Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 157584

April 2, 2009

CONGRESSMAN ENRIQUE T. GARCIA of the 2nd District of Bataan, Petitioner,

vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF THE DEPARTMENT OF ENERGY,
CALTEX PHILIPPINES, INC., PETRON CORPORATION, and PILIPINAS SHELL
CORPORATION Respondents.
DECISION
BRION, J.:
For the second time, petitioner Enrique T. Garcia, Jr. (petitioner Garcia) asks this Court to
examine the constitutionality of Section 19 of Republic Act No. 8479 (R.A. No. 8479), otherwise
known as the Oil Deregulation Law of 1998) through this petition for certiorari.1 He raises once
again before us the propriety of implementing full deregulation by removing the system of price
controls in the local downstream oil industry a matter that we have ruled upon in the past.
THE FACTS
After years of imposing significant controls over the downstream oil industry in the Philippines,
the government decided in March 1996 to pursue a policy of deregulation by enacting Republic
Act No. 8180 (R.A. No. 8180) or the Downstream Oil Industry Deregulation Act of 1996.
R.A. No. 8180, however, met strong opposition, and rightly so, as this Court concluded in its
November 5, 1997 decision in Tatad v. Secretary of Department of Energy.2 We struck down the
law as invalid because the three key provisions intended to promote free competition were shown
to achieve the opposite result; contrary to its intent, R.A. No. 8180s provisions on tariff
differential, inventory requirements, and predatory pricing inhibited fair competition, encouraged
monopolistic power, and interfered with the free interaction of market forces. We declared:
R.A. No. 8180 needs provisions to vouchsafe free and fair competition. The need for these
vouchsafing provisions cannot be overstated. Before deregulation, PETRON, SHELL and
CALTEX had no real competitors but did not have a free run of the market because government
controls both the pricing and non-pricing aspects of the oil industry. After deregulation,

PETRON, SHELL and CALTEX remain unthreatened by real competition yet are no longer
subject to control by government with respect to their pricing and non-pricing decisions. The
aftermath of R.A. No. 8180 is a deregulated market where competition can be corrupted and
where market forces can be manipulated by oligopolies.3
Notwithstanding the existence of a separability clause among its provisions, we struck down
R.A. No. 8180 in its entirety because its offensive provisions permeated the whole law and were
the principal tools to carry deregulation into effect.
Congress responded to our Decision in Tatad by enacting on February 10, 1998 a new oil
deregulation law, R.A. No. 8479. This time, Congress excluded the offensive provisions found in
the invalidated law. Nonetheless, petitioner Garcia again sought to declare the new oil
deregulation law unconstitutional on the ground that it violated Article XII, Section 19 of the
Constitution.4 He specifically objected to Section 19 of R.A. No. 8479 which, in essence,
prescribed the period for removal of price control on gasoline and other finished petroleum
products and set the time for the full deregulation of the local downstream oil industry. The
assailed provision reads:
SEC. 19. Start of Full Deregulation. Full deregulation of the Industry shall start five (5) months
following the effectivity of this Act: Provided, however, That when the public interest so
requires, the President may accelerate the start of full deregulation upon the recommendation of
the DOE and the Department of Finance (DOF) when the prices of crude oil and petroleum
products in the world market are declining and the value of the peso in relation to the US dollar
is stable, taking into account relevant trends and prospects; Provided, further, That the foregoing
provision notwithstanding, the five (5)-month Transition Phase shall continue to apply to LPG,
regular gasoline and kerosene as socially-sensitive petroleum products and said petroleum
products shall be covered by the automatic pricing mechanism during the said period.
Upon the implementation of full deregulation as provided herein, the Transition Phase is deemed
terminated and the following laws are repealed:
a) Republic Act No. 6173, as amended;
b) Section 5 of Executive Order No. 172, as amended;
c) Letter of Instruction No. 1431, dated October 15, 1984;
d) Letter of Instruction No. 1441, dated November 20, 1984, as amended;
e) Letter of Instruction No. 1460, dated May 9, 1985;

f) Presidential Decree No. 1889; and

g) Presidential Decree No. 1956, as amended by Executive Order No. 137:
Provided, however, That in case full deregulation is started by the President in the exercise of the
authority provided in this Section, the foregoing laws shall continue to be in force and effect with
respect to LPG, regular gasoline and kerosene for the rest of the five (5)-month period.
Petitioner Garcia contended that implementing full deregulation and removing price control at a
time when the market is still dominated and controlled by an oligopoly5 would be contrary to
public interest, as it would only provide an opportunity for the Big 3 to engage in price-fixing
and overpricing. He averred that Section 19 of R.A. No. 8479 is glaringly pro-oligopoly, anticompetition, and anti-people, and thus asked the Court to declare the provision unconstitutional.
On December 17, 1999, in Garcia v. Corona (1999 Garcia case),6 we denied petitioner Garcias
plea for nullity. We declined to rule on the constitutionality of Section 19 of R.A. No. 8479 as we
found the question replete with policy considerations; in the words of Justice Ynares-Santiago,
the ponente of the 1999 Garcia case:
It bears reiterating at the outset that the deregulation of the oil industry is a policy determination
of the highest order. It is unquestionably a priority program of Government. The Department of
Energy Act of 1992 expressly mandates that the development and updating of the existing
Philippine energy program shall include a policy direction towards deregulation of the power
and energy industry.
Be that as it may, we are not concerned with whether or not there should be deregulation. This is
outside our jurisdiction. The judgment on the issue is a settled matter and only Congress can
reverse it.
xxx xxx xxx
Reduced to its basic arguments, it can be seen that the challenge in this petition is not against the
legality of deregulation. Petitioner does not expressly challenge deregulation. The issue, quite
simply, is the timeliness or the wisdom of the date when full deregulation should be effective.
In this regard, what constitutes reasonable time is not for judicial determination. Reasonable time
involves the appraisal of a great variety of relevant conditions, political, social and economic.
They are not within the appropriate range of evidence in a court of justice. It would be an
extravagant extension of judicial authority to assert judicial notice as the basis for the
determination. [Emphasis supplied.]

Undaunted, petitioner Garcia is again before us in the present petition for certiorari seeking a
categorical declaration from this Court of the unconstitutionality of Section 19 of R.A. No. 8479.
THE PETITION
Petitioner Garcia does not deny that the present petition for certiorari raises the same issue of the
constitutionality of Section 19 of R.A. No. 8479, which was already the subject of the 1999
Garcia case. He disagrees, however, with the allegation that the prior rulings of the Court in the
two oil deregulation cases7 amount to res judicata that would effectively bar the resolution of the
present petition. He reasons that res judicata will not apply, as the earlier cases did not
completely resolve the controversy and were not decided on the merits. Moreover, he maintains
that the present case involves a matter of overarching and overriding importance to the national
economy and to the public and cannot be sacrificed for technicalities like res judicata.8
To further support the present petition, petitioner Garcia invokes the following additional
grounds to nullify Section 19 of R.A. No. 8479:
1. Subsequent events after the lifting of price control in 1997 have confirmed the continued
existence of the Big 3 oligopoly and its overpricing of finished petroleum products;
2. The unabated overpricing of finished petroleum products by the Big 3 oligopoly is gravely and
undeniably detrimental to the public interest;
3. No longer may the bare and blatant constitutionality of the lifting of price control be glossed
over through the expediency of legislative wisdom or judgment call in the face of the Big 3
oligopolys characteristic, definitive, and continued overpricing;
4. To avoid declaring the lifting of price control on finished petroleum products as
unconstitutional is to consign to the dead letter dustbin the solemn and explicit constitutional
command for the regulation of monopolies/oligopolies.9
THE COURTS RULING
We resolve to dismiss the petition.
In asking the Court to declare Section 19 of R.A. No. 8479 as unconstitutional for contravening
Section 19, Article XII of the Constitution, petitioner Garcia invokes the exercise by this Court
of its power of judicial review, which power is expressly recognized under Section 4(2), Article
VIII of the Constitution.10 The power of judicial review is the power of the courts to test the
validity of executive and legislative acts for their conformity with the Constitution.11 Through

such power, the judiciary enforces and upholds the supremacy of the Constitution.12 For a court
to exercise this power, certain requirements must first be met, namely:
(1) an actual case or controversy calling for the exercise of judicial power;
(2) the person challenging the act must have standing to challenge; he 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;
(3) the question of constitutionality must be raised at the earliest possible opportunity; and
(4) the issue of constitutionality must be the very lis mota of the case.13
Actual Case Controversy
Susceptible of Judicial Determination
The petition fails to satisfy the very first of these requirements the existence of an actual case
or controversy calling for the exercise of judicial power. An actual case or controversy is one that
involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial
resolution; the case must not be moot or academic or based on extra-legal or other similar
considerations not cognizable by a court of justice. Stated otherwise, it is not the mere existence
of a conflict or controversy that will authorize the exercise by the courts of its power of review;
more importantly, the issue involved must be susceptible of judicial determination. Excluded
from these are questions of policy or wisdom, otherwise referred to as political questions:
As Taada v. Cuenco puts it, political questions refer to those questions which, under the
Constitution, are to be decided by the people in their sovereign capacity, or in regard to which
full discretionary authority has been delegated to the legislative or executive branch of
government. Thus, if an issue is clearly identified by the text of the Constitution as matters for
discretionary action by a particular branch of government or to the people themselves then it is
held to be a political question. In the classic formulation of Justice Brennan in Baker v. Carr,
[p]rominent on the surface of any case held to involve a political question is found a textually
demonstrable constitutional commitment of the issue to a coordinate political department; or a
lack of judicially discoverable and manageable standards for resolving it; or the impossibility of
deciding without an initial policy determination of a kind clearly for non-judicial discretion; or
the impossibility of a courts undertaking independent resolution without expressing lack of the
respect due coordinate branches of government; or an unusual need for unquestioning adherence
to a political decision already made; or the potentiality of embarrassment from multifarious
pronouncements by various departments on the one question.14 [Emphasis supplied.]

Petitioner Garcias issues fit snugly into the political question mold, as he insists that by adopting
a policy of full deregulation through the removal of price controls at a time when an oligopoly
still exists, Section 19 of R.A. No. 8479 contravenes the Constitutional directive to regulate or
prohibit monopolies15 under Article XII, Section 19 of the Constitution. This Section states:
The State shall regulate or prohibit monopolies when the public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed.
Read correctly, this constitutional provision does not declare an outright prohibition of
monopolies. It simply allows the State to act when public interest so requires; even then, no
outright prohibition is mandated, as the State may choose to regulate rather than to prohibit. Two
elements must concur before a monopoly may be regulated or prohibited:
1. There in fact exists a monopoly or an oligopoly, and
2. Public interest requires its regulation or prohibition.
Whether a monopoly exists is a question of fact. On the other hand, the questions of (1) what
public interest requires and (2) what the State reaction shall be essentially require the exercise of
discretion on the part of the State.
Stripped to its core, what petitioner Garcia raises as an issue is the propriety of immediately and
fully deregulating the oil industry. Such determination essentially dwells on the soundness or
wisdom of the timing and manner of the deregulation Congress wants to implement through R.A.
No. 8497. Quite clearly, the issue is not for us to resolve; we cannot rule on when and to what
extent deregulation should take place without passing upon the wisdom of the policy of
deregulation that Congress has decided upon. To use the words of Baker v. Carr,16 the ruling that
petitioner Garcia asks requires an initial policy determination of a kind clearly for non-judicial
discretion; the branch of government that was given by the people the full discretionary
authority to formulate the policy is the legislative department.
Directly supporting our conclusion that Garcia raises a political question is his proposal to adopt
instead a system of partial deregulation a system he presents as more consistent with the
Constitutional dictate. He avers that free market forces (in a fully deregulated environment)
cannot prevail for as long as the market itself is dominated by an entrenched oligopoly. In such
situation, he claims that prices are not determined by the free play of supply and demand, but
instead by the entrenched and dominant oligopoly where overpricing and price-fixing are
possible.17 Thus, before full deregulation can be implemented, he calls for an indefinite period
of partial deregulation through imposition of price controls.18

Petitioner Garcias thesis readily reveals the political,19 hence, non-justiciable, nature of his
petition; the choice of undertaking full or partial deregulation is not for this Court to make. By
enacting the assailed provision Section 19 of R.A. No. 8479, Congress already determined
that the problems confronting the local downstream oil industry are better addressed by
removing all forms of prior controls and adopting a deregulated system. This intent is expressed
in Section 2 of the law:
Section 2. Declaration of Policy. It shall be the policy of the State to liberalize and deregulate
the downstream oil industry in order to ensure a truly competitive market under a regime of fair
prices, adequate and continuous supply of environmentally-clean and high-quality petroleum
products. To this end, the State shall promote and encourage the entry of new participants in the
downstream oil industry, and introduce adequate measures to ensure the attainment of these
goals.
In Tatad, we declared that the fundamental principle espoused by Section 19, Article XII of the
Constitution is competition.20 Congress, by enacting R.A. No. 8479, determined that this
objective is better realized by liberalizing the oil market, instead of continuing with a highly
regulated system enforced by means of restrictive prior controls. This legislative determination
was a lawful exercise of Congress prerogative and one that this Court must respect and uphold.
Regardless of the individual opinions of the Members of this Court, we cannot, acting as a body,
question the wisdom of a co-equal departments acts. The courts do not involve themselves with
or delve into the policy or wisdom of a statute;21 it sits, not to review or revise legislative action,
but to enforce the legislative will.22For the Court to resolve a clearly non-justiciable matter
would be to debase the principle of separation of powers that has been tightly woven by the
Constitution into our republican system of government.
This same line of reasoning was what we used when we dismissed the first Garcia case. The
petitioner correctly noted that this is not a matter of res judicata (as the respondents invoked), as
the application of the principle of res judicata presupposes that there is a final judgment or decree
on the merits rendered by a court of competent jurisdiction. To be exact, we are simply declaring
that then, as now, and for the same reasons, we find that there is no justiciable controversy that
would justify the grant of the petition.
Grave Abuse of Discretion
Recourse to the political question doctrine necessarily raises the underlying doctrine of
separation of powers among the three great branches of government that our Constitution has
entrenched. But at the same time that the Constitution mandates this Court to respect acts
performed by co-equal departments done within their sphere of competence and authority, it has
also allowed us to cross the line of separation on a very limited and specific point to determine

whether the acts of the executive and the legislative departments are null because they were
undertaken with grave abuse of discretion. IBP v. Zamora teaches us that When political questions are involved, the Constitution limits the determination as to whether
there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
the official whose action is being questioned.
xxx xxx xxx
[W]hile this Court has no power to substitute its judgment for that of Congress or of the
President, it may look into the question of whether such exercise has been made in grave abuse
of discretion. A showing that plenary power is granted either department of government, may not
be an obstacle to judicial inquiry, for the improvident exercise or abuse thereof may give rise to
justiciable controversy. 23 [Emphasis supplied.]
Jurisprudence has defined grave abuse of discretion to mean the capricious or whimsical exercise
of judgment that is so patent and gross as to amount to an evasion of positive duty or a virtual
refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the
power is exercised in an arbitrary and despotic manner by reason of passion or hostility.24
Significantly, the pleadings before us fail to disclose any act of the legislature that may be
characterized as patently capricious or whimsical. A reading of the congressional deliberations
made on R.A. No. 8479 indicates that the measure was thoroughly and carefully considered.
Indeed, petitioner Garcia was among the many who interpellated the laws principal author, then
Congressman Dante O. Tinga, now a Member of this Court.
We note, too, that petitioner Garcia has not adequately proven at this point that an oligopoly does
in fact exist in the form of the Big 3, and that the Big 3 have actually engaged in oligopolistic
practices. He merely cites (in his argument against the applicability of res judicata) and relies on
the facts and findings stated in the two prior cases on oil deregulation. This calls to mind what
former Chief Justice Panganiban said in his Separate Opinion in the 1999 Garcia case:
Petitioner merely resurrects and relies heavily on the arguments, the statistics and the proofs he
submitted two years ago in the first oil deregulation case, Tatad v. Secretary of the Department of
Energy. Needless to state, those reasons were taken into consideration in said case, and they
indeed helped show the unconstitutionality of RA 8180. But exactly the same old grounds cannot
continue to support petitioners present allegation that the major oil companies Petron, Shell
and Caltex persist to this date in their oligopolistic practices, as a consequence of the current
Oil Deregulation Law and in violation of the Constitution. In brief, the legal cause and effect
relationship has not been amply shown. [Emphasis supplied.]

This observation is true in the present case as it was true in the 1999 Garcia case; the petitioner
has simply omitted the citation of facts, figures and statistics specifically supporting his petition.
To prove charges of continued overpricing or price-fixing, he refers to data showing price
adjustments of petroleum products for the period covering February 8, 1997 to August 1, 1997.
Insofar as R.A. No. 8479 is concerned, however, these data are irrelevant, as they cover a period
way before R.A. No. 8479 was enacted.25
Petitioner Garcia contends that the identity in the pricing patterns of the Big 3 confirms the
existence of an oligopoly and shows that they have colluded to engage in unlawful cartel-like
behaviour. His reasoning fails to persuade us. That the oil firms have the same prices and change
them at the same rate at the same time are not sufficient evidence to conclude that collusion
exists. An independent study on local oil prices explains:
[W]hen products are highly substitutable with each other (or what economists call
homogeneous products), then firms will tend to set similar prices, especially when there are
many competing sellers. Otherwise, if one firm tried to set a price significantly higher than the
others, it would find itself losing customers to the others.26
Even assuming that the Big 3 have indeed colluded in fixing oil prices, this development will not
necessarily justify a declaration against the validity and constitutionality of Section 19 of R.A.
No. 8479. The remedy against the perceived failure of the Oil Deregulation Law to combat
cartelization is not to declare it invalid, but to set in motion its anti-trust safeguards under
Sections 11,27 12,28 and 13.29
Lis Mota
Lis Mota the fourth requirement to satisfy before this Court will undertake judicial review
means that the Court will not pass upon a question of unconstitutionality, although properly
presented, if the case can be disposed of on some other ground, such as the application of the
statute or the general law. The petitioner must be able to show that the case cannot be legally
resolved unless the constitutional question raised is determined.30 This requirement is based on
the rule that every law has in its favor the presumption of constitutionality; 31 to justify its
nullification, there must be a clear and unequivocal breach of the Constitution, and not one that is
doubtful, speculative, or argumentative.
Petitioner Garcia argues against full deregulation implemented through the lifting of price
control, as it allows oligopoly, overpricing and price-fixing. R.A. No. 8479, however, does not
condone these acts; indeed, Section 11 (a) of the law expressly prohibits and punishes
cartelization, which is defined in the same section as any agreement, combination or concerted
action by refiners, importers and/or dealers, or their representatives, to fix prices, restrict outputs
or divide markets, either by products or by areas, or allocate markets, either by products or by

areas, in restraint of trade or free competition, including any contractual stipulation which
prescribes pricing levels and profit margins. This definition is broad enough to include the
alleged acts of overpricing or price-fixing by the Big 3. R.A. No. 8479 has provided, aside from
prosecution for cartelization, several other anti-trust mechanisms, including the enlarged scope of
the Department of Energys monitoring power and the creation of a Joint Task Force to
immediately act on complaints against unreasonable rise in the price of petroleum
products.32Petitioner Garcias failure is that he failed to show that he resorted to these measures
before filing the instant petition. His belief that these oversight mechanisms are unrealistic and
insufficient does not permit disregard of these remedies.33
CONCLUSION
To summarize, we declare that the issues petitioner Garcia presented to this Court are nonjusticiable matters that preclude the Court from exercising its power of judicial review. The
immediate implementation of full deregulation of the local downstream oil industry is a policy
determination by Congress which this Court cannot overturn without offending the Constitution
and the principle of separation of powers. That the law failed in its objectives because its
adoption spawned the evils petitioner Garcia alludes to does not warrant its nullification. In the
words of Mr. Justice Leonardo A. Quisumbing in the 1999 Garcia case, [a] calculus of fear and
pessimism xxx does not justify the remedy petitioner seeks: that we overturn a law enacted by
Congress and approved by the Chief Executive.34
WHEREFORE, we hereby DISMISS the petition. No pronouncements as to costs.
SO ORDERED.

People v. Vera
Cu Unjieng was convicted by the trial court in Manila. He filed for reconsideration which was
elevated to the SC and the SC remanded the appeal to the lower court for a new trial. While
awaiting new trial, he appealed for probation alleging that the he is innocent of the crime he was
convicted of. Judge Tuason of the Manila CFI directed the appeal to the Insular Probation Office.
The IPO denied the application. However, Judge Vera upon another request by petitioner allowed
the petition to be set for hearing. The City Prosecutor countered alleging that Vera has no power
to place Cu Unjieng under probation because it is in violation of Sec. 11 Act No. 4221 which

provides that the act of Legislature granting provincial boards the power to provide a system of
probation to convicted person. Nowhere in the law is stated that the law is applicable to a city
like Manila because it is only indicated therein that only provinces are covered. And even if
Manila is covered by the law it is unconstitutional because Sec 1 Art 3 of the Constitution
provides equal protection of laws. The said law provides absolute discretion to provincial boards
and this also constitutes undue delegation of power. Further, the said probation law may be an
encroachment of the power of the executive to provide pardon because providing probation, in
effect, is granting freedom, as in pardon.
ISSUE: Whether or not there is undue delegation of power.
HELD: The act of granting probation is not the same as pardon. In fact it is limited and is in a
way an imposition of penalty. There is undue delegation of power because there is

no set standard provided by Congress on how provincial boards must act in

carrying out a system of probation. The provincial boards are given absolute
discretion which is violative of the constitution and the doctrine of the non
delegability of power. Further, it is a violation of equity so protected by the constitution. The
challenged section of Act No. 4221 in section 11 which reads as follows: This Act shall apply
only in those provinces in which the respective provincial boards have provided for the salary of
a probation officer at rates not lower than those now provided for provincial fiscals. Said
probation officer shall be appointed by the Secretary of Justice and shall be subject to the
direction of the Probation Office. This only means that only provinces that can provide
appropriation for a probation officer may have a system of probation within their locality. This
would mean to say that convicts in provinces where no probation officer is instituted may not
avail of their right to probation.

Eastern Shipping lines v. POEA

G.R. No. 76633 October 18, 1988 [Non delegation of legislative power; subordinate legislation]
FACTS:
A Chief Officer of a ship was killed in an accident in Japan. The widow filed a complaint for
charges against the Eastern Shipping Lines with POEA, based on a Memorandum Circular No. 2,

issued by the POEA which stipulated death benefits and burial for the family of overseas
workers. ESL questioned the validity of the memorandum circular as violative of the principle of
non-delegation of legislative power. It contends that no authority had been given the POEA to
promulgate the said regulation; and even with such authorization, the regulation represents an
exercise of legislative discretion which, under the principle, is not subject to delegation.
Nevertheless, POEA assumed jurisdiction and decided the case.
ISSUE:
Whether or not the Issuance of Memorandum Circular No. 2 is a violation of non-delegation of
powers.
RULING:
No. SC held that there was a valid delegation of powers.
The authority to issue the said regulation is clearly provided in Section 4(a) of Executive Order
No. 797. ... "The governing Board of the Administration (POEA), as hereunder provided shall
promulgate the necessary rules and regulations to govern the exercise of the adjudicatory
functions of the Administration (POEA)."
It is true that legislative discretion as to the substantive contents of the law cannot be delegated.
What can be delegated is the discretion to determine how the law may be enforced, not what the
law shall be. The ascertainment of the latter subject is a prerogative of the legislature. This
prerogative cannot be abdicated or surrendered by the legislature to the delegate.
The reasons given above for the delegation of legislative powers in general are particularly
applicable to administrative bodies. With the proliferation of specialized activities and their
attendant peculiar problems, the national legislature has found it more and more necessary to
entrust to administrative agencies the authority to issue rules to carry out the general provisions
of the statute. This is called the "power of subordinate legislation."
With this power, administrative bodies may implement the broad policies laid down in a statute
by "filling in' the details which the Congress may not have the opportunity or competence to
provide. This is effected by their promulgation of what are known as supplementary regulations,
such as the implementing rules issued by the Department of Labor on the new Labor Code.
These regulations have the force and effect of law.
There are two accepted tests to determine whether or not there is a valid delegation of legislative
power:
1. Completeness test - the law must be complete in all its terms and conditions when it leaves
the legislature such that when it reaches the delegate the only thing he will have to do is enforce
it.

2. Sufficient standard test - there must be adequate guidelines or stations in the law to map out
the boundaries of the delegate's authority and prevent the delegation from running riot.
Both tests are intended to prevent a total transference of legislative authority to the delegate, who
is not allowed to step into the shoes of the legislature and exercise a power essentially legislative.

Ynot v. IAC
Police Power Not Validly Exercised
There had been an existing law which prohibited the slaughtering of carabaos (EO 626). To
strengthen the law, Marcos issued EO 626-A which not only banned the movement of carabaos
from interprovinces but as well as the movement of carabeef. On 13 Jan 1984, Ynot was caught
transporting 6 carabaos from Masbate to Iloilo. He was then charged in violation of EO 626-A.
Ynot averred EO 626-A as unconstitutional for it violated his right to be heard or his right to due
process. He said that the authority provided by EO 626-A to outrightly confiscate carabaos even

without being heard is unconstitutional. The lower court ruled against Ynot ruling that the EO is
a valid exercise of police power in order to promote general welfare so as to curb down the
indiscriminate slaughter of carabaos.
ISSUE: Whether or not the law is valid.
HELD: The SC ruled that the EO is not valid as it indeed violates due process. EO 626-A
ctreated a presumption based on the judgment of the executive. The movement of carabaos from
one area to the other does not mean a subsequent slaughter of the same would ensue. Ynot
should be given to defend himself and explain why the carabaos are being transferred before they
can be confiscated. The SC found that the challenged measure is an invalid exercise of the
police power because the method employed to conserve the carabaos is not reasonably necessary
to the purpose of the law and, worse, is unduly oppressive. Due process is violated because the
owner of the property confiscated is denied the right to be heard in his defense and is
immediately condemned and punished. The conferment on the administrative authorities of the
power to adjudge the guilt of the supposed offender is a clear encroachment on judicial functions
and militates against the doctrine of separation of powers. There is, finally, also an invalid
delegation of legislative powers to the officers mentioned therein who are granted unlimited
discretion in the distribution of the properties arbitrarily taken.

Tablarin v. Gutierrez
G.R. No. 78164 July 31, 1987
Feliciano, J.
Facts:
The petitioners sought admission into colleges or schools of medicine for the school
year 1987-1988. However, the petitioners either did not take or did not successfully take the
National Medical Admission Test (NMAT) required by the Board of Medical Education, one of

the public respondents, and administered by the private respondent, the Center for Educational
Measurement (CEM).
On 5 March 1987, the petitioners filed with the Regional Trial Court, National Capital Judicial
Region, a Petition for Declaratory Judgment and Prohibition with a prayer for Temporary
Restraining Order and Preliminary Injunction. The petitioners sought to enjoin the Secretary of
Education, Culture and Sports, the Board of Medical Education and the Center for Educational
Measurement from enforcing Section 5 (a) and (f) of Republic Act No. 2382, as amended, and
MECS Order No. 52, series of 1985, dated 23 August 1985 and from requiring the taking and
passing of the NMAT as a condition for securing certificates of eligibility for admission, from
proceeding with accepting applications for taking the NMAT and from administering the NMAT
as scheduled on 26 April 1987 and in the future. After hearing on the petition for issuance of
preliminary injunction, the trial court denied said petition. The NMAT was conducted and
administered as previously scheduled.
Issue:
whether Section 5 (a) and (f) of Republic Act No. 2382, as amended, offend against the
constitutional principle which forbids the undue delegation of legislative power, by failing to
establish the necessary standard to be followed by the delegate, the Board of Medical Education
Held:
The standards set for subordinate legislation in the exercise of rule making authority by
an administrative agency like the Board of Medical Education are necessarily broad and highly
abstract. The standard may be either expressed or implied. If the former, the non-delegation
objection is easily met. The standard though does not have to be spelled out specifically. It could
be implied from the policy and purpose of the act considered as a whole. In the Reflector Law,
clearly the legislative objective is public safety.
In this case, the necessary standards are set forth in Section 1 of the 1959 Medical Act: the
standardization and regulation of medical education and in Section 5 (a) and 7 of the same Act,
the body of the statute itself, and that these considered together are sufficient compliance with
the requirements of the non-delegation principle.
Belgica et. al. v. Ochoa et.al.
This case is consolidated with G.R. No. 208493 and G.R. No. 209251.
The so-called pork barrel system has been around in the Philippines since about 1922. Pork
Barrel is commonly known as the lump-sum, discretionary funds of the members of the
Congress. It underwent several legal designations from Congressional Pork Barrel to the latest
Priority Development Assistance Fund or PDAF. The allocation for the pork barrel is
integrated in the annual General Appropriations Act (GAA).
Since 2011, the allocation of the PDAF has been done in the following manner:

a. P70 million: for each member of the lower house; broken down to P40 million for hard
projects (infrastructure projects like roads, buildings, schools, etc.), and P30 million for soft
projects (scholarship grants, medical assistance, livelihood programs, IT development, etc.);
b. P200 million: for each senator; broken down to P100 million for hard projects, P100 million
for soft projects;
c. P200 million: for the Vice-President; broken down to P100 million for hard projects, P100
million for soft projects.
The PDAF articles in the GAA do provide for realignment of funds whereby certain cabinet
members may request for the realignment of funds into their department provided that the
request for realignment is approved or concurred by the legislator concerned.
Presidential Pork Barrel
The president does have his own source of fund albeit not included in the GAA. The so-called
presidential pork barrel comes from two sources: (a) the Malampaya Funds, from the
Malampaya Gas Project this has been around since 1976, and (b) the Presidential Social Fund
which is derived from the earnings of PAGCOR this has been around since about 1983.
Pork Barrel Scam Controversy
Ever since, the pork barrel system has been besieged by allegations of corruption. In July 2013,
six whistle blowers, headed by Benhur Luy, exposed that for the last decade, the corruption in
the pork barrel system had been facilitated by Janet Lim Napoles. Napoles had been helping
lawmakers in funneling their pork barrel funds into about 20 bogus NGOs (non-government
organizations) which would make it appear that government funds are being used in legit
existing projects but are in fact going to ghost projects. An audit was then conducted by the
Commission on Audit and the results thereof concurred with the exposes of Luy et al.
Motivated by the foregoing, Greco Belgica and several others, filed various petitions before the
Supreme Court questioning the constitutionality of the pork barrel system.
ISSUES:
I. Whether or not the congressional pork barrel system is constitutional.
II. Whether or not presidential pork barrel system is constitutional.
HELD:
I. No, the congressional pork barrel system is unconstitutional. It is unconstitutional because it
violates the following principles:
a. Separation of Powers
As a rule, the budgeting power lies in Congress. It regulates the release of funds (power of the
purse). The executive, on the other hand, implements the laws this includes the GAA to which
the PDAF is a part of. Only the executive may implement the law but under the pork barrel
system, whats happening was that, after the GAA, itself a law, was enacted, the legislators
themselves dictate as to which projects their PDAF funds should be allocated to a clear act of
implementing the law they enacted a violation of the principle of separation of powers. (Note
in the older case of PHILCONSA vs Enriquez, it was ruled that pork barrel, then called as CDF

or the Countrywide Development Fund, was constitutional insofar as the legislators only
recommend where their pork barrel funds go).
This is also highlighted by the fact that in realigning the PDAF, the executive will still have to
get the concurrence of the legislator concerned.
b. Non-delegability of Legislative Power
As a rule, the Constitution vests legislative power in Congress alone. (The Constitution does
grant the people legislative power but only insofar as the processes of referendum and initiative
are concerned). That being, legislative power cannot be delegated by Congress for it cannot
delegate further that which was delegated to it by the Constitution.
Exceptions to the rule are:
(i) delegated legislative power to local government units but this shall involve purely local
matters;
(ii) 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.
In this case, the PDAF articles which allow the individual legislator to identify the projects to
which his PDAF money should go to is a violation of the rule on non-delegability of legislative
power. The power to appropriate funds is solely lodged in Congress (in the two houses
comprising it) collectively and not lodged in the individual members. Further, nowhere in the
exceptions does it state that the Congress can delegate the power to the individual member of
Congress.
c. Principle of Checks and Balances
One feature in the principle of checks and balances is the power of the president to veto items in
the GAA which he may deem to be inappropriate. But this power is already being undermined
because of the fact that once the GAA is approved, the legislator can now identify the project to
which he will appropriate his PDAF. Under such system, how can the president veto the
appropriation made by the legislator if the appropriation is made after the approval of the GAA
again, Congress cannot choose a mode of budgeting which effectively renders the
constitutionally-given power of the President useless.
d. Local Autonomy
As a rule, the local governments have the power to manage their local affairs. Through their
Local Development Councils (LDCs), the LGUs can develop their own programs and policies
concerning their localities. But with the PDAF, particularly on the part of the members of the
house of representatives, whats happening is that a congressman can either bypass or duplicate a
project by the LDC and later on claim it as his own. This is an instance where the national
government (note, a congressman is a national officer) meddles with the affairs of the local
government and this is contrary to the State policy embodied in the Constitution on local
autonomy. Its good if thats all that is happening under the pork barrel system but worse, the
PDAF becomes more of a personal fund on the part of legislators.

II. Yes, the presidential pork barrel is valid.

The main issue raised by Belgica et al against the presidential pork barrel is that it is
unconstitutional because it violates Section 29 (1), Article VI of the Constitution which provides:
No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.
Belgica et al emphasized that the presidential pork comes from the earnings of the Malampaya
and PAGCOR and not from any appropriation from a particular legislation.
The Supreme Court disagrees as it ruled that PD 910, which created the Malampaya Fund, as
well as PD 1869 (as amended by PD 1993), which amended PAGCORs charter, provided for the
appropriation, to wit:
(i) PD 910: Section 8 thereof provides that all fees, among others, collected from certain energyrelated ventures shall form part of a special fund (the Malampaya Fund) which shall be used to
further finance energy resource development and for other purposes which the President may
direct;
(ii) PD 1869, as amended: Section 12 thereof provides that a part of PAGCORs earnings shall be
allocated to a General Fund (the Presidential Social Fund) which shall be used in government
infrastructure projects.
These are sufficient laws which met the requirement of Section 29, Article VI of the
Constitution. The appropriation contemplated therein does not have to be a particular
appropriation as it can be a general appropriation as in the case of PD 910 and PD 1869.

SECOND DIVISION

PACIFIC STEAM LAUNDRY, INC.,

Petitioner,

G.R. No. 165299

Present:
CARPIO, J., Chairperson,
LEONARDO-DE CASTRO,*
BRION,
DEL CASTILLO, and
ABAD, JJ.

- versus -

LAGUNA LAKE DEVELOPMENT

Promulgated:
AUTHORITY,
Respondent.
December 18, 2009
x-------------------------------------------------- x
DECISION
CARPIO, J.:
The Case
This is a petition for review[1] of the Decision[2] dated 30 June 2004 and the Resolution
dated 8 September 2004 of the Court of Appeals in CA-G.R. SP No. 75238.

The Facts
Petitioner Pacific Steam Laundry, Inc. (petitioner) is a company engaged in the business of
laundry services. On 6 June 2001, the Environmental Management Bureau of the Department of
Environment and Natural Resources (DENR) endorsed to respondent Laguna Lake
Development Authority (LLDA) the inspection report on the complaint of black smoke emission
from petitioners plant located at 114 Roosevelt Avenue, Quezon City.[3] On 22 June 2001,
LLDA conducted an investigation and found that untreated wastewater generated from
petitioners laundry washing activities was discharged directly to the San Francisco Del Monte
River. Furthermore, the Investigation Report[4] stated that petitioners plant was operating
without LLDA clearance, AC/PO-ESI, and Discharge Permit from LLDA. On 5 September 2001,
the Environmental Quality Management Division of LLDA conducted wastewater sampling of
petitioners effluent.[5] The result of the laboratory analysis showed non-compliance with
effluent standards particularly Total Suspended Solids (TSS), Biochemical Oxygen Demand
(BOD), Oil/Grease Concentration and Color Units. [6] Consequently, LLDA issued to petitioner a
Notice of Violation[7] dated 30 October 2001 which states:
THE GENERAL MANAGER

PACIFIC STEAM LAUNDRY, INC.

114 Roosevelt Avenue, Brgy. Paraiso
Quezon City
Subject: Notice of Violation
PH-01-10-303
Gentlemen:
This refers to the findings of the inspection and result of laboratory analysis of the
wastewater collected from your firm last 5 September 2001. Evaluation of the results of
laboratory analysis showed that your plants effluent failed to conform with the 1990 Revised
Effluent Standard for Inland Water Class C specifically in terms of TSS, BOD, Oil/Grease and
Color. (Please see attached laboratory analysis)
In view thereof, you are hereby directed to submit corrective measures to abate/control
the water pollution caused by your firm, within fifteen (15) days from receipt of this letter.
Furthermore, pursuant to Section 9 of Presidential Decree No. 984, PACIFIC STEAM
LAUNDRY, INC. is hereby ordered to pay a penalty of One Thousand Pesos (P1,000.00) per day
of discharging pollutive wastewater to be computed from 5 September 2001, the date of
inspection until full cessation of discharging pollutive wastewater and a fine of Five Thousand
Pesos (P5,000.00) per year for operating without the necessary clearance/permits from the
Authority.
Very truly yours,
(signed)
CALIXTO R. CATAQUIZ
General Manager

Petitioner submitted its application for LLDA Clearance and Discharge Permit and
informed LLDA that it would undertake the necessary measures to abate the water pollution.
[8]
On 1 March 2002, a compliance monitoring was conducted and the result of the laboratory
analysis[9] still showed non-compliance with effluent standards in terms of TSS, BOD, Chemical
Oxygen Demand (COD), and Oil/Grease Concentration. It was reported that petitioners
wastewater treatment facility was under construction. Subsequently, another wastewater
sampling was conducted on 25 April 2002 but the results [10] still failed to conform with the
effluent standards in terms of Oil/Grease Concentration.
Meanwhile, on 15 April 2002, a Pollution Control and Abatement case was filed against
petitioner before the LLDA. During the public hearing on 30 April 2002, LLDA informed
petitioner of its continuous non-compliance with the effluent standards. Petitioner requested for
another wastewater sampling which was conducted on 5 June 2002. The laboratory results [11] of
the wastewater sampling finally showed compliance with the effluent standard in all parameters.

On 9 August 2002, another public hearing was held to discuss the dismissal of the water
pollution case and the payment of the accumulated daily penalty. According to LLDA, the
penalty should be reckoned from 5 September 2001, the date of initial sampling, to 17 May
2002, the date LLDA received the request for re-sampling. Petitioner manifested that its
wastewater discharge was not on a daily basis. In its position paper [12] dated 25 August 2002,
petitioner prayed that the Notice of Violation dated 30 October 2001 be set aside and the penalty
and fine imposed be reckoned from the date of actual hearing on 15 April 2002.
On 16 September 2002, LLDA issued an Order to Pay, [13] the pertinent portion of which
reads:
Respondent prayed that the Notice of Violation issued on 30 October 2001
and its corresponding daily penalty be set aside and that the imposable penalty be
reckoned from the date of actual hearing and not on 5 September 2001. It is
respondents position that the Notice of Violation and the imposition of the
penalty had no legal and factual basis because it had already installed the
necessary wastewater treatment to abate the water pollution.
This Public Hearing Committee finds respondents arguments devoid of merit.
Presidential Decree No. 984 prohibits the discharge of pollutive wastewater and any person
found in violation thereof shall pay a fine not exceeding five thousand pesos (PhP5,000.00) [sic]
for every day during which such violation continues. The mere discharge of wastewater not
conforming with the effluent standard is the violation referred to in PD No. 984. Sample of
respondents effluent was collected on 5 September 2001 and the results of laboratory analysis
confirmed the quality thereof. Thus, a notice of violation was issued against the respondent after
it was established that its discharge was pollutive. The fact that the subsequent re-sampling
reported compliance with the effluent standard does not negate the 5 September 2001 initial
sampling. Respondent passed the standard because it already implemented remedial measures to
abate the water pollution. It is therefore but just and proper that the penalty should be imposed
from the date of initial sampling, 5 September 2001, to 17 May 2002, the date the request for resampling was received by the Authority. The 5 June 2002 sampling confirmed that respondents
effluent already complied with the standard showing that its water pollution has ceased.
Respondent did not submit any proof of its actual operation hence, the penalty shall be computed
for five (5) working days per week, excluding Saturdays and Sundays as well as legal holidays
from 5 September 2001 to 17 May 2002, for a total of one hundred seventy-two (172) days.
WHEREFORE, premises considered, respondent Pacific steam Laundry, Inc. is hereby
ordered to pay the accumulated daily penalty amounting to ONE HUNDRED SEVENTY-TWO
THOUSAND (PhP172,000.00) PESOS within fifteen(15) days from receipt hereof as a condition
sine qua non for the dismissal of the above-captioned case.
SO ORDERED.[14]
Petitioner filed a motion for reconsideration, which the LLDA denied in its Order [15] dated
27 November 2002.

Petitioner then filed with the Court of Appeals a petition for review under Rule 43 of the
Rules of Court. The Court of Appeals denied the petition, as well as the motion for
reconsideration filed by petitioner. Hence, this petition.

The Court of Appeals Ruling

The Court of Appeals held that LLDA has the power to impose fines, thus:
Concededly, the power to impose administrative fines in pollution
abatement cases was expressly granted under Section 9 of P.D. 984 to the now
defunct National Pollution Control Commission (NPCC), thus:
Section 9. Penalties. - (a) Any person found violating or
failing to comply with any order, decision or regulation of the
Commission for the control or abatement of pollution shall pay a
fine not exceeding five thousand pesos per day for every day
during which such violation or default continues; and
the Commission is hereby authorized and empowered to impose
the fine after due notice and hearing.
Nonetheless, it may be well to recall that the LLDA was created under
R.A. 4850 with the end view of promoting and accelerating the development and
balanced growth of the Laguna Lake area and the surrounding provinces, and
carrying out the development of the Laguna Lake Region with due regard and
adequate provisions for environmental management and control, preservation of
the quality of human life and ecological systems, and the preservation of undue
ecological disturbances, deterioration and pollution. To correct deficiencies
and clarify ambiguities that impede the accomplishment of the Authorities
goal, Former President Ferdinand E. Marcos promulgated P.D. 813. Finally, to
enable the LLDA to effectively perform its role, Former President Marcos further
issued E.O. 927, which granted the LLDA additional powers and functions, viz:
Section 4. Additional Powers and Functions. - The
authority shall have the following powers and functions:
xxx
(d) Make, alter or modify orders requiring the
discontinuance of pollution specifying the
conditions and time within which such
continuance must be accomplished.
xxx

(i)

Exercise such powers and perform such other

functions as may be necessary to carry out its duties and
responsibilities under this Executive order.

Indeed, the express grant of power to impose administrative fines as

couched in the language of P.D. 984 was not reproduced in E.O. 927, however, it
can be logically implied from LLDAs authority to exercise the power to make,
alter or modify orders requiring the discontinuance of pollution. In addition, the
clear intendment of E.O. 927 to clothe LLDA not only with the express powers
granted to it, but also those implied, incidental and necessary for the exercise of
its express powers can be easily discerned from the grant of the general power to
exercise (such) powers and perform such other functions as may be necessary to
carry out its duties and responsibilities.
This finds support in the wealth of authorities in American Jurisprudence,
citing adherence of other courts to the principle that the authority given to an
agency should be liberally construed in order to permit the agency to carry out its
statutory responsibilities. This is especially true where the agency is concerned
with protecting the public health and welfare, the delegation of authority to
the agency is liberally construed.
The LLDA, as an agency implementing pollution laws, rules and
regulations, should be given some measures of flexibility in its operations in order
not to hamper it unduly in the fulfillment of its objectives. How could it
effectively perform its role if in every act of violation, it must resort to other
venue for the appropriate remedy, because it is impotent by itself to punish or deal
with it?[16] (Emphasis in the original)
The Issues
Petitioner raises two issues:
1.

Does the respondent LLDA have the implied power to impose

as set forth in PD 984?

2.

Does
penalties

fines

the grant of implied power to LLDA to impose

violate the rule on non-delegation of legislative powers?[17]
The Ruling of the Court

We find the petition without merit.

Power of LLDA to Impose Fines

Petitioner asserts that LLDA has no power to impose fines since such power to impose
penal sanctions, which was once lodged with the National Pollution Control Commission
(NPCC), is now assumed by the Pollution Adjudication Board pursuant to Executive Order No.
192 (EO 192).[18]
We disagree with petitioner.
Presidential Decree No. 984 (PD 984)[19] created and established the NPCC under the
Office of the President. EO 192, which reorganized the DENR, created the Pollution
Adjudication Board under the Office of the DENR Secretary which assumed the powers and
functions of the NPCC with respect to adjudication of pollution cases.
Section 19 of EO 192 provides:
SEC. 19. Pollution Adjudication Board. There is hereby created a
Pollution Adjudication Board under the Office of the Secretary. The Board
shall be composed of the Secretary as Chairman, two (2) Undersecretaries as may
be designated by the Secretary, the Director of Environmental Management, and
three (3) others to be designated by the Secretary as members. The Board shall
assume the powers and functions of the Commission/Commissioners of the
National Pollution Control Commission with respect to the adjudication of
pollution cases under Republic Act 3931 and Presidential Decree 984,
particularly with respect to Section 6 letters e, f, g, j, k, and p of P.D. 984. The
Environmental Management Bureau shall serve as the Secretariat of the Board.
These powers and functions may be delegated to the regional officers of the
Department in accordance with rules and regulations to be promulgated by the
Board. (Emphasis supplied)
Section 6, paragraphs (e), (f), (g), (j), (k), and (p) of PD 984 referred to above states:
SEC. 6. Powers and Functions. The Commission shall have the
following powers and functions:
xxx
(e) Issue orders or decisions to compel compliance with the provisions of this Decree
and its implementing rules and regulations only after proper notice and hearing.
(f) Make, alter or modify orders requiring the discontinuance of pollution specifying the
conditions and the time within which such discontinuance must be accomplished.
(g) Issue, renew, or deny permits, under such conditions as it may
determine to be reasonable, for the prevention and abatement of pollution, for the
discharge of sewage, industrial waste, or for the installation or operation of
sewage works and industrial disposal system or parts thereof: Provided,
however, the Commission, by rules and regulations, may require subdivisions,
condominium, hospitals, public buildings and other similar human settlements to
put up appropriate central sewerage system and sewage treatment works, except
that no permits shall be required of any new sewage works or changes to or

extensions of existing works that discharge only domestic or sanitary wastes from
a single residential building provided with septic tanks or their equivalent. The
Commission may impose reasonable fees and charges for the issuance or renewal
of all permits herein required.
xxx
(j) Serve as arbitrator for the determination of reparations, or restitution of the damages
and losses resulting from pollution.
(k) Deputize in writing or request assistance of appropriate government agencies or
instrumentalities for the purpose of enforcing this Decree and its implementing rules and
regulations and the orders and decisions of the Commission.
xxx
(p) Exercise such powers and perform such other functions as may be necessary to carry
out its duties and responsibilities under this Decree.
On the other hand, LLDA is a special agency created under Republic Act No. 4850 (RA
4850) to manage and develop the Laguna Lake region, comprising of the provinces of Rizal
and Laguna and the cities of San Pablo, Manila, Pasay, Quezon and Caloocan. RA 4850, as
amended by Presidential Decree No. 813 (PD 813), [21] mandates LLDA to carry out the
development of the Laguna Lake region, with due regard and adequate provisions for
environmental management and control, preservation of the quality of human life and ecological
systems, and the prevention of undue ecological disturbances, deterioration and pollution.[22]
[20]

Under Executive Order No. 927 (EO 927), [23] LLDA is granted additional powers and
functions to effectively perform its role and to enlarge its prerogatives of monitoring, licensing
and enforcement, thus:
SECTION 4. Additional Powers and Functions. The Authority [LLDA] shall
have the following powers and functions:
a) Issue standards, rules and regulations to govern the approval of plans
and specifications for sewage works and industrial waste disposal systems and the
issuance of permits in accordance with the provisions of this Executive Order;
inspect the construction and maintenance of sewage works and industrial waste
disposal systems for compliance to plans.
b) Adopt, prescribe, and promulgate rules and regulations governing the Procedures of
the Authority with respect to hearings, plans, specifications, designs, and other data for sewage
works and industrial waste disposal system, the filing of reports, the issuance of permits, and
other rules and regulations for the proper implementation and enforcement of this Executive
Order.
c) Issue orders or decisions to compel compliance with the provisions of
this Executive Order and its implementing rules and regulations only after
proper notice and hearing.
d) Make, alter or modify orders requiring the discontinuance of pollution specifying
the conditions and the time within which such discontinuance must be accomplished.
e) Issue, renew or deny permits, under such conditions as it may determine to be
reasonable, for the prevention and abatement of pollution, for the discharge of sewage, industrial

waste, or for the installation or operation of sewage works and industrial disposal system or parts
thereof: Provided, however, that the Authority, by rules and regulations, may require
subdivisions, condominiums, hospitals, public buildings and other similar human settlements to
put up appropriate central sewerage system and sewage treatment works, except that no permits
shall be required of any new sewage works or changes to or extensions of existing works that
discharge only domestic or sanitary wastes from a single residential building provided with
septic tanks or their equivalent. The Authority may impose reasonable fees and charges for the
issuance or renewal of all permits herein required.
f) After due notice and hearing, the Authority may also revoke, suspend
or modify any permit issued under this Order whenever the same is necessary to
prevent or abate pollution.
g) Deputize in writing or request assistance of appropriate government agencies or
instrumentalities for the purpose of enforcing this executive Order and its implementing rules
and regulations and the orders and decision of the Authority.
(h) Authorize its representative to enter at all reasonable times any property of the public
dominion and private property devoted to industrial, manufacturing processing or commercial
use without doing damage, for the purpose of inspecting and investigating conditions relating to
pollution or possible or imminent pollution.
(i) Exercise such powers and perform such other functions as may be
necessary to carry out its duties and responsibilities under this Executive
Order. (Emphasis supplied)
A comparison of the powers and functions of the Pollution Adjudication Board and the
LLDA reveals substantial similarity. Both the Pollution Adjudication Board and the LLDA are
empowered, among others, to: (1) make, alter or modify orders requiring the discontinuance of
pollution; (2) issue, renew, or deny permits for the prevention and abatement of pollution, for the
discharge of sewage, industrial waste, or for the installation or operation of sewage works and
industrial disposal system; and (3) exercise such powers and perform such other functions
necessary to carry out their duties and responsibilities. The difference is that while Section 19 of
EO 192 vested the Pollution Adjudication Board with the specific power to adjudicate pollution
cases in general,[24] the scope of authority of LLDA to adjudicate pollution cases is limited to the
Laguna Lake region as defined by RA 4850, as amended.
Thus, in Laguna Lake Development Authority v. Court of Appeals,[25] the Court held that
the adjudication of pollution cases generally pertains to the Pollution Adjudication Board, except
where a special law, such as the LLDA Charter, provides for another forum. Indeed, even PD 984
authorizes the LLDA to undertake pollution control activities within LLDAs development area.
Section 10 of PD 984 provides:
SEC. 10. Jurisdiction. The Commission [NPCC] shall have no
jurisdiction over waterworks or sewage system operated by the Metropolitan
Waterworks Sewerage System, but the rules and regulations issued by the
Commission for the protection and prevention of pollution under the authority
herein granted shall supersede and prevail over any rules or regulations as may

heretofore have been issued by other government agencies or instrumentalities on

the same subject.
In case of development projects involving specific human settlement
sites or integrated regional or subregional projects, such as the Tondo
Foreshore Development Authority and the Laguna Lake Development
Authority, the Commission shall consult with the authorities charged with
the planning and execution of such projects to ensure that their pollution
control standards comply with those of the Commission. Once minimum
pollution standards are established and agreed upon, the development
authorities concerned may, by mutual agreement and prior consultation with
the Commission, undertake the pollution control activities themselves.
(Boldfacing and underscoring supplied)
In this case, the DENRs Environmental Management Bureau endorsed to LLDA the
pollution complaint against petitioner. Under Section 16 of EO 192, the Environmental
Management Bureau assumed the powers and functions of the NPCC except with respect to
adjudication of pollution cases, thus:
SEC. 16. Environmental Management Bureau. There is hereby created an
Environmental Management Bureau. The National Environmental Protection
Council (NEPC), the National Pollution Control Commission (NPCC) and the
Environmental Center of the Philippines (ECP), are hereby abolished and their
powers and functions are hereby integrated into the Environmental
Management Bureau in accordance with Section 24(c) hereof, subject to
Section 19hereof. x x x (Emphasis supplied)
The Environmental Management Bureau also serves as the Secretariat of the Pollution
Adjudication Board, and its Director is one of the members of the Pollution Adjudication Board.
Clearly, by endorsing to LLDA the pollution complaint against petitioner, the Environmental
Management Bureau deferred to LLDAs jurisdiction over the pollution complaint against
petitioner.
Although the Pollution Adjudication Board assumed the powers and functions of the
NPCC with respect to adjudication of pollution cases, this does not preclude LLDA from
assuming jurisdiction of pollution cases within its area of responsibility and to impose fines as
penalty.
Thus, in the recent case of The Alexandra Condominium Corporation v. Laguna Lake
Development Authority,[26] the Court affirmed the ruling of the Court of Appeals which sustained
LLDAs Order, requiring petitioner therein to pay a fine of P1,062,000 representing penalty for
pollutive wastewater discharge. Although petitioner in that case did not challenge LLDAs
authority to impose fine, the Court acknowledged the power of LLDA to impose fines, holding
that under Section 4-A of RA 4850, as amended, LLDA is entitled to compensation for damages
resulting from failure to meet established water and effluent standards. Section 4-A of RA 4850,
as amended, reads:

SEC. 4-A. Compensation for damages to the water and aquatic resources of
Laguna de Bay and its tributaries resulting from failure to meet established water
and effluent quality standards or from such other wrongful act or omission of a
person, private or public, juridical or otherwise, punishable under the law shall be
awarded to the Authority to be earmarked for water quality control and
management.
Under Section 4(h) of EO 927, LLDA may exercise such powers and perform such other
functions as may be necessary to carry out its duties and responsibilities. InLaguna Lake
Development Authority v. Court of Appeals,[27] the Court upheld the power of LLDA to issue
an ex-parte cease and desist order even if such power is not expressly conferred by law, holding
that an administrative agency has also such powers as are necessarily implied in the exercise of
its express powers. The Court ruled that LLDA, in the exercise of its express powers under its
charter, as a regulatory and quasi-judicial body with respect to pollution cases in the Laguna
Lake region, has the implied authority to issue a cease and desist order. In the same manner,
we hold that the LLDA has the power to impose fines in the exercise of its function as a
regulatory and quasi-judicial body with respect to pollution cases in the Laguna Lake region.
No Undue Delegation of Legislative Power
Petitioner contends that if LLDA is deemed to have implied power to impose penalties,
then LLDA will have unfettered discretion to determine for itself the penalties it may impose,
which will amount to undue delegation of legislative power.
We do not agree. Contrary to petitioners contention, LLDAs power to impose fines is not
unrestricted. In this case, LLDA investigated the pollution complaint against petitioner
and conducted wastewater sampling of petitioners effluent. It was only after the investigation
result showing petitioners failure to meet the established water and effluent quality standards
that LLDA imposed a fine against petitioner. LLDA then imposed upon petitioner a penalty
of P1,000 per day of discharging pollutive wastewater. TheP1,000 penalty per day is in
accordance with the amount of penalty prescribed under PD 984:
SEC. 8. Prohibitions. No person shall throw, run, drain, or otherwise
dispose into any of the water, air and/or land resources of the Philippines, or
cause, permit, suffer to be thrown, run, drain, allow to seep or otherwise
dispose thereto any organic or inorganic matter or any substance in gaseous
or liquid form that shall cause pollution thereof.
xxx
SEC 9. Penalties. x x x
(b) Any person who shall violate any of the previous provisions of Section Eight of this
Decree or its implementing rules and regulations, or any Order or Decision of the
Commission, shall be liable to a penalty of not to exceed one thousand pesos each day
during which the violation continues, or by imprisonment of from two years to six years, or by
both fine and imprisonment, and in addition such person may be required or enjoined from
continuing such violation as hereinafter provided.

x x x (Emphasis supplied)
Clearly, there are adequate statutory limitations on LLDAs power to impose fines which
obviates unbridled discretion in the exercise of such power.
WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 30 June 2004
and the Resolution dated 8 September 2004 of the Court of Appeals in CA-G.R. SP No. 75238.
SO ORDERED.