 Indeed, the great battle over the validity of the
exercise of this power by administrative agencies was fought in the
1920s on the issue of undue delegation precisely because the
power delegated was legislative. The growing complexity of
modern society, the multiplication of the subjects of governmental
regulations and the increased difficulty of administering the laws

made the creation of administrative agencies and the delegation to

them of legislative power necessary.

There is no basis for petitioners' argument that rate fixing is merely

an exercise of administrative power, that if President Marcos had
power to revise the rates previously fixed by the PPA through the
issuance of E.O. No. 1088, the PPA could in turn revise those fixed
by the President, as the PPA actually did in A.O. No. 43-86, which
fixed lower rates of pilotage fees, and even entirely left the fees to
be paid for pilotage to the agreement of the parties to a contract.
The orders previously issued by the PPA were in the nature of
subordinate legislation, promulgated by it in the exercise of
delegated power. As such these could only be amended or revised
by law, as the President did by E.O. No. 1088.

It is not an answer to say that E.O. No. 1088 should not be

considered a statute because that would imply the withdrawal of
power from the PPA. What determines whether an act is a law or an
administrative issuance is not its form but its nature. Here, as we
have already said, the power to fix the rates of charges for
services, including pilotage service, has always been regarded as
legislative in character.

Nor is there any doubt of the power of the then President to fix
rates. On February 3, 1986, when he issued E.O. No. 1088,
President Marcos was authorized under Amendment No. 6 of the
1973 Constitution to exercise legislative power, just as he was
under the original 1973 Constitution, when he issued P.D. No. 857
which created the PPA, endowing it with the power to regulate
pilotage service in Philippine ports. Although the power to fix rates
for pilotage had been delegated to the PPA, it became necessary to
rationalize the rates of charges fixed by it through the imposition of
uniform rates. That is what the President did in promulgating E.O.
No. 1088. As the President could delegate the ratemaking power to
the PPA, so could he exercise it in specific instances without
thereby withdrawing the power vested by P.D. No. 857, 20(a) in
the PPA "to impose, fix, prescribe, increase or decrease such rates,
charges or fees . . . for the services rendered by the Authority or by
any private organization within a Port District."

It is worthy to note that E.O. No. 1088 provides for adjusted

pilotage service rates without withdrawing the power of the PPA to
impose, prescribe, increase or decrease rates, charges or fees. The
reason is because E.O. No. 1088 is not meant simply to fix new
pilotage rates. Its legislative purpose is the "rationalization of
pilotage service charges, through the imposition of uniform and
adjusted rates for foreign and coastwise vessels in all Philippine
ports."

5. PHILIPPINE CONSUMERS FOUNDATION, INC. vs. THE

SECRETARY OF EDUCATION, CULTURE AND SPORTS, G.R. No.
78385, August 31, 1987
Parties:
Petitioner: PHILIPPINE CONSUMERS FOUNDATION, INC.
Respondent: THE SECRETARY OF EDUCATION, CULTURE
AND SPORTS
Ponente: GANCAYCO, J.
Facts:
This is an original Petition for prohibition with a prayer for the
issuance of a writ of preliminary injunction.
The record of the case discloses that the herein petitioner
Philippine Consumers Foundation, Inc. is a non-stock, non-profit
corporate entity duly organized and existing under the laws of the
Philippines. The herein respondent Secretary of Education, Culture
and Sports is a ranking cabinet member who heads the Department
of Education, Culture and Sports of the Office of the President of the
Philippines.
On February 21, 1987, the Task Force on Private Higher Education
created by the Department of Education, Culture and Sports
(hereinafter referred to as the DECS) submitted a report entitled
"Report and Recommendations on a Policy for Tuition and Other
School Fees." The report favorably recommended to the DECS the
following courses of action with respect to the Government's policy
on increases in school fees for the schoolyear 1987 to 1988
(1) Private schools may be allowed to increase its total school fees
by not more than 15 per cent to 20 per cent without the need for

the prior approval of the DECS. Schools that wish to increase school
fees beyond the ceiling would be subject to the discretion of the
DECS;
(2) Any private school may increase its total school fees in excess
of the ceiling, provided that the total schools fees will not exceed
P1,000.00 for the school year in the elementary and secondary
levels, and P50.00 per academic unit on a semestral basis for the
collegiate level. 1
The DECS took note of the report of the Task Force and on the basis
of the same, the DECS, through the respondent Secretary of
Education, Culture and Sports (hereinafter referred to as the
respondent Secretary), issued an Order authorizing, inter alia, the
15% to 20% increase in school fees as recommended by the Task
Force. The petitioner sought a reconsideration of the said Order,
apparently on the ground that the increases were too high. 2
Thereafter, the DECS issued Department Order No. 37 dated April
10, 1987 modifying its previous Order and reducing the increases
to a lower ceiling of 10% to 15%, accordingly. 3 Despite this
reduction, the petitioner still opposed the increases. On April 23,
1987, the petitioner, through counsel, sent a telegram to the
President of the Philippines urging the suspension of the
implementation of Department Order No. 37. 4 No response
appears to have been obtained from the Office of the President.
Thus, on May 20, 1987, the petitioner, allegedly on the basis of the
public interest, went to this Court and filed the instant Petition for
prohibition, seeking that judgment be rendered declaring the
questioned Department Order unconstitutional. The thrust of the
Petition is that the said Department Order was issued without any
legal basis. The petitioner also maintains that the questioned
Department Order was issued in violation of the due process clause
of the Constitution in as much as the petitioner was not given due
notice and hearing before the said Department Order was issued.
Issue:
Whether or not the fixing of school fees through department order
by DECS is a valid delegation of legislative power.
Ruling:
After a careful examination of the entire record of the case, We find
the instant Petition devoid of merit.

We are not convinced by the argument that the power to regulate

school fees "does not always include the power to increase" such
fees. Section 57 (3) of Batas Pambansa Blg. 232, otherwise known
as The Education Act of 1982, vests the DECS with the power to
regulate the educational system in the country, to wit:

administrative agency are meant to apply to all enterprises of a

given kind throughout the country, they may partake of a
legislative character. Where the rules and the rates imposed apply
exclusively to a particular party, based upon a finding of fact, then
its function is quasi-judicial in character.

SEC. 57.
Educations and powers of the Ministry. The Ministry
shall:
xxx
xxx
xxx
(3)
Promulgate rules and regulations necessary for the
administration, supervision and regulation of the educational
system in accordance with declared policy.
xxx
xxx
xxx 9

Is Department Order No. 37 issued by the DECS in the exercise of

its legislative function? We believe so. The assailed Department
Order prescribes the maximum school fees that may be charged by
all private schools in the country for school year 1987 to 1988. This
being so, prior notice and hearing are not essential to the validity of
its issuance.

Section 70 of the same Act grants the DECS the power to issue
rules which are likewise necessary to discharge its functions and
duties under the law, to wit:
SEC. 70.
Rule-making Authority. The Minister of Education
and Culture, charged with the administration and enforcement of
this Act, shall promulgate the necessary implementing rules and
regulations.
In the absence of a statute stating otherwise, this power includes
the power to prescribe school fees. No other government agency
has been vested with the authority to fix school fees and as such,
the power should be considered lodged with the DECS if it is to
properly and effectively discharge its functions and duties under
the law.
We find the remaining argument of the petitioner untenable. The
petitioner invokes the due process clause of the Constitution
against the alleged arbitrariness of the assailed Department Order.
The petitioner maintains that the due process clause requires that
prior notice and hearing are indispensable for the Department
Order to be validly issued.
We disagree.
The function of prescribing rates by an administrative agency may
be either a legislative or an adjudicative function. If it were a
legislative function, the grant of prior notice and hearing to the
affected parties is not a requirement of due process. As regards
rates prescribed by an administrative agency in the exercise of its
quasi-judicial function, prior notice and hearing are essential to the
validity of such rates. When the rules and/or rates laid down by an

This observation notwithstanding, there is a failure on the part of

the petitioner to show clear and convincing evidence of such
arbitrariness. As the record of the case discloses, the DECS is not
without any justification for the issuance of the questioned
Department Order. It would be reasonable to assume that the
report of the Task Force created by the DECS, on which it based its
decision to allow an increase in school fees, was made judiciously.
Moreover, upon the instance of the petitioner, as it so admits in its
Petition, the DECS had actually reduced the original rates of 15% to
20% down to 10% to 15%, accordingly. Under the circumstances
peculiar to this case, We cannot consider the assailed Department
Order arbitrary.
Under the Rules of Court, it is presumed that official duty has been
regularly performed. 10 In the absence of proof to the contrary,
that presumption prevails. This being so, the burden of proof is on
the party assailing the regularity of official proceedings. In the case
at bar, the petitioner has not successfully disputed the
presumption.
We commend the petitioner for taking the cudgels for the public,
especially the parents and the students of the country. Its zeal in
advocating the protection of the consumers in its activities should
be lauded rather than discouraged. But a more convincing case
should be made out by it if it is to seek relief from the courts some
time in the future. Petitioner must establish that respondent acted
without or in excess of her jurisdiction; or with grave abuse of
discretion, and there is no appeal or any other plain, speedy, and
adequate remedy in the ordinary course of law before the
extraordinary writ of prohibition may issue.
This Court, however, does not go to the extent of saying that it
gives its judicial imprimatur to future increases in school fees. The

increases must not be unreasonable and arbitrary so as to amount

to an outrageous exercise of government authority and power. In
such an eventuality, this Court will not hesitate to exercise the
power of judicial review in its capacity as the ultimate guardian of
the Constitution.

F. Construction and Administrative Interpretation

1. VICTORIAS MILLING COMPANY, INC. vs. SOCIAL SECURITY
COMMISSION, G.R. No. L-16704, March 17, 1962

Parties:
Petitioner-appellant: VICTORIAS MILLING COMPANY, INC.

1/2% contributions will be based, up to a maximum of P500

for any one month.

Upon receipt of a copy thereof, petitioner Victorias Milling

Company, Inc., through counsel, wrote the Social Security
Commission in effect protesting against the circular as
contradictory to a previous Circular No. 7 expressly excluding
overtime pay and bonus in the computation of the employers' and
employees' respective monthly premium contributions, and
submitting, "In order to assist your System in arriving at a proper
interpretation of the term 'compensation' for the purposes of" such
computation, their observations on Republic Act No. 1161 (Social
Security Law) and its amendment and on the general interpretation
of the words "compensation", "remuneration" and "wages". Counsel
further questioned the validity of the circular for lack of authority
on the part of the Social Security Commission to promulgate it
without the approval of the President and for lack of publication in
the Official Gazette.

Respondent-appellee: SOCIAL SECURITY COMMISSION

Ponente: BARRERA, J.

Social Security Commission ruled that Circular No. 22 is not a rule

or regulation that needed the approval of the President and
publication in the Official Gazette to be effective, but a mere
administrative interpretation of the statute, a mere statement of
general policy or opinion as to how the law should be construed.

Facts:

On October 15, 1958, the Social Security Commission issued its

Circular No. 22 of the following tenor:

Effective November 1, 1958, all Employers in computing

the premiums due the System, will take into consideration
and include in the Employee's remuneration all bonuses and
overtime pay, as well as the cash value of other media of
remuneration. All these will comprise the Employee's
remuneration or earnings, upon which the 3-1/2% and 2-

Not satisfied with this ruling, petitioner comes to this Court on

appeal.

Issue:

Whether or not Circular No. 22 is a rule or regulation, as

contemplated in Section 4(a) of Republic Act 1161 empowering the

Social Security Commission "to adopt, amend and repeal subject to

the approval of the President such rules and regulations as may be
necessary to carry out the provisions and purposes of this Act."

Ruling:

There is a distinction between an administrative rule or regulation

and an administrative interpretation of a law whose enforcement is
entrusted to an administrative body. When an administrative
agency promulgates rules and regulations, it "makes" a new law
with the force and effect of a valid law, while when it renders an
opinion or gives a statement of policy, it merely interprets a preexisting law.

Rules and regulations when promulgated in pursuance of the

procedure or authority conferred upon the administrative agency
by law, partake of the nature of a statute, and compliance
therewith may be enforced by a penal sanction provided in the law.
This is so because statutes are usually couched in general terms,
after expressing the policy, purposes, objectives, remedies and
sanctions intended by the legislature.

A rule is binding on the courts so long as the procedure fixed for its
promulgation is followed and its scope is within the statutory
authority granted by the legislature, even if the courts are not in
agreement with the policy stated therein or its innate wisdom. On
the other hand, administrative interpretation of the law is at best
merely advisory, for it is the courts that finally determine what the
law means.

Circular No. 22 in question was issued by the Social Security

Commission, in view of the amendment of the provisions of the
Social Security Law defining the term "compensation" contained in

Section 8 (f) of Republic Act No. 1161 which, before its amendment,
reads as follows:

(f) Compensation All remuneration for employment

include the cash value of any remuneration paid in any
medium other than cash except (1) that part of the
remuneration in excess of P500 received during the month;
(2) bonuses, allowances or overtime pay; and (3) dismissal
and all other payments which the employer may make,
although not legally required to do so.

Republic Act No. 1792 changed the definition of "compensation" to:

(f) Compensation All remuneration for employment

include the cash value of any remuneration paid in any
medium other than cash except that part of the
remuneration in excess of P500.00 received during the
month.

It will thus be seen that whereas prior to the amendment, bonuses,

allowances, and overtime pay given in addition to the regular or
base pay were expressly excluded, or exempted from the definition
of the term "compensation", such exemption or exclusion was
deleted by the amendatory law. It thus became necessary for the
Social Security Commission to interpret the effect of such deletion
or elimination. Circular No. 22 was, therefore, issued to apprise
those concerned of the interpretation or understanding of the
Commission, of the law as amended, which it was its duty to
enforce. It did not add any duty or detail that was not already in the
law as amended. It merely stated and circularized the opinion of
the Commission as to how the law should be construed.

Circular No. 22 purports merely to advise employers-members of

the System of what, in the light of the amendment of the law, they

should include in determining the monthly compensation of their

employees upon which the social security contributions should be
based, and that such circular did not require presidential approval
and publication in the Official Gazette for its effectivity.

Commission's interpretation of the amendment embodied in its

Circular No. 22, is correct. The express elimination among the
exemptions excluded in the old law, of all bonuses, allowances and
overtime pay in the determination of the "compensation" paid to
employees makes it imperative that such bonuses and overtime
pay must now be included in the employee's remuneration in
pursuance of the amendatory law

While it is true that terms or words are to be interpreted in

accordance with their well-accepted meaning in law, nevertheless,
when such term or word is specifically defined in a particular law,
such interpretation must be adopted in enforcing that particular
law, for it cannot be gainsaid that a particular phrase or term may
have one meaning for one purpose and another meaning for some
other purpose. Such is the case that is now before us. Republic Act
1161 specifically defined what "compensation" should mean "For
the purposes of this Act". Republic Act 1792 amended such
definition by deleting same exemptions authorized in the original
Act. By virtue of this express substantial change in the phraseology
of the law, whatever prior executive or judicial construction may
have been given to the phrase in question should give way to the
clear mandate of the new law.

The Resolution appealed from was affirmed, with costs against

appellant.

Principle Involved: Administrative Interpretation of a Statute

2. TAYUG RURAL BANK vs. CENTRAL BANK OF THE
PHILIPPINES, G.R. No. L-46158, November 28, 1986
Parties:
Plaintiff-appellee: TAYUG RURAL BANK

Defendant-appellant: CENTRAL BANK OF THE PHILIPPINES

Ponente: PARAS, J.
Facts:
Tayug Rural is a bank in Pangasinan which took out 13 loans from
Central Bank in 1962 and 1963, all covered by promissory notes,
amounting to P813,000.00. In late 1964, Central Bank released a
circular; Memorandum Circular No. DLC-8 thru the Director of Loans
and Credit. This circular all informed all rural banks that an
additional 10% per annum penalty interest would be assessed on
all past due loans beginning 1965. This was enforced beginning July
1965.
In 1969, the outstanding balance of Tayug was at P444,809.45.
Tayug Rural filed a case in CFI Manila to recover the 10% penalty it
paid up to 1968, amounting to about P16,874.97, and to restrain
Central bank from further imposing the penalty.
Central Bank filed a counterclaim for the outstanding balance
including the 10% penalty, stating that it was legally imposed
under the Rules and Regulations Governing Rural Banks
promulgated by the Monetary Board on 1958, under R.A. No. 720
(The Rural Banks' Act).
Tayugs defense was that the counterclaim should be dismissed
since the unpaid obligation of Tayug was due to Central Banks
flexible and double standard policy of its rediscounting privileges to
Tayug Rural and its subsequent arbitrary and illegal imposition of
the 10% penalty. Tayug Rural contends that no such 10% penalty
starting from 1965 was included in the promissory notes covering
the loans.
A judgment was rendered by CFI Manila in favor of Central Bank
ordering Tayug Rural Bank to pay 10% penalty in the amount of
around P19,335.88 pesos for loans up to July 1969, and to pay
nothing for the next remaining loans. Tayugs claim in the case was
however successful, and so Tayug was also ordered to pay
P444,809.45, with interest to the Central Bank for the overdue
accounts with respect to the promissory notes.
Central Bank appealed to the CA, but also lost on the ground that
only a legal question had been raised in the pleadings.

The case was then raised to the SC, with each party arguing in the
following manner: CFI rules that the circulars retroactive effect on
past due loans impairs the obligation of contracts and deprives
Tayug Rural of property without due process of law. Central Bank
reasons that Tayug Rural, despite the loans, should have known
that rules and regulations authorize the Central Bank to impose
additional reasonable penalties.
Issue:
Whether or not The Central Bank can validly impose the 10%
penalty via Memorandum Circular No. DLC-8.
Ruling:
No. A reading of the circular and pertinent provisions, including that
of R.A No. 720, shows that nowhere therein is the authority given to
the Monetary Board to mete out additional penalties to the rural
banks on past due accounts with the Central Bank. As said by the
CFI, while the Monetary Board possesses broad supervisory powers,
nonetheless, the retroactive imposition of administrative penalties
cannot be taken as a measure supervisory in character.
Administrative rules have the force and effect of law. There are,
however, limitations in the rule-making power of administrative
agencies. All that is required of administrative rules and regulations
is to implement given legislation by not contradicting it and
conform to the standards prescribed by law. Rules and regulations
cannot go beyond the basic law. Since compliance therewith can be
enforced by a penal sanction, an administrative agency cannot
implement a penalty not provided in the law authorizing it, much
less one that is applied retroactively.
The new clause imposing an additional penalty was not part of the
promissory notes when Tayug Rural took out its loans. The law
cannot be given retroactive effect. More to the point, the Monetary
Board revoked the additional penalty later in 1970, which clearly
shows an admission that it had no power to impose the same. The
Central bank hoped to rectify the defect by revising the DLC Form
later. However, Tayug Rural must pay the additional 10% in case of
suit, since in the promissory notes, 10% should be paid in
attorneys fees and costs of suit and collection.
The decision of the trial court was affirmed with modification that
Appellee Rural Bank is ordered to pay a sum equivalent to 10% of
the outstanding balance of its past overdue accounts, but not in

any case less than P500.00 as attorney's fees and costs of suit and
collection.
Principle Involved: Rule-making Power of Administrative Agencies
3. PHARMACEUTICAL AND HEALTH CARE ASSOCIATION OF
THE PHILIPPINES vs. HEALTH SECRETARY FRANCISCO T.
DUQUE III; HEALTH UNDER SECRETARIES DR. ETHELYN P.
NIETO, DR. MARGARITA M. GALON, ATTY. ALEXANDER A.
PADILLA, & DR. JADE F. DEL MUNDO; and ASSISTANT
SECRETARIES DR. MARIO C. VILLAVERDE, DR. DAVID J.
LOZADA, AND DR. NEMESIO T. GAKO, G.R. No. 173034,
October 9, 2007
Parties:
Petitioner:
PHARMACEUTICAL
AND
HEALTH
CARE
ASSOCIATION OF THE PHILIPPINES
Respondents: HEALTH SECRETARY FRANCISCO T. DUQUE
III; HEALTH UNDER SECRETARIES DR. ETHELYN P. NIETO, DR.
MARGARITA M. GALON, ATTY. ALEXANDER A. PADILLA, & DR.
JADE F. DEL MUNDO; and ASSISTANT SECRETARIES DR.
MARIO C. VILLAVERDE, DR. DAVID J. LOZADA, AND DR.
NEMESIO T. GAKO
Ponente: AUSTRIA-MARTINEZ, J.
Facts:
Named as respondents are the Health Secretary, Undersecretaries,
and Assistant Secretaries of the Department of Health (DOH). For
purposes of herein petition, the DOH is deemed impleaded as a corespondent since respondents issued the questioned RIRR in their
capacity as officials of said executive agency.
Executive Order No. 51 (Milk Code) was issued by President
Corazon Aquino on October 28, 1986 by virtue of the legislative
powers granted to the president under the Freedom Constitution.
One of the preambular clauses of the Milk Code states that the law
seeks to give effect to Article 112 of the International Code of
Marketing of Breastmilk Substitutes (ICMBS), a code adopted by the
World Health Assembly (WHA) in 1981. From 1982 to 2006, the
WHA adopted several Resolutions to the effect that breastfeeding
should be supported, promoted and protected, hence, it should be
ensured that nutrition and health claims are not permitted for
breastmilk substitutes. In 1990, the Philippines ratified the
International Convention on the Rights of the Child. Article 24 of

said instrument provides that State Parties should take appropriate

measures to diminish infant and child mortality, and ensure that all
segments of society, specially parents and children, are informed of
the advantages of breastfeeding. On May 15, 2006, the DOH issued
herein assailed RIRR which was to take effect on July 7, 2006.
Petitioner challenged the said order and contended that respondent
officers of the DOH acted without or in excess of jurisdiction, or with
grave abuse of discretion amounting to lack or excess of
jurisdiction, and in violation of the provisions of the Constitution in
promulgating the RIRR.
On the other hand, respondents averred RIRR seeks not only to
implement the Milk Code but also various international instruments
which are deemed part of the law of the land. Among these
international instruments are the ICMBS and Resolutions issued by
World Health Agencies (WHA).
Issue:
Whether or not Administrative Order or the Revised Implementing
Rules and Regulations (RIRR) issued by the Department of Health
(DOH) is unconstitutional.
Ruling:
Yes, it is unconstitutional. Petition is partially granted.
Under the 1987 Constitution, international law can become part of
the sphere of domestic law either by transformation or
incorporation. The transformation method requires that an
international law be transformed into a domestic law through a
constitutional mechanism such as local legislation. The
incorporation method applies when, by mere constitutional
declaration, international law is deemed to have the force of
domestic law.
Treaties become part of the law of the land through transformation
pursuant to Article VII, Section 21 of the Constitution which
provides that "No treaty or international agreement shall be valid
and effective unless concurred in by at least two-thirds of all the
members of the Senate." Thus, treaties or conventional
international law must go through a process prescribed by the
Constitution for it to be transformed into municipal law that can be
applied to domestic conflicts.

The ICMBS and WHA Resolutions are not treaties as they have not
been concurred in by at least two-thirds of all members of the
Senate as required under Section 21, Article VII of the 1987
Constitution.
However, the ICMBS which was adopted by the WHA in 1981 had
been transformed into domestic law through local legislation, the
Milk Code. Consequently, it is the Milk Code that has the force and
effect of law in this jurisdiction and not the ICMBS per se.
The Milk Code is almost a verbatim reproduction of the ICMBS, but
it is well to emphasize at this point that the Code did not adopt the
provision in the ICMBS absolutely prohibiting advertising or other
forms of promotion to the general public of products within the
scope of the ICMBS. Instead, the Milk Code expressly provides that
advertising, promotion, or other marketing materials may be
allowed if such materials are duly authorized and approved by the
Inter-Agency Committee (IAC).
Apparently, the WHA Resolution adopting the ICMBS and
subsequent WHA Resolutions urging member states to implement
the ICMBS are merely recommendatory and legally non-binding.
Thus, unlike what has been done with the ICMBS whereby the
legislature enacted most of the provisions into law which is the Milk
Code, the subsequent WHA Resolutions, 30 specifically providing
for exclusive breastfeeding from 0-6 months, continued
breastfeeding up to 24 months, and absolutely prohibiting
advertisements and promotions of breastmilk substitutes, have not
been adopted as a domestic law.
As previously discussed, for an international rule to be considered
as customary law, it must be established that such rule is being
followed by states because they consider it obligatory to comply
with such rules (opinio juris). Respondents have not presented any
evidence to prove that the WHA Resolutions, although signed by
most of the member states, were in fact enforced or practiced by at
least a majority of the member states; neither have respondents
proven that any compliance by member states with said WHA
Resolutions was obligatory in nature.
Respondents failed to establish that the provisions of pertinent
WHA Resolutions are customary international law that may be
deemed part of the law of the land.
Consequently, legislation is necessary to transform the provisions
of the WHA Resolutions into domestic law. The provisions of the
WHA Resolutions cannot be considered as part of the law of the

land that can be implemented by executive agencies without the

need of a law enacted by the legislature.
In view of the enactment of the Milk Code which does not contain a
total ban on the advertising and promotion of breastmilk
substitutes, but instead, specifically creates an IAC which will
regulate said advertising and promotion, it follows that a total ban
policy could be implemented only pursuant to a law amending the
Milk Code passed by the constitutionally authorized branch of
government, the legislature.
Thus, only the provisions of the Milk Code, but not those of
subsequent WHA Resolutions, can be validly implemented by the
DOH through the subject RIRR.
Except Sections 4(f), 11 and 46, the rest of the provisions of the
RIRR are in consonance with the objective, purpose and intent of
the Milk Code, constituting reasonable regulation of an industry
which affects public health and welfare and, as such, the rest of the
RIRR do not constitute illegal restraint of trade nor are they
violative of the due process clause of the Constitution.
4. EMILIO Y. HILADO vs. THE COLLECTOR OF INTERNAL
REVENUE and THE COURT OF TAX APPEALS, G.R. No. L-9408,
October 31, 1956
Parties:
Petitioner: EMILIO Y. HILADO
Respondents: THE COLLECTOR OF INTERNAL REVENUE
and THE COURT OF TAX APPEALS
Ponente: Bautista, Angelo J.
Facts:
On March 1952, Petitioner filed his income tax return for 1951 and
claimed the deduction of the sum of P12,837.65 from his gross
income, as a loss consisting in a portion of his war damage claim
pursuant to General Circular No. V-123 issued by the Collector of
Internal Revenue (CIR). Said claim had been duly approved by the
Philippine War Damage Commission under the Philippine
Rehabilitation Act of 1946 but was not paid pursuant to a notice
served upon him by said Commission stating that his claim will not
be paid until the United States Congress should make further
appropriation. Petitioner considered said amount as a business
asset which he is entitled to deduct as a loss in his return for

1951. Meanwhile, on August 1952, the Secretary of Finance,

through the CIR, issued General Circular No. V-139 which not only
revoked and declared void his general Circular No. V- 123 but laid
down the rule that losses of property which occurred during the
period of World War II from fires, storms, shipwreck or other
casualty, or from robbery, theft, or embezzlement are deductible in
the year of actual loss or destruction of said property. As a
consequence, the amount of P12,837.65 was disallowed as a
deduction from the gross income of Petitioner for 1951 and the CIR
demanded from him the payment of the sum of P3,546 as
deficiency income tax for said year. When the petition for
reconsideration filed by Petitioner was denied, he filed a petition for
review with the Court of Tax Appeals (CTA). CTA rendered decision
affirming the assessment made by Respondent CIR. This is an
appeal from said decision.
Issue:
1. Whether or not the Secretary of Finance acted without valid
authority in revoking General Circular No. V-123 and approving in
lieu thereof General Circular No. V-139.
2. Whether or not a vested right can be acquired from a previous
circular (Circular No. V-123) which was declared void.
Ruling:
1. No. The Secretary of Finance is vested with authority to revoke,
repeal or abrogate the acts or previous rulings of his predecessor in
office because the construction of a statute by those administering
it is not binding on their successors if thereafter the latter become
satisfied that a different construction should be given.
2. No. General Circular No. V-123, having been issued on a wrong
construction of the law, cannot give rise to a vested right that can
be invoked by a taxpayer. The reason is obvious: a vested right
cannot spring from a wrong interpretation.
It seems too clear for serious argument that an administrative
officer cannot change a law enacted by Congress. A regulation that
is merely an interpretation of the statute when once determined to
have been erroneous becomes nullity. An erroneous construction of
the law by the Treasury Department or the collector of internal
revenue does not preclude or estop the government from collecting
a tax which is legally due. (Ben Stocker, et al., 12 B. T. A., 1351.)

Art. 2254. No vested or acquired right can arise from acts or

omissions which are against the law or which infringe upon the
rights of others. (Article 2254, New Civil Code.)
Wherefore, the decision appealed
pronouncement as to costs.

from

is

affirmed

without

5. ABS-CBN BROADCASTING CORPORATION vs. COURT OF

TAX APPEALS and THE COMMISSIONER OF INTERNAL
REVENUE, G.R. No. L-52306, October 12, 1981
Parties:
Petitioner: ABS-CBN BROADCASTING CORPORATION
Respondents: COURT OF TAX APPEALS and
COMMISSIONER OF INTERNAL REVENUE

THE

Ponente: MELENCIO-HERRERA, J.
Facts:
ABS-CBN is engaged in the business of telecasting local as well as
foreign films acquired from foreign corporations not engaged in
trade or business within the Philippines. The applicable law for the
income tax of non-resident corporations is section 24 (b) of the
National Internal Revenue Code, as amended by Republic Act No.
2343 dated June 20, 1959, which provides:
(b) Tax on foreign corporations.(1) Non-resident corporations.
There shall be levied, collected, and paid for each taxable year, in
lieu of the tax imposed by the preceding paragraph, upon the
amount received by every foreign corporation not engaged in trade
or business within the Philippines, from an sources within the
Philippines, as interest, dividends, rents, salaries, wages,
premiums, annuities, compensations, remunerations, emoluments,
or other fixed or determinable annual or periodical gains, profits,
and income, a tax equal to thirty per centum of such amount.
On April 12, 1961, in implementation of said provision, the CIR
issued General Circular No. V-3349. Pursuant to the foregoing, ABSCBN dutifully withheld and turned over to the BIR the amount of
30% of one-half of the film rentals paid by it to foreign corporations
not engaged in trade or business within the Philippines. The last
year that ABS-CBN withheld taxes pursuant to the foregoing
Circular was in 1968.

On June 27, 1968, RA 5431 amended Section 24 (b) 10 of the Tax

Code increasing the tax rate from 30% to 35% and revising the tax
basis from "such amount" referring to rents, etc. to "gross income."
On February 8, 1971, the CIR issued Revenue Memorandum
Circular No. 4-71, revoking General Circular No. V-334, and holding
that the latter was "erroneous for lack of legal basis," because "the
tax therein prescribed should be based on gross income without
deduction whatever. On the basis of this new Circular, CIR issued
against ABS-CBN a letter of assessment and demand requiring
them to pay deficiency withholding income tax on the remitted film
rentals for the years 1965 through 1968 and film royalty as of the
end of 1968 in the total amount of P525,897.06. Petitioner
requested for a reconsideration and withdrawal of the assessment.
However, without acting thereon, respondent, on April 6, 1976,
issued a warrant of distraint and levy over petitioner's personal as
well as real properties. The petitioner then filed its Petition for
Review with the Court of Tax Appeals whose Decision, affirming the
assessment made by the CIR is, in turn, the subject of this review.
Issue:
Whether or not respondent can apply General Circular No. 4-71
retroactively and issue a deficiency assessment against petitioner
in the amount of P525,897.06 as deficiency withholding income tax
for the year 1965 to1968.
Ruling:
No. Sec. 338-A 11 (now Sec. 327) of the Tax Code applies in this
case. Rulings or circulars promulgated by the CIR have no
retroactive application where to so apply them would be prejudicial
to taxpayers.
The retroactive application of Memorandum Circular No. 4-71
prejudices ABS-CBN since: a) it was issued only in 1971, or 3 years
after 1968, the last year that petitioner had withheld taxes under
General Circular No. V-334; b) the assessment and demand on
petitioner to pay deficiency withholding income tax was also made
three years after 1968 for a period of time commencing in 1965; c)
ABS-CBN was no longer in a position to withhold taxes due from
foreign corporations because it had already remitted all film rentals
and no longer had any control over them when the new Circular
was issued. And in so far as the enumerated exceptions (to nonretroactivity) are concerned, ABS-CBN does not fall under any of
them.

This Court is not unaware of the well-entrenched principle that the

Government is never estopped from collecting taxes because of
mistakes or errors on the part of its agents. In fact, utmost caution
should be taken in this regard. But, like other principles of law, this
also admits of exceptions in the interest of justice and fairplay.

The facts set forth in the information and proved on the trial does
not constitute a violation of Cat 1760 as alleged in the information
but it constitute a violation in Art 581 of the Penal Code sentencing
him to pay a fine of seventy pesetas or 14 pesos.

WHEREFORE, the judgment of the Court of Tax Appeals is hereby

reversed, and the questioned assessment set aside. No costs.

2. THE PEOPLE OF THE PHILIPPINE ISLANDS vs. AUGUSTO A.

SANTOS, G.R. No. L-44291, August 15, 1936

G. Penal Regulations

Parties:
Petitioner: THE PEOPLE OF THE PHILIPPINE ISLANDS
Respondent: AUGUSTO A. SANTOS

1. THE UNITED STATES vs. ADRIANO PANLILIO, G.R. No. L9876, December 8, 1914
Parties:
Petitioner: THE UNITED STATES
Respondent: ADRIANO PANLILIO

Ponente: VILLA-REAL, J.
Facts:

Facts:

Augusto Santos is an owner of fishing boat Malabon II and III, who

ordered his fishermen to fish, loiter and anchor with the 3km U.S.
Military jurisdiction near the island of Corregidor without permission
from Sec. of Agriculture and Commerce.

On Feb. 22, 1952, all Carabao of Panlilio was being quarantined

suspecting that is suffered from dangerous communicable disease
called RINDERPEST, he was informed in writing for such matter by
the Dept. of Agriculture.

The fiscal filed against Augusto Santos a violation of sec. 28 Admin.

Order 2; provides that boat licensed under Act 4003 are prohibited
to gather, collect and catch fish and other sea products, to anchor
or loiter within the 3km jurisdiction of US military authorities.

The servants of Panlilio took the carabao out of the corral to the
adjacent area land for the purpose of working them.

Sec 28 Admin Order 2was issued by the Sec. Of Agriculture &

commerce by virtue of an authority vested in him by Sec 4 Act.
4003: that he shall issue instructions, orders, rules and regulations
to carry into effect provisions in Act 4003 and conduct proceedings
under such provisions.

Ponente: MORELAND, J.

D.A. Filed a case against Panlilio for violation of Sec 6 of Act 1760
and later amended to Sec 3,4 and 5 Act 1760. Taking his Carabao
while under quarantine.
Issue:
1. Whether or not accused violate sec. 3,4 and 5 of Act 1760.
2. Whether or not Act 1760 is a penal regulation.
Ruling:
Panlilio did not violate Sectiones 3,4 and 5 because:
- no importation of animals was made;
- no proof that the animals is suffering from Renderpest
- it was only taken out of the corral to the adjoining land, not on
highways, nor moved from one municipality to another.

Issue:
1. Whether or not Sec. of Agri & Commerce exercise an excess of
regulatory power as vested by Sec. 4 Act 4003.
2. Whether or not Sec. Of Agri & Commerce can exercise legislative
power in issuing an Admin Order 2.
3. Whether or not Sec. 28 of Admin Order 2 is null and void.
Ruling:
Act 4003 does not contain any conditional clause quoted in sec 28
AO 2 such clause supplies a defect if the law. In Sec 4 Act 4003 he
shall issue from time to time instructions, orders, rules and

regulations consistent with this the Act as may be necessary to

carry into effect the provisions thereof and conduct of proceedings
arising from such provisions.
Therefore such act constitutes excess regulatory power conferred
to him because it is beyond the scope provisions of Act 4003.
The Secretary has no power to legislate on the matter because
such power cannot be delegated to him which is exclusive for Phil.
Legislature.

2. a permit to transport large cattle issued under the authority

of the provincial commander; and
3. three certificates of inspection
a. one from the Constabulary command attesting that the
carabaos were not included in the list of lost, stolen and
questionable animals;
b. one from the Livestock inspector, Bureau of Animal
Industry of Libmanan, Camarines Sur; and
c. one from the mayor of Sipocot.

Therefore sec 28 is null and void.

Santos charges does not constitute a crime or a violation of some
criminal law within the jurisdiction of the civil courts, information
DISMISSED.
3. ANSELMO L. PESIGAN and MARCELINO L. PESIGAN vs.
JUDGE DOMINGO MEDINA ANGELES, Regional Trial Court,
Caloocan City Branch 129, acting for REGIONAL TRIAL
COURT of Camarines Norte, now presided over by JUDGE
NICANOR ORIO, Daet Branch 40; DRA. BELLA S. MIRANDA,
ARNULFO V. ZENAROSA, ET AL., G.R. No. L-64279, April 30,
1984
Parties:
Petitioners: ANSELMO L. PESIGAN and MARCELINO L.
PESIGAN
Respondents: JUDGE DOMINGO MEDINA ANGELES,
Regional Trial Court, Caloocan City Branch 129, acting for
REGIONAL TRIAL COURT of Camarines Norte, now presided
over by JUDGE NICANOR ORIO, Daet Branch 40; DRA.
BELLA S. MIRANDA, ARNULFO V. ZENAROSA, ET AL.
Ponente: AQUINO, J.
Facts: Anselmo and Marcelo Pesigan transported in the evening of
April 2, 1982 twenty-six carabaos and a calf from Camarines Sur
with Batangas as their destination.
They were provided with three certificates:
1. a health certificate from the provincial veterinarian of
Camarines Sur, issued under the Revised Administrative
Code and Presidential Decree No. 533, the Anti-Cattle
Rustling Law of 1974;

In spite of the permit to transport and the said four certificates, the
carabaos, while passing at Basud, Camarines Norte, were
confiscated by the town's police station commander, and by
provincial veterinarian. The confiscation was basis on the
aforementioned Executive Order No. 626-A which prohibits the
transportation and slaughtering of carabaos. The confiscated
carabaos or carabeef were distributed to twenty-five farmers of
Basud, and to a farmer from the Vinzons municipal nursery.
Issue: Whether or not E.O. No. 626-A, providing for the confiscation
and forfeiture by the government of carabaos transported from one
province to another, dated October 25, 1980 is enforceable before
publication in the Official Gazette on June 14, 1982.
Ruling: We hold that the said executive order should not be
enforced against the Pesigans on April 2, 1982 because, as already
noted, it is a penal regulation published more than two months
later in the Official Gazette dated June 14, 1982. It became
effective only fifteen days thereafter as provided in article 2 of the
Civil Code and section 11 of the Revised Administrative Code.
Principles involved:
The word "laws" in article 2 of the NCC (article 1 of the old
Civil Code) includes circulars and regulations which
prescribe penalties.
Commonwealth Act No. 638 requires that all Presidential
EOs having general applicability should be published in the
Official Gazette. It provides that every order or document
which shall prescribe a penalty shall be deemed to have
general applicability and legal effect. Indeed, the practice
has always been to publish executive orders in the Gazette.
Section 551 of the Revised Administrative Code provides
that even bureau "regulations and orders shall become

effective only when approved by the Department Head and

published in the Official Gazette or otherwise publicly
promulgated".
Publication is necessary to apprise the public of the contents
of the regulations and make the said penalties binding on
the persons affected thereby.
Justice and fairness dictates that the public must be
informed of that provision by means of publication before
violators of the E.O can be bound thereby.

affirming the necessity for publication of some of the decrees. The

court ordered the respondents to publish in the official gazette all
unpublished Presidential Issuances which are of general force and
effect. The petitioners suggest that there should be no distinction
between laws of general applicability and those which are not. The
publication means complete publication, and that publication must
be made in the official gazette. In a comment required by the
Solicitor General, he claimed first that the motion was a request for
an advisory opinion and therefore be dismissed. And on the clause
unless otherwise provided in Article 2 of the new civil code meant
that the publication required therein was not always imperative,
that the publication when necessary, did not have to be made in
the official gazette.
Issue: Whether or not publication in the Official Gazette is required
for the effectivity of laws and statute.

H. Effectivity of Rules
1. LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and
MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY
AND NATIONALISM, INC. (MABINI) vs. HON. JUAN C. TUVERA,
in his capacity as Executive Assistant to the President,
HON. JOAQUIN VENUS, in his capacity as Deputy Executive
Assistant to the President, MELQUIADES P. DE LA CRUZ,
ETC., ET AL., G.R. No. L-63915, December 29, 1986
Parties:
Petitioners:
LORENZO
M.
TAADA,
ABRAHAM
F.
SARMIENTO, and MOVEMENT OF ATTORNEYS FOR
BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.
(MABINI)
Respondents: HON. JUAN C. TUVERA, in his capacity as
Executive Assistant to the President, HON. JOAQUIN VENUS, in his
capacity as Deputy Executive Assistant to the President,
MELQUIADES P. DE LA CRUZ, ETC., ET AL.
Ponente: CRUZ, J.
Facts: Petitioners Lorenzo M. Tanada, et. al. invoked due process in
demanding the disclosure of a number of Presidential Decrees
which they claimed had not been published as required by Law. The
government argued that while publication was necessary as a rule,
it was not so when it was otherwise provided, as when the decrees
themselves declared that they were to become effective
immediately upon approval. The court decided on April 24, 1985 in

Ruling: The Philippine Constitution does not require the publication

of the laws as a pre-requisite for their effectivity; neither the
publication of laws in the Official gazette as a pre-requisite for their
effectivity.
Article 2 of the Civil Code provides that laws shall take effect
fifteen days following the completion of their publication on the
Official Gazette, unless it is otherwise provided This pre-requisite
does not apply to a law with a fixed provision as to when will it take
effect. The intention of this provision is to give the general public
enough awareness of the laws that will regulate their actions.
Commonwealth Act No. 638 does not support the proposition that
for the effectivity of laws, it must be published in the Official
Gazette. The said act only provides the uniform publication and
distribution of the Official Gazette, only important legislative acts
and those of public in nature are required to be published in the
Official Gazette.
Ignorance of the law excuses no one, it is unjust if a person will be
punished with a law he had no notice, thats why laws which is
public in nature shall be published in the Official gazette to protect
the constitutional right of the people, to be informed on matter of
public concern. For no person should be bound by law without
notice. The Court declared that presidential issuances of general
application which have not been published have no force and
effect.
Principles involved:

Article 2 of the Civil Code provides that laws shall take

effect fifteen days following the completion of their
publication on the Official Gazette, unless it is otherwise
provided.

Commonwealth Act No. 638 only provides the uniform

publication and distribution of the Official Gazette, only
important legislative acts and those of public in nature
are required to be published in the Official Gazette.