SMART COMMUNICATIONS, INC.
(SMART) and PILIPINO TELEPHONE In case of conflict between a statute and an administrative order, the former
CORPORATION (PILTEL), petitioners,
vs.
NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), respondent.
G.R. No. 151908            August 12, 2003
FACTS:
The National Telecommunications Commission (NTC) issued a Memorandum
Circular that mandates telecom providers to send billing statements to each sim
card holders and verify their addresses and identifications. SMART and PILTEL
filed a case in the trial court of Quezon City against the Memorandum Circular
on the rationale that 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 Philippine and
that the said Circular is oppressive.
The RTC ruled in favor of SMART/PILTEL. However, CA ruled in favor of NTC
and dismissed the petition of SMART/PILTEL on the ground that the RTC has no
jurisdiction try and hear the case.
ISSUE:
Whether or not SMART/PILTEL is required to exhaust all remedies before
resorting to the Court for relief.
RULING:
The Court ruled in favor of SMART/PILTEL.
SMART/PILTEL was correct in invoking the judicial power of the court to review
the circular issued by NTC.
Administrative agencies possess quasi-legislative or rule-making powers and
quasi-judicial or administrative adjudicatory powers. Quasi-legislative or rule-
making power is the power to make rules and regulations which results in
delegated legislation that is within the confines of the granting statute and the
doctrine of non-delegability and separability of powers.
The rules and regulations 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.
must prevail.
They must conform to and be consistent with the provisions of the enabling
statute in order for such rule or regulation to be valid. 
The administrative body exercises its quasi-judicial power when it performs in a
judicial manner an act which is essentially of an executive or administrative
nature, where the power to act in such manner is incidental to or reasonably
necessary for the performance of the executive or administrative duty entrusted
to it. In 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.
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 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.
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.
 GRECO BELGICA et al, Petitioners,
vs.
EXECUTIVE SECRETARY PAQUITO N. OCHOA JR. et al, Respondents.
G.R. No. 208566               November 19, 2013
FACTS:
On the grounds of the CoA Report simultaneous with the Napoles Controversy
on the alleged misappropriation of public funds under the “Congressional Pork
Barrel System” and the “Presidential Pork Barrel”, petitioners filed a case to the
Supreme Court which sought for the unconstitutionality of such scheme and
that the provisions of the GAA of 2013 which provided for the 2013 PDAF, and
the Executive‘s lump-sum, discretionary funds, such as the Malampaya Funds
and the Presidential Social Fund, be declared unconstitutional and null and void
for being acts constituting grave abuse of discretion.
Petitioners assail Section 8 of PD 910 and Section 12 of PD1869, which
respectively provide for the Malampaya Funds and the Presidential Social Fund,
as invalid appropriations laws since they do not have the "primary and specific"
purpose of authorizing the release of public funds from the National Treasury.
Petitioners suppose that such funds are being used without any valid law
allowing for their proper appropriation in violation of Section 29(1), Article VI of
the 1987 Constitution which states that: "No money shall be paid out of the
Treasury except in pursuance of an appropriation made by law."
ISSUE:
Whether or not the CoA Report provides for the existence of an actual
controversy
Whether or not the 2013 PDAF Article and all other Congressional Pork Barrel
Laws similar thereto are unconstitutional considering that they violate the
principles of/constitutional provisions on (a) separation of powers; (b) non-
delegability of legislative power; (c) checks and balances; (d) accountability; (e)
political dynasties; and (f) local autonomy.
Whether or not the powers of the President to direct and financed priority
infrastructure projects relating to the Presidential Social Fund, are
unconstitutional insofar as they constitute undue delegations of legislative
power.
Ruling:
On the CoA Report
The Court ruled that the report of the Commission on Audit must be given
weight especially as it is a constitutionally-mandated audit arm of the
government.
The COA is endowed with enough latitude to determine, prevent, and disallow
irregular, unnecessary, excessive, extravagant or unconscionable expenditures of
government funds. It is tasked to be vigilant and conscientious in safeguarding
the proper use of the government's, and ultimately the people's, property. The
exercise of its general audit power is among the constitutional mechanisms that
gives life to the check and balance system inherent in our form of government.
Thus, if only for the purpose of validating the existence of an actual and
justiciable controversy in these cases, the Court deems the findings under the
CoA Report to be sufficient.
NOTE:
Congressional Pork Barrel which is herein defined as a kind of lump-sum,
discretionary fund wherein legislators, either individually or collectively organized
into committees, are able to effectively control certain aspects of the fund’s
utilization through various post-enactment measures and/or practices.
Presidential Pork Barrel which is herein defined as a kind of lump-sum,
discretionary fund which allows the President to determine the manner of its
utilization.
On the Congressional Pork Barrel
The Court ruled in favor of the petitioners.
On Separation of Powers
It is clear that only Congress, acting as a bicameral body, and the people,
through the process of initiative and referendum, may constitutionally wield
legislative power and no other. This premise embodies the principle of non-
delegability of legislative power, and the only recognized exceptions thereto would
be: (a) delegated legislative power to local governments which, by immemorial
practice, are allowed to legislate on purely local matters; and (b) constitutionally-
grafted exceptions such as the authority of the President to, by law, exercise
powers necessary and proper to carry out a declared national policy in times of
war or other national emergency, or fix within specified limits, and subject to
such limitations and restrictions as Congress may impose, tariff rates, import
and export quotas, tonnage and wharfage dues, and other duties or imposts
within the framework of the national development program of the Government.
The defining feature of all forms of Congressional Pork Barrel would be the
authority of legislators to participate in the post-enactment phases of project
implementation. It refers to "projects to be identified by legislators” which
provides the allocation limit for the total amount of projects identified by each
legislator. Aside from the area of project identification, legislators have also been
accorded post-enactment authority in the areas of fund release and realignment
that is accorded in the provisions of the 2013 PDAF Article and empowers the
House Committee on Appropriations and the Senate Committee on Finance to
request the release of funds or endorsement to the DBM.
Clearly, these post-enactment measures which govern the areas of project
identification, fund release and fund realignment are not related to functions of
congressional oversight and, hence, allow legislators to intervene and/or assume
duties that properly belong to the sphere of budget execution. Indeed, by virtue of
the foregoing, legislators have been, in one form or another, authorized to
participate in "the various operational aspects of budgeting," including "the
evaluation of work and financial plans for individual activities" and the
"regulation and release of funds" in violation of the separation of powers principle.
The fundamental rule, as categorically articulated in Abakada, cannot be
overstated – from the moment the law becomes effective, any provision of law
that empowers Congress or any of its members to play any role in the
implementation or enforcement of the law violates the principle of separation of
powers and is thus unconstitutional.
Ultimately, legislators cannot exercise powers which they do not have, whether
through formal measures written into the law or informal practices
institutionalized in government agencies, else the Executive department be
deprived of what the Constitution has vested as its own.
On Non-delegability of Legislative Powers
On the PDAF Article, insofar as it confers post-enactment identification authority
to individual legislators, violates the principle of non-delegability since said
legislators are effectively allowed to individually exercise the power of
appropriation, which is lodged in Congress.
That the power to appropriate must be exercised only through legislation is clear
from Section 29(1), Article VI of the 1987 Constitution which states that: "No
money shall be paid out of the Treasury except in pursuance of an appropriation
made by law."
The power of appropriation involves (a) the setting apart by law of a certain sum
from the public revenue for (b) a specified purpose. Essentially, under the 2013
PDAF Article, individual legislators are given a personal lump-sum fund from
which they are able to dictate (a) how much from such fund would go to (b) a
specific project or beneficiary that they themselves also determine. As these two
(2) acts comprise the exercise of the power of appropriation as described in
Bengzon, and given that the 2013 PDAF Article authorizes individual legislators
to perform the same, undoubtedly, said legislators have been conferred the
power to legislate which the Constitution does not, however, allow. Thus, keeping
with the principle of non-delegability of legislative power, the Court hereby
declares the 2013 PDAF Article, as well as all other forms of Congressional Pork
Barrel which contain the similar legislative identification feature as herein
discussed, as unconstitutional.
On Checks and Balances
The 2013 PDAF Article is unconstitutional as it contains a general appropriation
which is not specific and cannot be vetoed by the President. This kind of lump-
sum/post-enactment legislative identification budgeting system fosters the
creation of a budget within a budget" which subverts the prescribed procedure of
presentment and consequently impairs the President‘s power of item veto.
The lump-sum amount of ₱24.79 Billion would be treated as a mere funding
source allotted for multiple purposes of spending, i.e., scholarships, medical
missions, assistance to indigents, preservation of historical materials,
construction of roads, flood control, etc. This setup connotes that the
appropriation law leaves the actual amounts and purposes of the appropriation
for further determination and, therefore, does not readily indicate a discernible
item which may be subject to the President‘s power of item veto.
For the President to exercise his item-veto power, it necessarily follows that there
exists a proper "item" which may be the object of the veto. An item, as defined in
the field of appropriations, pertains to "the particulars, the details, the distinct
and severable parts of the appropriation or of the bill."

An item of an appropriation bill obviously means an item which, in itself, is a
specific appropriation of money, not some general provision of law which
happens to be put into an appropriation bill.
In contrast, what beckons constitutional infirmity are appropriations which
merely provide for a singular lump-sum amount to be tapped as a source of
funding for multiple purposes. Since such appropriation type necessitates the
further determination of both the actual amount to be expended and the actual
purpose of the appropriation which must still be chosen from the multiple
purposes stated in the law, it cannot be said that the appropriation law already
indicates a "specific appropriation of money‖ and hence, without a proper line-
item which the President may veto. As a practical result, the President would
then be faced with the predicament of either vetoing the entire appropriation if he
finds some of its purposes wasteful or undesirable, or approving the entire
appropriation so as not to hinder some of its legitimate purposes.
On this premise, it may be concluded that an appropriation bill, to ensure that
the President may be able to exercise his power of item veto, must contain
"specific appropriations of money" and not only "general provisions" which
provide for parameters of appropriation.
In fact, on the accountability side, the same lump-sum budgeting scheme has,
as the CoA Chairperson relays, "limited state auditors from obtaining relevant
data and information that would aid in more stringently auditing the utilization
of said Funds." Accordingly, she recommends the adoption of a "line by line
budget or amount per proposed program, activity or project, and per
implementing agency."
On Accountability
Among others, an accountability mechanism with which the proper expenditure
of public funds may be checked is the power of congressional oversight.
Congressional oversight may be performed either through: (a) scrutiny based
primarily on Congress‘ power of appropriation and the budget hearings
conducted in connection with it, its power to ask heads of departments to appear
before and be heard by either of its Houses on any matter pertaining to their
departments and its power of confirmation; or (b) investigation and monitoring of
the implementation of laws pursuant to the power of Congress to conduct
inquiries in aid of legislation.
The Court agrees with petitioners that certain features embedded in some forms
of Congressional Pork Barrel, among others the 2013 PDAF Article, has an effect
on congressional oversight. The fact that individual legislators are given post-
enactment roles in the implementation of the budget makes it difficult for them
to become disinterested "observers" when scrutinizing, investigating or
monitoring the implementation of the appropriation law. To a certain extent, the
conduct of oversight would be tainted as said legislators, who are vested with
post-enactment authority, would, in effect, be checking on activities in which
they themselves participate.
On Political Dynasty
The Court found the arguments by the petitioners on this score to be largely
speculative since it has not been properly demonstrated how the Pork Barrel
System would be able to propagate political dynasties.
On Local Autonomy
In the cases at bar, petitioners contend that the Congressional Pork Barrel goes
against the constitutional principles on local autonomy since it allows district
representatives, who are national officers, to substitute their judgments in
utilizing public funds for local development. The Court agrees with petitioners.
The Court observes that the gauge of PDAF and CDF allocation/division is based
solely on the fact of office, without taking into account the specific interests and
peculiarities of the district the legislator represents. In this regard, the
allocation/division limits are clearly not based on genuine parameters of equality,
wherein economic or geographic indicators have been taken into consideration.
As a result, a district representative of a highly-urbanized metropolis gets the
same amount of funding as a district representative of a far-flung rural province
which would be relatively "underdeveloped" compared to the former. To add,
what rouses graver scrutiny is that even Senators and Party-List Representatives
– and in some years, even the Vice-President – who do not represent any locality,
receive funding from the Congressional Pork Barrel as well. These certainly are
anathema to the Congressional Pork Barrel‘s original intent which is "to make
equal the unequal." Ultimately, the PDAF and CDF had become personal funds
under the effective control of each legislator and given unto them on the sole
account of their office.
The Court also observes that this concept of legislator control underlying the
CDF and PDAF conflicts with the functions of the various Local Development
Councils (LDCs) which are already legally mandated to "assist the corresponding
sanggunian in setting the direction of economic and social development, and
coordinating development efforts within its territorial jurisdiction."
Considering that LDCs are instrumentalities whose functions are essentially
geared towards managing local affairs,235 their programs, policies and resolutions
should not be overridden nor duplicated by individual legislators, who are
national officers that have no law-making authority except only when acting as a
body.
With PDAF, a Congressman can simply bypass the local development council
and initiate projects on his own, and even take sole credit for its execution.
Indeed, this type of personality-driven project identification has not only
contributed little to the overall development of the district, but has even
contributed to "further weakening infrastructure planning and coordination
efforts of the government."
On the Presidential Social Fund
The Court disagrees with the petitioners.
"An appropriation made by law‖ under the contemplation of Section 29(1), Article
VI of the 1987 Constitution exists when a provision of law (a) sets apart a
determinate or determinable amount of money and (b) allocates the same for a
particular public purpose. These two minimum designations of amount and
purpose stem from the very definition of the word "appropriation," which means
"to allot, assign, set apart or apply to a particular use or purpose," and hence, if
written into the law, demonstrate that the legislative intent to appropriate exists.
As the Constitution "does not provide or prescribe any particular form of words
or religious recitals in which an authorization or appropriation by Congress shall
be made, except that it be ‘made by law,‘" an appropriation law may be "detailed
and as broad as Congress wants it to be" for as long as the intent to appropriate
may be gleaned from the same.
To constitute an appropriation there must be money placed in a fund applicable
to the designated purpose. The word appropriate means to allot, assign, set apart
or apply to a particular use or purpose. An appropriation in the sense of the
constitution means the setting apart a portion of the public funds for a public
purpose. No particular form of words is necessary for the purpose, if the
intention to appropriate is plainly manifested.  To be sufficient, the standard must specify the limits of the delegate‘s authority,
Thus, the Court cannot sustain the argument that the appropriation must be the
"primary and specific" purpose of the law in order for a valid appropriation law to
exist. To reiterate, if a legal provision designates a determinate or determinable
amount of money and allocates the same for a particular public purpose, then
the legislative intent to appropriate becomes apparent and, hence, already
sufficient to satisfy the requirement of an "appropriation made by law" under
contemplation of the Constitution.
It may then be concluded that the PSF contain legal appropriations under
Section 29(1), Article VI of the 1987 Constitution. However, the 2013 PDAF
Article cannot be considered the same on the basis that it contains post-
enactment measures.
On Undue Delegation of Legislative Powers
The Court agrees with petitioners‘ submissions.
Section 8 of PD 910 constitutes an undue delegation of legislative power since
the phrase "and for such other purposes as may be hereafter directed by the
President" gives the President "unbridled discretion to determine for what
purpose the funds will be used."
While the designation of a determinate or determinable amount for a particular
public purpose is sufficient for a legal appropriation to exist, the appropriation
law must contain adequate legislative guidelines if the same law delegates rule-
making authority to the Executive either for the purpose of (a) filling up the
details of the law for its enforcement, known as supplementary rule-making, or
(b) ascertaining facts to bring the law into actual operation, referred to as
contingent rule-making.
There are two (2) fundamental tests to ensure that the legislative guidelines for
delegated rule-making are indeed adequate. The first test is called the
"completeness test." Case law states that a law is complete when it sets forth
therein the policy to be executed, carried out, or implemented by the delegate. On
the other hand, the second test is called the "sufficient standard test."
Jurisprudence holds that a law lays down a sufficient standard when it provides
adequate guidelines or limitations in the law to map out the boundaries of the
delegate‘s authority and prevent the delegation from running riot.
announce the legislative policy, and identify the conditions under which it is to be
implemented.
The Court agrees with petitioners that the phrase "and for such other purposes
as may be hereafter directed by the President" under Section 8 of PD 910
constitutes an undue delegation of legislative power insofar as it does not lay
down a sufficient standard to adequately determine the limits of the President‘s
authority with respect to the purpose for which the Malampaya Funds may be
used.  The Court’s pronouncement on unconstitutionality of the 2013 PDAF Article and
As it reads, the said phrase gives the President wide latitude to use the
Malampaya Funds for any other purpose he may direct and, in effect, allows him
to unilaterally appropriate public funds beyond the purview of the law.
That the subject phrase may be confined only to "energy resource development
and exploitation programs and projects of the government" under the principle of
ejusdem generis, meaning that the general word or phrase is to be construed to
include – or be restricted to – things akin to, resembling, or of the same kind or
class as those specifically mentioned, is belied by three (3) reasons: first, the
phrase "energy resource development and exploitation programs and projects of
the government" states a singular and general class and hence, cannot be
treated as a statutory reference of specific things from which the general phrase
"for such other purposes" may be limited; second, the said phrase also exhausts
the class it represents, namely energy development programs of the government;
and, third, the Executive department has, in fact, used the Malampaya Funds
for non-energy related purposes under the subject phrase, thereby contradicting
respondents‘ own position that it is limited only to "energy resource development
and exploitation programs and projects of the government."
Effect of the Court’s Decision
Congressional Pork Barrel System must be treated as prospective in effect in view
of the Operative Fact Doctrine.
To explain, the operative fact doctrine exhorts the recognition that until the
judiciary, in an appropriate case, declares the invalidity of a certain legislative or
executive act, such act is presumed constitutional and thus, entitled to
obedience and respect and should be properly enforced and complied with.
The doctrine merely "reflects awareness that precisely because the judiciary is
the governmental organ which has the final say on whether or not a legislative or
executive measure is valid, a period of time may have elapsed before it can
exercise the power of judicial review that may lead to a declaration of nullity. It
would be to deprive the law of its quality of fairness and justice then, if there be
no recognition of what had transpired prior to such adjudication."
The actual existence of a statute, prior to such a determination of
unconstitutionality, is an operative fact and may have consequences which
cannot justly be ignored.

Thus, while Section 8 of PD 910 may have passed the completeness test since
the policy of energy development is clearly deducible from its text, the phrase
"and for such other purposes as may be hereafter directed by the President"
under the same provision of law should nonetheless be stricken down as
unconstitutional as it lies independently unfettered by any sufficient standard of
the delegating law.

It is also worth noting that the phrase “priority infrastructure development

projects” is too broad and gives the President unbridled authority to determine a
project as “priority”. The law does not give a definition of "priority infrastructure
development projects" and leaves the President without any guideline to construe
the same.
 BPI LEASING CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, COURT OF TAX APPEAL AND
COMMISSIONER OF INTERNAL REVENUE, respondents.
G.R. No. 127624             November 18, 2003
FACTS:
BLC is a corporation engaged in the business of leasing properties.  For the
calendar year 1986, BLC paid the Commissioner of Internal Revenue (CIR) a total
of P1,139,041.49 representing 4% "contractor’s percentage tax" then imposed by
Section 205 of the National Internal Revenue Code (NIRC), based on its gross
rentals from equipment leasing for the said year amounting to P27,783,725.42.
On 1986, the CIR issued a Revenue Regulation that finance and leasing
companies shall be subject to gross receipt tax of 5%-3%-1% on actual income
earned. This means that companies registered under Republic Act 5980, such as
BLC, are not liable for "contractor’s percentage tax" under Section 205 but are,
instead, subject to "gross receipts tax" under Section 260 (now Section 122) of
the NIRC. Since BLC had earlier paid the "contractor’s percentage tax," it re-
computed its tax liabilities under the "gross receipts tax" and arrived at the
amount of P361,924.44.
On April 11, 1988, BLC filed a claim for a refund with the CIR for the amount of
P777,117.05, representing the difference between the P1,139,041.49 it had paid
as "contractor’s percentage tax" and P361,924.44 it should have paid for "gross
receipts tax." Four days later, to stop the running of the prescriptive period for
refunds, petitioner filed a petition for review with the CTA.
The CTA dismissed the case and ruled that the Revenue Regulation can only be
applied prospectively and that the regulation only covers on or after Jan. 7, 1987.
BLC raised its case to the Supreme Court on the ground that the Revenue
Regulation should apply retroactively as it is legislative in nature.
ISSUE:
Whether or not the Revenue Regulation is legislative or interpretative in
character.
Whether or not the Revenue Regulation is applied prospectively or retroactively.
RULING:
On whether the Revenue Regulation is Legislative or Interpretative
The Court finds the questioned revenue regulation to be legislative in nature.
Administrative issuances may be distinguished according to their nature and
substance: legislative and interpretative. A legislative rule is in the matter of
subordinate legislation, designed to implement a primary legislation by providing
the details thereof. An interpretative rule, on the other hand, is designed to
provide guidelines to the law which the administrative agency is in charge of
enforcing.
Section 1 of Revenue Regulation 19-86 plainly states that it was promulgated
pursuant to Section 277 of the NIRC. Section 277 (now Section 244) is an
express grant of authority to the Secretary of Finance to promulgate rules and
regulations for the enforcement of the provisions of the NIRC.
The Court recognized that the application of Section 277 provides for the exercise
of quasi-legislative or rule-making authority. It cannot be disputed that Revenue
Regulation 19-86 was issued pursuant to the rule-making power of the Secretary
of Finance, thus making it legislative, and not interpretative as alleged by BLC.
When an administrative rule goes beyond merely providing for the means that
can facilitate or render less cumbersome the implementation of the law
and substantially 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 the issuance is given the force and effect of
law.
In this case, Revenue Regulation 19-86 would be beneficial to the taxpayers as
they are subjected to lesser taxes. Petitioner, in fact, is invoking Revenue
Regulation 19-86 as the very basis of its claim for refund. If it were invalid, then
petitioner all the more has no right to a refund.
 On whether it is applied Prospectively or Retroactively

It shall be applied prospectively.

It was noted by the Court that the regulation is clear with its intention that it
shall operate on January 7, 1987 and that it "shall be applicable to all leases
written on or after the said date." 

The principle is well entrenched that statutes, including administrative rules and
regulations, operate prospectively only, unless the legislative intent to the
contrary is manifest by express terms or by necessary implication.

Being clear on its prospective application, it must be given its literal meaning and
applied without further interpretation.

It is also apt to add that tax refunds are in the nature of tax exemptions. As such,
these are regarded as in derogation of sovereign authority and are to be strictly
construed against the person or entity claiming the exemption. The burden of
proof is upon him who claims the exemption and he must be able to justify his
claim by the clearest grant under Constitutional or statutory law, and he cannot
be permitted to rely upon vague implications.

Nothing that BLC has raised justifies a tax refund.

 THE DEPARTMENT OF HEALTH et at, Petitioners,
vs.
PHILIP MORRIS PHILIPPINES MANUFACTURING, INC, Respondent.
G.R. No. 202943 March 25, 2015
FACTS:
On November 19, 2008, PMPMI, through the advertising agency PCN Promopro,
Inc. (PCN) applied for a sales promotion permit before the BFAD, now the FDA,
for its Gear Up Promotional Activity (Gear Up Promo).
After 15 days of inaction from BFAD, PCN inquired about the status of their
application. BFAD verbally stated that there is an existing Memorandum
prohibiting tobacco companies from conducting any tobacco promotional
activities in the country.
Another application was filed by PMPMI, through Arc Worldwide Philippines Co.
for a promotional permit. BFAD refused and advised AWPC to await its formal
written notice. BFAD eventually denied the Gear Up Promo application in
accordance with the provisions of RA 9211 or the "Tobacco Regulation Act of
2003" stating that "all promotions, advertisements and/or sponsorships of
tobacco products are already prohibited."
PMPMI filed an administrative appeal in DOH on the ground that promotion is
not prohibited but merely restricted. DOH denied the appeal on the bases of that
the issuance of permits for sales promotional activities was never a ministerial
duty of the BFAD; rather, it was a discretionary power to be exercised within
the confines of the law. Moreover, previous approvals of sales promotional permit
applications made by the BFAD did not create a vested right on the part of the
tobacco companies to have all applications approved; and that it was the
purpose of RA 9211 to ban tobacco advertisement, promotions, and
sponsorship.
DOH raised the case to the Supreme Court.
ISSUE:
Whether or not DOH has the authority to regulate tobacco sales promotions and
completely prohibit tobacco sales
RULING:
The Court ruled in favor of PMPMI.
The Court found that RA 9211 impliedly repealed the relevant provisions of the
former law with respect to the authority of the DOH to regulate tobacco sales
promotions and that the creation of the IAC-Tobacco effectively and impliedly
repealed the authority of the DOH to rule upon applications for sales promotional
permits filed by tobacco companies such as those filed by PMPMI subject of this
case.
The Court also notes that both laws separately treat "promotion" as one of the
activities related to tobacco: RA 7394 defines "sales promotion" under Article 4
(bm), while RA 9211 speaks of "promotion" or "tobacco promotion" under Section
4 (l).
The Court agrees with the CA that it is the IAC-Tobacco and not the DOH which
has the primary jurisdiction to regulate sales promotion activities. As such, the
DOH’s ruling, including its construction of RA 9211 (i.e., that
it completely banned tobacco advertisements, promotions, and sponsorships,
as promotion is inherent in both advertising and sponsorship), are declared null
and void as a necessary consequence.

PMPMI appealed to CA. The CA ruled in favor of PMPMI and held that the DOH
does not have unbriddled authority to deny PMPMI’s promotional permit
applications, adding that "[w]hen the law is clear and free from any doubt or
ambiguity, there is no room for construction or interpretation, only for
application." Furthermore, it ruled that the DOH is bereft of any authority to
enforce the provisions of RA 9211 as it is bestowed to the Inter-Agency
Committee-Tobacco as provided by the said law.
 Conchita Carpio-Morales
v.
Court of Appeals
G.R. Nos. 217126-27 November 10, 2015
FACTS:
A complaint/affidavit was filed before the Office of the Ombudsman against
Binay, Jr. and other public officers and employees of the City Government of
Makati (Binay, Jr., et al), accusing them of Plunder and violation of RA 3019,
otherwise known as “The Anti-Graft and Corrupt Practices Act,” in connection
with the five phases of the procurement and construction of the Makati City Hall
Parking Building.
The Ombudsman ruled that the requisites for the preventive suspension of a
public officer are present, and that their continued stay in office may prejudice
the investigation relative to the OMB Cases filed against them.
Binay, Jr. filed a petition for certiorari before the CA seeking the nullification of
the preventive suspension order, and praying for the issuance of a TRO and/or
WPI to enjoin its implementation.
Primarily, Binay, Jr. argued that he could not be held administratively liable for
any anomalous activity attending any of the five phases of the Makati Parking
Building project since: (a) Phases I and II were undertaken before he was elected
Mayor of Makati in 2010; and (b) Phases III to V transpired during his first term
and that his re-election as City Mayor of Makati for a second term
effectively condoned his administrative liability therefor, if any, thus
rendering the administrative cases against him moot and academic.
Prior to the hearing of the oral arguments before the CA, the Ombudsman filed
the present petition before this Court, assailing the CA’s Resolution, which
granted Binay, Jr.’s prayer for TRO.
The Ombudsman claims that the CA had no jurisdiction to grant Binay, Jr.’s
prayer for a TRO.
ISSUE:
Whether or not the doctrine of condonation should apply in Binay’s case.
RULING:
The petition is partly meritorious.
This Court simply finds no legal authority to sustain the condonation doctrine in
this jurisdiction. It was a doctrine adopted from one class of US rulings way back
in 1959 and thus, out of touch from – and now rendered obsolete by – the
current legal regime. In consequence, it is high time for this Court to abandon
the condonation doctrine that originated from Pascual, and affirmed in the cases
following the same, such as Aguinaldo, Salalima, Mayor Garcia, and Governor
Garcia, Jr. which were all relied upon by the CA.
It should, however, be clarified that this Court’s abandonment of the
condonation doctrine should be prospective in application for the reason that
judicial decisions applying or interpreting the laws or the Constitution, until
reversed, shall form part of the legal system of the Philippines.
The condonation doctrine was first enunciated in Pascual v. Hon. Provincial
Board of Nueva Ecija, there is no truth in Pascual’s postulation that the courts
would be depriving the electorate of their right to elect their officers if condonation
were not to be sanctioned. In political law, election pertains to the process by
which a particular constituency chooses an individual to hold a public office.
In this jurisdiction, there is, again, no legal basis to conclude that election
automatically implies condonation. Neither is there any legal basis to say that
every democratic and republican state has an inherent regime of condonation. If
condonation of an elective official’s administrative liability would perhaps, be
allowed in this jurisdiction, then the same should have been provided by law
under our governing legal mechanisms. May it be at the time of Pascual or at
present, by no means has it been shown that such a law, whether in a
constitutional or statutory provision, exists.
Misconduct committed by an elective official is easily covered up, and is almost
always unknown to the electorate when they cast their votes. At a conceptual
level, condonation presupposes that the condoner has actual knowledge of what
is to be condoned. Thus, there could be no condonation of an act that is
unknown
Therefore, inferring from this manifest absence, it cannot be said that the
electorate’s will has been abdicated.
 Senate of the Philippines et al,
v.
Eduardo Ermita
G.R. No. 169777             April 20, 2006
FACTS:
In 2005,scandalsinvolving anomalous transactions about the North Rail Project
as well as the Garci tapes surfaced. This prompted the Senate to conduct a
public hearing to investigate the said anomalies particularly the alleged
overpricing in the NRP. The investigating Senate committee issued invitations to
certain department heads and military officials to speak before the committee as
resource persons.
Ermita submitted that he and some of the department heads cannot attend the
said hearing due to pressing matters that need immediate attention. AFP Chief of
Staff Senga likewise sent a similar letter. Drilon, the senate president, accepted
the said requests for they were sent belatedly and arrangements were already
made and scheduled. Subsequently, GMA issued EO 464 which took effect
immediately. EO 464 basically prohibited Department heads, Senior officials of
executive departments who in the judgment of the department heads are covered
by the executive privilege; Generals and flag officers of the Armed Forces of the
Philippines and such other officers who in the judgment of the Chief of Staff are
covered by the executive privilege; Philippine National Police (PNP) officers with
rank of chief superintendent or higher and such other officers who in the
judgment of the Chief of the PNP are covered by the executive privilege; Senior
national security officials who in the judgment of the National Security Adviser
are covered by the executive privilege; and such other officers as may be
determined by the President, from appearing in such hearings conducted by
Congress without first securing the president’s approval. The department heads
and the military officers who were invited by the Senate committee then invoked
EO 464 to except themselves.
Despite EO 464, the scheduled hearing proceeded with only 2 military personnel
attending. For defying President Arroyo’s order barring military personnel from
testifying before legislative inquiries without her approval, Brig. Gen. Gudani and
Col. Balutan were relieved from their military posts and were made to face court
martial proceedings. EO 464’s constitutionality was assailed for it is alleged that
it infringes on the rights and duties of Congress to conduct investigation in aid of
legislation and conduct oversight functions in the implementation of laws.
ISSUE:
Whether or not EO 464 is unconstitutional
RULING:
The SC ruled that EO 464 is constitutional in part. 
To determine the validity of the provisions of EO 464, the SC sought to
distinguish Section 21 from Section 22 of Art 6 of the 1987 Constitution. The
Congress’ power of inquiry is expressly recognized in Section 21 of Article VI of
the Constitution. Although there is no provision in the Constitution expressly
investing either House of Congress with power to make investigations and exact
testimony to the end that it may exercise its legislative functions advisedly and
effectively, such power is so far incidental to the legislative function as to be
implied. In other words, the power of inquiry – with process to enforce it – is an
essential and appropriate auxiliary to the legislative function.
A legislative body cannot legislate wisely or effectively in the absence of
information respecting the conditions which the legislation is intended to affect or
change; and where the legislative body does not itself possess the requisite
information – which is not infrequently true – recourse must be had to others
who do possess it.
Section 22 on the other hand provides for the Question Hour. The Question Hour
is closely related with the legislative power, and it is precisely as a complement to
or a supplement of the Legislative Inquiry. The appearance of the members of
Cabinet would be very, very essential not only in the application of check and
balance but also, in effect, in aid of legislation.
Section 22 refers only to Question Hour, whereas, Section 21 would refer
specifically to inquiries in aid of legislation, under which anybody for that matter,
may be summoned and if he refuses, he can be held in contempt of the House.
A distinction was thus made between inquiries in aid of legislation and the
question hour. While attendance was meant to be discretionary in the question
hour, it was compulsory in inquiries in aid of legislation. Sections 21 and 22,
therefore, while closely related and complementary to each other, should not be
considered as pertaining to the same power of Congress.
One specifically relates to the power to conduct inquiries in aid of legislation, the
aim of which is to elicit information that may be used for legislation, while the
other pertains to the power to conduct a question hour, the objective of which is
to obtain information in pursuit of Congress’ oversight function. Ultimately, the
power of Congress to compel the appearance of executive officials under Section
21 and the lack of it under Section 22 find their basis in the principle of
separation of powers.

While the executive branch is a co-equal branch of the legislature, it cannot

frustrate the power of Congress to legislate by refusing to comply with its
demands for information. When Congress exercises its power of inquiry, the only
way for department heads to exempt themselves therefrom is by a valid claim of
privilege. They are not exempt by the mere fact that they are department heads.
Only one executive official may be exempted from this power — the President on
whom executive power is vested, hence, beyond the reach of Congress except
through the power of impeachment.

It is based on her being the highest official of the executive branch, and the due
respect accorded to a co-equal branch of government which is sanctioned by a
long-standing custom. The requirement then to secure presidential consent
under Section 1, limited as it is only to appearances in the question hour, is valid
on its face. For under Section 22, Article VI of the Constitution, the appearance of
department heads in the question hour is discretionary on their part. Section 1
cannot, however, be applied to appearances of department heads in inquiries in
aid of legislation. Congress is not bound in such instances to respect the refusal
of the department head to appear in such inquiry, unless a valid claim of
privilege is subsequently made, either by the President herself or by the
Executive Secretary.

When Congress merely seeks to be informed on how department heads are

implementing the statutes which it has issued, its right to such information is
not as imperative as that of the President to whom, as Chief Executive, such
department heads must give a report of their performance as a matter of duty. In
such instances, Section 22, in keeping with the separation of powers, states that
Congress may only request their appearance. Nonetheless, when the inquiry in
which Congress requires their appearance is ‘in aid of legislation’ under Section
21, the appearance is mandatory for the same reasons stated in Arnault.
 AL-AMANAH ISLAMIC INVESTMENT BANK OF THE
PHILIPPINES, petitioner,
vs.
THE HONORABLE CIVIL SERVICE COMMISSION and NAPOLEON M.
MALBUN, respondents.
G.R. No. 100599 April 8, 1992
FACTS:
Napoleon M. Malbun, the Branch Manager of the bank in Cagayan de Oro City
was charged by the then Philippine Amanah Bank Acting President Farouk A.
Carpizo for Neglect of Duty, Inefficiency and Incompetence arising from the
alleged unauthorized and illegal encashment of commercial checks drawn
against uncleared and unfunded deposits in the Civil Service Commission. After
further investigation, it was concluded that Malbun was not guilty of the charges.
However, after an appeal and reinvestigation, the CSC determined that Malbun
is not only guilty of Neglect of Duty but also Gross Neglect of Duty which should
have been filed against him. But considering the two existing mitigating
circumstances and the length of service, only a suspension of one year was
imposed against him.
The Bank filed a motion for reconsideration on the ground that the penalty
should have been a dismissal because of Malbun’s prior conviction for neglect of
duty in 1979.
The CSC, however, refused to consider this "prior conviction" of the private
respondent on the ground that this is not a newly discovered evidence and that
the petitioner in its exercise of reasonable diligence could have discovered and
produced the document during the hearing conducted or could have presented
the same in its appeal to the Merit Systems Protection Board (MSPB) as well as in
the Commission.
ISSUE:
Whether or not Malbun should be dismissed
RULING:
The Court ruled that Malbun should be dismissed.
Section 695 of the Revised Administrative Code of 1917 provides that a civil
service subordinate officer or employee, may for neglect of duty or violation of
reasonable office regulations be removed from the service.
Memorandum Circular No. 8, Series of 1970 of the Civil Service Commission
provides for the penalties which include transfer or demotion, forced resignation,
and dismissal, and the mitigating circumstances which are (1) physical illness,
(2) good faith, (3) length of service, and (4) analogous circumstances.
The Civil Service Commission considered as mitigating circumstances: (1) length
of service, and (2) first offense. The CSC also considered abuse of confidence as
aggravating circumstance.
First offense cannot be considered as mitigating circumstance, unlike length of
service.
It was noted by the Court that there was thirteen transgressions committed by
Malbun that incurred a loss of P597,450.05 from the bank as a result of these
unauthorized withdrawals. Under these circumstances, it cannot be considered
as the private respondent's grave misconduct as  first offense.
The Court also noted that there was a prior conviction which should have been
considered by the Commission in imposing the proper penalty even if such
evidence was only presented during the motion for reconsideration.
Administrative agencies like the Civil Service Commission exercising quasi-
judicial functions are free from the rigidity of certain procedural requirements.
Because of the existence of the aggravating circumstance of abuse of confidence,
the mitigating circumstance of length of service was offset by the former and
thus, the proper penalty for the repeated offenses committed by Malbun against
the beneficial interest of the Bank is dismissal from the government service with
forfeiture of benefits.