G.R. No. L-34674 October 26, 1931 for the reason that, while Act No.
for the reason that, while Act No. 3155 were declared unconstitutional, Act No. 3052 would
MAURICIO CRUZ, petitioner-appellant,
vs.
STANTON YOUNGBERG, Director of the Bureau of Animal Industry, respondent-appellee.
OSTRAND, J.:
This is a petition brought originally before the Court of First Instance of Manila for the issuance of a
writ of mandatory injunction against the respondent, Stanton Youngberg, as Director of the Bureau
of Animal Industry, requiring him to issue a permit for the landing of ten large cattle imported by
the petitioner and for the slaughter thereof. The petitioner attacked the constitutionality of Act No.
3155, which at present prohibits the importation of cattle from foreign countries into the Philippine
Islands.
Among other things in the allegation of the petition, it is asserted that "Act No. 3155 of the
Philippine Legislature was enacted for the sole purpose of preventing the introduction of cattle
diseases into the Philippine Islands from foreign countries, as shown by an explanatory note and text
of Senate Bill No. 328 as introduced in the Philippine Legislature, ... ." The Act in question reads as
follows:
SECTION 1. After March thirty-first, nineteen hundred and twenty-five existing
contracts for the importation of cattle into this country to the contrary notwithstanding, it
shall be strictly prohibited to import, bring or introduce into the Philippine Islands any
cattle from foreign countries: Provided, however, That at any time after said date, the
Governor-General, with the concurrence of the presiding officers of both Houses, may
raise such prohibition entirely or in part if the conditions of the country make this
advisable or if decease among foreign cattle has ceased to be a menace to the agriculture
and live stock of the lands.
SEC. 2. All acts or parts of acts inconsistent with this Act are hereby repealed.
SEC. 3. This Act shall take effect on its approval.
Approved, March 8, 1924.
The respondent demurred to the petition on the ground that it did not state facts sufficient to
constitute a cause of action. The demurrer was based on two reasons, namely, (1) that if Act No.
3155 were declared unconstitutional and void, the petitioner would not be entitled to the relief
demanded because Act No. 3052 would automatically become effective and would prohibit the
respondent from giving the permit prayed for; and (2) that Act No. 3155 was constitutional and,
therefore, valid.
The court sustained the demurrer and the complaint was dismissed by reason of the failure of the
petitioner to file another complaint. From that order of dismissal, the petitioner appealed to this
court.
The appellee contends that even if Act No. 3155 be declared unconstitutional by the fact alleged by
the petitioner in his complaint, still the petitioner can not be allowed to import cattle from Australia
automatically become effective. Act No. 3052 reads as follows:
SECTION 1. Section seventeen hundred and sixty-two of Act Numbered Twenty-seven
hundred and eleven, known as the Administrative Code, is hereby amended to read as
follows:
"SEC. 1762. Bringing of animals imported from foreign countries into the
Philippine Islands. — It shall be unlawful for any person or corporation to
import, bring or introduce live cattle into the Philippine Islands from any
foreign country. The Director of Agriculture may, with the approval of the
head of the department first had, authorize the importation, bringing or
introduction of various classes of thoroughbred cattle from foreign countries
for breeding the same to the native cattle of these Islands, and such as may be
necessary for the improvement of the breed, not to exceed five hundred head
per annum: Provided, however, That the Director of Agriculture shall in all
cases permit the importation, bringing or introduction of draft cattle and bovine
cattle for the manufacture of serum: Provided, further, That all live cattle from
foreign countries the importation, bringing or introduction of which into the
Islands is authorized by this Act, shall be submitted to regulations issued by
the Director of Agriculture, with the approval of the head of the department,
prior to authorizing its transfer to other provinces.
"At the time of the approval of this Act, the Governor-General shall issue
regulations and others to provide against a raising of the price of both fresh and
refrigerated meat. The Governor-General also may, by executive order,
suspend, this prohibition for a fixed period in case local conditions require it."
SEC. 2. This Act shall take effect six months after approval.
Approved, March 14, 1922.
The petitioner does not present any allegations in regard to Act No. 3052 to show its nullity or
unconstitutionality though it appears clearly that in the absence of Act No. 3155 the former act
would make it impossible for the Director of the Bureau of Animal Industry to grant the petitioner a
permit for the importation of the cattle without the approval of the head of the corresponding
department.
An unconstitutional statute can have no effect to repeal former laws or parts of laws by
implication, since, being void, it is not inconsistent with such former laws. (I Lewis
Sutherland, Statutory Construction 2nd ed., p. 458, citing McAllister vs. Hamlin, 83 Cal.,
361; 23 Pac., 357; Orange Country vs. Harris, 97 Cal., 600; 32 Pac., 594; Carr vs. State,
127 Ind., 204; 11 L.R.A., 370, etc.)
This court has several times declared that it will not pass upon the constitutionality of statutes unless
it is necessary to do so (McGirr vs. Hamilton and Abreu, 30 Phil., 563, 568; Walter E. Olsen &
Co. vs. Aldanese and Trinidad, 43 Phil., 259) but in this case it is not necessary to pass upon the
validity of the statute attacked by the petitioner because even if it were declared unconstitutional,
the petitioner would not be entitled to relief inasmuch as Act No. 3052 is not in issue.
But aside from the provisions of Act No. 3052, we are of the opinion that Act No. 3155 is entirely
valid. As shown in paragraph 8 of the amended petition, the Legislature passed Act No. 3155 to
protect the cattle industry of the country and to prevent the introduction of cattle diseases through
importation of foreign cattle. It is now generally recognized that the promotion of industries
affecting the public welfare and the development of the resources of the country are objects within
the scope of the police power (12 C.J., 927; 6 R.C.L., 203-206 and decisions cited therein; Reid vs.
Colorado, 187 U.S., 137, 147, 152; Yeazel vs. Alexander, 58 Ill., 254). In this connection it is said
in the case of Punzalan vs. Ferriols and Provincial Board of Batangas (19 Phil., 214), that the
provisions of the Act of Congress of July 1, 1902, did not have the effect of denying to the
Government of the Philippine Islands the right to the exercise of the sovereign police power in the
promotion of the general welfare and the public interest. The facts recited in paragraph 8 of the
amended petition shows that at the time the Act No. 3155 was promulgated there was reasonable
necessity therefor and it cannot be said that the Legislature exceeded its power in passing the Act.
That being so, it is not for this court to avoid or vacate the Act upon constitutional grounds nor will
it assume to determine whether the measures are wise or the best that might have been adopted. (6
R.C.L., 243 and decisions cited therein.)1awphil.net
In his third assignment of error the petitioner claims that "The lower court erred in not holding that
the power given by Act No. 3155 to the Governor-General to suspend or not, at his discretion, the
prohibition provided in the act constitutes an unlawful delegation of the legislative powers." We do
not think that such is the case; as Judge Ranney of the Ohio Supreme Court in Cincinnati,
Wilmington and Zanesville Railroad Co. vs. Commissioners of Clinton County (1 Ohio St., 77, 88)
said in such case:
The true distinction, therefore, is between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and conferring an authority or
discretion as to its execution, to be exercised under and in pursuance of the law. The first
cannot be done; to the latter no valid objection can be made.
Under his fourth assignment of error the appellant argues that Act No. 3155 amends section 3 of the
Tariff Law, but it will be noted that Act No. 3155 is not an absolute prohibition of the importation
of cattle and it does not add any provision to section 3 of the Tariff Law. As stated in the brief of the
Attorney-General: "It is a complete statute in itself. It does not make any reference to the Tariff
Law. It does not permit the importation of articles, whose importation is prohibited by the Tariff
Law. It is not a tariff measure but a quarantine measure, a statute adopted under the police power of
the Philippine Government. It is at most a `supplement' or an `addition' to the Tariff Law. (See
MacLeary vs. Babcock, 82 N.E., 453, 455; 169 Ind., 228 for distinction between `supplemental' and
`amendatory' and O'Pry vs. U.S., 249 U.S., 323; 63 Law. ed., 626, for distinction between `addition'
and `amendment.')"
The decision appealed from is affirmed with the costs against the appellant. So ordered.
G.R. No. L-32166 October 18, 1977
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,
vs.
HON. MAXIMO A. MACEREN CFI, Sta. Cruz, Laguna, JOSE BUENAVENTURA,
GODOFREDO REYES, BENJAMIN REYES, NAZARIO AQUINO and CARLO DEL
ROSARIO, accused-appellees.
AQUINO, J.:
This is a case involving the validity of a 1967 regulation, penalizing electro fishing in fresh water
fisheries, promulgated by the Secretary of Agriculture and Natural Resources and the Commissioner
of Fisheries under the old Fisheries Law and the law creating the Fisheries Commission.
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. 84-1.
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 by "using their own motor banca,
equipped with motor; with a generator colored green with attached dynamo colored gray or
somewhat white; and electrocuting device locally known as sensored with a somewhat webbed
copper wire on the tip or other end of a bamboo pole with electric wire attachment which was
attached to the dynamo direct and with the use of these devices or equipments catches fish thru
electric current, which destroy any aquatic animals within its cuffed reach, to the detriment and
prejudice of the populace" (Criminal Case No. 5429).
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 (Civil Case No. SC-36). 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 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.
As legal background, it should be stated that section 11 of the Fisheries Law prohibits "the use of
any obnoxious or poisonous substance" in fishing.
Section 76 of the same law punishes any person who uses an obnoxious or poisonous substance in
fishing with a fine of not more than five hundred pesos nor more than five thousand, and by
imprisonment for not less than six months nor more than five years.
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 (62 O.G. 1224), prohibiting electro fishing in all Philippine waters. The order is quoted
below: ñé+.£ªwph!1
 SUBJECT: PROHIBITING ELECTRO FISHING IN ALL
WATERS ñé+.£ªwph!1
OF THE PHILIPPINES.
Pursuant to Section 4 of Act No. 4003, as amended, and Section 4 of R.A. No. 3512, the following
rules and regulations regarding the prohibition of electro fishing in all waters of the Philippines are
promulgated for the information and guidance of all concerned.ñé+.£ªwph!1
SECTION 1. — Definition. — Words and terms used in this Order 11
construed as follows:
(a) Philippine waters or territorial waters of the Philippines' includes all waters
of the Philippine Archipelago, as defined in the t between the United States
and Spain, dated respectively the tenth of December, eighteen hundred ninety
eight and the seventh of November, nineteen hundred. For the purpose of this
order, rivers, lakes and other bodies of fresh waters are included.
(b) Electro Fishing. — Electro fishing is the catching of fish with the use
of electric current. The equipment used are of many electrical devices which
may be battery or generator-operated and from and available source of electric
current.
(c) 'Persons' includes firm, corporation, association, agent or employee.
(d) 'Fish' includes other aquatic products.
SEC. 2. — Prohibition. — It shall be unlawful for any person to engage in
electro fishing or to catch fish by the use of electric current in any portion of
the Philippine waters except for research, educational and scientific purposes
which must be covered by a permit issued by the Secretary of Agriculture and
Natural Resources which shall be carried at all times.
SEC. 3. — Penalty. — Any violation of the provisions of this
Administrative Order shall subject the offender to a fine of not
exceeding five hundred pesos (P500.00) or imprisonment of not extending six
(6) months or both at the discretion of the Court.
SEC. 4. — Repealing Provisions. — All administrative orders or parts
thereof inconsistent with the provisions of this Administrative Order are
hereby revoked.
SEC. 5. — Effectivity. — This Administrative Order shall take effect six (60)
days after its publication in the Office Gazette.
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 (63 O.G. 9963).
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."
The Court of First Instance and the prosecution (p. 11 of brief) assumed that electro fishing is
punishable under section 83 of the Fisheries Law (not under section 76 thereof), which provides that
any other violation of that law "or of any rules and regulations promulgated thereunder shall subject
the offender to a fine of not more than two hundred pesos (P200), or in t for not more than six
months, or both, in the discretion of the court."
That assumption is incorrect because 3 of the aforequoted Administrative Order No. 84 imposes a
fm of not exceeding P500 on a person engaged in electro fishing, which amount the 83. It seems that
the Department of Fisheries prescribed their own penalty for swift fishing which penalty is less than
the severe penalty imposed in section 76 and which is not Identified to the at penalty imposed in
section 83.
Had Administrative Order No. 84 adopted the fighter penalty prescribed in on 83, then the crime of
electro fishing would be within the exclusive original jurisdiction of the inferior court (Sec. 44 [f],
Judiciary Law; People vs. Ragasi, L-28663, September 22,
We have discussed this pre point, not raised in the briefs, because it is obvious that the crime of
electro fishing which is punishable with a sum up to P500, falls within the concurrent original
jurisdiction of the inferior courts and the Court of First instance (People vs. Nazareno, L-40037,
April 30, 1976, 70 SCRA 531 and the cases cited therein).
And since the instant case was filed in the municipal court of Sta. Cruz, Laguna, a provincial
capital, the order of d rendered by that municipal court was directly appealable to the Court, not to
the Court of First Instance of Laguna (Sec. 45 and last par. of section 87 of the Judiciary Law;
Esperat vs. Avila, L-25992, June 30, 1967, 20 SCRA 596).
It results that the Court of First Instance of Laguna had no appellate jurisdiction over the case. Its
order affirming the municipal court's order of dismissal is void for lack of motion. This appeal shall
be treated as a direct appeal from the municipal court to this Court. (See People vs. Del Rosario, 97
Phil. 67).
In this appeal, the prosecution argues that Administrative Orders Nos. 84 and 84-1 were not issued
under section 11 of the Fisheries Law which, as indicated above, punishes fishing by means of an
obnoxious or poisonous substance. This contention is not well-taken because, as already stated, the
Penal provision of Administrative Order No. 84 implies that electro fishing is penalized as a form of
fishing by means of an obnoxious or poisonous substance under section 11.
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
(Sec. 4[c] and [h] Republic Act No. 3512; (3) the declared national policy to encourage, Promote
and conserve our fishing resources (Sec. 1, Republic Act No. 3512), 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."
As already pointed out above, the prosecution's reference to section 83 is out of place because the
penalty for electro fishing under Administrative order No. 84 is not the same as the penalty fixed in
section 83.
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 84-1 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.
Had the lawmaking body intended to punish electro fishing, a penal provision to that effect could
have been easily embodied in the old Fisheries Law.
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, as already shown, 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.
The lawmaking body cannot delegate to an executive official the power to declare what acts should
constitute an offense. It can authorize the issuance of regulations and the imposition of the penalty
provided for in the law itself. (People vs. Exconde 101 Phil. 11 25, citing 11 Am. Jur. 965 on p. 11
32).
Originally, Administrative Order No. 84 punished electro fishing in all waters. Later, the ban against
electro fishing was confined to fresh water fisheries. The amendment created the impression that
electro fishing is not condemnable per se. It could be tolerated in marine waters. That circumstances
strengthens the view that the old law does not eschew all forms of electro fishing.
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 (71 O.G. 4269), expressly punishes electro fishing in
fresh water and salt water areas.
That decree provides: ñé+.£ªwph!1
SEC. 33. — Illegal fishing, dealing in illegally caught fish or fishery/aquatic
products. — It shall he unlawful for any person to catch, take or gather or
cause to be caught, taken or gathered fish or fishery/aquatic products in
Philippine waters with the use of explosives, obnoxious or poisonous
substance, or by the use of electricity as defined in paragraphs (1), (m) and (d),
respectively, of Section 3 hereof: ...
The decree Act No. 4003, as amended, Republic Acts Nos. 428, 3048, 3512 and 3586, Presidential
Decrees Nos. 43, 534 and 553, and all , Acts, Executive Orders, rules and regulations or parts
thereof inconsistent with it (Sec. 49, P. D. No. 704).
The inclusion in that decree of provisions defining and penalizing electro fishing is a clear
recognition of the deficiency or silence on that point of the old Fisheries Law. It is an admission that
a mere executive regulation is not legally adequate to penalize electro fishing.
Note that the definition of electro fishing, which is found in section 1 (c) of Fisheries Administrative
Order No. 84 and which is not provided for the old Fisheries Law, is now found in section 3(d) of
the decree. Note further that the decree penalty electro fishing by "imprisonment from two (2) to
four (4) years", a punishment which is more severe than the penalty of a time of not excluding P500
or imprisonment of not more than six months or both fixed in section 3 of Fisheries Administrative
Order No. 84.
An examination of the rule-making power of executive officials and administrative agencies and, in
particular, of the Secretary of Agriculture and Natural Resources (now Secretary of Natural
Resources) under the Fisheries Law sustains the view that he ex his authority in penalizing electro
fishing by means of an administrative order.
Administrative agent are clothed with rule-making powers because the lawmaking body finds it
impracticable, if not impossible, to anticipate and provide for the multifarious and complex
situations that may be encountered in enforcing the law. All that is required is that the regulation
should be germane to the defects and purposes of the law and that it should conform to the standards
that the law prescribes (People vs. Exconde 101 Phil. 1125; Director of Forestry vs. Muñ;oz, L-
24796, June 28, 1968, 23 SCRA 1183, 1198; Geukeko vs. Araneta, 102 Phil. 706, 712).
The lawmaking body cannot possibly provide for all the details in the enforcement of a particular
statute (U.S. vs. Tupasi Molina, 29 Phil. 119, 125, citing U.S. vs. Grimaud 220 U.S. 506;
Interprovincial Autobus Co., Inc. vs. Coll. of Internal Revenue, 98 Phil. 290, 295-6).
The grant of the rule-making power to administrative agencies is a relaxation of the principle of
separation of powers and is an exception to the nondeleption of legislative, powers. Administrative
regulations or "subordinate legislation calculated to promote the public interest are necessary
because of "the growing complexity of modem life, the multiplication of the subjects of
governmental regulations, and the increased difficulty of administering the law" Calalang vs.
Williams, 70 Phil. 726; People vs. Rosenthal and Osmeñ;a, 68 Phil. 328).
Administrative regulations adopted under legislative authority by a particular department must be in
harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its
general provisions. By such regulations, of course, the law itself cannot be extended. (U.S. vs.
Tupasi Molina, supra). An administrative agency cannot amend an act of Congress (Santos vs.
Estenzo, 109 Phil. 419, 422; Teoxon vs. Members of the d of Administrators, L-25619, June 30,
1970, 33 SCRA 585; Manuel vs. General Auditing Office, L-28952, December 29, 1971, 42 SCRA
660; Deluao vs. Casteel, L-21906, August 29, 1969, 29 SCRA 350).
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. (University of Santo Tomas vs. Board of Tax A 93 Phil. 376, 382,
citing 12 C.J. 845-46. As to invalid regulations, see of Internal Revenue vs. Villaflor 69 Phil. 319,
Wise & Co. vs. Meer, 78 Phil. 655, 676; Del March vs. Phil. Veterans Administrative, L-27299,
June 27, 1973, 51 SCRA 340, 349).
There is no question that the Secretary of Agriculture and Natural Resources has rule-making
powers. Section 4 of the Fisheries law provides that the Secretary "shall from time to time issue
instructions, orders, and regulations consistent" with that law, "as may be and proper to carry into
effect the provisions thereof." That power is now vested in the Secretary of Natural Resources by on
7 of the Revised Fisheries law, Presidential December No. 704.
Section 4(h) of Republic Act No. 3512 empower the Co of Fisheries "to prepare and execute upon
the approval of the Secretary of Agriculture and Natural Resources, forms instructions, rules and
regulations consistent with the purpose" of that enactment "and for the development of fisheries."
Section 79(B) of the Revised Administrative Code provides that "the Department Head shall have
the power to promulgate, whenever he may see fit do so, all rules, regulates, orders, memorandums,
and other instructions, not contrary to law, to regulate the proper working and harmonious and
efficient administration of each and all of the offices and dependencies of his Department, and for
the strict enforcement and proper execution of the laws relative to matters under the jurisdiction of
said Department; but none of said rules or orders shall prescribe penalties for the violation thereof,
except as expressly authorized by law."
Administrative regulations issued by a Department Head in conformity with law have the force of
law (Valerie vs. Secretary of culture and Natural Resources, 117 Phil. 729, 733; Antique Sawmills,
Inc. vs. Zayco, L- 20051, May 30, 1966, 17 SCRA 316). As he exercises the rule-making 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.
Article 7 of the Civil Code embodies the basic principle that administrative or executive acts, orders
and regulations shall be valid only when they are not contrary to the laws or the Constitution."
As noted by Justice Fernando, "except for constitutional officials who can trace their competence to
act to the fundamental law itself, a public office must be in the statute relied upon a grant of power
before he can exercise it." "department zeal may not be permitted to outrun the authority conferred
by statute." (Radio Communications of the Philippines, Inc. vs. Santiago, L-29236, August 21,
1974, 58 SCRA 493, 496-8).
"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. The details and the manner of carrying out the law are oftentimes left to the
administrative agency entrusted with its enforcement. In this sense, it has been said that rules and
regulations are the product of a delegated power to create new or additional legal provisions that
have the effect of law." The rule or regulation should be within the scope of the statutory authority
granted by the legislature to the administrative agency. (Davis, Administrative Law, p. 194, 197,
cited in Victories Milling Co., Inc. vs. Social Security Commission, 114 Phil. 555, 558).
In case of discrepancy between the basic law and a rule or regulation issued to implement said law,
the basic law prevails because said rule or regulation cannot go beyond the terms and provisions of
the basic law (People vs. Lim, 108 Phil. 1091).
This Court in its decision in the Lim case, supra, promulgated on July 26, 1960, called the attention
of technical men in the executive departments, who draft rules and regulations, to the importance
and necessity of closely following the legal provisions which they intend to implement so as to
avoid any possible misunderstanding or confusion.
The rule is that the violation of a regulation prescribed by an executive officer of the government in
conformity with and based upon a statute authorizing such regulation constitutes an offense and
renders the offender liable to punishment in accordance with the provisions of the law (U.S. vs.
Tupasi Molina, 29 Phil. 119, 124).
In other words, a violation or infringement of a rule or regulation validly issued can constitute a
crime punishable as provided in the authorizing statute and by virtue of the latter (People vs.
Exconde 101 Phil. 1125, 1132).
It has been held that "to declare what shall constitute a crime and how it shall be punished is a
power vested exclusively in the legislature, and it may not be delegated to any other body or
agency" (1 Am. Jur. 2nd, sec. 127, p. 938; Texas Co. vs. Montgomery, 73 F. Supp. 527).
In the instant case the regulation penalizing electro fishing is not strictly in accordance with the
Fisheries Law, under which the regulation was issued, because the law itself does not expressly
punish electro fishing.
The instant case is similar to People vs. Santos, 63 Phil. 300. The Santos case involves section 28 of
Fish and Game Administrative Order No. 2 issued by the Secretary of Agriculture and Natural
Resources pursuant to the aforementioned section 4 of the Fisheries Law.
Section 28 contains the proviso that a fishing boat not licensed under the Fisheries Law and under
the said administrative order may fish within three kilometers of the shoreline of islands and
reservations over which jurisdiction is exercised by naval and military reservations authorities of the
United States only upon receiving written permission therefor, which permission may be granted by
the Secretary upon recommendation of the military or naval authorities concerned. A violation of
the proviso may be proceeded against under section 45 of the Federal Penal Code.
Augusto A. Santos was prosecuted under that provision in the Court of First Instance of Cavite for
having caused his two fishing boats to fish, loiter and anchor without permission from the Secretary
within three kilometers from the shoreline of Corrigidor Island.
This Court held that the Fisheries Law does not prohibit boats not subject to license from fishing
within three kilometers of the shoreline of islands and reservations over which jurisdiction is
exercised by naval and military authorities of the United States, without permission from the
Secretary of Agriculture and Natural Resources upon recommendation of the military and naval
authorities concerned.
As the said law does not penalize the act mentioned in section 28 of the administrative order, the
promulgation of that provision by the Secretary "is equivalent to legislating on the matter, a power
which has not been and cannot be delegated to him, it being expressly reserved" to the lawmaking
body. "Such an act constitutes not only an excess of the regulatory power conferred upon the
Secretary but also an exercise of a legislative power which he does not have, and therefore" the said
provision "is null and void and without effect". Hence, the charge against Santos was dismiss.
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. (Glustrom vs. State, 206
Ga. 734, 58 Second 2d 534; See 2 Am. Jr. 2nd 129-130).
Where the legislature has delegated to executive or administrative officers and boards authority to
promulgate rules to carry out an express legislative purpose, the rules of administrative officers and
boards, which have the effect of extending, or which conflict with the authority granting statute, do
not represent a valid precise of the rule-making power but constitute an attempt by an administrative
body to legislate (State vs. Miles, Wash. 2nd 322, 105 Pac. 2nd 51).
In a prosecution for a violation of an administrative order, it must clearly appear that the order is
one which falls within the scope of the authority conferred upon the administrative body, and the
order will be scrutinized with special care. (State vs. Miles supra).
The Miles case involved a statute which authorized the State Game Commission "to adopt,
promulgate, amend and/or repeal, and enforce reasonable rules and regulations governing and/or
prohibiting the taking of the various classes of game.
Under that statute, the Game Commission promulgated a rule that "it shall be unlawful to offer, pay
or receive any reward, prize or compensation for the hunting, pursuing, taking, killing
or displaying of any game animal, game bird or game fish or any part thereof."
Beryl S. Miles, the owner of a sporting goods store, regularly offered a ten-down cash prize to the
person displaying the largest deer in his store during the open for hunting such game animals. For
that act, he was charged with a violation of the rule Promulgated by the State Game Commission.
It was held that there was no statute penalizing the display of game. What the statute penalized was
the taking of game. If the lawmaking body desired to prohibit the display of game, it could have
readily said so. It was not lawful for the administrative board to extend or modify the statute. Hence,
the indictment against Miles was quashed. The Miles case is similar to this case.
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, Laguna in
Criminal Case No. 5429 is affirmed. Costs de oficio.
SO ORDERED.
G.R. No. L-50908 January 31, 1984
MARY CONCEPCION BAUTISTA and ENRIQUE D. BAUTISTA, petitioners,
vs.
ALFREDO L. JUINIO, ROMEO F. EDU and FIDEL V. RAMOS, respondents.
FERNANDO, C.J.:
The validity of an energy conservation measure, Letter of Instruction No. 869, issued on May 31,
1979 — the response to the protracted oil crisis that dates back to 1974 — is put in issue in this
prohibition proceeding filed by petitioners, spouses Mary Concepcion Bautista and Enrique
D. Bautista, for being allegedly violative of the due process and equal protection
guarantees 1 of the Constitution. The use of private motor vehicles with H and EH plates on week-
ends and holidays was banned from "[12:00] a.m. Saturday morning to 5:00 a.m. Monday morning,
or 1:00 a.m. of the holiday to 5:00 a.m. of the day after the holiday." 2 Motor vehicles of the
following classifications are exempted: (a) S (Service); (b) T (Truck); (e) DPL (Diplomatic); (d) CC
(Consular Corps); (e) TC (Tourist Cars). 3Pursuant thereto, respondent Alfredo L. Juinio, then
Minister of Public Works, Transportation and Communications and respondent Romeo P. Edu, then
Commissioner of Land Transportation Commission issued on June 11, 1979, Memorandum Circular
No. 39, which imposed "the penalties of fine, confiscation of vehicle and cancellation of registration
on owners of the above-specified vehicles" found violating such Letter of Instruction. 4 It was then
alleged by petitioners that "while the purpose for the issuance of the LOI 869 is laudable, to wit,
energy conservation, the provision banning the use of H and EH [vehicles] is unfair, discriminatory,
[amounting to an] arbitrary classification" and thus in contravention of the equal protection
clause. 5 Moreover, for them, such Letter of Instruction is a denial of due process, more specifically,
"of their right to use and enjoy their private property and of their freedom to travel and hold family
gatherings, reunions and outings on week-ends and holidays," inviting attention to the fact that
others not included in the ban enjoying "unrestricted freedom." 6 It would follow, so they contend
that Memorandum Circular No. 39 imposing penalties of fine, confiscation of the vehicle and
cancellation of license is likewise unconstitutional, for being violative of the doctrine of "undue
delegation of legislative power." 7 It is to be noted that such Memorandum Circular does not impose
the penalty of confiscation but merely that of impounding, fine, and for the third offense that of
cancellation of certificate of registration and for the rest of the year or for ninety days whichever is
longer.
This Court gave due course to the petition requiring respondent to answer. There was admission of
the facts as substantially alleged except, as previously noted, that the ban starts at 12:00 a.m. rather
than 1:00 a.m. of a Saturday or of a holiday and as to the mention of a Willy's Kaiser jeep being
registered in the name of a certain Teresita Urbina, about which respondents had no knowledge.
There was a denial of the allegations that the classification of vehicles into heavy H and extra heavy
(EH) on the other hand and light and bantam on the other hand was violative of equal protection and
the regulation as to the use of the former cars on the dates specified a transgression of due process.
The answer likewise denied that there was an undue delegation of legislative power, reference being
made to the Land Transportation and Traffic Code. 8 There was also a procedural objection raised,
namely, that what is sought amounts at most to an advisory opinion rather than an ajudication of a
case or controversy.
Petitioners filed a motion to be allowed to reply to the answer. It was granted. The reply,
considering its exhaustive character serving as its memorandum, stressed anew what it emphasized
as the arbitrary, unreasonable, and oppressive aspects of the challenged Letter of Instruction and
Memorandum Circular No. 39. It disputed what it characterized as an "erroneous and arbitrary
presumption that heavy car owners unnecessarily use and therefore waste gasoline whenever they
drive their cars on week-ends and holidays;" 9 it stigmatized the ban as defeating its "avowed
purpose in the case of the affluent who own not only heavy limousines but also many small cars [as]
they may be compelled to use at least two small cars;" 10 referred to the high cost of taxis or other
public transports for those "not able to afford expensive small cars [possibly] only one heavy and
possible old model;" 11 cited the case of "many eight cylinder vehicles which because of their
weight have been registered as light but in fact consume more or as much gasoline as the banned
vehicles." 12 Their conclusion is that "the ban imposed, in result and effect is class legislation." 13
The parties were required to submit memoranda. Respondents did so but not petitioners. They relied
on their reply to the answer — as noted, a rather comprehensive pleading. For reasons to be
set forth, this Court holds that the petition cannot prosper.
1. First as to the procedural objection. In the memorandum for respondents, one of the issues raised
was whether "the power of judicial review may be invoked considering the inadequacy of the record
and the highly abstract and academic questions raised by the petitioners." 14 It is inaccurate to say
that the record is inadequate. It does not admit of doubt that the ban applies to petitioners who are
"the registered owners of an eight cylinder 1969 Buick, and the vendees of a six cylinder Willy's
kaiser jeep, which are both classified as heavy or H." 15 To that extent, therefore, the enforcement
of the assailed Letter of Instruction will amount to a deprivation of what otherwise would be a valid
exercise of a property right. Thus they fall squarely within "the unchallenged rule" as to who may
raise a constitutional question, namely, to quote the language of Justice Laurel in the leading case
of People v. Vera, 16 "that the person who impugns the validity of a statute must have a personal
and substantial interest in the case such that he has sustained, or will sustain direct injury as a result
of its enforcement. 17 Moreover, that rule has been considerably relaxed. 18 The question then is
neither abstract nor academic as contended by respondents.
2. There is, however, this formidable obstacle that confronts petitioners. What they seek is for this
Court to hold that a Letter of Instruction, a regulatory measure precisely enacted to cope with the
serious and grave problem of energy conservation, is void on its face. Such a task is rendered
unusually difficult by what has been referred to by Justice Laurel in the leading case of Angara v.
Electoral Commission 19 as the "presumption of constitutionality" and by the same jurist in the case
of People v. Vera 20 in slightly different words "a presumption that such an act falls within
constitutional limitations." There is need then for a factual foundation of invalidity. In the language
of Ermita-Malate Hotel & Motel Operations Association, Inc. v. City Mayor or Manila: "It admits
of no doubt therefore that there being a presumption of validity, the necessity for evidence to rebut it
is unavoidable, unless the statute or ordinance is void on its face, which is not the case here. The
principle has been nowhere better expressed than in the leading case of O'Gorman & Young v.
Hartford Fire Insurance Co., where the American Supreme Court through Justice Brandeis tersely
and succinctly summed up the matter thus: 'The statute here questioned deals with a subject clearly
within the scope of the police power. We are asked to declare it void on the ground that the specific
method of regulation prescribed is unreasonable and hence deprives the plaintiff of due process of
law. As underlying questions of fact may condition the constitutionality of legislation of this
character, the presumption of constitutionality must prevail in the absence of some factual
foundation of record for overthrowing the statute.' " 21
3. It is true, of course, that there may be instances where a police power measure may, because of its
arbitrary, oppressive or unjust character, be held offensive to the due process clause and, therefore,
may, when challenged in an appropriate legal proceeding, be declared void on its face. This is not
one of them. A recital of the whereas clauses of the Letter of Instruction makes it clear. Thus:
"[Whereas], developments in the international petroleum supply situation continue to follow a trend
of limited production and spiralling prices thereby precluding the possibility of immediate relief in
supplies within the foreseeable future; [Whereas], the uncertainty of fuel supply availability
underscores a compelling need for the adoption of positive measures designed to insure the viability
of the country's economy and sustain its developmental growth; [Whereas], to cushion the effect of
increasing oil prices and avoid fuel supply disruptions, it is imperative to adopt a program directed
towards the judicious use of our energy resources complemented with intensified conservation
efforts and efficient utilization thereof; * * *." 22 That is undeniable is that the action taken is an
appropriate response to a problem that presses urgently for solution. It may not be the only
alternative, but its reasonableness is immediately apparent. Thus, to repeat, substantive due process,
which is the epitome of reasonableness and fair play, is not ignored, much less infringed.
4. In the interplay between such a fundamental right and police power, especially so where the
assailed governmental action deals with the use of one's property, the latter is accorded much
leeway. That is settled law. What is more, it is good law. Due process, therefore, cannot be validly
invoked. As stressed in the cited Ermita-Malate Hotel decision: "To hold otherwise would be to
unduly restrict and narrow the scope of police power which has been properly characterized as the
most essential, insistent and the least limitable of powers, extending as it does 'to all the great public
needs.' It would be, to paraphrase another leading decision, to destroy the very purpose of the state
if it could be deprived or allowed itself to be deprived of its competence to promote public health,
public morals, public safety and the general welfare. Negatively put, police power is 'that inherent
and plenary power in the State which enables it to prohibit all that is hurtful to the comfort, safety,
and welfare of society.' " 23
5. The due process question having been disposed of, there is still the objection based on the equal
protection clause to be considered. A governmental act may not be offensive to the due process
clause, but may run counter to such a guarantee. Such is the case when there is no rational basis for
the classification followed. That is the point raised by petitioners. For them, there is no rational
justification for the ban being imposed on vehicles classified as heavy (H) and extra-heavy (EH), for
precisely those owned by them fall within such category. Tested by the applicable standard that
must be satisfied to avoid the charge of a denial of equal protection, the objection of petitioners is
shown to be lacking in merit. Such a classification on its face cannot be characterized as an affront
to reason. A legal norm according to J.M. Tuason & Co., Inc. vs. Land Tenure
Administration, 24 "whether embodied in a rule, principle, or standard, constitutes a defense against
anarchy at one extreme and tyranny at the other. Thereby, people living together in a community
with its myriad and complex problems can minimize the friction and reduce the conflicts, to assure,
at the very least, a peaceful ordering of existence. The Ideal situation is for the law's benefits to be
available to all, that none be placed outside the sphere of its coverage. Only thus could chance and
favor be excluded and the affairs of men governed by that serene and impartial uniformity, which is
of the very essence of the Idea of law. The actual, given things as they are and likely to continue to
be, cannot approximate the Ideal. Nor is the law susceptible to the reproach that it does not take into
account the realties of the situation. * * * To assure that the general welfare be promoted, which is
the end of law, a regulatory measure may cut into the rights to liberty and property. Those adversely
affected may under such circumstances invoke the equal protection clause only if they can show that
the governmental act assailed, far from being inspired by the attainment of the common weal was
prompted by the spirit of hostility, or at the very least, discrimination that finds no support in
reason. It suffices then that the laws operate equally and uniformly on all persons under similar
circumstances or that all persons must be treated in the same manner, the conditions not being
different, both in the privileges conferred and the liabilities imposed. Favoritism and undue
preference cannot be allowed. For the principle is that equal protection and security shall be given to
every person under circumstances, which if not Identical are analogous. If law be looked upon in
terms of burden or charges, those that fall within a class should be treated in the same fashion,
whatever restrictions cast on some in the group equally binding on the rest." 25
6. Nor does it militate against the validity of the Letter of Instruction just because the ban imposed
does not go as far as it could have and therefore could be less efficacious in character. That was the
solution which for the President expressing a power validly lodged in him, recommended itself.
There was a situation that called for a corrective measure. He decided that what was issued by him
would do just that or, at the very least, help in easing the situation. That it did not cover other
matters which could very well have been regulated does not call for a declaration of nullity. The
President, to paraphrase Lutz v. Araneta, 26 "is not required by the Constitution to adhere to the
policy of all or none." 27 It is quite obvious then that no equal protection question arises.
7. It may not be amiss to refer to a 1981 American Supreme Court decision, Minnesota v. Clover
Leaf Creamery Company. 28 Respondent along with several other business corporations adversely
affected involved in the manufacture and utilization of plastic milk containers filed suit in a
Minnesota district court seeking to enjoin enforcement of a Minnesota statute banning the retail sale
of milk in plastic nonreturnable, nonrefillable containers, but permitting such sale in other
nonreturnable, nonrefillable containers, such as paperboard, milk cartons. After conducting
extensive evidentiary hearings, the Minnesota court enjoined enforcement of the statute, finding that
it violated among others the equal protection clause of the Fourteenth Amendment to the Federal
Constitution. The Minnesota Supreme Court affirmed. On certiorari, the United States Supreme
Court reversed, with only Justice Stevens dissenting. The opinion by Justice Brennan noted that
"proponents of the legislation argued that it would promote resource conservation, ease solid waste
disposal problems, and conserve energy." 29 That sufficed for the Court to conclude "that the ban on
plastic nonreturnable milk containers bears a rational relation to the State's objectives, and must be
sustained under the Equal Protection Clause." 30 It does show that notwithstanding the "new equal
protection approach" with its emphasis on "suspect classification" and "fundamental rights and
interests standard," a concept so ably expounded by professor Gunther, the "rational relation
test" 31 still retains its validity. Not that there could be any objection to the classification here
followed as being in any way susceptible to such a pejorative expression as "suspect" or that the
assailed Letter of Instruction does not qualify under "the fundamental rights and interests" standard
8. There was set forth in the petition what were referred to as "other reasonable measures which the
authorities concerned with energy conservation can take immediately, which are in fact acceptable
and obviously called for and should have been done long ago, to wit: 1. require and establish taxi
stands equipped with efficient telephone and communication systems; 2. strict implementation and
observance of cargo truck hours on main arteries; 3. strict observance of traffic rules; 4. effective
solution of traffic problems and decongestion of traffic through rerouting and quick repair of roads
and efficient operation of double decker buses; 5. rationing of gasoline to avoid panic buying and
give the private car owner the option and responsibility of deciding on the use of his allocation; 6.
allow neon and electrically devised advertising signs only from five o'clock p.m. to nine o'clock
p.m. 7. prohibit immediately the importation of heavy and luxury cars and seriously re-examine the
car manufacturing program." 32 Admittedly, such measures are conducive to energy conservation.
The question before us however is limited to whether or not Letter of Instruction 869 as
implemented by Memorandum Circular No. 39 is violative of certain constitutional rights. It goes no
further than that. The determination of the mode and manner through which the objective of
minimizing the consumption of oil products may be attained is left to the discretion of the political
branches. 33 Absent therefore the alleged infringement of constitutional rights, more precisely the
due process and equal protection guarantees, this Court cannot adjudge Letter of Instruction No. 869
as tainted by unconstitutionality.
9. It was likewise contended that Memorandum Circular No. 39, issued by the then respondent
Minister of Public Works, Transportation and Communications, and then respondent Land
Transportation Commissioner, imposing the penalties "of fine, confiscation of vehicle and
cancellation of license is likewise unconstitutional," petitioners invoking the principle of non-
delegation of legislative power. 34 To that extent that a Letter of Instruction may be viewed as an
exercise of the decree-making power of the President, then such an argument is futile. If, however,
viewed as a compliance with the duty to take care that the laws be faithfully executed, as a
consequence of which subordinate executive officials may in turn issue implementing rules and
regulations, then the objection would properly be considered as an ultra vires allegation. There is
this relevant excerpt from Teoxon v. Member of the Board of Administrators: 35 "1. The recognition
of the power of administrative officials to promulgate rules in the implementation of the statute,
necessarily limited to what is provided for in the legislative enactment, may be found in the early
case of United States v. Barrias decided in 1908. Then came, in a 1914 decision, United States v.
Tupasi Molina, a delineation of the scope of such competence. Thus: 'Of course the regulations
adopted under legislative authority by a particular department must be in harmony with the
provisions of the law, and for the sole purpose of carrying into effect its general provisions. By such
regulations, of course, the law itself can not be extended. So long, however, as the regulations relate
solely to carrying into effect the provisions of the law, they are valid.' In 1936, in People v. Santos,
this Court expressed its disapproval of an administrative order that would amount to an excess of the
regulatory power vested in an administrative official. We reaffirmed such a doctrine in a 1951
decision, where we again made clear that where an administrative order betrays inconsistency or
repugnancy to the provisions of the Act, 'the mandate of the Act must prevail and must be followed.'
Justice Barrera, speaking for the Court in Victorias Milling Company, Inc. v. Social Security
Commission, citing Parker as well as Davis did tersely sum up the matter thus: 'A rule is binding on
tile courts so long as the procedure fixed for its promulgation is followed and its scope is within the
statutory 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.' It cannot be
otherwise as the Constitution limits the authority of the President, in whom all executive power
resides, to take care that the laws be faithfully executed. No lesser administrative executive office or
agency then can, contrary to the express language of the Constitution, assert for itself a more
extensive prerogative." 36 It was alleged in the Answer of Solicitor General Estelito P. Mendoza that
Letter of Instruction 869 and Memorandum Circular No. 39 were adopted pursuant to the Land
Transportation and Traffic Code. 37 It contains a specific provision as to penalties. 38 Thus: "For
violation of any provisions of this Act or regulations promulgated pursuant hereto, not hereinbefore
specifically punished, a fine of not less than ten nor more than fifty pesos shall be
imposed." 39 Memorandum Circular No. 39 cannot be held to be ultra vires as long as the fine
imposed is not less than ten nor more than fifty pesos. As to suspension of registration, 40 the Code,
insofar as applicable, provides: "Whenever it shall appear from the records of the Commission that
during any twelve-month period more than three warnings for violations of this Act have been given
to the owner of a motor vehicle, or that the said owner has been convicted by a competent court
more than once for violation of such laws, the Commissioner may, in his discretion, suspend the
certificate of registration for a period not exceeding ninety days and, thereupon, shall require the
immediate surrender of the number plates * * *." 41 It follows that while the imposition of a fine or
the suspension of registration under the conditions therein set forth is valid under the Land
Transportation and Traffic Code, the impounding of a vehicle finds no statutory justification. To
apply that portion of Memorandum Circular No. 39 would be ultra vires. It must likewise be made
clear that a penalty even if warranted can only be imposed in accordance with the procedure
required by law. 42
WHEREFORE, the petition is dismissed.
G.R. No. 96266 July 18, 1991
ERNESTO M. MACEDA, petitioner,
vs.
ENERGY REGULATORY BOARD, CALTEX (Philippines), INC., PILIPINAS SHELL
PETROLEUM CORPORATION AND PETRON CORPORATION, respondents.
RESOLUTION
MEDIALDEA, J.:
In G.R. No. 96266, petitioner Maceda seeks nullification of the Energy Regulatory Board (ERB)
Orders dated December 5 and 6, 1990 on the ground that the hearings conducted on the second
provisional increase in oil prices did not allow him substantial cross-examination, in effect,
allegedly, a denial of due process.
The facts of the case are as follows:
Upon the outbreak of the Persian Gulf conflict on August 2, 1990, private respondents oil
companies filed with the ERB their respective applications on oil price increases (docketed as ERB
Case Nos. 90-106, 90-382 and 90-384, respectively).
On September 21, 1990, the ERB issued an order granting a provisional increase of P1.42 per liter.
Petitioner Maceda filed a petition for Prohibition on September 26, 1990 (E. Maceda v. ERB, et al.,
G.R. No. 95203), seeking to nullify the provisional increase. We dismissed the petition on
December 18, 1990, reaffirming ERB's authority to grant provisional increase even without prior
hearing, pursuant to Sec. 8 of E.O. No. 172, clarifying as follows:
What must be stressed is that while under Executive Order No. 172, a hearing is
indispensable, it does not preclude the Board from ordering, ex-parte, a provisional
increase, as it did here, subject to its final disposition of whether or not: (1) to make it
permanent; (2) to reduce or increase it further; or (3) to deny the application. Section 3,
paragraph (e) is akin to a temporary restraining order or a writ of preliminary attachment
issued by the courts, which are given ex-parte and which are subject to the resolution of
the main case.
Section 3, paragraph (e) and Section 8 do not negate each other, or otherwise, operate
exclusively of the other, in that the Board may resort to one but not to both at the same
time. Section 3(e) outlines the jurisdiction of the Board and the grounds for which it may
decree a price adjustment, subject to the requirements of notice and hearing. Pending that,
however, it may order, under Section 8, an authority to increase provisionally, without
need of a hearing, subject to the final outcome of the proceeding. The Board, of course, is
not prevented from conducting a hearing on the grant of provisional authority-which is of
course, the better procedure — however, it cannot be stigmatized later if it failed to
conduct one. (pp. 129-130, Rollo) (Emphasis supplied)
In the same order of September 21, 1990, authorizing provisional increase, the ERB set the
applications for hearing with due notice to all interested parties on October 16, 1990. Petitioner
Maceda failed to appear at said hearing as well as on the second hearing on October 17, 1990.
To afford registered oppositors the opportunity to cross-examine the witnesses, the ERB set the
continuation of the hearing to October 24, 1990. This was postponed to November 5, 1990, on
written notice of petitioner Maceda.
On November 5, 1990, the three oil companies filed their respective motions for leave to file or
admit amended/supplemental applications to further increase the prices of petroleum products.
The ERB admitted the respective supplemental/amended petitions on November 6, 1990 at the same
time requiring applicants to publish the corresponding Notices of Public Hearing in two newspapers
of general circulation (p. 4, Rollo and Annexes "F" and "G," pp. 60 and 62, Rollo).
Hearing for the presentation of the evidence-in-chief commenced on November 21, 1990 with ERB
ruling that testimonies of witnesses were to be in the form of Affidavits (p. 6, Rollo). ERB
subsequently outlined the procedure to be observed in the reception of evidence, as follows:
CHAIRMAN FERNANDO:
Well, at the last hearing, applicant Caltex presented its evidence-in-chief and there is an
understanding or it is the Board's wish that for purposes of good order in the presentation
of the evidence considering that these are being heard together, we will defer the cross-
examination of applicant Caltex's witness and ask the other applicants to present their
evidence-in-chief so that the oppositors win have a better Idea of what an of these will
lead to because as I mentioned earlier, it has been traditional and it is the intention of the
Board to act on these applications on an industry-wide basis, whether to accept, reject,
modify or whatever, the Board win do it on an industry wide basis, so, the best way to
have (sic) the oppositors and the Board a clear picture of what the applicants are asking
for is to have all the evidence-in-chief to be placed on record first and then the
examination will come later, the cross-examination will come later. . . . (pp. 5-6, tsn.,
November 23, 1990, ERB Cases Nos. 90-106, 90382 and 90-384). (p. 162, Rollo)
Petitioner Maceda maintains that this order of proof deprived him of his right to finish his cross-
examination of Petron's witnesses and denied him his right to cross-examine each of the witnesses
of Caltex and Shell. He points out that this relaxed procedure resulted in the denial of due process.
We disagree. The Solicitor General has pointed out:
. . . The order of testimony both with respect to the examination of the particular witness
and to the general course of the trial is within the discretion of the court and the exercise
of this discretion in permitting to be introduced out of the order prescribed by the rules is
not improper (88 C.J.S. 206-207).
Such a relaxed procedure is especially true in administrative bodies, such as the ERB
which in matters of rate or price fixing is considered as exercising a quasi-legislative, not
quasi-judicial, function As such administrative agency, it is not bound by the strict or
technical rules of evidence governing court proceedings (Sec. 29, Public Service Act;
Dickenson v. United States, 346, U.S. 389, 98 L. ed. 132, 74 S. St. 152). (Emphasis
supplied)
In fact, Section 2, Rule I of the Rules of Practice and Procedure Governing Hearings
Before the ERB provides that —
 These Rules shall govern pleadings, practice and procedure before the Energy Regulatory
Board in all matters of inquiry, study, hearing, investigation and/or any other proceedings
within the jurisdiction of the Board. However, in the broader interest of justice, the Board
may, in any particular matter, except itself from these rules and apply such suitable
procedure as shall promote the objectives of the Order.
(pp. 163-164, Rollo)
Petitioner Maceda also claims that there is no substantial evidence on record to support the
provisional relief.
We have, in G.R. Nos. 95203-05, previously taken judicial notice of matters and events related to
the oil industry, as follows:
The Solicitor General has pointed out that aside from the increase in crude oil prices, all the
applications of the respondent oil companies filed with the ERB covered claims from the OPSF.
We shall thus respect the ERB's Order of December 5, 1990 granting a provisional price increase on
petroleum products premised on the oil companies' OPSF claims, crude cost peso differentials, forex
risk for a subsidy on sale to NPC (p. 167, Rollo), since the oil companies are "entitled to as much
relief as the fact alleged constituting the course of action may warrant," (Javellana v. D.O. Plaza
Enterprises, Inc., G.R. No. L-28297, March 30, 1970, 32 SCRA 261 citing Rosales v. Reyes, 25
Phil. 495; Aguilar v. Rubiato, 40 Phil. 470) as follows:
Per Liter
Weighted

. . . (1) as of June 30, 1990, the OPSF has incurred a deficit of P6.1 Billion; (2) the Petron Shell Caltex Average
exchange rate has fallen to P28.00 to $1.00; (3) the country's balance of payments is
expected to reach $1 Billion; (4) our trade deficit is at P2.855 Billion as of the first nine Crude Cost P3.11 P3.6047 P2.9248 P3.1523
months of the year.

Peso Cost
. . . (p. 150, Rollo)

Diffn'l 2.1747 1.5203 1.5669 1.8123

The Solicitor General likewise commented:

Forex Risk
Among the pieces of evidence considered by ERB in the grant of the contested
provisional relief were: (1) certified copies of bins of lading issued by crude oil suppliers
to the private respondents; (2) reports of the Bankers Association of the Philippines on Fee -0.1089 -0,0719 -0.0790 -0.0896
the peso-dollar exchange rate at the BAP oil pit; and (3) OPSF status reports of the Office
of Energy Affairs. The ERB was likewise guided in the determination of international Subsidy on
crude oil prices by traditional authoritative sources of information on crude oil and
petroleum products, such as Platt's Oilgram and Petroleum Intelligence Weekly. (p.
158, Rollo) Sales to NPC 0.1955 0.0685 0.0590 0.1203

Thus, We concede ERB's authority to grant the provisional increase in oil price, as We note that the Total Price
Order of December 5, 1990 explicitly stated:
Increase
in the light, therefore, of the rise in crude oil importation costs, which as earlier
mentioned, reached an average of $30.3318 per barrel at $25.551/US $ in September- Applied for P59.3713 P5.1216 P4.4717 P4.9954
October 1990; the huge OPSF deficit which, as reported by the Office of Energy Affairs,
has amounted to P5.7 Billion (based on filed claims only and net of the P5 Billion OPSF)
as of September 30, 1990, and is estimated to further increase to over P10 Billion by end Less: September 21 Price
December 1990; the decision of the government to discontinue subsidizing oil prices in
view of inflationary pressures; the apparent inadequacy of the proposed additional P5.1 Relief
Billion government appropriation for the OPSF and the sharp drop in the value of the
peso in relation to the US dollar to P28/US $, this Board is left with no other recourse but
Actual Price Increase P1.42
to grant applicants oil companies further relief by increasing the prices of petroleum
products sold by them. (p. 161, Rollo)
Actual Tax Reduction:
Petitioner Maceda together with petitioner Original (G.R. No. 96349) also claim that the provisional
increase involved amounts over and above that sought by the petitioning oil companies. Ad Valorem Tax
 (per Sept. 1, 1990 The petitions of E.O. Original et al. (G.R. No. 96349) and C.S. Povedas, Jr. (G.R. No. 96284),
insofar as they question the ERB's authority under Sec. 8 of E.O. 172, have become moot and
price build-up) P1.3333 academic.

Specific Tax (per We lament Our helplessness over this second provisional increase in oil price. We have stated that
this "is a question best judged by the political leadership" (G.R. Nos. 95203-05, G.R. Nos. 95119-
21, supra). We wish to reiterate Our previous pronouncements therein that while the government is
Oct. 5, 1990 price able to justify a provisional increase, these findings "are not final, and it is up to petitioners to
demonstrate that the present economic picture does not warrant a permanent increase."
build-up) .6264 .7069 2.1269
In this regard, We also note the Solicitor General's comments that "the ERB is not averse to the idea
Net Price Increase of a presidential review of its decision," except that there is no law at present authorizing the same.
Perhaps, as pointed out by Justice Padilla, our lawmakers may see the wisdom of allowing
presidential review of the decisions of the ERB since, despite its being a quasi-judicial body, it is
Applied for 2.8685 still "an administrative body under the Office of the President whose decisions should be appealed
to the President under the established principle of exhaustion of administrative remedies," especially
Nonetheless, it is relevant to point out that on December 10, 1990, the ERB, in response to the on a matter as transcendental as oil price increases which affect the lives of almost an Filipinos.
President's appeal, brought back the increases in Premium and Regular gasoline to the levels
mandated by the December 5, 1990 Order (P6.9600 and P6.3900, respectively), as follows: ACCORDINGLY, the petitions are hereby DISMISSED.

Product In Pesos Per Liter SO ORDERED.

OPSF

Premium Gasoline 6.9600

Regular Gasoline 6.3900

Avturbo 4.9950

Kerosene 1.4100

Diesel Oil 1.4100

Fuel Oil/Feedstock 0.2405

LPG 1.2200

Asphalt 2.5000

Thinner 2.5000

In G.R. No. 96349, petitioner Original additionally claims that if the price increase will be used to
augment the OPSF this will constitute illegal taxation. In the Maceda case, (G.R. Nos. 95203-
05, supra) this Court has already ruled that "the Board Order authorizing the proceeds generated by
the increase to be deposited to the OPSF is not an act of taxation but is authorized by Presidential
Decree No. 1956, as amended by Executive Order No. 137.
G.R. No. 78385 August 31, 1987
PHILIPPINE CONSUMERS FOUNDATION, INC., petitioner,
vs.
THE SECRETARY OF EDUCATION, CULTURE AND SPORTS, respondent.
GANCAYCO, J.:
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
schoolyear 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 asmuch as
the petitioner was not given due notice and hearing before the said Department Order was issued.
In support of the first argument, the petitioner argues that while the DECS is authorized by law to
regulate school fees in educational institutions, the power to regulate does not always include the
power to increase school fees. 5
Regarding the second argument, the petitioner maintains that students and parents are interested
parties that should be afforded an opportunity for a hearing before school fees are increased. In sum,
the petitioner stresses that the questioned Order constitutes a denial of substantive and procedural
due process of law.
Complying with the instructions of this Court, 6 the respondent Secretary submitted a Comment on
the Petition. 7The respondent Secretary maintains, inter alia, that the increase in tuition and other
school fees is urgent and necessary, and that the assailed Department Order is not arbitrary in
character. In due time, the petitioner submitted a Reply to the Comment. 8 Thereafter, We
considered the case submitted for resolution.
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:
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
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 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. 9a
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 schoolyear 1987 to 1988. This being so, prior notice and
hearing are not essential to the validity of its issuance.
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. 11
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.
WHEREFORE, in view of the foregoing, the instant Petition for prohibition is hereby DISMISSED
for lack of merit. We make no pronouncement as to costs.
SO ORDERED.
G.R. No. 119761 August 29, 1996
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
HON. COURT OF APPEALS, HON. COURT OF TAX APPEALS and FORTUNE
TOBACCO CORPORATION, respondents.
VITUG, J.:
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 Vinzons-Chato in her capacity as Commissioner of Internal
Revenue."
The facts, by and large, are not in dispute.
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." 3
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") to read; as follows:
Sec. 142. Cigars and Cigarettes. —
xxx xxx xxx
(c) Cigarettes packed by machine. — There shall be levied, assessed and
collected on cigarettes packed by machine a tax at the rates prescribed
below based on the constructive manufacturer's wholesale price or the actual
manufacturer's wholesale price, whichever is higher:
(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.
xxx xxx xxx
When the registered manufacturer's wholesale price or the actual
manufacturer's wholesale price whichever is higher of existing brands of
cigarettes, including the amounts intended to cover the taxes, of cigarettes
packed in twenties does not exceed Four Pesos and eighty centavos (P4.80) per
pack, the rate shall be twenty percent (20%). 7 (Emphasis supplied)
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 the
full text of which expressed:
REPUBLIKA NG PILIPINAS
KAGAWARAN NG PANANALAPI
KAWANIHAN NG RENTAS INTERNAS
REVENUE MEMORANDUM CIRCULAR NO. 37-93
SUBJECT: Reclassification of Cigarettes Subject to Excise Tax
TO: All Internal Revenue Officers and Others Concerned.
In view of the issues raised on whether "HOPE," "MORE" and "CHAMPION"
cigarettes which are locally manufactured are appropriately considered as
locally manufactured cigarettes bearing a foreign brand, this Office is
compelled to review the previous rulings on the matter.
Section 142 (c)(1) National Internal Revenue Code, as amended by R.A. No.
6956, provides:
On locally manufactured cigarettes bearing a foreign
brand, fifty-five percent (55%) Provided, That this rate
shall apply 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. Whenever it has to be
determined whether or not a cigarette bears a foreign
brand, the listing of brands manufactured in foreign
countries appearing in the current World Tobacco
Directory shall govern.
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. . . ."
"HOPE" is listed in the World Tobacco Directory as being manufactured by (a)
Japan Tobacco, Japan and (b) Fortune Tobacco, Philippines. "MORE" is listed
in the said directory as being manufactured by: (a) Fills de Julia Reig, Andorra;
(b) Rothmans, Australia; (c) RJR-Macdonald Canada; (d) Rettig-Strenberg,
Finland; (e) Karellas, Greece; (f) R.J. Reynolds, Malaysia; (g) Rothmans, New
Zealand; (h) Fortune Tobacco, Philippines; (i) R.J. Reynolds, Puerto Rico; (j)
R.J. Reynolds, Spain; (k) Tabacalera, Spain; (l) R.J. Reynolds, Switzerland;
and (m) R.J. Reynolds,
J USA. "Champion" is registered in the said directory as
being manufactured
u by (a) Commonwealth Bangladesh; (b) Sudan, Brazil; (c)
Japan Tobacco, lJapan; (d) Fortune Tobacco, Philippines; (e) Haggar, Sudan;
and (f) Tabac Reunies,
y Switzerland.
1
Since there is no, showing who among the above-listed manufacturers of the
1 the said brands are the real owner/s thereof, then it follows
cigarettes bearing
9 be considered foreign brand for purposes of determining
that the same shall
9 pursuant to Section 142 of the National Internal Revenue
the ad valorem tax
Code. As held in3 BIR Ruling No. 410-88, dated August 24, 1988, "in cases
where it cannot be established or there is dearth of evidence as to whether a
brand is foreign or not, resort to the World Tobacco Directory should be
made."
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.
Any ruling inconsistent herewith is revoked or modified accordingly.
 W Accordingly, the deficiency ad valorem tax assessment issued on petitioner
A Fortune Tobacco Corporation in the amount of P9,598,334.00, exclusive of
Y surcharge and interest, is hereby canceled for lack of legal basis.
V
I Respondent Commissioner of Internal Revenue is hereby enjoined from
N collecting the deficiency tax assessment made and issued on petitioner in
Z relation to the implementation of RMC No. 37-93.
O
N
S SO ORDERED. 9
-
C In its resolution, dated 11 October 1994, the CTA dismissed for lack of merit the motion
H for reconsideration.
A
T
O The CIR forthwith filed a petition for review with the Court of Appeals, questioning the
C CTA's 10th August 1994 decision and 11th October 1994 resolution. On 31 March 1993,
o the appellate court's Special Thirteenth Division affirmed in all respects the assailed
m decision and resolution.
m
i In the instant petition, the Solicitor General argues: That —
s
s
i I. RMC 37-93 IS A RULING OR OPINION OF THE
o COMMISSIONER OF INTERNAL REVENUE
n INTERPRETING THE PROVISIONS OF THE TAX
e CODE.
r
II. BEING AN INTERPRETATIVE RULING OR
On 02 July 1993, at about 17:50 hours, BIR Deputy Commissioner Victor A. Deoferio, OPINION, THE PUBLICATION OF RMC 37-93,
Jr., sent via telefax a copy of RMC 37-93 to Fortune Tobacco but it was addressed to no FILING OF COPIES THEREOF WITH THE UP LAW
one in particular. On 15 July 1993, Fortune Tobacco received, by ordinary mail, a CENTER AND PRIOR HEARING ARE NOT
certified xerox copy of RMC 37-93. NECESSARY TO ITS VALIDITY, EFFECTIVITY
AND ENFORCEABILITY.

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 III. PRIVATE RESPONDENT IS DEEMED TO HAVE
was denied on 29 July 1993. The following day, or on 30 July 1993, the CIR assessed BEEN NOTIFIED OR RMC 37-93 ON JULY 2, 1993.
Fortune Tobacco for ad valorem tax deficiency amounting to P9,598,334.00.
IV. RMC 37-93 IS NOT DISCRIMINATORY SINCE IT
On 03 August 1993, Fortune Tobacco filed a petition for review with the CTA. 8 APPLIES TO ALL LOCALLY MANUFACTURED
CIGARETTES SIMILARLY SITUATED AS "HOPE,"
"MORE" AND "CHAMPION" CIGARETTES.
On 10 August 1994, the CTA upheld the position of Fortune Tobacco and adjudged:
V. PETITIONER WAS NOT LEGALLY PROSCRIBED
WHEREFORE, Revenue Memorandum Circular No. 37-93 reclassifying the FROM RECLASSIFYING "HOPE," "MORE" AND
brands of cigarettes, viz: "HOPE," "MORE" and "CHAMPION" being "CHAMPION" CIGARETTES BEFORE THE
manufactured by Fortune Tobacco Corporation as locally manufactured EFFECTIVITY OF R.A. NO. 7654.
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 VI. SINCE RMC 37-93 IS AN INTERPRETATIVE
CURRENTLY CLASSIFIED AND TAXED at 55% pursuant to Section RULE, THE INQUIRY IS NOT INTO ITS VALIDITY,
1142(c)(1) of the Tax Code, as amended by R.A. No. 7654 and were therefore EFFECTIVITY OR ENFORCEABILITY BUT INTO
still classified as other locally manufactured cigarettes and taxed at 45% or ITS CORRECTNESS OR PROPRIETY; RMC 37-93 IS
20% as the case may be. CORRECT. 10
In fine, petitioner opines that RMC 37-93 is merely an interpretative ruling of the BIR
which can thus become effective without any prior need for notice and hearing, nor
publication, and that its issuance is not discriminatory since it would apply under similar
circumstances to all locally manufactured cigarettes.
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.
Let us first distinguish between two kinds of administrative issuances — a legislative
rule and an interpretative rule.
In Misamis Oriental Association of Coco Traders, Inc., vs. Department of Finance
Secretary, 11 the Court expressed:
. . . a legislative rule is in the nature of subordinate legislation, designed to
implement a primary legislation by providing the details thereof . In the same
way that laws must have the benefit of public hearing, it is generally required
that before a legislative rule is adopted there must be hearing. In this
connection, the Administrative Code of 1987 provides:
Public Participation. — 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 two (2) weeks before the first hearing thereon.
(3) In case of opposition, the rules on contested cases shall be observed.
In addition such rule must be published. On the other hand, interpretative rules
are designed to provide guidelines to the law which the administrative agency
is in charge of enforcing. 12
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 quasi-legislative authority. The due observance of the requirements
of notice, of hearing, and of publication should not have been then ignored.
Indeed, the BIR itself, in its RMC 10-86, has observed and provided:
RMC NO. 10-86
Effectivity of Internal Revenue Rules and Regulations
It has been observed that one of the problem areas bearing on compliance with
Internal Revenue Tax rules and regulations is lack or insufficiency of due
notice to the tax paying public. Unless there is due notice, due compliance
therewith may not be reasonably expected. And most importantly, their strict
enforcement could possibly suffer from legal infirmity in the light of the
constitutional provision on "due process of law" and the essence of the Civil
Code provision concerning effectivity of laws, whereby due notice is a basic
requirement (Sec. 1, Art. IV, Constitution; Art. 2, New Civil Code).
In order that there shall be a just enforcement of rules and regulations, in
conformity with the basic element of due process, the following procedures are
hereby prescribed for the drafting, issuance and implementation of the said
Revenue Tax Issuances:
(1) This Circular shall apply only to (a) Revenue
Regulations; (b) Revenue Audit Memorandum Orders;
and (c) Revenue Memorandum Circulars and Revenue
Memorandum Orders bearing on internal revenue tax
rules and regulations.
(2) Except when the law otherwise expressly provides,
the aforesaid internal revenue tax issuances shall not
begin to be operative until after due notice thereof may be
fairly presumed.
Due notice of the said issuances may be fairly presumed
only after the following procedures have been taken;
 xxx xxx xxx
(5) Strict compliance with the foregoing procedures is
enjoined. 13
Nothing on record could tell us that it was either impossible or impracticable for the BIR
to observe and comply with the above requirements before giving effect to its questioned
circular.
Not insignificantly, RMC 37-93 might have likewise infringed on uniformity of taxation.
Article VI, Section 28, paragraph 1, of the 1987 Constitution mandates taxation to be
uniform and equitable. Uniformity requires that all subjects or objects of taxation,
similarly situated, are to be treated alike or put on equal footing both in privileges and
liabilities. 14 Thus, all taxable articles or kinds of property of the same class must be taxed
at the same rate 15 and the tax must operate with the same force and effect in every place
where the subject may be found.
Apparently, RMC 37-93 would only apply to "Hope Luxury," "Premium More" and
"Champion" cigarettes and, unless petitioner would be willing to concede to the
submission of private respondent that the circular should, as in fact my esteemed
colleague Mr. Justice Bellosillo so expresses in his separate opinion, be
considered adjudicatory in nature and thus violative of due process following the Ang
Tibay 16 doctrine, the measure suffers from lack of uniformity of taxation. In its decision,
the CTA has keenly noted that other cigarettes bearing foreign brands have not been
similarly included within the scope of the circular, such as —
1. Locally manufactured by ALHAMBRA INDUSTRIES, INC.
(a) "PALM TREE" is listed as manufactured by office of
Monopoly, Korea (Exhibit "R")
2. Locally manufactured by LA SUERTE CIGAR and CIGARETTE
COMPANY
(a) "GOLDEN KEY" is listed being manufactured by
United Tobacco, Pakistan (Exhibit "S")
(b) "CANNON" is listed as being manufactured by Alpha
Tobacco, Bangladesh (Exhibit "T")
3. Locally manufactured by LA PERLA INDUSTRIES, INC.
(a) "WHITE HORSE" is listed as being manufactured by
Rothman's, Malaysia (Exhibit "U")
(b) "RIGHT" is listed as being manufactured by
SVENSKA, Tobaks, Sweden (Exhibit "V-1")
4. Locally manufactured by MIGHTY CORPORATION
(a) "WHITE HORSE" is listed as being manufactured by
Rothman's, Malaysia (Exhibit "U-1")
5. Locally manufactured by STERLING TOBACCO CORPORATION
(a) "UNION" is listed as being manufactured by Sumatra
Tobacco, Indonesia and Brown and Williamson, USA
(Exhibit "U-3")
(b) "WINNER" is listed as being manufactured by Alpha
Tobacco, Bangladesh; Nangyang, Hongkong; Joo Lan,
Malaysia; Pakistan Tobacco Co., Pakistan; Premier
Tobacco, Pakistan and Haggar, Sudan (Exhibit "U-4"). 17
The court quoted at length from the transcript of the hearing conducted on 10 August
1993 by the Committee on Ways and Means of the House of Representatives; viz:
THE CHAIRMAN. So you have specific information on Fortune Tobacco
alone. You don't have specific information on other tobacco manufacturers.
Now, there are other brands which are similarly situated. They are locally
manufactured bearing foreign brands. And may I enumerate to you all these
brands, which are also listed in the World Tobacco Directory . . . Why were
these brand not reclassified at 55 if your want to give a level playing filed to
foreign manufacturers?
MS. CHATO. Mr. Chairman, in fact, we have already prepared a Revenue
Memorandum Circular that was supposed to come after RMC No. 37-93 which
have really named specifically the list of locally manufactured cigarettes
bearing a foreign brand for excise tax purposes and includes all these brands
that you mentioned at 55 percent except that at that time, when we had to come
up with this, we were forced to study the brands of Hope, More and Champion
because we were given documents that would indicate the that these brands
were actually being claimed or patented in other countries because we went by
Revenue Memorandum Circular 1488 and we wanted to give some rationality
to how it came about but we couldn't find the rationale there. And we really
found based on our own interpretation that the only test that is given by that
existing law would be registration in the World Tobacco Directory. So we
came out with this proposed revenue memorandum circular which we
forwarded to the Secretary of Finance except that at that point in time, we went
by the Republic Act 7654 in Section 1 which amended Section 142, C-1, it
said, that on locally manufactured cigarettes which are currently classified and
taxed at 55 percent. So we were saying that when this law took effect in July 3
and if we are going to come up with this revenue circular thereafter, then I
think our action would really be subject to question but we feel that . . .
Memorandum Circular Number 37-93 would really cover even similarly
situated brands. And in fact, it was really because of the study, the short time
that we were given to study the matter that we could not include all the rest of
the other brands that would have been really classified as foreign brand if we
went by the law itself. I am sure that by the reading of the law, you would
without that ruling by Commissioner Tan they would really have been included
 in the definition or in the classification of foregoing brands. These brands that
you referred to or just read to us and in fact just for your information, we really
came out with a proposed revenue memorandum circular for those brands.
(Emphasis supplied)
(Exhibit "FF-2-C," pp. V-5 TO V-6, VI-1 to VI-3).
xxx xxx xxx
MS. CHATO. . . . But I do agree with you now that it cannot and in fact that is
why I felt that we . . . I wanted to come up with a more extensive coverage and
precisely why I asked that revenue memorandum circular that would cover all
those similarly situated would be prepared but because of the lack of time and
I came out with a study of RA 7654, it would not have been possible to really
come up with the reclassification or the proper classification of all brands that
are listed there. . . (emphasis supplied) (Exhibit "FF-2d," page IX-1)
xxx xxx xxx
HON. DIAZ. But did you not consider that there are similarly situated?
MS. CHATO. That is precisely why, Sir, after we have come up with this
Revenue Memorandum Circular No. 37-93, the other brands came about the
would have also clarified RMC 37-93 by I was saying really because of the
fact that I was just recently appointed and the lack of time, the period that was
allotted to us to come up with the right actions on the matter, we were really
caught by the July 3 deadline. But in fact, We have already prepared a revenue
memorandum circular clarifying with the other . . . does not yet, would have
been a list of locally manufactured cigarettes bearing a foreign brand for
excise tax purposes which would include all the other brands that were
mentioned by the Honorable Chairman. (Emphasis supplied) (Exhibit "FF-2-
d," par. IX-4). 18
All taken, the Court is convinced that the hastily promulgated RMC 37-93 has fallen short of a valid
and effective administrative issuance.
WHEREFORE, the decision of the Court of Appeals, sustaining that of the Court of Tax Appeals, is
AFFIRMED. No costs.
SO ORDERED.
G.R. No. L-59234 September 30, 1982
TAXICAB OPERATORS OF METRO MANILA, INC., FELICISIMO CABIGAO and ACE
TRANSPORTATION CORPORATION, petitioners,
vs.
THE BOARD OF TRANSPORTATION and THE DIRECTOR OF THE BUREAU OF
LAND TRANSPORTATION, respondents.
MELENCIO-HERRERA, J.:
This Petition for "Certiorari, Prohibition and mandamus with Preliminary Injunction and Temporary
Restraining Order" filed by the Taxicab Operators of Metro Manila, Inc., Felicisimo Cabigao and
Ace Transportation, seeks to declare the nullity of Memorandum Circular No. 77-42, dated October
10, 1977, of the Board of Transportation, and Memorandum Circular No. 52, dated August 15,
1980, of the Bureau of Land Transportation.
Petitioner Taxicab Operators of Metro Manila, Inc. (TOMMI) is a domestic corporation composed
of taxicab operators, who are grantees of Certificates of Public Convenience to operate taxicabs
within the City of Manila and to any other place in Luzon accessible to vehicular traffic. Petitioners
Ace Transportation Corporation and Felicisimo Cabigao are two of the members of TOMMI, each
being an operator and grantee of such certificate of public convenience.
On October 10, 1977, respondent Board of Transportation (BOT) issued Memorandum Circular No.
77-42 which reads:
SUBJECT: Phasing out and Replacement of
Old and Dilapidated Taxis
WHEREAS, it is the policy of the government to insure that only safe and
comfortable units are used as public conveyances;
WHEREAS, the riding public, particularly in Metro-Manila, has, time and
again, complained against, and condemned, the continued operation of old and
dilapidated taxis;
WHEREAS, in order that the commuting public may be assured of comfort,
convenience, and safety, a program of phasing out of old and dilapidated taxis
should be adopted;
WHEREAS, after studies and inquiries made by the Board of Transportation,
the latter believes that in six years of operation, a taxi operator has not only
covered the cost of his taxis, but has made reasonable profit for his
investments;
NOW, THEREFORE, pursuant to this policy, the Board hereby declares that
no car beyond six years shall be operated as taxi, and in implementation of the
same hereby promulgates the following rules and regulations:
 1. As of December 31, 1977, all taxis of Model 1971 and earlier are ordered
withdrawn from public service and thereafter may no longer be registered and
operated as taxis. In the registration of cards for 1978, only taxis of Model
1972 and later shall be accepted for registration and allowed for operation;
2. As of December 31, 1978, all taxis of Model 1972 are ordered withdrawn
from public service and thereafter may no longer be registered and operated as
taxis. In the registration of cars for 1979, only taxis of Model 1973 and later
shall be accepted for registration and allowed for operation; and every year
thereafter, there shall be a six-year lifetime of taxi, to wit:
1980 — Model 1974
1981 — Model 1975, etc.
All taxis of earlier models than those provided above are hereby ordered
withdrawn from public service as of the last day of registration of each
particular year and their respective plates shall be surrendered directly to the
Board of Transportation for subsequent turnover to the Land Transportation
Commission.
For an orderly implementation of this Memorandum Circular, the rules herein
shall immediately be effective in Metro-Manila. Its implementation outside
Metro- Manila shall be carried out only after the project has been implemented
in Metro-Manila and only after the date has been determined by the Board. 1
Pursuant to the above BOT circular, respondent Director of the Bureau of Land Transportation
(BLT) issued Implementing Circular No. 52, dated August 15, 1980, instructing the Regional
Director, the MV Registrars and other personnel of BLT, all within the National Capitol Region, to
implement said Circular, and formulating a schedule of phase-out of vehicles to be allowed and
accepted for registration as public conveyances. To quote said Circular:
Pursuant to BOT Memo-Circular No. 77-42, taxi units with year models over
six (6) years old are now banned from operating as public utilities in Metro
Manila. As such the units involved should be considered as automatically
dropped as public utilities and, therefore, do not require any further dropping
order from the BOT.
Henceforth, taxi units within the National Capitol Region having year models
over 6 years old shall be refused registration. The following schedule of phase-
out prescribed for the guidance of all concerned.
Strict compliance here is desired. 2
In accordance therewith, cabs of model 1971 were phase-out in registration year 1978; those of
model 1972, in 1979; those of model 1973, in 1980; and those of model 1974, in 1981.
On January 27, 1981, petitioners filed a Petition with the BOT, docketed as Case No. 80-7553,
seeking to nullify MC No. 77-42 or to stop its implementation; to allow the registration and
operation in 1981 and subsequent years of taxicabs of model 1974, as well as those of earlier models
which were phased-out, provided that, at the time of registration, they are roadworthy and fit for
operation.
On February 16, 1981, petitioners filed before the BOT a "Manifestation and Urgent Motion",
praying for an early hearing of their petition. The case was heard on February 20, 1981. Petitioners
presented testimonial and documentary evidence, offered the same, and manifested that they would
submit additional documentary proofs. Said proofs were submitted on March 27, 1981 attached to
petitioners' pleading entitled, "Manifestation, Presentation of Additional Evidence and Submission
of the Case for Resolution." 3
On November 28, 1981, petitioners filed before the same Board a "Manifestation and Urgent
Motion to Resolve or Decide Main Petition" praying that the case be resolved or decided not later
than December 10, 1981 to enable them, in case of denial, to avail of whatever remedy they may
have under the law for the protection of their interests before their 1975 model cabs are phased-out
on January 1, 1982.
Petitioners, through its President, allegedly made personal follow-ups of the case, but was later
informed that the records of the case could not be located.
On December 29, 1981, the present Petition was instituted wherein the following queries were
posed for consideration by this Court:
A. Did BOT and BLT promulgate the questioned memorandum circulars in
accord with the manner required by Presidential Decree No. 101, thereby
safeguarding the petitioners' constitutional right to procedural due process?
B. Granting, arguendo, that respondents did comply with the procedural
requirements imposed by Presidential Decree No. 101, would the
implementation and enforcement of the assailed memorandum circulars violate
the petitioners' constitutional rights to.
(1) Equal protection of the law;
(2) Substantive due process; and
(3) Protection against arbitrary and
unreasonable classification and
standard?
On Procedural and Substantive Due Process:
Presidential Decree No. 101 grants to the Board of Transportation the power
4. To fix just and reasonable standards, classification, regulations, practices,
measurements, or service to be furnished, imposed, observed, and followed by
operators of public utility motor vehicles.
Section 2 of said Decree provides procedural guidelines for said agency to follow in the exercise of
its powers:
 Sec. 2. Exercise of powers. — In the exercise of the powers granted in the
preceding section, the Board shag proceed promptly along the method
of legislative inquiry.
Apart from its own investigation and studies, the Board, in its discretion, may
require the cooperation and assistance of the Bureau of Transportation, the
Philippine Constabulary, particularly the Highway Patrol Group, the support
agencies within the Department of Public Works, Transportation and
Communications, or any other government office or agency that may be able to
furnish useful information or data in the formulation of the Board of any
policy, plan or program in the implementation of this Decree.
The Board may also can conferences, require the submission of position papers
or other documents, information, or data by operators or other persons that
may be affected by the implementation of this Decree, or employ any other
suitable means of inquiry.
In support of their submission that they were denied procedural due process, petitioners contend that
they were not caged upon to submit their position papers, nor were they ever summoned to attend
any conference prior to the issuance of the questioned BOT Circular.
It is clear from the provision aforequoted, however, that the leeway accorded the Board gives it a
wide range of choice in gathering necessary information or data in the formulation of any policy,
plan or program. It is not mandatory that it should first call a conference or require the submission
of position papers or other documents from operators or persons who may be affected, this being
only one of the options open to the Board, which is given wide discretionary authority. Petitioners
cannot justifiably claim, therefore, that they were deprived of procedural due process. Neither can
they state with certainty that public respondents had not availed of other sources of inquiry prior to
issuing the challenged Circulars. operators of public conveyances are not the only primary sources
of the data and information that may be desired by the BOT.
Dispensing with a public hearing prior to the issuance of the Circulars is neither violative of
procedural due process. As held in Central Bank vs. Hon. Cloribel and Banco Filipino, 44 SCRA
307 (1972):
Pevious notice and hearing as elements of due process, are constitutionally
required for the protection of life or vested property rights, as well as of
liberty, when its limitation or loss takes place in consequence of a judicial or
quasi-judicial proceeding, generally dependent upon a past act or event which
has to be established or ascertained. It is not essential to the validity of general
rules or regulations promulgated to govern future conduct of a class or persons
or enterprises, unless the law provides otherwise. (Emphasis supplied)
Petitioners further take the position that fixing the ceiling at six (6) years is arbitrary and oppressive
because the roadworthiness of taxicabs depends upon their kind of maintenance and the use to
which they are subjected, and, therefore, their actual physical condition should be taken into
consideration at the time of registration. As public contend, however, it is impractical to subject
every taxicab to constant and recurring evaluation, not to speak of the fact that it can open the door
to the adoption of multiple standards, possible collusion, and even graft and corruption. A
reasonable standard must be adopted to apply to an vehicles affected uniformly, fairly, and justly.
The span of six years supplies that reasonable standard. The product of experience shows that by
that time taxis have fully depreciated, their cost recovered, and a fair return on investment obtained.
They are also generally dilapidated and no longer fit for safe and comfortable service to the public
specially considering that they are in continuous operation practically 24 hours everyday in three
shifts of eight hours per shift. With that standard of reasonableness and absence of arbitrariness, the
requirement of due process has been met.
On Equal Protection of the Law:
Petitioners alleged that the Circular in question violates their right to equal protection of the law
because the same is being enforced in Metro Manila only and is directed solely towards the taxi
industry. At the outset it should be pointed out that implementation outside Metro Manila is also
envisioned in Memorandum Circular No. 77-42. To repeat the pertinent portion:
For an orderly implementation of this Memorandum Circular, the rules herein
shall immediately be effective in Metro Manila. Its implementation outside
Metro Manila shall be carried out only after the project has been implemented
in Metro Manila and only after the date has been determined by the Board. 4
In fact, it is the understanding of the Court that implementation of the Circulars in Cebu City is
already being effected, with the BOT in the process of conducting studies regarding the operation of
taxicabs in other cities.
The Board's reason for enforcing the Circular initially in Metro Manila is that taxicabs in this city,
compared to those of other places, are subjected to heavier traffic pressure and more constant use.
This is of common knowledge. Considering that traffic conditions are not the same in every city, a
substantial distinction exists so that infringement of the equal protection clause can hardly be
successfully claimed.
As enunciated in the preambular clauses of the challenged BOT Circular, the overriding
consideration is the safety and comfort of the riding public from the dangers posed by old and
dilapidated taxis. The State, in the exercise, of its police power, can prescribe regulations to promote
the health, morals, peace, good order, safety and general welfare of the people. It can prohibit all
things hurtful to comfort, safety and welfare of society. 5 It may also regulate property rights. 6 In
the language of Chief Justice Enrique M. Fernando "the necessities imposed by public welfare may
justify the exercise of governmental authority to regulate even if thereby certain groups may
plausibly assert that their interests are disregarded". 7
In so far as the non-application of the assailed Circulars to other transportation services is
concerned, it need only be recalled that the equal protection clause does not imply that the same
treatment be accorded all and sundry. It applies to things or persons Identically or similarly situated.
It permits of classification of the object or subject of the law provided classification is reasonable or
based on substantial distinction, which make for real differences, and that it must apply equally to
each member of the class. 8 What is required under the equal protection clause is the uniform
operation by legal means so that all persons under Identical or similar circumstance would be
accorded the same treatment both in privilege conferred and the liabilities imposed. 9 The
challenged Circulars satisfy the foregoing criteria.
Evident then is the conclusion that the questioned Circulars do not suffer from any constitutional
infirmity. To declare a law unconstitutional, the infringement of constitutional right must be clear,
categorical and undeniable. 10
WHEREFORE, the Writs prayed for are denied and this Petition is hereby dismissed. No costs
G.R. No. L-9876 December 8, 1914
THE UNITED STATES, plaintiff-appellee,
vs.
ADRIANO PANLILIO, defendant-appellant.
MORELAND, J.:
This is an appeal from a judgment of the Court of First Instance of the Province of Pampanga
convicting the accused of a violation of the law relating to the quarantining of animals suffering
from dangerous communicable or contagious diseases and sentencing him to pay a fine of P40, with
subsidiary imprisonment in case of insolvency, and to pay the costs of the trial.
The information charges: "That on or about the 22nd day of February, 1913, all of the carabaos
belonging to the above-named accused having been exposed to the dangerous and contagious
disease known as rinderpest, were, in accordance with an order of duly-authorized agent of the
Director of Agriculture, duly quarantined in a corral in the barrio of Masamat, municipality of
Mexico, Province of Pampanga, P. I.; that, on said place, the said accused, Adriano Panlilio,
illegally and voluntarily and without being authorized so to do, and while the quarantine against said
carabaos was still in force, permitted and ordered said carabaos to be taken from the corral in which
they were then quarantined and conducted from one place to another; that by virtue of said orders of
the accused, his servants and agents took the said carabaos from the said corral and drove them from
one place to another for the purpose of working them."
The defendant demurred to this information on the ground that the acts complained of did not
constitute a crime. The demurrer was overruled and the defendant duly excepted and pleaded not
guilty.
From the evidence introduced by the prosecution on the trial of the cause it appears that the
defendant was notified in writing on February 22, 1913, by a duly authorized agent of the Director
of agriculture, that all of his carabaos in the barrio of Masamat, municipality of Mexico, Pampanga
Province, had been exposed to the disease commonly known as rinderpest, and that said carabaos
were accordingly declared under quarantine, and were ordered kept in a corral designated by an
agent of the Bureau of Agriculture and were to remain there until released by further order of the
Director of Agriculture.
It further appears from the testimony of the witnesses for the prosecution that the defendant fully
understood that, according to the orders of the Bureau of Agriculture, he was not to remove the
animals, or to permit anyone else to remove them, from the quarantine in which they had been
placed. In spite, however, of all this, the carabaos were taken from the corral by the commands of
the accused and driven from place to place on his hacienda, and were used as work animals thereon
in the same manner as if they had not been quarantined.
The contention of the accused is that the facts alleged in the information and proved on the trial do
not constitute a violation of Act No. 1760 or any portion thereof.
We are forced to agree with this contention.1awphil.net
The original information against the accused charged a violation of section 6 of Act No. 1760
committed by the accused in that he ordered and permitted his carabaos, which, at the time, were in
quarantine, to be taken from quarantine and moved from one place to another on his hacienda. An
amended information was filed. It failed, however, to specify that section of Act No. 1760 alleged to
have been violated, evidently leaving that to be ascertained by the court on the trial.
The only sections of Act No. 1760, which prohibit acts and pronounce them unlawful are 3, 4 and 5.
This case does not fall within any of them. Section 3 provides, in effect, that it shall be unlawful for
any person, firm, or corporation knowingly to ship or otherwise bring into the Philippine Islands any
animal suffering from, infected with, or dead of any dangerous communicable disease, or any of the
effects pertaining to such animal which are liable to introduce such disease into the Philippine
Islands. Section 4 declares, substantially, that it shall be unlawful for any reason, firm, or
corporation knowingly to ship, drive or otherwise take or transport from one island, province,
municipality, township, or settlement to another any domestic animal suffering from any dangerous
communicable diseased or to expose such animal either alive or dead on any public road or highway
where it may come in contact with other domestic animals. Section 5 provides that whenever the
Secretary of the Interior shall declare that a dangerous communicable animal disease prevails in any
island, province, municipality, township, or settlement and that there is danger of spreading such
disease by shipping, driving or otherwise transporting or taking out of such island, province,
municipality, township, or settlement any class of domestic animal, it shall be unlawful for any
person, firm or corporation to ship, drive or otherwise remove the kind of animals so specified from
such locality except when accompanied by a certificate issued by authority of the Director of
Agriculture stating the number and the kind of animals to be shipped, driven, taken or transported,
their destination, manner in which they are authorized to be shipped, driven, taken, or transported,
and their brands and distinguishing marks.
A simple reading of these sections demonstrates clearly that the case at bar does not fall within any
of them. There is no question here of importation and there is no charge or proof that the animals in
question were suffering from a dangerous communicable disease or that the Secretary of the Interior
had made the declaration provided for in section 5 or that the accused had driven or taken said
animals from one island, province, municipality, township or settlement to another. It was alleged
had been exposed to a dangerous communicable disease and that they had been placed in a corral in
quarantine on the premises of the accused and that he, in violation of the quarantine, had taken them
from the corral and worked them upon the lands adjoining. They had not been in highway nor
moved from one municipality or settlement to another. They were left upon defendant's hacienda,
where they were quarantined, and there worked by the servants of the accused.
The Solicitor-General in his brief in this court admits that the sections referred to are not applicable
to the case at bar and also admits that section 7 of said Act is not applicable. This section provides:
"Whenever the Director of Agriculture shall order any animal placed in quarantine in accordance
with the provisions of this Act, the owner of such animal, or his agent, shall deliver it at the place
designated for the quarantine and shall provide it with proper food, water, and attendance. Should
the owner or his agent fail to comply with this requirement the Director of Agriculture may furnish
supplies and attendance needed, and the reasonable cost of such supplies and attendance shall be
collectible from the owner or his agent."
We are in accord with the opinion expressed by the Solicitor-General with respect to this section, as
we are with his opinion as to sections 3, 4, and 5. the law nowhere makes it a penal offense to refuse
to comply with the provisions of section 7, nor is the section itself so phrased as to warrant the
conclusion that it was intended to be a penal section. The section provides the means by which the
refusal of the owner to comply therewith shall be overcome and the punishment, if we may call it
punishment, which he shall receive by reason of that refusal. It has none of the aspects of a penal
provision or the form or substance of such provision. It does not prohibit any act. It does not compel
an act nor does it really punish or impose a criminal penalty. The other sections of the law under
which punishments may be inflicted are so phrased as to make the prohibited act unlawful, and
section 8 provides the punishment for any act declared unlawful by the law.
The Solicitor-General suggests, but does not argue, that section 6 is applicable to the case at bar.
Section 6 simply authorizes the Director of Agriculture to do certain things, among them, paragraph
(c) "to require that animals which are suffering from dangerous communicable diseases or have
been exposed thereto be placed in quarantine at such place and for such time as may be deemed by
him necessary to prevent the spread of the disease." Nowhere in the law, however, is the violation of
the orders of the Bureau of Agriculture prohibited or made unlawful, nor is there provided any
punishment for a violation of such orders. Section 8 provides that "any person violating any of
the provisions of this Act shall, upon conviction, be punished by a fine of not more than one
thousand pesos, or by imprisonment for not more than six months, or by both such fine and
imprisonment, in the discretion of the court, for each offense." A violation of the orders of the
Bureau of Agriculture, as authorized by paragraph (c), is not a violation of the provision of the Act.
The orders of the Bureau of Agriculture, while they may possibly be said to have the force of law,
are statutes and particularly not penal statutes, and a violation of such orders is not a penal offense
unless the statute itself somewhere makes a violation thereof unlawful and penalizes it. Nowhere in
Act No. 1760 is a violation of the orders of the Bureau of Agriculture made a penal offense, nor is
such violation punished in any way therein.
In the resolution of this case the Supreme Court found that the facts set forth in the information and
proved on the trial did not constitute a violation of section 315 of Act No. 355 as alleged in the
information, but did constitute a violation of article 387 in connection with article 383 of the Penal
Code, and accordingly convicted the accused under those articles and sentenced him to the
corresponding penalty.
In that case the court said: "The foregoing facts, duly established as they were by the testimony of
credible witnesses who heard and saw everything that occurred, show beyond peradventure of doubt
that the crime of attempted bribery, as defined in article 387, in connection with article 383 of the
Penal Code, has been committed, it being immaterial whether it is alleged in the complaint that
section 315 of Act No. 355 of the Philippine Commission was violated by the defendant, as the
same recites facts and circumstances sufficient to constitute the crime of bribery as defined and
punished in the aforesaid articles of the Penal Code." (U. S. vs. Lim San, 17 Phil. Rep., 273; U.S. vs.
Jeffrey, 15 Phil. Rep., 391; U. S. vs. Guzman, 25 Phil. Rep., 22.)
The accused is accordingly convicted of a violation of article 581, paragraph 2, of the Penal Code,
and is sentenced to pay a fine of seventy pesetas (P14) and censure, with subsidiary imprisonment in
case of insolvency, and the costs of this appeal. So ordered.

Finally, it is contended by the Government that if the offense stated in the information and proved
upon the trial does not constitute a violation of any of the provisions of Act No. 1760, it does
constitute a violation of article 581, paragraph 2, of the Penal Code. It provides:

A fine of not less than fifteen and not more than seventy pesetas and censure shall be
imposed upon: . . .

2. Any person who shall violate the regulations, ordinances, or proclamations issued with
reference to any epedemic disease among animals, the extermination of locusts, or any
other similar plague.1awphil.net

It alleged in the information and was proved on the trial that the Bureau of agriculture had ordered a
quarantine of the carabaos at the time and place mentioned; that the quarantine had been executed
and completed and the animals actually segregated and confined; that the accused, in violation of
such quarantine and of the orders of the Bureau of Agriculture, duly promulgated, broke the
quarantine, removed the animals and used them in the ordinary work of his plantation. We consider
these acts a plain violation of the article of the Penal Code as above quoted. The fact that the
information in its preamble charged a violation of act No. 1760 does not prevent us from finding the
accused guilty of a violation of an article of the Penal Code. The complaint opens as follows: "The
undersigned accuses Adriano Panlilio of a violation of Act No. 1760, committed as follows:" Then
follows the body of the information already quoted in this opinion. We would not permit an accused
to be convicted under one Act when he is charged with the violation of another, if the change from
one statute to another involved a change of the theory of the trial or required of the defendant a
different defense or surprised him in any other way. The allegations required under Act No. 1760
include those required under article 581. The accused could have defended himself in no different
manner if he had been expressly charged with a violation of article 581.

In the case of United States vs. Paua (6 Phil. Rep., 740), the information stating the facts upon
which the charge was founded terminated with his expression: "In violation of section 315 of Act
No. 355 of the Philippine Commission, in effect on the 6th of February, 1902."
G.R. No. 127685 July 23, 1998
BLAS F. OPLE, petitioner,
vs.
RUBEN D. TORRES, respondents.
PUNO, J.:
The petition at bar is a commendable effort on the part of Senator Blas F. Ople to prevent the
shrinking of the right to privacy, which the revered Mr. Justice Brandeis considered as "the most
comprehensive of rights and the right most valued by civilized men." 1 Petitioner Ople prays that
we invalidate Administrative Order No. 308 entitled "Adoption of a National Computerized
Identification Reference System" on two important constitutional grounds, viz: one, it is a
usurpation of the power of Congress to legislate, and two, it impermissibly intrudes on our
citizenry's protected zone of privacy. We grant the petition for the rights sought to be
vindicated by the petitioner need stronger barriers against further erosion.
A.O. No. 308 was issued by President Fidel V. Ramos On December 12, 1996 and reads as follows:
ADOPTION OF A NATIONAL COMPUTERIZED
IDENTIFICATION REFERENCE SYSTEM
WHEREAS, there is a need to provide Filipino citizens and foreign residents
with the facility to conveniently transact business with basic service and social
security providers and other government instrumentalities;
WHEREAS, this will require a computerized system to properly and efficiently
identify persons seeking basic services on social security and reduce, if not
totally eradicate fraudulent transactions and misrepresentations;
WHEREAS, a concerted and collaborative effort among the various basic
services and social security providing agencies and other government
intrumentalities is required to achieve such a system;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the
Philippines, by virtue of the powers vested in me by law, do hereby direct the
following:
Sec. 1. Establishment of a National Compoterized Identification Reference
System. A decentralized Identification Reference System among the key basic
services and social security providers is hereby established.
Sec. 2. Inter-Agency Coordinating Committee. An Inter-Agency Coordinating
Committee (IACC) to draw-up the implementing guidelines and oversee the
implementation of the System is hereby created, chaired by the Executive
Secretary, with the following as members:
Head, Presidential Management Staff
Secretary, National Economic Development Authority
Secretary, Department of the Interior and Local Government
Secretary, Department of Health
Administrator, Government Service Insurance System,
Administrator, Social Security System,
Administrator, National Statistics Office
Managing Director, National Computer Center.
Sec. 3. Secretariat. The National Computer Center (NCC) is hereby designated
as secretariat to the IACC and as such shall provide administrative and
technical support to the IACC.
Sec. 4. Linkage Among Agencies. The Population Reference Number (PRN)
generated by the NSO shall serve as the common reference number to establish
a linkage among concerned agencies. The IACC Secretariat shall coordinate
with the different Social Security and Services Agencies to establish the
standards in the use of Biometrics Technology and in computer application
designs of their respective systems.
Sec. 5. Conduct of Information Dissemination Campaign. The Office of the
Press Secretary, in coordination with the National Statistics Office, the GSIS
and SSS as lead agencies and other concerned agencies shall undertake a
massive tri-media information dissemination campaign to educate and raise
public awareness on the importance and use of the PRN and the Social
Security Identification Reference.
Sec. 6. Funding. The funds necessary for the implementation of the system
shall be sourced from the respective budgets of the concerned agencies.
Sec. 7. Submission of Regular Reports. The NSO, GSIS and SSS shall submit
regular reports to the Office of the President through the IACC, on the status of
implementation of this undertaking.
Sec. 8. Effectivity. This Administrative Order shall take effect immediately.
DONE in the City of Manila, this 12th day of December in the year of Our
Lord, Nineteen Hundred and Ninety-Six.
(SGD.) FIDEL V. RAMOS
A.O. No. 308 was published in four newspapers of general circulation on January 22, 1997 and
January 23, 1997. On January 24, 1997, petitioner filed the instant petition against respondents, then
Executive Secretary Ruben Torres and the heads of the government agencies, who as members of
the Inter-Agency Coordinating Committee, are charged with the implementation of A.O. No. 308.
On April 8, 1997, we issued a temporary restraining order enjoining its implementation.
Petitioner contends:
A. THE ESTABLISNMENT OF A NATIONAL COMPUTERIZED
IDENTIFICATION REFERENCE SYSTEM REQUIRES A LEGISLATIVE
ACT. THE ISSUANCE OF A.O. NO. 308 BY THE PRESIDENT OF THE
REPUBLIC OF THE PHILIPPINES IS, THEREFORE, AN
UNCONSTITUTIONAL USURPATION OF THE LEGISLATIVE POWERS
OF THE CONGRESS OF THE REPUBLIC OF THE PHILIPPINES.
B. THE APPROPRIATION OF PUBLIC FUNDS BY THE PRESIDENT FOR
THE IMPLEMENTATION OF A.O. NO. 308 IS AN UNCONSTITUTIONAL
USURPATION OF THE EXCLUSIVE RIGHT OF CONGRESS TO
APPROPRIATE PUBLIC FUNDS FOR EXPENDITURE.
C. THE IMPLEMENTATION OF A.O. NO. 308 INSIDIOUSLY LAYS THE
GROUNDWORK FOR A SYSTEM WHICH WILL VIOLATE THE BILL
OF RIGHTS ENSHRINED IN THE CONSTITUTION. 2
Respondents counter-argue:
A. THE INSTANT PETITION IS NOT A JUSTICIABLE CASE AS WOULD
WARRANT A JUDICIAL REVIEW;
B. A.O. NO. 308 [1996] WAS ISSUED WITHIN THE EXECUTIVE AND
ADMINISTRATIVE POWERS OF THE PRESIDENT WITHOUT
ENCROACHING ON THE LEGISLATIVE POWERS OF CONGRESS;
C. THE FUNDS NECESSARY FOR THE IMPLEMENTATION OF THE
IDENTIFICATION REFERENCE SYSTEM MAY BE SOURCED FROM
THE BUDGETS OF THE CONCERNED AGENCIES;
D. A.O. NO. 308 [1996] PROTECTS AN INDIVIDUAL'S INTEREST IN
PRIVACY. 3
We now resolve.
I While Congress is vested with the power to enact laws, the President executes the laws. 14 The
As is usual in constitutional litigation, respondents raise the threshold issues relating to the standing
to sue of the petitioner and the justiciability of the case at bar. More specifically, respondents aver
that petitioner has no legal interest to uphold and that the implementing rules of A.O. No. 308 have
yet to be promulgated.
These submissions do not deserve our sympathetic ear. Petitioner Ople is a distinguished member of
our Senate. As a Senator, petitioner is possessed of the requisite standing to bring suit raising the
issue that the issuance of A.O. No. 308 is a usurpation of legislative power. 4 As taxpayer and
member of the Government Service Insurance System (GSIS), petitioner can also impugn the
legality of the misalignment of public funds and the misuse of GSIS funds to implement A.O. No.
308. 5
The ripeness for adjudication of the Petition at bar is not affected by the fact that the implementing
rules of A.O. No. 308 have yet to be promulgated. Petitioner Ople assails A.O. No. 308 as
invalid per se and as infirmed on its face. His action is not premature for the rules yet to be
promulgated cannot cure its fatal defects. Moreover, the respondents themselves have started the
implementation of A.O. No. 308 without waiting for the rules. As early as January 19, 1997,
respondent Social Security System (SSS) caused the publication of a notice to bid for the
manufacture of the National Identification (ID) card. 6 Respondent Executive Secretary Torres has
publicly announced that representatives from the GSIS and the SSS have completed the guidelines
for the national identification system. 7 All signals from the respondents show their unswerving will
to implement A.O. No. 308 and we need not wait for the formality of the rules to pass judgment on
its constitutionality. In this light, the dissenters insistence that we tighten the rule on standing is not
a commendable stance as its result would be to throttle an important constitutional principle and a
fundamental right.
II
We now come to the core issues. Petitioner claims that A.O. No. 308 is not a mere administrative
order but a law and hence, beyond the power of the President to issue. He alleges that A.O. No. 308
establishes a system of identification that is all-encompassing in scope, affects the life and liberty of
every Filipino citizen and foreign resident, and more particularly, violates their right to privacy.
Petitioner's sedulous concern for the Executive not to trespass on the lawmaking domain of
Congress is understandable. The blurring of the demarcation line between the power of the
Legislature to make laws and the power of the Executive to execute laws will disturb their delicate
balance of power and cannot be allowed. Hence, the exercise by one branch of government of power
belonging to another will be given a stricter scrutiny by this Court.
The line that delineates Legislative and Executive power is not indistinct. Legislative power is "the
authority, under the Constitution, to make laws, and to alter and repeal them." 8 The Constitution, as
the will of the people in their original, sovereign and unlimited capacity, has vested this power in
the Congress of the Philippines. 9 The grant of legislative power to Congress is broad, general and
comprehensive. 10 The legislative body possesses plenary power for all purposes of civil
government. 11 Any power, deemed to be legislative by usage and tradition, is necessarily possessed
by Congress, unless the Constitution has lodged it elsewhere. 12 In fine, except as limited by the
Constitution, either expressly or impliedly, legislative power embraces all subjects and extends to
matters of general concern or common interest. 13
executive power is vested in the Presidents. 15 It is generally defined as the power to enforce and
administer the laws. 16 It is the power of carrying the laws into practical operation and enforcing
their due observance. 17
As head of the Executive Department, the President is the Chief Executive. He represents the
government as a whole and sees to it that all laws are enforced by the officials and employees of his
department. 18 He has control over the executive department, bureaus and offices. This means that
he has the authority to assume directly the functions of the executive department, bureau and office
or interfere with the discretion of its officials.19 Corollary to the power of control, the President also
has the duty of supervising the enforcement of laws for the maintenance of general peace and public
order. Thus, he is granted administrative power over bureaus and offices under his control to enable
him to discharge his duties effectively. 20
Administrative power is concerned with the work of applying policies and enforcing orders as
determined by proper governmental organs. 21 It enables the President to fix a uniform standard of
administrative efficiency and check the official conduct of his agents. 22 To this end, he can issue
administrative orders, rules and regulations.
Prescinding from these precepts, we hold that A.O. No. 308 involves a subject that is not
appropriate to be covered by an administrative order. An administrative order is:
Sec. 3. Administrative Orders. — Acts of the President which relate to
particular aspects of governmental operation in pursuance of his duties as
administrative head shall be promulgated in administrative orders. 23
An administrative order is an ordinance issued by the President which relates to specific
aspects in the administrative operation of government. It must be in harmony with the law
and should be for the sole purpose of implementing the law and carrying out the
legislative policy. 24 We reject the argument that A.O. No. 308 implements the legislative
policy of the Administrative Code of 1987. The Code is a general law and "incorporates
in a unified document the major structural, functional and procedural principles of
governance." 25 and "embodies changes in administrative structure and procedures
designed to serve the
people." 26 The Code is divided into seven (7) Books: Book I deals with Sovereignty and
General Administration, Book II with the Distribution of Powers of the three branches of
Government, Book III on the Office of the President, Book IV on the Executive Branch,
Book V on Constitutional Commissions, Book VI on National Government Budgeting,
and Book VII on Administrative Procedure. These Books contain provisions on the
organization, powers and general administration of the executive, legislative and judicial
branches of government, the organization and administration of departments, bureaus and
offices under the executive branch, the organization and functions of the Constitutional
Commissions and other constitutional bodies, the rules on the national government
budget, as well as guideline for the exercise by administrative agencies of quasi-
legislative and quasi-judicial powers. The Code covers both the internal administration of
government, i.e, internal organization, personnel and recruitment, supervision and
discipline, and the effects of the functions performed by administrative officials on
private individuals or parties outside government. 27
It cannot be simplistically argued that A.O. No. 308 merely implements the Administrative Code of
1987. It establishes for the first time a National Computerized Identification Reference System.
Such a System requires a delicate adjustment of various contending state policies — the primacy
of national security, the extent of privacy interest against dossier-gathering by government,
the choice of policies, etc. Indeed, the dissent of Mr. Justice Mendoza states that the A.O. No.
308 involves the all-important freedom of thought. As said administrative order redefines the
parameters of some basic rights of our citizenry vis-a-vis the State as well as the line that separates
the administrative power of the President to make rules and the legislative power of Congress, it
ought to be evident that it deals with a subject that should be covered by law.
Nor is it correct to argue as the dissenters do that A.D. No. 308 is not a law because it confers no
right, imposes no duty, affords no proctection, and creates no office. Under A.O. No. 308, a citizen
cannot transact business with government agencies delivering basic services to the people without
the contemplated identification card. No citizen will refuse to get this identification card for no one
can avoid dealing with government. It is thus clear as daylight that without the ID, a citizen will
have difficulty exercising his rights and enjoying his privileges. Given this reality, the contention
that A.O. No. 308 gives no right and imposes no duty cannot stand.
Again, with due respect, the dissenting opinions unduly expand the limits of administrative
legislation and consequently erodes the plenary power of Congress to make laws. This is contrary to
the established approach defining the traditional limits of administrative legislation. As well stated
by Fisher: ". . . Many regulations however, bear directly on the public. It is here that administrative
legislation must he restricted in its scope and application. Regulations are not supposed to be a
substitute for the general policy-making that Congress enacts in the form of a public law. Although
administrative regulations are entitled to respect, the authority to prescribe rules and regulations is
not an independent source of power to make laws." 28
III
Assuming, arguendo, that A.O. No. 308 need not be the subject of a law, still it cannot pass
constitutional muster as an administrative legislation because facially it violates the right to privacy.
The essence of privacy is the "right to be let alone." 29 In the 1965 case of Griswold v.
Connecticut, 30 the United States Supreme Court gave more substance to the right of privacy when it
ruled that the right has a constitutional foundation. It held that there is a right of privacy which can
be found within the penumbras of the First, Third, Fourth, Fifth and Ninth Amendments, 31 viz:
Specific guarantees in the Bill of Rights have penumbras formed by
emanations from these guarantees that help give them life and substance . . .
various guarantees create zones of privacy. The right of association contained
in the penumbra of the First Amendment is one, as we have seen. The Third
Amendment in its prohibition against the quartering of soldiers "in any house"
in time of peace without the consent of the owner is another facet of that
privacy. The Fourth Amendment explicitly affirms the ''right of the people to
be secure in their persons, houses and effects, against unreasonable searches
and seizures." The Fifth Amendment in its Self-Incrimination Clause enables
the citizen to create a zone of privacy which government may not force him to
surrender to his detriment. The Ninth Amendment provides: "The enumeration
in the Constitution, of certain rights, shall not be construed to deny or
disparage others retained by the people."
In the 1968 case of Morfe v. Mutuc, 32 we adopted the Griswold ruling that there is a
constitutional right to privacy. Speaking thru Mr. Justice, later Chief Justice, Enrique
Fernando, we held:
xxx xxx xxx
The Griswold case invalidated a Connecticut statute which made the use of
contraceptives a criminal offence on the ground of its amounting to an
unconstitutional invasion of the right of privacy of married persons; rightfully
it stressed "a relationship lying within the zone of privacy created by several
fundamental constitutional guarantees." It has wider implications though. The
constitutional right to privacy has come into its own.
 So it is likewise in our jurisdiction. The right to privacy as such is accorded
recognition independently of its identification with liberty; in itself, it is fully
deserving of constitutional protection. The language of Prof. Emerson is
particularly apt: "The concept of limited government has always included the
idea that governmental powers stop short of certain intrusions into the personal
life of the citizen. This is indeed one of the basic distinctions between absolute
and limited government. Ultimate and pervasive control of the individual, in all
aspects of his life, is the hallmark of the absolute state. In contrast, a system of
limited government safeguards a private sector, which belongs to the
individual, firmly distinguishing it from the public sector, which the state can
control. Protection of this private sector — protection, in other words, of the
dignity and integrity of the individual — has become increasingly
important as modern society has developed. All the forces of a
technological age — industrialization, urbanization, and organization —
operate to narrow the area of privacy and facilitate intrusion into it. In
modern terms, the capacity to maintain and support this enclave of private life
marks the difference between a democratic and a totalitarian society."
Indeed, if we extend our judicial gaze we will find that the right of privacy is recognized and
enshrined in several provisions of our Constitution. 33 It is expressly recognized in section 3 (1) of
the Bill of Rights:
Sec. 3. (1) The privacy of communication and correspondence shall be
inviolable except upon lawful order of the court, or when public safety or order
requires otherwise as prescribed by law.
Other facets of the right to privacy are protectad in various provisions of the Bill of
Rights, viz: 34
Sec. 1. No person shall be deprived of life, liberty, or property without due
process of law, nor shall any person be denied the equal protection of the laws.
Sec. 2. The right of the people to be secure in their persons, houses papers, and
effects against unreasonable searches and seizures of whatever nature and for
any purpose shall be inviolable, and no search warrant or warrant of arrest
shall issue except upon probable cause to be determined personally by the
judge after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched
and the persons or things to be seized.
xxx xxx xxx
Sec. 6. The liberty of abode and of changing the same within the limits
prescribed by law shall not be impaired except upon lawful order of the court.
Neither shall the right to travel be impaired except in the interest of national
security, public safety, or public health as may be provided by law.
xxx xxx xxx
Sec. 8. The right of the people, including those employed in the public and
private sectors, to form unions, associations, or societies for purposes not
contrary to law shall not be abridged.
Sec. 17. No person shall be compelled to be a witness against himself.
Zones of privacy are likewise recognized and protected in our laws. The Civil Code provides that
"[e]very person shall respect the dignity, personality, privacy and peace of mind of his neighbors
and other persons" and punishes as actionable torts several acts by a person of meddling and prying
into the privacy of another. 35 It also holds a public officer or employee or any private individual
liable for damages for any violation of the rights and liberties of another person, 36 and recognizes
the privacy of letters and other private communications. 37 The Revised Penal Code makes a crime
the violation of secrets by an officer, 38the revelation of trade and industrial secrets, 39 and trespass
to dwelling. 40 Invasion of privacy is an offense in special laws like the Anti-Wiretapping
Law, 41 the Secrecy of Bank Deposits Act 42 and the Intellectual Property Code. 43 The Rules of
Court on privileged communication likewise recognize the privacy of certain information. 44
Unlike the dissenters, we prescind from the premise that the right to privacy is a fundamental right
guaranteed by the Constitution, hence, it is the burden of government to show that A.O. No. 308 is
justified by some compelling state interest and that it is narrowly drawn. A.O. No. 308 is predicated
on two considerations: (1) the need to provides our citizens and foreigners with the facility to
conveniently transact business with basic service and social security providers and other
government instrumentalities and (2) the need to reduce, if not totally eradicate, fraudulent
transactions and misrepresentations by persons seeking basic services. It is debatable whether these
interests are compelling enough to warrant the issuance of A.O. No. 308. But what is not arguable is
the broadness, the vagueness, the overbreadth of A.O. No. 308 which if implemented will put our
people's right to privacy in clear and present danger.
The heart of A.O. No. 308 lies in its Section 4 which provides for a Population Reference Number
(PRN) as a "common reference number to establish a linkage among concerned agencies" through
the use of "Biometrics Technology" and "computer application designs."
Biometry or biometrics is "the science of the applicatin of statistical methods to biological facts; a
mathematical analysis of biological data." 45 The term "biometrics" has evolved into a broad
category of technologies which provide precise confirmation of an individual's identity through the
use of the individual's own physiological and behavioral characteristics. 46 A physiological
characteristic is a relatively stable physical characteristic such as a fingerprint, retinal scan, hand
geometry or facial features. A behavioral characteristic is influenced by the individual's personality
and includes voice print, signature and keystroke. 47 Most biometric idenfication systems use a card
or personal identificatin number (PIN) for initial identification. The biometric measurement is used
to verify that the individual holding the card or entering the PIN is the legitimate owner of the card
or PIN. 48
A most common form of biological encoding is finger-scanning where technology scans a fingertip
and turns the unique pattern therein into an individual number which is called a biocrypt. The
biocrypt is stored in computer data banks 49 and becomes a means of identifying an individual using
a service. This technology requires one's fingertip to be scanned every time service or access is
provided. 50 Another method is the retinal scan. Retinal scan technology employs optical technology
to map the capillary pattern of the retina of the eye. This technology produces a unique print similar
to a finger print. 51 Another biometric method is known as the "artificial nose." This device
chemically analyzes the unique combination of substances excreted from the skin of people. 52 The
latest on the list of biometric achievements is the thermogram. Scientists have found that by taking
pictures of a face using infra-red cameras, a unique heat distribution pattern is seen. The different
densities of bone, skin, fat and blood vessels all contribute to the individual's personal "heat
signature." 53
In the last few decades, technology has progressed at a galloping rate. Some science fictions are
now science facts. Today, biometrics is no longer limited to the use of fingerprint to identify an
individual. It is a new science that uses various technologies in encoding any and all biological
characteristics of an individual for identification. It is noteworthy that A.O. No. 308 does not state
what specific biological characteristics and what particular biometrics technology shall be used to
identify people who will seek its coverage. Considering the banquest of options available to the
implementors of A.O. No. 308, the fear that it threatens the right to privacy of our people is not
groundless.
A.O. No. 308 should also raise our antennas for a further look will show that it does not state
whether encoding of data is limited to biological information alone for identification purposes. In
fact, the Solicitor General claims that the adoption of the Identification Reference System will
contribute to the "generation of population data for development planning." 54 This is an admission
that the PRN will not be used solely for identification but the generation of other data with remote
relation to the avowed purposes of A.O. No. 308. Clearly, the indefiniteness of A.O. No. 308 can
give the government the roving authority to store and retrieve information for a purpose other than
the identification of the individual through his PRN.
The potential for misuse of the data to be gathered under A.O. No. 308 cannot be undarplayed as the
dissenters do. Pursuant to said administrative order, an individual must present his PRN everytime
he deals with a government agency to avail of basic services and security. His transactions with the
government agency will necessarily be recorded — whether it be in the computer or in the
documentary file of the agency. The individual's file may include his transactions for loan
availments, income tax returns, statement of assets and liabilities, reimbursements for medication,
hospitalization, etc. The more frequent the use of the PRN, the better the chance of building a huge
formidable informatin base through the electronic linkage of the files. 55 The data may be gathered
for gainful and useful government purposes; but the existence of this vast reservoir of personal
information constitutes a covert invitation to misuse, a temptation that may be too great for some of
our authorities to resist. 56
We can even grant, arguendo, that the computer data file will be limited to the name, address and
other basic personal infomation about the individual. 57 Even that hospitable assumption will not
save A.O. No. 308 from constitutional infirmity for again said order does not tell us in clear and
categorical terms how these information gathered shall he handled. It does not provide who shall
control and access the data, under what circumstances and for what purpose. These factors are
essential to safeguard the privacy and guaranty the integrity of the information. 58 Well to note, the
computer linkage gives other government agencies access to the information. Yet, there are no
controls to guard against leakage of information. When the access code of the control programs of
the particular computer system is broken, an intruder, without fear of sanction or penalty, can make
use of the data for whatever purpose, or worse, manipulate the data stored within the system. 59
It is plain and we hold that A.O. No. 308 falls short of assuring that personal information which will
be gathered about our people will only be processed for unequivocally specified purposes. 60 The
lack of proper safeguards in this regard of A.O. No. 308 may interfere with the individual's liberty
of abode and travel by enabling authorities to track down his movement; it may also enable
unscrupulous persons to access confidential information and circumvent the right against self-
incrimination; it may pave the way for "fishing expeditions" by government authorities and evade
the right against unreasonable searches and seizures. 61 The possibilities of abuse and misuse of the
PRN, biometrics and computer technology are accentuated when we consider that the individual
lacks control over what can be read or placed on his ID, much less verify the correctness of the data
encoded. 62 They threaten the very abuses that the Bill of Rights seeks to prevent. 63
The ability of sophisticated data center to generate a comprehensive cradle-to-grave dossier on an
individual and transmit it over a national network is one of the most graphic threats of the computer
revolution. 64 The computer is capable of producing a comprehensive dossier on individuals out of
information given at different times and for varied purposes. 65 It can continue adding to the stored
data and keeping the information up to date. Retrieval of stored date is simple. When information of
a privileged character finds its way into the computer, it can be extracted together with other data on
the subject. 66Once extracted, the information is putty in the hands of any person. The end of privacy
begins.
Though A.O. No. 308 is undoubtedly not narrowly drawn, the dissenting opinions would dismiss its
danger to the right to privacy as speculative and hypothetical. Again, we cannot countenance such a
laidback posture. The Court will not be true to its role as the ultimate guardian of the people's liberty
if it would not immediately smother the sparks that endanger their rights but would rather wait for
the fire that could consume them.
We reject the argument of the Solicitor General that an individual has a reasonable expectation of
privacy with regard to the Natioal ID and the use of biometrics technology as it stands on quicksand.
The reasonableness of a person's expectation of privacy depends on a two-part test: (1) whether by
his conduct, the individual has exhibited an expectation of privacy; and (2) whether this expectation
is one that society recognizes as reasonable. 67 The factual circumstances of the case determines the
reasonableness of the expectation. 68 However, other factors, such as customs, physical surroundings
and practices of a particular activity, may serve to create or diminish this expectation. 69 The use of
biometrics and computer technology in A.O. No. 308 does not assure the individual of a reasonable
expectation of privacy. 70 As technology advances, the level of reasonably expected privacy
decreases. 71 The measure of protection granted by the reasonable expectation diminishes as relevant
technology becomes more widely accepted. 72 The security of the computer data file depends not
only on the physical inaccessibility of the file but also on the advances in hardware and software
computer technology. A.O. No. 308 is so widely drawn that a minimum standard for a reasonable
expectation of privacy, regardless of technology used, cannot be inferred from its provisions.
The rules and regulations to be by the IACC cannot remedy this fatal defect. Rules and regulations
merely implement the policy of the law or order. On its face, A.O. No. gives the IACC virtually
infettered discretion to determine the metes and bounds of the ID System.
Nor do your present laws prvide adequate safeguards for a reasonable expectation of privacy.
Commonwealth Act. No. 591 penalizes the disclosure by any person of data furnished by the
individual to the NSO with imprisonment and fine. 73 Republic Act. No. 1161 prohibits public
disclosure of SSS employment records and reports. 74 These laws, however, apply to records and
data with the NSO and the SSS. It is not clear whether they may be applied to data with the other
government agencies forming part of the National ID System. The need to clarify the penal aspect
of A.O. No. 308 is another reason why its enactment should be given to Congress.
Next, the Solicitor General urges us to validate A.O. No. 308's abridgment of the right of privacy by
using the rational relationship test. 75 He stressed that the purposes of A.O. No. 308 are: (1) to
streamline and speed up the implementation of basic government services, (2) eradicate fraud by
avoiding duplication of services, and (3) generate population data for development planning. He
cocludes that these purposes justify the incursions into the right to privacy for the means are
rationally related to the end. 76
We are not impressed by the argument. In Morfe v. Mutuc, 77 we upheld the constitutionality of R.A.
3019, the Anti-Graft and Corrupt Practices Act, as a valid police power measure. We declared that
the law, in compelling a public officer to make an annual report disclosing his assets and liabilities,
his sources of income and expenses, did not infringe on the individual's right to privacy. The law
was enacted to promote morality in public administration by curtailing and minimizing the
opportunities for official corruption and maintaining a standard of honesty in the public service. 78
The same circumstances do not obtain in the case at bar. For one, R.A. 3019 is a statute, not an
administrative order. Secondly, R.A. 3019 itself is sufficiently detailed. The law is clear on what
practices were prohibited and penalized, and it was narrowly drawn to avoid abuses. IN the case at
bar, A.O. No. 308 may have been impelled by a worthy purpose, but, it cannot pass constitutional
scrutiny for it is not narrowly drawn. And we now hod that when the integrity of a fundamental
right is at stake, this court will give the challenged law, administrative order, rule or regulation a
stricter scrutiny. It will not do for the authorities to invoke the presumption of regularity in the
performance of official duties. Nor is it enough for the authorities to prove that their act is not
irrational for a basic right can be diminished, if not defeated, even when the government does not
act irrationally. They must satisfactorily show the presence of compelling state interests and that the
law, rule or regulation is narrowly drawn to preclude abuses. This approach is demanded by the
1987 Constitution whose entire matrix is designed to protect human rights and to prevent
authoritarianism. In case of doubt, the least we can do is to lean towards the stance that will not put
in danger the rights protected by the Constitutions.
The case of Whalen v. Roe 79 cited by the Solicitor General is also off-line. In Whalen, the United
States Supreme Court was presented with the question of whether the State of New York could keep
a centralized computer record of the names and addresses of all persons who obtained certain drugs
pursuant to a doctor's prescription. The New York State Controlled Substance Act of 1972 required
physicians to identify parties obtaining prescription drugs enumerated in the statute, i.e., drugs with
a recognized medical use but with a potential for abuse, so that the names and addresses of the
patients can be recorded in a centralized computer file of the State Department of Health. The
plaintiffs, who were patients and doctors, claimed that some people might decline necessary
medication because of their fear that the computerized data may be readily available and open to
public disclosure; and that once disclosed, it may stigmatize them as drug addicts. 80 The plaintiffs
alleged that the statute invaded a constitutionally protected zone of privacy, i.e., the individual
interest in avoiding disclosure of personal matters, and the interest in independence in making
certain kinds of important decisions. The U.S. Supreme Court held that while an individual's interest
in avoiding disclosuer of personal matter is an aspect of the right to privacy, the statute did not pose
a grievous threat to establish a constitutional violation. The Court found that the statute was
necessary to aid in the enforcement of laws designed to minimize the misuse of dangerous drugs.
The patient-identification requirement was a product of an orderly and rational legislative decision
made upon recommmendation by a specially appointed commission which held extensive hearings
on the matter. Moreover, the statute was narrowly drawn and contained numerous safeguards
against indiscriminate disclosure. The statute laid down the procedure and requirements for the
gathering, storage and retrieval of the informatin. It ebumerated who were authorized to access the
data. It also prohibited public disclosure of the data by imposing penalties for its violation. In view
of these safeguards, the infringement of the patients' right to privacy was justified by a valid
exercise of police power. As we discussed above, A.O. No. 308 lacks these vital safeguards.
Even while we strike down A.O. No. 308, we spell out in neon that the Court is not per se agains the
use of computers to accumulate, store, process, retvieve and transmit data to improve our
bureaucracy. Computers work wonders to achieve the efficiency which both government and private
industry seek. Many information system in different countries make use of the computer to facilitate
important social objective, such as better law enforcement, faster delivery of public services, more
efficient management of credit and insurance programs, improvement of telecommunications and
streamlining of financial activities. 81 Used wisely, data stored in the computer could help good
administration by making accurate and comprehensive information for those who have to frame
policy and make key decisions. 82 The benefits of the computer has revolutionized information
technology. It developed the internet, 83 introduced the concept of cyberspace 84 and the information
superhighway where the individual, armed only with his personal computer, may surf and search all
kinds and classes of information from libraries and databases connected to the net.
In no uncertain terms, we also underscore that the right to privacy does not bar all incursions into
individual privacy. The right is not intended to stifle scientific and technological advancements that
enhance public service and the common good. It merely requires that the law be narrowly
focused 85 and a compelling interest justify such intrusions. 86 Intrusions into the right must be
accompanied by proper safeguards and well-defined standards to prevent unconstitutional invasions.
We reiterate that any law or order that invades individual privacy will be subjected by this Court to
strict scrutiny. The reason for this stance was laid down in Morfe v. Mutuc, to wit:
The concept of limited government has always included the idea that
governmental powers stop short of certain intrusions into the personal life of
the citizen. This is indeed one of the basic disctinctions between absolute and
limited government. Ultimate and pervasive control of the individual, in all
aspects of his life, is the hallmark of the absolute state. In contrast, a system of
limited government safeguards a private sector, which belongs to the
individual, firmly distinguishing it from the public sector, which the state can
control. Protection of this private sector — protection, in other words, of the
dignity and integrity of the individual — has become increasingly
important as modern society has developed. All the forces of a
technological age — industrialization, urbanization, and organization —
operate to narrow the area of privacy and facilitate intrusion into it. In modern
terms, the capacity to maintain and support this enclave of private life marks
the difference between a democratic and a totalitarian society. 87
IV
The right to privacy is one of the most threatened rights of man living in a mass society. The threats
emanate from various sources — governments, journalists, employers, social scientists,
etc. 88 In th case at bar, the threat comes from the executive branch of government which by issuing
A.O. No. 308 pressures the people to surrender their privacy by giving information about
themselves on the pretext that it will facilitate delivery of basic services. Given the record-keeping
power of the computer, only the indifferent fail to perceive the danger that A.O. No. 308 gives the
government the power to compile a devastating dossier against unsuspecting citizens. It is timely to
take note of the well-worded warning of Kalvin, Jr., "the disturbing result could be that everyone
will live burdened by an unerasable record of his past and his limitations. In a way, the threat is that
because of its record-keeping, the society will have lost its benign capacity to forget." 89 Oblivious
to this counsel, the dissents still say we should not be too quick in labelling the right to privacy as a
fundamental right. We close with the statement that the right to privacy was not engraved in our
Constitution for flattery.
IN VIEW WHEREOF, the petition is granted and Administrative Order No. 308 entitled "Adoption
of a National Computerized Identification Reference System" declared null and void for being
unconstitutional.
SO ORDERED.
G.R. No. 157286 June 16, 2006

THE PUBLIC SCHOOLS DISTRICT SUPERVISORS ASSOCIATION (PSDSA), Petitioners,

vs.
HON. EDILBERTO C. DE JESUS, Department Secretary, THE DEPARTMENT OF
EDUCATION, and THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.

DECISION

CALLEJO, SR., J.:

This is a Petition for Prohibition with prayer for temporary restraining order and/or preliminary
injunction filed by the Public Schools District Supervisor Association (PSDSA) seeking to declare
as unconstitutional Rule IV, Section 4.3; Rule V, Sections 5.1 and the second paragraph of Section
5.2; and Rule VI, Section 6.2, paragraph 11 of Department of Education Order No. 1, Series of
2003. The petition likewise seeks to compel, by way of a writ of mandamus, the Department of
Education, Culture, and Sports (DECS) and the Department of Budget and Management (DBM) to
upgrade the salary grade level of the district supervisors from Salary Grade (SG) 19 to SG 24.

The Antecedents

Ever since the Department of Education (DepEd)1 was founded decades ago, its management had
been so centralized in the Manila office. Schools in the national, regional, and division levels merely
followed and implemented the orders and memoranda issued by the Education Secretary. Due to the
evolution of the learning process and the onset of information technology, there was a need for a
radical change in the governance of the DepEd. Thus, a study on how to improve the management
of the Department was conducted, and one of the proposals was the abolition of the office of the
district supervisor.

Then Senator Tessie Aquino-Oreta, the Chairman of the Committee on Education, authored Senate
Bill No. 2191, the thrust of which was to change the existing management style and focus on the
schools where the teaching-learning process occurs. The bill was intended to highlight shared
governance in the different levels in the DECS hierarchy and establish authority, accountability, and
responsibility for achieving higher learning outcomes. While the governance of basic education
would begin at the national level, the field offices (regions, divisions, schools, and learning centers)
would translate the policy into programs, projects, and services to fit local needs.2 The national level
was likewise to be tasked to define the roles and responsibilities of, and provide resources to the
field offices which would implement educational programs, projects, and services in communities
they serve.3 At the forefront would be the DepEd Secretary, vested with the overall authority and
supervision over the operations of the department on the national, regional, division, and schools
district level.4

Republic Act No. 9155, otherwise known as the "Governance of Basic Education Act 2001,"
became a law on August 11, 2001, in accordance with Section 27(1), Article VI of the Constitution.
Under the law, each regional office shall have a director, an assistant director, and an office staff for
program promotion and support, planning, administrative and fiscal services. 5 The regional director
was given the authority to hire, place and evaluate all employees in the regional office except for the
position of assistant director,6 as well as the authority, accountability, and responsibility to
determine the organization component of the divisions and districts, and approve the staffing pattern
of all employees therein;7 evaluate all division superintendents and assistant division
superintendents in the region;8 and other functions as may be assigned by the proper authorities. 9
A division, on the other hand, is headed by a schools division superintendent with the following
responsibilities, among others: to supervise the operations of all public and private elementary,
secondary, and integrated schools, and learning centers;10 to hire, place and evaluate all division
supervisors and schools district supervisors as well as all employees in the divisions, both teaching
and non-teaching personnel, including school heads, except for the assistant division
superintendent;11 and perform other functions as may be assigned by proper authorities.12
The office of the schools district supervisor has been retained under the law. Each district is headed
by a school district supervisor and an office staff for program promotion. However, the
responsibilities of the schools district supervisor are limited to the following: (1) providing
professional and instructional advice and support to the school heads and teachers/facilitators of
schools and learning centers in the district or cluster thereof; (2) curricula supervision; and (3)
performing such other functions as may be assigned by proper authorities. The schools district
supervisors have no administrative, management, control or supervisory functions over the schools
and learning centers within their respective districts.13
On the school level, an Elementary School Principal (ESP) was designated as school head for all
public elementary schools; and a Secondary School Principal (SSP) for high schools or a cluster
thereof.14 The ESP and the SSP serve as both instructional leaders and administrative managers with
the following authority, accountability and responsibility:
(7) Administering and managing all personnel, physical, and fiscal resources of the
school;
(8) Recommending the staffing complement of the school based on its needs;
(9) Encouraging staff development;
xxxx
(11) Accepting donations, gifts, bequests, and grants for the purpose of upgrading
teachers’/learning facilitators’ competencies, improving and expanding school
facilities, and providing instructional materials and equipment. Such donations or
grants must be reported to the appropriate district supervisors and division
superintendents; and
(12) Performing such other functions as may be assigned by proper authorities. 15
Under Section 14 of the law, the DepEd Secretary is mandated to "promulgate the implementing
rules and regulations within ninety (90) days after the approval of the Act, provided that the
principle of shared governance shall be fully implemented within two (2) years" after such approval.
Before the DepEd could issue the appropriate implementing rules and regulations, petitioner sought
the legal assistance of the Integrated Bar of the Philippines (IBP) National Committee on Legal Aid
to make representations for the resolution of the following administrative issues:
1. Restoration of the functions, duties, responsibilities, benefits, prerogatives, and
position level of Public Schools District Supervisors.
2. Upgrading of Salary Grade level of Public Schools District Supervisors from Salary
Grade Level 19 to Salary Grade Level 24 under DBM Circular No. 36, otherwise known
as the Compensation and Position Classification Rules and Regulation.16
In a Letter dated March 1, 2002 addressed to then DepEd Secretary Raul Roco, the IBP stated that,
per its review of the documents submitted by the PSDSA, it found the latter’s position valid and
legal, to wit:
First: The basis for the abolition of the position of District Supervisors under the Attrition Law and
DECS Department Order No. 110, Series of 1991 is no longer valid and rendered moot and
academic due to issuance of DECS Department Order No. 22, Series of 1996 and the passage by
Congress of the Philippines of Republic Act No. 9155, otherwise known as the Basic Education
Governance Act of 2000. Under R.A. 9155, school districts are mandated to be maintained and
responsibilities of Public School’s Districts Supervisors have been clearly defined.
Second: There is a clear case of discrimination of grant of salaries and benefits to District
Supervisors compared to salaries and benefits received by the School Principals – which position
is lower in the hierarchy of positions as prepared by the Department of Education and the
Department of Budget and Management. School Principals and District Supervisors enjoy the same
level of Salary Grade even if the latter position is considered as a promotion and enjoys a higher
level of position than that of the position of School Principals. 17
The PSDSA thus requested the DepEd Secretary to call an immediate consultation with the district
supervisors nationwide through a convention, and their valid inputs be considered in formulating the
rules and regulations to be urged by the DepEd. However, the Secretary failed to reply. Thus, the
IBP reiterated the concerns raised by the PSDSA in a Letter18 to the DepEd dated April 15, 2002.
On January 6, 2003, DepEd Secretary Edilberto C. De Jesus issued DECS Office Order No. 1,
which constitutes the Implementing Rules and Regulations (IRR) of R.A. No. 9155. Sections 4.1 to
4.3, Rule IV of the IRR provide:
SECTION 4.1. The Schools Division Superintendent. – A division shall consist of a province or
city which shall have a schools division superintendent. There shall be at least one assistant
schools division superintendent and office staff for programs promotion, planning, administrative,
fiscal, legal, ancillary, and other support services.
SECTION 4.2. Authority, Accountability, and Responsibility of the Schools Division
Superintendent. – Consistent with the national educational policies, plans, and standards,
the schools division superintendents shall have authority, accountability, and responsibility for the
following:
1) Developing and implementing division education development plans;
2) Planning and managing the effective and efficient performance of all personnel,
physical, and fiscal resources of the division, including professional staff development;
3) Hiring, placing, and evaluating all division supervisors and schools district supervisors
as well as all employees in the division, both teaching and non-teaching personnel,
including school heads, except for the assistant division superintendents;
 4) Monitoring the utilization of funds provided by the national government and the local
government units to the schools and learning centers;
5) Ensuring compliance of quality standards for basic education programs and for this
purpose strengthening the role of division supervisors as subject area specialists;
6) Promoting awareness of, and adherence by, all schools and learning centers to
accreditation standards prescribed by the Secretary of Education;
7) Supervising the operations of all public and private elementary, secondary, and
integrated schools, and learning centers; and
8) Performing such other functions as may be assigned by the Secretary and/or Regional
Director.
SECTION 4.3. Appointing and Disciplinary Authority of the Schools Division Superintendent. –
The schools district superintendent shall appoint the division supervisors and school district
supervisors as well as all employees in the division, both teaching and non-teaching personnel,
including school heads, except for the assistant schools division superintendent, subject to the civil
service laws, rules and regulations, and the policies and guidelines to be issued by the Secretary of
Education for the purpose.
The schools division superintendent shall have disciplinary authority only over the non-teaching
personnel under his jurisdiction.
Such exercise of disciplinary authority by the schools division superintendent over the non-teaching
personnel shall be subject to the civil service laws, rules and regulations, and procedures and
guidelines to be issued by the Secretary of Education relative to this matter.
The Regional Director shall continue exercising disciplinary authority over the teaching personnel
insofar as the latter are covered by specific and exclusive disciplinary provisions under the Magna
Carta for Public School Teachers (R.A. No. 4670).19
Sections 5.1 and 5.2, Rule V of the IRR, in turn, provide:
SECTION 5.1. The Schools District Supervisor. – A school district shall have a school district
supervisor and office staff for program promotion.
The schools district supervisor shall primarily perform staff functions and shall not exercise
administrative supervision over school principals, unless specifically authorized by the proper
authorities. The main focus of his/her functions shall be instructional and curricula supervision
aimed at raising academic standards at the school level.
The schools district supervisor shall be specifically responsible for:
1) Providing professional and instructional advice and support to the school heads and
teachers/facilitators of schools and learning centers in the district or cluster thereof;
2) Curricula supervision; and
3) Performing such other functions as may be assigned by the Secretary, Regional
Directors, and Schools Division Superintendents where they belong.
The schools district supervisor being mentioned in this section shall refer to a public schools district
supervisor.
SECTION 5.2. The School District. – A school district already existing at the time of the passage
of this Act shall be maintained. However, an additional school district may be established by the
regional director based on criteria set by the Secretary and on the recommendation of the schools
division superintendent. For this purpose, the Secretary of Education shall set standards and
formulate criteria as basis of the Regional Directors of the establishment of an additional school
district.20
On March 13, 2003, the PSDSA, the national organization of about 1,800 public school district
supervisors of the DepEd, in behalf of its officers and members, filed the instant petition for
prohibition and mandamus, alleging that:
I. THE ACT OF THE DEPARTMENT OF EDUCATION IN REMOVING PETITIONERS’
ADMINISTRATIVE SUPERVISION OVER ELEMENTARY SCHOOLS AND ITS
PRINCIPALS (SCHOOL HEADS) WITHIN HIS/HER DISTRICT AND CONVERTING
HIS/HER ADMINISTRATIVE FUNCTION TO THAT OF PERFORMING STAFF FUNCTION
FOR THE DIVISION OFFICE PER SECTION 5.1 RULE V OF THE IMPLEMENTING RULES
AND REGULATIONS OF REPUBLIC ACT 9155 (DEPED ORDER NO. 1, SERIES OF 2003) IS
A GROSS VIOLATION OF REPUBLIC ACT 9155 – THE GOVERNANCE OF BASIC
EDUCATION ACT OF 2001.
II. THE IMPLEMENTING RULES AND REGULATION OF REPUBLIC ACT 9155 AS
PROMULGATED UNDER DEPED ORDER NO. 1, SERIES OF 2003 EXPANDED THE LAW
AND INCLUDED PROVISIONS WHICH ARE DIAMETRICALLY OPPOSED TO THE
LETTER AND SPIRIT OF THE SUBJECT LAW.
III. THE DOWNGRADING OF SALARY GRADE LEVEL OF THE PUBLIC SCHOOLS
DISTRICT SUPERVISOR OR THE NEGLECT OR REFUSAL OF THE DEPARTMENT OF
EDUCATION AND THE DEPARTMENT OF BUDGET AND MANAGEMENT TO UPGRADE
THE SALARY GRADE LEVEL OF PUBLIC SCHOOLS DISTRICT TO A RESPECTABLE
LEVEL OF SALARY GRADE HIGHER THAN THAT OF THE PRINCIPALS – DESPITE
CLEAR INTENTION OF R.A. 9155 TO RETAIN THE POSITION OF PSDS IN THE
HIERARCHY OF ADMINISTRATIVE MANAGERS AND OFFICERS OF THE DEPARTMENT
OF EDUCATION – IS UNCONSTITUTIONAL AND ILLEGAL.21
Petitioners maintain that the questioned provisions of the IRR are invalid because they "extended or
expanded and modified" the provisions of R.A. No. 9155. They argue that the said law should be
read in harmony with other "existing educational laws" which it did not specifically repeal, such as
Batas Pambansa Blg. 232, otherwise known as "The Education Act of 1982," as amended by R.A.
No. 7798; R.A. No. 4670, otherwise known as the "Magna Charta for Public School Teachers"; and
R.A. No. 7784 captioned "An Act to Strengthen Teacher Education in the Philippines by
Establishing Centers of Excellence, Creating a Teacher Education Council for the Purpose,
Appropriating Funds Therefore, and for Other Purposes."
Petitioners assert that under Section 7(D) of R.A. No. 9155, the district offices of the DepEd are
intended as field offices where the district supervisors can assist the ESPs and teachers/learning
facilitators within their district as experienced educational managers. Thus, the district supervisors
were not divested of the inherent administrative functions to manage and oversee the schools within
their respective districts, including their subordinates. They emphasize that the law provides an
"office staff for program promotion" in the school districts, which would be of no use if the office
has no administrative supervision over schools within its respective districts.
Petitioners assert that under the IRR, the schools district supervisors primarily perform staff
functions and shall not exercise administrative supervision over school principals, unless
specifically authorized by the proper authorities. Thus, under the IRR, the exercise of administrative
supervision over school principals was made discretionary and subject to the whims and caprices of
"the proper authorities." The logical inference of this provision, petitioners aver, is that the
administrative supervisory powers can be withdrawn from a district supervisor without any reason
at all, a provision which has no basis in the enabling law.
Petitioners further contend that the DepEd has no authority to incorporate its plan of downgrading
the position of district supervisor, that is, from being an administrator of a particular district office
to a position performing a staff function, to exercise administrative supervision over the school
principals only when specifically authorized by proper authorities. Petitioners insist that respondent
Education Secretary was focused on removing the level of management in the district office, such
that the IRR empower school heads (principals) to have administrative and instructional supervision
of school or cluster of schools, while supervision of all public and private elementary, secondary,
and integrated schools and learning centers was given to the division office.
Petitioners further insist that respondent Education Secretary failed to consider the fact that R.A.
No. 9155 strengthened the district office as a mid-level administrative field office of the DepEd.
The law even mandates to allow the district supervisor to have an office staff for program promotion
in the district office. Apart from the current administrative functions inherent in the district office,
DECS Service Manual 2000 vested additional specific functions to the district offices, to provide
professional and instructional advice and support to the school heads and teachers/facilitators of
schools and learning centers in the district, as well as curricula supervision.
Petitioners posit that R.A. No. 9155 did not, in anyway, allow or authorize the reorganization of the
entire DepEd; it never reduced the position, rank, classification, and salary grade level of district
supervisors, nor abolished the district offices which are responsible for the administration and
management of elementary schools within its jurisdiction. It did not remove from the district
supervisors the function of administrative supervision over schools within their respective areas. In
fact, petitioners insist, what the law did was to give the district supervisor additional responsibility
of providing professional and instructional advice and support to the school heads and
teachers/facilitators of schools and learning centers in the district or cluster thereof.
Petitioners point out that under Section 4.3, paragraph (b), Rule IV of the IRR, the schools division
superintendent was given the power to appoint the division supervisors and schools district
supervisor and other employees subject to civil service laws, rules, and regulations, and the policies
and guidelines to be issued by the Secretary of Education for the purpose. On the other hand, the
school division superintendent shall have disciplinary authority only over the non-teaching
personnel under his jurisdiction. Such exercise of disciplinary authority by the schools division
superintendent over the non-teaching personnel shall be subject to civil service laws, rules, and
regulations, and procedures and guidelines to be issued by the Secretary of Education relative to this
matter. The regional director shall continue exercising disciplinary authority over the teaching
personnel in so far as the latter are covered by specific and exclusive disciplinary provisions under
the Magna Carta for Public School Teachers (R.A. 4670).
Petitioners posit that this grant of disciplining authority to the regional director for teaching
personnel who commit violations of laws, rules, and regulations is definitely not provided for in
R.A. No. 9155. The division superintendent was given the power not only to hire and appoint the
division supervisors, district supervisors, school heads, or principals as well as employees in the
division, both teaching and non-teaching positions. However, when it comes to disciplining officers
and teaching personnel who commit infractions or violations of law, rules, and regulations of the
DepEd, the exercise of such disciplining authority is lodged in the hands of the regional director.
Petitioners point out that the power to hire teachers is in the hands of the division superintendent;
principles of administrative rules and procedure provide that the authority to hire and appoint carries
with it the authority to discipline and fire the hired and appointed personnel particularly if the law is
silent thereon. Since the division superintendent has the authority to hire teaching personnel within
its division, he/she should also take the responsibility of disciplining erring teachers and employees.
If the set-up of placing the power of hiring and power to discipline or fire an errant personnel is
separated or divided between two offices of the DepEd, the proliferation of "palakasan" or "bata-
bata" system will flourish, to the detriment of the public education system and public service.
Petitioners also point out that under Section 7(E)(11) of R.A. No. 9155, school heads are authorized
to accept gifts, donations, bequests, and grants for the purpose of upgrading teacher’s/learning
facilitator’s competencies, improving and expanding school facilities and providing
instructional materials and equipment, which, in turn, shall be reported to the appropriate district
supervisors and division superintendents. However, under Section 6.2(11), Rule VI of the IRR, on
the authority, accountability, and responsibility of school heads, district supervisors were deleted as
one of the administrative officers to whom such reporting is to be made. Petitioners conclude that to
the extent that the division superintendents are not mandated to report donations and grants to
district supervisors, the IRR is void.
On their plea for mandamus, petitioners pray that the Court compel the DepEd and the DBM to
upgrade their present salary grade. They claim that the position of an ESP is already classified as SG
21, which is higher by two grades than that of district supervisors, SG 19. Considering their higher
position in the department’s pecking order, vis-à-vis that of the ESPs, petitioners opine that to
rectify the present grade-level distortion, their salary grade should be upgraded to SG 24. 22
For its part, the Office of the Solicitor General (OSG) avers that a perusal of Section 7(D) of R.A.
No. 9155 shows that the district supervisor has limited responsibilities, and that the power to
exercise administrative supervision over the ESPs is not covered by any of those responsibilities.
The Education Secretary is the disciplining authority in the DepEd, with the regional directors
acting as the disciplining authority in their respective regions.
As to petitioners’ gripe that the IRR deleted district supervisors from among those school
heads who should report when "[a]ccepting donations, gifts, bequests, and grants for the
purpose of upgrading teachers’/learning facilitators’ competencies, improving and expanding
school facilities, and providing instructional materials and equipment," the OSG avers that this
reportorial function is "directory" and merely for "convenience."
Anent petitioners’ grievance on their alleged stagnant salary grade level, the OSG points out that the
same is "already provided for under FY 2003 GAA, [thus], petitioners’ complaint against the
non-increase of their SG level is already moot and academic." The OSG also emphasizes
that the upgrading of the ESP’s salary grade over the petitioners is not violative of petitioners’
right to equal protection of the law, since "district supervisors and ESPs are not similarly
situated."
In reply, petitioners contend that the upgrading of the salary grade level of district supervisors to SG Senator Tessie Aquino-Oreta, the Chairperson of the Senate Committee on Education and the
21 is an admission by the DepEd and by the DBM of the validity of their demand to increase their Sponsor of the Bill, objected to such proposal:
salary grade to a respectable SG 24.
The President:
The petition is partially granted.
Why do we not say AND SHALL NOT BE INCLUDED?
It must be stressed that the power of administrative officials to promulgate rules in the
implementation of a statute is necessarily limited to what is provided for in the legislative Senator Cayetano:
enactment.23 The implementing rules and regulations of a law cannot extend the law or expand its
coverage, as the power to amend or repeal a statute is vested in the legislature. 24 It bears stressing,
however, that administrative bodies are allowed under their power of subordinate legislation to Yes, better yet, Mr. President. I thank the Chair for that amendment.
implement the broad policies laid down in a statute by "filling in" the details. All that is required is
that the regulation be germane to the objectives and purposes of the law; that the regulation does not The President:
contradict but conforms with the standards prescribed by law. 25 Moreover, as a matter of policy, this
Court accords great respect to the decisions and/or actions of administrative authorities not only
because of the doctrine of separation of powers but also for their presumed knowledgeability and All right. Can we approve that? The sponsor accepts the amendment, I assume.
expertise in the enforcement of laws and regulations entrusted to their jurisdiction. 26 The rationale
for this rule relates not only to the emergence of the multifarious needs of a modern or modernizing Senator Aquino-Oreta:
society and the establishment of diverse administrative agencies for addressing and satisfying those
needs; it also relates to the accumulation of experience and growth of specialized capabilities by the
administrative agency charged with implementing a particular statute. 27 Yes, Mr. President.

We have reviewed the IRR and find that Section 4.3 of Rule IV, and Sections 5.1 and 5.2 of Rule V The President:
are valid. The provisions merely reiterate and implement the related provisions of R.A. No. 9155.
Under the law, a division superintendent has the authority and responsibility to hire, place, and Is there any objection from the floor? (Silence) There being none, the amendment is approved.
evaluate all division supervisors and district supervisors as well as all employees in the division,
both teaching and non-teaching personnel, including school heads.28 A school head is a person
Senator Cayetano:
responsible for the administrative and instructional supervision of the schools or cluster of
schools.29 The division superintendent, on the other hand, supervises the operation of all public and
private elementary, secondary, and integrated schools and learning centers. 30 Thank you, Mr. President.

Administrative supervision means "overseeing or the power or authority of an officer to see that
their subordinate officers perform their duties. If the latter fails or neglects to fulfill them, the former
may take such action or steps as prescribed by law to make them perform their duties."31
A plain reading of the law will show that the schools district supervisors have no administrative
supervision over the school heads; their responsibility is limited to those enumerated in Section 7(D)
of R.A. No. 9155, to wit:
(1) Providing professional and instructional advice and support to the school heads and
teachers/facilitators of schools and learning centers in the district or cluster thereof;
In line 17, it ends with the conjunction "and." I would like to propose an amendment by inserting a
new paragraph (b). This is, of course, the duties and responsibilities of schools district supervisors.
It is to SUPERVISE SCHOOL PRINCIPALS IN THE DISTRICT, because right now, this is
exactly their job.
Again, the reality is, there are efforts to minimize, if not remove, the principal function of school
supervisors, which is to supervise school principals in the district. I just want it to be there to ensure
that their primary functions remain as such.
Therefore, what appears as paragraph (b) in line 18 will now be subparagraph (c).

(2) Curricula supervision; and The President:

(3) Performing such other functions as may be assigned by proper authorities. What does the sponsor say?

As gleaned from the Senate deliberations on Senate Bill No. 2191, the district supervisors were
divested of any administrative supervision over elementary and public high schools. The Senate
resolved to vest the same in the division superintendents, and the Lower House concurred. Senator
Rene Cayetano proposed that the traditional function of the school supervisors of exercising
administrative supervision over the elementary and public high schools be maintained. However,
Senator Aquino-Oreta:
Mr. President, may I just explain. There are two school supervisors. One is for the academic
function and the other is for the administrative function. As such, if these two supervisors will
dictate to the principals, then our thrust in reducing the level of bureaucracy might not be met. Also,
the thrust of this governance bill really is to flesh out the importance of the school as the heart of
education here. In that heart, we have the teacher, the student, and the school head.
What we are trying to do here is to bring to the forefront the school itself. In fact, right now, there is
a move in the DECS to do away with the school supervisor in charge of administrative and leave
that function to the principal. If the principal, the school head will be dictated upon by these two
school supervisors, we might not be able to achieve what we want to do here – putting to the
forefront the school itself. Meaning, putting to the forefront the school head, the teacher,
and the student.
Senator Cayetano:
Mr. President, I would like to thank the sponsor for that enlightenment. That is precisely my point.
Not too long ago, I was a speaker before the school supervisors all over the land. One of the points
that they complained about was, in most cases, their job to supervise school principals is now being
removed or have been removed simply because – and I may be inaccurate here – the Japanese
government – I know it is a foreign government that funded a study of the organizational
setup of the DECS – has recommended the abolition of school supervisors.
Mr. President, again I thank the lady senator. But again let us look at who supervisors of schools
are. Supervisors of schools once upon a time were all school principals. They rose from the ranks,
that is why they are fully aware of the administrative as well as the instructional capability of the
principals now who are under them. To remove their right to supervise, – now it is the ADB, I am
correct, the lady senator is correct because as I said I was not sure – to remove this
traditional function would really render the supervisors practically without anything to do. That is
why they are now being justified that henceforth there will be no principals that will be promoted as
school supervisors because when the school supervisors reach the age of retirement and retire, no
principals shall be promoted to that level. But these school supervisors now, Mr. President, were
once upon a time in their professional lives principals, and they know best how the schools should
be run – administratively and instructionally. That is the reason for that, Mr. President.
The President:
What does the sponsor say?
Senator Cayetano:
So, may I ask the sponsor to accept this, Mr. President.

This is the reason this representation would like to ensure that the traditional function of the school Senator Aquino-Oreta:
supervisors, among which is to supervise school principals, remain as such. What is good for the
Japanese education is not necessarily good for the Philippines. This representation knows that this is Mr. President, what was the amendment?
precisely one of the complaints of the school supervisors.

Senator Cayetano:
The lady sponsor admitted that, indeed, there is an effort to phase out the school supervisors. That is
precisely my point, Mr. President. I do not want the school supervisors to be phased out simply
because a foreign government which funded the study of our education has suggested it. To insert a new paragraph, paragraph (b) in line 18, which states: SUPERVISE SCHOOL
PRINCIPALS IN THE DISTRICT.
The President:
The President:
What does the sponsor say?
May I suggest, THE SUPERVISION OF SCHOOL PRINCIPALS IN THE DISTRICT, because –
Senator Aquino-Oreta:
Senator Cayetano:
Mr. President, actually, it is not Japanese. It is an ADB proposal to the DECS. The DECS had a
study made on how to improve the management order of the DECS. That was one of the proposals. Yes, Mr. President.
They gave three proposals. One of them was to take out the school supervisors.
The President:
But precisely, Mr. President, we are not doing that, we are not taking them out. What we are saying
is for the school supervisor to focus on the curriculum because in the administration of the affairs of – the antecedent for that is, "The schools district supervisor shall be responsible for."
the school, we are saying that the principal knows best how to administer or how to run the school
better. And so, we are saying here that school supervisors will be there contrary to the view of that
ADB study. We will maintain them, but the focus of the school supervisors will be on the Senator Cayetano:
curriculum of the schools.
That is right, Mr. President. Supervision, yes.
Senator Cayetano:
The President:
What does the sponsor say? Thank you, Mr. President.

Senator Aquino-Oreta: With the permission of the lady senator, after consulting her and the Majority Leader, I would like
to propose an amendment by rewording the original amendment I was proposing last night. The
Mr. President, may I have one minute? reworded proposed amendment would be like this: CURRICULA SUPERVISION.

SUSPENSION OF SESSION The President:

Senator Tatad: That would be on what page?

Senator Cayetano:
Mr. President, I move that we suspend the session for one minute.

That would be on page 10, line 17, as a new paragraph (b).

The President:

Is there any objection? (Silence) There being none, the session is suspended for one minute. The President:

It was 5:33 p.m. And how will it read?

RESUMPTION OF SESSION Senator Cayetano:

At 5:43 p.m., the session was resumed. CURRICULA SUPERVISION.

The President: The President:

The session is resumed. Just that?

Senator Cayetano:
SUSPENSION OF CONSIDERATION OF S. NO. 2191

Just that, Mr. President.

Senator Tatad:

Mr. President, we are still trying to find a way out of these conflicting points of view on the role of Senator Tatad:
the supervisor. To allow the parties to have a little more time to work on this, I move that we
suspend consideration of Senate Bill No. 2191. (Underscoring supplied)32 Put a semicolon (;).

When the session resumed, Senator Cayetano no longer pursued his proposed amendment, and Senator Cayetano:
moved instead that the same be amended to read "Curricula Supervision." The Senate approved the
proposal of the Senator: And because of that, line 18 which is paragraph (b), should now be paragraph (c).

The President: The President:

The session is resumed. Senator Cayetano is recognized. What does the sponsor say?

CAYETANO AMENDMENT Senator Aquino-Oreta:

Senator Cayetano: The amendment is accepted, Mr. President. (Underscoring supplied)33

Thus, under R.A. No. 9155, administrative supervision over school heads is not one of those
responsibilities conferred on district supervisors.
It is a settled rule of statutory construction that the express mention of one person, thing, act, or
consequence excludes all others. This rule is expressed in the familiar maxim expressio unius est
exclusio alterius. Where a statute, by its terms, is expressly limited to certain matters, it may not, by
interpretation or construction, be extended to others. The rule proceeds from the premise that the
legislature would not have made specified enumerations in a statute had the intention been not to
restrict its meaning and to confine its terms to those expressly mentioned. 34
It is not surprising that Senator Aquino-Oreta maintained her position that district supervisors
should not have administrative control or even supervision over ESPs and SSPs. As early as 1990,
the DECS had adopted the policy that, effective January 1, 1991, the positions of district supervisors
and division supervisors would be gradually phased out by not filling-up these positions as they
become vacant.35 On September 17, 1991, then DECS Secretary Isidro Cariño issued DECS
Order No. 110, Series of 1991, declaring that, to foster better considerations and
articulation of progress in the elementary level, all elementary school principals shall report
directly to the school division superintendents. In his Order dated June 22, 1994, then DECS
Secretary Armand V. Fabella declared that DECS Order No. 110 shall remain in effect, with the
recommendation that, in order to facilitate the phase-out of district supervisor positions, incumbent
district supervisors were encouraged to transfer to vacant division supervisor positions, provided
they meet the qualification standards for such positions.36 For his part, in his DECS Order No. 22,
Series of 1996, DECS Secretary Ricardo T. Gloria restored the district supervisor positions but only
on a selective basis and subject to the following guidelines:
a) Schools superintendents, with the concurrence/approval of their regional directors,
may have the option to restore the position in selected districts after a careful evaluation
of need. For this purpose, the number of schools and their geographical location and
distance for effective monitoring, the availability of regular transportation, urban-rural
setting, etc., should be considered in the decision.
b) The role of the district supervisor as an instructional leader and resource for teachers,
rather than merely as an administrative supervisor, should be emphasized in their
functions and duties.
c) In the event of restoration and appointment of the position in a particular district, the
school superintendent shall ensure that the system of field supervision previous to the
issuance of DECS Orders No. 110, s. 1991 and No. 41, s. 1994 shall, likewise, be
restored. Correspondingly, the designation of coordinating principals in affected districts
shall be withdrawn.
d) Should a division office opt not to restore some or all district supervisor positions, the
funds for such positions may be used to create new positions or upgrade existing
positions, subject to the approval of the Department of Budget and Management.
e) Considering that a number of vacated district supervisor positions in some divisions
may have been converted to other positions and/or otherwise phased out since 1991,
appointments of district supervisors shall be issued by regional directors only upon
verification from the Department of Budget and Management that the said position may
be filled.
It is enjoined that regional directors and schools superintendents shall exert special effort to ensure
that the implementation of this Order shall be harmonious and conducive to field supervision.37
Under DECS Order No. 36, Series of 1998 issued by DECS Secretary Erlinda C. Pefianco, the
positions of district supervisors were restored to their original status as a supervisory level in the
DECS administrative hierarchy subject to the following guidelines:
1.1 The positions of Education and District Supervisors are hereby restored to their original status as
a supervisory level in the DECS administrative hierarchy, subject to the following guidelines:
1.1.1 The functions of a district supervisor as an instructional leader and resource person
for teachers should be emphasized.
In the event of restoration and appointment of public schools district supervisor, the designation of
the coordinating principal shall be withdrawn.
Appointment of district supervisors shall be issued by regional directors only upon verification from
the Department of Budget and Management that the positions still exist since a number of vacated
district supervisor positions in some divisions may have been converted to other positions and/or
otherwise phased out since 1991.38
However, as already stated, the Senate resolved to maintain the positions of district supervisors but
limited their responsibilities only to those enumerated in Section 7(D) of R.A. No. 9155 to conform
to the basic thrust and objectives of the law. Far from strengthening the office of the district
supervisors as a mid-head field office of the DepEd, the law limited the authority and responsibility
attached to such position.
While it is true that the district supervisor is given a support staff for program promotion, it cannot
thereby be implied that he/she likewise has administrative supervision over ESPs and SSPs. Such a
construction has no basis in law and in fact. Indeed, such a construction of the statute defeats the
very purpose of the law.
It is a basic precept that the intent of the legislature is the controlling factor in the interpretation of
the statute. The particular words, clauses, and phrases should not be studied as detached and isolated
expression, but the whole and every part of the statute must be considered in fixing the meaning of
any of its parts and in order to produce a harmonious whole.39
Besides, Congress enumerated the duties and responsibilities of a district supervisor. Congress
would not have made specific enumerations in a statute if it had the intention not to restrict or limit
its meaning and confine its terms only to those expressly enumerated. Courts may not, in the guise
of interpretation, enlarge the scope of a statute and include situations not provided nor intended by
Congress.40
The submission of the OSG, that the schools district supervisors have the administrative supervision
over school heads, is more in accord with the law, to wit:
Section 7 of RA 9155, on School District Level, pertinently provides that "a school district shall
have a school district supervisor and an office staff for program promotion," and that the schools
district supervisor shall be responsible for: (1) "(p)roviding professional and instructional advice
and support to the school heads and teachers/facilitators of schools and learning centers in the
district [or] cluster thereof;" (2) "(c)urricula supervision;" and, (3) "(p)erforming such other
functions as may be assigned by the proper authorities."
A perusal of Section 7 shows that the District Supervisor has limited responsibilities, and that the
power to exercise administrative supervision over the ESPs is not covered by responsibility nos. 1
and 2. Neither is that power covered by the directive that the District Supervisor shall have an office
staff for program promotion. The only logical conclusion, therefore, that can be derived from the
aforesaid enumeration of responsibilities is that the District Supervisor may only exercise
administrative supervision over ESPs when such function is assigned by proper authorities. And,
since the DepEd Secretary specifically declared through the IRR of RA 9155, that the District
Supervisor shall not exercise administrative supervision over the ESPs, unless otherwise authorized,
petitioners cannot complain against the said declaration. On this score, it is settled that the intent of
the statute is the law (Philippine National Bank v. Office of the President, 252 SCRA 5 [1996]). In
the absence of legislative intent to the contrary, words and phrases used in a statute should be given
their plain, ordinary and common usage meaning (Mustang Lumber, Inc. v. Court of Appeals, 257
SCRA 430 [1996]).
Needless to say, Section 7, on Division Level, further provides that the School Division
Superintendent shall have authority, accountability and responsibility for, among others,
"(s)upervising the operation of all public and private elementary, secondary and integrated schools,
and learning centers." To claim, therefore, that the District Supervisor has administrative
supervision over the ESPs would also violate the above-quoted provision.41
The Court likewise declares that the last paragraph of Section 4.3 of the IRR, stating that the
regional director shall continue exercising disciplinary authority over the teaching personnel insofar
as the latter are covered by specific and exclusive disciplinary provisions under R.A. No. 4670
("Magna Carta for Public School Teachers") does not contravene R.A. No. 9155. Indeed, the IRR
merely reiterates the DECS Rules of Procedure, DECS Order No. 33, issued on March 30, 1999 by
the DepEd Secretary, and R.A. No. 4670 which was approved on June 18, 1966, and pursuant to
Section 7, Chapter II, Book IV of the 1987 Administrative Code, which provides that the DepEd
Secretary is empowered to
a. Promulgate rules and regulations necessary to carry out department objectives,
policies, functions, plans, programs, and projects; and
b. Promulgate administrative issuances necessary for the efficient administration of the
offices under the Secretary and for execution of the laws relative thereto.
Additionally, the IRR was issued by the DepEd Secretary pursuant to Section 7(A)(1) of R.A. No.
9155, which mandates that the Secretary formulate national educational policies and enhance the
employment status, professional competence, welfare, and working conditions of all the DepEd
personnel.42
We agree that R.A. No. 9155 does not provide who has disciplinary authority over the teaching
personnel of the DepEd. However, under Section 3, Chapter III of DECS Order No. 33, Series of
1999, otherwise known as the 1999 DECS Rules of Procedure, the disciplining authority in the
DECS is the DepEd Secretary, with the regional directors acting as such in their respective regions
except those appointed by the President.43
The officers and employees referred to in the Rules of Procedure include teachers who, under R.A.
No. 4670, shall mean:
x x x all persons engaged in classroom teaching, in any level of instruction, on full-time basis,
including guidance counselors, school librarians, industrial arts, or vocational instructors, and all
other persons performing supervisory and/or administrative functions in all schools, colleges and
universities operated by the Government or its political subdivisions; but shall not include school
nurses, school physicians, school dentists, and other school employees.
A division superintendent of schools is not a disciplining authority over teachers, whether under
R.A. No. 4670 or under the DECS Rules of Procedure. In fact, under Section 2, Chapter VII of such
Rules of Procedure, a division superintendent is a chairperson of the investigating committee over
formal complaints filed against such teachers:
a) When the respondent is an elementary or secondary school teacher, head teacher, principal,
district supervisor/chair/coordinator or Education Supervisor I –
(1) The schools division superintendent or his or her duly authorized representative, as
chairperson;
(2) The duly authorized representative of the school, district, or division teacher’s
organization, as member; and
(3) The division supervisor for elementary or secondary education where the respondent
belongs, as member.
The foregoing rule is based on Section 9 of R.A. No. 4670 which reads:
Sec. 9. Administrative Charges. Administrative charges against a teacher shall be heard initially by
a committee composed of the corresponding School Superintendent of the Division or a duly
authorized representative who should, at least, have the rank of a division supervisor, where the
teacher belongs, as chairman, a representative of the local or, in its absence, any existing provincial
or national teacher’s organization and a supervisor of the Division, the last two to be designated
by the Director of Public Schools. The committee shall submit its findings and recommendations to
the Director of Public Schools within thirty days from the termination of the hearings: Provided,
however, That where the school superintendent is the complainant or an interested party, all the
members of the committee shall be appointed by the Secretary of Education.
Anent the issue on reporting of acceptance of donations, Section 7(E)(11) of R.A. No. 9155
provides:
(11) Accepting donations, gifts, bequests, and grants for the purpose of upgrading
teachers’/learning facilitators’ competencies, improving and expanding school facilities, and
providing instructional materials and equipment. Such donations or grants must be reported to the
appropriate district supervisors and division superintendents. (emphasis supplied)
However, Section 6.2(11), Rule VI of the IRR provides that:
(11) Accepting donations, gifts, bequests, and grants in accordance with existing laws and policy of
the Department for the purpose of upgrading teachers’/learning facilitators’ competencies,
improving and expanding school facilities, and providing instructional materials and
equipment. Such donations or grants must be reported to the division superintendents. (emphasis
supplied)
We agree with petitioners’ contention that, under the law, donations and grants must be
reported to the appropriate district supervisors and not only to the division superintendents.
The use in the law of the word "must" is an expression of the mandatory nature of the reporting of
donations and grants to district supervisors. The reason for the provision is that such grants and
donations which are intended to upgrade teachings/learning facilitators’ competencies, improve
and expand school facilities, and provide instructional materials and equipment will assist the
school district supervisors in the performance of their duties and responsibilities under Section 7(D)
of R.A. No. 9155, and submit appropriate recommendations to the proper administrative officers.
On petitioner’s plaint of the failure of respondents to upgrade their salary grade level to at
most SG 21, and for the issuance of the writ of mandamus mandating respondents to increase
their salary grade from SG 19 to 24, the same is premature.
There is no showing in the petition that, before filing their petition, petitioners sought an adjustment
of level of their salary grade from SG 19 to SG 21 before respondents or the Civil Service
Commission. Section 17 of Presidential Decree No. 985, as amended by Section 14 of R.A. No.
6758, otherwise known as the Salary Standardization Law, provides:
Sec. 17. Powers and Functions. – The Budget Commission (now Department of Budget and
Management), principally through the OCPC (now CPCB, Compensation and Position
Classification Board) shall, in addition to those provided under other Sections of this Decree, have
the following powers and functions:
a. Administer the compensation and position classification system established herein and revise it as
necessary;
xxxx
f. Certify classification actions and changes in class or grade of positions whenever the facts
warrant, such certification to be binding on administrative, certifying, payroll, disbursing,
accounting and auditing officers of the national government and government-owned or controlled
corporations and financial institutions.
Sections 10 and 11 of R.A. No. 9155 provide:
SEC. 10. The Secretary of Education and the Secretary of Budget and Management shall, within
ninety (90) days from the approval of this Act, jointly promulgate the guidelines on the allocation,
distribution, and utilization of resources provided by the national government for the field offices,
taking into consideration the uniqueness of the working conditions of the teaching service.
The Secretary of the Department of Education shall ensure that resources appropriated for the field
offices are adequate and that resources for school personnel, school desks, and textbooks and other
instructional materials intended are allocated directly and released immediately by the Department
of Budget and Management to said offices.
SEC. 11. The Secretary of the Department of Education, subject to civil service laws and
regulations, shall issue appropriate personnel policy rules and regulations that will best meet the
requirements of the teaching profession taking into consideration the uniqueness of the working
conditions of the teaching service.
And insofar as the salary system for teaching positions is concerned, Section 14 provides:
SEC. 14. The Salary System for Teaching Position. – The salary grade of a teacher shall be
determined in accordance with the following:
a. The Teachers’ Preparation Pay Schedule shall be prepared by the Commission in
consultation with the Department of Education and Culture. Under this system, the
teacher's academic or educational preparation, teaching experience in both private and
public schools, and extra-curricular activities for professional growth, shall be considered
in pursuance of the principle of 'equal pay for equal training and experience.'
xxxx
d. The Budget Commission, in coordination and consultation with the Department of
Education and Culture and the Civil Service Commission may, when future needs
require, modify, change or otherwise improve on the salary system herein established for
the teaching and closely related occupations, any change that may be made as provided
herein shall become part of the implementing rules of this Decree to be issued by the
Budget Commission upon prior approval by the President.
Moreover, the issue of whether or not respondents should be compelled to adjust upwards the salary
grade of petitioners to SG 21 has become moot and academic, because, on November 3, 2003, the
DepEd and the DBM issued Joint Circular No. 1, Series of 2003 containing the guidelines in the
implementation of the Salary Upgrading for District and Education Supervisors, to wit:
4.0 GUIDELINES
4.1 To maintain the previous salary grade relationships under RA No. 6758 among the
PSDS and ES I, on the one hand, and Elementary School Principal (ESP) IV and
Secondary School Principal (SSP) II, on the other hand, and to preserve the consistency
in the salary grade relationships of said positions, the following are hereby authorized:
4.1.1 Upgrading of the PSDS and ES I positions from SG-19 to SG-20 in July
2003 and to SG-21 in July 2004;
4.1.2 Upgrading of the ES II positions by two (2) salary grades from SG-20 to
SG-21 in July 2003 and to SG-22 in July 2004;
4.1.3 A one-step salary adjustment to incumbents of ES III positions starting
July 2003 and another one-step salary adjustment starting July 2004;
4.1.4 A one-step salary adjustment to incumbents of CES positions starting
July 2003 and another one-step salary adjustment starting July 2004.
4.2 Attached herewith is Annex A containing the summary of the guidelines for the salary
upgrading of positions authorized herein.
5.0 SALARY RULES
 5.1 For purposes of the salary upgrading herein authorized, the basic salary of the
employee concerned shall be adjusted as follows:
5.1.1 Effective July 1, 2003 – at the same salary step of his assigned
salary grade as of June 30, 2003 (Illustrative Example A) adopting the
Salary Schedule prescribed under National Budget Circular (NBC) No. 474
(Annex B);
5.1.2 Effective July 1, 2004 – at the same salary step of his assigned
salary grade as of June 30, 2004 (Illustrative Example A) adopting the
Salary Schedule prescribed under National Budget Circular (NBC) No. 474
(Annex B).
This Circular Letter shall take effect on July 1, 2003.
IN VIEW OF ALL THE FOREGOING, the petition for prohibition is PARTIALLY GRANTED.
Joint Circular No. 1, Series of 2003 is declared valid, except Section 6.2(11), Rule VI thereof which
provides that "donations or grants shall be reported only to the division superintendents." Such
donations or grants must also be reported to the appropriate school district supervisors, as mandated
by Republic Act No. 9155. Petitioners’ prayer for the issuance of a writ of mandamus is
DENIED for lack of merit. No costs.
SO ORDERED.

5.2 The transition allowance as defined in 3.2 being received by the PSDS and ES, if any,
shall be considered as advance entitlement of the salary increase herein authorized.
(Illustrative Examples B and C)

5.3 No step adjustment shall be granted to incumbents of positions whose salary already
falls at or exceeds the maximum step (eighth step) of the salary grade allocation of their
positions. (Illustrative Example D)

5.4 The herein salary increases shall be effected through the issuance of a Notice of
Salary Adjustment (NOSA) by the duly authorized official. (Annex C)

6.0 FUNDING SOURCE

The amounts necessary to implement the salary adjustments authorized herein shall be charged
against the Nationwide lump sum appropriation for the purpose amounting to fifty million pesos
(P50,000,000) in the DepEd’s budget in RA 9206, the CY 2003 General Appropriations Act.
For CY 2004, the same shall be charged against the lump sum appropriation for the
purpose that may be included in the 2004 budget.

7.0 POST-AUDIT

Any salary adjustment paid under this Circular shall be subject to post-audit by the DBM – ROs
concerned. Any payments thereof which are not in accordance herewith shall be adjusted
accordingly.

8.0 CONTRIBUTIONS

The salary adjustments authorized herein are subject to the mandatory requirements for life and
retirement premiums, and health insurance premiums.

9.0 SAVING CLAUSE

Conflicts arising from the implementation of the provisions of this Circular shall be resolved by the
Department of Education, upon prior consultation with the Department of Budget and Management.

10.0 EFFECTIVITY
G.R. No. 116422 November 4, 1996
AVELINA B. CONTE and LETICIA BOISER-PALMA, petitioners,
vs.
COMMISSION ON AUDIT (COA), respondent.
PANGANIBAN, J.:
Are the benefits provided for under Social Security System Resolution No. 56 to be
considered simply as "financial assistance" for retiring employees, or does such scheme
constitute a supplementary retirement plan proscribed by Republic Act No. 4968?
The foregoing question is addressed by this Court in resolving the instant petition
for certiorari which seeks to reverse and set aside Decision No. 94-
1261 dated March 15, 1994 of respondent Commission on Audit, which denied
petitioners' request for reconsideration of its adverse ruling disapproving claims for
financial assistance under SSS Resolution No. 56.
The Facts
Petitioners Avelina B. Conte and Leticia Boiser-Palma were former employees of the
Social Security System (SSS) who retired from government service on May 9, 1990 and
September 13, 1992, respectively. They availed of compulsory retirement benefits under
Republic Act No. 660.2
In addition to retirement benefits provided under R.A. 660, petitioners also claimed SSS
"financial assistance" benefits granted under SSS Resolution No. 56, series of 1971.
A brief historical backgrounder is in order. SSS Resolution No. 56, 3 approved on January
21, 1971, provides financial incentive and inducement to SSS employees qualified to
retire to avail of retirement benefits under RA 660 as amended, rather than the retirement
benefits under RA 1616 as amended, by giving them "financial assistance" equivalent in
amount to the difference between what a retiree would have received under RA 1616, less
what he was entitled to under RA 660. The said SSS Resolution No. 56 states:
RESOLUTION NO. 56
WHEREAS, the retirement benefits of SSS employees are provided for under
Republic Acts 660 and 1616 as amended;.
WHEREAS, SSS employees who are qualified for compulsory retirement at
age 65 or for optional retirement at a lower age are entitled to either the life
annuity under R.A. 660, as amended, or the gratuity under R.A. 1616, as
amended;
WHEREAS, a retirement benefit to be effective must be a periodic income as
close as possible to the monthly income that would have been due to the retiree
during the remaining years of his life were he still employed;
WHEREAS, the life annuity under R.A. 660, as amended, being closer to the
monthly income that was lost on account of old age than the gratuity under
R.A. 1616, as amended, would best serve the interest of the retiree;
WHEREAS, it is the policy of the Social Security Commission to promote and
to protect the interest of all SSS employees, with a view to providing for their
well-being during both their working and retirement years;
WHEREAS, the availment of life annuities built up by premiums paid on
behalf of SSS employees during their working years would mean more savings
to the SSS;
WHEREAS, it is a duty of the Social Security Commission to effect savings in
every possible way for economical and efficient operations;
WHEREAS, it is the right of every SSS employee to choose freely and
voluntarily the benefit he is entitled to solely for his own benefit and for the
benefit of his family;
NOW, THEREFORE, BE IT RESOLVED, That all the SSS employees who
are simultaneously qualified for compulsory retirement at age 65 or for
optional retirement at a lower age be encouraged to avail for themselves the
life annuity under R.A. 660, as amended;
RESOLVED, FURTHER, That SSS employees who availed themselves of the
said life annuity, in appreciation and recognition of their long and faithful
service, be granted financial assistance equivalent to the gratuity plus return of
contributions under R.A. 1616, as amended, less the five year guaranteed
annuity under R.A. 660, as amended;
RESOLVED, FINALLY, That the Administrator be authorized to act on all
applications for retirement submitted by SSS employees and subject to
availability of funds, pay the corresponding benefits in addition to the money
value of all accumulated leaves. (emphasis supplied)
Long after the promulgation of SSS Resolution No. 56, respondent Commission on Audit
(COA) issued a ruling, captioned as "3rd Indorsement" dated July 10, 1989, 4 disallowing
in audit "all such claims for financial assistance under SSS Resolution No. 56", for the
reason that: —
. . . the scheme of financial assistance authorized by the SSS is similar to those
separate retirement plan or incentive/separation pay plans adopted by other
government corporate agencies which results in the increase of benefits beyond
what is allowed under existing retirement laws. In this regard, attention . . . is
invited to the view expressed by the Secretary of Budget and Management
dated February 17, 1988 to the COA General Counsel against the proliferation
of retirement plans which, in COA Decision No. 591 dated August 31, 1988,
was concurred in by this Commission. . . .
 Accordingly, all such claims for financial assistance under SSS Resolution
No. 56 dated January 21, 1971 should be disallowed in audit. (emphasis
supplied)
Despite the aforequoted ruling of respondent COA, then SSS Administrator Jose L.
Cuisia, Jr. nevertheless wrote5 on February 12, 1990 then Executive Secretary Catalino
Macaraig, Jr., seeking "presidential authority for SSS to continue implementing its
Resolution No. 56 dated January 21, 1971 granting financial assistance to its qualified
retiring employees".
However, in a letter-reply dated May 28, 1990,6 then Executive Secretary Macaraig
advised Administrator Cuisia that the Office of the President "is not inclined to favorably
act on the herein request, let alone over-rule the disallowance by COA" of such claims,
because, aside from the fact that decisions, order or actions of the COA in the exercise of
its audit functions are appealable to the Supreme Court7 pursuant to Sec. 50 of PD 1445,
the benefits under said Res. 56, though referred to as "financial assistance", constituted
additional retirement benefits, and the scheme partook of the nature of a supplementary
pension/retirement plan proscribed by law.
The law referred to above is RA 4968 (The Teves Retirement Law), which took effect
June 17, 1967 and amended CA 186 (otherwise known as the Government Service
Insurance Act, or the GSIS Charter), making Sec. 28 (b) of the latter act read as follows:
(b) Hereafter, no insurance or retirement plan for officers or employees shall
be created by employer. All supplementary retirement or pension plans
heretofore in force in any government office. agency or instrumentality or
corporation owned or controlled by the government, are hereby declared in
operative or abolished; Provided, That the rights of those who are already
eligible to retire there under shall not be affected." (emphasis supplied)
On January 12, 1993, herein petitioners filed with respondent COA their "letter-
appeal/protest"8 seeking reconsideration of COA's ruling of July 10, 1989 disallowing
claims for financial assistance under Res. 56.
On November 15, 1993, petitioner Conte sought payment from SSS of the benefits under
Res. 56. On December 9, 1993, SSS Administrator Renato C. Valencia denied9 the
request in consonance with the previous disallowance by respondent COA, but assured
petitioner that should the COA change its position, the SSS will resume the grant of
benefits under said Res. 56.
On March 15, 1994, respondent COA rendered its COA Decision No. 94-126 denying
petitioners' request for reconsideration.
Thus this petition for certiorari under Rule 65 of the Rules of Court.
The Issues
The issues10 submitted by petitioners may be simplified and restated thus: Did public
respondent abuse its discretion when it disallowed in audit petitioners' claims for benefits
under SSS Res. 562?
Petitioners argue that the financial assistance under Res. 56 is not a retirement plan
prohibited by RA 4968, and that Res. 56 provides benefits different from and "aside
from" what a retiring SSS employee would be entitled to under RA 660. Petitioners
contend that it "is a social amelioration and economic upliftment measure undertaken not
only for the benefit of the SSS but more so for the welfare of its qualified retiring
employees." As such, it "should be interpreted in a manner that would give the . . . most
advantage to the recipient — the retiring employees whose dedicated, loyal, lengthy
and faithful service to the agency of government is recognized and amply
rewarded — the rationale for the financial assistance plan." Petitioners reiterate the
argument in their letter dated January 12, 1993 to COA that:
Motivation can be in the form of financial assistance, during their stay in the
service or upon retirement, as in the SSS Financial Assistance Plan. This is so,
because Government has to have some attractive remuneration programs to
encourage well-qualified personnel to pursue a career in the government
service, rather than in the private sector or in foreign countries . . .
A more developmental view of the financial institutions' grant of certain forms
of financial assistance to its personnel, we believe, would enable government
administrators to see these financial forms of remuneration as contributory to
the national developmental efforts for effective and efficient administration of
the personnel programs in different institutions.11
The Court's Ruling
Petitioners' contentions are not supported by law. We hold that Res. 56 constitutes a
supplementary retirement plan.
A cursory examination of the preambular clauses and provisions of Res. 56 provides a
number of clear indications that its financial assistance plan constitutes a supplemental
retirement/pension benefits plan. In particular, the fifth preambular clause which provides
that "it is the policy of the Social Security Commission to promote and to protect the
interest of all SSS employees, with a view to providing for their well-being duringboth
their working and retirement years", and the wording of the resolution itself which states
"Resolved, further, that SSS employees who availed themselves of the said life annuity
(under RA 660), in appreciation and recognition of their long and faithful service, be
granted financial assistance . . . can only be interpreted to mean that the benefit being
granted is none other than a kind of amelioration to enable the retiring employee to enjoy
(or survive) his retirement years and a reward for his loyalty and service. Moreover, it is
plain to see that the grant of said financial assistance is inextricably linked with and
inseparable from the approval of retirement benefits under RA 660, i.e., that availment of
said financial assistance under Res. 56 may not be done independently of but only in
conjunction with the availment of retirement benefits under RA 660, and that the former
is in augmentation or supplementation of the latter benefits.
Likewise, then SSS Administrator Cuisia's historical overview of the origins and purpose
of Res. 56 is very instructive and sheds much light on the controversy: 12
Resolution No. 56, . . ., applies where a retiring SSS employee is qualified to
claim under either RA 660 (pension benefit, that is, 5 year lump sum pension
and after 5 years, lifetime pension), or RA 1616 (gratuity benefit plus return of
contribution), at his option. The benefits under RA 660 are entirely payable by
 GSIS while those under RA 1616 are entirely shouldered by SSS except the
return of contribution by GSIS.
Resolution No. 56 came about upon observation that qualified SSS employees
have invariably opted to retire under RA 1616 instead of RA 660 because the
total benefit under the former is much greater than the 5-year lump sum under
the latter. As a consequence, the SSS usually ended up virtually paying the
entire retirement benefit, instead of GSIS which is the main insurance carrier
for government employees. Hence, the situation has become so expensive for
SSS that a study of the problem became inevitable.
As a result of the study and upon the recommendation of its Actuary, the SSS
Management recommended to the Social Security Commission that retiring
employees who are qualified to claim under either RA 660 or 1616 should be
"encouraged" to avail for themselves the life annuity under RA 660, as
amended, with the SSS providing a "financial assistance" equivalent to the
difference between the benefit under RA 1616 (gratuity plus return of
contribution) and the 5-year lump sum pension under RA 660.
The Social Security Commission, as the policy-making body of the SSS
approved the recommendation in line with its mandate to "insure the efficient,
honest and economical administration of the provisions and purposes of this
Act. (Section 3 (c) of the Social Security Law).
Necessarily, the situation was reversed with qualified SSS employees opting to
retire under RA No. 660 or RA 1146 instead of RA 1616, resulting in
substantial savings for the SSS despite its having to pay "financial assistance".
Until Resolution No. 56 was questioned by COA. (emphasis part of original
text; emphasis ours).
Although such financial assistance package may have been instituted for noble, altruistic
purposes as well as from self-interest and a desire to cut costs on the part of the SSS,
nevertheless, it is beyond any dispute that such package effectively constitutes a
supplementary retirement plan. The fact that it was designed to equalize the benefits
receivable from RA 1616 with those payable under RA 660 and make the latter program
more attractive, merely confirms the foregoing finding.
That the Res. 56 package is labelled "financial assistance" does not change its essential
nature. Retirement benefits are, after all, a form of reward for an employee's loyalty and
service to the employer, and are intended to help the employee enjoy the remaining years
of his life, lessening the burden of worrying about his financial support or upkeep.13 On
the other hand, a pension partakes of the nature of "retained wages" of the retiree for a
dual purpose: to entice competent people to enter the government service, and to permit
them to retire from the service with relative security, not only for those who have retained
their vigor, but more so for those who have been incapacitated by illness or accident. 14
Is SSS Resolution No. 56 then within the ambit of and thus proscribed by Sec. 28 (b) of
CA 186 as amended by RA 4968?
We answer in the affirmative. Said Sec. 28 (b) as amended by RA 4968 in no uncertain
terms bars the creation of any insurance or retirement plan — other than the GSIS —
for government officers and employees, in order to prevent the undue and
inequitous proliferation of such plans. It is beyond cavil that Res. 56 contravenes the
said provision of law and is therefore invalid, void and of no effect. No ignore this and
rule otherwise would be tantamount to permitting every other government office or
agency to put up its own supplementary retirement benefit plan under the guise of such
"financial assistance".
We are not unmindful of the laudable purposes for promulgating Res. 56, and the positive
results it must have had, not only in reducing costs and expenses on the part of the SSS in
connection with the pay-out of retirement benefits and gratuities, but also in improving
the quality of life for scores of retirees. But it is simply beyond dispute that the SSS had
no authority to maintain and implement such retirement plan, particularly in the face of
the statutory prohibition. The SSS cannot, in the guise of rule-making, legislate or amend
laws or worse, render them nugatory.
It is doctrinal that in case of conflict between a statute and an administrative order, the
former must prevail.15A rule or regulation must conform to and be consistent with the
provisions of the enabling statute in order for such rule or regulation to be valid. 16 The
rule-making power of a public administrative body is a delegated legislative power,
which it may not use either to abridge the authority given it by the Congress or the
Constitution or to enlarge its power beyond the scope intended. Constitutional and
statutory provisions control with respect to what rules and regulations may be
promulgated by such a body, as well as with respect to what fields are subject to
regulation by it. It 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.17 Though well-settled is the rule that retirement laws are liberally interpreted in
favor of the retiree,18 nevertheless, there is really nothing to interpret in either RA 4968
or Res. 56, and correspondingly, the absence of any doubt as to the ultra-vires nature and
illegality of the disputed resolution constrains us to rule against petitioners.
As a necessary consequence of the invalidity of Res. 56, we can hardly impute abuse of
discretion of any sort to respondent Commission for denying petitioners' request for
reconsideration of the 3rd Indorsement of July 10, 1989. On the contrary, we hold that
public respondent in its assailed Decision acted with circumspection in denying
petitioners claim. It reasoned thus:
After a careful evaluation of the facts herein obtaining, this Commission finds
the instant request to be devoid of merit. It bears stress that the financial
assistance contemplated under SSS Resolution No. 56 is granted to SSS
employees who opt to retire under R.A. No. 660. In fact, by the aggrieved
parties' own admission (page 2 of the request for reconsideration dated January
12, 1993), it is a financial assistance granted by the SSS management to its
employees. in addition to the retirement benefits under Republic Act. No. 660."
(underscoring supplied for emphasis) There is therefore no question, that the
said financial assistance partakes of the nature of a retirement benefit that has
the effect of modifying existing retirement laws particularly R.A. No. 660.
Petitioners also asseverate that the scheme of financial assistance under Res. 56 may be
likened to the monetary benefits of government officials and employees who are paid,
over and above their salaries and allowances as provided by statute, an
additional honorarium in varying amounts. We find this comparison baseless and subsequently determined invalidity of Res. 56, the promulgation and implementation of
misplaced. As clarified by the Solicitor General:19 which they had nothing to do with.

Petitioners' comparison of SSS Resolution No. 56 with the "honoraria" given
to government officials and employees of the "National Prosecution Service of
the Department of Justice", Office of the Government Corporate Counsel and
even in the "Office of the Solicitor General" is devoid of any basis. The
monetary benefits or "honoraria" given to these officials or employees are
categorized as travelling and/or representation expenses which are incurred by
them in the course of handling cases, attending court/administrative hearings,
or performing other field work. These monetary benefits are given upon
rendition of service while the "financial benefits" under SSS Resolution No. 56
are given upon retirement from service.
In a last-ditch attempt to convince this Court that their position is tenable, petitioners
invoke equity. They "believe that they are deserving of justice and equity in their quest
for financial assistance under SSS Resolution No. 56, not so much because the SSS is one
of the very few stable agencies of government where no doubt this recognition and
reputation is earned . . . but more so due to the miserable scale of compensation granted
to employees in various agencies to include those obtaining in the SSS." 20
And here is where "equity" may properly be invoked: since "SSS employees who are
qualified for compulsory retirement at age 65 or for optional retirement at a lower age are
entitled to either the life annuity under R.A. 660, as amended, or the gratuity under R.A.
1616, as amended",22 it appears that petitioners, being qualified to avail of benefits under
RA 660, may also readily qualify under RA 1616. It would therefore not be misplaced to
enjoin the SSS to render all possible assistance to petitioners for the prompt processing
and approval of their applications under RA 1616, and in the meantime, unless barred by
existing regulations, to advance to petitioners the difference between the amounts due
under RA 1616, and the amounts they already obtained, if any, under RA 660.
WHEREFORE, the petition is hereby DISMISSED for lack of merit, there having been
no grave abuse of discretion on the part of respondent Commission. The assailed
Decision of public respondent is AFFIRMED, and SSS Resolution No. 56 is hereby
declared ILLEGAL, VOID AND OF NO EFFECT. The SSS is hereby urged to assist
petitioners and facilitate their applications under RA 1616, and to advance to them, unless
barred by existing regulations, the corresponding amounts representing the difference
between the two benefits programs. No costs.

We must admit we sympathize with petitioners in their financial predicament as a result SO ORDERED.
of their misplaced decision to avail of retirement benefits under RA 660, with the false
expectation that "financial assistance" under the disputed Res. 56 will also materialize.
Nevertheless, this Court has always held that equity, which has been aptly described as
"justice outside legality," is applied only in the absence of, and never against, statutory
law or judicial rules of procedure.21 In this case, equity cannot be applied to give validity
and effect to Res. 56, which directly contravenes the clear mandate of the provisions of
RA 4968.

Likewise, we cannot but be aware that the clear imbalance between the benefits available
under RA 660 and those under RA 1616 has created an unfair situation for it has shifted
the burden of paying such benefits from the GSIS (the main insurance carrier of
government employees) to the SSS. Without the corrective effects of Res. 56, all retiring
SSS employees without exception will be impelled to avail of benefits under RA 1616.
The cumulative effect of such availments on the financial standing and stability of the
SSS is better left to actuarians. But the solution or remedy for such situation can be
provided only by Congress. Judicial hands cannot, on the pretext of showing concern for
the welfare of government employees, bestow equity contrary to the clear provisions of
law.

Nevertheless, insofar as herein petitioners are concerned, this Court cannot just sit back
and watch as these two erstwhile government employees, who after spending the best
parts of their lives in public service have retired hoping to enjoy their remaining years,
face a financially dismal if not distressed future, deprived of what should have been due
them by way of additional retirement benefits, on account of a bureaucratic boo-boo
improvidently hatched by their higher-ups. It is clear to our mind that petitioners applied
for benefits under RA 660 only because of the incentives offered by Res. 56, and
that absent such incentives, they would have without fall availed of RA 1616 instead. We
likewise have no doubt that petitioners are simply innocent bystanders in this whole
bureaucratic rule-making/financial scheme-making drama, and that therefore, to the
extent possible, petitioners ought not be penalized or made to suffer as a result of the
G.R. No. 151908 August 12, 2003
SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE
CORPORATION (PILTEL), petitioners,
vs.
NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), respondent.
YNARES-SANTIAGO, J.:
Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission
(NTC) issued on June 16, 2000 Memorandum Circular No. 13-6-2000, promulgating rules and
regulations on the billing of telecommunications services. Among its pertinent provisions are the
following:
(1) The billing statements shall be received by the subscriber of the telephone service not
later than 30 days from the end of each billing cycle. In case the statement is received
beyond this period, the subscriber shall have a specified grace period within which to pay
the bill and the public telecommunications entity (PTEs) shall not be allowed to
disconnect the service within the grace period.
(2) There shall be no charge for calls that are diverted to a voice mailbox, voice prompt,
recorded message or similar facility excluding the customer's own equipment.
(3) PTEs shall verify the identification and address of each purchaser of prepaid SIM
cards. Prepaid call cards and SIM cards shall be valid for at least 2 years from the date of
first use. Holders of prepaid SIM cards shall be given 45 days from the date the prepaid
SIM card is fully consumed but not beyond 2 years and 45 days from date of first use to
replenish the SIM card, otherwise the SIM card shall be rendered invalid. The validity of
an invalid SIM card, however, shall be installed upon request of the customer at no
additional charge except the presentation of a valid prepaid call card.
(4) Subscribers shall be updated of the remaining value of their cards before the start of
every call using the cards.
(5) The unit of billing for the cellular mobile telephone service whether postpaid or
prepaid shall be reduced from 1 minute per pulse to 6 seconds per pulse. The authorized
rates per minute shall thus be divided by 10.1
The Memorandum Circular provided that it shall take effect 15 days after its publication in a
newspaper of general circulation and three certified true copies thereof furnished the UP Law
Center. It was published in the newspaper, The Philippine Star, on June 22, 2000. 2 Meanwhile, the
provisions of the Memorandum Circular pertaining to the sale and use of prepaid cards and the unit
of billing for cellular mobile telephone service took effect 90 days from the effectivity of the
Memorandum Circular.
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. The Memorandum directed CMTS operators to:
a. strictly comply with Section B(1) of MC 13-6-2000 requiring the presentation and
verification of the identity and addresses of prepaid SIM card customers;
b. require all your respective prepaid SIM cards dealers to comply with Section B(1) of
MC 13-6-2000;
c. deny acceptance to your respective networks prepaid and/or postpaid customers using
stolen cellphone units or cellphone units registered to somebody other than the applicant
when properly informed of all information relative to the stolen cellphone units;
d. share all necessary information of stolen cellphone units to all other CMTS operators
in order to prevent the use of stolen cellphone units; and
e. require all your existing prepaid SIM card customers to register and present valid
identification cards.3
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 13-
6-2000.
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.4
On October 20, 2000, petitioners Isla Communications Co., Inc. and Pilipino Telephone
Corporation filed against the National Telecommunications Commission, 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. The complaint was docketed as Civil
Case No. Q-00-42221 at the Regional Trial Court of Quezon City, Branch 77.5
Petitioners Islacom and Piltel alleged, inter alia, 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.
Soon thereafter, petitioners Globe Telecom, Inc and Smart Communications, Inc. filed a joint
Motion for Leave to Intervene and to Admit Complaint-in-Intervention.6 This 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, 2000.7
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, after hearing petitioners' application for preliminary injunction as well as
respondent's motion to dismiss, the trial court issued on November 20, 2000 an Order, the
dispositive portion of which reads:
WHEREFORE, premises considered, the defendants' motion to dismiss is hereby denied
for lack of merit. The plaintiffs' application for the issuance of a writ of preliminary
injunction is hereby granted. Accordingly, the defendants are hereby enjoined from
implementing NTC Memorandum Circular 13-6-2000 and the NTC Memorandum, dated
October 6, 2000, pending the issuance and finality of the decision in this case. The
plaintiffs and intervenors are, however, required to file a bond in the sum of FIVE
HUNDRED THOUSAND PESOS (P500,000.00), Philippine currency.
SO ORDERED.8
Likewise, Globe and Islacom filed a petition for review, docketed as G.R. No. 152063, assigning the
following errors:
Defendants filed a motion for reconsideration, which was denied in an Order dated February 1,
2001.9
Respondent NTC thus filed a special civil action for certiorari and prohibition with the Court of
Appeals, which was docketed as CA-G.R. SP. No. 64274. On October 9, 2001, a decision was
rendered, the decretal portion of which reads:
WHEREFORE, premises considered, the instant petition for certiorari and prohibition is
GRANTED, in that, the order of the court a quo denying the petitioner's motion to
dismiss as well as the order of the court a quo granting the private respondents' prayer for
a writ of preliminary injunction, and the writ of preliminary injunction issued thereby, are
hereby ANNULLED and SET ASIDE. The private respondents' complaint and
complaint-in-intervention below are hereby DISMISSED, without prejudice to the
referral of the private respondents' grievances and disputes on the assailed issuances of
the NTC with the said agency.
10
SO ORDERED.
Petitioners' motions for reconsideration were denied in a Resolution dated January 10, 2002 for lack
of merit.11
Hence, the instant petition for review filed by Smart and Piltel, which was docketed as G.R. No.
151908, anchored on the following grounds:
A.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT
THE NATIONAL TELECOMMUNICATIONS COMMISSION (NTC) AND NOT THE
REGULAR COURTS HAS JURISDICTION OVER THE CASE.
B.
THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN HOLDING
THAT THE PRIVATE RESPONDENTS FAILED TO EXHAUST AN AVAILABLE
ADMINISTRATIVE REMEDY.
C.
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
BILLING CIRCULAR ISSUED BY THE RESPONDENT NTC IS
UNCONSTITUTIONAL AND CONTRARY TO LAW AND PUBLIC POLICY.
D.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
PRIVATE RESPONDENTS FAILED TO SHOW THEIR CLEAR POSITIVE RIGHT
TO WARRANT THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION.12
1. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE
THE DOCTRINES OF PRIMARY JURISDICTION AND EXHAUSTION OF
ADMINISTRATIVE REMEDIES DO NOT APPLY SINCE THE INSTANT CASE IS
FOR LEGAL NULLIFICATION (BECAUSE OF LEGAL INFIRMITIES AND
VIOLATIONS OF LAW) OF A PURELY ADMINISTRATIVE REGULATION
PROMULGATED BY AN AGENCY IN THE EXERCISE OF ITS RULE MAKING
POWERS AND INVOLVES ONLY QUESTIONS OF LAW.
2. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE
THE DOCTRINE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES
NOT APPLY WHEN THE QUESTIONS RAISED ARE PURELY LEGAL
QUESTIONS.
3. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE
THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES
NOT APPLY WHERE THE ADMINISTRATIVE ACTION IS COMPLETE AND
EFFECTIVE, WHEN THERE IS NO OTHER REMEDY, AND THE PETITIONER
STANDS TO SUFFER GRAVE AND IRREPARABLE INJURY.
4. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE
PETITIONERS IN FACT EXHAUSTED ALL ADMINISTRATIVE REMEDIES
AVAILABLE TO THEM.
 5. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED IN ISSUING
ITS QUESTIONED RULINGS IN THIS CASE BECAUSE GLOBE AND ISLA HAVE
A CLEAR RIGHT TO AN INJUNCTION.13
The two petitions were consolidated in a Resolution dated February 17, 2003. 14
On March 24, 2003, the petitions were given due course and the parties were required to submit
their respective memoranda.15
We find merit in the petitions.
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.16
The rules and regulations that administrative agencies promulgate, which are the product of a
delegated legislative power to create new and additional legal provisions that have the effect of law,
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. Constitutional and statutory provisions control with respect to what rules and
regulations may be promulgated by an administrative body, as well as with respect to what fields are
subject to regulation by it. It 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. In case of conflict
between a statute and an administrative order, the former must prevail. 18
Not to be confused with the quasi-legislative or rule-making power of an administrative agency is
its quasi-judicial or administrative adjudicatory power. This is the power to hear and determine
questions of fact to which the legislative policy is to apply and to decide in accordance with the
standards laid down by the law itself in enforcing and administering the same law. 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 carrying out their quasi-judicial functions, the administrative officers or bodies are
required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and
draw conclusions from them as basis for their official action and exercise of discretion in a judicial
nature.19
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. In Association of Philippine Coconut Dessicators v. Philippine Coconut
Authority,20 it was held:
The rule of requiring exhaustion of administrative remedies before a party may seek judicial review,
so strenuously urged by the Solicitor General on behalf of respondent, has obviously no application
here. The resolution in question was issued by the PCA in the exercise of its rule- making or
legislative power. However, only judicial review of decisions of administrative agencies made in the
exercise of their quasi-judicial function is subject to the exhaustion doctrine.
Even assuming arguendo that the principle of exhaustion of administrative remedies apply in this
case, the records reveal that petitioners sufficiently complied with this requirement. Even during the
drafting and deliberation stages leading to the issuance of Memorandum Circular No. 13-6-2000,
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.21 After the same was issued, petitioners wrote successive letters dated July 3,
200022 and July 5, 2000,23 asking for the suspension and reconsideration of the so-called Billing
Circular. These letters were not acted upon until October 6, 2000, when respondent NTC issued the
second assailed Memorandum implementing certain provisions of the 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.
In like manner, the doctrine of primary jurisdiction applies only where the administrative agency
exercises its quasi-judicial or adjudicatory function. Thus, in cases involving specialized disputes,
the practice has been to refer the same to an administrative agency of special competence pursuant
to the doctrine of primary jurisdiction. The courts will not determine a controversy involving a
question which is within the jurisdiction of the administrative tribunal prior to the resolution of that
question by the administrative tribunal, where the question demands the exercise of sound
administrative discretion requiring the special knowledge, experience and services of the
administrative tribunal to determine technical and intricate matters of fact, and a uniformity of
ruling is essential to comply with the premises of the regulatory statute administered. 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. It applies where the claim
is originally cognizable in the courts and comes into play whenever enforcement of the claim
requires the resolution of issues which, under a regulatory scheme, has been placed within the
special competence of an administrative body; in such case, the judicial process is suspended
pending referral of such issues to the administrative body for its view.24
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. Indeed, the Constitution vests the power of judicial review or the power to
declare a law, treaty, international or executive agreement, presidential decree, order, instruction,
ordinance, or regulation in the courts, including the regional trial courts. 25 This is within the scope
of judicial power, which includes the authority of the courts to determine in an appropriate action
the validity of the acts of the political departments.26 Judicial power includes the duty of the courts
of justice to settle actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse of discretion amounting
to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. 27
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. In Drilon v. Lim,28 it was held:
We stress at the outset that the lower court had jurisdiction to consider the
constitutionality of Section 187, this authority being embraced in the general definition of
the judicial power to determine what are the valid and binding laws by the criterion of
 their conformity to the fundamental law. Specifically, B.P. 129 vests in the regional trial
courts jurisdiction over all civil cases in which the subject of the litigation is incapable of
pecuniary estimation, even as the accused in a criminal action has the right to question in
his defense the constitutionality of a law he is charged with violating and of the
proceedings taken against him, particularly as they contravene the Bill of Rights.
Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court
appellate jurisdiction over final judgments and orders of lower courts in all cases in
which the constitutionality or validity of any treaty, international or executive agreement,
law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in
question.29
In their complaint before the Regional Trial Court, petitioners averred that the Circular contravened
Civil Code provisions on sales and violated the constitutional prohibition against the deprivation of
property without due process of law. These are within the competence of the trial judge. Contrary to
the finding of the Court of Appeals, the issues raised in the complaint do not entail highly technical
matters. Rather, what is required of the judge who will resolve this issue is a basic familiarity with
the workings of the cellular telephone service, including prepaid SIM and call cards – and this is
judicially known to be within the knowledge of a good percentage of our population – and
expertise in fundamental principles of civil law and the Constitution.
Hence, the Regional Trial Court has jurisdiction to hear and decide Civil Case No. Q-00-42221. 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 in CA-G.R. SP No. 64274 dated October 9, 2001 and its Resolution dated
January 10, 2002 are REVERSED and SET ASIDE. The Order dated November 20, 2000 of the
Regional Trial Court of Quezon City, Branch 77, in Civil Case No. Q-00-42221 is REINSTATED.
This case is REMANDED to the court a quo for continuation of the proceedings.
SO ORDERED.
G.R. No. 175220 February 12, 2009
WILLIAM C. DAGAN, CARLOS H. REYES, NARCISO MORALES, BONIFACIO
MANTILLA, CESAR AZURIN, WEITONG LIM, MA. TERESA TRINIDAD, MA.
CARMELITA FLORENTINO, Petitioners,
vs.
PHILIPPINE RACING COMMISSION, MANILA JOCKEY CLUB, INC., and PHILIPPINE
RACING CLUB, INC.,Respondents.
DECISION
TINGA, J.:
The subject of this petition for certiorari is the decision1 of the Court of Appeals in CA-G.R. SP No.
95212, affirming in toto the judgment2 of the Regional Trial Court of Makati in Civil Case No. 04-
1228.
The controversy stemmed from the 11 August 2004 directive3 issued by the Philippine Racing
Commission (Philracom) directing the Manila Jockey Club, Inc. (MJCI) and Philippine Racing
Club, Inc. (PRCI) to immediately come up with their respective Clubs’ House Rule to address
Equine Infectious Anemia (EIA)4 problem and to rid their facilities of horses infected with EIA.
Said directive was issued pursuant to Administrative Order No. 55 dated 28 March 1994 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). 6
In compliance with the directive, 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 whether they are afflicted with the EIA virus. Subsequently, on 17 September 2004,
Philracom issued copies of the guidelines for the monitoring and eradication of EIA. 7
Petitioners and racehorse owners William Dagan (Dagan), Carlos Reyes, Narciso Morales,
Bonifacio Montilla, Cezar Azurin, Weitong Lim, Ma. Teresa Trinidad and Ma. Carmelita Florentino
refused to comply with the directive. First, they alleged that there had been no prior consultation
with horse owners. Second, they claimed that neither official guidelines nor regulations had been
issued relative to the taking of blood samples. And third, they asserted that no documented case of
EIA had been presented to justify the undertaking.8
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.
When their complaint went unheeded, the racehorse owners lodged a complaint before the Office of
the President (OP) which in turn issued a directive instructing Philracom to investigate the matter.
For failure of Philracom to act upon the directive of the OP, petitioners filed a petition for injunction
with application for the issuance of a temporary restraining order (TRO). In an order 9 dated 11
November 2004, the trial court issued a TRO.
Dagan refused to comply with the directives because, according to him, the same are unfair as there
are no implementing rules on the banning of sick horses from races. Consequently, his horses were
evicted from the stables and transferred to an isolation area. He also admitted that three of his horses
had been found positive for EIA.10
Confronted with two issues, namely: whether there were valid grounds for the issuance of a writ of
injunction and whether respondents had acted with whim and caprice in the implementation of the
contested guideline, the trial court resolved both queries in the negative.
The trial court found that most racehorse owners, except for Dagan, had already subjected their
racehorses to EIA testing. Their act constituted demonstrated compliance with the contested
guidelines, according to the trial court. Hence, the acts sought to be enjoined had been rendered
moot and academic.
With respect to the subject guidelines, the trial court upheld their validity as an exercise of police
power, thus:
The Petitioner’s submission that the subject guidelines are oppressive and hence
confiscatory of proprietary rights is likewise viewed by this Court to be barren of factual and
legal support. The horseracing industry, needless to state, is imbued with public interest deserving
of utmost concern if not constant vigilance. The Petitioners do not dispute this. It is because of this
basic fact that respondents are expected to police the concerned individuals and adopt measures that
will promote and protect the interests of all the stakeholders starting from the moneyed horse-
owners, gawking bettors down to the lowly maintainers of the stables. This is a clear and valid
exercise of police power with the respondents acting for the State. Participation in the business of
horseracing is but a privilege; it is not a right. And no clear acquiescence to this postulation can
there be than the Petitioners' own undertaking to abide by the rules and conditions issued and
imposed by the respondents as specifically shown by their contracts of lease with MCJI. 111avvphi1
Petitioners appealed to the Court of Appeals. In its Decision dated 27 October 2006, the appellate
court affirmed in toto the decision of the trial court.
The appellate court upheld the authority of Philracom to formulate guidelines since it is vested with
exclusive jurisdiction over and control of the horse-racing industry per Section 8 of Presidential
Decree (P.D.) No. 8. The appellate court further pointed out that P.D. No. 420 also endows
Philracom with the power to prescribe additional rules and regulations not otherwise inconsistent
with the said presidential decree12 and to perform such duties and exercise all powers incidental or
necessary to the accomplishment of its aims and objectives.13 It similarly concluded that the petition
for prohibition should be dismissed on the ground of mootness in light of evidence indicating that
petitioners had already reconsidered their refusal to have their horses tested and had, in fact,
subsequently requested the administration of the test to the horses.14
Aggrieved by the appellate court’s decision, petitioners filed the instant certiorari
petition15 imputing grave abuse of discretion on the part of respondents in compelling petitioners to
subject their racehorses to blood testing.
In their amended petition,16 petitioners allege that Philracom’s unsigned and undated
implementing guidelines suffer from several infirmities. They maintain that the assailed
guidelines do not comply with due process requirements. Petitioners insist that racehorses
already in the MJCI stables were allowed to be so quartered because the individual horse owners
had already complied with the Philracom regulation that horses should not bear any disease. There
was neither a directive nor a rule that racehorses already lodged in the stables of the racing clubs
should again be subjected to the collection of blood samples preparatory to the conduct of the EIA
tests,17petitioners note. Thus, it came as a surprise to horse owners when told about the
administration of a new Coggins Tests on old horses since the matter had not been taken up with
them.18 No investigation or at least a summary proceeding was conducted affording petitioners an
opportunity to be heard.19 Petitioners also aver that the assailed guidelines are ultra vires in that the
sanctions imposed for refusing to submit to medical examination are summary eviction from the
stables or arbitrary banning of participation in the races, notwithstanding the penalties prescribed in
the contract of lease.20
In its Comment,21 the PRCI emphasizes that it merely obeyed the terms of its franchise and abided
by the rules enacted by Philracom.22 For its part, Philracom, through the Office of the Solicitor-
General (OSG), stresses that the case has become moot and academic since most of petitioners had
complied with the guidelines by subjecting their race horses to EIA testing. The horses found
unafflicted with the disease were eventually allowed to join the races.23 Philracom also justified its
right under the law to regulate horse racing.24 MJCI adds that Philracom need
not delegate its rule-making power to the former since MJCI’s right to formulate its internal rules
is subsumed under the franchise granted to it by Congress. 25
In their Reply,26 petitioners raise for the first time the issue that Philracom had unconstitutionally
delegated its rule-making power to PRCI and MJCI in issuing the directive for them to come up
with club rules. In response to the claim that respondents had merely complied with their duties
under their franchises, petitioners counter that the power granted to PRCI and MJCI under their
respective franchises is limited to: (1) the construction, operation and maintenance of racetracks; (2)
the establishment of branches for booking purposes; and (3) the conduct of horse races.
It appears on record that only Dagan had refused to comply with the orders of respondents.
Therefore, the case subsists as regards Dagan.
Petitioners essentially assail two issuances of Philracom; namely: the Philracom directive 27 and the
subsequent guidelines addressed to MJCI and PRCI.
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.28
All the prescribed requisites are met as regards the questioned issuances. Philracom’s 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.29 This rule however admits of recognized
exceptions30 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. 31
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 standard—the limits of which
are sufficiently determinate and determinable—to 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. 32
P.D. No. 420 hurdles the tests of completeness and standards sufficiency.
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, to wit:
Section 9. Specific Powers. Specifically, the Commission shall have the power:
a. To enforce all laws, decrees and executive orders relating to horse-racing that are not
expressly or implied repealed or modified by this Decree, including all such existing rules
and regulations until otherwise modified or amended by the Commission;
b. To prescribe additional rules and regulations not otherwise inconsistent with this
Decree;
c. To register race horses, horse owners or associations or federations thereof, and to
regulate the construction of race tracks and to grant permit for the holding of races;
d. To issue, suspend or revoke permits and licenses and to impose or collect fees for the
issuance of such licenses and permits to persons required to obtain the same;
e. To review, modify, approve or disapprove the rules and regulations issued by any
person or entity concerning the conduct of horse races held by them;
f. To supervise all such race meeting to assure integrity at all times. It can order the
suspension of any racing event in case of violation of any law, ordinance or rules and
regulations;
g. To prohibit the use of improper devices, drugs, stimulants or other means to enhance or
diminish the speed of horse or materially harm their condition;
h. To approve the annual budget of the omission and such supplemental budgets as may
be necessary;
i. To appoint all personnel, including an Executive Director of the Commission, as it may
be deem necessary in the exercise and performance of its powers and duties; and
j. To enter into contracts involving obligations chargeable to or against the funds of the
Commission. (Emphasis supplied)
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.
Petitioners also question 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 Club’s House Rule to address the
problem and rid their facilities of horses infected with EIA." PRCI and MJCI followed-up
when they ordered the racehorse owners to submit blood samples and subject their race
horses to blood testing. Compliance with the Philracom’s directive is part of the mandate of
PRCI and MJCI under Sections 133 of R.A. No. 795334 and Sections 135 and 236 of 8407.37
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." 38 As justified by
PRCI, "obeying the terms of the franchise and abiding by whatever rules enacted by Philracom is its
duty."39
More on the second, third and fourth requisites.
As to the second requisite, petitioners raise some infirmities relating to Philracom’s 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 Philracom’s directive, this circumstance does not render
the directive nor the guidelines void. The directive’s 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.
Petitioners also argue that Philracom’s guidelines have no force and effect for lack of publication
and failure to file copies with the University of the Philippines (UP) Law Center as required by law.
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 7and hearing.40 In Abella, Jr. v. Civil Service
Commission,41 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.42

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.43

The assailed guidelines prescribe the procedure for monitoring and eradicating EIA. These
guidelines are in accord with Philracom’s 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 PRCI’s 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.44Those 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, Philracom’s 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.

All told, we find 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 Philracom’s directive.

WHEREFORE, the petition is DISMISSED. Costs against petitioner William Dagan.

SO ORDERED.