Part III - Admin Law Cases - Dean Roy 2D 2012

Part III | Admin Law Cases | Dean Roy
2D 2012
III. POWERS AND FUNCTIONS OF ADMINISTRATIVE AGENCIES

A.
SOURCES AND SCOPE

1.
GUERZON V CA
FACTS
Petitioner executed with Basic Landoil Energy Corp (later acquired by Shell) a Service Station Lease and Dealers Sales
Contract. Respondent Bureau of Energy Utilization (BEU) approved the latter contract and issued a Certificate of Authority
in Petitioners favor. After the contract, respondent Shell wrote Guerzon informing him that they are not renewing the
contract. A copy of said letter was furnished to BEU. Thereafter, BEU issued an order directing petitioner to vacate the
premises and to show cause in writing why no administrative order and/or criminal proceedings shall be instituted for his
violations.
Shell was able to secure the possession of the gas station. Guerzon then filed with the RTC a complaint but such was
dismissed for lack of jurisdiction to annuk the order of a quasi-judicial body of equivalent category as the RTC.
ISSUES
W/N the BEU has the authority to order petitioner to vacate the premises.
RULING
NO. The power of an administrative agency has only such powers as are expressly granted (here PD 1206) to it by law and
those that are necessarily implied in the exercise thereof. Said PD states that after notice and hearing, it can impose and
collect a fine and failure to pay the fine or to cease and discontinue the violation of the law (i.e. illegal trading in petroleum
products) shall be sufficient reason for suspension, closure or stoppage of operations.
Nowhere in the order is it stated that petitioner engaged inillegal trading or any other violation of BP 33. It merely made a
vague reference to violation of BEU laws, rules and regulation. The BEU (like its predecessor, the Oil Industry
Commission) has no power to decide contractual disputes between gasonline dealers and oil companies. It cannot order
petitioner to vacate the premises as this is an appropriate case in the vicil courts for unlawful detainer. Assuming arguendo
that it did had the authority, it still failed to comply with the requirement of notice and hearing.
NOTE: Nevertheless,petitioner could not require that possession be given to him as the contract was not renewed.
2.
LASTIMOSA V VASQUEZ
FACTS
Petitioner is First Asst. Provincial Prosecutor or Cebu. She and the Provincial Prosecutor refused or failed to file a criminal
charge of attempted rape against Municipal Mayor Rogelio Ilustrisimo. Petitioner was filed with an administrative complaint
for grave misconduct, insubordination, gross neglect of duty and maliciously refraining from prosecuting crime and a charge
for indirect contempt. They were also placed under 6 mos preventive suspension.
Prior to this, a complaint was assigned to a graft investigation officer who found no prima facie evidence and recommended
dismissal. However, the Ombudsman Vasquex disapproved the recommendation and directed that the Mayor be charged in
the RTC. The Deputy Ombudsman for Visayas then referred the matter to the Provincial Prosecutor and later to petitioner.
Petitioner found that only acts of lasciviousness have been committed and filed a case under such.
ISSUES
W/N the Ombudsman has authority to file an administrative case against the petitioners and preventively suspend them.
RULING
YES.The Ombudsmans power to investigate and prosecute include the investigation and prosecution of any crime
committed by a public official regardless if such were related to, or connected with, or arise from, the performance of his
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official duty. The Ombudsman is authorized to call on prosecutors for assistance under S31 fo RA 6770 . When a
prosecutor is deputized, he is subject to supervision and control of the Ombudsman. Such supervision and control would
mean that they can alter, repeal or modify findings of their subordinates. The office also has the power to punish for
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contempt under Rule 71, S3 of the Rules of Court .
1
2
Ombudsman Act of 1989

The case does not resolve the issue of w/n petitioners refusal amounted to defiance of orders. Only the power to cite for contempt was established.
ANTONIO | CABRAL | CRUZ | HIPOLITO | MENDOZA J | MENDOZA R | SIRON | SOLLER

3.
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MATIENZO V ABELLERA
FACTS
Petitioners and private respondents are taxicab operators in Metro Manila. The respondents, however, admit to operate
colorum or kabit taxis, thus, they applied for legalization of their unauthorized excess tacis citing PD 101. Respondent Board
set such applications for hearing and granted provisional authority to operate. Petitioners argue that the Board cannot do
this as the six month period in the Transitory Provision has lapsed and has become functus officio.
ISSUES
W/N the board can grant such permits.
RULING
YES. The power vested by PD 101 to BOT was to grant special permits of limited term for the operation of public utility
motor vehicles as may, in the judgment of the Board, be necessary to replace or convert clandestine operators into
legitimate and responsible operators. Such power remains even after the six months prescribed in the law as such period
merely provides for the withdrawal of the States waiver of its right to punish said colorum operators. Notice and hearing are
not required for the grant of such temporary authority because of its provisional nature and that the primary application shall
be given a full hearing.
To determine whether a Board or Commission has power, it should be (1) liberally construed in light of its purpose for which
is was created and (2) that incidentally necessary to a full implementation of legislative intent as being germane to the law.
Thus, the BOR shall, from time to tim,e, re-study the public need for publit utilities in any area int he Phils for the purpose of
re-evaluating the policies.
4.
PASEI V TORRES
FACTS
Phil. Asso. Of Service Exporters Inc is the largest national org of private employment and recruitment agencies duly licensed
and authorized by the POEA for landbased workers, including domestic helpers. Due to the abuses suffered by DHs, DOLE
Sec. Torres issues Dept. Order 16, temporarily suspending the reecruitment of DH in HK. Pursuant to such, POEA issued
Memo Circ. 30 providing guidelines on the Govt processing and deployment of DH to HK and accreditation of HK
recruitment agencies.
ISSUES
W/N the DOLE and POEA acted in grave abuse of discretion in creating such order and circulars.
RULING
The vesture of quasi-legislative and quasi-judicial powers are not unconstitutional, unreasonable and oppressive as it is
necessitated by the growing complezity of the modern society. The power to restrict and regulate under Art 36 of the Labor
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Code involves a grant of police power. The circulars do NOT prohibit petitioner from recruiting and deployment of OFWs.
Nevertheless, it cannot be implemented because of lack of publication.
5.
REALTY EXCHANGE VENTURE CORP. V SENDINO
FACTS
Respondent Sendino entered into a reservation agreement with petitioner Realty Exchange Venture, Inc. (REVI) for a lot
located in Raymondville Subdivision in Sucat for P307,800. Sendino paid a total of P5000 as reservation fee.
Six months thereafter Sendino paid 16K as downpayment. She was however advised by REVI to change her co-maker.
Sendino agreed, to which she asked for an extension of one month or so. For alleged non-compliance with the appropriate
documentary requirements, REVI unilaterally rescinded the contract.
Sendino sued for Specific Performance against REVI with the Office of Appeals, Adjudication and Legal Affairs (OAALA) of
the HLURB.
REVI argued that OAALA-HLURB has no jurisdiction to hear and decide the case because EO 90 which created the HLURB
did not grant such powers to it. Although such quasi-judicial function was exercised by the Human Settlements Regulatory
Commission (HSRC), HLURBs predecessor.
Art. 36 Regulatory Power the Sec. Of labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this
title (Regulation of Recruitment and Placement activities) and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and
implement the provisions of this title.
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ISSUES
1.
2.
Whether the HLURB has quasi-judicial functions notwithstanding the absence of such grant of power by EO 90.
Whether a decision can be rendered by OAALA- a subordinate office of the Board of Commissioners.
RULING
1. YES. The HLURB has quasi-judicial functions.
Although such power was not granted by the law creating the HLURB, it can be implied from the fact that HLURB is the
sole regulatory board for housing and land development. HLURB would have been reduced to a functionally sterile entity
if it lacked the powers exercised by its predecessor, the HSRC, which included the power to settle disputes concerning
land use.
2.
YES. The Board of Commissioners may delegate such function to the OAALA.
The power conferred upon an administrative agency to issue rules and regulations necessary to carry out its functions
has been held to be an adequate source of authority to delegate a particular function. The board may adopt rules of
procedure for the conduct of its business for the effective accomplishment of its mandated functions.
6.
MSEI V SEC
FACTS
The Securities and Exchange Commission denied the Makati Stock Exchange, Inc., permission to operate a stock exchange
unless it agreed not to list for trading on its board, securities already listed in the Manila Stock Exchange.
ISSUE
Whether the SEC may in the public interest validly impose such a condition?
RULING
NO. It is fundamental that an administrative officer has only such powers as are expressly granted to him by the statue, and
those necessarily implied in the exercise thereof. The SEC cites no provision of law supporting its rule. Neither did the
Commission make any explanation on how it could be necessary in the performance of its functions. For all practical
purposes the SECs order would make it impossible for MSEI to operate. So its permission would really amount to a
prohibition.
The Legislature has specified the conditions under which a stock exchange may legally obtain a permit; it is not for the SEC
to impose others.
B.
(EXECUTIVE)/ADMINISTRATIVE FUNCTIONS
1.
PICOP V DEPUTY EXECUTIVE SECRETARY
FACTS
PICOP was granted a Timber License Agreement (TLA 43-1) covering lands in Agusan and Surigao. In 1960 the Bureau of
Forestry, headed by Genio, drew the boundary line (Genio Line) of PICOPs concession area. In 1969, the western boundary
of PICOPs TLA was amended to conform with the western boundary line established by the Genio line. This amendment
was embodied in PICOPs TLA 43-3.
DMPI was also the grantee of an Ordinary Timber License (OTL). In 1967 the concession area of DMPI was consolidated
with others. PICOPs and DMPIs concession areas are adjacent to each other, with the eastern boundary of DMPI being
common with the western boundary of PICOP.
The Sec. of the Ministry of Natl Resources ordered the correction of PICOPs TLA. The Ministry found that TLA 43-3 of
PICOP is erroneous because it deprived DMPI of an area to which it is entitled.
ISSUE
W/N the Ministry of Natural Resources may order the corrections of the boundaries?
RULING
YES. The Court held that the powers granted to the Secretary of Natural Resources by law regarding the disposition of
public lands such as granting of licenses, permits, leases and contracts or approving, rejecting, reinstating or cancelling
applications or deciding conflicting applications, are all executive and administrative in nature. It is a well recognized
principle that purely administrative functions may not be interfered with by the courts.

2.
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EVANGELISTA V JARENCIO
FACTS
The President created the Presidential Agency on Reforms and Government Operations (PARGO). Its main function being to
investigate all cases of graft, and to submit the proper recommendation to the President. For a realistic performance of these
functions, the President vested this agency all investigating powers including the power to summon witnesses by subpoena
ad testificandum or duces tecum, administer oaths, take testimony or evidence relevant to the investigation.
Usec Evangelista issued a subpoena ad testificandum to Manalastas, commanding him to be a witness for the PARGO, and
testify in a certain investigation being conducted by the Agency.
Manalastas petitioned the CFI of Manila to issue a TRO against PARGO. He was also assailing the legality of the subpoena.
ISSUE
W/N the PARGO, an executive office, enjoys the authority to issue subpoenas in its conduct of fact finding investigation.
RULING
YES. An administrative agency may be authorized to make investigations in proceedings for the sole purpose of obtaining
information on which future action of a legislative or judicial nature may be taken. The subpoena power of PARGO is not
confined to mere quasi-judicial functions but may also be used to meet the very purpose of its creation, to forestall and erode
nefarious activities and anomalies in the civil service.
Administrative agencies may issue administrative subpoenas in the course of investigations whether or not
adjudication is involved and whether or not probable cause is shown.
C.
ADMINISTRATIVE CONSTRUCTION AND INTERPRETATION

1. ESPANOL v CHAIRMAN and MEMBERS OF THE BOARD OF ADMINISTRATORS, PHIL. VETERANS
ADMINISTRATION
FACTS
Espanol was a widow of a deceased veteran, who died in the service during WWII. She applied for a monthly pension under
RA 65 with the PVA. It was approved and she received her monthly pension and her minor children their monthly
dependent's pension.
However, the PVA cancelled her monthly pension as well as the minor children's, in accordance with an administrative policy
stating that beneficiaries of veterans receiving pension from the US Veterans Administration are no longer entitled to receive
pension from PVA.
After more than 22 years, Espanol filed a petition against PVA for the restoration and continued payment of her monthly
pension, including that of her minor children. CFI of Manila ruled in favor of Espanol.
ISSUES
1. W/N the action to restore her monthly pension and that of her children has already prescribed
2. W/N there was a need for prior exhaustion of administrative remedies
3. W/N a corresponding appropriation is necessary before PVA can disburse public funds to restore her pension
HELD
1. NO. Art. 1144 of the NCC provides for a 10-year prescription for actions based on an obligation created by law. Espanol
cannot be said to have a cause of action, in compelling PVA to continue paying her monthly pension because PVA's act of
cancellation, being pursuant to an administrative policy, cannot be considered a violation of her right to receive her monthly
pension.
It is a rule in admin law that admin regulations and policies enacted by admin bodies to interpret the law which they are
entrusted to enforce, have the force of law, are entitled to great respect and have in their favor a presumption of legality.
Thus, the cancellation of Espanol's monthly pension, being presumed valid, cannot be considered as a violation of Espanol's
right to receive monthly pension under RA 65. It is only when the Court declares such policy invalid will the prescription
period begin to run.
2. NO. It is a rule that when a case involves solely legal questions, as in this case, the litigant (Espanol) need not exhaust all
administrative remedies before judicial relief is sought.
3. NO. Espanol does not seek to recover increased benefits under RA 5753 (which increased the pension of totally disabled
veterans of WWII and their living dependents--needs prior appropriation), but for the restoration of her monthly pension and
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her children's monthly dependent's pension under RA 65, the coverage of which Congress had already appropriated.
2. VICTORIAS MILLING COMPANY v SOCIAL SECURITY COMMISSION
FACTS
In 1958, the SSC issued a circular (no. 22) providing that bonuses and overtime pay shall be included in the computation of
the employers' and employees' respective monthly premium contributions.
However, Victorias Milling protested such circular and contended that it was contradictory to a previous circular (no. 7),
which expressly excluded bonuses and overtime from the computation. Moreover, it challenged the validity of the circular for
lack of authority on the part of SSC to promulgate it without the approval of the President and for lack of publication in the
OG.
The SSC ruled that the circular is not a rule or regulation that needed the approval of the President and publication to be
effective, but an administrative interpretation of the statute, a mere statement of general policy or opinion as to how the law
should be construed.
ISSUE
W/N Circular No. 22 is a rule or regulation that requires presidential approval and publication in the OG for its effectivity
HELD
NO. There is a distinction between an admin rule or regulation and an admin interpretation of a law whose enforcement is
entrusted to an admin body. When an administrative agency promulgates rules and regulations, it "makes" a new law with
the force and effect of a valid law, while when it renders an opinion or gives a statement of policy, it merely interprets a preexisting law. Rules and regulations when promulgated in pursuance of the procedure or authority conferred upon the
administrative agency by law, partake of the nature of a statute, and compliance therewith may be enforced by a penal
sanction provided in the law. This is so because statutes are usually couched in general terms, after expressing the policy,
purposes, objectives, remedies and sanctions intended by the legislature. The details and the manner of carrying out the law
are often times left to the administrative agency entrusted with its enforcement. In this sense, it has been said that rules and
regulations are the product of a delegated power to create new or additional legal provisions that have the effect of law.
The SSC issued Circular No. 22 to apprise those concerned of the interpretation and understanding of the Commission of
the law, as amended, which it was its duty to enforce. It did not add any duty or detail that was not already in the law as
amended. It merely stated and circularized the opinion of the Commission as to how the law should be construed--that the
exemption of bonuses, allowances and overtime pay was deleted by the amendatory law.
Circular No. 22 merely advised employers-members of the system of what they should include in the determination of the
monthly compensation of their employees upon which the contributions are based.
3. HILADO v CIR and CTA
FACTS
Emilio Hilado filed his income tax return for 1951 with the treasurer of Bacolod City, claiming a deductible item of P12,837.65
from his gross income pursuant to General Circular V-123 issued by the Collector of Internal Revenue, pursuant to rules laid
down by the Secretary of Finance. The Secretary of Finance, through the Collector, issued General Circular V-139 which
revoked and declared void Circular V-123; and laid down the rule[s] that losses of property which occurred in World War II
from fires, storms, shipwreck or other casualty, or from robbery, theft, or embezzlement are deductible in the year of actual
loss or destruction of said property. As a consequence, the deductions were disallowed.
ISSUE
W/N the Secretary of Finance acted without valid authority in revoking V-123 and approving V-139 in lieu thereof
HELD
NO. The Secretary of Finance is vested with authority to revoke, repeal or abrogate the acts or previous rulings of his
predecessor in office because the construction of a statute by those administering it is not binding on their successors if
thereafter the latter becomes satisfied that a different construction should be given.
Moreover, since V-123, having been issued on a wrong construction of the law, it cannot give rise to a vested right that can
be invoked by a taxpayer. A vested right cannot spring from a wrong interpretation
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4. CO V CA
FACTS
(1983)Co, under an agreement with a salvaging firm to salvage and refloat a sunken vessel, issued a check to the same in
consideration of his share in the expenses of salvage operations. The salvage company presented the check to the bank
and was dishonoured because of closed account.
Co was charged with violation of BP 22, bouncing checks law, before the RTC of Pasay and was eventually convicted.
He assails his conviction on the ground that the appellate courts relied on Que vs people (1987 case-Que doctrine for
brevity) which pronounces that a check issued merely to guarantee the performance of an obligation is covered by BP 22,
thus unlawful. According to Co, the proper rule is that stated in the Circular No. 4 of the ministry of justice (1981) which did
not consider the delivery of a rubber or bouncing check as a guarantee for an obligation as a punishable offense. The said
circular was reversed by circular no. 12 one year after Co had delivered the bouncing check to the complainant- stating that
it shall then be unlawful for an individual to issue bouncing checks as a guarantee to an obligation.
ISSUE
Which rule to follow, the Que doctrine (1987) or the Minsitry circular (1981)?
HELD
Ministry Circular (1981). The issuance of the check that bounced was in 1983, 4 years prior to the promulgation of the
judgement in Que. Since judicial decisions form part of the legal system of the Philippines and that laws shall have no
retroactive effect unless the contrary is provided, the doctrine enunciated in Que must only apply to future conditions i.e.
1987 onwards.
Principle of prospectivity. The principle of prospectivity has also been applied to judicial decisions which although, in
themselves not laws, are nevertheless evidence of what the law means. The reason being is that under Art 8 of the NCC,
Judicial decisions applying or interpreting the laws of the constitution shall form a part of the legal system. The weight of
authority is decidedly in favour of the proposition that the Que doctrine should not be applied. It should not be given a
retroactive effect to the prejudice of the petitioner and other persons similarly situated, who relied on the official opinion of
the Minister of justice that such a check did not fall within the scope of the BP 22.
D.
PROMULGATION OF RULES
1.
TAXICAB OPERATORS V BOT
FACTS
Pursuant to the charter of bureau of transportation, it issued a memorandum circular prohibiting the use of cars more than 6
years of age from operating as taxicab within the area of Manila or any other place in Luzon accessible to vehicular traffic.
To execute this, an implementing circular was issued phasing out particular vehicles which are more than 6 years of age
from registration and operating as public utility vehicles. The petitioners assail such circulars for violating their right to due
process.
ISSUE
In issuing a circular of BOT, are previous notice and hearing required?
HELD
NO. It is not mandatory that it should first call a conference or require the submission of position papers or other documents
from operators or persons who may be affected, this being only one of the options open to the Board which is given wide
discretionary authority. Petitioners cannot thus claim that they were denied of procedural due process.
As held in one case cited Previous notice and hearing as elements of due process, are constitutionally required for the
protection of life or vested property rights, as well as of liberty, when its limitation or loss takes place in consequence of a
judicial or quasi-judicial proceeding, generally dependent upon a past act or event which has to be established or
ascertained. It is not essential to the validity of general rules or regulations promulgated to govern future conduct of a class
or persons or enterprises, unless the law provides otherwise.
2.
TANADA V TUVERA
FACTS
Art 2 of the NCC states: Laws shall take effect after fifteen days following the completion of their publication in the Official
Gazette, unless it is otherwise provided.
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Petitioners invoke due process for publication of certain laws to comply with the requirement of publication pursuant to article
2 of the NCC. The public respondents on the other hand assert that publication is not required as indicated in the clause
unless it is otherwise provided
ISSUE
Whether publication is required in all laws.
HELD
YES. The clause unless it is otherwise provided refers to the date of effectivity and not to the requirement of publication
itself, which cannot in any way be omitted. The clause does not mean that the legislature may make the law effective
immediately upon approval, or on any other date, without its previous publication.
Publication is indispensible in every case, but the legislature may in its discretion provide that the usual fifteen day period
shall be shortened or extended. Thus, all statutes, including those of local application and private laws, shall be published as
a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity date is fixed by the
legislature.
3.
PHIL. CONSUMERS FOUNDATION INC V SECRETARY OF EDUCATION
FACTS
In 1987, the Task Force on Private Higher Education submitted a report, which favorably recommended to the DECS
courses of action with respect to the Government's policy on increases in school fees for SY 1987-1988.
On this basis, the Secretary of DECS issued an order authorizing a 15-20% increase in school fees as recommended by the
Task Force. Philippine Consumers Foundation Inc (PCFI) opposed the order on the ground that the increases were too high.
DECS issued Dept Order No. 37 reducing the increases to a lower ceiling of 10-15%. Again, PCFI opposed.
ISSUE
W/N DECS has the power to prescribe school fees
HELD
YES. In the absence of a statute stating otherwise, this power includes the power to prescribe school fees. No other
government agency has been vested with the authority to fix school fees and as such, the power should be considered
lodged with the DECS if it is to properly and effectively discharge its functions and duties under the law.
The function of prescribing rates by an administrative agency may be either a legislative or an adjudicative function. If it were
a legislative function, the grant of prior notice and hearing to the affected parties is not a requirement of due process. As
regards rates prescribed by an administrative agency in the exercise of its quasi-judicial function, prior notice and hearing
are essential to the validity of such rates. When the rules and/or rates laid down by an administrative agency are meant to
apply to all enterprises of a given kind throughout the country, they may partake of a legislative character. Where the rules
and the rates imposed apply exclusively to a particular party, based upon a finding of fact, then its function is quasi-judicial in
character.
Is Department Order No. 37 issued by the DECS in the exercise of its legislative function? YES. The assailed Department
Order prescribes the maximum school fees that may be charged by all private schools in the country for SY 1987 to 1988.
This being so, prior notice and hearing are not essential to the validity of its issuance.
4.
PHILCOMSAT V ALCUAZ
FACTS
By virtue of Republic Act 5514, the Philippine Communications Satellite Corporation (PHILCOMSAT) was granted a
franchise to establish, construct, maintain and operate in the Philippines, at such places as the grantee may select, station or
stations and associated equipment and facilities for international satellite communications, the authority to construct and
operate such ground facilities as needed to deliver telecommunications services from the communications satellite system
and ground terminal or terminals. By designation of the Republic of the Philippines, it is also the sole signatory for the
Philippines in the Agreement and the Operating Agreement relating to the International Telecommunications Satellite
Organization (INTELSAT), as well as in the Convention and the Operating Agreement of the International Maritime Satellite
Organization (INMARSAT), which two global commercial telecommunications satellite corporations were collectively
established by various states in line with the principles set forth in Resolution 1721 (XVI) of the United Nationss General
Assembly. Since 1968, It has been leasing its satellite circuits to PLDT, Philippine Global Communications, Eastern
Telecom, Globe Mackay Cable and Radio Corp. ITT, and Capitol Wireless or their predecessors-in-interest. The satellite
services thus provided by PHILCOMSAT enable said international carriers to serve the public with indispensable
communication services, such as overseas telephone, telex, facsimile, telegrams, high speed data, live television in full
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color, and television standard conversion from European to American or vice versa. It was exempt from the jurisdiction of the
then Public Service Commission, now National Telecommunications Commission (NTC). However, pursuant to Executive
Order (EO) 196 issued on 17 June 1987, it was placed under the jurisdiction, control and regulation of NTC, including all its
facilities and services and the fixing of rates. Implementing said executive order, NTC required PHILCOMSAT to apply for
the requisite certificate of public convenience and necessity covering its facilities and the services it renders, as well as the
corresponding authority to charge rates therefor. On 9 September 1987, PHILCOMSAT filed with NTC an application for
authority to continue operating and maintaining the same facilities it has been continuously operating and maintaining since
1967, to continue providing the international satellite communications services it has likewise been providing since 1967, and
to charge the current rates applied for in rendering such services. Pending hearing, it also applied for a provisional authority
so that it can continue to operate and maintain the facilities, provide the services and charge therefor the aforesaid rates
therein applied for. On 16 September 1987, PHILCOMSAT was granted a provisional authority to continue operating its
existing facilities, to render the services it was then offering, and to charge the rates it was then charging. This authority was
valid for 6 months from the date of said order. When said provisional authority expired on 17 March 1988, it was extended for
another 6 months, or up to 16 September 1988. Thereafter, the NTC further extended the provisional authority of
PHILCOMSAT for another 6 months, counted from 16 September 1988, but it directed PHILCOMSAT to charge modified
reduced rates through a reduction of 15% on the present authorized rates. PHILCOMSAT assailed said order.
ISSUE
W/N the NTC is required to provide notice and hearing to PHILCOMSAT in its rate-fixing order, which fixed a temporary rate
pending final determination of PHILCOMSATs application.
HELD
YES. The NTC, in the exercise of its rate-fixing power, is limited by the requirements of public safety, public interest,
reasonable feasibility and reasonable rates, which conjointly more than satisfy the requirements of a valid delegation of
legislative power. The NTC order violates procedural due process because it was issued motu proprio, without notice to
PHILCOMSAT and without the benefit of a hearing. Said order was based merely on an initial evaluation, which is a
unilateral evaluation, but had PHILCOMSAT been given an opportunity to present its side before the order in question was
issued, the confiscatory nature of the rate reduction and the consequent deterioration of the public service could have been
shown and demonstrated to NTC. The order pertains exclusively to PHILCOMSAT and to no other. Reduction of rates was
made without affording PHILCOMSAT the benefit of an explanation as to what particular aspect or aspects of the financial
statements warranted a corresponding rate reduction. PHILCOMSAT was not even afforded the opportunity to crossexamine the inspector who issued the report on which NTC based its questioned order. While the NTC may fix a temporary
rate pending final determination of the application of PHILCOMSAT, such rate-fixing order, temporary though it may be, is
not exempt from the statutory procedural requirements of notice and hearing, as well as the requirement of reasonableness.
Assuming that such power is vested in NTC, it may not exercise the same in an arbitrary and confiscatory manner.
Categorizing such an order as temporary in nature does not perforce entail the applicability of a different rule of statutory
procedure than would otherwise be applied to any other order on the same matter unless otherwise provided by the
applicable law. NTC has no authority to make such order without first giving PHILCOMSAT a hearing, whether the order be
temporary or permanent, and it is immaterial whether the same is made upon a complaint, a summary investigation, or upon
the commissions own motion.
5.
RCPI V NTC and PLDT
FACTS
In 1984, PLDT filed an application with NTC for the Approval of Rates for Digital Transmission Service Facilities, which was
provisionally approved and set the case for hearing within the prescribed 30-day period allowed by law. NTC issued a notice
of hearing, setting PLDT's application for hearing on Feb 22, 1984 at 9:30AM.
In this notice of hearing, petitioners, RCPI and Clavecilla Radio System were not included in the list of affected parties (only
Phil. Telegraph & Telephone Corp. was included). At the hearing, PT&T Co. (along with other petitioners) appeared and
moved for some time within which to file an opposition or reply to said application. They alleged that neither NTC nor PLDT
informed them of the existence of this provisional authority and that the application filed by respondent PLDT is not for
approval of rates as its caption misleadingly indicates but for authority to engage in new services not covered by private
respondent's franchise and certificate of public convenience and necessity. Petitioners further claimed that PLDT is limited
by its legislative franchise to render only "radiotelephonic services," exclusive of "radiotelegraphic or record services." Thus,
the issuance of the provisional authority by NTC without notice and hearing constitutes grave abuse of discretion inasmuch
as such power or prerogative exists only for rate cases under Section 16(c) of the Public Service Act.
ISSUE
W/N NTC gravely abused its discretion amounting to excess or lack of jurisdiction in issuing a provisional authority in favor of
PLDT, without prior notice to RCPI, PT&T Corp. and Clavecilla Radio System
HELD
NO. Section 16(c) of the Public Service Act provides for the fixing of rates, by the NTC, which shall be imposed and
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observed by any public service, as follows:

Sec. 16 (c). To fix and determine individual and joint rates, tolls, charges, classifications, or schedules thereof, as well as
commutation, mileage, kilometrage, and other special rates which shall be imposed, observed and followed thereafter by any
public service: Provided, That the Commission may, in its discretion, approve rates proposed by public services provisionally
and without necessity of any hearing but it shall call a hearing thereon within thirty days, thereafter, upon publication and notice
to the concerns operating in the territory affected: Provided, further That in case the public service equipment of an operator is
used principally or secondarily for the promotion of a private business shall be considered in relation with the public service of
such operator for the purpose of fixing the rates.
The Public Service Commission found that the application involved in the present petition is actually an application for
approval of rates for digital transmission service facilities which it may approve provisionally and without the necessity of any
notice and hearing as provided in the above-quoted provision of law.
Well-settled is the rule that the Public Service Commission now is empowered to approve provisionally rates of utilities
without the necessity of a prior hearing. Under the Public Service Act, as amended, the NTC can fix a provisional amount for
the subscriber's investment to be effective immediately, without hearing. Further, the Public Service Act makes no distinction
between initial or revised rates. These rates are necessarily proposed merely, until the Commission approves them.
Moreover, the Commission can hear and approve revised rates without published notices or hearing. The reason is easily
discerned from the fact that provisional rates are by their nature temporary and subject to adjustment in conformity with the
definitive rates approved after final hearing and it was so stated in the case at bar, in the National Telecommunications
Commission's order of January 25, 1984.
The Commission did not grant the PLDT any authority to engage in new communication service, but merely in any new
proved provisionally PLDT's proposed revision of its then authorized schedule of rates for the lease on availment by
endusers of the digital full period leased lines or channels for data transmission which said company acquired, installed, and
presently maintain in serviceable condition, a relief well within its power to grant. Undoubtedly, a public utility is entitled to a
just compensation and a fair return upon the value of its property while it is being used in public service.
As to the required notice, it is impossible for the NTC to give personal notice to all parties affected, not all of them being
known to it. More than that, there is no dispute that the notice of hearing was published and as admitted by petitioners, one
of them received the notice, which in turn informed the others. In fact, the petitioners have timely opposed the petition in
question, so that lack of notice was deemed cured. Under the circumstances, the Commission may be deemed to have
substantially complied with the requirements. In any event, the provisional nature of the authority and the fact that the
primary application shall be given a full hearing are the safeguards against its abuse.
Moreover, the maximum rate fixed in a franchise, which its holder is authorized to collect, is always subject to a revision and
regulation by the NTC. For if such maximum rate is not subject to alteration, the power of the Commission to review would
be rendered nugatory, as it cannot be said that the power to revise may be exercised only where the franchise does not
impose a limitation. Therefore, the authority of the Commission to issue ex parte a provisional permit to operate proposed
public service is not absolute but is based on the superior and imperative necessity of meeting an urgent public need. It is
the duty of the NTC to see to the needs and interest of the public.
Finally, there is a legal presumption that the rates are reasonable and it must be conceded that the fixing of rates by the
government through its authorized agent, involves the exercise of reasonable discretion, and unless there is an abuse of that
discretion, the courts will not interfere. Likewise, as a rule, the court does not interfere with administrative action prior to its
completion on finality.
A doctrine long recognized is that where the law confines in an administrative office the power to determine particular
questions or matters upon the facts presented, the jurisdiction of such office shall prevail over the courts. Hence, findings of
administrative officials and agencies who have acquired expertise because their jurisdiction is confined to specific matters
are generally accorded not only respect but at times even finality if such findings are supported by substantial evidence.
6.
REPUBLIC V MEDINA
FACTS
Meralco filed an application w/ Public Service Commission for the approval of the revised rate schedules with increased
charges due to economic conditions. The Commission subsequently approved the proposed rates provisionally. Such
approved rates are subject to adjustment and applicant shall return sums collected if on the merits, application was not found
meritorious.
Oppositors filed opposition on grounds that Meralco was in sound financial condition and is capable of maintaining efficient
service without the increased rates. The Commission then issued an order directing the Auditor General to conduct an
examination of Meralcos books of account within a deadline. Extension was given but it failed to verify the reasonableness
of the valuation due to lack of time. After the hearing, the proposed rate schedules were approved.
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ISSUES
1. W/N the provisional rate proceedings were void due to lack of notice
2. W/N the hearings were conducted in proper haste
HELD
1. NO. It was valid. Public Service Act specifically authorizes the Commission at its discretion to approve proposed rates
provisionally without need for a hearing. Such rates are temporary in nature and are subject to adjustment in conformity
with the definitive rates approved after final hearing.
2.
E.
NO. Trials and hearings are continuous but there are intervals of several days or weeks. Outline of the case was
lengthy. Hearings were held and only once did they proceed beyond 5 p.m. No undue restrictions were placed on the
oppositors and even individual consumers were allowed to cross examine applicants witnesses. These facts would
show that hearings were not conducted with undue haste. And the impending retirement of the Commissioner did not
play a role in his being strict in granting continuances.
REQUISITES FOR VALIDITY OF RULES
1.
VDA. DE PINEDA V PENA
FACTS
The Ped Mining claim was located by Pedro Sibayan. After his death, his heirs executed a deed of extra-judicial settlement
wherein they waived their rights and interest over the Ped claim in favor of their co-heirs Feliza Sibayan. Feliza then
transferred said claims to Sofia Reyes. The Ullmann mining claim was located by Elvira Carmelo and was subsequently
transferred to Joseph Palengaoan. Reyes, Palengaoan and others, formed the KM 21 Mining Association later converted to
KM. 21 Exploration Corporation to which they conveyed their respective claims, including the Ped and Ulmann claims.
Ultimately, the claims were assigned to the Baguio Gold Mining Company for operation.
Petitioners filed with the Bureau of Mines a letter-complaint against private respondents for alleged overlapping and
encroachment of the Ulmann claim over the Ped claim. The director of Mines held that there was no conflict between the
Ped and the Ulmann claims. This was based on the fact that the petitioners did not comply with the requirements of PD No.
463, requiring the petitioners to file an application to avail of the Ped claim within a prescribed period. It held that the failure
of petitioners to file such resulted to their loss of whatever rights they had over the mining claim. It held that such amounted
to the abandonment by petitioners of the mining claim. The Minister of Natural Resources affirmed the decision of the
Director.
ISSUE
1.
2.
W/N the Minister and the Director had jurisdiction to pass upon the validity of the Ped claim, in as much as the
petitioners merely filed a protest case of overlapping of mining claims.
If they had such jurisdiction, W/N they committed GAD in declaring petitioners to have abandoned their mining
claim.
HELD
1. YES. They had jurisdiction to do so. PD 463 vests the Bureau of Mines with jurisdiction over protests of mining claims.
Section 128 the Director, or the Secretary, in case of appeals, may motu proprio look into the validity of mining claims,
whether raised as an issue or not. Congress may validly delegate to administrative agencies the authority to promulgate
RR to implement a given legislation and effectuate its policies. In order to be valid, the administrative regulation must be
germane to the objects and purposes of the law, conform, to the standards that the law prescribes, and must relate solely
to carrying into effect the general provisions of the law.
2.
YES, hence the decision was null and void. Respondent directors finding that the petitioners failed to file the availment
application was based solely on evidence submitted by the respondents, namely, a certification issued by the Mines
Regional Officer of Baguio City stating that petitioners failed to file the application within the period provided by law.
2.
LUZON POLYMERS V CLAVE
FACTS
This case involves a question with respect to an administrative grant of an emergency allowance of P50.00 to the employees
of a corporation with a capital stock of P1M.
Let us trace back the history of the laws pertaining to such a grant:
First, PD 390 granted said allowance then a LOI was issued by President Marcos to implement the policy in said decree.
The LOI provides: for enterprises capitalized at 1M 4M or more, P50 or higher shall be granted. For enterprises
capitalized at P100K 1M, P30 or higher. Second, the DOLE issued an interpretative Bulletin: P50 or higher where the
ANTONIO | CABRAL | CRUZ | HIPOLITO | MENDOZA J | MENDOZA R | SIRON | SOLLER 10
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capital stock or the total assets exceed P1M. P30 or higher where the capital stock or the total assets is P100k- P1M. Third,
Presidential Decree no. 525 made mandatory the payment of emergency allowance under LOI 174 which is P50/month if the
capitalization is
P1M, P30 of the capitalization is P100K P1M. Fourth, Rules and Regulations implementing PD No. 525
states P50 where the capital stock or total assets whichever is applicable and higher, is P1M or more. P30 where it is at
least P100K but less than P1M.
Petitioner is a corporation with an authorized capital stock of P1M and total assets of P2.6M. DOLE held that petitioner is
liable for P50 allowance, and, since it had only been giving P30, it was liable for a deficiency of P20 per month per
employees. It was of the opinion that the basis to be used with respect to petitioner was its total assets was
P1M, then
petitioner should have been paying P50 as allowance.
ISSUE
W/N the petitioner was indeed liable for P50 allowance instead of only P30 (W/N the rules and regulations issued, which was
the basis for the decision of the DOLE, was valid)
HELD
NO, the petitioner was only liable for P30 allowance. The rules and regulations were issued with GAD. To begin with, the
LOI 174 created a problem with respect to the category of an enterprise which has a capitalization of P1M as it fell under
both the P50 and P30 brackets of emergency allowance. This grey area however, was clarified by the Interpretative Bulletin
wherein the P50 allowance would apply to those whose capitalization was
P1M. Clearly then the petitioner falls within the
P30 bracket. While the said administrative interpretation of LOI 174 is at best merely advisory for it is only the courts which
have the power to determine what the LOI really means, it is significant to note that said bulletin was adopted in PD 525.
What seems to have confused the matter is the issuance of the RR implementing PD 525. It only injected a new
determinative factor, i.e., the total assets of the employer, it also provided a choice for the determinative factor, whichever is
higher between the employers authorized c/s and its total assets. The said rule, therefore, introduced a matter which is not
germane to the provisions of PD 525, hence, it is null and void. AN administrative agency, like the DOLE, cannot amend the
law it seeks to implement.
3.
LINA V CARINO
FACTS
This is a petition for Mandamus filed by petitioner Senator Lina, Jr., who disputes the legal authority of respondent Cario to
issue DECS Order No. 30. It is entitled Guidelines on Tuition and/or other School Fees in Private Schools, Colleges and
Universities for SY 1991-1992. which allows private schools to increase tuition and other school fees, subject to certain
guidelines set out in said order.
Respondent Secretary contends its validity by citing PD 451; conversely, petitioner Lina contends that Order No. 30 is invalid
for being contrary to BP 232 and RA 6782.
ISSUE
W/N respondent Secretary had authority to issue DECS Order No. 30. (Was it within the scope of the law?)
HELD
YES. PD 451, promulgated on 1974, authorizes the Secretary of Education and Culture to fix the tuition and other school
fees charged by private schools. BP 232, passed on 1982 states that each private school shall determine its rate of tuition
and other school fees, subject to rules and regulations promulgated by the Ministry of Education, Culture and Sports. RA
6782 deals with government assistance to students and teachers in private schools, not with the question of authority to fix
tuition and school fees.
Hence, Order No. 30 in seeking to fix tuition and other school fees is valid pursuant to PD 451; it is not invalidated by BP 232
since the latter authorizes public schools to determine its tuition rate subject to rules promulgated by the Ministry of
Education, Culture, and Sports; and it is not invalidated by RA 6782 since it confers authority to the State Assistance Council
(SAC) to give government assistance to students, and not the authority to fix tuition and other school fees.
DECS Order No. 30 is valid.
4.
LUPANGCO V CA
FACTS
Respondent Professional Regulation Commission (PRC) issued Resolution No. 105 as parts of its "Additional Instructions to
Examinees," to all those applying for admission to take the licensure examinations in accountancy. Petitioners, all reviewers
preparing to take the licensure examinations in accountancy filed on their own behalf and all others similarly situated like
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them, with the Regional Trial Court of Manila a complaint for injunction with a prayer with the issuance of a writ of a
preliminary injunction against respondent PRC to restrain the latter from enforcing the above-mentioned resolution and to
declare the same unconstitutional.
Respondent PRC filed a motion to dismiss on the ground that the lower court had no jurisdiction to review and to enjoin the
enforcement of its resolution. The lower court declared that it had jurisdiction to try the case and enjoined the respondent
commission from enforcing and giving effect to Resolution No. 105 which it found to be unconstitutional.
CA granted the petition declaring RTC had no jurisdiction; hence this petition.
ISSUE
W/N the RTC has jurisdiction to review and enjoin the PRC resolution. (sub-issue)
W/N PRC may lawfully (pursuant to the Constitution) prohibit the examinees from attending review classes, receiving
handout materials, tips, or the like three (3) days before the date of the examination. (pertinent to outline issue)
HELD
NO. Sec 9, paragraph 3 of BP 129 states that CA shall have exclusive jurisdiction over all final judgments, decisions,
resolutions, orders, or awards of Regional Trial Courts and quasi-judicial agencies. To fall under this exclusive appellate
jurisdiction, there has to be a final order or ruling of the administrative body involved exercised its quasi-judicial functions.
Quasi-judicial function is a determination of rights, privileges and duties resulting in a decision or order which applies to a
specific situation and does not cover rules and regulations issued by the administrative body to implement its purely
administrative policies and functions like Resolution No. 105. Hence, the power to review and enjoin the assailed PRC
resolution falls under the general jurisdiction of the RTC.
The questioned resolutions purpose is "to preserve the integrity and purity of the licensure examinations." The
unreasonableness is more obvious in that one who is caught committing the prohibited acts even without any ill motives will
be barred from taking future examinations conducted by the respondent PRC. Furthermore, it is inconceivable how the
Commission can manage to have a watchful eye on each and every examinee during the three days before the examination
period. To be valid, such rules and regulations must be reasonable and fairly adapted to the end in view. If shown to bear no
reasonable relation to the purposes for which they are authorized to be issued, then they must be held to be invalid. Hence,
PRC resolution is unconstitutional for being unreasonable.
5.
DECS V DIEGO
FACTS
The private respondent is a graduate of the University of the East with a degree of Bachelor of Science in Zoology. The
petitioner claims that he took the NMAT three times and flunked it as many times. 1 When he applied to take it again, the
petitioner rejected his application on the basis of the aforesaid rule. He then went to the Regional Trial Court of Valenzuela,
Metro Manila, to compel his admission to the test.
RTC found for Diego, and declared invalid the challenged order. CA
ISSUE
W/N a person who has thrice failed the National Medical Admission Test (NMAT) is entitled to take it again. (reasonable?)
HELD
NO. In Tablarin v. Gutierrez, 4 this Court upheld the constitutionality of the NMAT as a measure intended to limit the
admission to medical schools only to those who have initially proved their competence and preparation for a medical
education. We see no reason why the rationale in the Tablarin case cannot apply to the case at bar. The issue raised in both
cases is the academic preparation of the applicant. This may be gauged at least initially by the admission test and, indeed
with more reliability, by the three-flunk rule. The latter cannot be regarded any less valid than the former in the regulation of
the medical profession. The three-flunk rule is a valid exercise of police power. Consequently it conforms to the requisites of
valid exercise police power: (a) the interests of the public generally, as distinguished from those of a particular class, require
the interference of the State, and more importantly, (b) the means employed are reasonably necessary to the attainment of
the object sought to be accomplished and not unduly oppressive upon individuals.
F.
ADMINISTRATIVE RULES WITH PENAL SANCTIONS

1.
PESIGAN V ANGELES
FACTS
Anselmo and Marcelo Pesigan were carabao dealers and was able to obtain 3 things: a health certificate, a permit to
transport large cattle, and three certificates of inspection. While they were transporting 26 carabaos and a calf in an Isuzu
10-wheeler truck, going from camarines sur to batangas, the carabaos were still seized by Lieutenant Zenarosa and Doctor
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Miranda despite the certificates. It was said that they were in violation of EO-626A, where carabaos are prohibited to be
transported from one province to another, and failure to follow would lead to confiscation. The carabaos were given to small
farmers. This lead The Pesigans to file an action for replevin. Judge Angeles dismissed the case for lack of cause of action.
ISSUE
W/N EO-626A is enforceable even before publication
HELD
NO, Although the date of signing of the law was October 25, 1980, the publication was done only on June 14, 1982, 2
months before the supposed violation of the law, done on April 2, 1982. The word "laws" in article 2 includes circulars and
regulations which prescribes penalties. This applies to EO-626A since forfeiture and confiscation makes it a penal statute.
Comm Act 638 required all EOs to be published in the Official and Gazette, and would only take effect 15 days after
publication. The carabaos must be returned, however, there can be no recovery of damages since it was done in good faith.
2.
PEOPLE V VERIDIANO II
FACTS
Benito Go Bio Jr. was charged with violation of BP22, dated April 9, 1979, when he issued a worthless check that did not
have sufficient funds with the intention to defraud the payee, and upon encashment, it was dishonored for lack of sufficient
funds. Go Bio Jr. filed a motion to quash, stating that on May 1979 when the check was issued, the law has not yet taken
effect. The prosecution contends that the law , assuming would take effect on June 29, 1979, the encashment was on
September 26, 1979, would be the date when the offense was committed. Judge Veridiano II dismissed the case, stating that
the making or issuing of the check would be the date of the reckoning for committing said violation and not at the time it was
dishonored.
ISSUES
1. W/N the date stated in the law is the date of effectivity
2. W/N the date of dishonor is the date the crime was committed
HELD
1. NO, Even if the law was dated April 9, 1979, the official Gazette that contains the law was only released for circulation on
June 14, 1979, and would take effect 15 days after such publication. Since BP22 is a penal statute containing provisions for
its penalties, the public must first be informed of its contents through publication before it would take effect. The accused
could not have committed a crime if it wasn't yet published for the purposes of informing him of such crime.
2. NO, The title of the law, as well as its provisions provide that it is the issuance of the check and not the dishonor that
would be the date of committing the crime.
G. CONSTRUCTION OF ADMINISTRATIVE RULES AND REGULATIONS
1.
DM CONSUNJI V COA
FACTS
MWSS advertised an invitation for public bidding of the contract known as "Contract for Pump/Lift Stations and
Rehabilitation: Tondo Pump Station" or "Contract PS-1" where three companies attended. The lowest bidder, A. L.
Sarmiento was found out that it did not comply with the conditions to bid and was disqualified. The second lowest bidder,
Erectors Inc. withdrew, leaving the highest bidder, D. M. Consunji to offer with the contract. Negotiations was done to lower
the expenses and the contract was modified to accommodate both parties. It was then officially awarded to petitioner, and
was given the presidential approval. The project was done 37 days ahead of the scheduled expiry of the contract, and
petitioner would be able to collect an incentive bonus for its early completion. MWSS paid the escalation price of P24.8M
However, Stated Auditor Lucita Sanchez disallowed the payment of P3.9M of alleged overpayment, stating that the
reckoning date of the price of escalation should have started from October 1982, when agreement was entered into and not
on May 1981, when the bidding was made. The COA issued a decision, saying that the contract was not of a bidded contract
but a negotiated contract.
ISSUE
Whether PS-1 is a bidded or negotiated contract
HELD
It is a Bidded Contract. Under PD 1594, the implementing rules and regulations show that infrastructure projects are to be
done first in a bidding. Failure of such bidding would lead to an advertisement of a second bidding. Failure of such bidding
would then lead to a negotiated contract. In this case, it is clear that petitioner was one of the bidders in the first bidding for
such project. There was no indication of a failure of bidding, neither was there a second bidding held. It follows then that the
subject contract was a bidded contract. The negotiations done between MWSS and petitioner would not necessarily make it
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a negotiated contract. Negotiated contracts is only made when there is a failure of both bidding. MWSS itself even
acknowledged it as a bidded contract when it was offered to petitioner. It follows that the escalation price would start on May
27, 1981, the date of the bidding, and not on October 1, 1982. There was no overpayment of P3.9M.
2.
PHIL. PETROLEUM V MUNICIPALITY OF PILILIA
FACTS
Petitioner, Philippine Petroleum Corp. (PPC), is engaged in the manufacture of lubricated oil basestock and conducts
business within Pililia Rizal. It also maintains an oil refinery including 49 storage tanks for its petroleum products.
It was provided in the National Internal Revenue Code(NIRC) Sec 142 that manufactured oils and other fuels would be
subject to specific tax. On 28 June 1973, PD 231 or the Local Tax Code was enacted and Sec 19 and 19(a) provided that
municipalities may impose taxes on business except on fixed taxes provided on manufacturers,, importers, etc. of any article
of commerce of whatever kind.
On 27 December 1973, Finance Secretary issued Provincial Circular 26-73 which directed provincial, city and municipal
treasurer to refrain from collecting any local tax in old or new tax ordinances in the business of manufacturing, importing, etc.
of petroleum products subject to specific tax under the NIRC.
Subsequently, on 9 January 1973, Finance Sec issued Provincial Circular 26 A-73 which instructed all City Treasurers to
refrain from collecting any local tax imposed in tax ordinances before or after the effectivity of the Local Tax Code on the
business of manufacturing, importing etc. of petroleum products subject to specific tax under NIRC.
On 14 June 1974, the Municipality of Rizal enacted a municipal resolution which imposed business taxes provided in the
Local Tax Code as well as mayor permits, sanitary inspection fees and storage permit fees for flammable, combustible or
explosive substances.
On 30 march 1974, PD 426 was issued which amended provisions of PD 231(local Tax Code) but retained Sec. 19 and 19
(a)
On 13 April 1974, PD 436 was promulgated which increased the specific tax on lubricating oils and similar petroleum
products and granted provinces, cities and municipalities certain shares in the specific tax on such products in line of Local
taxes imposed on petroleum products.
Due to the 2 provincial circulars, the municipal tax ordinance was not implemented and was deemed suspended.
On 13 March 1977, provincial circular 6-77 was issued which directed all city and municipal treasurers to refrain from
collecting storage fees on flammable materials under the local tax code ordinance because it partakes the nature of a
service charge.
On 3 June 1977, NIRC code of 1977 was enacted and sec 153 imposed specific tax on REFINED and MANUFACTURED
MOTOR FUELS.
On 4 April 1986, the Municipality of Rizal sued for collection PPC based on the local ordinance business tax (1979-1986),
storage permit fees (1975-1986, mayors permit and sanitary inspection fees.
ISSUE
W/N PPC whose oil products are subject to specific tax under NIRC is still liable to pay business tax and storage fees
considering the provincial circulars refraining the municipalities to do so.
HELD
YES, although the provincial circulars suspended the effectivity of local tax code which imposed business taxes, it must be
noted that with the issuance of PD 426 at a later date is deemed to have repealed the circulars when sec 19 and 19 (a) were
carried over and no exemptions were given to manufacturers, importers, etc. of petroleum products.
Well settled is the rule that administrative regulations must be in harmony with the provisions of the law. In case of
discrepancy between the basic law and an implementing rule, the former prevails. It is the intention of the framers of PD 426
to terminate the effectivity of the circulars in as much as it is in contravention with sec 19 and 19(a) of PD 426.
Although PD 436 prohibits the imposition of local taxes on petroleum products, it did not amend sec. 19(a) of PD 231 as
amended by PD 426 which granted the municipality the right to levy taxes on business manufacturers etc.
Also, to allow the continuous effectivity of the circulars would be tantamount to restricting the power of municipality to tax by
mere administrative issuances.
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With regard to the storage permit fees, the petitioner is not liable to pay since the storage tanks are owned by PPC and not
by the municipality. Hence there is no service rendered by the municipality which would be charged.
3.
CEBU OXYGEN AND ACETYLENE CORP. V DRILON
FACTS
Petitioner and its rank and file employees entered into a Collective Bargaining Agreement(CBA) which covered the years
1986-1988. The agreement provided for the manner by which salary would be increased yearly. It was also stated that in the
event that a law was passed which provides higher rates of salary increase then petitioner will be paying for the difference.
On 14 December 1987, RA 6640 was passed which provided the rates of salary increase in the private sector pegged at
P10/day except to non-agricultural workers working outside Metro Manila where the rates would be P11/day. It also provided
that for those who were already receiving the min. wage of P100 the rate of increase would be P10/day.
The Sec. of Labor issued the implementing rules of RA 6640 which as contained in Sec 8 thereof prohibits the employer from
crediting anniversary wage increases negotiated under a collective bargaining agreement against such wage increases
mandated by RA 6640.
th
For the first year of the CBA, the petitioner conformed and paid the difference and 13 month pay.
On 22 February 1988, the Labor and Employment Officer commenced a routine inspection of petitioners establishment and
found that 208 employees to be underpaid. Hence the Assistant Regional Director issued an Order instructing petitioner to
th
pay the underpaid employees of P200 in monthly salary and P231 in 13 month pay.
Petitioner protested on the ground that anniversary wage increase under the CBA should be credited against the wage
increase mandated by RA 6640. If the petitioners contention would be followed then it is only liable for P62 in monthly salary
th
and P31 in 13 month pay. Such protest was not entertained. Hence, the case was brought immediately to the Supreme
Court since the case involves pure questions of law.
ISSUE
W/N Sec. 8 of the Rules implementing the provision of RA 6640 which excludes anniversary wage increase provided from
being credited to the wage increase provided by RA6640 is null and void on the ground that it duly expands the provision of
RA 6640.
HELD
YES, It is a fundamental rule that the implementing rules cannot add or detract from the provisions of law it is designed to
implement. The provisions of RA 6640 do not prohibit the crediting of the CBA anniversary wage increases for purposes of
complying with RA 6640. The implementing rules cannot provide for such a prohibition not contemplated by the law.
H.
REPEAL OF ADMINISTRATIVE RULES AND REGULATIONS

1.
HILADO V CIR
FACTS
The Finance Secretary issued Gen. Circ. V-123 which interpreted and implemented SEC30 of NIRC which prescribes that
losses sustained during WWII are allowable as tax deductions only within the corresponding taxable year. Gen. Circ. V-123
thus allowed losses to be deducted in the year the last installment was received with notice that no further payment would be
made by the War Damage Commission under the Phil. Rehabilitation Act of 1946 until the US Congress makes further
appropriation.
On March 1952, Emilio Hilado filed his income tax return for 1951 and claimed the amount of P12K as a deductible item from
his gross income pursuant to Gen. Circ. V-123. He declared the amount as a loss consisting in a portion of his war damage
claim which had been duly approved by the Phil. War Damage Commission under the Phil. Rehabilitation Act but was not
paid pursuant to a notice that part of his claim will not be paid unless there are further appropriation by the US Congress.
On the basis of such return, an assessment notice demanding payment of 9K was sent to Hilado, who paid the tax in
monthly installments, the last payment having been made in 1953.
Meanwhile, the Finance Sec. sought the opinion of the DOJ Sec. regarding the rule enunciated by Gen. Circ. V-123. The
DOJ Sec. opined that the circular was not sound because the proper rule should be that losses incurred be declared as
deductibles during the year they were sustained.
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Thus, in August 1952, the Finance Sec. issued Gen. Circ. V-139 which revoked and voided Gen. Circ. V-123 and provided
that losses of property which occurred during WWII from fires, storms, shipwrecks and other casualty are deductible in the
year of actual loss or destruction of said property.
As a result, the 12K was disallowed as a deduction from Hilados gross income for 1951 and the CIR demanded payment of
P3K as deficiency income for that year.
ISSUES
1. W/N the repeal of Gen. Circ. V-123 through the issuance of Gen. Circ. V-139 by the Finance Secretary was valid.
2. W/N Gen. Circ. V-139 be given retroactive effect.
HELD:
1. YES, although only courts may pass upon the validity of the circular pursuant to the separation of powers, the Finance
sec. is vested with authority to revoke, repeal or abrogate the acts or previous rulings of his predecessor because the
construction of a statute by those administering it is not binding on their successors if thereafter the latter become satisfied
that a different construction should be given.
2. YES, it would not obliterate any vested right acquired by petitioner under the previous circular because a vested right
cannot spring from a wrong construction of the law. An administrative officer cannot change a law enacted by congress. An
erroneous construction of the law does not preclude the government from collecting tax which is legally due.

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Part III | Admin Law Cases | Dean Roy

III. POWERS AND FUNCTIONS OF ADMINISTRATIVE AGENCIES

SOURCES AND SCOPE

Ombudsman Act of 1989

ANTONIO | CABRAL | CRUZ | HIPOLITO | MENDOZA J | MENDOZA R | SIRON | SOLLER