G.R. No.

90336 August 12, 1991

RUPERTO
TAULE,
vs.
SECRETARY LUIS T. SANTOS and
LEANDRO VERCELES, respondents.

petitioner,
GOVERNOR

Balgos & Perez and Bugaring, Tugonon & Associates

Law Offices for petitioner.
Juan G. Atencia for private respondent.

GANCAYCO, J.:p
The extent of authority of the Secretary of Local
Government over the katipunan ng mga barangay or
the barangay councils is brought to the fore in this
case.
On June 18,1989, the Federation of Associations of
Barangay Councils (FABC) of Catanduanes, composed
of eleven (11) members, in their capacities as
Presidents of the Association of Barangay Councils in
their respective municipalities, convened in Virac,
Catanduanes with six members in attendance for the
purpose of holding the election of its officers.

Torres
of
Baras.
The
Board
of
Election
Supervisors/Consultants was composed of Provincial
Government Operation Officer (PGOO) Alberto P.
Molina, Jr. as Chairman with Provincial Treasurer Luis A.
Manlapaz, Jr. and Provincial Election Supervisor Arnold
Soquerata as members.
When the group decided to hold the election despite
the absence of five (5) of its members, the Provincial
Treasurer and the Provincial Election Supervisor walked
out.
The election nevertheless proceeded with PGOO
Alberto P. Molina, Jr. as presiding officer. Chosen as
members of the Board of Directors were Taule, Aquino,
Avila, Jacob and Sales.
Thereafter, the following were elected officers of the
FABC:
President Ruperto Taule
Vice-President Allan Aquino
Secretary Vicente Avila
Treasurer Fidel Jacob
Auditor Leo Sales

Present were petitioner Ruperto Taule of San Miguel,

Allan Aquino of Viga, Vicente Avila of Virac, Fidel Jacob
of Panganiban, Leo Sales of Caramoran and Manuel

On June 19, 1989, respondent Leandro I. Verceles,

Governor of Catanduanes, sent a letter to respondent

Luis
T.
Santos,
the
Secretary
of
Local
Government,* protesting the election of the officers of
the FABC and seeking its nullification in view of several
flagrant irregularities in the manner it was
conducted. 2

dated August 4, 1989 and September 5, 1989 for

being null and void.

In compliance with the order of respondent Secretary,

petitioner Ruperto Taule as President of the FABC, filed
his comment on the letter-protest of respondent
Governor denying the alleged irregularities and
denouncing said respondent Governor for meddling or
intervening in the election of FABC officers which is a
purely non-partisan affair and at the same time
requesting for his appointment as a member of the
Sangguniang Panlalawigan of the province being the
duly elected President of the FABC in Catanduanes. 3

1) Whether or not the respondent

Secretary has jurisdiction to entertain an
election protest involving the election of
the officers of the Federation of
Association of Barangay Councils;

On August 4, 1989, respondent Secretary issued a

resolution nullifying the election of the officers of the
FABC in Catanduanes held on June 18, 1989 and
ordering a new one to be conducted as early as
possible to be presided by the Regional Director of
Region V of the Department of Local Government. 4
Petitioner filed a motion for reconsideration of the
resolution of August 4, 1989 but it was denied by
respondent Secretary in his resolution of September 5,
1989. 5
In the petition for certiorari before Us, petitioner seeks
the reversal of the resolutions of respondent Secretary

Petitioner
raises
following issues:

the

2) Whether or not the respondent

Governor has the legal personality to file
an election protest;
3) Assuming that
the
respondent
Secretary has jurisdiction over the
election protest, whether or not he
committed grave abuse of discretion
amounting to lack of jurisdiction in
nullifying the election;
The Katipunan ng mga Barangay is the organization of
all sangguniang barangays in the following levels: in
municipalities to be known as katipunang bayan; in
cities, katipunang
panlungsod;
in
provinces, katipunang
panlalawigan;
in
regions,katipunang pampook; and on the national
level, katipunan ng mga barangay. 6

The Local Government Code provides for the manner

in which the katipunan ng mga barangay at all levels
shall be organized:
Sec. 110. Organization. (1) The
katipunan at all levels shall be organized
in the following manner:
(a) The katipunan in each level shall elect
a board of directors and a set of officers.
The president of each level shall
represent the katipunan concerned in the
next higher level of organization.
(b) The katipunan ng mga barangay shall
be composed of the katipunang pampook,
which shall in turn be composed of the
presidents
of
the
katipunang
panlalawigan
and
the
katipunang
panlungsod. The presidents of the
katipunang bayan in each province shall
constitute the katipunang panlalawigan.
The katipunang panlungsod and the
katipunang bayan shall be composed of
the punong barangays of cities and
municipalities, respectively.
xxx xxx xxx
The respondent Secretary, acting in accordance with
the provision of the Local Government Code
empowering him to "promulgate in detail the

implementing circulars and the rules and regulations

to carry out the various administrative actions required
for the initial implementation of this Code in such a
manner as will ensure the least disruption of on-going
programs and projects 7 issued Department of Local
Government Circular No. 89-09 on April 7, 1989, 8 to
provide the guidelines for the conduct of the elections
of officers of the Katipunan ng mga Barangay at the
municipal, city, provincial, regional and national levels.
It is now the contention of petitioner that neither the
constitution nor the law grants jurisdiction upon the
respondent Secretary over election contests involving
the election of officers of the FABC, the katipunan ng
mga barangay at the provincial level. It is petitioner's
theory that under Article IX, C, Section 2 of the 1987
Constitution, it is the Commission on Elections which
has jurisdiction over all contests involving elective
barangay officials.
On the other hand, it is the opinion of the respondent
Secretary that any violation of the guidelines as set
forth in said circular would be a ground for filing a
protest and would vest upon the Department
jurisdiction to resolve any protest that may be filed in
relation thereto.
Under Article IX, C, Section 2(2) of the 1987
Constitution, the Commission on Elections shall
exercise "exclusive original jurisdiction over all
contests relating to the elections, returns, and
qualifications of all elective regional, provincial, and

city officials, and appellate jurisdiction over all

contests involving elective municipal officials decided
by trial courts of general jurisdiction, or involving
elective barangay officials decided by trial courts of
limited jurisdiction." The 1987 Constitution expanded
the jurisdiction of the COMELEC by granting it
appellate jurisdiction over all contests involving
elective municipal officials decided by trial courts of
general jurisdiction or elective barangay officials
decided by trial courts of limited jurisdiction. 9
The jurisdiction of the COMELEC over contests
involving elective barangay officials is limited to
appellate jurisdiction from decisions of the trial courts.
Under the law, 10 the sworn petition contesting the
election of a barangay officer shall be filed with the
proper Municipal or Metropolitan Trial Court by any
candidate who has duly filed a certificate of candidacy
and has been voted for the same office within 10 days
after the proclamation of the results. A voter may also
contest the election of any barangay officer on the
ground of ineligibility or of disloyalty to the Republic of
the Philippines by filing a sworn petition forquo
warranto with the Metropolitan or Municipal Trial Court
within 10 days after the proclamation of the results of
the election.11 Only appeals from decisions of inferior
courts on election matters as aforestated may be
decided by the COMELEC.
The Court agrees with the Solicitor General that the
jurisdiction of the COMELEC is over popular elections,
the elected officials of which are determined through

the will of the electorate. An election is the

embodiment of the popular will, the expression of the
sovereign power of the people. 12 It involves the choice
or selection of candidates to public office by popular
vote. 13 Specifically, the term "election," in the context
of the Constitution, may refer to the conduct of the
polls, including the listing of voters, the holding of the
electoral campaign, and the casting and counting of
the votes 14 which do not characterize the election of
officers in the Katipunan ng mga barangay. "Election
contests" would refer to adversary proceedings by
which matters involving the title or claim of title to an
elective office, made before or after proclamation of
the winner, is settled whether or not the contestant is
claiming the office in dispute 15 and in the case of
elections of barangay officials, it is restricted to
proceedings after the proclamation of the winners as
no pre-proclamation controversies are allowed.16
The jurisdiction of the COMELEC does not cover
protests over the organizational set-up of the
katipunan ng mga barangay composed of popularly
elected punong barangays as prescribed by law whose
officers are voted upon by their respective members.
The COMELEC exercises only appellate jurisdiction over
election contests involving elective barangay officials
decided by the Metropolitan or Municipal Trial Courts
which likewise have limited jurisdiction. The authority
of the COMELEC over the katipunan ng mga
barangay is limited by law to supervision of the
election
of
the
representative
of
thekatipunan concerned
to
the sanggunian in
a

particular level conducted by their own respective

organization. 17

power conferred by law and which now has the force

and effect of law. 18

However, the Secretary of Local Government is not

vested with jurisdiction to entertain any protest
involving the election of officers of the FABC.

Now the question that arises is whether or not a

violation of said circular vests jurisdiction upon the
respondent Secretary, as claimed by him, to hear a
protest filed in relation thereto and consequently
declare an election null and void.

There is no question that he is vested with the power

to promulgate rules and regulations as set forth in
Section 222 of the Local Government Code.
Likewise, under Book IV, Title XII, Chapter 1, See. 3(2)
of the Administrative Code of 1987, ** the respondent
Secretary has the power to "establish and prescribe
rules,
regulations
and
other
issuances
and
implementing laws on the general supervision of local
government units and on the promotion of local
autonomy and monitor compliance thereof by said
units."
Also, the respondent Secretary's rule making power is
provided in See. 7, Chapter II, Book IV of the
Administrative Code, to wit:
(3) Promulgate rules and regulations
necessary to carry out department
objectives, policies, functions, plans,
programs and projects;
Thus, DLG Circular No. 89-09 was issued by
respondent Secretary in pursuance of his rule-making

It is a well-settled principle of administrative law that

unless expressly empowered, administrative agencies
are bereft of quasi- judicial powers. 19 The jurisdiction
of administrative authorities is dependent entirely
upon the provisions of the statutes reposing power in
them; they cannot confer it upon themselves. 20 Such
jurisdiction is essential to give validity to their
determinations. 21
There is neither a statutory nor constitutional provision
expressly or even by necessary implication conferring
upon the Secretary of Local Government the power to
assume jurisdiction over an election protect involving
officers of the katipunan ng mga barangay. An
understanding of the extent of authority of the
Secretary over local governments is therefore
necessary if We are to resolve the issue at hand.
Presidential power over local governments is limited by
the Constitution to the exercise of general
supervision 22 "to ensure that local affairs are
administered according to law." 23 The general

supervision is exercised by the President through the

Secretary of Local Government. 24
In administrative law, supervision means overseeing or
the power or authority of an officer to see that the
subordinate officers perform their duties. If the latter
fails or neglects to fulfill them the former may take
such action or step as prescribed by law to make them
perform their duties. Control, on the other hand,
means the power of an officer to alter or modify or
nullify or set aside what a subordinate officer had done
in the performance of his duties and to substitute the
judgment of the former for that of the latter. The
fundamental law permits the Chief Executive to wield
no more authority than that of checking whether said
local government or the officers thereof perform their
duties as provided by statutory enactments. Hence,
the President cannot interfere with local governments
so long as the same or its officers act within the scope
of
their
authority. 25 Supervisory
power,
when
contrasted with control, is the power of mere oversight
over an inferior body; it does not include any
restraining authority over such body. 26
Construing the constitutional limitation on the power of
general supervision of the President over local
governments, We hold that respondent Secretary has
no authority to pass upon the validity or regularity of
the election of the officers of the katipunan. To allow
respondent Secretary to do so will give him more
power than the law or the Constitution grants. It will in
effect give him control over local government officials

for it will permit him to interfere in a purely democratic

and non-partisan activity aimed at strengthening the
barangay as the basic component of local
governments so that the ultimate goal of fullest
autonomy may be achieved. In fact, his order that the
new elections to be conducted be presided by the
Regional Director is a clear and direct interference by
the Department with the political affairs of the
barangays which is not permitted by the limitation of
presidential power to general supervision over local
governments. 27
Indeed, it is the policy of the state to ensure the
autonomy of local governments. 28 This state policy is
echoed in the Local Government Code wherein it is
declared that "the State shall guarantee and promote
the autonomy of local government units to ensure
their fullest development as self-reliant communities
and make them more effective partners in the pursuit
of national development and social progress." 29 To
deny the Secretary of Local Government the power to
review the regularity of the elections of officers of the
katipunan would be to enhance the avowed state
policy of promoting the autonomy of local
governments.
Moreover, although the Department is given the power
to prescribe rules, regulations and other issuances, the
Administrative Code limits its authority to merely
"monitoring compliance" by local government units of
such issuances. 30To monitor means "to watch, observe
or check. 31 This is compatible with the power of

supervision of the Secretary over local governments

which as earlier discussed is limited to checking
whether the local government unit concerned or the
officers thereof perform their duties as provided by
statutory enactments. Even the Local Government
Code which grants the Secretary power to issue
implementing circulars, rules and regulations is silent
as to how these issuances should be enforced. Since
the respondent Secretary exercises only supervision
and not control over local governments, it is truly
doubtful if he could enforce compliance with the DLG
Circular. 32 Any doubt therefore as to the power of the
Secretary to interfere with local affairs should be
resolved in favor of the greater autonomy of the local
government.
Thus, the Court holds that in assuming jurisdiction
over the election protest filed by respondent Governor
and declaring the election of the officers of the FABC
on June 18, 1989 as null and void, the respondent
Secretary acted in excess of his jurisdiction. The
respondent Secretary not having the jurisdiction to
hear an election protest involving officers of the FABC,
the recourse of the parties is to the ordinary courts.
The Regional Trial Courts have the exclusive original
jurisdiction to hear the protest. 33
The provision in DLG Circular No. 89-15 amending DLG
Circular No. 89-09 which states that "whenever the
guidelines are not substantially complied with, the
election shall be declared null and void by the
Department of Local Government and an election shall

conduct and being invoked by the Solicitor General

cannot be applied. DLG Circular No. 89-15 was issued
on July 3, 1989 after the June 18, 1989 elections of the
FABC officers and it is the rule in statutory construction
that laws, including circulars and regulations 34 cannot
be applied retrospectively. 35 Moreover, such provision
is null and void for having been issued in excess of the
respondent Secretary's jurisdiction, inasmuch as an
administrative authority cannot confer jurisdiction
upon itself.
As regards the second issue raised by petitioner, the
Court finds that respondent Governor has the
personality to file the protest. Under Section 205 of the
Local Government Code, the membership of
the sangguniang
panlalawigan consists
of
the
governor, the vice-governor, elective members of the
said sanggunian and the presidents of the katipunang
panlalawigan and the kabataang barangay provincial
federation. The governor acts as the presiding officer
of thesangguniang panlalawigan. 36
As presiding officer of the sagguniang panlalawigan,
the respondent governor has an interest in the election
of the officers of the FABC since its elected president
becomes a member of the assembly. If the president of
the FABC assumes his presidency under questionable
circumstances and is allowed to sit in the sangguniang
panlalawigan the official actions of the sanggunian
may be vulnerable to attacks as to their validity or
legality. Hence, respondent governor is a proper party

to question the regularity of the elections of the

officers of the FABC.
As to the third issue raised by petitioner, the Court has
already ruled that the respondent Secretary has no
jurisdiction to hear the protest and nullify the
elections.
Nevertheless, the Court holds that the issue of the
validity of the elections should now be resolved in
order to prevent any unnecessary delay that may
result from the commencement of an appropriate
action by the parties.
The elections were declared null and void primarily for
failure to comply with Section 2.4 of DLG Circular No.
89-09 which provides that "the incumbent FABC
President or the Vice-President shall preside over the
reorganizational meeting, there being a quorum." The
rule specifically provides that it is the incumbent FABC
President or Vice-President who shall preside over the
meeting. The word "shall" should be taken in its
ordinary signification, i.e., it must be imperative or
mandatory
and
not
merely
37
permissive, as the rule is explicit and requires no
other interpretation. If it had been intended that any
other official should preside, the rules would have
provided so, as it did in the elections at the town and
city levels 38 as well as the regional level..39
It is admitted that neither the incumbent FABC
President nor the Vice-President presided over the

meeting and elections but Alberto P. Molina, Jr., the

Chairman
of
the
Board
of
Election
Supervisors/Consultants. Thus, there was a clear
violation of the aforesaid mandatory provision. On this
ground, the elections should be nullified.
Under Sec. 2.3.2.7 of the same circular it is provided
that a Board of Election Supervisors/Consultants shall
be constituted to oversee and/or witness the
canvassing of votes and proclamation of winners. The
rules confine the role of the Board of Election
Supervisors/Consultants to merely overseeing and
witnessing the conduct of elections. This is consistent
with the provision in the Local Government Code
limiting the authority of the COMELEC to the
supervision of the election. 40
In case at bar, PGOO Molina, the Chairman of the
Board, presided over the elections. There was direct
participation by the Chairman of the Board in the
elections contrary to what is dictated by the rules.
Worse, there was no Board of Election Supervisors to
oversee the elections in view of the walk out staged by
its two other members, the Provincial COMELEC
Supervisor and the Provincial Treasurer. The objective
of keeping the election free and honest was therefore
compromised.
The Court therefore finds that the election of officers of
the FABC held on June 18, 1989 is null and void for
failure to comply with the provisions of DLG Circular
No. 89-09.

Meanwhile, pending resolution of this petition,

petitioner filed a supplemental petition alleging that
public respondent Local Government Secretary, in his
memorandum dated June 7, 1990, designated Augusto
Antonio as temporary representative of the Federation
to
the sangguniang
panlalawigan of
41
Catanduanes. By virtue of this memorandum,
respondent governor swore into said office Augusto
Antonio on June 14, 1990. 42
The Solicitor General filed his comment on the
supplemental petition 43 as required by the resolution
of the Court dated September 13,1990.
In his comment, the Solicitor General dismissed the
supervening event alleged by petitioner as something
immaterial to the petition. He argues that Antonio's
appointment was merely temporary "until such time
that the provincial FABC president in that province has
been elected, appointed and qualified." 44 He stresses
that Antonio's appointment was only a remedial
measure designed to cope with the problems brought
about by the absence of a representative of the FABC
to the "sanggunian ang panlalawigan."
Sec. 205 (2) of the Local Government Code (B.P. Blg.
337) provides(2) The sangguniang panlalawigan shall
be composed of the governor, the vicegovernor, elective members of the said
sanggunian and the presidents of the

katipunang
panlalawigan and
the
kabataang barangay provincial federation
who shall be appointed by the President
of the Philippines. (Emphasis supplied.)
Batas Pambansa Blg. 51, under Sec. 2 likewise states:
xxx xxx xxx
The sangguniang panlalawigan of each
province shall be composed of the
governor as chairman and presiding
officer, the vice-governor as presiding
officer
pro
tempore,
the
elective
sangguniang panlalawigan members, and
the appointive members consisting of the
president of the provincial association of
barangay councils, and the president of
the provincial federation of the kabataang
barangay. (Emphasis supplied.)
In Ignacio vs. Banate Jr. 45 the Court, interpreting
similarly worded provisions of Batas Pambansa Blg.
337 and Batas Pambansa Blg. 51 on the composition of
the sangguniang panlungsod, 46 declared as null and
void the appointment of private respondent Leoncio
Banate
Jr.
as
member
of
the Sangguniang
Panlungsod of the City of Roxas representing
thekatipunang panlungsod ng mga barangay for he
lacked the elegibility and qualification required by law,
not being a barangay captain and for not having been
elected president of the association of barangay

councils. The Court held that an unqualified person

cannot be appointed a member of the sanggunian,
even in an acting capacity. In Reyes vs. Ferrer, 47 the
appointment of Nemesio L. Rasgo Jr. as representative
of the youth sector to the sangguniang panlungsod of
Davao City was declared invalid since he was never
the president of the kabataang barangay city
federation as required by Sec. 173, Batas Pambansa
Blg. 337.
In the present controversy involving the sangguniang
panlalawigan, the law is likewise explicit. To be
appointed by the President of the Philippines to sit in
the sangguniang panlalawigan is the president of
the katipunang panlalawigan. The appointee must
meet the qualifications set by law. 48 The appointing
power is bound by law to comply with the
requirements as to the basic qualifications of the
appointee to the sangguniang panlalawigan. The
President of the Philippines or his alter ego, the
Secretary of Local Government, has no authority to
appoint anyone who does not meet the minimum
qualification to be the president of the federation of
barangay councils.
Augusto Antonio is not the president of the federation.
He is a member of the federation but he was not even
present during the elections despite notice. The
argument that Antonio was appointed as a remedial
measure in the exigency of the service cannot be
sustained. Since Antonio does not meet the basic
qualification of being president of the federation, his

appointment to the sangguniang panlalawigan is not

justified notwithstanding that such appointment is
merely in a temporary capacity. If the intention of the
respondent Secretary was to protect the interest of the
federation in thesanggunian, he should have
appointed the incumbent FABC President in a hold-over
capacity. For even under the guidelines, the term of
office of officers of the katipunan at all levels shall be
from the date of their election until their successors
shall have been duly elected and qualified, without
prejudice to the terms of their appointments as
members of the sanggunian to which they may be
correspondingly appointed. 49 Since the election is still
under protest such that no successor of the incumbent
has as yet qualified, the respondent Secretary has no
choice but to have the incumbent FABC President sit as
member of the sanggunian. He could even have
appointed petitioner since he was elected the
president of the federation but not Antonio. The
appointment of Antonio, allegedly the protege of
respondent Governor, gives credence to petitioner's
charge of political interference by respondent
Governor in the organization. This should not be
allowed. The barangays should be insulated from any
partisan activity or political intervention if only to give
true meaning to local autonomy.
WHEREFORE, the petition is GRANTED in that the
resolution of respondent Secretary dated August 4,
1989 is hereby SET ASIDE for having been issued in
excess of jurisdiction.

The election of the officials of the ABC Federation held

on June 18, 1989 is hereby annulled. A new election of
officers of the federation is hereby ordered to be
conducted immediately in accordance with the
governing rules and regulations.
The Supplemental petition is hereby GRANTED. The
appointment of Augusto Antonio as representative to
theSangguniang Panlalawigan in a temporary capacity
is declared null and void.
No costs.

ROMERO, J.:
The clash between the responsibility of the City
Government of Caloocan to dispose off the 350 tons of
garbage it collects daily and the growing concern and
sensitivity to a pollution-free environment of the
residents of Barangay Camarin, Tala Estate, Caloocan
City where these tons of garbage are dumped
everyday is the hub of this controversy elevated by the
protagonists to the Laguna Lake Development
Authority (LLDA) for adjudication.

SO ORDERED.
G.R. No. 110120 March 16, 1994
LAGUNA
LAKE
DEVELOPMENT
AUTHORITY, petitioner,
vs.
COURT OF APPEALS, HON. MANUEL JN. SERAPIO,
Presiding Judge RTC, Branch 127, Caloocan City,
HON. MACARIO A. ASISTIO, JR., City Mayor of
Caloocan and/or THE CITY GOVERNMENT OF
CALOOCAN, respondents.
Alberto N. Hidalgo and Ma. Teresa T. Oledan for
petitioner.
The City Legal Officer & Chief, Law Department for
Mayor Macario A. Asistio, Jr. and the City Government
of Caloocan.

The instant case stemmed from an earlier petition filed

with this Court by Laguna Lake Development Authority
(LLDA
for
short)
docketed
as
G.R.
No. 107542 against the City Government of Caloocan,
et al. In the Resolution of November 10, 1992, this
Court referred G.R. No. 107542 to the Court of Appeals
for appropriate disposition. Docketed therein as CAG.R.
SP
No.
29449,
the
Court
of
Appeals,
in
a
1
decision promulgated on January 29, 1993 ruled that
the LLDA has no power and authority to issue a cease
and desist order enjoining the dumping of garbage in
Barangay Camarin, Tala Estate, Caloocan City. The
LLDA now seeks, in this petition, a review of the
decision of the Court of Appeals.
The facts, as disclosed in the records, are undisputed.

On March 8, 1991, the Task Force Camarin Dumpsite of

Our Lady of Lourdes Parish, Barangay Camarin,
Caloocan City, filed a letter-complaint 2 with the
Laguna Lake Development Authority seeking to stop
the operation of the 8.6-hectare open garbage
dumpsite in Tala Estate, Barangay Camarin, Caloocan
City due to its harmful effects on the health of the
residents and the possibility of pollution of the water
content of the surrounding area.
On November 15, 1991, the LLDA conducted an on-site
investigation, monitoring and test sampling of the
leachate 3 that seeps from said dumpsite to the nearby
creek which is a tributary of the Marilao River. The
LLDA Legal and Technical personnel found that the City
Government of Caloocan was maintaining an open
dumpsite at the Camarin area without first securing an
Environmental Compliance Certificate (ECC) from the
Environmental Management Bureau (EMB) of the
Department of Environment and Natural Resources, as
required under Presidential Decree No. 1586, 4 and
clearance from LLDA as required under Republic Act
No. 4850, 5 as amended by Presidential Decree No. 813
and Executive Order No. 927, series of 1983. 6
After a public hearing conducted on December 4,
1991, the LLDA, acting on the complaint of Task Force
Camarin Dumpsite, found that the water collected
from the leachate and the receiving streams could
considerably affect the quality, in turn, of the receiving
waters since it indicates the presence of bacteria,
other than coliform, which may have contaminated the

sample during collection or handling. 7 On December 5,

1991, the LLDA issued a Cease and Desist
Order8 ordering the City Government of Caloocan,
Metropolitan Manila Authority, their contractors, and
other entities, to completely halt, stop and desist from
dumping any form or kind of garbage and other waste
matter at the Camarin dumpsite.
The dumping operation was forthwith stopped by the
City Government of Caloocan. However, sometime in
August 1992 the dumping operation was resumed
after a meeting held in July 1992 among the City
Government of Caloocan, the representatives of Task
Force Camarin Dumpsite and LLDA at the Office of
Environmental Management Bureau Director Rodrigo
U. Fuentes failed to settle the problem.
After an investigation by its team of legal and technical
personnel on August 14, 1992, the LLDA issued
another order reiterating the December 5, 1991, order
and issued an Alias Cease and Desist Order enjoining
the City Government of Caloocan from continuing its
dumping operations at the Camarin area.
On September 25, 1992, the LLDA, with the assistance
of the Philippine National Police, enforced its Alias
Cease and Desist Order by prohibiting the entry of all
garbage dump trucks into the Tala Estate, Camarin
area being utilized as a dumpsite.
Pending resolution of its motion for reconsideration
earlier filed on September 17, 1992 with the LLDA, the

City Government of Caloocan filed with the Regional

Trial Court of Caloocan City an action for the
declaration of nullity of the cease and desist order with
prayer for the issuance of writ of injunction, docketed
as Civil Case No. C-15598. In its complaint, the City
Government of Caloocan sought to be declared as the
sole authority empowered to promote the health and
safety and enhance the right of the people in Caloocan
City to a balanced ecology within its territorial
jurisdiction. 9
On September 25, 1992, the Executive Judge of the
Regional Trial Court of Caloocan City issued a
temporary restraining order enjoining the LLDA from
enforcing its cease and desist order. Subsequently, the
case was raffled to the Regional Trial Court, Branch
126 of Caloocan which, at the time, was presided over
by Judge Manuel Jn. Serapio of the Regional Trial Court,
Branch 127, the pairing judge of the recently-retired
presiding judge.
The LLDA, for its part, filed on October 2, 1992 a
motion to dismiss on the ground, among others, that
under Republic Act No. 3931, as amended by
Presidential Decree No. 984, otherwise known as the
Pollution Control Law, the cease and desist order
issued by it which is the subject matter of the
complaint is reviewable both upon the law and the
facts of the case by the Court of Appeals and not by
the Regional Trial Court. 10

On October 12, 1992 Judge Manuel Jn. Serapio issued

an order consolidating Civil Case No. C-15598 with
Civil Case No. C-15580, an earlier case filed by the
Task Force Camarin Dumpsite entitled "Fr. John Moran,
et al. vs. Hon. Macario Asistio." The LLDA, however,
maintained during the trial that the foregoing cases,
being independent of each other, should have been
treated separately.
On October 16, 1992, Judge Manuel Jn. Serapio, after
hearing the motion to dismiss, issued in the
consolidated cases an order 11 denying LLDA's motion
to dismiss and granting the issuance of a writ of
preliminary injunction enjoining the LLDA, its agent
and all persons acting for and on its behalf, from
enforcing or implementing its cease and desist order
which prevents plaintiff City of Caloocan from dumping
garbage at the Camarin dumpsite during the pendency
of this case and/or until further orders of the court.
On November 5, 1992, the LLDA filed a petition
for certiorari, prohibition and injunction with prayer for
restraining order with the Supreme Court, docketed as
G.R. No. 107542, seeking to nullify the aforesaid order
dated October 16, 1992 issued by the Regional Trial
Court, Branch 127 of Caloocan City denying its motion
to dismiss.
The Court, acting on the petition, issued a
Resolution 12 on November 10, 1992 referring the case
to the Court of Appeals for proper disposition and at
the same time, without giving due course to the

petition, required the respondents to comment on the

petition and file the same with the Court of Appeals
within ten (10) days from notice. In the meantime, the
Court issued a temporary restraining order, effective
immediately and continuing until further orders from it,
ordering the respondents: (1) Judge Manuel Jn.
Serapio, Presiding Judge, Regional Trial Court, Branch
127, Caloocan City to cease and desist from exercising
jurisdiction over the case for declaration of nullity of
the cease and desist order issued by the Laguna Lake
Development Authority (LLDA); and (2) City Mayor of
Caloocan and/or the City Government of Caloocan to
cease and desist from dumping its garbage at the Tala
Estate, Barangay Camarin, Caloocan City.

and what conditions, if any, may be required if it is to

be so lifted or whether the restraining order should be
maintained or converted into a preliminary injunction.

Respondents City Government of Caloocan and Mayor

Macario A. Asistio, Jr. filed on November 12, 1992 a
motion for reconsideration and/or to quash/recall the
temporary restraining order and an urgent motion for
reconsideration alleging that ". . . in view of the
calamitous situation that would arise if the respondent
city government fails to collect 350 tons of garbage
daily for lack of dumpsite (i)t is therefore, imperative
that the issue be resolved with dispatch or with
sufficient leeway to allow the respondents to find
alternative solutions to this garbage problem."

It was agreed at the conference that the LLDA had

until December 15, 1992 to finish its study and review
of respondent's technical plan with respect to the
dumping of its garbage and in the event of a rejection
of respondent's technical plan or a failure of
settlement, the parties will submit within 10 days from
notice their respective memoranda on the merits of
the case, after which the petition shall be deemed
submitted for resolution. 15 Notwithstanding such
efforts, the parties failed to settle the dispute.

On November 17, 1992, the Court issued a

Resolution 13 directing the Court of Appeals to
immediately set the case for hearing for the purpose
of determining whether or not the temporary
restraining order issued by the Court should be lifted

The Court of Appeals set the case for hearing on

November 27, 1992, at 10:00 in the morning at the
Hearing Room, 3rd Floor, New Building, Court of
Appeals. 14 After the oral argument, a conference was
set on December 8, 1992 at 10:00 o'clock in the
morning where the Mayor of Caloocan City, the
General Manager of LLDA, the Secretary of DENR or his
duly authorized representative and the Secretary of
DILG or his duly authorized representative were
required to appear.

On April 30, 1993, the Court of Appeals promulgated

its decision holding that: (1) the Regional Trial Court
has no jurisdiction on appeal to try, hear and decide
the action for annulment of LLDA's cease and desist
order, including the issuance of a temporary
restraining order and preliminary injunction in relation

thereto, since appeal therefrom is within the exclusive

and appellate jurisdiction of the Court of Appeals
under Section 9, par. (3), of Batas Pambansa Blg. 129;
and (2) the Laguna Lake Development Authority has
no power and authority to issue a cease and desist
order under its enabling law, Republic Act No. 4850, as
amended by P.D. No. 813 and Executive Order
No. 927, series of 1983.
The Court of Appeals thus dismissed Civil Case No.
15598 and the preliminary injunction issued in the said
case was set aside; the cease and desist order of LLDA
was likewise set aside and the temporary restraining
order enjoining the City Mayor of Caloocan and/or the
City Government of Caloocan to cease and desist from
dumping its garbage at the Tala Estate, Barangay
Camarin, Caloocan City was lifted, subject, however, to
the condition that any future dumping of garbage in
said area, shall be in conformity with the procedure
and protective works contained in the proposal
attached to the records of this case and found on
pages 152-160 of the Rollo, which was thereby
adopted by reference and made an integral part of the
decision, until the corresponding restraining and/or
injunctive relief is granted by the proper Court upon
LLDA's institution of the necessary legal proceedings.
Hence, the Laguna Lake Development Authority filed
the instant petition for review on certiorari, now
docketed as G.R. No. 110120, with prayer that the
temporary restraining order lifted by the Court of
Appeals be re-issued until after final determination by

this Court of the issue on the proper interpretation of

the powers and authority of the LLDA under its
enabling law.
On July, 19, 1993, the Court issued a temporary
restraining order 16 enjoining the City Mayor of
Caloocan and/or the City Government of Caloocan to
cease and desist from dumping its garbage at the Tala
Estate, Barangay Camarin, Caloocan City, effective as
of this date and containing until otherwise ordered by
the Court.
It is significant to note that while both parties in this
case agree on the need to protect the environment
and to maintain the ecological balance of the
surrounding areas of the Camarin open dumpsite, the
question as to which agency can lawfully exercise
jurisdiction over the matter remains highly open to
question.
The City Government of Caloocan claims that it is
within its power, as a local government unit, pursuant
to the general welfare provision of the Local
Government Code, 17 to determine the effects of the
operation of the dumpsite on the ecological balance
and to see that such balance is maintained. On the
basis of said contention, it questioned, from the
inception of the dispute before the Regional Trial Court
of Caloocan City, the power and authority of the LLDA
to issue a cease and desist order enjoining the
dumping of garbage in the Barangay Camarin over

which the City Government of Caloocan has territorial

jurisdiction.
The Court of Appeals sustained the position of the City
of Caloocan on the theory that Section 7 of Presidential
Decree No. 984, otherwise known as the Pollution
Control law, authorizing the defunct National Pollution
Control Commission to issue an ex-parte cease and
desist order was not incorporated in Presidential
Decree No. 813 nor in Executive Order No. 927, series
of
1983. The Court of Appeals ruled that under Section 4,
par. (d), of Republic Act No. 4850, as amended, the
LLDA is instead required "to institute the necessary
legal proceeding against any person who shall
commence to implement or continue implementation
of any project, plan or program within the Laguna de
Bay region without previous clearance from the
Authority."
The LLDA now assails, in this partition for review, the
abovementioned ruling of the Court of Appeals,
contending that, as an administrative agency which
was granted regulatory and adjudicatory powers and
functions by Republic Act No. 4850 and its amendatory
laws, Presidential Decree No. 813 and Executive Order
No. 927, series of 1983, it is invested with the power
and authority to issue a cease and desist order
pursuant to Section 4 par. (c), (d), (e), (f) and (g) of
Executive Order No. 927 series of 1983 which provides,
thus:

Sec. 4. Additional Powers and Functions.

The authority shall have the following
powers and functions:
xxx xxx xxx
(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.
(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 decisions
of the Authority.
The LLDA claims that the appellate court deliberately
suppressed and totally disregarded the above
provisions of Executive Order No. 927, series of 1983,
which granted administrative quasi-judicial functions
to LLDA on pollution abatement cases.
In light of the relevant environmental protection laws
cited which are applicable in this case, and the
corresponding overlapping jurisdiction of government
agencies implementing these laws, the resolution of
the issue of whether or not the LLDA has the authority
and power to issue an order which, in its nature and
effect was injunctive, necessarily requires a
determination of the threshold question: Does the
Laguna Lake Development Authority, under its Charter
and its amendatory laws, have the authority to
entertain the complaint against the dumping of
garbage in the open dumpsite in Barangay Camarin
authorized by the City Government of Caloocan which
is allegedly endangering the health, safety, and
welfare of the residents therein and the sanitation and
quality of the water in the area brought about by
exposure to pollution caused by such open garbage
dumpsite?

The matter of determining whether there is such

pollution of the environment that requires control, if
not prohibition, of the operation of a business
establishment is essentially addressed to the
Environmental Management Bureau (EMB) of the DENR
which, by virtue of Section 16 of Executive Order No.
192, series of 1987, 18 has assumed the powers and
functions of the defunct National Pollution Control
Commission created under Republic Act No. 3931.
Under said Executive Order, a Pollution Adjudication
Board (PAB) under the Office of the DENR Secretary
now assumes the powers and functions of the National
Pollution Control Commission with respect to
adjudication of pollution cases. 19
As a general rule, the adjudication of pollution cases
generally pertains to the Pollution Adjudication Board
(PAB), except in cases where the special law provides
for another forum. It must be recognized in this regard
that the LLDA, as a specialized administrative agency,
is specifically mandated under Republic Act No. 4850
and its amendatory laws to carry out and make
effective the declared national policy 20 of promoting
and accelerating the development and balanced
growth of the Laguna Lake area and the surrounding
provinces of Rizal and Laguna and the cities of San
Pablo, Manila, Pasay, Quezon and Caloocan 21 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. Under such a broad grant

and power and authority, the LLDA, by virtue of its

special charter, obviously has the responsibility to
protect the inhabitants of the Laguna Lake region from
the deleterious effects of pollutants emanating from
the discharge of wastes from the surrounding areas. In
carrying out the aforementioned declared policy, the
LLDA is mandated, among others, to pass upon and
approve or disapprove all plans, programs, and
projects
proposed
by
local
government
offices/agencies within the region, public corporations,
and private persons or enterprises where such plans,
programs and/or projects are related to those of the
LLDA for the development of the region. 22

representatives of the City Government of Caloocan,

Task Force Camarin Dumpsite and LLDA sometime in
July
1992
to
discuss
the
possibility
of
re-opening the open dumpsite.

In the instant case, when the complainant Task Force

Camarin Dumpsite of Our Lady of Lourdes Parish,
Barangay Camarin, Caloocan City, filed its lettercomplaint before the LLDA, the latter's jurisdiction
under its charter was validly invoked by complainant
on the basis of its allegation that the open dumpsite
project of the City Government of Caloocan in
Barangay Camarin was undertaken without a
clearance from the LLDA, as required under Section 4,
par. (d), of Republic Act. No. 4850, as amended by P.D.
No. 813 and Executive Order No. 927. While there is
also an allegation that the said project was without an
Environmental Compliance Certificate from the
Environmental Management Bureau (EMB) of the
DENR, the primary jurisdiction of the LLDA over this
case
was
recognized
by
the
Environmental
Management Bureau of the DENR when the latter
acted as intermediary at the meeting among the

The irresistible answer is in the affirmative.

Having thus resolved the threshold question, the

inquiry then narrows down to the following issue: Does
the LLDA have the power and authority to issue a
"cease and desist" order under Republic Act No. 4850
and its amendatory laws, on the basis of the facts
presented in this case, enjoining the dumping of
garbage in Tala Estate, Barangay Camarin, Caloocan
City.

The cease and desist order issued by the LLDA

requiring the City Government of Caloocan to stop
dumping its garbage in the Camarin open dumpsite
found by the LLDA to have been done in violation of
Republic Act No. 4850, as amended, and other relevant
environment laws, 23 cannot be stamped as an
unauthorized exercise by the LLDA of injunctive
powers. By its express terms, Republic Act No. 4850,
as amended by P.D. No. 813 and Executive Order No.
927, series of 1983, authorizes the LLDA to "make,
alter or modify order requiring the discontinuance or
pollution." 24 (Emphasis supplied) Section 4, par. (d)
explicitly authorizes the LLDA to make whatever order
may be necessary in the exercise of its jurisdiction.

To be sure, the LLDA was not expressly conferred the

power "to issue and ex-parte cease and desist order"
in a language, as suggested by the City Government of
Caloocan, similar to the express grant to the defunct
National Pollution Control Commission under Section 7
of P.D. No. 984 which, admittedly was not reproduced
in P.D. No. 813 and E.O. No. 927, series of 1983.
However, it would be a mistake to draw therefrom the
conclusion that there is a denial of the power to issue
the order in question when the power "to make, alter
or modify orders requiring the discontinuance of
pollution" is expressly and clearly bestowed upon the
LLDA by Executive Order No. 927, series of 1983.
Assuming arguendo that the authority to issue a
"cease and desist order" were not expressly conferred
by law, there is jurisprudence enough to the effect that
the rule granting such authority need not necessarily
be express. 25 While it is a fundamental rule that an
administrative agency has only such powers as are
expressly granted to it by law, it is likewise a settled
rule that an administrative agency has also such
powers as are necessarily implied in the exercise of its
express powers. 26 In the exercise, therefore, of its
express powers under its charter as a regulatory and
quasi-judicial body with respect to pollution cases in
the Laguna Lake region, the authority of the LLDA to
issue a "cease and desist order" is, perforce, implied.
Otherwise, it may well be reduced to a "toothless"
paper agency.

In this connection, it must be noted that in Pollution

Adjudication Board v. Court of Appeals, et al., 27 the
Court ruled that the Pollution Adjudication Board (PAB)
has the power to issue an ex-parte cease and desist
order when there is prima facieevidence of an
establishment exceeding the allowable standards set
by the anti-pollution laws of the country. The ponente,
Associate Justice Florentino P. Feliciano, declared:
Ex parte cease and desist orders are
permitted by law and regulations in
situations like that here presented
precisely
because
stopping
the
continuous discharge of pollutive and
untreated effluents into the rivers and
other inland waters of the Philippines
cannot be made to wait until protracted
litigation over the ultimate correctness or
propriety of such orders has run its full
course, including multiple and sequential
appeals such as those which Solar has
taken, which of course may take several
years. The relevant pollution control
statute and implementing regulations
were enacted and promulgated in the
exercise of that pervasive, sovereign
power to protect the safety, health, and
general welfare and comfort of the public,
as well as the protection of plant and
animal life, commonly designated as the
police power. It is a constitutional
commonplace
that
the
ordinary

requirements of procedural due process

yield to the necessities of protecting vital
public interests like those here involved,
through the exercise of police power. . . .
The immediate response to the demands of "the
necessities of protecting vital public interests" gives
vitality to the statement on ecology embodied in the
Declaration of Principles and State Policies or the 1987
Constitution. Article II, Section 16 which provides:
The State shall protect and advance the
right of the people to a balanced and
healthful ecology in accord with the
rhythm and harmony of nature.
As a constitutionally guaranteed right of every person,
it carries the correlative duty of non-impairment. This
is but in consonance with the declared policy of the
state "to protect and promote the right to health of the
people and instill health consciousness among
them." 28 It is to be borne in mind that the Philippines
is party to the Universal Declaration of Human Rights
and the Alma Conference Declaration of 1978 which
recognize health as a fundamental human right. 29
The issuance, therefore, of the cease and desist order
by the LLDA, as a practical matter of procedure under
the circumstances of the case, is a proper exercise of
its power and authority under its charter and its
amendatory laws. Had the cease and desist order
issued by the LLDA been complied with by the City

Government of Caloocan as it did in the first instance,

no further legal steps would have been necessary.
The charter of LLDA, Republic Act No. 4850, as
amended, instead of conferring upon the LLDA the
means of directly enforcing such orders, has provided
under its Section 4 (d) the power to institute
"necessary legal proceeding against any person who
shall
commence
to
implement
or
continue
implementation of any project, plan or program within
the Laguna de Bay region without previous clearance
from the LLDA."
Clearly, said provision was designed to invest the LLDA
with sufficiently broad powers in the regulation of all
projects initiated in the Laguna Lake region, whether
by the government or the private sector, insofar as the
implementation of these projects is concerned. It was
meant to deal with cases which might possibly arise
where decisions or orders issued pursuant to the
exercise of such broad powers may not be obeyed,
resulting in the thwarting of its laudabe objective. To
meet
such
contingencies,
then
the
writs
of mandamus and injunction which are beyond the
power of the LLDA to issue, may be sought from the
proper courts.
Insofar as the implementation of relevant anti-pollution
laws in the Laguna Lake region and its surrounding
provinces, cities and towns are concerned, the Court
will not dwell further on the related issues raised which
are more appropriately addressed to an administrative

agency with the special knowledge and expertise of

the LLDA.
WHEREFORE, the petition is GRANTED. The temporary
restraining order issued by the Court on July 19, 1993
enjoining the City Mayor of Caloocan and/or the City
Government of Caloocan from dumping their garbage
at the Tala Estate, Barangay Camarin, Caloocan City is
hereby made permanent.
SO ORDERED.

G.R. No. L-13827

BENJAMIN
MASANGCAY, petitioner,
vs.
THE COMMISSION ON ELECTIONS, respondent.
Godofredo A. Ramos and Ruby Salazar-Alberto for
petitioner.
Office of the Solicitor General and Dominador D. Dayot
for respondent.

BAUTISTA ANGELO, J.:

September 28, 1962

Benjamin Masangcay, with several others, was on

October 14, 1957 charged before the Commission on
Election with contempt for having opened three boxes
bearing serial numbers l-8071, l-8072 and l-8073
containing official and sample ballots for the
municipalities of the province of Aklan, in violation of
the instructions of said Commission embodied in its
resolution promulgated September 2, 1957, and its
unnumbered resolution date March 5, 1957, inasmuch
as he opened said boxes not the presence of the
division superintendent of schools of Aklan, the
provincial auditor, and the authorized representatives
of the Nacionalista Party, the Liberal Party and the
Citizens' Party, as required in the aforesaid resolutions,
which are punishable under Section 5 of the Revised
Election Code and Rule 64 of the Rules of Court.
Masangcay was then the provincial treasurer of Aklan
designated by the Commission in its resolution in Case
CE-No. 270, part II 2 (b) thereof, to take charge of the
receipt and custody of the official ballots, election
forms and supplies, as well as of their distribution,
among the different municipalities of the province.

In compliance with the summons issued to Masangcay

and his co-respondents to appear and show cause why
they should not be punished for contempt on the basis
of the aforementioned charge, they all appeared
before the Commission on October 21, 1957 and
entered a plea of not guilty. Thereupon, evidence was
presented by both the prosecution and the defense,
and on December 16, 1957 the Commission rendered
its decision finding Masangcay and his co-respondent
Molo guilty as charged and sentencing each of them to
suffer three months imprisonment and pay a fine of
P500, with subsidiary imprisonment of two months in
case of insolvency, to be served in the provincial jail of
Aklan. The other respondents were exonerated for lack
of evidence.
Masangcay brought the present petition for review
raising as main issue the constitutionality of Section 5
of the Revised Election Code which grants the
Commission on Elections as well as its members the
power to punish acts of contempt against said body
under the same procedure and with the same
penalties provided for in Rule 64 of the Rules of Court
in that the portion of said section which grants to the
Commission and members the power to punish for
contempt is unconstitutional for it infringes the
principle underlying the separation of powers that
exists among the three departments of our
constitutional form of government. In other words, it is
contended that, even if petitioner can be held guilty of
the act of contempt charged, the decision is null and
void for lack of valid power on the part of the
Commission to impose such disciplinary penalty under
the principle of separation of powers. There is merit in
the contention that the Commission on Elections lacks
power to impose the disciplinary penalty meted out to

petitioner in the decision subject of review. We had

occasion to stress in the case of Guevara v. The
Commission on Elections 1 that under the law and the
constitution, the Commission on Elections has only the
duty to enforce and administer all laws to the conduct
of elections, but also the power to try, hear and decide
any controversy that may be submitted to it in
connection with the elections. In this sense, said, the
Commission, although it cannot be classified a court of
justice within the meaning of the Constitution (Section
30, Article VIII), for it is merely an administrative body,
may however exercise quasi-judicial functions insofar
as controversies that by express provision law come
under its jurisdiction. The difficulty lies in drawing the
demarcation line between the duty which inherently is
administrative in character and a function which calls
for the exercise of the quasi-judicial function of the
Commission. In the same case, we also expressed the
view that when the Commission exercises a ministerial
function it cannot exercise the power to punish
contempt because such power is inherently judicial in
nature, as can be clearly gleaned from the following
doctrine we laid down therein:
. . . In proceeding on this matter, it only
discharged a ministerial duty; it did not exercise
any judicial function. Such being the case, it
could not exercise the power to punish for
contempt as postulated in the law, for such
power is inherently judicial in nature. As this
Court has aptly said: 'The power to punish for
contempt is inherent in all courts; its existence
is essential to the preservation of order in
judicial proceedings, and to the enforcement of
judgments, orders and mandates courts, and,
consequently, in the administration of justice

(Slade Perkins v. Director of Prisons, 58 Phil.,

271; U.S. v. Lee Hoc, 36 Phil., 867; In Re Sotto,
46 O.G., 2570; In Re Kelly, Phil., 944). The
exercise of this power has always been regarded
as a necessary incident and attribute of courts
(Slade Perkins v. Director of Prisons, Ibid.). Its
exercise by administrative bodies has been
invariably limited to making effective the power
to elicit testimony (People v. Swena, 296 P.,
271). And the exercise of that power by an
administrative body in furtherance of its
administrative function has been held invalid
(Langenberg v. Lecker, 31 N.E., 190; In Re Sims,
37 P., 135; Roberts v. Hacney, 58 SW.,
810).1awphl.nt
In the instant case, the resolutions which the
Commission tried to enforce and for whose violation
the charge for contempt was filed against petitioner
Masangcay merely call for the exercise of an
administrative or ministerial function for they merely
concern the procedure to be followed in the
distribution of ballots and other election paraphernalia
among the different municipalities. In fact, Masangcay,
who as provincial treasurer of Aklan was the one
designated to take charge of the receipt, custody and
distribution of election supplies in that province, was
charged with having opened three boxes containing
official ballots for distribution among several
municipalities in violation of the instructions of the
Commission which enjoin that the same cannot be
opened except in the presence of the division
superintendent of schools, the provincial auditor, and
the authorized representatives of the Nacionalista
Party, the Liberal Party, and the Citizens' Party, for he
ordered their opening and distribution not in

accordance with the manner and procedure laid down

in said resolutions. And because of such violation he
was dealt as for contempt of the Commission and was
sentenced accordingly. In this sense, the Commission
has exceeded its jurisdiction in punishing him for
contempt, and so its decision is null and void.
Having reached the foregoing conclusion, we deem it
unnecessary
to
pass
on
the
question
of
constitutionality raised by petitioner with regard to the
portion of Section 5 of the Revised Election Code which
confers upon the Commission on Elections the power
to punish for contempt for acts provided for in Rule 64
of our rules of court.
WHEREFORE, the decision appealed from insofar as
petitioner Benjamin Masangcay is concerned, as well
as the resolution denying petitioner's motion for
reconsideration, insofar as it concerns him, are hereby
reversed, without pronouncement as to costs.
Bengzon, C. J., Padilla, Labrador, Concepcion, Barrera,
Paredez, Dizon, Regala and Makalintal, JJ., concur.
Reyes, J. B. L., J., took no part.

[G.R.

Nos.

49664-67.

November

22,

1990.]

PANTRANCO SOUTH EXPRESS, INC., Petitioner, v.

BOARD OF TRANSPORTATION and BATANGAS
LAGUNA TAYABAS BUS CO., INC., Respondents.
Parco,
Sabillo,
for Petitioner.

Regondola

&

Maronilla

Pablito A. Gahol for BLTB Co.

SYLLABUS
1. CIVIL LAW; COMMON CARRIERS; CERTIFICATE OF
PUBLIC CONVENIENCE; BOARD OF TRANSPORTATION,
GIVEN THE POWER AND DISCRETION TO DECREE OR
REFUSE THE CANCELLATION OF THE SAME IF
SUPPORTED WITH EVIDENCE; OTHER BASES FOR BOTS
DECISIONS. There can be no dispute that the law

(Section 16 (n) of the Public Service Act) gives to the

BOT (successor of the Public Service Commission)
ample power and discretion to decree or refuse the
cancellation of a certificate of public convenience
issued to an operator as long as there is evidence to
support its action, as held by this Court in a long line of
cases, wherein it was even intimated that in matters of
this nature so long as the action is justified this Court
will not substitute its discretion for that of the BOT (see
Javier, Et. Al. v. de Leon, Et Al., 109 Phil. 751; Santiago
Ice Plant and Co. v. Lahoz, 87 Phil. 221; Raymundo
Transportation Co. v. Cedra, 99 Phil. 99; Manila Yellow
Taxicab Co., Inc. v. Castelo, 108 Phil. 394; Dagupan Ice
Plant Co., Inc. v. de Lucero, Et. Al. citing Manila Yellow
Taxicab Co.; Inc., Et Al., v. Araullo, 34 O.G. 241;
Sambrano v. Northern Luzon Transportation Co., 35
O.G. 2271). The BOT, in refusing to cancel the
certificates of public convenience of BLTB, relied on
these pieces of evidence; (1) the letter of BLTB dated
September 18, 1972; (2) reports/complaints from the
general public; (3) reports of its fieldmen; and (4) its
own observations acquired thru inspection trips, all of
which form part of its records. As We have ruled
before, the BOT is particularly a fact-finding body
whose decisions on questions regarding certificates of
public convenience are influenced not only by the facts
as disclosed by the evidence in the case before it but
also by the reports of its field agents and inspectors
that are periodically submitted to it (see La Mallorca
and Pampanga Bus Co., Inc. v. Mercado, G.R. No. L19120, November 29, 1965, 15 SCRA 343). Likewise,
the BOT has the power to take into consideration the
result of its own observation and investigation of the
matter submitted to it for decision, in connection with
other evidence presented at the hearing of a case
(Manila Yellow Taxicab Co., Inc., Et. Al. v. N. & B.

Stables Co., Inc., 60 Phil. 851 citing Manila Yellow

Taxicab Co., Inc., Et. Al. v. Danon, 58 Phil. 75; Manila
Electric
Co.
v.
Balagtas,
58
Phil.
429).
2. ID.; ID.; ID.; MERE FAILURE TO TEMPORARILY
OPERATE THE TRANSPORTATION LINES SHOULD NOT
BE A GROUND FOR THE CANCELLATION THEREOF.
Taking into consideration BLTBs letter dated
September 18, 1972, it acted in good faith when it did
not immediately operate on those lines and not
because of a design to prejudice public interest.
Certificates of public convenience involve investment
of a big amount of capital, both in securing the
certificate and in maintaining the operation of the lines
covered thereby, and mere failure to operate
temporarily should not be a ground for cancellation,
especially as when, in the case at bar, the suspension
of the service was directly caused by circumstances
beyond
the
operators
control
(Pangasinan
Transportation Co. v. F.F. Halili, Et Al., 95 Phil. 694).
3. ID.; ID.; ID.; MAY NOT BE VALIDLY REVOKED IN THE
ABSENCE OF WILLFUL AND CONTUMACIOUS VIOLATION
BY THE UTILITY OPERATOR; BOT GUIDED BY PUBLIC
NECESSITY
AND
CONVENIENCE
AS
PRIMARY
CONSIDERATIONS. In absence of showing that there
is willful and contumacious violation on the part of the
utility operator, no certificate of public convenience
may be validly revoked (Manzanal v. Ausejo, Et Al.,
G.R. No. L-31056, August 4, 1988, 164 SCRA 36). More
importantly, what cannot be ignored is that the needs
of the public are paramount, as elucidated by the BOT
in its order. In the exercise of its power to grant or
cancel certificates of public convenience, the BOT is
guided by public necessity and convenience as
primary considerations (see Dizon v. Public Service

Commission, Et Al., G.R. No. L-34820, April 30, 1973,

50 SCRA 500).
DECISION

On March 24, 1976, in Cases Nos. 70-5749, 70-5750

and 70-5751, PANTRANCO filed an urgent petition
charging BLTB with abandoning said services from
March, 1975 to March, 1976 and reiterating its prayer
for the cancellation of the certificates of public
convenience
(pp.
77-78,
Rollo).

MEDIALDEA, J.:
This is a petition for certiorari and/or prohibition with
prayer for the issuance of a restraining order seeking
to annul the order of public respondent Board of
Transportation
dated
January
4,
1979.
The antecedent facts, as culled from the pleadings, are
as
follows:chanrob1es
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library
On August 5, 1971, the then Public Service
Commission granted certificates of public convenience
to private respondent Batangas Laguna Tayabas Bus
Co., Inc. (BLTB) for the operation of twelve (12) bus
units on the Pasay City Legaspi City line (Case No.
70-5749); six (6) bus units on the Pasay City Bulan,
Sorsogon line (Case No. 70-5750), and ten (10) bus
units on the Pasay City Sorsogon line (Case No. 705751) (pp. 59-64, Rollo).chanrobles law library : red
On April 4, 1975, petitioner Pantranco South Express,
Inc. (PANTRANCO) filed a complaint against BLTB
before public respondent Board of Transportation
(BOT), docketed as Case No. 75-31-C, charging it with
abandonment of services on said lines from August,
1971 to April, 1975 and praying for the cancellation of
BLTBs certificates of public convenience (pp. 69-70,
Rollo).

BLTB did not file any written answer either to the

complaint in Case No. 75-31-C or to the urgent petition
in Cases Nos. 70-5749, 70-5750, and 70-5751. Rather,
in a Motion dated July 26, 1978, BLTB, referring to
hearings before the BOT on March 24, 1977 and April
13,
1977,
alleged
(pp.
126-128,
Rollo):jgc:chanrobles.com.ph
"3. At said hearings, Respondent admitted nonoperation of the bus services authorized in Cases Nos.
70-5749,70-5750 and 70-5751 and thus the need for
Complainant to present evidence in both proceedings
may
be
dispensed
with.
"4. At the said hearings, Respondent advanced
affirmative defenses on Complainants Urgent Motion
of March 24, 1977 (sic) which Respondent, in its
Rejoinder of May 5, 1977, adopted also as its
affirmative defenses with respect to Case No. 75-31-C.
"Briefly, these affirmative defenses are:chanrob1es
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library
(a) Respondent actually registered under PUB
denomination all the twenty eight (28) buses
authorized for operation under the certificates sought
to
be
cancelled
(Annex
A);

(b) The following supervening factors which are

beyond Respondents control however, arose and
prevented Respondent from operating the lines at
issue:chanrob1es
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library

Respondent

(1)

(c) Respondent has the capability to operate, in fact,

has ready the full twenty-eight (28) buses needed for
full
operation
of
the
authorized
services;

The

gasoline

crises

starting

1971;

(2) The destructive big floods in 1972 and 1974;

(3) The general troubled conditions of peace and order
in 1971 and 1972 leading to the declaration of martial
law;
(4) Starting 1973 and on to 1974,1975 and 1976 the
nearly prohibitive cost of units and spare parts (if
available at all), the higher costs of operations and
acute
tire
shortages
particularly
in
1974;
(5) All these, which are of general public knowledge
and known to the Board, brought the whole land
transportation industry in what might be termed as in
extremis condition causing the bankruptcy of many
operators,
big
and
small;
and
(6) Complainant Pantranco South Express, Inc. was not
spared the ill effects of these adverse conditions to the
extent that up to the present it has not registered all
the buses required for its regular bus operations
(Annex
B,
B-1).
"5. At the said hearings also, Respondent prayed that
these incidents in these proceedings be considered
and decided in the light of present conditions which
are:chanrob1es
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library
(a)

The

certificates

of

public

convenience

of

are

still

valid;

(b) Respondent is willing and desirous to operate (sic)

the
said
certificates;

(d) Complainant is not operating all its authorized bus

services for lack of sufficient rolling stock;
(e) The need for the services sought to be cancelled is
patent, in fact, urgent at the present time; and
(f) That the public interest is paramount against other
considerations such as the incidents in these
cases."cralaw
virtua1aw
library
On January 4, 1979, the BOT issued an order, the
dispositive portion of which reads (p. 133,
Rollo):jgc:chanrobles.com.ph
"In view of all the foregoing, this Board, in addition to
its
rulings
mentioned
above

"1. Orders respondent to operate within fifteen (15)

days from date hereof the whole complement of
twenty-eight (28) units authorized under the said
certificates, utilizing for the purpose such units
presently authorized as RESERVES and inform the
Board within ten (10) days from commencement of
operation, the makes and motor numbers of the units
to be operated for each line and the case numbers
under which they are authorized for appropriate entry
in the records of the above-entitled cases, and

"2. Orders the fine of P10,000.00 imposed above to be

paid to this Board within ten (10) days from receipt by
it of a copy of this Order and declares the consolidated
complaints filed in the above-entitled cases closed and
terminated.
"Failure of respondent/applicant to comply with any of
the foregoing requirements shall be considered
sufficient cause for this Board to withdraw the
authority
herein
granted.
"SO

ORDERED."cralaw

virtua1aw

library

It rationalized the non-cancellation of BLTBs

certificates of public convenience, as follows (pp. 128
A-133,
Rollo):chanrobles
virtual
lawlibrary
"Obviously, cancellation of a certificate of public
convenience is a penalty of the severest degree. Its
consequences are suffered not exclusively by the
operator; it extends to the travelling public whose
needs for transportation facilities would further be
aggravated by a diminution of needed services.
Consequently, where such a penalty is prayed for, this
Board requires the evidence to be strong. Less than
that this Board must apply the less severe penalties
provided for by law, but equally disciplinary in nature.
"Sec. 16 (n) of the Public Service Law empowers this
Board to suspend or revoke any certificate . . .
whenever the holder thereof has violated or wilfully
(sic) and contumaciously refused to comply with any
order, rule or regulation of the Board or any provision
of
this
Act..
.
.

"Sec. 21 of the same law provides that every public

service violating or failing to comply with the terms
and conditions of any certificate or any orders,
decisions or regulations of the Commission shall be
subject to a fine not exceeding two hundred pesos per
day for every day of service during which such default
or
violation
continues
.
.
.
"A reading of both provisions would show that failure
to comply with the terms and conditions of any
certificate of public convenience is basically punished
with a fine, unless the violation is willful or
contumacious, in which case the penalty of
suspension, or cancellation may be imposed.
"Judged by the foregoing standards, this Board
declares the evidence of the complainant to be sadly
lacking in elements that would qualify the
respondents failure to operate as wilful and
contumacious. True the respondent did not operate on
its certificate from the time it was granted on August
4, 1971 up to the present. It had not justified its nonoperation from said date up to September 2, 1972. But
on September 2, 1972, the respondent justified its
non-operation by writing to the Board, that because of
unfinished portions of the road it could not render the
service authorized by the Board to be rendered. The
Board
never
overruled
the Respondent.
"x

"At this point, it must be borne in mind that whether in

the case of application for new services, or for the
cancellation of lines already granted, this Board must
determine
what
the
public
need
is.

"This leads us into discussing what the public need is

in the areas covered by the certificates of public
convenience
in
question.
"The Board, in its desire to be responsive to public
need, has always kept itself informed of actual and
latest transportation conditions in the provinces,
including the Bicol region. Thru reports/complaints
from the general public, from reports of its fieldmen,
and from its own personal observations acquired thru
inspection trips, this Board is aware that buses which
are operating are very much less than what has been
authorized. This was officially confirmed in a meeting
of provincial and Metro-Manila bus operators held in
Malacaang Palace on June 21, 1976, presided over by
His Excellency, President Ferdinand E. Marcos himself.
"In Bicol region, for instance, in the past four years
(1974, 1975, 1976 and 1977) PSEI (PANTRANCO)
registered and operated less than 50% of its
authorized units:chanrob1es virtual 1aw library
Year

Authorized

1974
1975

Units

466
(not

Registered

159
available)

units
162

units

1976

453

227

units

1977

464

221

units

and among the lines not so operated or only partially

operated, either through expiration of certificates,
petitioned suspension of operation or for sheer lack of
units are long distance lines from Manila to the

provinces of Quezon, Camarines Norte, Camarines Sur,

Albay and Sorsogon aside from lines serving interprovincial and local needs in Quezon province and the
whole Bicol Region. Among them are the following
lines which are concurrert in whole or in portions of the
lines Pasay City Legaspi City, Pasay Sorsogon and
Pasay Bulan, all the said lines requiring the
operation of some two hundred twenty seven (227)
buses:jgc:chanrobles.com.ph
"x

"The non-operation by PSEI (PANTRANCO) of these

more than two hundred (200) buses clearly requires
the entry or operation of an equal number of buses.
Any prohibition against an effort to fill up a public need
would
be
contrary
to
public
interest.
"Public interest will better be served if respondent is
allowed to operate the service authorized in its
certificate of public convenience. To cancel these
certificates at a time when the clamor and demand for
such service have been increasing day to day, prodded
by the peoples desire to avail of the excellent road
conditions, which in turn conduces to fast and
convenient travel, would be to negate and turn back
the clock of progress which has been seeping steadily
and constantly to the long neglected vast communal
area that is the Bicol Region. To authorize the
operation of these services will complement the
governments multi-purpose development effort to
hasten the Socio-Economic growth of these areas,
notable among which are the Philippines-Japan
Friendship Highway, of which the routes covered by
applicant/respondents certificates traverse and the
Bicol River Basin Development Project, a program

designed to tap the rich natural resources of the

region."cralaw
virtua1aw
library

certificates of public convenience is addressed to the

sound
discretion
of
the
BOT;

Hence,

2) its letter dated September 18, 1972 (erroneously

referred to as the letter dated September 2, 1972)
forms
part
of
the
BOTs
records;
and

the

present

petition.

On January 15, 1979, We issued a temporary

restraining order enjoining the BOT from enforcing its
January 4, 1979 order (pp. 147-148, Rollo).chanrobles
virtual
lawlibrary
In this petition, PANTRANCO imputes grave abuse of
discretion, acting without or in excess of jurisdiction on
the part of the BOT when it issued the questioned
order, as indicated by several circumstance that it
enumerated. Among these, only the following deserve
discussion:chanrob1es
virtual
1aw
library
1) refusal to cancel the certificates of public
convenience of BLTB despite its abandonment and/or
non-operation on the subject lines since August 5,
1971
up
to
the
present;
2) using as basis for its questioned order BLTBs letter
dated September 2, 1972 (wherein it justified its nonoperation on account of unfinished portions of the
road) which is not part of the records of the case; and
3) resorting to extraneous facts not supported by
competent evidence as basis for its conclusion that the
demand of public need would be more paramount than
the
need
to
penalize
BLTB.
For its part, BLTB contends that:chanrob1es virtual
1aw
library
1)

the

cancellation

or

non-cancellation

of

its

3) the BOT acted correctly in the exercise of its sound

discretion and within its jurisdiction when it found that
the demand of public need would be paramount than
the
need
to
penalize
it
(BLTB).
There can be no dispute that the law (Section 16 (n) of
the Public Service Act) gives to the BOT (successor of
the Public Service ommission) * ample power and
discretion to decree or refuse the cancellation of a
certificate of public convenience issued to an operator
as long as there is evidence to support its action, as
held by this Court in a long line of cases, wherein it
was even intimated that in matters of this nature so
long as the action is justified this Court will not
substitute its discretion for that of the BOT (see Javier,
Et. Al. v. de Leon, Et Al., 109 Phil. 751; Santiago Ice
Plant and Co. v. Lahoz, 87 Phil. 221; Raymundo
Transportation Co. v. Cedra, 99 Phil. 99; Manila Yellow
Taxicab Co., Inc. v. Castelo, 108 Phil. 394; Dagupan Ice
Plant Co., Inc. v. de Lucero, Et. Al. citing Manila Yellow
Taxicab Co.; Inc., Et Al., v. Araullo, 34 O.G. 241;
Sambrano v. Northern Luzon Transportation Co., 35
O.G. 2271). The BOT, in refusing to cancel the
certificates of public convenience of BLTB, relied on
these pieces of evidence; (1) the letter of BLTB dated
September 18, 1972; (2) reports/complaints from the
general public; (3) reports of its fieldmen; and (4) its
own observations acquired thru inspection trips, all of
which form part of its records. As We have ruled

before, the BOT is particularly a fact-finding body

whose decisions on questions regarding certificates of
public convenience are influenced not only by the facts
as disclosed by the evidence in the case before it but
also by the reports of its field agents and inspectors
that are periodically submitted to it (see La Mallorca
and Pampanga Bus Co., Inc. v. Mercado, G.R. No. L19120, November 29, 1965, 15 SCRA 343). Likewise,
the BOT has the power to take into consideration the
result of its own observation and investigation of the
matter submitted to it for decision, in connection with
other evidence presented at the hearing of a case
(Manila Yellow Taxicab Co., Inc., Et. Al. v. N. & B.
Stables Co., Inc., 60 Phil. 851 citing Manila Yellow
Taxicab Co., Inc., Et. Al. v. Danon, 58 Phil. 75; Manila
Electric
Co.
v.
Balagtas,
58
Phil.
429).
Taking into consideration BLTBs letter dated
September 18, 1972, it acted in good faith when it did
not immediately operate on those lines and not
because of a design to prejudice public interest.
Certificates of public convenience involve investment
of a big amount of capital, both in securing the
certificate and in maintaining the operation of the lines
covered thereby, and mere failure to operate
temporarily should not be a ground for cancellation,
especially as when, in the case at bar, the suspension
of the service was directly caused by circumstances
beyond
the
operators
control
(Pangasinan
Transportation Co. v. F.F. Halili, Et Al., 95 Phil. 694). In
the absence of showing that there is willful and
contumacious violation on the part of the utility
operator, no certificate of public convenience may be
validly revoked (Manzanal v. Ausejo, Et Al., G.R. No. L31056, August 4, 1988, 164 SCRA 36). More
importantly, what cannot be ignored is that the needs

of the public are paramount, as elucidated by the BOT

in its order. In the exercise of its power to grant or
cancel certificates of public convenience, the BOT is
guided by public necessity and convenience as
primary considerations (see Dizon v. Public Service
Commission, Et Al., G.R. No. L-34820, April 30, 1973,
50 SCRA 500).chanrobles lawlibrary : rednad
Apparently, PANTRANCOs purpose in instituting the
proceedings for cancellation of BLTBs certificates of
public convenience is to remove it (BLTB) as a
competitor in the business in which they are both
engaged (see Pangasinan Transportation Co. v. F.F.
Halili, Et Al., supra), which is detestable. Experience
has demonstrated that healthy competition always
redounds to the benefit of the commuters and the
development
of
transportation
as
a
whole.
ACCORDINGLY, the petition is hereby DISMISSED. The
order of the Board of Transportation dated January 4,
1979 is AFFIRMED. The temporary restraining order
issued
on
January
15,
1979
is
LIFTED.
SO ORDERED.

G.R. No. L-17778

November 30, 1962

IN RE CONTEMPT PROCEEDINGS AGAINST

ARMANDO RAMOS, JESUS L. CARMELO, in his
capacity as Chairman of the Probe Committee,
Office of the Mayor of Manila, petitioner-appellant,
vs.
ARMANDO RAMOS, respondent-appellee.
City Fiscal Hermogenes Concepcion, Jr. for petitionerappellant.
Armando Ramos for and in his own behalf as
respondent-appellee.
REGALA, J.:
On February 3, 1960, the Mayor of Manila issued an
executive order creating a committee "to investigate
the anomalies involving the license inspectors and
other personnel of the License Inspection Division of
the Office of the City Treasurer and of the License and
Permits Division of this Office (of the Mayor)." He
named Mr. Jesus L. Carmelo as chairman of said
committee.
It appears that the committee issued subpoenas to
Armando Ramos, a private citizen working as a
bookkeeper in the Casa de Alba, requiring him to
appear before it on June 3, 8, 9, 15 and 16 and August
4 and 11, 1960, in connection with an administrative
case against Crisanta Estanislao but that Ramos, on

whom the subpoenas were duly served, refused to

appear.
Claiming that Ramos' refusal tended "to impede,
obstruct, or degrade the administrative proceedings,"
petitioner filed in the Court of First Instance of Manila a
petition to declare Armando Ramos in contempt. After
hearing, during which petitioner was required to show
a prima facie case, the trial court dismissed the
petition. The lower court held that there is no law
empowering committees created by municipal mayors
to issue subpoenas and demand that witnesses testify
under oath. It also held that to compel Ramos to testify
would be to violate his right against self-incrimination.
It appears that in a statement given to investigators of
the Office of the Mayor, Ramos admitted having
misappropriated on several occasions, sums of money
given to him by the owner of Casa de Alba for the
payment of the latter's taxes for 1956-1959 and that
this fact had not been discovered earlier because
Ramos used to entertain employees in the City
Treasurer's office at Casa de Alba where Ramos was a
bookkeeper as stated above. The trial court held that
to compel Ramos to confirm this statement in the
administrative case against certain employees in the
Office of the City Treasurer would be to compel him to
give testimony that could be used against him in a
criminal case for estafa of which the owner of Casa de
Alba was the offended party. From that decision,
petitioner appealed to this Court.

The main issue in this ease is the power, if any, of

committee, like the committee of which petitioner is
the chairman, to subpoena witnesses to appear before
it and to ask for their punishment in case of refusal.
The rule is that Rule 64 (Contempt) 1 of the Rules of
Court applies only to inferior and superior courts and
does not comprehend contempt committed against
administrative officials or bodies like the one in this
case, unless said contempt is clearly considered and
expressly defined as contempt of court, as is done in
paragraph 2 of Section 580 of the Revised
Administrative Code. (People v. Mendoza; People v.
Dizon, 49 O. G. No. 2, 541.)
Petitioner invokes Section 580 of the Revised
Administrative Code which provides as follows:
Powers incidental to taking of testimony.
When authority to take testimony or evidence is
conferred upon an administrative officer or upon
any nonjudicial person, committee, or other
body, such authority shall be understood to
comprehend the right to administer oaths and
summons witnesses and shall include authority
to require the production of documents under
a subpoena duces tecum or otherwise, subject
in all respects to the same restrictions and
qualifications as apply in judicial proceedings of
a similar character.

Saving the provisions of section one hundred

and two of this Act, any one who, without lawful
excuse, fails to appear upon summons issued
under the authority of the preceding paragraph
or who, appearing before any individual or body
exercising the power therein defined, refuses to
make oath, give testimony, or produce
documents for inspection, when thereunto
lawfully required, shall be subject to discipline
as in case of contempt of court and upon
application of the individual or body exercising
the power in question shall be dealt with by the
judge of first instance having jurisdiction of the
case in the manner provided by law.
One who invokes this provision of the law must first
show that he has "authority to take testimony or
evidence" before he can apply to the courts for the
punishment of hostile witnesses. (Francia v. Pecson, et
al., 87 Phil. 100.)
Now, what authority to take testimony does
petitioner's committee have from which the power to
cite witnesses may be implied, pursuant to section
580?
To be sure, there is nothing said in the executive order
of the Mayor creating the committee about such a
grant of power. All that the order gives to this body is
the power to investigate anomalies involving certain
city employees.

Petitioner contends that the Mayor of Manila has the

implied power to investigate city officials and
employees appointed by him to the end that the power
expressly vested in him to suspend and remove such
officials of employees (Sec. 22, Republic Act No. 409)
may be justly and fairly exercised. We agree with this
proposition
and
We
held
so
in
the
case
ofPagkanlungan v. De la Fuente, 48 O.G. No. 10, p.
4332. But We do not agree with the petitioner that a
delegation of such power to investigation implies also
a delegation of the power to take testimony or
evidence of witnesses whose appearance may be
require by the compulsory process of subpoena. Thus,
in denying this power to an investigating body in the
Office of the Mayor of Manila, We said in Francia v.
Pecson, et al., supra: "Were do not think the mayor (of
Manila) can delegate or confer the powers to
administer oaths, to take testimony, and to issue
subpoenas."
Furthermore, it is doubtful whether the provisions of
section 580 of the Administrative Code are applicable
to the City of Manila as these pertain to national
bureaus or offices of the government.
Citing 50 Am. Jur. 449, petitioner contends that "the
power of the investigation committee to issue
compulsory process to secure the attendance of
witnesses
undoubtedly
exists
since
only
complimentary to the power of the mayor to
investigate, suspend and remove city officers and
employees, supra, is the recognized rule that where

the statute grants a right, it also confers by implication

every particular power necessary for the exercise
thereof." There is no merit in the argument. In the first
place, the authority cited speaks of statutory, grant of
power to a body. Here, We have seen that whatever
power may be claimed by petitioner's committee may
only be traced to the power of the Mayor to investigate
as implied from his power to suspend or remove
certain city employees. There is no statutory grant of
power to investigate to petitioner's committee.
In the second place, even granting that the Mayor has
the implied power to require the appearance of
witnesses before him, the rule, as noted earlier, is that
the Mayor can not delegate this power to a body like
the committee of the petitioner. (Francia v. Pecson, et
al., supra.)
Lastly, 50 Am. Jur. Sec. 428, p. 450 itself admits an
exception to the rule invoked by the petitioner. Thus, it
is stated that "where the liberty and property of
persons are sought to be brought within the operation
of a power claimed to be impliedly granted by an act
because necessary to its due execution, the case must
be clearly seen to be within those intended to be
reached." Here, no less than the liberty of Armando
Ramos is involved in the claim of the committee to the
right to cite witnesses.
We hold, therefore, that petitioner's committee has no
power to cite witnesses to appear before it and to ask
for their punishment in case of refusal. This conclusion

makes it unnecessary for Us to pass upon the other

error assigned by petitioner as having been allegedly
committed by the trial court.
WHEREFORE, the decision of the Court of First Instance
of Manila is hereby affirmed, without pronouncement
as to costs.
Padilla, Bautista Angelo, Labrador, Concepcion, Reyes,
J.B.L., Barrera, Paredes, Dizon and Makalintal,
JJ., concur.
Bengzon, C.J., took no part.

Office of the Solicitor General Antonio P. Barredo, Ist.

Assistant Solicitor General Esmeraldo Umali and
Solicitor Bernardo P. Pardo for petitioners.
Gregorio A.
respondents.

Ejercito

and

Felix

C.

Chavez

for

MARTIN, J.:

G.R. No. L-29274 November 27, 1975

SEC. QUIRICO P. EVANGELISTA, in his capacity as
Secretary of the Presidential Agency on Reforms
and
Government
Operations,
and
the
PRESIDENTIAL AGENCY ON REFORMS AND
GOVERNMENT OPERATIONS (PARGO), petitioner,
vs.
HON. HILARION U. JARENCIO, as Presiding Judge,
Court of First Instance of Manila, Branch XXIII,
and FERNANDO MANALASTAS, Assistant City
Public Service Officer of Manila, and ALL OTHER
CITY OFFICIALS AND EMPLOYEES SIMILARLY
SITUATED, respondents.

This is an original action for certiorari and prohibition

with preliminary injunction, under Rule 65 of the Rules
of Court, seeking to annul and set aside the order of
respondent Judge, the Honorable Hilarion J. Jarencio,
Presiding Judge of the Court of First Instance of Manila,
dated July 1, 1968, in Civil Case No. 73305, entitled
"Fernando Manalastas vs. Sec. Ramon D. Bagatsing,
etc.", which reads as follows:
IT IS ORDERED that, upon the filing of a
bond in the amount of P5,000.00, let the
writ of preliminary injunction prayed for
by the petitioner [private respondent] be
issued
restraining
the
respondents
[petitioners],
their
agents,
representatives, attorneys and/or other
persons acting in their behalf from further
issuing subpoenas in connection with
the fact-finding investigations
to
the
petitioner [private respondent] and from
instituting contempt proceedings against

the petitioner [private respondent] under

Section 580 of the Revised Administrative
Code. (Stress supplied).

or employee and to file and prosecute the

proper charges with the appropriate
agency.

Pursuant to his special powers and duties under

Section 64 of the Revised Administrative Code, 1 the
President of the Philippines created the Presidential
Agency on Reforms and Government Operations
(PARGO) under Executive Order No. 4 of January 7,
1966. 2 Purposedly, he charged the Agency with the
following functions and responsibilities: 3

For a realistic performance of these functions, the

President vested in the Agency all the powers of an
investigating committee under Sections 71 and 580 of
the Revised Administrative Code, including the power
to summon witnesses by subpoena or subpoena duces
tecum, administer oaths, take testimony or evidence
relevant to the investigation. 4

b. To investigate all activities involving or

affecting immoral practices, graft and
corruptions,
smuggling
(physical
or
technical), lawlessness, subversion, and
all other activities which are prejudicial to
the government and the public interests,
and to submit proper recommendations to
the President of the Philippines.

Whereupon, on June 7, 1968, petitioner Quirico

Evangelista, as Undersecretary of the Agency, issued
to respondent Fernando Manalastas, then Acting City
Public Service Officer of Manila, a subpoena ad
testificandum commanding him "to be and appear as
witness at the Office of the PRESIDENTIAL AGENCY ON
REFORMS AND GOVERNMENT OPERATIONS ... then and
there to declare and testify in a certain investigation
pending therein."

c. To investigate cases of graft and

corruption and violations of Republic Acts
Nos. 1379 and 3019, and gather
necessary evidence to establish prima
facie, acts of graft and acquisition of
unlawfully amassed wealth ... .
h. To receive and evaluate, and to
conduct fact-finding investigations of
sworn complaints against the acts,
conduct or behavior of any public official

Instead of obeying the subpoena, respondent Fernando

Manalastas filed on June 25, 1968 with the Court of
First Instance of Manila an Amended Petition for
prohibition, certiorari and/or
injunction
with
preliminary injunction and/or restraining order
docketed as Civil Case No. 73305 and assailed its
legality.
On July 1, 1968, respondent
aforementioned Order:

Judge

issued

the

IT IS ORDERED that, upon the filing of a

bond in the amount of P5,000.00, let the
writ of preliminary injunction prayed for
by the petitioner [private respondent] be
issued
restraining
the
respondents
[petitioners],
their
agents,
representatives, attorneys and/or other
persons acting in their behalf from further
issuing subpoenas in connection with
the fact-finding investigations
to
the
petitioner [private respondent] and from
instituting contempt proceedings against
the petitioner [private respondent] under
Section 530 of the Revised Administrative
Code. (Stress supplied).
Because of this, petitioners 5 elevated the matter
direct to Us without a motion for reconsideration first
filed on the fundamental submission that the Order is
a patent nullity. 6
As unfurled, the dominant issue in this case is whether
the Agency, acting thru its officials, enjoys the
authority to issue subpoenas in its conduct of factfinding investigations.
It has been essayed that the life blood of the
administrative process is the flow of fact, the
gathering, the organization and the analysis of
evidence. 7 Investigations
are
useful
for
all
administrative functions, not only for rule making,
adjudication, and licensing, but also for prosecuting,

for supervising and directing, for determining general

policy, for recommending, legislation, and for purposes
no more specific than illuminating obscure areas to
find out what if anything should be done. 8 An
administrative agency may be authorized to make
investigations, not only in proceedings of a legislative
or judicial nature, but also in proceedings whose sole
purpose is to obtain information upon which future
action of a legislative or judicial nature may be
taken 9 and may require the attendance of witnesses
in proceedings of a purely investigatory nature. It may
conduct general inquiries into evils calling for
correction, and to report findings to appropriate bodies
and make recommendations for actions. 10
We recognize that in the case before Us, petitioner
Agency draws its subpoena power from Executive
Order No. 4, para. 5 which, in an effectuating mood,
empowered it to "summon witness, administer oaths,
and
take
testimony
relevant
to
the
investigation" 11 with the authority "to require the
production of documents under a subpoena duces
tecum or otherwise, subject in all respects to the same
restrictions and qualifications as apply in judicial
proceedings of a similar character." 12Such subpoena
power operates in extenso to all the functions of the
Agency as laid out in the aforequoted sub-paragraphs
(b),(e), and (h). It is not bordered by nor is it merely
exercisable, as respondents would have it, in quasijudicial or adjudicatory function under sub-paragraph
(b). The functions enumerated in all these subparagraphs (b), (e), and (h) interlink or intertwine with

one another with the principal aim of meeting the very

purpose of the creation of the Agency, which is to
forestall and erode nefarious activities and anomalies
in the civil service. To hold that the subpoena power of
the Agency is confined to mere quasi-judicial or
adjudicatory functions would therefore imperil or
inactiviate the Agency in its investigatory functions
under
sub-paragraphs (e) and (h). More than that, the
enabling authority itself (Executive Order No. 4, para.
5) fixes no distinction when and in what function
should the subpoena power be exercised. Similarly, We
see no reason to depart from the established rule that
forbids differentiation when the law itself makes none.
Nor could We impress upon this subpoena power the
alleged strictures of a subpoena issued under the
Rules of Court 13to abridge its application. The seeming
proviso in Section 580 of the Revised Administrative
Code that the right to summon witnesses and the
authority to require the production of documents
under a subpoena duces tecum or otherwise shall be
"subject in all respects to the same restrictions and
qualifications as apply in judicial proceedings of a
similar character" cannot be validly seized upon to
require, in respondents' formulation, that, as in a
subpoena under the Rules, a specific case must be
pending before a court for hearing or trial and that the
hearing or trial must be in connection with the exercise
of
the
court's
judicial
or
adjudicatory
14
functions before a non-judicial subpoena can be
issued by an administrative agency like petitioner

Agency. It must be emphasized, however, that an

administrative subpoena differs in essence from a
judicial subpoena. Clearly, what the Rules speaks of is
a judicial subpoena, one procurable from and issuable
by a competent court, and not an administrative
subpoena. To an extent, therefore, the "restrictions and
qualifications" referred to in Section 580 of the Revised
Administrative Code could mean the restraints against
infringement of constitutional rights or when the
subpoena is unreasonable or oppressive and when the
relevancy of the books, documents or things does not
appear. 15
Rightly,
administrative
agencies
may
enforce
subpoenas issued in the course of investigations,
whether or not adjudication is involved, and whether
or not probable cause is shown 16 and even before the
issuance of a complaint. 17 It is not necessary, as in the
case of a warrant, that a specific charge or complaint
of violation of law be pending or that the order be
made pursuant to one. It is enough that the
investigation
be
for
a
lawfully
authorized
18
purpose. The purpose of the subpoena is to discover
evidence, not to prove a pending charge, but upon
which to make one if the discovered evidence so
justifies. 19 Its obligation cannot rest on a trial of the
value of testimony sought; it is enough that the
proposed investigation be for a lawfully authorized
purpose, and that the proposed witness be claimed to
have information that might shed some helpful
light. 20 Because judicial power is reluctant if not
unable to summon evidence until it is shown to be

relevant to issues on litigations it does not follow that

an administrative agency charged with seeing that the
laws are enforced may not have and exercise powers
of original inquiry. The administrative agency has the
power of inquisition which is not dependent upon a
case or controversy in order to get evidence, but can
investigate merely on suspicion that the law is being
violated or even just because it wants assurance that
it is not. When investigative and accusatory duties are
delegated by statute to an administrative body, it, too
may take steps to inform itself as to whether there is
probable violation of the law. 21 In sum, it may be
stated that a subpoena meets the requirements for
enforcement if the inquiry is (1) within the authority of
the agency; (2) the demand is not too indefinite; and
(3) the information is reasonably relevant. 22
There is no doubt that the fact-finding investigations
being conducted by the Agency upon sworn
statements implicating certain public officials of the
City
Government
of
Manila
in
anomalous
23
transactions fall within the Agency's sphere of
authority and that the information sought to be elicited
from respondent Fernando Manalastas, of which he is
claimed to be in possession, 24 is reasonably relevant
to the investigations.
We are mindful that the privilege against selfincrimination extends in administrative investigations,
generally,
in
scope
similar
to
adversary
25
26
proceedings. In Cabal v. Kapunan, Jr., the Court
ruled that since the administrative charge of

unexplained wealth against the respondent therein

may result in the forfeiture of the property under the
Anti-Graft and Corrupt Practices Act, a proceeding
criminal or penal in nature, the complainant cannot
call the respondent to the witness stand without
encroaching upon his constitutional privilege against
self-incrimination. Later, in Pascual, Jr. v. Board of
Medical Examiners, 27 the same approach was followed
in the administrative proceedings against a medical
practitioner that could possibly result in the loss of his
privilege to practice the medical profession.
Nevertheless, in the present case, We find that
respondent Fernando Manalastas is not facing any
administrative charge. 28 He is merely cited as a
witness
in
connection
with
the
fact-finding
investigation of anomalies and irregularities in the City
Government of Manila with the object of submitting
the assembled facts to the President of the Philippines
or to file the corresponding charges. 29 Since the only
purpose of investigation is to discover facts as a basis
of future action, any unnecessary extension of the
privilege would thus be unwise. 30 Anyway, by all
means, respondent Fernando Manalastas may contest
any attempt in the investigation that tends to
disregard his privilege against self-incrimination.
A question of constitutional dimension is raised by
respondents on the inherent power of the President of
the Philippines to issue subpoena. 31 More tersely
stated, respondents would now challenge, in a
collateral way, the validity of the basic authority,
Executive Order No. 4, as amended in part by

Executive Order No. 88. Unfortunately, for reasons of

public policy, the constitutionality of executive orders,
which are commonly said to have the force and effect
of
statutes 32 cannot
be
collaterally
33
impeached. Much more when the issue was not duly
pleaded in the court below as to be acceptable for
adjudication now. 34 The settled rule is that the Court
will not anticipate a question of constitutional law in
advance of the necessity of deciding it. 35
Nothing then appears conclusive than that the
disputed subpoena issued by petitioner Quirico
Evangelista to respondent Fernando Manalastas is well
within the legal competence of the Agency to issue.
WHEREFORE, the aforequoted order of respondent
Judge, dated July 1, 1968, is hereby set aside and
declared of no force and effect.
Without pronouncement as to costs.
SO ORDERED.

G.R. No. 137473

August 2, 2001

ESTELITO
V.
REMOLONA, petitioner,
vs.
CIVIL SERVICE COMMISSION, respondent.

PUNO, J.:
The present petition seeks to review and set aside the
Decision rendered by the Court of Appeals dated July
31, 19981upholding the decision of the Civil Service
Commission which ordered the dismissal of petitioner
Estelito V. Remolona (Remolona) from the government
service for dishonesty, and the Resolution dated
February 5, 19992 denying petitioner's motion for
reconsideration.
Records show that petitioner Estelito V. Remolona is
the Postmaster at the Postal Office Service in Infanta,
Quezon, while his wife Nery Remolona is a teacher at
the Kiborosa Elementary School.
In a letter3 dated January 3, 1991, Francisco R.
America, District Supervisor of the Department of
Education, Culture & Sports at Infanta, Quezon,
inquired from the Civil Service Commission (CSC) as to
the status of the civil service eligibility of Mrs.
Remolona who purportedly got a rating of 81.25% as
per Report of Rating issued by the National Board for
Teachers.4 Mr. America likewise disclosed that he
received information that Mrs. Remolona was
campaigning for a fee of P8,000.00 per examinee for a
passing mark in the teacher's board examinations. -On February 11, 1991, then CSC Chairman Patricia A.
Sto. Tomas issued an Order directing CSC Region IV
Director Bella Amilhasan to conduct an investigation
on Mrs. Remolona's eligibility, after verification from

the Register of Eligibles in the Office for Central

Personnel Records revealed "that Remolona's name is
not in the list of passing and failing examinees, and
that the list of examinees for December 10, 1989 does
not include the name of Remolona. Furthermore,
Examination No. 061285 as indicated in her report of
rating belongs to a certain Marlou C. Madelo, who took
the examination in Cagayan de Oro and got a rating of
65.00%."5
During the preliminary investigation conducted by
Jaime G. Pasion, Director II, Civil Service Field Office,
Lucena City, Quezon, only petitioner Remolona
appeared. He signed a written statement of
facts6 regarding the issuance of the questioned Report
of Rating of Mrs. Remolona, which is summarized in
the Memorandum7 submitted by Director Pasion as
follows:
"3.1 That sometime in the first week of
September, 1990, while riding in a Kapalaran
Transit Bus from Sta. Cruz, Laguna on his way to
San Pablo City, he met one Atty. Hadji Salupadin
(this is how it sounded) who happened to be
sitting beside him;
3.2 That a conversation broke out between them
until he was able to confide his problem to Atty.
Salupadin about his wife having difficulty in
acquiring an eligibility;

3.3 That Atty. Salupadin who represented

himself as working at the Batasan, offered his
help for a fee of P3,000.00;
3.4 That the following day they met at the
Batasan where he gave the amount of
P2,000.00, requirements, application form and
picture of his wife;
3.5 That the following week, Thursday, at
around 1:00 P.M., they met again at the Batasan
where he handed to Atty. Salupadin the amount
of P1,000.00 plus P500.00 bonus who in turn
handed to him the Report of Rating of one Nery
C. Remolona with a passing grade, then they
parted;
3.6 That sometime in the last week of
September, he showed the Report of Rating to
the District Supervisor, Francisco America who
informed her (sic) that there was no vacancy;
3.7 That he went to Lucena City and complained
to Dr. Magsino in writing . . . that Mr. America is
asking for money in exchange for the
appointment of his wife but failed to make good
his promise. He attached the corroborating
affidavits of Mesdames Carmelinda Pradillada
and Rosemarie P. Romantico and Nery C.
Remolona x x x;

3.8 That from 1986 to 1988, Mr. America was

able to get six (6) checks at P2,600.00 each plus
bonus of Nery C. Remolona;
3.9 That Mr. America got mad at them. And
when he felt that Mr. America would verify the
authenticity of his wife's Report of Rating, he
burned the original."
Furthermore, Remolona admitted that he was
responsible in acquiring the alleged fake eligibility,
that his wife has no knowledge thereof, and that he did
it because he wanted them to be together. Based on
the foregoing, Director Pasion recommended the filing
of the appropriate administrative action against
Remolona but absolved Mrs. Nery Remolona from any
liability since it has not been shown that she willfully
participated in the commission of the offense.
Consequently, a Formal Charge dated April 6, 1993
was filed against petitioner Remolona, Nery C.
Remolona, and Atty. Hadji Salupadin for possession of
fake eligibility, falsification and dishonesty. 8 A formal
hearing ensued wherein the parties presented their
respective evidence. Thereafter, CSC Regional Director
Bella A. Amilhasan issued a Memorandum dated
February 14, 19959 recommending that the spouses
Estelito and Nery Remolona be found guilty as charged
and be meted the corresponding penalty.
Said recommendation was adopted by the CSG which
issued Resolution No. 95-2908 on April 20, 1995,

finding the spouses Estelito and Nery Remolona guilty

of dishonesty and imposing the penalty of dismissal
and all its accessory penalties. The case against Atty.
Hadji Salupadin was held in abeyance pending proof of
his identity.10 In its Resolution No. 96551011 dated
August 27, 1996, the CSC, acting on the motion for
reconsideration filed by the spouses Remolona,
absolved Nery Remolona from liability and held that:
"Further, a review of the records and of the
arguments presented fails to persuade this
Commission to reconsider its earlier resolution
insofar as Estelito Remolona's culpability is
concerned. The evidence is substantial enough
to effect his conviction. His act of securing a
fake eligibility for his wife is proved by
substantial evidence. However, in the case of
Nery Remolona, the Commission finds her
innocent of the offense charged, for there is no
evidence to show that she has used the fake
eligibility to support an appointment or
promotion. In fact, Nery Remolona did not
indicate in her Personal Data Sheet that she
possesses any eligibility. It must be pointed out
that it was her husband who unilaterally worked
to secure a fake eligibility for her.
WHEREFORE,
the
instant
Motion
for
Reconsideration is hereby denied insofar as
respondent Estelito Remolona is concerned.
However, Resolution No. 95-2908 is modified in
the sense that respondent Nery Remolona is

exonerated of the charges. Accordingly, Nery

Remolona is automatically reinstated to her
former position as Teacher with back salaries
and other benefits."
On appeal, the Court of Appeals rendered its
questioned decision dismissing the petition for review
filed by herein petitioner Remolona. His motion for
reconsideration and/or new trial was likewise denied.
Hence, this petition for review.

also avers that his motion for new trial should be

granted on the ground that the transcript of
stenographic notes taken during the hearing of the
case before the Regional Office of the CSC was not
forwarded to the Court of Appeals. Finally, he pleads
that the penalty of dismissal with forfeiture of all
benefits is too harsh considering the nature of the
offense for which he was convicted, the length of his
service in government, that this is his first offense, and
the fact that no damage was caused to the
government.

Petitioner submits that the Court of Appeals erred:

"1. in denying petitioner's motion for new trial;
2. in holding that
dishonesty; and

petitioner

is

liable

for

3. in sustaining the dismissal of the petitioner

for an offense not work connected in relation to
his official position in the government service."
The main issue posed for resolution is whether a civil
service employee can be dismissed from the
government service for an offense which is not workrelated or which is not connected with the
performance of his official duty. Remolona likewise
imputes a violation of his right to due process during
the preliminary investigation because he was not
assisted by counsel. He claims that the extra-judicial
admission allegedly signed by him is inadmissible
because he was merely made to sign a blank form. He

The submission of Remolona that his alleged extrajudicial confession is inadmissible because he was not
assisted by counsel during the investigation as
required under Section 12 paragraphs 1 and 3, Article
III of the 1987 Constitution deserves scant
consideration.
The right to counsel under Section 12 of the Bill of
Rights is meant to protect a suspect in a criminal case
under custodial investigation. Custodial investigation is
the stage where the police investigation is no longer a
general inquiry into an unsolved crime but has begun
to focus on a particular suspect who had been taken
into custody by the police to carry out a process of
interrogation that lends itself to elicit incriminating
statements. It is when questions are initiated by law
enforcement officers after a person has been taken
into custody or otherwise deprived of his freedom of
action in any significant way. The right to counsel
attaches only upon the start of such investigation.

Therefore, the exclusionary rule under paragraph (2),

Section 12 of the Bill of Rights applies only to
admissions made in a criminal investigation but not to
those made in an administrative investigation.12
While investigations conducted by an administrative
body may at times be akin to a criminal proceeding,
the fact remains that under existing laws, a party in an
administrative inquiry may or may not be assisted by
counsel, irrespective of the nature of the charges and
of the respondent's capacity to represent himself, and
no duty rests on such body to furnish the person being
investigated with counsel. In an administrative
proceeding, a respondent has the option of engaging
the services of counsel or not. This is clear from the
provisions of Section 32, Article VII of Republic Act No.
2260 (otherwise known as the Civil Service Act) and
Section 39, paragraph 2, Rule XIV (on discipline) of the
Omnibus Rules Implementing Book V of Executive
Order No. 292 (otherwise known as the Administrative
Code of 1987). Thus, the right to counsel is not always
imperative in administrative investigations because
such inquiries are conducted merely to determine
whether there are facts that merit disciplinary measure
against erring public officers and employees, with the
purpose of maintaining the dignity of government
service. As such, the hearing conducted by the
investigating authority is not part of a criminal
prosecution.13
In the case at bar, Remolona was not accused of any
crime in the investigation conducted by the CSC field

office. The investigation was conducted for the

purpose of ascertaining the facts and whether there is
a prima facie evidence sufficient to form a belief that
an offense cognizable by the CSC has been committed
and that Remolona is probably guilty thereof and
should be administratively charged. Perforce, the
admissions
made
by
Remolona
during
such
investigation may be used as evidence to justify his
dismissal.
The contention of Remolona that he never executed an
extra-judicial admission and that he merely signed a
blank form cannot be given credence. Remolona
occupies a high position in government as Postmaster
at Infanta, Quezon and, as such, he is expected to be
circumspect in his actions specially where he is being
administratively charged with a grave offense which
carries the penalty of dismissal from service.
Remolona insists that his dismissal is a violation of his
right to due process under Section 2(3), Article XI (B)
of the Constitution which provides that "no officer or
employee in the Civil Service shall be removed or
suspended except for cause." Although the offense of
dishonesty is punishable under the Civil Service law,
Remolona opines that such act must have been
committed in the performance of his function and duty
as Postmaster. Considering that the charge of
dishonesty involves the falsification of the certificate of
rating of his wife Nery Remolona, the same has no
bearing on his office and hence, he is deemed not to

have been dismissed for cause. This proposition is

untenable.
It cannot be denied that dishonesty is considered a
grave offense punishable by dismissal for the first
offense under Section 23, Rule XIV of the Rules
Implementing Book V of Executive Order No. 292. And
the rule is that dishonesty, in order to warrant
dismissal, need not be committed in the course of the
performance of duty by the person charged. The
rationale for the rule is that if a government officer or
employee is dishonest or is guilty of oppression or
grave misconduct, even if said defects of character are
not connected with his office, they affect his right to
continue in office. The Government cannot tolerate in
its service a dishonest official, even if he performs his
duties correctly and well, because by reason of his
government position, he is given more and ample
opportunity to commit acts of dishonesty against his
fellow men, even against offices and entities of the
government other than the office where he is
employed; and by reason of his office, he enjoys and
possesses a certain influence and power which renders
the victims of his grave misconduct, oppression and
dishonesty less disposed and prepared to resist and to
counteract his evil acts and actuations. The private life
of an employee cannot be segregated from his public
life. Dishonesty inevitably reflects on the fitness of the
officer or employee to continue in office and the
discipline and morale of the service.14

The principle is that when an officer or employee is

disciplined, the object sought is not the punishment of
such officer or employee but the improvement of the
public service and the preservation of the public's faith
and confidence in the government.15
The general rule is that where the findings of the
administrative body are amply supported by
substantial evidence, such findings are accorded not
only respect but also finality, and are binding on this
Court.16 It is not for the reviewing court to weigh the
conflicting evidence, determine the credibility of
witnesses, or otherwise substitute its own judgment
for that of the administrative agency on the sufficiency
of evidence.17 Thus, when confronted with conflicting
versions of factual matters, it is for the administrative
agency concerned in the exercise of discretion to
determine which party deserves credence on the basis
of the evidence received.18 The rule, therefore, is that
courts of justice will not generally interfere with purely
administrative matters which are addressed to the
sound discretion of government agencies unless there
is a clear showing that the latter acted arbitrarily or
with grave abuse of discretion or when they have
acted in a capricious and whimsical manner such that
their action may amount to an excess of jurisdiction. 19
We have carefully scrutinized the records of the case
below and we find no compelling reason to deviate
from the findings of the CSC and the Court of Appeals.
The written admission of Remolona is replete with
details that could have been known only to him. No ill-

motive or bad faith was ever imputed to Director

Pasion who conducted the investigation. The
presumption that official duty has been regularly
performed remains unrebutted.

WHEREFORE, the decision appealed from is hereby

AFFIRMED in toto.
SO ORDERED.

The transmittal of the transcript of stenographic notes

taken during the formal hearing before the CSC is
entirely a matter of discretion on the part of the Court
of Appeals. Revised Administrative Circular No. 1-95 of
this Court clearly states that in resolving appeals from
quasi-judicial agencies, it is within the discretion of the
Court of Appeals to have the original records of the
proceedings under review transmitted to it. 20 Verily,
the Court of Appeals decided the merits of the case on
the bases of the uncontroverted facts and admissions
contained in the pleadings filed by the parties.
We likewise find no merit in the contention of
Remolona that the penalty of dismissal is too harsh
considering that there was no damage caused to the
government since the certificate of rating was never
used to get an appointment for his wife, Nery
Remolona. Although no pecuniary damage was
incurred by the government, there was still falsification
of an official document that constitutes gross
dishonesty
which
cannot
be
countenanced,
considering that he was an accountable officer and
occupied a sensitive position. 21 The Code of Conduct
and Ethical Standards for Public Officials and
Employees enunciates the State policy of promoting a
high standard of ethics and utmost responsibility in the
public service.22

G.R. No. 4349

September 24, 1908

THE
UNITED
STATES, plaintiff-appellee,
vs.
ANICETO BARRIAS, defendant-appellant.
Ortigas
&
Fisher
for
Attorney-General Araneta for appellee.
TRACEY, J.:

appellant.

In the Court of First Instance of the city of Manila the

defendant was charged within a violation of
paragraphs 70 and 83 of Circular No. 397 of the Insular
Collector of Customs, duly published in the Official
Gazette and approved by the Secretary of Finance and
Justice.1 After a demurrer to the complaint of the
lighter Maude, he was moving her and directing her
movement, when heavily laden, in the Pasig River, by
bamboo poles in the hands of the crew, and without
steam, sail, or any other external power. Paragraph 70
of Circular No. 397 reads as follows:
No heavily loaded casco, lighter, or other similar
craft shall be permitted to move in the Pasig
River without being towed by steam or moved
by other adequate power.
Paragraph 83 reads, in part, as follows:
For the violation of any part of the foregoing
regulations, the persons offending shall be liable
to a fine of not less than P5 and not more than
P500, in the discretion of the court.
In this court, counsel for the appellant attacked the
validity of paragraph 70 on two grounds: First that it is
unauthorized by section 19 of Act No. 355; and,
second, that if the acts of the Philippine Commission
bear the interpretation of authorizing the Collector to
promulgate such a law, they are void, as constituting
an illegal delegation of legislative power.

The Attorney-General does not seek to sustain the

conviction but joins with the counsel for the defense in
asking for the discharge of the prisoner on the first
ground stated by the defense, that the rule of the
Collector cited was unauthorized and illegal, expressly
passing over the other question of the delegation of
legislative power.
By sections 1, 2, and 3 of Act No. 1136, passed April
29, 1904, the Collector of Customs is authorized to
license craft engaged in the lighterage or other
exclusively harbor business of the ports of the Islands,
and, with certain exceptions, all vessels engaged in
lightering are required to be so licensed. Sections 5
and 8 read as follows:
SEC. 5. The Collector of Customs for the
Philippine
Islands
is
hereby
authorized,
empowered, and directed to promptly make and
publish suitable rules and regulations to carry
this law into effect and to regulate the business
herein licensed.
SEC. 8. Any person who shall violate the
provisions of this Act, or of any rule or regulation
made and issued by the Collector of Customs for
the Philippine Islands, under and by authority of
this Act, shall be deemed guilty of a
misdemeanor, and upon conviction shall be
punished by imprisonment for not more than six
months, or by a fine of not more than one
hundred dollars, United States currency, or by

both such fine and imprisonment, at the

discretion of the court; Provided, That violations
of law may be punished either by the method
prescribed in section seven hereof, or by that
prescribed in this section or by both.
Under this statute, which was not referred to on the
argument, or in the original briefs, there is no difficulty
in sustaining the regulation of the Collector as coming
within the terms of section 5. Lighterage, mentioned in
the Act, is the very business in which this vessel was
engaged, and when heavily laden with hemp she was
navigating the Pasig River below the Bridge of Spain,
in the city of Manila. This spot is near the mouth of the
river, the docks whereof are used for the purpose of
taking on and discharging freight, and we entertain no
doubt that it was in right sense a part of the harbor,
without having recourse to the definition of paragraph
8 of Customs Administrative Circular No. 136, which
reads as follows:
The limits of a harbor for the purpose of
licensing vessels as herein prescribed (for the
lighterage and harbor business) shall be
considered to include its confluent navigable
rivers and lakes, which are navigable during any
season of the year.
The necessity confiding to some local authority the
framing, changing, and enforcing of harbor regulations
is recognized throughout the world, as each region and
each a harbor requires peculiar use more minute than

could be enacted by the central lawmaking power, and

which, when kept within the proper scope, are in their
nature police regulations not involving an undue grant
of legislative power.
The complaint in this instance was framed with
reference, as its authority, to sections 311 and 319 [19
and 311] at No. 355 of the Philippine Customs
Administrative Acts, as amended by Act Nos. 1235 and
1480. Under Act No. 1235, the Collector is not only
empowered to make suitable regulations, but also to
"fix penalties for violation thereof," not exceeding a
fine of P500.
This provision of the statute does, indeed, present a
serious question.
One of the settled maxims in constitutional law
is, that the power conferred upon the legislature
to make laws can not be delegated by that
department to any body or authority. Where the
sovereign power of the State has located the
authority, there it must remain; only by the
constitutional agency alone the laws must be
made until the constitution itself is changed.
The power to whose judgment, wisdom, and
patriotism this high prerogative has been
intrusted can not relieve itself of the
responsibility by choosing other agencies upon
which the power shall be developed, nor can its
substitutes
the
judgment,
wisdom,
and
patriotism and of any other body for those to

which alone the people have seen fit to confide

this sovereign trust. (Cooley's Constitutional
limitations, 6th ed., p. 137.)
This doctrine is based on the ethical principle that such
a delegated power constitutes not only a right but a
duty to be performed by the delegate by the
instrumentality
of
his
own
judgment
acting
immediately upon the matter of legislation and not
through the intervening mind of another. In the case of
the United States vs. Breen (40 Fed. Phil. Rep. 402), an
Act of Congress allowing the Secretary of War to make
such rules and regulations as might be necessary to
protect improvements of the Mississipi River, and
providing that a violation thereof should constitute a
misdemeanor, was sustained on the ground that the
misdemeanor was declared not under the delegated
power of the Secretary of War, but in the Act of
Congress, itself. So also was a grant to him of power to
prescribe rules for the use of canals. (U.S. vs.Ormsbee,
74 Fed. Rep. 207.) but a law authorizing him to require
alteration of any bridge and to impose penalties for
violations of his rules was held invalid, as vesting in
him upon a power exclusively lodged in Congress
(U.S. vs. Rider, 50 Fed. Rep., 406.) The subject is
considered and some cases reviewed by the Supreme
Court of the United States, in reKollock (165 U.S. 526),
which upheld the law authorizing a commissioner of
internal revenue to designate and stamps on
oleomargarine packages, an improper use of which
should thereafter constitute a crime or misdemeanor,
the court saying (p. 533):

The criminal offense is fully and completely

defined by the Act and the designation by the
Commissioner of the particular marks and
brands to be used was a mere matter of detail.
The regulation was in execution of, or
supplementary to, but not in conflict with the
law itself. . . .
In Massachusetts it has been decided that the
legislature may delegate to the governor and counsel
the
power
to
make
pilot
regulations.
(Martin vs. Witherspoon et al., 135 Mass. 175).
In the case of The Board of Harbor Commissioners of
the Port of Eureka vs. Excelsior Redwood Company (88
Cal. 491), it was ruled that harbor commissioners can
not impose a penalty under statues authorizing them
to do so, the court saying:
Conceding that the legislature could delegate to
the plaintiff the authority to make rules and
regulation with reference to the navigation of
Humboldt Bay, the penalty for the violation of
such rules and regulations is a matter purely in
the hands of the legislature.
Having reached the conclusion that Act No. 1136 is
valid, so far as sections 5 and 8 are concerned, and is
sufficient to sustain this prosecution, it is unnecessary
that we should pass on the questions discussed in the
briefs as to the extend and validity of the other acts.
The reference to them in the complaint is not material,

as we have frequently held that where an offense is

correctly described in the complaint an additional
reference to a wrong statute is immaterial.
We are also of the opinion that none of the subsequent
statutes cited operate to repeal the aforesaid section
Act No. 1136.
So much of the judgment of the Court of First Instance
as convicts the defendant of a violation of Acts Nos.
355 and 1235 is hereby revoked and is hereby
convicted of a misdemeanor and punished by a fine of
25 dollars, with costs of both instances. So ordered.

G.R. No. L-45685

November 16, 1937

THE PEOPLE OF THE PHILIPPINE ISLANDS and

HONGKONG
&
SHANGHAI
BANKING
CORPORATION,petitioners,
vs.
JOSE O. VERA, Judge . of the Court of First
Instance
of
Manila,
and
MARIANO
CU
UNJIENG, respondents.
Office of the Solicitor General Tuason and City Fiscal
Diaz
for
the
Government.
De Witt, Perkins and Ponce Enrile for the Hongkong
and
Shanghai
Banking
Corporation.
Vicente J. Francisco, Feria and La O, Orense and
Belmonte, and Gibbs and McDonough for respondent
Cu
Unjieng.
No appearance for respondent Judge.

LAUREL, J.:
This is an original action instituted in this court on
August 19, 1937, for the issuance of the writ
of certiorari and of prohibition to the Court of First
Instance of Manila so that this court may review the
actuations of the aforesaid Court of First Instance in
criminal case No. 42649 entitled "The People of the
Philippine Islands vs. Mariano Cu Unjieng, et al.", more
particularly the application of the defendant Mariano
Cu Unjieng therein for probation under the provisions

of Act No. 4221, and thereafter prohibit the said Court

of First Instance from taking any further action or
entertaining further the aforementioned application for
probation, to the end that the defendant Mariano Cu
Unjieng may be forthwith committed to prison in
accordance with the final judgment of conviction
rendered by this court in said case (G. R. No. 41200). 1
Petitioners herein, the People of the Philippine and the
Hongkong and Shanghai Banking Corporation, are
respectively the plaintiff and the offended party, and
the respondent herein Mariano Cu Unjieng is one of the
defendants, in the criminal case entitled "The People
of the Philippine Islands vs. Mariano Cu Unjieng, et al.",
criminal case No. 42649 of the Court of First Instance
of Manila and G.R. No. 41200 of this court. Respondent
herein, Hon. Jose O. Vera, is the Judge ad interim of the
seventh branch of the Court of First Instance of Manila,
who heard the application of the defendant Mariano Cu
Unjieng for probation in the aforesaid criminal case.
The information in the aforesaid criminal case was filed
with the Court of First Instance of Manila on October
15, 1931, petitioner herein Hongkong and Shanghai
Banking Corporation intervening in the case as private
prosecutor. After a protracted trial unparalleled in the
annals of Philippine jurisprudence both in the length of
time spent by the court as well as in the volume in the
testimony and the bulk of the exhibits presented, the
Court of First Instance of Manila, on January 8, 1934,
rendered a judgment of conviction sentencing the
defendant Mariano Cu Unjieng to indeterminate

penalty ranging from four years and two months of

prision correccional to eight years of prision mayor, to
pay the costs and with reservation of civil action to the
offended party, the Hongkong and Shanghai Banking
Corporation. Upon appeal, the court, on March 26,
1935, modified the sentence to an indeterminate
penalty of from five years and six months of prision
correccional to seven years, six months and twentyseven days of prision mayor, but affirmed the
judgment in all other respects. Mariano Cu Unjieng
filed a motion for reconsideration and four successive
motions for new trial which were denied on December
17, 1935, and final judgment was accordingly entered
on December 18, 1935. The defendant thereupon
sought to have the case elevated on certiorari to the
Supreme Court of the United States but the latter
denied the petition for certiorari in
November,
1936. This court, on
November 24, 1936,
denied the petition subsequently filed by the
defendant for leave to file a second alternative motion
for reconsideration or new trial and thereafter
remanded the case to the court of origin for execution
of the judgment.
The instant proceedings have to do with the
application for probation filed by the herein respondent
Mariano Cu Unjieng on
November 27, 1936,
before the trial court, under the provisions of Act No.
4221 of the defunct Philippine Legislature. Herein
respondent Mariano Cu Unjieng states in his
petition, inter alia, that he is innocent of the crime of
which he was convicted, that he has no criminal record

and that he would observe good conduct in the future.

The Court of First Instance of Manila, Judge Pedro
Tuason presiding, referred the application for probation
of the Insular Probation Office which recommended
denial of the same June 18, 1937. Thereafter, the Court
of First Instance of Manila, seventh branch, Judge Jose
O. Vera presiding, set the petition for hearing on April
5, 1937.
On April 2, 1937, the Fiscal of the City of Manila filed
an opposition to the granting of probation to the herein
respondent Mariano Cu Unjieng. The private
prosecution also filed an opposition on April 5, 1937,
alleging, among other things, that Act No. 4221,
assuming that it has not been repealed by section 2 of
Article XV of the Constitution, is nevertheless violative
of section 1, subsection (1), Article III of the
Constitution guaranteeing equal protection of the laws
for the reason that its applicability is not uniform
throughout the Islands and because section 11 of the
said Act endows the provincial boards with the power
to make said law effective or otherwise in their
respective or otherwise in their respective provinces.
The private prosecution also filed a supplementary
opposition on April 19, 1937, elaborating on the
alleged unconstitutionality on Act No. 4221, as an
undue delegation of legislative power to the provincial
boards of several provinces (sec. 1, Art. VI,
Constitution). The City Fiscal concurred in the
opposition of the private prosecution except with
respect to the questions raised concerning the
constitutionality of Act No. 4221.

On June 28, 1937, herein respondent Judge Jose O.

Vera promulgated a resolution with a finding that "las
pruebas
no
han
establecido
de
unamanera
concluyente la culpabilidad del peticionario y que
todos los hechos probados no son inconsistentes o
incongrentes con su inocencia" and concludes that the
herein respondent Mariano Cu Unjieng "es inocente
por duda racional" of the crime of which he stands
convicted by this court in G.R. No. 41200, but denying
the latter's petition for probation for the reason that:
. . . Si este Juzgado concediera la poblacion
solicitada por las circunstancias y la historia
social que se han expuesto en el cuerpo de esta
resolucion, que hacen al peticionario acreedor
de la misma, una parte de la opinion publica,
atizada por los recelos y las suspicacias, podria
levantarse indignada contra un sistema de
probacion
que
permite
atisbar
en
los
procedimientos ordinarios de una causa criminal
perturbando la quietud y la eficacia de las
decisiones ya recaidas al traer a la superficie
conclusiones
enteramente
differentes,
en
menoscabo del interes publico que demanda el
respeto de las leyes y del veredicto judicial.
On July 3, 1937, counsel for the herein respondent
Mariano Cu Unjieng filed an exception to the resolution
denying probation and a notice of intention to file a
motion for reconsideration. An alternative motion for
reconsideration or new trial was filed by counsel on
July 13, 1937. This was supplemented by an additional

motion for reconsideration submitted on July 14, 1937.

The aforesaid motions were set for hearing on July 31,
1937, but said hearing was postponed at the petition
of counsel for the respondent Mariano Cu Unjieng
because a motion for leave to intervene in the case
as amici curiaesigned by thirty-three (thirty-four)
attorneys had just been filed with the trial court.
Attorney Eulalio Chaves whose signature appears in
the aforesaid motion subsequently filed a petition for
leave to withdraw his appearance as amicus curiae on
the ground that the motion for leave to intervene
as amici curiae was circulated at a banquet given by
counsel for Mariano Cu Unjieng on the evening of July
30, 1937, and that he signed the same "without
mature deliberation and purely as a matter of courtesy
to the person who invited me (him)."
On August 6, 1937, the Fiscal of the City of Manila filed
a motion with the trial court for the issuance of an
order of execution of the judgment of this court in said
case and forthwith to commit the herein respondent
Mariano Cu Unjieng to jail in obedience to said
judgment.
On August 7, 1937, the private prosecution filed its
opposition to the motion for leave to intervene
as amici curiaeaforementioned, asking that a date be
set for a hearing of the same and that, at all events,
said motion should be denied with respect to certain
attorneys signing the same who were members of the
legal staff of the several counsel for Mariano Cu
Unjieng. On August 10, 1937, herein respondent Judge

Jose O. Vera issued an order requiring all parties

including the movants for intervention as amici
curiae to appear before the court on August 14, 1937.
On the last-mentioned date, the Fiscal of the City of
Manila moved for the hearing of his motion for
execution of judgment in preference to the motion for
leave to intervene as amici curiae but, upon objection
of counsel for Mariano Cu Unjieng, he moved for the
postponement of the hearing of both motions. The
respondent judge thereupon set the hearing of the
motion for execution on August 21, 1937, but
proceeded to consider the motion for leave to
intervene as amici curiae as in order. Evidence as to
the circumstances under which said motion for leave
to intervene as amici curiae was signed and submitted
to court was to have been heard on August 19, 1937.
But at this juncture, herein petitioners came to this
court on extraordinary legal process to put an end to
what they alleged was an interminable proceeding in
the Court of First Instance of Manila which fostered
"the campaign of the defendant Mariano Cu Unjieng
for delay in the execution of the sentence imposed by
this Honorable Court on him, exposing the courts to
criticism and ridicule because of the apparent inability
of the judicial machinery to make effective a final
judgment of this court imposed on the defendant
Mariano Cu Unjieng."
The scheduled hearing before the trial court was
accordingly suspended upon the issuance of a
temporary restraining order by this court on August
21, 1937.

To support their petition for the issuance of the

extraordinary writs of certiorari and prohibition, herein
petitioners allege that the respondent judge has acted
without jurisdiction or in excess of his jurisdiction:
I. Because said respondent judge lacks the power to
place respondent Mariano Cu Unjieng under probation
for the following reason:
(1) Under section 11 of Act No. 4221, the said of
the Philippine Legislature is made to apply only
to the provinces of the Philippines; it nowhere
states that it is to be made applicable to
chartered cities like the City of Manila.
(2) While section 37 of the Administrative Code
contains a proviso to the effect that in the
absence of a special provision, the term
"province" may be construed to include the City
of Manila for the purpose of giving effect to laws
of general application, it is also true that Act No.
4221 is not a law of general application because
it is made to apply only to those provinces in
which the respective provincial boards shall
have provided for the salary of a probation
officer.

there is an Insular Probation Officer willing to act

for the City of Manila, said Probation Officer
provided for in section 10 of Act No. 4221 being
different and distinct from the Probation Officer
provided for in section 11 of the same Act.
II. Because even if the respondent judge originally had
jurisdiction to entertain the application for probation of
the respondent Mariano Cu Unjieng, he nevertheless
acted without jurisdiction or in excess thereof in
continuing to entertain the motion for reconsideration
and by failing to commit Mariano Cu Unjieng to prison
after he had promulgated his resolution of June 28,
1937, denying Mariano Cu Unjieng's application for
probation, for the reason that:
(1) His jurisdiction and power in probation
proceedings is limited by Act No. 4221 to the
granting or denying of applications for
probation.
(2) After he had issued the order denying
Mariano Cu Unjieng's petition for probation on
June 28, 1937, it became final and executory at
the moment of its rendition.
(3) No right on appeal exists in such cases.

(3) Even if the City of Manila were considered to

be a province, still, Act No. 4221 would not be
applicable to it because it has provided for the
salary of a probation officer as required by
section 11 thereof; it being immaterial that

(4) The respondent judge lacks the power to

grant a rehearing of said order or to modify or
change the same.

III. Because the respondent judge made a finding that

Mariano Cu Unjieng is innocent of the crime for which
he was convicted by final judgment of this court, which
finding is not only presumptuous but without
foundation in fact and in law, and is furthermore in
contempt of this court and a violation of the
respondent's oath of office as ad interim judge of first
instance.
IV. Because the respondent judge has violated and
continues to violate his duty, which became imperative
when he issued his order of June 28, 1937, denying the
application for probation, to commit his co-respondent
to jail.
Petitioners also avers that they have no other plain,
speedy and adequate remedy in the ordinary course of
law.
In a supplementary petition filed on September 9,
1937, the petitioner Hongkong and Shanghai Banking
Corporation further contends that Act No. 4221 of the
Philippine Legislature providing for a system of
probation for persons eighteen years of age or over
who are convicted of crime, is unconstitutional
because it is violative of section 1, subsection (1),
Article III, of the Constitution of the Philippines
guaranteeing equal protection of the laws because it
confers upon the provincial board of its province the
absolute discretion to make said law operative or
otherwise in their respective provinces, because it
constitutes an unlawful and improper delegation to the

provincial boards of the several provinces of the

legislative power lodged by the Jones Law (section 8)
in the Philippine Legislature and by the Constitution
(section 1, Art. VI) in the National Assembly; and for
the further reason that it gives the provincial boards,
in contravention of the Constitution (section 2, Art.
VIII) and the Jones Law (section 28), the authority to
enlarge the powers of the Court of First Instance of
different provinces without uniformity. In another
supplementary petition dated September 14, 1937, the
Fiscal of the City of Manila, in behalf of one of the
petitioners, the People of the Philippine Islands,
concurs for the first time with the issues raised by
other petitioner regarding the constitutionality of Act
No. 4221, and on the oral argument held on October 6,
1937, further elaborated on the theory that probation
is a form of reprieve and therefore Act. No. 4221 is an
encroachment on the exclusive power of the Chief
Executive to grant pardons and reprieves. On October
7, 1937, the City Fiscal filed two memorandums in
which he contended that Act No. 4221 not only
encroaches upon the pardoning power to the
executive, but also constitute an unwarranted
delegation of legislative power and a denial of the
equal protection of the laws. On October 9, 1937, two
memorandums, signed jointly by the City Fiscal and
the Solicitor-General, acting in behalf of the People of
the Philippine Islands, and by counsel for the
petitioner, the Hongkong and Shanghai Banking
Corporation, one sustaining the power of the state to
impugn the validity of its own laws and the other

contending that Act No. 4221 constitutes an

unwarranted delegation of legislative power, were
presented. Another joint memorandum was filed by
the same persons on the same day, October 9, 1937,
alleging that Act No. 4221 is unconstitutional because
it denies the equal protection of the laws and
constitutes an unlawful delegation of legislative power
and, further, that the whole Act is void: that the
Commonwealth is not estopped from questioning the
validity of its laws; that the private prosecution may
intervene in probation proceedings and may attack the
probation law as unconstitutional; and that this court
may pass upon the constitutional question in
prohibition proceedings.
Respondents in their answer dated August 31, 1937,
as well as in their oral argument and memorandums,
challenge each and every one of the foregoing
proposition raised by the petitioners.
As special defenses, respondents allege:
(1) That the present petition does not state facts
sufficient in law to warrant the issuance of the
writ ofcertiorari or of prohibition.
(2) That the aforesaid petition is premature
because the remedy sought by the petitioners is
the very same remedy prayed for by them
before the trial court and was still pending
resolution before the trial court when the
present petition was filed with this court.

(3) That the petitioners having themselves

raised the question as to the execution of
judgment before the trial court, said trial court
has acquired exclusive jurisdiction to resolve the
same under the theory that its resolution
denying probation is unappealable.
(4) That upon the hypothesis that this court has
concurrent jurisdiction with the Court of First
Instance to decide the question as to whether or
not the execution will lie, this court nevertheless
cannot exercise said jurisdiction while the Court
of First Instance has assumed jurisdiction over
the same upon motion of herein petitioners
themselves.
(5) That upon the procedure followed by the
herein petitioners in seeking to deprive the trial
court of its jurisdiction over the case and
elevate the proceedings to this court, should not
be tolerated because it impairs the authority
and dignity of the trial court which court while
sitting in the probation cases is "a court of
limited jurisdiction but of great dignity."
(6) That under the supposition that this court
has jurisdiction to resolve the question
submitted to and pending resolution by the trial
court, the present action would not lie because
the resolution of the trial court denying
probation is appealable; for although the
Probation Law does not specifically provide that

an applicant for probation may appeal from a

resolution of the Court of First Instance denying
probation, still it is a general rule in this
jurisdiction that a final order, resolution or
decision of an inferior court is appealable to the
superior court.
(7) That the resolution of the trial court denying
probation of herein respondent Mariano Cu
Unjieng being appealable, the same had not
become final and executory for the reason that
the said respondent had filed an alternative
motion for reconsideration and new trial within
the requisite period of fifteen days, which
motion the trial court was able to resolve in view
of the restraining order improvidently and
erroneously issued by this court.lawphi1.net
(8) That the Fiscal of the City of Manila had by
implication admitted that the resolution of the
trial court denying probation is not final and
unappealable when he presented his answer to
the motion for reconsideration and agreed to
the postponement of the hearing of the said
motion.
(9) That under the supposition that the order of
the trial court denying probation is not
appealable, it is incumbent upon the accused to
file an action for the issuance of the writ
of certiorari with mandamus, it appearing that
the trial court, although it believed that the

accused was entitled to probation, nevertheless

denied probation for fear of criticism because
the accused is a rich man; and that, before a
petition for certiorari grounded on an irregular
exercise of jurisdiction by the trial court could
lie, it is incumbent upon the petitioner to file a
motion for reconsideration specifying the error
committed so that the trial court could have an
opportunity to correct or cure the same.
(10) That on hypothesis that the resolution of
this court is not appealable, the trial court
retains its jurisdiction within a reasonable time
to correct or modify it in accordance with law
and justice; that this power to alter or modify an
order or resolution is inherent in the courts and
may be exercise eithermotu proprio or upon
petition of the proper party, the petition in the
latter case taking the form of a motion for
reconsideration.
(11) That on the hypothesis that the resolution
of the trial court is appealable as respondent
allege, said court cannot order execution of the
same while it is on appeal, for then the appeal
would not be availing because the doors of
probation will be closed from the moment the
accused commences to serve his sentence (Act
No. 4221, sec. 1; U.S. vs. Cook, 19 Fed. [2d],
827).

In their memorandums filed on October 23, 1937,

counsel for the respondents maintain that Act No.
4221 is constitutional because, contrary to the
allegations of the petitioners, it does not constitute an
undue delegation of legislative power, does not
infringe the equal protection clause of the Constitution,
and does not encroach upon the pardoning power of
the Executive. In an additional memorandum filed on
the same date, counsel for the respondents reiterate
the view that section 11 of Act No. 4221 is free from
constitutional objections and contend, in addition, that
the private prosecution may not intervene in probation
proceedings, much less question the validity of Act No.
4221; that both the City Fiscal and the SolicitorGeneral are estopped from questioning the validity of
the Act; that the validity of Act cannot be attacked for
the first time before this court; that probation in
unavailable; and that, in any event, section 11 of the
Act No. 4221 is separable from the rest of the Act. The
last memorandum for the respondent Mariano Cu
Unjieng was denied for having been filed out of time
but was admitted by resolution of this court and filed
anew on
November 5, 1937. This memorandum
elaborates on some of the points raised by the
respondents and refutes those brought up by the
petitioners.
In the scrutiny of the pleadings and examination of the
various aspects of the present case, we noted that the
court below, in passing upon the merits of the
application of the respondent Mariano Cu Unjieng and
in denying said application assumed the task not only

of considering the merits of the application, but of

passing upon the culpability of the applicant,
notwithstanding the final pronouncement of guilt by
this court. (G.R. No. 41200.) Probation implies guilt be
final judgment. While a probation case may look into
the circumstances attending the commission of the
offense, this does not authorize it to reverse the
findings and conclusive of this court, either directly or
indirectly, especially wherefrom its own admission
reliance was merely had on the printed briefs,
averments, and pleadings of the parties. As already
observed by this court inShioji vs. Harvey ([1922], 43
Phil., 333, 337), and reiterated in subsequent cases, "if
each and every Court of First Instance could enjoy the
privilege of overruling decisions of the Supreme Court,
there would be no end to litigation, and judicial chaos
would result." A becoming modesty of inferior courts
demands conscious realization of the position that
they occupy in the interrelation and operation of the
intergrated judicial system of the nation.
After threshing carefully the multifarious issues raised
by both counsel for the petitioners and the
respondents, this court prefers to cut the Gordian knot
and take up at once the two fundamental questions
presented, namely, (1) whether or not the
constitutionality of Act No. 4221 has been properly
raised in these proceedings; and (2) in the affirmative,
whether
or
not
said
Act
is
constitutional.
Considerations of these issues will involve a discussion
of certain incidental questions raised by the parties.

To arrive at a correct conclusion on the first question,

resort to certain guiding principles is necessary. It is a
well-settled rule that the constitutionality of an act of
the legislature will not be determined by the courts
unless that question is properly raised and presented
inappropriate cases and is necessary to a
determination of the case; i.e., the issue of
constitutionality must be the very lis mota presented.
(McGirr vs. Hamilton and Abreu [1915], 30 Phil., 563,
568; 6 R. C. L., pp. 76, 77; 12 C. J., pp. 780-782, 783.)
The question of the constitutionality of an act of the
legislature is frequently raised in ordinary actions.
Nevertheless, resort may be made to extraordinary
legal remedies, particularly where the remedies in the
ordinary course of law even if available, are not plain,
speedy and adequate. Thus, in Cu Unjieng vs.
Patstone ([1922]), 42 Phil., 818), this court held that
the question of the constitutionality of a statute may
be raised by the petitioner in mandamus proceedings
(see, also, 12 C. J., p. 783); and in Government of the
Philippine Islands vs. Springer ([1927], 50 Phil., 259
[affirmed in Springer vs. Government of the Philippine
Islands (1928), 277 U. S., 189; 72 Law. ed., 845]), this
court
declared
an
act
of
the
legislature
unconstitutional in an action of quo warranto brought
in the name of the Government of the Philippines. It
has also been held that the constitutionality of a
statute
may
be
questioned
in habeas
corpus proceedings (12 C. J., p. 783; Bailey onHabeas
Corpus, Vol. I, pp. 97, 117), although there are
authorities to the contrary; on an application for

injunction to restrain action under the challenged

statute (mandatory, see Cruz vs. Youngberg [1931], 56
Phil., 234); and even on an application for preliminary
injunction
where
the
determination
of
the
constitutional question is necessary to a decision of
the case. (12 C. J., p. 783.) The same may be said as
regards prohibition and certiorari.(Yu Cong Eng vs.
Trinidad [1925], 47 Phil., 385; [1926], 271 U. S., 500;
70 Law. ed., 1059; Bell vs. First Judicial District Court
[1905], 28 Nev., 280; 81 Pac., 875; 113 A. S. R., 854; 6
Ann. Cas., 982; 1 L. R. A. [N. S], 843, and cases cited).
The case of Yu Cong Eng vs. Trinidad, supra, decided
by this court twelve years ago was, like the present
one, an original action for certiorari and prohibition.
The constitutionality of Act No. 2972, popularly known
as the Chinese Bookkeeping Law, was there
challenged by the petitioners, and the constitutional
issue was not met squarely by the respondent in a
demurrer. A point was raised "relating to the propriety
of the constitutional question being decided in original
proceedings in prohibition." This court decided to take
up the constitutional question and, with two justices
dissenting, held that Act No. 2972 was constitutional.
The case was elevated on writ of certiorari to the
Supreme Court of the United States which reversed the
judgment of this court and held that the Act was
invalid. (271 U. S., 500; 70 Law. ed., 1059.) On the
question of jurisdiction, however, the Federal Supreme
Court, though its Chief Justice, said:
By the Code of Civil Procedure of the Philippine
Islands, section 516, the Philippine supreme

court is granted concurrent jurisdiction in

prohibition with courts of first instance over
inferior tribunals or persons, and original
jurisdiction over courts of first instance, when
such courts are exercising functions without or
in excess of their jurisdiction. It has been held
by that court that the question of the validity of
the criminal statute must usually be raised by a
defendant in the trial court and be carried
regularly in review to the Supreme Court.
(Cadwallader-Gibson Lumber Co. vs. Del Rosario,
26 Phil., 192). But in this case where a new act
seriously affected numerous persons and
extensive property rights, and was likely to
cause a multiplicity of actions, the Supreme
Court exercised its discretion to bring the issue
to the act's validity promptly before it and
decide in the interest of the orderly
administration of justice. The court relied by
analogy upon the cases of Ex parte Young (209
U. S., 123;52 Law ed., 714; 13 L. R. A. [N. S.]
932; 28 Sup. Ct. Rep., 441; 14 Ann. Ca., 764;
Traux vs. Raich, 239 U. S., 33; 60 Law. ed., 131;
L. R. A. 1916D, 545; 36 Sup. Ct. Rep., 7; Ann.
Cas., 1917B, 283; and Wilson vs. New, 243 U. S.,
332; 61 Law. ed., 755; L. R. A. 1917E, 938; 37
Sup. Ct. Rep., 298; Ann. Cas. 1918A, 1024).
Although objection to the jurisdiction was raise
by demurrer to the petition, this is now
disclaimed on behalf of the respondents, and
both parties ask a decision on the merits. In

view of the broad powers in prohibition granted

to that court under the Island Code, we
acquiesce in the desire of the parties.
The writ of prohibition is an extraordinary judicial writ
issuing out of a court of superior jurisdiction and
directed to an inferior court, for the purpose of
preventing the inferior tribunal from usurping a
jurisdiction with which it is not legally vested. (High,
Extraordinary Legal Remedies, p. 705.) The general
rule, although there is a conflict in the cases, is that
the merit of prohibition will not lie whether the inferior
court has jurisdiction independent of the statute the
constitutionality of which is questioned, because in
such cases the interior court having jurisdiction may
itself determine the constitutionality of the statute,
and its decision may be subject to review, and
consequently the complainant in such cases ordinarily
has adequate remedy by appeal without resort to the
writ of prohibition. But where the inferior court or
tribunal derives its jurisdiction exclusively from an
unconstitutional statute, it may be prevented by the
writ of prohibition from enforcing that statute. (50 C. J.,
670; Ex parte Round tree [1874, 51 Ala., 42; In
re Macfarland, 30 App. [D. C.], 365; Curtis vs. Cornish
[1912], 109 Me., 384; 84 A., 799; Pennington vs.
Woolfolk [1880], 79 Ky., 13; State vs. Godfrey [1903],
54 W. Va., 54; 46 S. E., 185; Arnold vs. Shields [1837],
5 Dana, 19; 30 Am. Dec., 669.)
Courts of First Instance sitting in probation proceedings
derived their jurisdiction solely from Act No. 4221

which prescribes in detailed manner the procedure for

granting probation to accused persons after their
conviction has become final and before they have
served their sentence. It is true that at common law
the authority of the courts to suspend temporarily the
execution of the sentence is recognized and, according
to a number of state courts, including those of
Massachusetts, Michigan, New York, and Ohio, the
power is inherent in the courts (Commonwealth vs.
Dowdican's Bail [1874], 115 Mass., 133; People vs.
Stickel [1909], 156 Mich., 557; 121 N. W., 497;
People ex rel. Forsyth vs. Court of Session [1894], 141
N. Y., 288; Weber vs. State [1898], 58 Ohio St., 616).
But, in the leading case of Ex parte United States
([1916], 242 U. S., 27; 61 Law. ed., 129; L. R. A.,
1917E, 1178; 37 Sup. Ct. Rep., 72; Ann. Cas. 1917B,
355), the Supreme Court of the United States
expressed the opinion that under the common law the
power of the court was limited to temporary
suspension, and brushed aside the contention as to
inherent judicial power saying, through Chief Justice
White:
Indisputably under our constitutional system the
right to try offenses against the criminal laws
and upon conviction to impose the punishment
provided by law is judicial, and it is equally to be
conceded that, in exerting the powers vested in
them on such subject, courts inherently possess
ample right to exercise reasonable, that is,
judicial, discretion to enable them to wisely
exert their authority. But these concessions

afford no ground for the contention as to power

here made, since it must rest upon the
proposition that the power to enforce begets
inherently a discretion to permanently refuse to
do so. And the effect of the proposition urged
upon the distribution of powers made by the
Constitution will become apparent when it is
observed that indisputable also is it that the
authority to define and fix the punishment for
crime is legislative and includes the right in
advance to bring within judicial discretion, for
the purpose of executing the statute, elements
of consideration which would be otherwise
beyond the scope of judicial authority, and that
the right to relieve from the punishment, fixed
by law and ascertained according to the
methods by it provided belongs to the executive
department.
Justice Carson, in his illuminating concurring opinion in
the case of Director of Prisons vs. Judge of First
Instance of Cavite (29 Phil., 265), decided by this court
in 1915, also reached the conclusion that the power to
suspend the execution of sentences pronounced in
criminal cases is not inherent in the judicial function.
"All are agreed", he said, "that in the absence of
statutory authority, it does not lie within the power of
the courts to grant such suspensions." (at p. 278.)
Both petitioner and respondents are correct, therefore,
when they argue that a Court of First Instance sitting in
probation proceedings is a court of limited jurisdiction.
Its jurisdiction in such proceedings is conferred

exclusively by
Legislature.

Act

No.

4221

of

the

Philippine

It is, of course, true that the constitutionality of a

statute will not be considered on application for
prohibition where the question has not been properly
brought to the attention of the court by objection of
some kind (Hill vs. Tarver [1901], 130 Ala., 592; 30 S.,
499; State ex rel. Kelly vs. Kirby [1914], 260 Mo., 120;
168 S. W., 746). In the case at bar, it is unquestionable
that the constitutional issue has been squarely
presented not only before this court by the petitioners
but also before the trial court by the private
prosecution. The respondent, Hon. Jose O Vera,
however, acting as judge of the court below, declined
to pass upon the question on the ground that the
private prosecutor, not being a party whose rights are
affected by the statute, may not raise said question.
The respondent judge cited Cooley on Constitutional
Limitations (Vol. I, p. 339; 12 C. J., sec. 177, pp. 760
and 762), and McGlue vs. Essex County ([1916], 225
Mass., 59; 113 N. E., 742, 743), as authority for the
proposition that a court will not consider any attack
made on the constitutionality of a statute by one who
has no interest in defeating it because his rights are
not affected by its operation. The respondent judge
further stated that it may not motu proprio take up the
constitutional question and, agreeing with Cooley that
"the power to declare a legislative enactment void is
one which the judge, conscious of the fallibility of the
human judgment, will shrink from exercising in any
case where he can conscientiously and with due

regard to duty and official oath decline the

responsibility" (Constitutional Limitations, 8th ed., Vol.
I, p. 332), proceeded on the assumption that Act No.
4221 is constitutional. While therefore, the court a
quo admits that the constitutional question was raised
before it, it refused to consider the question solely
because it was not raised by a proper party.
Respondents herein reiterates this view. The argument
is advanced that the private prosecution has no
personality to appear in the hearing of the application
for probation of defendant Mariano Cu Unjieng in
criminal case No. 42648 of the Court of First Instance
of Manila, and hence the issue of constitutionality was
not properly raised in the lower court. Although, as a
general rule, only those who are parties to a suit may
question the constitutionality of a statute involved in a
judicial decision, it has been held that since the decree
pronounced by a court without jurisdiction is void,
where the jurisdiction of the court depends on the
validity of the statute in question, the issue of the
constitutionality will be considered on its being
brought to the attention of the court by persons
interested in the effect to be given the statute.(12 C.
J., sec. 184, p. 766.) And, even if we were to concede
that the issue was not properly raised in the court
below by the proper party, it does not follow that the
issue may not be here raised in an original action
of certiorariand prohibitions. It is true that, as a
general rule, the question of constitutionality must be
raised at the earliest opportunity, so that if not raised
by the pleadings, ordinarily it may not be raised at the

trial, and if not raised in the trial court, it will not

considered on appeal. (12 C. J., p. 786. See,
also, Cadwallader-Gibson Lumber Co. vs. Del Rosario,
26 Phil., 192, 193-195.) But we must state that the
general rule admits of exceptions. Courts, in the
exercise of sounds discretion, may determine the time
when a question affecting the constitutionality of a
statute should be presented. (In re Woolsey [1884], 95
N. Y., 135, 144.) Thus, in criminal cases, although there
is a very sharp conflict of authorities, it is said that the
question may be raised for the first time at any stage
of the proceedings, either in the trial court or on
appeal. (12 C. J., p. 786.) Even in civil cases, it has
been held that it is the duty of a court to pass on the
constitutional question, though raised for the first time
on appeal, if it appears that a determination of the
question is necessary to a decision of the case.
(McCabe's Adm'x vs. Maysville & B. S. R. Co., [1910],
136 ky., 674; 124 S. W., 892; Lohmeyer vs. St. Louis
Cordage Co. [1908], 214 Mo., 685; 113 S. W. 1108;
Carmody vs. St. Louis Transit Co., [1905], 188 Mo.,
572; 87 S. W., 913.) And it has been held that a
constitutional question will be considered by an
appellate court at any time, where it involves the
jurisdiction of the court below (State vs. Burke [1911],
175 Ala., 561; 57 S., 870.) As to the power of this court
to consider the constitutional question raised for the
first time before this court in these proceedings, we
turn again and point with emphasis to the case of Yu
Cong Eng vs. Trinidad, supra. And on the hypotheses
that the Hongkong & Shanghai Banking Corporation,

represented by the private prosecution, is not the

proper party to raise the constitutional question here
a point we do not now have to decide we are of
the opinion that the People of the Philippines,
represented by the Solicitor-General and the Fiscal of
the City of Manila, is such a proper party in the present
proceedings. The unchallenged rule is that the person
who impugns the validity of a statute must have a
personal and substantial interest in the case such that
he has sustained, or will sustained, direct injury as a
result of its enforcement. It goes without saying that if
Act No. 4221 really violates the constitution, the
People of the Philippines, in whose name the present
action is brought, has a substantial interest in having it
set aside. Of grater import than the damage caused by
the illegal expenditure of public funds is the mortal
wound inflicted upon the fundamental law by the
enforcement of an invalid statute. Hence, the wellsettled rule that the state can challenge the validity of
its own laws. In Government of the Philippine Islands
vs. Springer ([1927]), 50 Phil., 259 (affirmed in
Springer vs. Government of the Philippine Islands
[1928], 277 U.S., 189; 72 Law. ed., 845), this court
declared an act of the legislature unconstitutional in an
action instituted in behalf of the Government of the
Philippines. In Attorney General vs. Perkins ([1889], 73
Mich., 303, 311, 312; 41 N. W. 426, 428, 429), the
State of Michigan, through its Attorney General,
instituted quo warranto proceedings to test the right of
the respondents to renew a mining corporation,
alleging that the statute under which the respondents

base their right was unconstitutional because it

impaired the obligation of contracts. The capacity of
the chief law officer of the state to question the
constitutionality of the statute was though, as a
general rule, only those who are parties to a suit may
question the constitutionality of a statute involved in a
judicial decision, it has been held that since the decree
pronounced by a court without jurisdiction in void,
where the jurisdiction of the court depends on the
validity of the statute in question, the issue of
constitutionality will be considered on its being
brought to the attention of the court by persons
interested in the effect to begin the statute. (12 C.J.,
sec. 184, p. 766.) And, even if we were to concede that
the issue was not properly raised in the court below by
the proper party, it does not follow that the issue may
not be here raised in an original action of certiorari and
prohibition. It is true that, as a general rule, the
question of constitutionality must be raised at the
earliest opportunity, so that if not raised by the
pleadings, ordinarily it may not be raised a the trial,
and if not raised in the trial court, it will not be
considered on appeal. (12 C.J., p. 786. See, also,
Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26
Phil., 192, 193-195.) But we must state that the
general rule admits of exceptions. Courts, in the
exercise of sound discretion, may determine the time
when a question affecting the constitutionality of a
statute should be presented. (In re Woolsey [19884],
95 N.Y., 135, 144.) Thus, in criminal cases, although
there is a very sharp conflict of authorities, it is said

that the question may be raised for the first time at

any state of the proceedings, either in the trial court or
on appeal. (12 C.J., p. 786.) Even in civil cases, it has
been held that it is the duty of a court to pass on the
constitutional question, though raised for first time on
appeal, if it appears that a determination of the
question is necessary to a decision of the case.
(McCabe's Adm'x vs. Maysville & B. S. R. Co. [1910],
136 Ky., 674; 124 S. W., 892; Lohmeyer vs. St. Louis,
Cordage Co. [1908], 214 Mo. 685; 113 S. W., 1108;
Carmody vs. St. Louis Transit Co. [1905], 188 Mo., 572;
87 S. W., 913.) And it has been held that a
constitutional question will be considered by an
appellate court at any time, where it involves the
jurisdiction of the court below (State vs. Burke [1911],
175 Ala., 561; 57 S., 870.) As to the power of this court
to consider the constitutional question raised for the
first time before this court in these proceedings, we
turn again and point with emphasis to the case of Yu
Cong Eng. vs. Trinidad, supra. And on the hypothesis
that the Hongkong & Shanghai Banking Corporation,
represented by the private prosecution, is not the
proper party to raise the constitutional question here
a point we do not now have to decide we are of
the opinion that the People of the Philippines,
represented by the Solicitor-General and the Fiscal of
the City of Manila, is such a proper party in the present
proceedings. The unchallenged rule is that the person
who impugns the validity of a statute must have a
personal and substantial interest in the case such that
he has sustained, or will sustain, direct injury as a

result of its enforcement. It goes without saying that if

Act No. 4221 really violates the Constitution, the
People of the Philippines, in whose name the present
action is brought, has a substantial interest in having it
set aside. Of greater import than the damage caused
by the illegal expenditure of public funds is the mortal
wound inflicted upon the fundamental law by the
enforcement of an invalid statute. Hence, the wellsettled rule that the state can challenge the validity of
its own laws. In Government of the Philippine Islands
vs. Springer ([1927]), 50 Phil., 259 (affirmed in
Springer vs. Government of the Philippine Islands
[1928], 277 U.S., 189; 72 Law. ed., 845), this court
declared an act of the legislature unconstitutional in an
action instituted in behalf of the Government of the
Philippines. In Attorney General vs. Perkings([1889], 73
Mich., 303, 311, 312; 41 N.W., 426, 428, 429), the
State of Michigan, through its Attorney General,
instituted quo warranto proceedings to test the right of
the respondents to renew a mining corporation,
alleging that the statute under which the respondents
base their right was unconstitutional because it
impaired the obligation of contracts. The capacity of
the chief law officer of the state to question the
constitutionality of the statute was itself questioned.
Said the Supreme Court of Michigan, through
Champlin, J.:
. . . The idea seems to be that the people are
estopped from questioning the validity of a law
enacted by their representatives; that to an
accusation by the people of Michigan of

usurpation their government, a statute enacted

by the people of Michigan is an adequate
answer. The last proposition is true, but, if the
statute
relied
on
in
justification
is
unconstitutional, it is statute only in form, and
lacks the force of law, and is of no more saving
effect to justify action under it than if it had
never been enacted. The constitution is the
supreme law, and to its behests the courts, the
legislature, and the people must bow . . . The
legislature and the respondents are not the only
parties in interest upon such constitutional
questions. As was remarked by Mr. Justice Story,
in speaking of an acquiescence by a party
affected by an unconstitutional act of the
legislature: "The people have a deep and vested
interest in maintaining all the constitutional
limitations upon the exercise of legislative
powers." (Allen vs. Mckeen, 1 Sum., 314.)
In State vs. Doane ([1916], 98 Kan., 435; 158 Pac., 38,
40), an original action (mandamus) was brought by the
Attorney-General of Kansas to test the constitutionality
of a statute of the state. In disposing of the question
whether or not the state may bring the action, the
Supreme Court of Kansas said:
. . . the state is a proper party indeed, the
proper party to bring this action. The state is
always interested where the integrity of its
Constitution or statutes is involved.

"It has an interest in seeing that

the will of the Legislature is not
disregarded, and need not, as an
individual plaintiff must, show
grounds of fearing more specific
injury. (State vs. Kansas City 60
Kan., 518 [57 Pac., 118])." (State
vs. Lawrence, 80 Kan., 707; 103
Pac., 839.)
Where the constitutionality of a statute is in
doubt the state's law officer, its AttorneyGeneral, or county attorney, may exercise his
bet judgment as to what sort of action he will
bring to have the matter determined, either by
quo warranto to challenge its validity (State vs.
Johnson, 61 Kan., 803; 60 Pac., 1068; 49 L.R.A.,
662), by mandamus to compel obedience to its
terms (State vs. Dolley, 82 Kan., 533; 108 Pac.,
846), or by injunction to restrain proceedings
under its questionable provisions (State ex rel.
vs. City of Neodesha, 3 Kan. App., 319; 45 Pac.,
122).
Other courts have reached the same conclusion (See
State vs. St. Louis S. W. Ry. Co. [1917], 197 S. W.,
1006; State vs. S.H. Kress & Co. [1934], 155 S., 823;
State vs. Walmsley [1935], 181 La., 597; 160 S., 91;
State vs. Board of County Comr's [1934], 39 Pac. [2d],
286; First Const. Co. of Brooklyn vs. State [1917], 211
N.Y., 295; 116 N.E., 1020; Bush vs. State {1918], 187
Ind., 339; 119 N.E., 417; State vs. Watkins [1933], 176

La., 837; 147 S., 8, 10, 11). In the case last cited, the
Supreme Court of Luisiana said:
It is contended by counsel for Herbert Watkins
that a district attorney, being charged with the
duty of enforcing the laws, has no right to plead
that a law is unconstitutional. In support of the
argument three decisions are cited, viz.:
State ex rel. Hall, District Attorney, vs. Judge of
Tenth Judicial District (33 La. Ann., 1222);
State ex rel. Nicholls, Governor vs. Shakespeare,
Mayor of New Orleans (41 Ann., 156; 6 So.,
592); and State ex rel., Banking Co., etc. vs.
Heard, Auditor (47 La. Ann., 1679; 18 So., 746;
47 L. R. A., 512). These decisions do not forbid a
district attorney to plead that a statute is
unconstitutional if he finds if in conflict with one
which it is his duty to enforce. In State ex rel.
Hall, District Attorney, vs. Judge, etc., the ruling
was the judge should not, merely because he
believed a certain statute to be unconstitutional
forbid the district attorney to file a bill of
information charging a person with a violation of
the statute. In other words, a judge should not
judicially declare a statute unconstitutional until
the question of constitutionality is tendered for
decision, and unless it must be decided in order
to determine the right of a party litigant.
State ex rel. Nicholls, Governor, etc., is authority
for the proposition merely that an officer on
whom a statute imposes the duty of enforcing
its provisions cannot avoid the duty upon the

ground
that
he
considers
the
statute
unconstitutional, and hence in enforcing the
statute he is immune from responsibility if the
statute be unconstitutional. State ex rel.
Banking Co., etc., is authority for the proposition
merely that executive officers, e.g., the state
auditor and state treasurer, should not decline
to perform ministerial duties imposed upon
them by a statute, on the ground that they
believe the statute is unconstitutional.
It is the duty of a district attorney to enforce the
criminal laws of the state, and, above all, to
support the Constitution of the state. If, in the
performance of his duty he finds two statutes in
conflict with each other, or one which repeals
another, and if, in his judgment, one of the two
statutes is unconstitutional, it is his duty to
enforce the other; and, in order to do so, he is
compelled to submit to the court, by way of a
plea, that one of the statutes is unconstitutional.
If it were not so, the power of the Legislature
would be free from constitutional limitations in
the enactment of criminal laws.
The respondents do not seem to doubt seriously the
correctness of the general proposition that the state
may impugn the validity of its laws. They have not
cited any authority running clearly in the opposite
direction. In fact, they appear to have proceeded on
the assumption that the rule as stated is sound but
that it has no application in the present case, nor may

it be invoked by the City Fiscal in behalf of the People

of the Philippines, one of the petitioners herein, the
principal reasons being that the validity before this
court, that the City Fiscal is estopped from attacking
the validity of the Act and, not authorized challenge
the validity of the Act in its application outside said
city. (Additional memorandum of respondents, October
23, 1937, pp. 8,. 10, 17 and 23.)
The mere fact that the Probation Act has been
repeatedly relied upon the past and all that time has
not been attacked as unconstitutional by the Fiscal of
Manila but, on the contrary, has been impliedly
regarded by him as constitutional, is no reason for
considering the People of the Philippines estopped
from nor assailing its validity. For courts will pass upon
a constitutional questions only when presented before
it in bona fide cases for determination, and the fact
that the question has not been raised before is not a
valid reason for refusing to allow it to be raised later.
The fiscal and all others are justified in relying upon
the statute and treating it as valid until it is held void
by the courts in proper cases.
It remains to consider whether the determination of
the constitutionality of Act No. 4221 is necessary to
the resolution of the instant case. For, ". . . while the
court will meet the question with firmness, where its
decision is indispensable, it is the part of wisdom, and
just respect for the legislature, renders it proper, to
waive it, if the case in which it arises, can be decided
on other points." (Ex parte Randolph [1833], 20 F. Cas.

No. 11, 558; 2 Brock., 447. Vide, also Hoover vs. wood
[1857], 9 Ind., 286, 287.) It has been held that the
determination of a constitutional question is necessary
whenever it is essential to the decision of the case (12
C. J., p. 782, citing Long Sault Dev. Co. vs. Kennedy
[1913], 158 App. Div., 398; 143 N. Y. Supp., 454 [aff.
212 N.Y., 1: 105 N. E., 849; Ann. Cas. 1915D, 56; and
app dism 242 U.S., 272]; Hesse vs. Ledesma, 7 Porto
Rico Fed., 520; Cowan vs. Doddridge, 22 Gratt [63 Va.],
458; Union Line Co., vs. Wisconsin R. Commn., 146
Wis., 523; 129 N. W., 605), as where the right of a
party is founded solely on a statute the validity of
which is attacked. (12 C.J., p. 782, citing Central Glass
Co. vs. Niagrara F. Ins. Co., 131 La., 513; 59 S., 972;
Cheney vs. Beverly, 188 Mass., 81; 74 N.E., 306).
There is no doubt that the respondent Cu Unjieng
draws his privilege to probation solely from Act No.
4221 now being assailed.
Apart from the foregoing considerations, that court will
also take cognizance of the fact that the Probation Act
is a new addition to our statute books and its validity
has never before been passed upon by the courts; that
may persons accused and convicted of crime in the
City of Manila have applied for probation; that some of
them are already on probation; that more people will
likely take advantage of the Probation Act in the
future; and that the respondent Mariano Cu Unjieng
has been at large for a period of about four years since
his first conviction. All wait the decision of this court on
the constitutional question. Considering, therefore, the
importance which the instant case has assumed and to

prevent multiplicity of suits, strong reasons of public

policy demand that the constitutionality of Act No.
4221 be now resolved. (Yu Cong Eng vs. Trinidad
[1925], 47 Phil., 385; [1926], 271 U.S., 500; 70 Law.
ed., 1059. See 6 R.C.L., pp. 77, 78; People vs. Kennedy
[1913], 207 N.Y., 533; 101 N.E., 442, 444; Ann. Cas.
1914C, 616; Borginis vs. Falk Co. [1911], 147 Wis.,
327; 133 N.W., 209, 211; 37 L.R.A. [N.S.] 489;
Dimayuga and Fajardo vs. Fernandez [1922], 43 Phil.,
304.) In Yu Cong Eng vs. Trinidad, supra, an analogous
situation confronted us. We said: "Inasmuch as the
property and personal rights of nearly twelve thousand
merchants are affected by these proceedings, and
inasmuch as Act No. 2972 is a new law not yet
interpreted by the courts, in the interest of the public
welfare and for the advancement of public policy, we
have determined to overrule the defense of want of
jurisdiction in order that we may decide the main
issue. We have here an extraordinary situation which
calls for a relaxation of the general rule." Our ruling on
this point was sustained by the Supreme Court of the
United States. A more binding authority in support of
the view we have taken can not be found.
We have reached the conclusion that the question of
the constitutionality of Act No. 4221 has been properly
raised. Now for the main inquiry: Is the Act
unconstitutional?
Under a doctrine peculiarly American, it is the office
and duty of the judiciary to enforce the Constitution.
This court, by clear implication from the provisions of

section 2, subsection 1, and section 10, of Article VIII

of the Constitution, may declare an act of the national
legislature invalid because in conflict with the
fundamental lay. It will not shirk from its sworn duty to
enforce the Constitution. And, in clear cases, it will not
hesitate to give effect to the supreme law by setting
aside a statute in conflict therewith. This is of the
essence of judicial duty.
This court is not unmindful of the fundamental criteria
in cases of this nature that all reasonable doubts
should be resolved in favor of the constitutionality of a
statute. An act of the legislature approved by the
executive, is presumed to be within constitutional
limitations. The responsibility of upholding the
Constitution rests not on the courts alone but on the
legislature as well. "The question of the validity of
every statute is first determined by the legislative
department of the government itself." (U.S. vs. Ten Yu
[1912], 24 Phil., 1, 10; Case vs. Board of Health and
Heiser [1913], 24 Phil., 250, 276; U.S. vs. Joson [1913],
26 Phil., 1.) And a statute finally comes before the
courts sustained by the sanction of the executive. The
members of the Legislature and the Chief Executive
have taken an oath to support the Constitution and it
must be presumed that they have been true to this
oath and that in enacting and sanctioning a particular
law they did not intend to violate the Constitution. The
courts cannot but cautiously exercise its power to
overturn the solemn declarations of two of the three
grand departments of the governments. (6 R.C.L., p.
101.) Then, there is that peculiar political philosophy

which bids the judiciary to reflect the wisdom of the

people as expressed through an elective Legislature
and an elective Chief Executive. It follows, therefore,
that the courts will not set aside a law as violative of
the Constitution except in a clear case. This is a
proposition too plain to require a citation of authorities.
One of the counsel for respondents, in the course of
his impassioned argument, called attention to the fact
that the President of the Philippines had already
expressed his opinion against the constitutionality of
the Probation Act, adverting that as to the Executive
the resolution of this question was a foregone
conclusion.
Counsel,
however,
reiterated
his
confidence in the integrity and independence of this
court. We take notice of the fact that the President in
his message dated September 1, 1937, recommended
to the National Assembly the immediate repeal of the
Probation Act (No. 4221); that this message resulted in
the approval of Bill No. 2417 of the Nationality
Assembly repealing the probation Act, subject to
certain conditions therein mentioned; but that said bill
was vetoed by the President on September 13, 1937,
much against his wish, "to have stricken out from the
statute books of the Commonwealth a law . . . unfair
and very likely unconstitutional." It is sufficient to
observe in this connection that, in vetoing the bill
referred to, the President exercised his constitutional
prerogative. He may express the reasons which he
may deem proper for taking such a step, but his
reasons are not binding upon us in the determination
of
actual
controversies
submitted
for
our

determination. Whether or not the Executive should

express or in any manner insinuate his opinion on a
matter encompassed within his broad constitutional
power of veto but which happens to be at the same
time pending determination in this court is a question
of propriety for him exclusively to decide or determine.
Whatever opinion is expressed by him under these
circumstances, however, cannot sway our judgment on
way or another and prevent us from taking what in our
opinion is the proper course of action to take in a given
case. It if is ever necessary for us to make any
vehement affirmance during this formative period of
our political history, it is that we are independent of
the Executive no less than of the Legislative
department of our government independent in the
performance of our functions, undeterred by any
consideration, free from politics, indifferent to
popularity, and unafraid of criticism in the
accomplishment of our sworn duty as we see it and as
we understand it.
The constitutionality of Act No. 4221 is challenged on
three principal grounds: (1) That said Act encroaches
upon the pardoning power of the Executive; (2) that its
constitutes an undue delegation of legislative power
and (3) that it denies the equal protection of the laws.
1. Section 21 of the Act of Congress of August 29,
1916, commonly known as the Jones Law, in force at
the time of the approval of Act No. 4221, otherwise
known as the Probation Act, vests in the GovernorGeneral of the Philippines "the exclusive power to

grant pardons and reprieves and remit fines and

forfeitures". This power is now vested in the President
of the Philippines. (Art. VII, sec. 11, subsec. 6.) The
provisions of the Jones Law and the Constitution differ
in some respects. The adjective "exclusive" found in
the Jones Law has been omitted from the Constitution.
Under the Jones Law, as at common law, pardon could
be granted any time after the commission of the
offense,
either
before
or
after
conviction
(Vide Constitution of the United States, Art. II, sec.
2; In re Lontok [1922], 43 Phil., 293). The GovernorGeneral of the Philippines was thus empowered, like
the President of the United States, to pardon a person
before the facts of the case were fully brought to light.
The framers of our Constitution thought this
undesirable and, following most of the state
constitutions, provided that the pardoning power can
only be exercised "after conviction". So, too, under the
new Constitution, the pardoning power does not
extend to "cases of impeachment". This is also the rule
generally
followed
in
the
United
States
(Vide Constitution of the United States, Art. II, sec. 2).
The rule in England is different. There, a royal pardon
can not be pleaded in bar of an impeachment; "but,"
says Blackstone, "after the impeachment has been
solemnly heard and determined, it is not understood
that the king's royal grace is further restrained or
abridged." (Vide, Ex parteWells [1856], 18 How., 307;
15 Law. ed., 421; Com. vs. Lockwood [1872], 109
Mass., 323; 12 Am. Rep., 699; Sterling vs. Drake
[1876], 29 Ohio St., 457; 23 am. Rep., 762.) The

reason for the distinction is obvious. In England,

Judgment on impeachment is not confined to mere
"removal from office and disqualification to hold and
enjoy any office of honor, trust, or profit under the
Government" (Art. IX, sec. 4, Constitution of the
Philippines) but extends to the whole punishment
attached by law to the offense committed. The House
of Lords, on a conviction may, by its sentence, inflict
capital punishment, perpetual banishment, perpetual
banishment, fine or imprisonment, depending upon the
gravity of the offense committed, together with
removal from office and incapacity to hold office.
(Com. vs. Lockwood, supra.) Our Constitution also
makes specific mention of "commutation" and of the
power of the executive to impose, in the pardons he
may grant, such conditions, restrictions and limitations
as he may deem proper. Amnesty may be granted by
the President under the Constitution but only with the
concurrence of the National Assembly. We need not
dwell at length on the significance of these
fundamental changes. It is sufficient for our purposes
to state that the pardoning power has remained
essentially the same. The question is: Has the
pardoning power of the Chief Executive under the
Jones Law been impaired by the Probation Act?
As already stated, the Jones Law vests the pardoning
power exclusively in the Chief Executive. The exercise
of the power may not, therefore, be vested in anyone
else.
". . . The benign prerogative of mercy reposed in the
executive cannot be taken away nor fettered by any

legislative restrictions, nor can like power be given by

the legislature to any other officer or authority. The
coordinate departments of government have nothing
to do with the pardoning power, since no person
properly belonging to one of the departments can
exercise any powers appertaining to either of the
others except in cases expressly provided for by the
constitution." (20 R.C.L., pp., , and cases cited.) " . . .
where the pardoning power is conferred on the
executive without express or implied limitations, the
grant is exclusive, and the legislature can neither
exercise such power itself nor delegate it elsewhere,
nor interfere with or control the proper exercise
thereof, . . ." (12 C.J., pp. 838, 839, and cases cited.) If
Act No. 4221, then, confers any pardoning power upon
the courts it is for that reason unconstitutional and
void. But does it?
In the famous Killitts decision involving an
embezzlement case, the Supreme Court of the United
States ruled in 1916 that an order indefinitely
suspending sentenced was void. (Ex parte United
States [1916], 242 U.S., 27; 61 Law. ed., 129; L.R.A.
1917E, 1178; 37 Sup. Ct. Rep., 72; Ann. Cas. 1917B,
355.) Chief Justice White, after an exhaustive review of
the authorities, expressed the opinion of the court that
under the common law the power of the court was
limited to temporary suspension and that the right to
suspend sentenced absolutely and permanently was
vested in the executive branch of the government and
not in the judiciary. But, the right of Congress to
establish probation by statute was conceded. Said the

court through its Chief Justice: ". . . and so far as the

future is concerned, that is, the causing of the
imposition of penalties as fixed to be subject, by
probation legislation or such other means as the
legislative mind may devise, to such judicial discretion
as may be adequate to enable courts to meet by the
exercise of an enlarged but wise discretion the infinite
variations which may be presented to them for
judgment, recourse must be had Congress whose
legislative power on the subject is in the very nature of
things adequately complete." (Quoted in Riggs vs.
United States [1926], 14 F. [2d], 5, 6.) This decision led
the National Probation Association and others to
agitate for the enactment by Congress of a federal
probation law. Such action was finally taken on March
4, 1925 (chap. 521, 43 Stat. L. 159, U.S.C. title 18, sec.
724). This was followed by an appropriation to defray
the salaries and expenses of a certain number of
probation officers chosen by civil service. (Johnson,
Probation for Juveniles and Adults, p. 14.)
In United States vs. Murray ([1925], 275 U.S., 347; 48
Sup. Ct. Rep., 146; 72 Law. ed., 309), the Supreme
Court of the United States, through Chief Justice Taft,
held that when a person sentenced to imprisonment
by a district court has begun to serve his sentence,
that court has no power under the Probation Act of
March 4, 1925 to grant him probation even though the
term at which sentence was imposed had not yet
expired. In this case of Murray, the constitutionality of
the probation Act was not considered but was
assumed. The court traced the history of the Act and

quoted from the report of the Committee on the

Judiciary of the United States House of Representatives
(Report No. 1377, 68th Congress, 2 Session) the
following statement:
Prior to the so-called Killitts case, rendered in
December, 1916, the district courts exercised a
form of probation either, by suspending
sentence or by placing the defendants under
state probation officers or volunteers. In this
case, however (Ex parte United States, 242 U.S.,
27; 61 L. Ed., 129; L.R.A., 1917E, 1178; 37 Sup.
Ct. Rep., 72 Ann. Cas. 1917B, 355), the Supreme
Court denied the right of the district courts to
suspend sentenced. In the same opinion the
court pointed out the necessity for action by
Congress if the courts were to exercise
probation powers in the future . . .
Since this decision was rendered, two attempts
have been made to enact probation legislation.
In 1917, a bill was favorably reported by the
Judiciary Committee and passed the House. In
1920, the judiciary Committee again favorably
reported a probation bill to the House, but it was
never reached for definite action.
If this bill is enacted into law, it will bring the
policy of the Federal government with reference
to its treatment of those convicted of violations
of its criminal laws in harmony with that of the
states of the Union. At the present time every

state has a probation law, and in all but twelve

states the law applies both to adult and juvenile
offenders. (see, also, Johnson, Probation for
Juveniles and Adults [1928], Chap. I.)

constitutionality of the Act has been assumed by the

Supreme Court of the United States in 1928 and
consistently sustained by the inferior federal courts in
a number of earlier cases.

The constitutionality of the federal probation law has

been sustained by inferior federal courts. In Riggs vs.
United Statessupra, the Circuit Court of Appeals of the
Fourth Circuit said:

We are fully convinced that the Philippine Legislature,

like the Congress of the United States, may legally
enact a probation law under its broad power to fix the
punishment of any and all penal offenses. This
conclusion is supported by other authorities. In Ex
parte Bates ([1915], 20 N. M., 542; L.R.A. 1916A, 1285;
151 Pac., 698, the court said: "It is clearly within the
province of the Legislature to denominate and define
all classes of crime, and to prescribe for each a
minimum and maximum punishment." And in State vs.
Abbott ([1910], 87 S.C., 466; 33 L.R.A. [N. S.], 112; 70
S. E., 6; Ann. Cas. 1912B, 1189), the court said: "The
legislative power to set punishment for crime is very
broad, and in the exercise of this power the general
assembly may confer on trial judges, if it sees fit, the
largest discretion as to the sentence to be imposed, as
to the beginning and end of the punishment and
whether it should be certain or indeterminate or
conditional." (Quoted in State vs. Teal [1918], 108 S.
C., 455; 95 S. E., 69.) Indeed, the Philippine Legislature
has defined all crimes and fixed the penalties for their
violation. Invariably, the legislature has demonstrated
the desire to vest in the courts particularly the trial
courts large discretion in imposing the penalties
which the law prescribes in particular cases. It is
believed that justice can best be served by vesting this
power in the courts, they being in a position to best

Since the passage of the Probation Act of March

4, 1925, the questions under consideration have
been reviewed by the Circuit Court of Appeals of
the Ninth Circuit (7 F. [2d], 590), and the
constitutionality of the act fully sustained, and
the same held in no manner to encroach upon
the pardoning power of the President. This case
will be found to contain an able and
comprehensive review of the law applicable
here. It arose under the act we have to consider,
and to it and the authorities cited therein special
reference is made (Nix vs. James, 7 F. [2d], 590,
594), as is also to a decision of the Circuit Court
of Appeals of the Seventh Circuit (Kriebel vs.
U.S., 10 F. [2d], 762), likewise construing the
Probation Act.
We have seen that in 1916 the Supreme Court of the
United States; in plain and unequivocal language,
pointed to Congress as possessing the requisite power
to enact probation laws, that a federal probation law
as actually enacted in 1925, and that the

determine the penalties which an individual convict,

peculiarly circumstanced, should suffer. Thus, while
courts are not allowed to refrain from imposing a
sentence merely because, taking into consideration
the degree of malice and the injury caused by the
offense, the penalty provided by law is clearly
excessive, the courts being allowed in such case to
submit to the Chief Executive, through the Department
of Justice, such statement as it may deem proper (see
art. 5, Revised Penal Code), in cases where both
mitigating and aggravating circumstances are
attendant in the commission of a crime and the law
provides for a penalty composed of two indivisible
penalties, the courts may allow such circumstances to
offset one another in consideration of their number
and importance, and to apply the penalty according to
the result of such compensation. (Art. 63, rule 4,
Revised Penal Code; U.S. vs. Reguera and Asuategui
[1921], 41 Phil., 506.) Again, article 64, paragraph 7,
of the Revised Penal Code empowers the courts to
determine, within the limits of each periods, in case
the penalty prescribed by law contains three periods,
the extent of the evil produced by the crime. In the
imposition of fines, the courts are allowed to fix any
amount within the limits established by law,
considering not only the mitigating and aggravating
circumstances, but more particularly the wealth or
means of the culprit. (Art. 66, Revised Penal Code.)
Article 68, paragraph 1, of the same Code provides
that "a discretionary penalty shall be imposed" upon a
person under fifteen but over nine years of age, who

has not acted without discernment, but always lower

by two degrees at least than that prescribed by law for
the crime which he has committed. Article 69 of the
same Code provides that in case of "incomplete selfdefense", i.e., when the crime committed is not wholly
excusable by reason of the lack of some of the
conditions required to justify the same or to exempt
from criminal liability in the several cases mentioned
in article 11 and 12 of the Code, "the courts shall
impose the penalty in the period which may be
deemed proper, in view of the number and nature of
the conditions of exemption present or lacking." And,
in case the commission of what are known as
"impossible" crimes, "the court, having in mind the
social danger and the degree of criminality shown by
the offender," shall impose upon him either arresto
mayor or a fine ranging from 200 to 500 pesos. (Art.
59, Revised Penal Code.)
Under our Revised Penal Code, also, one-half of the
period of preventive imprisonment is deducted form
the entire term of imprisonment, except in certain
cases expressly mentioned (art. 29); the death penalty
is not imposed when the guilty person is more than
seventy years of age, or where upon appeal or revision
of the case by the Supreme Court, all the members
thereof are not unanimous in their voting as to the
propriety of the imposition of the death penalty (art.
47, see also, sec. 133, Revised Administrative Code, as
amended by Commonwealth Act No. 3); the death
sentence is not to be inflicted upon a woman within
the three years next following the date of the sentence

or while she is pregnant, or upon any person over

seventy years of age (art. 83); and when a convict
shall become insane or an imbecile after final sentence
has been pronounced, or while he is serving his
sentenced, the execution of said sentence shall be
suspended with regard to the personal penalty during
the period of such insanity or imbecility (art. 79).
But the desire of the legislature to relax what might
result in the undue harshness of the penal laws is
more
clearly
demonstrated
in
various
other
enactments, including the probation Act. There is the
Indeterminate Sentence Law enacted in 1933 as Act
No. 4103 and subsequently amended by Act No. 4225,
establishing a system of parole (secs. 5 to 100 and
granting the courts large discretion in imposing the
penalties of the law. Section 1 of the law as amended
provides; "hereafter, in imposing a prison sentence for
an offenses punished by the Revised Penal Code, or its
amendments, the court shall sentence the accused to
an indeterminate sentence the maximum term of
which shall be that which, in view of the attending
circumstances, could be properly imposed under the
rules of the said Code, and to a minimum which shall
be within the range of the penalty next lower to that
prescribed by the Code for the offense; and if the
offense is punished by any other law, the court shall
sentence the accused to an indeterminate sentence,
the maximum term of which shall not exceed the
maximum fixed by said law and the minimum shall not
be less than the minimum term prescribed by the
same." Certain classes of convicts are, by section 2 of

the law, excluded from the operation thereof. The

Legislature has also enacted the Juvenile Delinquency
Law (Act No. 3203) which was subsequently amended
by Act No. 3559. Section 7 of the original Act and
section 1 of the amendatory Act have become article
80 of the Revised Penal Code, amended by Act No.
4117 of the Philippine Legislature and recently
reamended by Commonwealth Act No. 99 of the
National Assembly. In this Act is again manifested the
intention of the legislature to "humanize" the penal
laws. It allows, in effect, the modification in particular
cases of the penalties prescribed by law by permitting
the suspension of the execution of the judgment in the
discretion of the trial court, after due hearing and after
investigation of the particular circumstances of the
offenses, the criminal record, if any, of the convict, and
his social history. The Legislature has in reality decreed
that in certain cases no punishment at all shall be
suffered by the convict as long as the conditions of
probation are faithfully observed. It this be so, then, it
cannot be said that the Probation Act comes in conflict
with the power of the Chief Executive to grant pardons
and reprieves, because, to use the language of the
Supreme Court of New Mexico, "the element of
punishment or the penalty for the commission of a
wrong, while to be declared by the courts as a judicial
function under and within the limits of law as
announced by legislative acts, concerns solely the
procedure and conduct of criminal causes, with which
the executive can have nothing to do." (Ex
parte Bates, supra.) In Williams vs. State ([1926], 162

Ga., 327; 133 S.E., 843), the court upheld the

constitutionality of the Georgia probation statute
against the contention that it attempted to delegate to
the courts the pardoning power lodged by the
constitution in the governor alone is vested with the
power to pardon after final sentence has been imposed
by the courts, the power of the courts to imposed any
penalty which may be from time to time prescribed by
law and in such manner as may be defined cannot be
questioned."
We realize, of course, the conflict which the American
cases disclose. Some cases hold it unlawful for the
legislature to vest in the courts the power to suspend
the operation of a sentenced, by probation or
otherwise, as to do so would encroach upon the
pardoning power of the executive. (In re Webb [1895],
89 Wis., 354; 27 L.R.A., 356; 46 Am. St. Rep., 846; 62
N.W., 177; 9 Am. Crim., Rep., 702; State ex rel.
Summerfield vs. Moran [1919], 43 Nev., 150; 182 Pac.,
927; Ex parte Clendenning [1908], 22 Okla., 108; 1
Okla. Crim. Rep., 227; 19 L.R.A. [N.S.], 1041; 132 Am.
St. Rep., 628; 97 Pac., 650; People vs. Barrett [1903],
202 Ill, 287; 67 N.E., 23; 63 L.R.A., 82; 95 Am. St. Rep.,
230; Snodgrass vs. State [1912], 67 Tex. Crim. Rep.,
615; 41 L. R. A. [N. S.], 1144; 150 S. W., 162; Ex
parte Shelor [1910], 33 Nev., 361;111 Pac., 291; Neal
vs. State [1898], 104 Ga., 509; 42 L. R. A., 190; 69 Am.
St. Rep., 175; 30 S. E. 858; State ex rel. Payne vs.
Anderson [1921], 43 S. D., 630; 181 N. W., 839; People
vs. Brown, 54 Mich., 15; 19 N. W., 571; States vs.
Dalton [1903], 109 Tenn., 544; 72 S. W., 456.)

Other cases, however, hold contra. (Nix vs. James

[1925; C. C. A., 9th], 7 F. [2d], 590; Archer vs. Snook
[1926; D. C.], 10 F. [2d], 567; Riggs. vs. United States
[1926; C. C. A. 4th], 14]) [2d], 5; Murphy vs. States
[1926], 171 Ark., 620; 286 S. W., 871; 48 A. L. R.,
1189; Re Giannini [1912], 18 Cal. App., 166; 122 Pac.,
831; Re Nachnaber [1928], 89 Cal. App., 530; 265 Pac.,
392; Ex parte De Voe [1931], 114 Cal. App., 730; 300
Pac., 874; People vs. Patrick [1897], 118 Cal., 332; 50
Pac., 425; Martin vs. People [1917], 69 Colo., 60; 168
Pac., 1171; Belden vs. Hugo [1914], 88 Conn., 50; 91
A., 369, 370, 371; Williams vs. State [1926], 162 Ga.,
327; 133 S. E., 843; People vs. Heise [1913], 257 Ill.,
443; 100 N. E., 1000; Parker vs. State [1893], 135 Ind.,
534; 35 N. E., 179; 23 L. R. A., 859; St. Hillarie,
Petitioner [1906], 101 Me., 522; 64 Atl., 882; People vs.
Stickle [1909], 156 Mich., 557; 121 N. W., 497; State
vs. Fjolander [1914], 125 Minn., 529; State ex rel.
Bottomnly vs. District Court [1925], 73 Mont., 541; 237
Pac., 525; State vs. Everitt [1913], 164 N. C., 399; 79
S. E., 274; 47 L. R. A. [N. S.], 848; State ex rel. Buckley
vs. Drew [1909], 75 N. H., 402; 74 Atl., 875; State vs.
Osborne [1911], 79 N. J. Eq., 430; 82 Atl. 424; Ex
parte Bates [1915], 20 N. M., 542; L. R. A., 1916 A.
1285; 151 Pac., 698; People vs. ex rel. Forsyth vs.
Court of Session [1894], 141 N. Y., 288; 23 L. R. A.,
856; 36 N. E., 386; 15 Am. Crim. Rep., 675; People ex
rel. Sullivan vs. Flynn [1907], 55 Misc., 639; 106 N. Y.
Supp., 928; People vs. Goodrich [1914], 149 N. Y.
Supp., 406; Moore vs. Thorn [1935], 245 App. Div.,
180; 281 N. Y. Supp., 49; Re Hart [1914], 29 N. D., 38;

L. R. A., 1915C, 1169; 149 N. W., 568; Ex parte Eaton

[1925], 29 Okla., Crim. Rep., 275; 233 P., 781; State vs.
Teal [1918], 108 S. C., 455; 95 S. E., 69; State vs.
Abbot [1910], 87 S. C., 466; 33 L.R.A., [N. S.], 112; 70
S. E., 6; Ann. Cas., 1912B, 1189; Fults vs. States
[1854],34 Tenn., 232; Woods vs. State [1814], 130
Tenn., 100; 169 S. W., 558; Baker vs. State [1814], 130
Tenn., 100; 169 S. W., 558; Baker vs. State [1913],70
Tex., Crim. Rep., 618; 158 S. W., 998; Cook vs. State
[1914], 73 Tex. Crim. Rep., 548; 165 S. W., 573; King
vs. State [1914], 72 Tex. Crim. Rep., 394; 162 S. W.,
890; Clare vs. State [1932], 122 Tex. Crim. Rep., 394;
162 S. W., 890; Clare vs. State [1932], 122 Tex. Crim.
Rep., 211; 54 S. W. [2d], 127; Re Hall [1927], 100 Vt.,
197; 136 A., 24; Richardson vs. Com. [1921], 131 Va.,
802; 109 S.E., 460; State vs. Mallahan [1911], 65
Wash., 287; 118 Pac., 42; State ex rel. Tingstand vs.
Starwich [1922], 119 Wash., 561; 206 Pac., 29; 26 A. L.
R., 393; 396.) We elect to follow this long catena of
authorities holding that the courts may be legally
authorized by the legislature to suspend sentence by
the establishment of a system of probation however
characterized. State ex rel. Tingstand vs. Starwich
([1922], 119 Wash., 561; 206 Pac., 29; 26 A. L. R.,
393), deserved particular mention. In that case, a
statute enacted in 1921 which provided for the
suspension of the execution of a sentence until
otherwise ordered by the court, and required that the
convicted person be placed under the charge of a
parole or peace officer during the term of such
suspension, on such terms as the court may

determine, was held constitutional and as not giving

the court a power in violation of the constitutional
provision vesting the pardoning power in the chief
executive of the state. (Vide, also, Re Giannini [1912],
18 Cal App., 166; 122 Pac., 831.)
Probation and pardon are not coterminous; nor are
they the same. They are actually district and different
from each other, both in origin and in nature. In
People ex rel. Forsyth vs. Court of Sessions ([1894],
141 N. Y., 288, 294; 36 N. E., 386, 388; 23 L. R. A., 856;
15 Am. Crim. Rep., 675), the Court of Appeals of New
York said:
. . . The power to suspend sentence and the
power to grant reprieves and pardons, as
understood when the constitution was adopted,
are totally distinct and different in their nature.
The former was always a part of the judicial
power; the latter was always a part of the
executive power. The suspension of the
sentence simply postpones the judgment of the
court temporarily or indefinitely, but the
conviction and liability following it, and the civil
disabilities, remain and become operative when
judgment is rendered. A pardon reaches both
the punishment prescribed for the offense and
the guilt of the offender. It releases the
punishment, and blots out of existence the guilt,
so that in the eye of the law, the offender is as
innocent as if he had never committed the
offense. It removes the penalties and

disabilities, and restores him to all his civil

rights. It makes him, as it were, a new man, and
gives him a new credit and capacity. (Ex
parte Garland, 71 U. S., 4 Wall., 333; 18 Law.
ed., 366; U. S. vs. Klein, 80 U. S., 13 Wall., 128;
20 Law. ed., 519; Knote vs. U. S., 95 U. S., 149;
24 Law. ed., 442.)
The framers of the federal and the state
constitutions were perfectly familiar with the
principles governing the power to grant
pardons, and it was conferred by these
instruments upon the executive with full
knowledge of the law upon the subject, and the
words of the constitution were used to express
the authority formerly exercised by the English
crown, or by its representatives in the colonies.
(Ex parte Wells, 59 U. S., 18 How., 307; 15 Law.
ed., 421.) As this power was understood, it did
not comprehend any part of the judicial
functions to suspend sentence, and it was never
intended that the authority to grant reprieves
and pardons should abrogate, or in any degree
restrict, the exercise of that power in regard to
its own judgments, that criminal courts has so
long maintained. The two powers, so distinct
and different in their nature and character, were
still left separate and distinct, the one to be
exercised by the executive, and the other by the
judicial department. We therefore conclude that
a statute which, in terms, authorizes courts of
criminal jurisdiction to suspend sentence in

certain cases after conviction, a power

inherent in such courts at common law, which
was understood when the constitution was
adopted to be an ordinary judicial function, and
which, ever since its adoption, has been
exercised of legislative power under the
constitution. It does not encroach, in any just
sense, upon the powers of the executive, as
they have been understood and practiced from
the earliest times. (Quoted with approval in
Directors of Prisons vs. Judge of First Instance of
Cavite [1915], 29 Phil., 265, Carson, J.,
concurring, at pp. 294, 295.)
In probation, the probationer is in no true sense, as in
pardon, a free man. He is not finally and completely
exonerated. He is not exempt from the entire
punishment which the law inflicts. Under the Probation
Act, the probationer's case is not terminated by the
mere fact that he is placed on probation. Section 4 of
the Act provides that the probation may be definitely
terminated and the probationer finally discharged from
supervision only after the period of probation shall
have been terminated and the probation officer shall
have submitted a report, and the court shall have
found that the probationer has complied with the
conditions of probation. The probationer, then, during
the period of probation, remains in legal custody
subject to the control of the probation officer and of
the court; and, he may be rearrested upon the nonfulfillment of the conditions of probation and, when
rearrested, may be committed to prison to serve the

sentence originally imposed upon him. (Secs. 2, 3, 5

and 6, Act No. 4221.)
The probation described in the act is not pardon.
It is not complete liberty, and may be far from it.
It is really a new mode of punishment, to be
applied by the judge in a proper case, in
substitution of the imprisonment and find
prescribed by the criminal laws. For this reason
its application is as purely a judicial act as any
other sentence carrying out the law deemed
applicable to the offense. The executive act of
pardon, on the contrary, is against the criminal
law, which binds and directs the judges, or
rather is outside of and above it. There is thus
no conflict with the pardoning power, and no
possible unconstitutionality of the Probation Act
for this cause. (Archer vs. Snook [1926], 10 F.
[2d], 567, 569.)
Probation should also be distinguished from reprieve
and from commutation of the sentence. Snodgrass vs.
State ([1912], 67 Tex. Crim. Rep., 615;41 L. R. A. [N.
S.], 1144; 150 S. W., 162), is relied upon most strongly
by the petitioners as authority in support of their
contention that the power to grant pardons and
reprieves, having been vested exclusively upon the
Chief Executive by the Jones Law, may not be
conferred by the legislature upon the courts by means
of probation law authorizing the indefinite judicial
suspension of sentence. We have examined that case
and found that although the Court of Criminal Appeals

of Texas held that the probation statute of the state in

terms conferred on the district courts the power to
grant pardons to persons convicted of crime, it also
distinguished between suspensions sentence on the
one hand, and reprieve and commutation of sentence
on the other. Said the court, through Harper, J.:
That the power to suspend the sentence does
not conflict with the power of the Governor to
grant reprieves is settled by the decisions of the
various courts; it being held that the distinction
between a "reprieve" and a suspension of
sentence is that a reprieve postpones the
execution of the sentence to a day certain,
whereas a suspension is for an indefinite time.
(Carnal vs. People, 1 Parker, Cr. R., 262; In re
Buchanan, 146 N. Y., 264; 40 N. E., 883), and
cases cited in 7 Words & Phrases, pp. 6115,
6116. This law cannot be hold in conflict with
the power confiding in the Governor to grant
commutations
of
punishment,
for
a
commutations is not but to change the
punishment assessed to a less punishment.
In State ex rel. Bottomnly vs. District Court ([1925], 73
Mont., 541; 237 Pac., 525), the Supreme Court of
Montana had under consideration the validity of the
adult probation law of the state enacted in 1913, now
found in sections 12078-12086, Revised Codes of
1921. The court held the law valid as not impinging
upon the pardoning power of the executive. In a

unanimous decision penned by Justice Holloway, the

court said:
. . . . the term "pardon", "commutation", and
"respite" each had a well understood meaning
at the time our Constitution was adopted, and
no one of them was intended to comprehend
the suspension of the execution of the judgment
as that phrase is employed in sections 1207812086. A "pardon" is an act of grace, proceeding
from the power intrusted with the execution of
the laws which exempts the individual on whom
it is bestowed from the punishment the law
inflicts for a crime he has committed (United
States vs. Wilson, 7 Pet., 150; 8 Law. ed., 640); It
is a remission of guilt (State vs. Lewis, 111 La.,
693; 35 So., 816), a forgiveness of the offense
(Cook vs. Middlesex County, 26 N. J. Law,
326; Ex parte Powell, 73 Ala., 517; 49 Am. Rep.,
71). "Commutation" is a remission of a part of
the punishment; a substitution of a less penalty
for the one originally imposed (Lee vs. Murphy,
22 Grat. [Va.] 789; 12 Am. Rep., 563; Rich vs.
Chamberlain, 107 Mich., 381; 65 N. W., 235). A
"reprieve" or "respite" is the withholding of the
sentence for an interval of time (4 Blackstone's
Commentaries, 394), a postponement of
execution (Carnal vs. People, 1 Parker, Cr. R. [N.
Y.], 272), a temporary suspension of execution
(Butler vs. State, 97 Ind., 373).

Few adjudicated cases are to be found in which

the validity of a statute similar to our section
12078 has been determined; but the same
objections have been urged against parole
statutes which vest the power to parole in
persons other than those to whom the power of
pardon is granted, and these statutes have been
upheld quite uniformly, as a reference to the
numerous cases cited in the notes to Woods vs.
State (130 Tenn., 100; 169 S. W.,558, reported in
L. R. A., 1915F, 531), will disclose. (See, also, 20
R. C. L., 524.)
We conclude that the Probation Act does not conflict
with the pardoning power of the Executive. The
pardoning power, in respect to those serving their
probationary sentences, remains as full and complete
as if the Probation Law had never been enacted. The
President may yet pardon the probationer and thus
place it beyond the power of the court to order his
rearrest and imprisonment. (Riggs vs. United States
[1926],
14 F. [2d], 5, 7.)
2. But while the Probation Law does not encroach
upon the pardoning power of the executive and is not
for that reason void, does section 11 thereof
constitute, as contended, an undue delegation of
legislative power?
Under the constitutional system, the powers of
government are distributed among three coordinate

and substantially independent organs: the legislative,

the executive and the judicial. Each of these
departments of the government derives its authority
from the Constitution which, in turn, is the highest
expression of popular will. Each has exclusive
cognizance of the matters within its jurisdiction, and is
supreme within its own sphere.
The power to make laws the legislative power is
vested in a bicameral Legislature by the Jones Law
(sec. 12) and in a unicamiral National Assembly by the
Constitution (Act. VI, sec. 1, Constitution of the
Philippines). The Philippine Legislature or the National
Assembly
may
not
escape
its
duties
and
responsibilities by delegating that power to any other
body or authority. Any attempt to abdicate the power
is unconstitutional and void, on the principle
that potestas delegata non delegare potest. This
principle is said to have originated with the glossators,
was introduced into English law through a misreading
of Bracton, there developed as a principle of agency,
was established by Lord Coke in the English public law
in decisions forbidding the delegation of judicial power,
and found its way into America as an enlightened
principle of free government. It has since become an
accepted corollary of the principle of separation of
powers. (5 Encyc. of the Social Sciences, p. 66.) The
classic statement of the rule is that of Locke, namely:
"The legislative neither must nor can transfer the
power of making laws to anybody else, or place it
anywhere but where the people have." (Locke on Civil
Government, sec. 142.) Judge Cooley enunciates the

doctrine in the following oft-quoted language: "One of

the settled maxims in constitutional law is, that the
power conferred upon the legislature to make laws
cannot be delegated by that department to any other
body or authority. Where the sovereign power of the
state has located the authority, there it must remain;
and by the constitutional agency alone the laws must
be made until the Constitution itself is charged. The
power to whose judgment, wisdom, and patriotism this
high prerogative has been intrusted cannot relieve
itself of the responsibilities by choosing other agencies
upon which the power shall be devolved, nor can it
substitute the judgment, wisdom, and patriotism of
any other body for those to which alone the people
have seen fit to confide this sovereign trust." (Cooley
on Constitutional Limitations, 8th ed., Vol. I, p. 224.
Quoted with approval in U. S. vs. Barrias [1908], 11
Phil., 327.) This court posits the doctrine "on the
ethical principle that such a delegated power
constitutes not only a right but a duty to be performed
by the delegate by the instrumentality of his own
judgment acting immediately upon the matter of
legislation and not through the intervening mind of
another. (U. S. vs. Barrias, supra, at p. 330.)
The rule, however, which forbids the delegation of
legislative power is not absolute and inflexible. It
admits of exceptions. An exceptions sanctioned by
immemorial practice permits the central legislative
body to delegate legislative powers to local
authorities. (Rubi vs. Provincial Board of Mindoro
[1919], 39 Phil., 660; U. S. vs. Salaveria [1918], 39

Phil., 102; Stoutenburgh vs. Hennick [1889], 129 U. S.,

141; 32 Law. ed., 637; 9 Sup. Ct. Rep., 256; State vs.
Noyes [1855], 30 N. H., 279.) "It is a cardinal principle
of our system of government, that local affairs shall be
managed by local authorities, and general affairs by
the central authorities; and hence while the rule is also
fundamental that the power to make laws cannot be
delegated, the creation of the municipalities exercising
local self government has never been held to trench
upon that rule. Such legislation is not regarded as a
transfer of general legislative power, but rather as the
grant of the authority to prescribed local regulations,
according to immemorial practice, subject of course to
the interposition of the superior in cases of necessity."
(Stoutenburgh vs. Hennick, supra.) On quite the same
principle, Congress is powered to delegate legislative
power to such agencies in the territories of the United
States as it may select. A territory stands in the same
relation to Congress as a municipality or city to the
state government. (United States vs. Heinszen [1907],
206 U. S., 370; 27 Sup. Ct. Rep., 742; 51 L. ed., 1098;
11 Ann. Cas., 688; Dorr vs. United States [1904], 195
U.S., 138; 24 Sup. Ct. Rep., 808; 49 Law. ed., 128; 1
Ann. Cas., 697.) Courts have also sustained the
delegation of legislative power to the people at large.
Some authorities maintain that this may not be done
(12 C. J., pp. 841, 842; 6 R. C. L., p. 164, citing People
vs. Kennedy [1913], 207 N. Y., 533; 101 N. E., 442;
Ann. Cas., 1914C, 616). However, the question of
whether or not a state has ceased to be republican in
form because of its adoption of the initiative and

referendum has been held not to be a judicial but a

political question (Pacific States Tel. & Tel. Co. vs.
Oregon [1912], 223 U. S., 118; 56 Law. ed., 377; 32
Sup. Cet. Rep., 224), and as the constitutionality of
such laws has been looked upon with favor by certain
progressive courts, the sting of the decisions of the
more conservative courts has been pretty well drawn.
(Opinions of the Justices [1894], 160 Mass., 586; 36 N.
E., 488; 23 L. R. A., 113; Kiernan vs. Portland [1910],
57 Ore., 454; 111 Pac., 379; 1132 Pac., 402; 37 L. R. A.
[N. S.], 332; Pacific States Tel. & Tel. Co. vs.
Oregon, supra.) Doubtless, also, legislative power may
be delegated by the Constitution itself. Section 14,
paragraph 2, of article VI of the Constitution of the
Philippines provides that "The National Assembly may
by law authorize the President, subject to such
limitations and restrictions as it may impose, to fix
within specified limits, tariff rates, import or export
quotas, and tonnage and wharfage dues." And section
16 of the same article of the Constitution provides that
"In times of war or other national emergency, the
National Assembly may by law authorize the President,
for a limited period and subject to such restrictions as
it may prescribed, to promulgate rules and regulations
to carry out a declared national policy." It is beyond the
scope of this decision to determine whether or not, in
the absence of the foregoing constitutional provisions,
the President could be authorized to exercise the
powers thereby vested in him. Upon the other hand,
whatever doubt may have existed has been removed
by the Constitution itself.

The case before us does not fall under any of the

exceptions hereinabove mentioned.
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. (Emphasis ours.)
In testing whether a statute constitute an undue
delegation of legislative power or not, it is usual to
inquire whether the statute was complete in all its
terms and provisions when it left the hands of the
legislature so that nothing was left to the judgment of
any other appointee or delegate of the legislature. (6
R. C. L., p. 165.) In the United States vs. Ang Tang Ho
([1922], 43 Phil., 1), this court adhered to the
foregoing rule when it held an act of the legislature
void in so far as it undertook to authorize the
Governor-General, in his discretion, to issue a
proclamation fixing the price of rice and to make the
sale of it in violation of the proclamation a crime.
(See and cf. Compaia General de Tabacos vs. Board of
Public Utility Commissioners [1916], 34 Phil., 136.) The
general rule, however, is limited by another rule that
to a certain extent matters of detail may be left to be

filled in by rules and regulations to be adopted or

promulgated by executive officers and administrative
boards. (6 R. C. L., pp. 177-179.)
For the purpose of Probation Act, the provincial boards
may be regarded as administrative bodies endowed
with power to determine when the Act should take
effect in their respective provinces. They are the
agents or delegates of the legislature in this respect.
The rules governing delegation of legislative power to
administrative and executive officers are applicable or
are at least indicative of the rule which should be here
adopted. An examination of a variety of cases on
delegation of power to administrative bodies will show
that the ratio decidendi is at variance but, it can be
broadly asserted that the rationale revolves around the
presence or absence of a standard or rule of action
or the sufficiency thereof in the statute, to aid the
delegate in exercising the granted discretion. In some
cases, it is held that the standard is sufficient; in
others that is insufficient; and in still others that it is
entirely lacking. As a rule, an act of the legislature is
incomplete and hence invalid if it does not lay down
any rule or definite standard by which the
administrative officer or board may be guided in the
exercise of the discretionary powers delegated to it.
(See Schecter vs. United States [1925], 295 U. S., 495;
79 L. ed., 1570; 55 Sup. Ct. Rep., 837; 97 A.L.R., 947;
People ex rel. Rice vs. Wilson Oil Co. [1936], 364 Ill.,
406; 4 N. E. [2d], 847; 107 A.L.R., 1500 and cases
cited. See also R. C. L., title "Constitutional Law", sec
174.) In the case at bar, what rules are to guide the

provincial boards in the exercise of their discretionary

power to determine whether or not the Probation Act
shall apply in their respective provinces? What
standards are fixed by the Act? We do not find any and
none has been pointed to us by the respondents. The
probation Act does not, by the force of any of its
provisions, fix and impose upon the provincial boards
any standard or guide in the exercise of their
discretionary power. What is granted, if we may use
the language of Justice Cardozo in the recent case of
Schecter, supra, is a "roving commission" which
enables the provincial boards to exercise arbitrary
discretion. By section 11 if the Act, the legislature does
not seemingly on its own authority extend the benefits
of the Probation Act to the provinces but in reality
leaves the entire matter for the various provincial
boards to determine. In other words, the provincial
boards of the various provinces are to determine for
themselves, whether the Probation Law shall apply to
their provinces or not at all. The applicability and
application of the Probation Act are entirely placed in
the hands of the provincial boards. If the provincial
board does not wish to have the Act applied in its
province, all that it has to do is to decline to
appropriate the needed amount for the salary of a
probation officer. The plain language of the Act is not
susceptible of any other interpretation. This, to our
minds, is a virtual surrender of legislative power to the
provincial boards.
"The true distinction", says Judge Ranney, "is between
the delegation of power to make the law, which

necessarily involves a discretion as to what it shall be,

and conferring an authority or discretion as to its
execution, to be exercised under and in pursuance of
the law. The first cannot be done; to the latter no valid
objection can be made." (Cincinnati, W. & Z. R. Co. vs.
Clinton County Comrs. [1852]; 1 Ohio St., 77, 88. See
also, Sutherland on Statutory Construction, sec 68.) To
the same effect are the decision of this court
in Municipality of Cardona vs. Municipality of
Binangonan ([1917], 36 Phil., 547); Rubi vs. Provincial
Board of Mindoro ([1919],39 Phil., 660) and Cruz vs.
Youngberg ([1931], 56 Phil., 234). In the first of these
cases, this court sustained the validity of the law
conferring upon the Governor-General authority to
adjust provincial and municipal boundaries. In the
second case, this court held it lawful for the legislature
to direct non-Christian inhabitants to take up their
habitation on unoccupied lands to be selected by the
provincial governor and approved by the provincial
board. In the third case, it was held proper for the
legislature to vest in the Governor-General authority to
suspend or not, at his discretion, the prohibition of the
importation of the foreign cattle, such prohibition to be
raised "if the conditions of the country make this
advisable or if deceased among foreign cattle has
ceased to be a menace to the agriculture and livestock
of the lands."
It should be observed that in the case at bar we are
not concerned with the simple transference of details
of execution or the promulgation by executive or
administrative officials of rules and regulations to carry

into effect the provisions of a law. If we were,

recurrence to our own decisions would be sufficient.
(U. S. vs. Barrias [1908], 11 Phil., 327; U.S. vs. Molina
[1914], 29 Phil., 119; Alegre vs. Collector of Customs
[1929], 53 Phil., 394; Cebu Autobus Co. vs. De Jesus
[1931], 56 Phil., 446; U. S. vs. Gomez [1915], 31 Phil.,
218; Rubi vs. Provincial Board of Mindoro [1919], 39
Phil., 660.)
It is connected, however, that a legislative act may be
made to the effect as law after it leaves the hands of
the legislature. It is true that laws may be made
effective on certain contingencies, as by proclamation
of the executive or the adoption by the people of a
particular community (6 R. C. L., 116, 170-172; Cooley,
Constitutional Limitations, 8th ed., Vol. I, p. 227). In
Wayman vs. Southard ([1825], 10 Wheat. 1; 6 Law. ed.,
253), the Supreme Court of the United State ruled that
the legislature may delegate a power not legislative
which it may itself rightfully exercise.(Vide, also,
Dowling vs. Lancashire Ins. Co. [1896], 92 Wis., 63; 65
N. W., 738; 31 L. R. A., 112.) The power to ascertain
facts is such a power which may be delegated. There is
nothing essentially legislative in ascertaining the
existence of facts or conditions as the basis of the
taking into effect of a law. That is a mental process
common to all branches of the government. (Dowling
vs. Lancashire Ins. Co., supra; In re Village of North
Milwaukee [1896], 93 Wis., 616; 97 N.W., 1033; 33
L.R.A., 938; Nash vs. Fries [1906], 129 Wis., 120; 108
N.W., 210; Field vs. Clark [1892], 143 U.S., 649; 12
Sup. Ct., 495; 36 Law. ed., 294.) Notwithstanding the

apparent tendency, however, to relax the rule

prohibiting delegation of legislative authority on
account of the complexity arising from social and
economic forces at work in this modern industrial age
(Pfiffner, Public Administration [1936] ch. XX; Laski,
"The Mother of Parliaments", foreign Affairs, July, 1931,
Vol. IX, No. 4, pp. 569-579; Beard, "Squirt-Gun Politics",
in Harper's Monthly Magazine, July, 1930, Vol. CLXI, pp.
147, 152), the orthodox pronouncement of Judge
Cooley in his work on Constitutional Limitations finds
restatement in Prof. Willoughby's treatise on the
Constitution of the United States in the following
language speaking of declaration of legislative
power to administrative agencies: "The principle which
permits the legislature to provide that the
administrative agent may determine when the
circumstances are such as require the application of a
law is defended upon the ground that at the time this
authority is granted, the rule of public policy, which is
the essence of the legislative act, is determined by the
legislature. In other words, the legislature, as it its duty
to do, determines that, under given circumstances,
certain executive or administrative action is to be
taken, and that, under other circumstances, different
of no action at all is to be taken. What is thus left to
the administrative official is not the legislative
determination of what public policy demands, but
simply the ascertainment of what the facts of the case
require to be done according to the terms of the law by
which he is governed." (Willoughby on the Constitution
of the United States, 2nd ed., Vol. II, p. 1637.) In Miller

vs. Mayer, etc., of New York [1883], 109 U.S., 3 Sup.

Ct. Rep., 228; 27 Law. ed., 971, 974), it was said: "The
efficiency of an Act as a declaration of legislative will
must, of course, come from Congress, but the
ascertainment of the contingency upon which the Act
shall take effect may be left to such agencies as it may
designate." (See, also, 12 C.J., p. 864; State vs. Parker
[1854], 26 Vt., 357; Blanding vs. Burr [1859], 13 Cal.,
343, 258.) The legislature, then may provide that a
contingencies leaving to some other person or body
the power to determine when the specified
contingencies has arisen. But, in the case at bar, the
legislature has not made the operation of the
Prohibition Act contingent upon specified facts or
conditions to be ascertained by the provincial board. It
leaves, as we have already said, the entire operation
or non-operation of the law upon the provincial board.
the discretion vested is arbitrary because it is absolute
and unlimited. A provincial board need not investigate
conditions or find any fact, or await the happening of
any specified contingency. It is bound by no rule,
limited by no principle of expendiency announced by
the legislature. It may take into consideration certain
facts or conditions; and, again, it may not. It may have
any purpose or no purpose at all. It need not give any
reason whatsoever for refusing or failing to appropriate
any funds for the salary of a probation officer. This is a
matter which rest entirely at its pleasure. The fact that
at some future time we cannot say when the
provincial boards may appropriate funds for the
salaries of probation officers and thus put the law into

operation in the various provinces will not save the

statute. The time of its taking into effect, we reiterate,
would yet be based solely upon the will of the
provincial boards and not upon the happening of a
certain
specified
contingency,
or
upon
the
ascertainment of certain facts or conditions by a
person or body other than legislature itself.
The various provincial boards are, in practical effect,
endowed with the power of suspending the operation
of the Probation Law in their respective provinces. In
some jurisdiction, constitutions provided that laws may
be suspended only by the legislature or by its
authority. Thus, section 28, article I of the Constitution
of Texas provides that "No power of suspending laws in
this state shall be exercised except by the legislature";
and section 26, article I of the Constitution of Indiana
provides "That the operation of the laws shall never be
suspended, except by authority of the General
Assembly." Yet, even provisions of this sort do not
confer absolute power of suspension upon the
legislature. While it may be undoubted that the
legislature may suspend a law, or the execution or
operation of a law, a law may not be suspended as to
certain individuals only, leaving the law to be enjoyed
by others. The suspension must be general, and
cannot be made for individual cases or for particular
localities. In Holden vs. James ([1814], 11 Mass., 396;
6 Am. Dec., 174, 177, 178), it was said:
By the twentieth article of the declaration of
rights in the constitution of this commonwealth,

it is declared that the power of suspending the

laws, or the execution of the laws, ought never
to be exercised but by the legislature, or by
authority derived from it, to be exercised in such
particular cases only as the legislature shall
expressly provide for. Many of the articles in
that declaration of rights were adopted from the
Magna Charta of England, and from the bill of
rights passed in the reign of William and Mary.
The bill of rights contains an enumeration of the
oppressive acts of James II, tending to subvert
and extirpate the protestant religion, and the
laws and liberties of the kingdom; and the first
of them is the assuming and exercising a power
of dispensing with and suspending the laws, and
the execution of the laws without consent of
parliament. The first article in the claim or
declaration of rights contained in the statute is,
that the exercise of such power, by legal
authority without consent of parliament, is
illegal. In the tenth section of the same statute
it is further declared and enacted, that "No
dispensation by non obstante of or to any
statute, or part thereof, should be allowed; but
the same should be held void and of no effect,
except a dispensation be allowed of in such
statute." There is an implied reservation of
authority in the parliament to exercise the
power here mentioned; because, according to
the theory of the English Constitution, "that
absolute despotic power, which must in all

governments reside somewhere," is intrusted to

the parliament: 1 Bl. Com., 160.
The principles of our government are widely
different in this particular. Here the sovereign
and absolute power resides in the people; and
the legislature can only exercise what is
delegated to them according to the constitution.
It is obvious that the exercise of the power in
question would be equally oppressive to the
subject, and subversive of his right to
protection, "according to standing laws,"
whether exercised by one man or by a number
of men. It cannot be supposed that the people
when adopting this general principle from the
English bill of rights and inserting it in our
constitution, intended to bestow by implication
on the general court one of the most odious and
oppressive prerogatives of the ancient kings of
England. It is manifestly contrary to the first
principles of civil liberty and natural justice, and
to the spirit of our constitution and laws, that
any one citizen should enjoy privileges and
advantages which are denied to all others under
like circumstances; or that ant one should be
subject to losses, damages, suits, or actions
from which all others under like circumstances
are exempted.
To illustrate the principle: A section of a statute
relative to dogs made the owner of any dog liable to
the owner of domestic animals wounded by it for the

damages without proving a knowledge of it vicious

disposition. By a provision of the act, power was given
to the board of supervisors to determine whether or
not during the current year their county should be
governed by the provisions of the act of which that
section constituted a part. It was held that the
legislature could not confer that power. The court
observed that it could no more confer such a power
than to authorize the board of supervisors of a county
to abolish in such county the days of grace on
commercial paper, or to suspend the statute of
limitations. (Slinger vs. Henneman [1875], 38 Wis.,
504.) A similar statute in Missouri was held void for the
same reason in State vs. Field ([1853, 17 Mo., 529;59
Am. Dec., 275.) In that case a general statute
formulating a road system contained a provision that
"if the county court of any county should be of opinion
that the provisions of the act should not be enforced,
they might, in their discretion, suspend the operation
of the same for any specified length of time, and
thereupon the act should become inoperative in such
county for the period specified in such order; and
thereupon order the roads to be opened and kept in
good repair, under the laws theretofore in force." Said
the court: ". . . this act, by its own provisions, repeals
the inconsistent provisions of a former act, and yet it is
left to the county court to say which act shall be
enforce in their county. The act does not submit the
question to the county court as an original question, to
be decided by that tribunal, whether the act shall
commence its operation within the county; but it

became by its own terms a law in every county not

excepted by name in the act. It did not, then, require
the county court to do any act in order to give it effect.
But being the law in the county, and having by its
provisions superseded and abrogated the inconsistent
provisions of previous laws, the county court is . . .
empowered, to suspend this act and revive the
repealed provisions of the former act. When the
question is before the county court for that tribunal to
determine which law shall be in force, it is urge before
us that the power then to be exercised by the court is
strictly legislative power, which under our constitution,
cannot be delegated to that tribunal or to any other
body of men in the state. In the present case, the
question is not presented in the abstract; for the
county court of Saline county, after the act had been
for several months in force in that county, did by order
suspend its operation; and during that suspension the
offense was committed which is the subject of the
present indictment . . . ." (SeeMitchell vs. State [1901],
134 Ala., 392; 32 S., 687.)
True, the legislature may enact laws for a particular
locality different from those applicable to other
localities and, while recognizing the force of the
principle hereinabove expressed, courts in may
jurisdiction have sustained the constitutionality of the
submission of option laws to the vote of the people. (6
R.C.L., p. 171.) But option laws thus sustained treat of
subjects purely local in character which should receive
different treatment in different localities placed under
different circumstances. "They relate to subjects

which, like the retailing of intoxicating drinks, or the

running at large of cattle in the highways, may be
differently regarded in different localities, and they are
sustained on what seems to us the impregnable
ground, that the subject, though not embraced within
the ordinary powers of municipalities to make by-laws
and ordinances, is nevertheless within the class of
public regulations, in respect to which it is proper that
the local judgment should control." (Cooley on
Constitutional Limitations, 5th ed., p. 148.) So that,
while we do not deny the right of local self-government
and the propriety of leaving matters of purely local
concern in the hands of local authorities or for the
people of small communities to pass upon, we believe
that in matters of general of general legislation like
that which treats of criminals in general, and as
regards the general subject of probation, discretion
may not be vested in a manner so unqualified and
absolute as provided in Act No. 4221. True, the statute
does not expressly state that the provincial boards
may suspend the operation of the Probation Act in
particular provinces but, considering that, in being
vested with the authority to appropriate or not the
necessary funds for the salaries of probation officers,
they thereby are given absolute discretion to
determine whether or not the law should take effect or
operate in their respective provinces, the provincial
boards are in reality empowered by the legislature to
suspend the operation of the Probation Act in
particular provinces, the Act to be held in abeyance
until the provincial boards should decide otherwise by

appropriating the necessary funds. The validity of a

law is not tested by what has been done but by what
may be done under its provisions. (Walter E. Olsen &
Co. vs. Aldanese and Trinidad [1922], 43 Phil., 259; 12
C. J., p. 786.)
It in conceded that a great deal of latitude should be
granted to the legislature not only in the expression of
what may be termed legislative policy but in the
elaboration and execution thereof. "Without this
power, legislation would become oppressive and yet
imbecile." (People vs. Reynolds, 5 Gilman, 1.) It has
been said that popular government lives because of
the inexhaustible reservoir of power behind it. It is
unquestionable that the mass of powers of
government is vested in the representatives of the
people and that these representatives are no further
restrained under our system than by the express
language of the instrument imposing the restraint, or
by particular provisions which by clear intendment,
have that effect. (Angara vs. Electoral Commission
[1936], 35 Off. Ga., 23; Schneckenburger vs. Moran
[1936], 35 Off. Gaz., 1317.) But, it should be borne in
mind that a constitution is both a grant and a
limitation of power and one of these time-honored
limitations is that, subject to certain exceptions,
legislative power shall not be delegated.
We conclude that section 11 of Act No. 4221
constitutes an improper and unlawful delegation of
legislative authority to the provincial boards and is, for
this reason, unconstitutional and void.

3. It is also contended that the Probation Act violates

the provisions of our Bill of Rights which prohibits the
denial to any person of the equal protection of the
laws (Act. III, sec. 1 subsec. 1. Constitution of the
Philippines.)
This basic individual right sheltered by the Constitution
is a restraint on all the tree grand departments of our
government and on the subordinate instrumentalities
and subdivision thereof, and on many constitutional
power, like the police power, taxation and eminent
domain. The equal protection of laws, sententiously
observes the Supreme Court of the United States, "is a
pledge of the protection of equal laws." (Yick Wo vs.
Hopkins [1886], 118 U. S., 356; 30 Law. ed., 220; 6
Sup. Ct. Rep., 10464; Perley vs. North Carolina, 249 U.
S., 510; 39 Sup. Ct. Rep., 357; 63 Law. ed., 735.) Of
course, what may be regarded as a denial of the equal
protection of the laws in a question not always easily
determined. No rule that will cover every case can be
formulated. (Connolly vs. Union Sewer Pipe Co. [1902],
184, U. S., 540; 22 Sup. Ct., Rep., 431; 46 Law. ed.,
679.) Class legislation discriminating against some and
favoring others in prohibited. But classification on a
reasonable basis, and nor made arbitrarily or
capriciously, is permitted. (Finely vs. California [1911],
222 U. S., 28; 56 Law. ed., 75; 32 Sup. Ct. Rep., 13;
Gulf. C. & S. F. Ry Co. vs. Ellis [1897], 165 U. S., 150;
41 Law. ed., 666; 17 Sup. Ct. Rep., 255; Smith, Bell &
Co. vs. Natividad [1919], 40 Phil., 136.) The
classification, however, to be reasonable must be
based on substantial distinctions which make real

differences; it must be germane to the purposes of the

law; it must not be limited to existing conditions only,
and must apply equally to each member of the class.
(Borgnis vs. Falk. Co. [1911], 147 Wis., 327, 353; 133
N. W., 209; 3 N. C. C. A., 649; 37 L. R. A. [N. S.], 489;
State vs. Cooley, 56 Minn., 540; 530-552; 58 N. W.,
150; Lindsley vs. Natural Carbonic Gas Co.[1911], 220
U. S., 61, 79, 55 Law. ed., 369, 377; 31 Sup. Ct. Rep.,
337; Ann. Cas., 1912C, 160; Lake Shore & M. S. R. Co.
vs. Clough [1917], 242 U.S., 375; 37 Sup. Ct. Rep.,
144; 61 Law. ed., 374; Southern Ry. Co. vs. Greene
[1910], 216 U. S., 400; 30 Sup. Ct. Rep., 287; 54 Law.
ed., 536; 17 Ann. Cas., 1247; Truax vs. Corrigan
[1921], 257 U. S., 312; 12 C. J., pp. 1148, 1149.)
In the case at bar, however, the resultant inequality
may be said to flow from the unwarranted delegation
of legislative power, although perhaps this is not
necessarily the result in every case. Adopting the
example given by one of the counsel for the
petitioners in the course of his oral argument, one
province may appropriate the necessary fund to defray
the salary of a probation officer, while another
province may refuse or fail to do so. In such a case, the
Probation Act would be in operation in the former
province but not in the latter. This means that a person
otherwise coming within the purview of the law would
be liable to enjoy the benefits of probation in one
province while another person similarly situated in
another province would be denied those same
benefits.
This
is
obnoxious
discrimination.
Contrariwise, it is also possible for all the provincial

boards to appropriate the necessary funds for the

salaries of the probation officers in their respective
provinces, in which case no inequality would result for
the obvious reason that probation would be in
operation in each and every province by the
affirmative action of appropriation by all the provincial
boards. On that hypothesis, every person coming
within the purview of the Probation Act would be
entitled to avail of the benefits of the Act. Neither will
there be any resulting inequality if no province,
through its provincial board, should appropriate any
amount for the salary of the probation officer which
is the situation now and, also, if we accept the
contention that, for the purpose of the Probation Act,
the City of Manila should be considered as a province
and that the municipal board of said city has not made
any appropriation for the salary of the probation
officer. These different situations suggested show,
indeed, that while inequality may result in the
application of the law and in the conferment of the
benefits therein provided, inequality is not in all cases
the necessary result. But whatever may be the case, it
is clear that in section 11 of the Probation Act creates
a situation in which discrimination and inequality are
permitted or allowed. There are, to be sure, abundant
authorities requiring actual denial of the equal
protection of the law before court should assume the
task of setting aside a law vulnerable on that score,
but premises and circumstances considered, we are of
the opinion that section 11 of Act No. 4221 permits of
the denial of the equal protection of the law and is on

that account bad. We see no difference between a law

which permits of such denial. A law may appear to be
fair on its face and impartial in appearance, yet, if it
permits of unjust and illegal discrimination, it is within
the constitutional prohibitions. (By analogy, Chy Lung
vs. Freeman [1876], 292 U. S., 275; 23 Law. ed., 550;
Henderson vs. Mayor [1876], 92 U. S., 259; 23 Law.
ed., 543; Ex parte Virginia [1880], 100 U. S., 339; 25
Law. ed., 676; Neal vs. Delaware [1881], 103 U. S.,
370; 26 Law. ed., 567; Soon Hing vs. Crowley [1885],
113 U. S., 703; 28 Law. ed., 1145, Yick Wo vs. Hopkins
[1886],118 U. S., 356; 30 Law. ed., 220; Williams vs.
Mississippi [1897], 170 U. S., 218; 18 Sup. Ct. Rep.,
583; 42 Law. ed., 1012; Bailey vs. Alabama [1911],
219 U. S., 219; 31 Sup. Ct. Rep. 145; 55 Law. ed.,
Sunday Lake Iron Co. vs. Wakefield [1918], 247 U. S.,
450; 38 Sup. Ct. Rep., 495; 62 Law. ed., 1154.) In other
words, statutes may be adjudged unconstitutional
because of their effect in operation (General Oil Co. vs.
Clain [1907], 209 U. S., 211; 28 Sup. Ct. Rep., 475; 52
Law. ed., 754; State vs. Clement Nat. Bank [1911], 84
Vt., 167; 78 Atl., 944; Ann. Cas., 1912D, 22). If the law
has the effect of denying the equal protection of the
law it is unconstitutional. (6 R. C. L. p. 372; Civil Rights
Cases, 109 U. S., 3; 3 Sup. Ct. Rep., 18; 27 Law. ed.,
835; Yick Wo vs. Hopkins, supra; State vs.
Montgomery, 94 Me., 192; 47 Atl., 165; 80 A. S. R.,
386; State vs. Dering, 84 Wis., 585; 54 N. W., 1104; 36
A. S. R., 948; 19 L. R. A., 858.) Under section 11 of the
Probation Act, not only may said Act be in force in one
or several provinces and not be in force in other

provinces, but one province may appropriate for the

salary of the probation officer of a given year and
have probation during that year and thereafter
decline to make further appropriation, and have no
probation is subsequent years. While this situation
goes rather to the abuse of discretion which delegation
implies, it is here indicated to show that the Probation
Act sanctions a situation which is intolerable in a
government of laws, and to prove how easy it is, under
the Act, to make the guaranty of the equality clause
but "a rope of sand". (Brewer, J. Gulf C. & S. F. Ry. Co.
vs. Ellis [1897], 165 U. S., 150 154; 41 Law. ed., 666;
17 Sup. Ct. Rep., 255.)lawph!1.net

triable only in the court of first instance of the City of

Manila, the defendant . . . shall not be entitled as of
right to a preliminary examination in any case where
the prosecuting attorney, after a due investigation of
the facts . . . shall have presented an information
against him in proper form . . . ." Upon the other hand,
an analysis of the arguments and the decision
indicates that the investigation by the prosecuting
attorney although not in the form had in the
provinces was considered a reasonable substitute
for the City of Manila, considering the peculiar
conditions of the city as found and taken into account
by the legislature itself.

Great reliance is placed by counsel for the respondents

on the case of Ocampo vs. United States ([1914], 234
U. S., 91; 58 Law. ed., 1231). In that case, the Supreme
Court of the United States affirmed the decision of this
court (18 Phil., 1) by declining to uphold the contention
that there was a denial of the equal protection of the
laws because, as held in Missouri vs. Lewis (Bowman
vs. Lewis) decided in 1880 (101 U. S., 220; 25 Law. ed.,
991), the guaranty of the equality clause does not
require territorial uniformity. It should be observed,
however, that this case concerns the right to
preliminary investigations in criminal cases originally
granted by General Orders No. 58. No question of
legislative authority was involved and the alleged
denial of the equal protection of the laws was the
result of the subsequent enactment of Act No. 612,
amending the charter of the City of Manila (Act No.
813) and providing in section 2 thereof that "in cases

Reliance is also placed on the case of Missouri vs.

Lewis, supra. That case has reference to a situation
where the constitution of Missouri permits appeals to
the Supreme Court of the state from final judgments of
any circuit court, except those in certain counties for
which counties the constitution establishes a separate
court of appeals called St. Louis Court of Appeals. The
provision complained of, then, is found in the
constitution itself and it is the constitution that makes
the apportionment of territorial jurisdiction.
We are of the opinion that section 11 of the Probation
Act is unconstitutional and void because it is also
repugnant
to
equal-protection
clause
of
our
Constitution.
Section 11 of the Probation Act being unconstitutional
and void for the reasons already stated, the next

inquiry is whether or not the entire Act should be

avoided.
In
seeking
the
legislative
intent,
the
presumption is against any mutilation of a
statute, and the courts will resort to elimination
only where an unconstitutional provision is
interjected into a statute otherwise valid, and is
so independent and separable that its removal
will leave the constitutional features and
purposes of the act substantially unaffected by
the process. (Riccio vs. Hoboken, 69 N. J. Law.,
649, 662; 63 L. R. A., 485; 55 Atl., 1109, quoted
in Williams vs. Standard Oil Co. [1929], 278 U.S.,
235, 240; 73 Law. ed., 287, 309; 49 Sup. Ct.
Rep., 115; 60 A. L. R., 596.) In Barrameda vs.
Moir ([1913], 25 Phil., 44, 47), this court stated
the well-established rule concerning partial
invalidity of statutes in the following language:
. . . where part of the a statute is void, as
repugnant to the Organic Law, while another
part is valid, the valid portion, if separable from
the valid, may stand and be enforced. But in
order to do this, the valid portion must be in so
far independent of the invalid portion that it is
fair to presume that the Legislative would have
enacted it by itself if they had supposed that
they could not constitutionally enact the other.
(Mutual Loan Co. vs. Martell, 200 Mass., 482; 86
N. E., 916; 128 A. S. R., 446; Supervisors of
Holmes Co. vs. Black Creek Drainage District, 99

Miss., 739; 55 Sou., 963.) Enough must remain

to make a complete, intelligible, and valid
statute, which carries out the legislative intent.
(Pearson vs. Bass. 132 Ga., 117; 63 S. E., 798.)
The void provisions must be eliminated without
causing results affecting the main purpose of
the Act, in a manner contrary to the intention of
the Legislature. (State vs. A. C. L. R., Co., 56
Fla., 617, 642; 47 Sou., 969; Harper vs.
Galloway, 58 Fla., 255; 51 Sou., 226; 26 L. R. A.,
N. S., 794; Connolly vs. Union Sewer Pipe Co.,
184 U. S., 540, 565; People vs. Strassheim, 240
Ill., 279, 300; 88 N. E., 821; 22 L. R. A., N. S.,
1135; State vs. Cognevich, 124 La., 414; 50
Sou., 439.) The language used in the invalid part
of a statute can have no legal force or efficacy
for any purpose whatever, and what remains
must express the legislative will, independently
of the void part, since the court has no power to
legislate. (State vs. Junkin, 85 Neb., 1; 122 N.
W., 473; 23 L. R. A., N. S., 839; Vide, also,. U. S.,
vs. Rodriguez [1918], 38 Phil., 759; Pollock vs.
Farmers' Loan and Trust Co. [1895], 158 U. S.,
601, 635; 39 Law. ed., 1108, 1125; 15 Sup. Ct.
Rep., 912; 6 R.C.L., 121.)
It is contended that even if section 11, which makes
the Probation Act applicable only in those provinces in
which the respective provincial boards provided for the
salaries of probation officers were inoperative on
constitutional grounds, the remainder of the Act would
still be valid and may be enforced. We should be

inclined to accept the suggestions but for the fact that

said section is, in our opinion, is inseparably linked
with the other portions of the Act that with the
elimination of the section what would be left is the
bare idealism of the system, devoid of any practical
benefit to a large number of people who may be
deserving of the intended beneficial result of that
system. The clear policy of the law, as may be gleaned
from a careful examination of the whole context, is to
make the application of the system dependent entirely
upon the affirmative action of the different provincial
boards through appropriation of the salaries for
probation officers at rates not lower than those
provided for provincial fiscals. Without such action on
the part of the various boards, no probation officers
would be appointed by the Secretary of Justice to act
in the provinces. The Philippines is divided or
subdivided into provinces and it needs no argument to
show that if not one of the provinces and this is the
actual situation now appropriate the necessary fund
for the salary of a probation officer, probation under
Act No. 4221 would be illusory. There can be no
probation without a probation officer. Neither can there
be a probation officer without the probation system.
Section 2 of the Acts provides that the probation
officer shall supervise and visit the probationer. Every
probation officer is given, as to the person placed in
probation under his care, the powers of the police
officer. It is the duty of the probation officer to see that
the conditions which are imposed by the court upon
the probationer under his care are complied with.

Among those conditions, the following are enumerated

in section 3 of the Act:
That the probationer (a) shall indulge in no
injurious or vicious habits;
(b) Shall avoid places or persons of disreputable
or harmful character;
(c) Shall report to the probation officer as
directed by the court or probation officers;
(d) Shall permit the probation officer to visit him
at reasonable times at his place of abode or
elsewhere;
(e) Shall truthfully answer any reasonable
inquiries on the part of the probation officer
concerning his conduct or condition; "(f) Shall
endeavor to be employed regularly; "(g) Shall
remain or reside within a specified place or
locality;
(f) Shall make reparation or restitution to the
aggrieved parties for actual damages or losses
caused by his offense;
(g) Shall comply with such orders as the court
may from time to time make; and

(h) Shall refrain from violating any law, statute,

ordinance, or any by-law or regulation,
promulgated in accordance with law.
The court is required to notify the probation officer in
writing of the period and terms of probation. Under
section 4, it is only after the period of probation, the
submission of a report of the probation officer and
appropriate finding of the court that the probationer
has complied with the conditions of probation that
probation may be definitely terminated and the
probationer finally discharged from supervision. Under
section 5, if the court finds that there is noncompliance with said conditions, as reported by the
probation officer, it may issue a warrant for the arrest
of the probationer and said probationer may be
committed with or without bail. Upon arraignment and
after an opportunity to be heard, the court may
revoke, continue or modify the probation, and if
revoked, the court shall order the execution of the
sentence originally imposed. Section 6 prescribes the
duties of probation officers: "It shall be the duty of
every probation officer to furnish to all persons placed
on probation under his supervision a statement of the
period and conditions of their probation, and to
instruct them concerning the same; to keep informed
concerning their conduct and condition; to aid and
encourage them by friendly advice and admonition,
and by such other measures, not inconsistent with the
conditions imposed by court as may seem most
suitable, to bring about improvement in their conduct
and condition; to report in writing to the court having

jurisdiction over said probationers at least once every

two months concerning their conduct and condition; to
keep records of their work; make such report as are
necessary for the information of the Secretary of
Justice and as the latter may require; and to perform
such other duties as are consistent with the functions
of the probation officer and as the court or judge may
direct. The probation officers provided for in this Act
may act as parole officers for any penal or reformatory
institution for adults when so requested by the
authorities thereof, and, when designated by the
Secretary of Justice shall act as parole officer of
persons released on parole under Act Number Fortyone
Hundred
and
Three,
without
additional
compensation."
It is argued, however, that even without section 11
probation officers maybe appointed in the provinces
under section 10 of Act which provides as follows:
There is hereby created in the Department of
Justice and subject to its supervision and
control, a Probation Office under the direction of
a Chief Probation Officer to be appointed by the
Governor-General with the advise and consent
of the Senate who shall receive a salary of four
eight hundred pesos per annum. To carry out
this Act there is hereby appropriated out of any
funds in the Insular Treasury not otherwise
appropriated, the sum of fifty thousand pesos to
be disbursed by the Secretary of Justice, who is
hereby authorized to appoint probation officers

and the administrative personnel of the

probation officer under civil service regulations
from
among
those
who
possess
the
qualifications,
training
and
experience
prescribed by the Bureau of Civil Service, and
shall fix the compensation of such probation
officers and administrative personnel until such
positions shall have been included in the
Appropriation Act.
But the probation officers and the administrative
personnel referred to in the foregoing section are
clearly not those probation officers required to be
appointed for the provinces under section 11. It may
be said, reddendo singula singulis, that the probation
officers referred to in section 10 above-quoted are to
act as such, not in the various provinces, but in the
central office known as the Probation Office
established in the Department of Justice, under the
supervision of the Chief Probation Officer. When the
law provides that "the probation officer" shall
investigate and make reports to the court (secs. 1 and
4); that "the probation officer" shall supervise and visit
the probationer (sec. 2; sec. 6, par. d); that the
probationer shall report to the "probationer officer"
(sec. 3, par. c.), shall allow "the probationer officer" to
visit him (sec. 3, par. d), shall truthfully answer any
reasonable inquiries on the part of "the probation
officer" concerning his conduct or condition (sec. 3,
par. 4); that the court shall notify "the probation
officer" in writing of the period and terms of probation
(sec. 3, last par.), it means the probation officer who is

in charge of a particular probationer in a particular

province. It never could have been intention of the
legislature, for instance, to require the probationer in
Batanes, to report to a probationer officer in the City of
Manila, or to require a probation officer in Manila to
visit the probationer in the said province of Batanes, to
place him under his care, to supervise his conduct, to
instruct him concerning the conditions of his probation
or to perform such other functions as are assigned to
him by law.
That under section 10 the Secretary of Justice may
appoint as many probation officers as there are
provinces or groups of provinces is, of course possible.
But this would be arguing on what the law may be or
should be and not on what the law is. Between is and
ought there is a far cry. The wisdom and propriety of
legislation is not for us to pass upon. We may think a
law better otherwise than it is. But much as has been
said regarding progressive interpretation and judicial
legislation we decline to amend the law. We are not
permitted to read into the law matters and provisions
which are not there. Not for any purpose not even to
save a statute from the doom of invalidity.
Upon the other hand, the clear intention and policy of
the law is not to make the Insular Government defray
the salaries of probation officers in the provinces but
to make the provinces defray them should they desire
to have the Probation Act apply thereto. The sum of
P50,000, appropriated "to carry out the purposes of
this Act", is to be applied, among other things, for the

salaries of probation officers in the central office at

Manila. These probation officers are to receive such
compensations as the Secretary of Justice may fix
"until such positions shall have been included in the
Appropriation Act". It was the intention of the
legislature to empower the Secretary of Justice to fix
the salaries of the probation officers in the provinces
or later on to include said salaries in an appropriation
act. Considering, further, that the sum of P50,000
appropriated in section 10 is to cover, among other
things, the salaries of the administrative personnel of
the Probation Office, what would be left of the amount
can hardly be said to be sufficient to pay even nominal
salaries to probation officers in the provinces. We take
judicial notice of the fact that there are 48 provinces in
the Philippines and we do not think it is seriously
contended that, with the fifty thousand pesos
appropriated for the central office, there can be in
each province, as intended, a probation officer with a
salary not lower than that of a provincial fiscal. If this a
correct, the contention that without section 11 of Act
No. 4221 said act is complete is an impracticable thing
under the remainder of the Act, unless it is conceded
that in our case there can be a system of probation in
the provinces without probation officers.
Probation as a development of a modern penology is a
commendable system. Probation laws have been
enacted, here and in other countries, to permit what
modern criminologist call the "individualization of the
punishment", the adjustment of the penalty to the
character of the criminal and the circumstances of his

particular case. It provides a period of grace in order to

aid in the rehabilitation of a penitent offender. It is
believed that, in any cases, convicts may be reformed
and their development into hardened criminals
aborted. It, therefore, takes advantage of an
opportunity for reformation and avoids imprisonment
so long as the convicts gives promise of reform.
(United States vs. Murray [1925], 275 U. S., 347 357,
358; 72 Law. ed., 309; 312, 313; 48 Sup. Ct. Rep., 146;
Kaplan vs. Hecht, 24 F. [2d], 664, 665.) The Welfare of
society is its chief end and aim. The benefit to the
individual convict is merely incidental. But while we
believe that probation is commendable as a system
and its implantation into the Philippines should be
welcomed, we are forced by our inescapable duty to
set the law aside because of the repugnancy to our
fundamental law.
In arriving at this conclusion, we have endeavored to
consider the different aspects presented by able
counsel for both parties, as well in their memorandums
as in their oral argument. We have examined the cases
brought to our attention, and others we have been
able to reach in the short time at our command for the
study and deliberation of this case. In the examination
of the cases and in then analysis of the legal principles
involved we have inclined to adopt the line of action
which in our opinion, is supported better reasoned
authorities and is more conducive to the general
welfare. (Smith, Bell & Co. vs. Natividad [1919], 40
Phil., 136.) Realizing the conflict of authorities, we
have declined to be bound by certain adjudicated

cases brought to our attention, except where the point

or principle is settled directly or by clear implication by
the more authoritative pronouncements of the
Supreme Court of the United States. This line of
approach is justified because:

[1899], 96 U. S., 1, 9; 24 Law. ed., 708; Yale Law

Journal, Vol. XXIX, No. 2, Dec. 1919, 141, 142),
fundamental principles should be interpreted
having in view existing local conditions and
environment.

(a) The constitutional relations between the

Federal and the State governments of the
United States and the dual character of the
American Government is a situation which does
not obtain in the Philippines;

Act No. 4221 is hereby declared unconstitutional and

void and the writ of prohibition is, accordingly,
granted. Without any pronouncement regarding costs.
So ordered.

(b) The situation of s state of the American

Union of the District of Columbia with reference
to the Federal Government of the United States
is not the situation of the province with respect
to the Insular Government (Art. I, sec. 8 cl. 17
and 10th Amendment, Constitution of the United
States; Sims vs. Rives, 84 Fed. [2d], 871),
(c) The distinct federal and the state judicial
organizations of the United States do not
embrace the integrated judicial system of the
Philippines (Schneckenburger vs. Moran [1936],
35 Off. Gaz., p. 1317);
(d) "General propositions do not decide concrete
cases" (Justice Holmes in Lochner vs. New York
[1904], 198 U. S., 45, 76; 49 Law. ed., 937, 949)
and, "to keep pace with . . . new developments
of times and circumstances" (Chief Justice Waite
in Pensacola Tel. Co. vs. Western Union Tel. Co.

Avancea, C.J., Imperial, Diaz and Concepcion, JJ.,

concur.
Villa-real and Abad Santos, JJ., concur in the result.

G.R. No. 76633 October 18, 1988

EASTERN
SHIPPING
LINES,
INC., petitioner,
vs.
PHILIPPINE
OVERSEAS
EMPLOYMENT
ADMINISTRATION (POEA), MINISTER OF LABOR
AND EMPLOYMENT, HEARING OFFICER ABDUL
BASAR and KATHLEEN D. SACO, respondents.
Jimenea, Dala & Zaragoza Law Office for petitioner.
The Solicitor General for public respondent.
Dizon Law Office for respondent Kathleen D. Saco.

CRUZ, J.:
The private respondent in this case was awarded the
sum of P192,000.00 by the Philippine Overseas
Employment Administration (POEA) for the death of
her husband. The decision is challenged by the
petitioner on the principal ground that the POEA had
no jurisdiction over the case as the husband was not
an overseas worker.
Vitaliano Saco was Chief Officer of the M/V Eastern
Polaris when he was killed in an accident in Tokyo,
Japan, March 15, 1985. His widow sued for damages

under Executive Order No. 797 and Memorandum

Circular No. 2 of the POEA. The petitioner, as owner of
the vessel, argued that the complaint was cognizable
not by the POEA but by the Social Security System and
should have been filed against the State Insurance
Fund. The POEA nevertheless assumed jurisdiction and
after considering the position papers of the parties
ruled in favor of the complainant. The award consisted
of P180,000.00 as death benefits and P12,000.00 for
burial expenses.
The petitioner immediately came to this Court,
prompting the Solicitor General to move for dismissal
on the ground of non-exhaustion of administrative
remedies.
Ordinarily, the decisions of the POEA should first be
appealed to the National Labor Relations Commission,
on the theoryinter alia that the agency should be given
an opportunity to correct the errors, if any, of its
subordinates. This case comes under one of the
exceptions, however, as the questions the petitioner is
raising are essentially questions of law. 1Moreover, the
private respondent himself has not objected to the
petitioner's direct resort to this Court, observing that
the usual procedure would delay the disposition of the
case to her prejudice.
The Philippine Overseas Employment Administration
was created under Executive Order No. 797,
promulgated on May 1, 1982, to promote and monitor
the overseas employment of Filipinos and to protect

their rights. It replaced the National Seamen Board

created earlier under Article 20 of the Labor Code in
1974. Under Section 4(a) of the said executive order,
the POEA is vested with "original and exclusive
jurisdiction over all cases, including money claims,
involving employee-employer relations arising out of or
by virtue of any law or contract involving Filipino
contract workers, including seamen." These cases,
according to the 1985 Rules and Regulations on
Overseas Employment issued by the POEA, include
"claims for death, disability and other benefits" arising
out of such employment. 2

who has worked overseas under a valid employment

contract and shall include seamen" 4 or "any person
working overseas or who has been employed by
another which may be a local employer, foreign
employer, principal or partner under a valid
employment
contract
and
shall
include
5
seamen." These definitions clearly apply to Vitaliano
Saco for it is not disputed that he died while under a
contract of employment with the petitioner and
alongside the petitioner's vessel, the M/V Eastern
Polaris, while berthed in a foreign country. 6

We see no reason to disturb the factual finding of the

POEA that Vitaliano Saco was an overseas employee of
the petitioner at the time he met with the fatal
accident in Japan in 1985.

It is worth observing that the petitioner performed at

least two acts which constitute implied or tacit
recognition of the nature of Saco's employment at the
time of his death in 1985. The first is its submission of
its shipping articles to the POEA for processing,
formalization and approval in the exercise of its
regulatory power over overseas employment under
Executive Order NO. 797. 7 The second is its
payment 8 of the contributions mandated by law and
regulations to the Welfare Fund for Overseas Workers,
which was created by P.D. No. 1694 "for the purpose of
providing social and welfare services to Filipino
overseas workers."

Under the 1985 Rules and Regulations on Overseas

Employment, overseas employment is defined as
"employment of a worker outside the Philippines,
including employment on board vessels plying
international waters, covered by a valid contract. 3 A
contract worker is described as "any person working or

Significantly, the office administering this fund, in the

receipt it prepared for the private respondent's
signature, described the subject of the burial benefits
as "overseas contract worker Vitaliano Saco." 9 While
this receipt is certainly not controlling, it does indicate,
in the light of the petitioner's own previous acts, that

The petitioner does not contend that Saco was not its
employee or that the claim of his widow is not
compensable. What it does urge is that he was not an
overseas worker but a 'domestic employee and
consequently his widow's claim should have been filed
with Social Security System, subject to appeal to the
Employees Compensation Commission.

the petitioner and the Fund to which it had made

contributions considered Saco to be an overseas
employee.
The petitioner argues that the deceased employee
should be likened to the employees of the Philippine
Air Lines who, although working abroad in its
international flights, are not considered overseas
workers. If this be so, the petitioner should not have
found it necessary to submit its shipping articles to the
POEA for processing, formalization and approval or to
contribute to the Welfare Fund which is available only
to overseas workers. Moreover, the analogy is hardly
appropriate as the employees of the PAL cannot under
the definitions given be considered seamen nor are
their appointments coursed through the POEA.
The award of P180,000.00 for death benefits and
P12,000.00 for burial expenses was made by the POEA
pursuant to its Memorandum Circular No. 2, which
became effective on February 1, 1984. This circular
prescribed a standard contract to be adopted by both
foreign and domestic shipping companies in the hiring
of Filipino seamen for overseas employment. A similar
contract had earlier been required by the National
Seamen Board and had been sustained in a number of
cases by this Court. 10 The petitioner claims that it had
never entered into such a contract with the deceased
Saco, but that is hardly a serious argument. In the first
place, it should have done so as required by the
circular, which specifically declared that "all parties to
the employment of any Filipino seamen on board any

ocean-going vessel are advised to adopt and use this

employment contract effective 01 February 1984 and
to desist from using any other format of employment
contract effective that date." In the second place, even
if it had not done so, the provisions of the said circular
are nevertheless deemed written into the contract with
Saco as a postulate of the police power of the State. 11
But the petitioner questions the validity of
Memorandum Circular No. 2 itself 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.
The authority to issue the said regulation is clearly
provided in Section 4(a) of Executive Order No. 797,
reading as follows:
...
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).
Similar authorization had been granted the National
Seamen Board, which, as earlier observed, had itself
prescribed a standard shipping contract substantially
the same as the format adopted by the POEA.

The second challenge is more serious as 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. Thus, in Ynot v.
Intermediate
Apellate
Court 12 which
annulled
Executive Order No. 626, this Court held:
We also mark, on top of all this, the
questionable manner of the disposition of
the confiscated property as prescribed in
the questioned executive order. It is there
authorized that the seized property shall
be distributed to charitable institutions
and other similar institutions as the
Chairman of the National Meat Inspection
Commission may see fit, in the case of
carabaos.' (Italics supplied.) The phrase
"may see fit" is an extremely generous
and dangerous condition, if condition it is.
It is laden with perilous opportunities for
partiality and abuse, and even corruption.
One searches in vain for the usual
standard and the reasonable guidelines,
or better still, the limitations that the
officers must observe when they make
their distribution. There is none. Their
options are apparently boundless. Who
shall be the fortunate beneficiaries of

their generosity and by what criteria shall

they be chosen? Only the officers named
can supply the answer, they and they
alone may choose the grantee as they
see fit, and in their own exclusive
discretion. Definitely, there is here a
'roving commission a wide and sweeping
authority that is not canalized within
banks that keep it from overflowing,' in
short a clearly profligate and therefore
invalid delegation of legislative powers.
There are two accepted tests to determine whether or
not there is a valid delegation of legislative power, viz,
the completeness test and the sufficient standard test.
Under the first test, the law must be complete in all its
terms and conditions when it leaves the legislature
such that when it reaches the delegate the only thing
he will have to do is enforce it. 13 Under the 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. 14
Both tests are intended to prevent a total transference
of legislative authority to the delegate, who is not
allowed to step into the shoes of the legislature and
exercise a power essentially legislative.
The principle of non-delegation of powers is applicable
to all the three major powers of the Government but is
especially important in the case of the legislative

power because of the many instances when its

delegation is permitted. The occasions are rare when
executive or judicial powers have to be delegated by
the authorities to which they legally certain. In the
case of the legislative power, however, such occasions
have become more and more frequent, if not
necessary. This had led to the observation that the
delegation of legislative power has become the rule
and its non-delegation the exception.
The reason is the increasing complexity of the task of
government and the growing inability of the legislature
to cope directly with the myriad problems demanding
its attention. The growth of society has ramified its
activities and created peculiar and sophisticated
problems that the legislature cannot be expected
reasonably to comprehend. Specialization even in
legislation has become necessary. To many of the
problems attendant upon present-day undertakings,
the legislature may not have the competence to
provide the required direct and efficacious, not to say,
specific solutions. These solutions may, however, be
expected from its delegates, who are supposed to be
experts in the particular fields assigned to them.
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.
Memorandum Circular No. 2 is one such administrative
regulation. The model contract prescribed thereby has
been applied in a significant number of the cases
without challenge by the employer. The power of the
POEA (and before it the National Seamen Board) in
requiring the model contract is not unlimited as there
is a sufficient standard guiding the delegate in the
exercise of the said authority. That standard is
discoverable in the executive order itself which, in
creating
the
Philippine
Overseas
Employment
Administration, mandated it to protect the rights of
overseas Filipino workers to "fair and equitable
employment practices."
Parenthetically, it is recalled that this Court has
accepted as sufficient standards "Public interest"
in People
v.
Rosenthal 15"justice
and
equity"
16
in Antamok Gold Fields v. CIR "public convenience
and welfare" in Calalang v. Williams 17 and "simplicity,

economy and efficiency" in Cervantes v. Auditor

General, 18 to mention only a few cases. In the United
States, the "sense and experience of men" was
accepted
in Mutual
Film
Corp.
v.
Industrial
19
Commission, and "national security" inHirabayashi v.
United States. 20

b. P180,000.00 for other

officers,
including
radio
operators
and
master
electrician

It is not denied that the private respondent has been

receiving a monthly death benefit pension of P514.42
since March 1985 and that she was also paid a
P1,000.00 funeral benefit by the Social Security
System. In addition, as already observed, she also
received a P5,000.00 burial gratuity from the Welfare
Fund for Overseas Workers. These payments will not
preclude allowance of the private respondent's claim
against the petitioner because it is specifically
reserved in the standard contract of employment for
Filipino seamen under Memorandum Circular No. 2,
Series of 1984, that

2. It is understood and agreed that the

benefits mentioned above shall be
separate and distinct from, and will be in
addition to whatever benefits which the
seaman is entitled to under Philippine
laws. ...

Section C. Compensation and Benefits.

1. In case of death of the seamen during
the term of his Contract, the employer
shall pay his beneficiaries the amount of:
a. P220,000.00 for master
and chief engineers

c. P 130,000.00 for ratings.

3. ...
c. If the remains of the
seaman is buried in the
Philippines, the owners shall
pay the beneficiaries of the
seaman an amount not
exceeding P18,000.00 for
burial expenses.
The underscored portion is merely a reiteration of
Memorandum Circular No. 22, issued by the National
Seamen Board on July 12,1976, providing an follows:
Income Benefits under this Rule Shall be
Considered Additional Benefits.

All compensation benefits under Title II,

Book Four of the Labor Code of the
Philippines (Employees Compensation
and State Insurance Fund) shall be
granted, in addition to whatever benefits,
gratuities or allowances that the seaman
or his beneficiaries may be entitled to
under the employment contract approved
by the NSB. If applicable, all benefits
under the Social Security Law and the
Philippine Medicare Law shall be enjoyed
by the seaman or his beneficiaries in
accordance with such laws.
The above provisions are manifestations of the
concern of the State for the working class, consistently
with the social justice policy and the specific provisions
in the Constitution for the protection of the working
class and the promotion of its interest.
One last challenge of the petitioner must be dealt with
to close t case. Its argument that it has been denied
due process because the same POEA that issued
Memorandum Circular No. 2 has also sustained and
applied it is an uninformed criticism of administrative
law itself. Administrative agencies are vested with two
basic powers, the quasi-legislative and the quasijudicial. The first enables them to promulgate
implementing rules and regulations, and the second
enables them to interpret and apply such regulations.
Examples abound: the Bureau of Internal Revenue
adjudicates on its own revenue regulations, the Central

Bank on its own circulars, the Securities and Exchange

Commission on its own rules, as so too do the
Philippine Patent Office and the Videogram Regulatory
Board and the Civil Aeronautics Administration and the
Department of Natural Resources and so on ad
infinitum on
their
respective
administrative
regulations. Such an arrangement has been accepted
as a fact of life of modern governments and cannot be
considered violative of due process as long as the
cardinal rights laid down by Justice Laurel in the
landmark case of Ang Tibay v. Court of Industrial
Relations 21 are observed.
Whatever doubts may still remain regarding the rights
of the parties in this case are resolved in favor of the
private respondent, in line with the express mandate
of the Labor Code and the principle that those with
less in life should have more in law.
When the conflicting interests of labor and capital are
weighed on the scales of social justice, the heavier
influence of the latter must be counter-balanced by the
sympathy and compassion the law must accord the
underprivileged worker. This is only fair if he is to be
given the opportunity and the right to assert and
defend his cause not as a subordinate but as a peer of
management, with which he can negotiate on even
plane. Labor is not a mere employee of capital but its
active and equal partner.
WHEREFORE, the petition is DISMISSED, with costs
against the petitioner. The temporary restraining order

dated December 10, 1986 is hereby LIFTED. It is so

ordered.
Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ.,
concur.

G.R. No. 111812 May 31, 1995

DIONISIO
M.
RABOR, petitioner,
vs.
CIVIL SERVICE COMMISSION, respondent.

FELICIANO, J.:
Petitioner Dionisio M. Rabor is a Utility Worker in the
Office of the Mayor, Davao City. He entered the
government service as a Utility worker on 10 April
1978 at the age of 55 years.
Sometime in May 1991, 1 Alma, D. Pagatpatan, an
official in the Office of the Mayor of Davao City,
advised Dionisio M. Rabor to apply for retirement,
considering that he had already reached the age of
sixty-eight (68) years and seven (7) months, with
thirteen (13) years and one (1) month of government
service. Rabor responded to this advice by exhibiting a
"Certificate
of
Membership" 2 issued
by
the
Government Service Insurance System ("GSIS") and
dated 12 May 1988. At the bottom of this "Certificate
of Membership" is a typewritten statement of the
following tenor: "Service extended to comply 15 years

service reqts." This statement is followed by a nonlegible initial with the following date "2/28/91."

Rabor as Utility Worker in that office, is

already non-extend[i]ble. 3

Thereupon, the Davao City Government, through Ms.

Pagatpatan, wrote to the Regional Director of the Civil
Service Commission, Region XI, Davao City ("CSROXI"), informing the latter of the foregoing and
requesting advice "as to what action [should] be taken
on this matter."

Accordingly, on 8 August l991, Mayor Duterte

furnished a copy of the 26 July 1991 letter of Director
Cawad to Rabor and advised him "to stop reporting for
work effective August 16, 1991." 4

In a letter dated 26 July 1991, Director Filemon B.

Cawad of CSRO-XI advised Davao City Mayor Rodrigo
R. Duterte as follows:
Please be informed that the extension of
services of Mr. Rabor is contrary to M.C.
No. 65 of the Office of the President, the
relevant portion of which is hereunder
quoted:
Officials and employees who
have
reached
the
compulsory retirement age
of 65 years shall not be
retained the service, except
for extremely meritorious
reasons in which case the
retention shall not exceed
six (6) months.
IN VIEW WHEREFORE, please be advised
that the services of Mr. Dominador [M.]

Petitioner Rabor then sent to the Regional Director,

CSRO-XI, a letter dated 14 August 1991, asking for
extension of his services in the City Government until
he "shall have completed the fifteen (15) years service
[requirement] in the Government so that [he] could
also avail of the benefits of the retirement laws given
to employees of the Government." The extension he
was asking for was about two (2) years. Asserting that
he was "still in good health and very able to perform
the duties and functions of [his] position as Utility
Worker," Rabor sought "extension of [his] service as an
exception to Memorandum Circular No. 65 of the Office
of the President." 5 This request was denied by Director
Cawad on 15 August 1991.
Petitioner Rabor next wrote to the Office of the
President on 29 January 1992 seeking reconsideration
of the decision of Director Cawad, CSRO-XI. The Office
of the President referred Mr. Rabor's letter to the
Chairman of the Civil Service Commission on 5 March
1992.
In its Resolution No. 92-594, dated 28 April 1992, the
Civil Service Commission dismissed the appeal of Mr.

Rabor and affirmed the action of Director Cawad

embodied in the latter's letter of 26 July 1991. This
Resolution stated in part:
In his appeal, Rabor requested that he be
allowed to continue rendering services as
Utility Worker in order to complete the
fifteen (15) year service requirement
under P.D. 1146.
CSC Memorandum Circular No. 27, s.
1990 provides, in part:
1. Any request for extension
of service of compulsory
retirees to complete the
fifteen
years
service
requirement for retirement
shall be allowed only to
permanent appointees in the
career service who are
regular members of the
Government
Service
Insurance System (GSIS)
andshall be granted for a
period of not exceeding one
(1) year.

Considering that as early as October 18,

1988, Rabor was already due for
retirement, his request for further
extension of service cannot be given due
course. 6 (Emphasis in the original)
On 28 October 1992, Mr. Rabor sought reconsideration
of Resolution No. 92-594 of the Civil Service
Commission this time invoking the Decision of this
Court in Cena v. Civil Service Commission. 7 Petitioner
also asked for reinstatement with back salaries and
benefits, having been separated from the government
service effective 16 August 1991. Rabor's motion for
reconsideration was denied by the Commission.
Petitioner Rabor sent another letter dated 16 April
1993 to the Office of the Mayor, Davao City, again
requesting that he be allowed to continue rendering
service to the Davao City Government as Utility Worker
in order to complete the fifteen (15) years service
requirement under P.D. No. 1146. This request was
once more denied by Mayor Duterte in a letter to
petitioner dated 19 May 1993. In this letter, Mayor
Duterte pointed out that, under Cena grant of the
extension of service was discretionary on the part of
the City Mayor, but that he could not grant the
extension requested. Mayor Duterte's letter, in
relevant part, read:
The matter was referred to the City Legal
Office and the Chairman of the Civil
Service Commission, in the advent of the

decision of the Supreme Court in the

Cena vs. CSC, et al. (G.R. No. 97419
dated July 3, 1992), for legal opinion. Both
the City Legal Officer and the Chairman of
the Civil Service Commission are one in
these opinion that extending you an
appointment in order that you may be
able to complete the fifteen-year service
requirement is discretionary [on the part
of] the City Mayor.
Much as we desire to extend you an
appointment but circumstances are that
we can no longer do so. As you are
already nearing your 70th birthday may
no longer be able to perform the duties
attached to your position. Moreover, the
position you had vacated was already
filled up.
We therefore regret to inform you that we
cannot
act
favorably
on
your
8
request. (Emphases supplied)
At this point, Mr. Rabor decided to come to this Court.
He filed a Letter/Petition dated 6 July 1993 appealing
from Civil Service Resolution No. 92-594 and from
Mayor Duterte's letter of 10 May 1993.
The Court required petitioner Rabor to comply with the
formal requirements for instituting a special civil action
of certiorarito review the assailed Resolution of the

Civil Service Commission. In turn, the Commission was

required
to
comment
on
petitioner's
Letter/Petition. 9 The
Court
subsequently
noted
petitioner's Letter of 13 September 1993 relating to
compliance with the mentioned formal requirements
and directed the Clerk of Court to advise petitioner to
engage the services of counsel or to ask for legal
assistance from the Public Attorney's Office (PAO). 10
The Civil Service Commission, through the Office of the
Solicitor General, filed its comment on 16 November
1993. The Court then resolved to give due course to
the Petition and required the parties to file
memoranda. Both the Commission and Mr. Rabor (the
latter through PAO counsel) did so.
In this proceeding, petitioner Rabor contends that his
claim falls squarely within the ruling of this Court
in Cena v. Civil Service Commission. 11
Upon the other hand, the Commission seeks to
distinguish this case from Cena. The Commission,
through the Solicitor General, stressed that in Cena,
this Court had ruled that the employer agency, the
Land Registration Authority of the Department of
Justice, was vested with discretion to grant to Cena the
extension requested by him. The Land Registration
Authority had chosen not to exercise its discretion to
grant or deny such extension. In contrast, in the
instant case, the Davao City Government did exercise
its discretion on the matter and decided to deny the

extension sought by petitioner Rabor for legitimate

reasons.
While the Cena decision is barely three (3) years old,
the Court considers that it must reexamine the
doctrine of Cena and the theoretical and policy
underpinnings thereof. 12
We start by recalling the factual setting of Cena.
Gaudencio Cena was appointed Registrar of the
Register of Deeds of Malabon, Metropolitan Manila, on
16 July 1987. He reached the compulsory retirement
age of sixty-five (65) years on 22 January 1991. By the
latter date, his government service would have
reached a total of eleven (11) years, nine (9) months
and six (6) days. Before reaching his 65th birthday,
Cena requested the Secretary of Justice, through the
Administrator of the Land Registration Authority
("LRA") that he be allowed to extend his service to
complete the fifteen-year service requirement to
enable him to retire with the full benefit of an Old-Age
Pension under Section 11 (b) of P.D. No. 1146. If Cena's
request were granted, he would complete fifteen (15)
years of government service on 15 April 1994, at the
age of sixty-eight (68) years.
The LRA Administrator sought a ruling from the Civil
Service Commission on whether or not Cena's request
could be granted considering that Cena was covered
by Civil Service Memorandum No. 27, Series of 1990.
On 17 October 1990, the Commission allowed Cena a

one (1) year extension of his service from 22 January

1991 to 22 January 1992 under its Memorandum
Circular No. 27. Dissatisfied, Cena moved for
reconsideration, without success. He then came to this
Court, claiming that he was entitled to an extension of
three (3) years, three (3) months and twenty-four (24)
days to complete the fifteen-year service requirement
for retirement with full benefits under Section 11 (b) of
P.D. No. 1146.
This Court granted Cena' s petition in its Decision of 3
July 1992. Speaking through Mr. Justice Medialdea, the
Court held that a government employee who has
reached the compulsory retirement age of sixty-five
(65) years, but at the same time has not yet
completed fifteen (15) years of government service
required under Section 11 (b) of P.D. No. 1146 to
qualify for the Old-Age Pension Benefit, may be
granted an extension of his government service for
such period of time as may be necessary to "fill up" or
comply with the fifteen (15)-year service requirement.
The Court also held that the authority to grant the
extension was a discretionary one vested in the head
of the agency concerned. Thus the Court concluded:
Accordingly, the Petition is GRANTED. The
Land Registration Authority (LRA) and
Department of Justice has the discretion
to allow petitioner Gaudencio Cena to
extend his 11 years, 9 months and 6
days of governmentto complete the
fifteen-year service so that he may retire

with full benefits under Section 11,

paragraph (b) of P.D. 1146. 13 (Emphases
supplied)

The Court went on to rely upon the canon of liberal

construction which has often been invoked in respect
of retirement statutes:

The Court reached the above conclusion primarily on

the basis of the "plain and ordinary meaning" of
Section 11 (b) of P.D. No. 1146. Section 11 may be
quoted in its entirety:

Being remedial in character, a statute

granting a pension or establishing [a]
retirement plan should be liberally
construed and administered in favor of
persons intended to be benefitted
thereby. The liberal approach aims to
achieve the humanitarian purposes of the
law in order that efficiency, security and
well-being of government employees may
be enhanced. 14 (Citations omitted)

Sec. 11 Conditions for Old-Age Pension.

(a) Old-Age Pension shall be paid to a
member who
(1) has at least fifteen (15)
years of service;
(2) is at least sixty (60)
years of age; and
(3) is separated from the
service.
(b) unless the service is extended by
appropriate authorities, retirement shall
be compulsory for an employee at sixtyfive-(65) years of age with at least fifteen
(15) years of service; Provided, that if he
has less than fifteen (15) years of service,
he shall he allowed to continue in the
service to completed the fifteen (15)
years. (Emphases supplied)

While Section 11 (b) appeared cast in verbally

unqualified terms, there were (and still are) two (2)
administrative issuances which prescribe limitations on
the extension of service that may be granted to an
employee who has reached sixty-five (65) years of
age.
The first administrative issuance is Civil Service
Commission Circular No. 27, Series of 1990, which
should be quoted in its entirety:
TO : ALL HEADS OF DEPARTMENTS,
BUREAUS AND AGENCIES OF THE
NATIONAL/LOCAL
GOVERNMENTS
INCLUDING
GOVERNMENTOWNED
AND/OR CONTROLLED CORPORATIONS
WITH ORIGINAL CHARTERS.

SUBJECT : Extension of Service of

Compulsory Retiree to Complete the
Fifteen Years Service Requirement for
Retirement Purposes.
Pursuant to CSC Resolution No. 90-454
dated May 21, 1990, the Civil Service
Commission
hereby
adopts
and
promulgates the following policies and
guidelines in the extension of services of
compulsory retirees to complete the
fifteen years service requirement for
retirement purposes:
1. Any request for the
extension of service of
compulsory
retirees
to
complete the fifteen (15)
years
service
requirement for
retirement
shall be allowed only to
permanent appointees in the
career service who are
regular members of the
Government
Service
Insurance System (GSIS),
and shall be granted for a
period not exceeding one (1)
year.
2. Any request for the
extension of service of

compulsory
retiree
to
complete the fifteen (15)
years service requirement
for retirement who entered
the government service at
57 years of age or over upon
prior grant of authority to
appoint him or her, shall no
longer be granted.
3. Any request for the
extension of service to
complete the fifteen (15)
years service requirement of
retirement shall be filled not
later than three (3) years
prior
to
the
date
of
compulsory retirement.
4. Any request for the
extension of service of a
compulsory
retiree
who
meets the minimum number
of years of service for
retirement purposes may be
granted for six (6) months
only
with
no
further
extension.
This Memorandum Circular shall take
effect immediately. (Emphases supplied)

The second administrative issuance Memorandum

Circular No. 65 of the Office of the President, dated 14
June 1988 provides:
xxx xxx xxx
WHEREAS, this Office has been. receiving
requests
for
reinstatement
and/or
retention in the service ofemployees who
have reached the compulsory retirement
age of 65 years, despite the strict
conditions provided for in Memorandum
Circular No. 163, dated March 5, 1968, as
amended.
WHEREAS, the President has recently
adopted a policy to adhere more strictly
to the law providing for compulsory
retirement age of 65 years and, in
extremely meritorious cases, to limit the
service beyond the age of 65 years to six
(6) months only.
WHEREFORE, the pertinent provision of
Memorandum Circular No. 163 or on the
retention in the service of officials or
employees who have reached the
compulsory retirement age of 65 years, is
hereby amended to read as follows:
Officials or employees who
have
reached
the

compulsory retirement age

of
65
years shall notbe
retained
in
the
service, except
for
extremely
meritorious
reasons in
which
case
the retention
shall
not
exceed six (6) months.
All heads of departments, bureaus, offices
and instrumentalities of the government
including
government-owned
or
controlled
corporations,
are
hereby
enjoined to require their respective offices
to strictly comply with this circular.
This Circular shall take effect immediately.

By authority
President
(Sgd.)

CATALINO M
JR.
Executive Sec
Manila, June
supplied)

14,

1988. 15 (Emphasis

Medialdea, J. resolved the challenges posed by the

above two (2) administrative regulations by, firstly,

considering asinvalid Civil Service Memorandum No.

27 and, secondly, by interpreting the Office of the
President's
Memorandum
Circular
No.
65
as inapplicable to the case of Gaudencio T. Cena.
We turn first to the Civil Service Commission's
Memorandum Circular No. 27. Medialdea, J. wrote:
The
Civil
Service
Commission
Memorandum Circular No. 27 being in the
nature of an administrative regulation,
must be governed by the principle that
administrative regulations adopted under
legislative authority by a particular
department must be in harmony with the
provisions of the law, and should be for
the sole purpose of carrying into effect its
general provisions (People v. Maceren,
G.R. No. L-32166, October 18, 1977, 79
SCRA 450; Teoxon v. Members of the
Board of Administrators, L-25619, June
30, 1970, 33 SCRA 585; Manuel v.
General
Auditing
Office,
L-28952,
December 29, 1971, 42 SCRA 660; Deluao
v. Casteel, L-21906, August 29, 1969, 29
SCRA 350). . . . . The rule on limiting to
one the year the extension of service of
an employee who has reached the
compulsory retirement age of sixty-five
(65) years, but has less than fifteen (15)
years of service under Civil Service
Memorandum Circular No. 27, S. 1990,

cannot likewise be
accorded
validity
because it has no relationship or
connection with any provision of P.D.
1146 supposed to be carried into
effect. The rule was an addition to or
extension of the law, not merely a mode
of carrying it into effect. The Civil Service
Commission has no power to supply
perceived
omissions
in
P.D.
16
1146. (Emphasis supplied)
It will be seen that Cena, in striking down Civil Service
Commission Memorandum No. 27, took a very narrow
view on the question of what subordinate rule-making
by an administrative agency is permissible and valid.
That restrictive view must be contrasted with this
Court's earlier ruling in People v. Exconde, 17 where Mr.
Justice J.B.L. Reyes said:
It is well established in this jurisdiction
that, while the making of laws is a nondelegable
activity
that
corresponds
exclusively to Congress, nevertheless, the
latter may constitutionally delegate
authority and promulgate rules and
regulations to implement a given
legislation and effectuate its policies, for
the reason that the legislature often finds
it impracticable (if not impossible) to
anticipate
and
provide
for
the
multifarious and complex situations that
may be met in carrying the law into

effect. All that is required is that the

regulation should be germane to the
objects and purposes of the law; that the
regulation be not in contradiction with it,
but conform to standards that the law
prescribes. 18 (Emphasis supplied)

Reflector Law, clearly the

legislative objective is public
safety. What is sought to be
attained
in Calalang
v.
William is "safe transit upon
the roads."

In Tablarin v. Gutierrez, 19 the Court, in sustaining the

validity of a MECS Order which established passing a
uniform admission test called the National Medical
Admission Test (NMAT) as a prerequisite for eligibility
for admission into medical schools in the Philippines,
said:

We believe and so hold that 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. 20 (Citations omitted; emphasis
partly in the original and partly supplied)

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.
As explained by then Mr. Justice Fernando
in Edu v. Ericta (35 SCRA 481 [1970])
The standards 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

In Edu v. Ericta, 21 then Mr. Justice Fernando stressed

the abstract and very general nature of the standards
which our Court has in prior case law upheld as
sufficient for purposes of compliance with the
requirements
for
validity
of
subordinate
or
administrative rule-making:
This Court has considered as sufficient
standards, "public welfare," (Municipality
of Cardona v. Municipality of Binangonan,
36 Phil. 547 [1917]); "necessary in the
interest of law and order," (Rubi v.
Provincial
Board,
39
Phil.
660

[1919]); "public
interest," (People
v.
Rosenthal,
68
Phil.
328
[1939]);
and "justice and equity and substantial
merits
of
the
case," (International
Hardwood v. Pangil Federation of Labor,
17
Phil.
602
[1940]). 22(Emphasis
supplied)
Clearly,
therefore, Cena when
it
required
a
considerably higher degree of detail in the statute to
be implemented, went against prevailing doctrine. It
seems clear that if the governing or enabling statute is
quite detailed and specific to begin with, there would
be very little need (or occasion) for implementing
administrative regulations. It is, however, precisely the
inability of legislative bodies to anticipate all (or many)
possible detailed situations in respect of any relatively
complex subject matter, that makes subordinate,
delegated rule-making by administrative agencies so
important and unavoidable. All that may be
reasonably; demanded is a showing that the delegated
legislation consisting of administrative regulations are
germane to the general purposes projected by the
governing or enabling statute. This is the test that is
appropriately applied in respect of Civil Service
Memorandum Circular No. 27, Series of 1990, and to
this test we now turn.
We consider that the enabling statute that should
appropriately be examined is the present Civil Service
law found in Book V, Title I, Subtitle A, of Executive
Order No. 292 dated 25 July 1987, otherwise known as

the Administrative Code of 1987 and not alone P.D.

No. 1146, otherwise known as the "Revised
Government Service Insurance Act of 1977." For the
matter of extension of service of retirees who have
reached sixty-five (65) years of age is an area that is
covered by both statutes and not alone by Section 11
(b) of P.D. 1146. This is crystal clear from examination
of many provisions of the present civil service law.
Section 12 of the present Civil Service law set out in
the 1987 Administrative Code provides, in relevant
part, as follows:
Sec. 12 Powers and Functions. The
[Civil Service] Commission shall have the
following powers and functions:
xxx xxx xxx
(2) Prescribe, amend and enforce rules
and regulations for carrying into effect
the provisions of the Civil Service
Law and other pertinent laws;
(3)
Promulgate policies,
standards and guidelines for the Civil
Service and adopt plans and programs to
promote economical,
efficient and effective
personnel
administration in the government;
xxx xxx xxx

(10) Formulate, administer and evaluate

programs relative to the development
and
retention of
a qualified
and
competent work force in the public
service;
xxx xxx xxx
(14) Take appropriate action on all
appointments
and
other
personnel
matters in the Civil Service including
extension of service beyond retirement
age;
xxx xxx xxx
(17) Administer the retirement program
for government officials and employees,
and
accredit
government
services
and evaluate qualifications for retirement;
xxx xxx xxx
(19)
Perform all
functions
properly belonging to a central personnel
agency and such other functions as may
be provided by law. (Emphasis supplied)
It was on the bases of the above quoted provisions of
the 1987 Administrative Code that the Civil Service
Commission promulgated its Memorandum Circular No.
27. In doing so, the Commission was acting as "the

central personnel agency of the government

empowered to promulgate policies, standards and
guidelines for efficient, responsive and effective
personnel administration in the government." 23 It was
also discharging its function of "administering the
retirement programfor government officials and
employees" and of "evaluat[ing] qualifications for
retirement."
In addition, the Civil Service Commission is charged by
the 1987 Administrative Code with providing
leadership
and
assistance
"in
the development and retention
of
qualified
and
efficient work force in the Civil Service" (Section 16
[10]) and with the "enforcement of the constitutional
and statutory provisions, relative to retirement and the
regulation for theeffective implementation of the
retirement of government officials and employees"
(Section 16 [14]).
We find it very difficult to suppose that the limitation of
permissible extensions of service after an employee
has reached sixty-five (65) years of age has no
reasonable relationship or is not germane to the
foregoing provisions of the present Civil Service Law.
The physiological and psychological processes
associated with ageing in human beings are in fact
related to the efficiency and quality of the service that
may be expected from individual persons. The policy
considerations which guided the Civil Service
Commission in limiting the maximum extension of
service allowable for compulsory retirees, were

summarized by Grio-Aquino, J. in her dissenting

opinion in Cena:
Worth pondering also are the points
raised by the Civil Service Commission
that extending the service of compulsory
retirees for longer than one (1) year
would: (1) give a premium to latecomers in the government service and in
effect discriminate against those who
enter the service at a younger age;
(2) delay the promotion of the latter and
of
next-in-rank
employees;
and
(3) prejudice the chances for employment
of
qualified
young
civil
service
applicants who have already passed the
various government examination but
must wait for jobs to be vacated by
"extendees" who have long passed the
mandatory retirement age but are
enjoying extension of their government
service to complete 15 years so they may
qualify for old-age pension. 24 (Emphasis
supplied).
Cena laid heavy stress on the interest of retirees or
would be retirees, something that is, in itself, quite
appropriate. At the same time, however, we are bound
to note that there should be countervailing stress on
the interests of the employer agency and of other
government employees as a whole. The results flowing
from the striking down of the limitation established in

Civil Service Memorandum Circular No. 27 may well be

"absurd and inequitable," as suggested by Mme.
Justice Grio-Aquino in her dissenting opinion. An
employee who has rendered only three (3) years of
government service at age sixty-five (65) can have his
service extended for twelve (12) years and finally
retire at the age of seventy-seven (77). This reduces
the significance of the general principle of compulsory
retirement at age sixty-five (65) very close to the
vanishing point.
The very real difficulties posed by the Cena doctrine
for rational personnel administration and management
in the Civil Service, are aggravated when Cena is
considered together with the case of Toledo v. Civil
Service Commission. 25Toledo involved the provisions
of Rule III, Section 22, of the Civil Service Rules on
Personnel Action and Policies (CSRPAP) which
prohibited the appointment of persons fifty-seven (57)
years old or above in government service without prior
approval of the Civil Service Commission. Civil Service
Memorandum Circular No. 5, Series of 1983 provided
that a person fifty-seven (57) years of age may be
appointed to the Civil Service provided that the
exigencies of the government service so required and
provided that the appointee possesses special
qualifications not possessed by other officers or
employees in the Civil Service and that the vacancy
cannot be filled by promotion of qualified officers or
employees of the Civil Service. Petitioner Toledo was
appointed Manager of the Education and Information
Division of the Commission on Elections when he was

almost fifty-nine (59) years old. No authority for such

appointment had been obtained either from the
President of the Philippines or from the Civil Service
Commission and the Commission found that the other
conditions laid down in Section 22 of Rule III, CSRPAP,
did not exist. The Court nevertheless struck down
Section 22, Rule III on the same exceedingly restrictive
view
of
permissible
administrative
legislation
that Cena relied on. 26
When one combines the doctrine of Toledo with the
ruling in Cena, very strange results follow. Under these
combined doctrines, a person sixty-four (64) years of
age may be appointed to the government service and
one (1) year later may demand extension of his
service for the next fourteen (14) years; he would
retire at age seventy-nine (79). The net effect is thus
that the general statutory policy of compulsory
retirement at sixty-five (65) years is heavily eroded
and effectively becomes unenforceable. That general
statutory policy may be seen to embody the notion
that there should be a certain minimum turn-over in
the government service and that opportunities for
government service should be distributed as broadly
as possible, specially to younger people, considering
that the bulk of our population is below thirty (30)
years of age. That same general policy also reflects
the life expectancy of our people which is still
significantly lower than the life expectancy of, e.g.,
people in Northern and Western Europe, North America
and Japan.

Our conclusion is that the doctrine of Cena should be

and is hereby modified to this extent: that Civil Service
Memorandum Circular No. 27, Series of 1990, more
specifically paragraph (1) thereof, is hereby declared
valid and effective. Section 11 (b) of P.D. No. 1146
must, accordingly, be read together with Memorandum
Circular No. 27. We reiterate, however, the holding
in Cena that the head of the government agency
concerned is vested with discretionary authority to
allow or disallow extension of the service of an official
or employee who has reached sixty-five (65) years of
age without completing fifteen (15) years of
government service; this discretion is, nevertheless, to
be exercised conformably with the provisions of Civil
Service Memorandum Circular No. 27, Series of 1990.
We do not believe it necessary to deal specifically with
Memorandum Circular No. 65 of the Office of the
President dated 14 June 1988. It will be noted from the
text quoted supra (pp. 11-12) that the text itself of
Memorandum Circular No. 65 (and for that matter, that
of Memorandum Circular No. 163, also of the Office of
the President, dated 5 March 1968) 27 does notpurport
to apply only to officers or employees who have
reached the age of sixty-five (65) years and who have
at least fifteen (l5) years of government service. We
noted earlier that Cena interpreted Memorandum
Circular No. 65 as referring only to officers and
employees who have both reached the compulsory
retirement age of sixty-five (65) and completed the
fifteen (15) years of government service. Cena so
interpreted this Memorandum Circular precisely

because Cena had reached the conclusion that

employees who have reached sixty-five (65) years of
age, but who have less than fifteen (15) years of
government service, may be allowed such extension of
service as may be needed to complete fifteen (15)
years
of
service.
In
other
words, Cena read
Memorandum Circular No. 65 in such a way as to
comfort with Cena's own conclusion reached without
regard to that Memorandum Circular. In view of the
conclusion that we today reached in the instant case,
this last ruling ofCena is properly regarded as
merely orbiter.
We also do not believe it necessary to determine
whether Civil Service Memorandum Circular No. 27 is
fully compatible with Office of the President's
Memorandum Circular No. 65; this question must be
reserved for detailed analysis in some future
justiciable case.
Applying now the results of our reexamination
of Cena to the instant case, we believe and so hold
that Civil Service Resolution No. 92-594 dated 28 April
1992 dismissing the appeal of petitioner Rabor and
affirming the action of CSRO-XI Director Cawad dated
26 July 1991, must be upheld and affirmed.
ACCORDINGLY, for all the foregoing, the Petition
for Certiorari is hereby DISMISSED for lack of merit. No
pronouncement as to costs.
SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo,

Melo, Puno, Vitug, Kapunan, Mendoza and Francisco,
JJ., concur.
Quiason, J., is on leave.

EN BANC
ABAKADA GURO PARTY G.R. No. 166715
LIST (formerly AASJS)*
OFFICERS/MEMBERS
SAMSON S. ALCANTARA,
ED VINCENT S. ALBANO,
ROMEO R. ROBISO,
RENE B. GOROSPE and
EDWIN R. SANDOVAL,
Petitioners, Present:
PUNO, C.
J.,
QUISUMB
ING,
YNARESSANTIAGO,
CARPIO,

AUSTRIAMARTINEZ,
CORONA,
- v e r s u s - CARPIO MORALES,

This petition for prohibition[1] seeks to prevent

respondents

AZCUNA,
TINGA,
CHICONAZARIO,
VELASCO, JR.
NACHURA,
REYES,

from

implementing

and

enforcing

Republic Act (RA) 9335[2] (Attrition Act of 2005).

RA 9335 was enacted to optimize the revenuegeneration capability and collection of the Bureau of

LEONARDO-DE CASTRO and

BRION, JJ.
HON. CESAR V. PURISIMA, in
his capacity as Secretary of
Finance, HON. GUILLERMO L.
PARAYNO, JR., in his capacity
as Commissioner of the Bureau
of Internal Revenue, and
HON. ALBERTO D. LINA, in his
Capacity as Commissioner of
Bureau of Customs,
Respondents. Promulgated:

Internal Revenue (BIR) and the Bureau of Customs

August 14, 2008

employees of the BIR and the BOC with at least six

x--------------------------------------------------x

months of service, regardless of employment status. [4]

DECISION
CORONA, J.:

(BOC). The law intends to encourage BIR and BOC

officials and employees to exceed their revenue
targets

by

providing

system

of

rewards

and

sanctions through the creation of a Rewards and

Incentives Fund (Fund) and a Revenue Performance
Evaluation Board (Board).[3] It covers all officials and

The Fund is sourced from the collection of the

BIR and the BOC in excess of their revenue targets for
the year, as determined by the Development Budget
and Coordinating Committee (DBCC). Any incentive or

reward is taken from the fund and allocated to the BIR

removing from the service officials and employees

and the BOC in proportion to their contribution in the

whose revenue collection falls short of the target; (3)

excess collection of the targeted amount of tax

terminate personnel in accordance with the criteria

revenue.[5]

adopted by the Board; (4) prescribe a system for

performance evaluation; (5) perform other functions,

The Boards in the BIR and the BOC are

composed of the Secretary of the Department of

including the issuance of rules and regulations and (6)

submit an annual report to Congress.[7]

Finance (DOF) or his/her Undersecretary, the Secretary

of the Department of Budget and Management (DBM)

The DOF, DBM, NEDA, BIR, BOC and the Civil

or his/her Undersecretary, the Director General of the

Service Commission (CSC) were tasked to promulgate

National Economic Development Authority (NEDA) or

and issue the implementing rules and regulations of

his/her Deputy Director General, the Commissioners of

RA 9335,[8] to be approved by a Joint Congressional

the BIR and the BOC or their Deputy Commissioners,

Oversight Committee created for such purpose. [9]

two representatives from the rank-and-file employees

and a representative from the officials nominated by
their recognized organization. [6]

Petitioners, invoking their right as taxpayers

filed this petition challenging the constitutionality of
RA 9335, a tax reform legislation. They contend that,

Each Board has the duty to (1) prescribe the

by establishing a system of rewards and incentives,

rules and guidelines for the allocation, distribution and

the law transform[s] the officials and employees of the

release of the Fund; (2) set criteria and procedures for

BIR and the BOC into mercenaries and bounty hunters

as they will do their best only in consideration of such

service if their revenue collections fall short of the

rewards. Thus, the system of rewards and incentives

target by at least 7.5%, the law does not, however, fix

invites corruption and undermines the constitutionally

the revenue targets to be achieved. Instead, the fixing

mandated duty of these officials and employees to

of revenue targets has been delegated to the President

serve the people with utmost responsibility, integrity,

without sufficient standards. It will therefore be easy

loyalty and efficiency.

for the President to fix an unrealistic and unattainable

target in order to dismiss BIR or BOC personnel.

Petitioners also claim that limiting the scope of

the system of rewards and incentives only to officials

Finally, petitioners assail the creation of a

and employees of the BIR and the BOC violates the

congressional oversight committee on the ground that

constitutional guarantee of equal protection. There is

it violates the doctrine of separation of powers. While

no valid basis for classification or distinction as to why

the legislative function is deemed accomplished and

such a system should not apply to officials and

completed upon the enactment and approval of the

employees of all other government agencies.

law, the creation of the congressional oversight

committee permits legislative participation in the

In addition, petitioners assert that the law

implementation and enforcement of the law.

unduly delegates the power to fix revenue targets to

the President as it lacks a sufficient standard on that

In their comment, respondents, through the Office of

matter. While Section 7(b) and (c) of RA 9335 provides

the Solicitor General, question the petition for being

that BIR and BOC officials may be dismissed from the

premature as there is no actual case or controversy

yet. Petitioners have not asserted any right or claim

check to any over-accumulation of power on the part

that will necessitate the exercise of this Courts

of the executive and the implementing agencies.

jurisdiction. Nevertheless, respondents acknowledge

that public policy requires the resolution of the
constitutional issues involved in this case. They assert
that the allegation that the reward system will breed
mercenaries is mere speculation and does not suffice
to invalidate the law. Seen in conjunction with the
declared objective of RA 9335, the law validly classifies

After a careful consideration of the conflicting

contentions of the parties, the Court finds that
petitioners have failed to overcome the presumption of
constitutionality in favor of RA 9335, except as shall
hereafter be discussed.
ACTUAL CASE AND RIPENESS

the BIR and the BOC because the functions they

perform

are

distinct

other

An actual case or controversy involves a conflict of

government agencies and instrumentalities. Moreover,

legal rights, an assertion of opposite legal claims

the law provides a sufficient standard that will guide

susceptible of judicial adjudication. [10] A closely related

the executive in the implementation of its provisions.

requirement is ripeness, that is, the question must be

Lastly, the creation of the congressional oversight

ripe for adjudication. And a constitutional question is

committee under the law enhances, rather than

ripe for adjudication when the governmental act being

violates,

challenged

separation

from

of

those

powers.

of

It

the

ensures

the

fulfillment of the legislative policy and serves as a

has

direct

adverse

effect

on

the

individual challenging it.[11] Thus, to be ripe for judicial

adjudication, the petitioner must show a personal

stake in the outcome of the case or an injury to himself

Constitution, it becomes not only the right but in fact

that can be redressed by a favorable decision of the

the duty of the judiciary to settle the dispute. [14]

Court.[12]
In this case, aside from the general claim that the
dispute has ripened into a judicial controversy by the

ACCOUNTABIL
ITY OF
PUBLIC
OFFICERS

mere enactment of the law even without any further

overt act,[13] petitioners fail either to assert any specific
and concrete legal claim or to demonstrate any direct
adverse effect of the law on them. They are unable to
show a personal stake in the outcome of this case or
an injury to themselves. On this account, their petition
is procedurally infirm.
This notwithstanding, public interest requires
the resolution of the constitutional issues raised by
petitioners. The grave nature of their allegations tends
to cast a cloud on the presumption of constitutionality
in favor of the law. And where an action of the
legislative branch is alleged to have infringed the

Section 1, Article 11 of the Constitution states:

Sec. 1. Public office is a public trust.
Public officers and employees must at all
times be accountable to the people, serve
them with utmost responsibility, integrity,
loyalty,
and
efficiency,
act
with
patriotism, and justice, and lead modest
lives.
Public office is a public trust. It must be
discharged by its holder not for his own personal gain
but for the benefit of the public for whom he holds it in
trust. By demanding accountability and service with
responsibility, integrity, loyalty, efficiency, patriotism
and justice, all government officials and employees

have the duty to be responsive to the needs of the

people they are called upon to serve.
Public

officers

enjoy

the

Petitioners claim that the implementation of RA

9335 will turn BIR and BOC officials and employees

presumption

of

into bounty hunters and mercenaries is not only

regularity in the performance of their duties. This

without any factual and legal basis; it is also purely

presumption necessarily obtains in favor of BIR and

speculative.

BOC officials and employees. RA 9335 operates on the

basis thereof and reinforces it by providing a system of
rewards and sanctions for the purpose of encouraging
the officials and employees of the BIR and the BOC to
exceed their revenue targets and optimize their
revenue-generation capability and collection.

[15]

A law enacted by Congress enjoys the strong

presumption

of

constitutionality.

To

justify

its

nullification, there must be a clear and unequivocal

breach

of

the

Constitution,

not

doubtful

and

equivocal one.[16] To invalidate RA 9335 based on

petitioners baseless supposition is an affront to the

The presumption is disputable but proof to the

contrary is required to rebut it. It cannot be overturned
by

mere

conjecture

or

denied

in

advance

also of the executive which approved it.

(as

petitioners would have the Court do) specially in this

case where it is an underlying principle to advance a
declared public policy.

wisdom not only of the legislature that passed it but

Public service is its own reward. Nevertheless,

public officers may by law be rewarded for exemplary
and exceptional performance. A system of incentives
for exceeding the set expectations of a public office is
not anathema to the concept of public accountability.

In fact, it recognizes and reinforces dedication to duty,

that the reward will not be claimed if it will be either

industry, efficiency and loyalty to public service of

the fruit of bounty hunting or mercenary activity or the

deserving government personnel.

product of the irregular performance of official duties.

In United

States

v.

Matthews,[17] the

One of these precautionary measures is embodied in

U.S.

Section 8 of the law:

Supreme Court validated a law which awards to

officers of the customs as well as other parties an
amount not exceeding one-half of the net proceeds of
forfeitures in violation of the laws against smuggling.
Citing Dorsheimer

v.

United

States,[18] the

U.S.

Supreme Court said:

The offer of a portion of such
penalties to the collectors is to stimulate
and reward their zeal and industry in
detecting fraudulent attempts to evade
payment of duties and taxes.
In the same vein, employees of the BIR and the
BOC may by law be entitled to a reward when, as a

SEC. 8. Liability of Officials, Examiners

and Employees of the BIR and the
BOC. The
officials,
examiners,
and
employees of the [BIR] and the [BOC] who
violate this Act or who are guilty of
negligence,
abuses
or
acts
of
malfeasance or misfeasance or fail to
exercise extraordinary diligence in the
performance of their duties shall be held
liable for any loss or injury suffered by
any business establishment or taxpayer
as a result of such violation, negligence,
abuse, malfeasance, misfeasance or
failure to exercise extraordinary diligence.

EQUAL
PROTECTION

consequence of their zeal in the enforcement of tax

and customs laws, they exceed their revenue targets.

Equality guaranteed under the equal protection

In addition, RA 9335 establishes safeguards to ensure

clause is equality under the same conditions and

among persons similarly situated; it is equality among

equals, not similarity of treatment of persons who are
classified based on substantial differences in relation
to the object to be accomplished. [19] When things or
persons are different in fact or circumstance, they may
be treated in law differently. In Victoriano v. Elizalde
Rope Workers Union,[20] this Court declared:
The guaranty of equal protection of
the laws is not a guaranty of equality in
the application of the laws upon all
citizens of the [S]tate. It is not, therefore,
a requirement, in order to avoid the
constitutional
prohibition
against
inequality, that every man, woman and
child should be affected alike by a
statute. Equality of operation of statutes
does not mean indiscriminate operation
on persons merely as such, but on
persons according to the circumstances
surrounding them. It guarantees equality,
not identity of rights. The Constitution
does not require that things which
are different in fact be treated in law
as though they were the same. The
equal protection clause does not
forbid discrimination as to things
that
are
different. It
does
not
prohibit legislation which is limited
either in the object to which it is

directed or by the territory within which

it is to operate.
The equal protection of the laws
clause
of
the
Constitution
allows
classification. Classification in law, as in
the other departments of knowledge or
practice, is the grouping of things in
speculation or practice because they
agree with one another in certain
particulars. A law is not invalid because of
simple inequality. The very idea of
classification is that of inequality, so that
it goes without saying that the mere fact
of inequality in no manner determines the
matter of constitutionality. All that is
required of a valid classification is
that it be reasonable, which means
that the classification should be
based on substantial distinctions
which make for real differences, that
it must be germane to the purpose of
the law; that it must not be limited
to existing conditions only; and that
it must apply equally to each
member of the class. This Court has
held that the standard is satisfied if
the classification or distinction is
based on a reasonable foundation or
rational basis and is not palpably
arbitrary.
In the exercise of its power to make
classifications for the purpose of enacting
laws over matters within its jurisdiction,
the state is recognized as enjoying a wide

range of discretion. It is not necessary

that the classification be based on
scientific or marked differences of things
or in their relation. Neither is it necessary
that the classification be made with
mathematical nicety. Hence, legislative
classification may in many cases properly
rest on narrow distinctions, for the equal
protection guaranty does not preclude the
legislature from recognizing degrees of
evil or harm, and legislation is addressed
to evils as they may appear.[21] (emphasis
supplied)

because they have the common distinct primary

function of generating revenues for the national
government through the collection of taxes, customs
duties, fees and charges.
The BIR performs the following functions:

The equal protection clause recognizes a valid

classification, that is, a classification that has a
reasonable

foundation

or

rational

basis

and

not arbitrary.[22] With respect to RA 9335, its expressed

Sec. 18. The Bureau of Internal Revenue.

The Bureau of Internal Revenue, which
shall be headed by and subject to the
supervision
and
control
of
the
Commissioner of Internal Revenue, who
shall be appointed by the President upon
the recommendation of the Secretary [of
the DOF], shall have the following
functions:
(1)

public policy is the optimization of the revenuegeneration capability and collection of the BIR and the

(2)

BOC.[23] Since the subject of the law is the revenuegeneration capability and collection of the BIR and the

(3)

BOC, the incentives and/or sanctions provided in the

law should logically pertain to the said agencies.
Moreover, the law concerns only the BIR and the BOC

(4)

Assess and collect all

taxes, fees and charges and
account
for
all
revenues
collected;
Exercise duly delegated
police powers for the proper
performance of its functions and
duties;
Prevent and prosecute tax
evasions and all other illegal
economic activities;
Exercise supervision and
control over its constituent and
subordinate units; and

(5)

Perform
such
other
functions as may be provided by
law.[24]
xxx xxx xxx (emphasis supplied)

(6)
(7)

On the other hand, the BOC has the following

(8)

functions:

(9)

Administer
all
legal
requirements
that
are
appropriate;
Prevent
and
prosecute
smuggling
and
other
illegal
activities in all ports under its
jurisdiction;
Exercise supervision and
control over its constituent units;
Perform
such
other
functions as may be provided by
law.[25]
xxx xxx (emphasis supplied)

Sec. 23. The Bureau of Customs. The

Bureau of Customs which shall be
headed and subject to the management
and control of the Commissioner of
Customs, who shall be appointed by the
President upon the recommendation of
the
Secretary[of
the
DOF]
and
hereinafter referred to as Commissioner,
shall have the following functions:

DOF. They principally perform the special function of

(1)

being the instrumentalities through which the State

(2)
(3)
(4)

(5)

Collect custom duties,

taxes and the corresponding
fees, charges and penalties;
Account for all customs
revenues collected;
Exercise police authority for
the enforcement of tariff and
customs laws;
Prevent
and
suppress
smuggling, pilferage and all other
economic frauds within all ports of
entry;
Supervise
and
control
exports, imports, foreign mails
and the clearance of vessels and
aircrafts in all ports of entry;

xxx

Both the BIR and the BOC are bureaus under the

exercises one of its great inherent functions taxation.

Indubitably, such substantial distinction is germane
and intimately related to the purpose of the law.
Hence, the classification and treatment accorded to
the BIR and the BOC under RA 9335 fully satisfy the
demands of equal protection.
UNDUE
DELEGATION

SEC. 2. Declaration of Policy. It is the

policy of the State to optimize the
revenue-generation
capability
and
collection of the Bureau of Internal
Revenue (BIR) and the Bureau of Customs
(BOC) by providing for a system of
rewards and sanctions through the
creation of a Rewards and Incentives Fund
and a Revenue Performance Evaluation
Board in the above agencies for the
purpose of encouraging their officials and
employees to exceed their revenue
targets.

Two tests determine the validity of delegation of

legislative power: (1) the completeness test and (2)
the sufficient standard test. A law is complete when
it sets forth therein the policy to be executed, carried
out or implemented by the delegate. [26] It lays down a
sufficient

standard

when

it

provides adequate

guidelines or limitations in the law to map out the

Section 4 canalized within banks that keep it

boundaries of the delegates authority and prevent the

overflowing[29] the

delegation from running riot.[27] To be sufficient, the

from

standard must specify the limits of the delegates

President to fix revenue targets:

authority, announce the legislative policy and identify

the conditions under which it is to be implemented. [28]
RA 9335 adequately states the policy and
standards to guide the President in fixing revenue
targets and the implementing agencies in carrying out
the provisions of the law. Section 2 spells out the
policy of the law:

delegated

power

to

the

SEC. 4. Rewards and Incentives Fund. A

Rewards and Incentives Fund, hereinafter
referred to as the Fund, is hereby created,
to be sourced from the collection of the
BIR and the BOC in excess of their
respective revenue targets of the
year,
as
determined
by
the
Development
Budget
and
Coordinating Committee (DBCC), in
the following percentages:
Excess of Collection of
the
Excess
the
Revenue Targets

Percent (%) of the

Excess Collection to
Accrue to the Fund

30% or below

15%

submitted by the President to Congress. [30] Thus, the

More than 30%
15% of the first 30%
determination of revenue targets does not rest solely
plus 20% of the
remaining excess
on the President as it also undergoes the scrutiny of
The
Fund
shall
be
deemed
automatically appropriated the year
the DBCC.
immediately following the year when the
On the other hand, Section 7 specifies the limits
revenue collection target was exceeded
and shall be released on the same fiscal
of the Boards authority and identifies the conditions
year.
Revenue targets shall refer to
the
original
estimated
revenue
collection expected of the BIR and
the BOC for a given fiscal year as
stated in the Budget of Expenditures
and Sources of Financing (BESF)
submitted by the President to
Congress. The BIR and the BOC shall
submit to the DBCC the distribution of the
agencies revenue targets as allocated
among its revenue districts in the case of
the BIR, and the collection districts in the
case of the BOC.
xxx xxx xxx (emphasis supplied)

Revenue targets are based on the original

estimated revenue collection expected respectively of
the BIR and the BOC for a given fiscal year as
approved by the DBCC and stated in the BESF

under which officials and employees whose revenue

collection falls short of the target by at least 7.5% may
be removed from the service:
SEC. 7. Powers and Functions of the
Board. The Board in the agency shall
have the following powers and functions:
xxx xxx xxx
(b) To set the criteria and procedures
for removing from service officials
and
employees
whose
revenue
collection falls short of the target by
at least seven and a half percent
(7.5%), with due consideration of all
relevant factors affecting the level of
collection as provided in the rules and
regulations
promulgated under this
Act, subject to civil service laws,
rules and regulations and compliance
with substantive and procedural due

process: Provided, That the following

exemptions shall apply:

official or employee from service

under this Act shall be without
prejudice to the application of other
relevant laws on accountability of
public officers and employees, such
as the Code of Conduct and Ethical
Standards of Public Officers and
Employees and the Anti-Graft and
Corrupt Practices Act;

1. Where the district or area of

responsibility is newly-created, not
exceeding two years in operation,
as has no historical record of
collection performance that can be
used as basis for evaluation; and
2. Where the revenue or customs
official or employee is a recent
transferee in the middle of the
period under consideration unless
the
transfer
was
due
to
nonperformance of revenue targets
or potential nonperformance of
revenue
targets:
Provided,
however, That when the district or
area of responsibility covered by
revenue or customs officials or
employees has suffered from
economic difficulties brought about
by natural calamities or force
majeure or economic causes as
may be determined by the Board,
termination shall be considered
only after careful and proper review
by the Board.
(c) To terminate personnel in accordance
with the criteria adopted in the preceding
paragraph: Provided, That such decision
shall be immediately executory: Provided,
further, That the application of the
criteria for the separation of an

xxx xxx xxx (emphasis supplied)

Clearly, RA 9335 in no way violates the security

of tenure of officials and employees of the BIR and the
BOC. The guarantee of security of tenure only means
that an employee cannot be dismissed from the
service for causes other than those provided by law
and only after due process is accorded the employee.
[31]

In the case of RA 9335, it lays down a reasonable

yardstick for removal (when the revenue collection

falls short of the target by at least 7.5%) with due
consideration of all relevant factors affecting the level
of collection. This standard is analogous to inefficiency
and incompetence in the performance of official

duties, a ground for disciplinary action under civil

service laws.[32] The action for removal is also subject
to civil service laws, rules and regulations and
compliance

with substantive

and procedural

due

process.
At any rate, this Court has recognized the
following

as

sufficient

standards:

public

interest,

justice and equity, public convenience and welfare and

simplicity, economy and welfare.[33] In this case, the
declared

policy

of

optimization

of

the

Senate and seven Members from the

House of Representatives. The Members
from the Senate shall be appointed by the
Senate President, with at least two
senators representing the minority. The
Members
from
the
House
of
Representatives shall be appointed by the
Speaker with at least two members
representing the minority. After the
Oversight Committee will have approved
the implementing rules and regulations
(IRR) it shall thereafter become functus
officio and therefore cease to exist.

revenue-

generation capability and collection of the BIR and the

BOC is infused with public interest.
SEPARATION
OF POWERS

The Joint Congressional Oversight Committee in

RA 9335 was created for the purpose of approving the
implementing rules and regulations (IRR) formulated
by the DOF, DBM, NEDA, BIR, BOC and CSC. On May
22, 2006, it approved the said IRR. From then on, it
became functus officio and ceased to exist. Hence, the
issue of its alleged encroachment on the executive
function of implementing and enforcing the law may

Section 12 of RA 9335 provides:

SEC. 12. Joint Congressional Oversight
Committee. There is hereby created a
Joint Congressional Oversight Committee
composed of seven Members from the

be considered moot and academic.

This notwithstanding, this might be as good a

time as any for the Court to confront the issue of the
constitutionality of the Joint Congressional Oversight
Committee created under RA 9335 (or other similar
laws for that matter).
The scholarly discourse of Mr. Justice (now Chief
Justice)

Puno

on

the

concept

of

congressional

oversight in Macalintal v. Commission on Elections[34] is

illuminating:
Concept and
oversight

bases

of

congressional

Broadly defined, the power of

oversight embraces all activities
undertaken by Congress to enhance
its understanding of and influence
over
the implementation of
legislation it has enacted. Clearly,
oversight
concerns postenactment measures undertaken by
Congress:
(a)
to
monitor
bureaucratic
compliance
with
program objectives, (b) to determine
whether
agencies
are
properly
administered,
(c)
to
eliminate
executive waste and dishonesty, (d)

to prevent executive usurpation of

legislative authority, and (d) to
assess executive conformity with the
congressional perception of public
interest.
The power of oversight has been
held to be intrinsic in the grant of
legislative power itself and integral to the
checks and balances inherent in a
democratic system of government. x x x x
xxxxx
Over the years, Congress has
invoked
its
oversight
power
with
increased frequency to check the
perceived exponential accumulation of
power by the executive branch. By the
beginning of the 20thcentury, Congress
has delegated an enormous amount of
legislative authority to the executive
branch and the administrative agencies.
Congress, thus, uses its oversight power
to make sure that the administrative
agencies perform their functions within
the authority delegated to them. x x x x x
xxxx
Categories
functions

of

congressional

oversight

The acts done by Congress

purportedly in the exercise of its
oversight powers may be divided
into three categories,

namely: scrutiny, investigation and super

vision.
a. Scrutiny
Congressional scrutiny implies
a
lesser
intensity
and
continuity
of
attention to administrative operations. Its
primary purpose is to determine economy
and efficiency of the operation of
government activities. In the exercise of
legislative
scrutiny,
Congress
may
request information and report from the
other branches of government. It can give
recommendations or pass resolutions for
consideration of the agency involved.
xxx xxx xxx
b. Congressional investigation
While congressional scrutiny is
regarded as a passive process of looking
at
the
facts
that
are
readily
available, congressional
investigation
involves a more intense digging of facts.
The power of Congress to conduct
investigation is recognized by the 1987
Constitution under section 21, Article VI,
xxx xxx xxx
c. Legislative supervision
The
third
and most
encompassing form by which Congress
exercises its oversight power is thru

legislative
supervision.
Supervision
connotes a continuing and informed
awareness on the part of a congressional
committee
regarding executive
operations in a given administrative area.
While both congressional scrutiny and
investigation involve inquiry into past
executive branch actions in order to
influence
future
executive
branch
performance, congressional
supervision
allows Congress to scrutinize the exercise
of delegated law-making authority, and
permits Congress to retain part of that
delegated authority.
Congress exercises supervision
over the executive agencies through its
veto power. It typically utilizes veto
provisions when granting the President or
an executive agency the power to
promulgate regulations with the force of
law. These provisions require the
President or an agency to present the
proposed regulations to Congress, which
retains a right to approve or disapprove
any regulation before it takes effect. Such
legislative veto provisions usually provide
that a proposed regulation will become a
law after the expiration of a certain period
of time, only if Congress does not
affirmatively disapprove of the regulation
in the meantime. Less frequently, the
statute
provides
that
a
proposed
regulation will become law if Congress
affirmatively approves it.

Supporters
of
legislative
veto stress that it is necessary to
maintain the balance of power between
the
legislative
and
the
executive
branches of government as it offers
lawmakers a way to delegate vast power
to the executive branch or to independent
agencies while retaining the option to
cancel particular exercise of such power
without having to pass new legislation or
to repeal existing law. They contend that
this arrangement promotes democratic
accountability as it provides legislative
check on the activities of unelected
administrative agencies. One proponent
thus explains:
It is too late to
debate the merits of this
delegation
policy:
the
policy
is
too
deeply
embedded in our law and
practice. It suffices to say
that the complexities of
modern government have
often led Congress-whether
by actual or perceived
necessity- to legislate by
declaring
broad
policy
goals and general statutory
standards,
leaving
the
choice of policy options to
the
discretion
of
an
executive officer. Congress
articulates legislative aims,
but
leaves
their

implementation
to
the
judgment of parties who
may or may not have
participated in or agreed
with the development of
those aims. Consequently,
absent safeguards, in many
instances the reverse of
our constitutional scheme
could be effected: Congress
proposes, the Executive
disposes. One safeguard, of
course, is the legislative
power
to
enact
new
legislation or to change
existing law. But without
some means of overseeing
post enactment activities of
the
executive
branch,
Congress would be unable
to determine whether its
policies
have
been
implemented in accordance
with legislative intent and
thus whether legislative
intervention is appropriate.
Its

opponents, however, criticize

the
legislative
veto as undue
encroachment upon the executive
prerogatives. They urge that any postenactment measures undertaken by
the legislative branch should be
limited to scrutiny and investigation;
any measure beyond that would
undermine the separation of powers

guaranteed by the Constitution. They

contend that legislative veto constitutes
an
impermissible
evasion
of
the
Presidents veto authority and intrusion
into the powers vested in the executive or
judicial
branches
of
government.
Proponents counter that legislative veto
enhances separation of powers as it
prevents the executive branch and
independent agencies from accumulating
too much power. They submit that
reporting requirements and congressional
committee investigations allow Congress
to scrutinize only the exercise of
delegated law-making authority. They do
not allow Congress to review executive
proposals before they take effect and
they do not afford the opportunity for
ongoing and binding expressions of
congressional
intent.
In
contrast,
legislative veto permits Congress to
participate prospectively in the approval
or disapproval of subordinate law or those
enacted
by
the
executive
branch
pursuant to a delegation of authority by
Congress. They further argue that
legislative veto is a necessary response
by Congress to the accretion of policy
control by forces outside its chambers. In
an era of delegated authority, they point
out that legislative veto is the most
efficient means Congress has yet devised
to retain control over the evolution and
implementation of its policy as declared
by statute.

In Immigration and Naturalization

Service v. Chadha, the U.S. Supreme
Court
resolved
the
validity
of
legislative veto provisions. The case
arose from the order of the immigration
judge suspending the deportation of
Chadha pursuant to 244(c)(1) of the
Immigration and Nationality Act. The
United States House of Representatives
passed
a
resolution
vetoing
the
suspension
pursuant
to
244(c)(2)
authorizing either House of Congress, by
resolution, to invalidate the decision of
the executive branch to allow a particular
deportable alien to remain in the United
States. The immigration judge reopened
the deportation proceedings to implement
the House order and the alien was
ordered
deported.
The
Board
of
Immigration Appeals dismissed the aliens
appeal, holding that it had no power to
declare unconstitutional an act of
Congress. The United States Court of
Appeals for Ninth Circuit held that the
House
was
without
constitutional
authority to order the aliens deportation
and
that
244(c)(2)
violated
the
constitutional doctrine on separation of
powers.
On appeal, the U.S. Supreme Court
declared 244(c)(2) unconstitutional. But
the Court shied away from the issue
of separation of powers and instead
held that the provision violates the
presentment clause and bicameralism. It

held that the one-house veto was

essentially legislative in purpose and
effect. As such, it is subject to the
procedures set out in Article I of the
Constitution requiring the passage by a
majority of both Houses and presentment
to the President. x x x x x x x x x

Overseas Absentee Voting Act of 2003) creating a Joint

Congressional Committee. The committee was tasked
not only to monitor and evaluate the implementation
of the said law but also to review, revise, amend and

Two
weeks
after
the Chadha decision, the Court upheld, in
memorandum decision, two lower court
decisions invalidating the legislative veto
provisions in the Natural Gas Policy Act of
1978 and the Federal Trade Commission
Improvement Act of 1980. Following this
precedence, lower courts invalidated
statutes
containing
legislative
veto
provisions although some of these
provisions required the approval of both
Houses of Congress and thus met the
bicameralism requirement of Article I.
Indeed, some of these veto provisions
were not even exercised.[35] (emphasis
supplied)

approve the IRR promulgated by the Commission on

Elections. The Court held that these functions infringed
on the constitutional independence of the Commission
on Elections.[36]
With this backdrop, it is clear that congressional
oversight is not unconstitutional per se, meaning, it
neither necessarily constitutes an encroachment on
the

executive

power

to

implement

laws

nor

undermines the constitutional separation of powers.

In Macalintal,

given

the

concept

and

configuration of the power of congressional oversight

and

considering

the

nature

and

powers

of

constitutional body like the Commission on Elections,

the Court struck down the provision in RA 9189 (The

Rather, it is integral to the checks and balances

inherent in a democratic system of government. It may
in fact even enhance the separation of powers as it
prevents the over-accumulation of power in the
executive branch.

However,

to

forestall

the

danger

of

before and be heard by either of its

congressional encroachment beyond the legislative

Houses on any matter pertaining to their

sphere, the Constitution imposes two basic and related

departments

constraints on Congress.[37]It may not vest itself, any of

confirmation[40] and

its committees or its members with either executive or

(2) investigation

and

and

its

power

monitoring[41] of

of

the

judicial power.[38] And, when it exercises its legislative

implementation of laws pursuant to the

power, it must follow the single, finely wrought and

power of Congress to conduct inquiries in

exhaustively considered, procedures specified under

aid of legislation.[42]

the

Constitution,[39] including

the

procedure

for
Any action or step beyond that will undermine the

enactment of laws and presentment.

separation of powers guaranteed by the Constitution.

Thus, any

post-enactment

congressional

Legislative vetoes fall in this class.

measure such as this should be limited to scrutiny and

Legislative veto is a statutory provision requiring

investigation. In particular, congressional oversight

must be confined to the following:
(1) scrutiny based primarily on Congress power
of appropriation and the budget hearings
conducted in connection with it, its power
to ask heads of departments to appear

the President or an administrative agency to present

the proposed implementing rules and regulations of a
law

to

Congress

which,

by itself

or

through

committee formed by it, retains a right or power to

approve or disapprove such regulations before they
take effect. As such, a legislative veto in the form of a

congressional oversight committee is in the form of an

left for the

inward-turning

administrative agency when it formulates rules and

congressional leash (other than through scrutiny and

regulations implementing the law is to fill up details

investigation) to an agency to which Congress has by

(supplementary

law initially delegated broad powers. [43] It radically

necessary to bring the law into actual operation

changes the design or structure of the Constitutions

(contingent rule-making).[48]

delegation

designed

to

attach

executive branch

rule-making)

or the concerned

or

ascertain

facts

diagram of power as it entrusts to Congress a direct

Administrative

role in enforcing, applying or implementing its own

regulations

enacted

by

administrative agencies to implement and interpret

laws.[44]

the law which they are entrusted to enforce have the

Congress

has

two

options

when

enacting

force of law and are entitled to respect. [49] Such rules

legislation to define national policy within the broad

and

horizons of its legislative competence. [45] It can itself

statute[50] and are just as binding as if they have been

formulate the details or it can assign to the executive

written in the statute itself. As such, they have the

branch

force and effect of law and enjoy the presumption of

the

managerial

responsibility
decisions

in

for

making

conformity

necessary
with

regulations

partake

of

the

nature

of

those

constitutionality and legality until they are set aside

standards.[46] In the latter case, the law must be

with finality in an appropriate case by a competent

complete in all its essential terms and conditions when

court.[51] Congress, in the guise of assuming the role of

it leaves the hands of the legislature. [47] Thus, what is

an overseer, may not pass upon their legality by

Representatives, except to the extent

reserved to the people by the provision
on initiative and referendum. (emphasis
supplied)

subjecting them to its stamp of approval without

disturbing

the

calculated

balance

of

powers

established by the Constitution. In exercising discretion

to approve

or disapprove

the IRR based

on a

determination of whether or not they conformed with

the provisions of RA 9335, Congress arrogated judicial
power unto itself, a power exclusively vested in this

Legislative power (or the power to propose,

enact, amend and repeal laws)[53] is vested in Congress
which consists of two chambers, the Senate and the
House

Court by the Constitution.

CONSIDERED OPINION OF
MR. JUSTICE DANTE O. TINGA

of

Representatives.

valid

exercise

of

legislative power requires the act of both chambers.

Corrollarily, it can be exercised neither solely by one of

Moreover,

the

requirement

that

the

implementing rules of a law be subjected to approval

the two chambers nor by a committee of either or both

chambers. Thus, assuming the validity of a legislative

by Congress as a condition for their effectivity violates

the cardinal constitutional principles of bicameralism
and the rule on presentment.[52]

veto, both a single-chamber legislative veto and a

congressional committee legislative veto are invalid.
Additionally, Section 27(1), Article VI of the

Section 1, Article VI of the Constitution states:

Section 1. The legislative power
shall be vested in the Congress of
the Philippines which shall consist of
a
Senate
and
a
House
of

Constitution provides:
Section 27. (1) Every bill passed
by the Congress shall, before it
becomes a law, be presented to the

President. If he approves the same, he

shall sign it, otherwise, he shall veto it
and return the same with his objections to
the House where it originated, which shall
enter the objections at large in its Journal
and proceed to reconsider it. If, after such
reconsideration, two-thirds of all the
Members of such House shall agree to
pass the bill, it shall be sent, together
with the objections, to the other House by
which it shall likewise be reconsidered,
and if approved by two-thirds of all the
Members of that House, it shall become a
law. In all such cases, the votes of each
House
shall
be
determined
by yeas or nays, and the names of the
members voting for or against shall be
entered in its Journal. The President shall
communicate his veto of any bill to the
House where it originated within thirty
days after the date of receipt thereof;
otherwise, it shall become a law as if he
had signed it. (emphasis supplied)

Legislature and of the Executive. Assuming that

legislative veto is a valid legislative act with the force
of law, it cannot take effect without such presentment
even if approved by both chambers of Congress.
In sum, two steps are required before a bill
becomes a law. First, it must be approved by both
Houses of Congress.[54] Second, it must be presented to
and approved by the President.[55] As summarized by
Justice Isagani Cruz[56] and Fr. Joaquin G. Bernas, S.J.
[57]

, the following is the procedure for the approval of

bills:
Every

bill

passed

by

Congress

must

be

presented to the President for approval or veto. In the

absence of presentment to the President, no bill
passed by Congress can become a law. In this sense,
law-making under the Constitution is a joint act of the

A bill is introduced by any member

of the House of Representatives or the
Senate except for some measures that
must originate only in the former
chamber.
The first reading involves
reading of the number and title
measure and its referral by the
President or the Speaker to the
committee for study.

only a
of the
Senate
proper

The bill may be killed in the

committee or it may be recommended for
approval, with or without amendments,
sometimes after public hearings are first
held thereon. If there are other bills of the
same nature or purpose, they may all be
consolidated into one bill under common
authorship or as a committee bill.
Once reported out, the bill shall be
calendared for second reading. It is at this
stage that the bill is read in its entirety,
scrutinized, debated upon and amended
when desired. The second reading is the
most important stage in the passage of a
bill.
The bill as approved on second
reading is printed in its final form and
copies thereof are distributed at least
three days before the third reading. On
the third reading, the members merely
register their votes and explain them if
they are allowed by the rules. No further
debate is allowed.
Once the bill passes third reading,
it is sent to the other chamber, where it
will also undergo the three readings. If
there are differences between the
versions approved by the two chambers,
a conference committee[58] representing
both Houses will draft a compromise
measure that if ratified by the Senate and
the House of Representatives will then be

submitted to
consideration.

the

President

for

his

The bill is enrolled when printed as

finally approved by the Congress,
thereafter
authenticated
with
the
signatures of the Senate President, the
Speaker, and the Secretaries of their
respective chambers[59]
The Presidents role in law-making.
The final step is submission to the
President for approval. Once approved, it
takes effect as law after the required
publication.[60]

Where Congress delegates the formulation of

rules to implement the law it has enacted pursuant to
sufficient standards established in the said law, the law
must be complete in all its essential terms and
conditions when it leaves the hands of the legislature.
And it may be deemed to have left the hands of the
legislature when it becomes effective because it is only
upon effectivity of the statute that legal rights and

obligations become available to those entitled by the

or its members to approve the implementing rules of a

language of the statute. Subject to the indispensable

law

requisite of publication under the due process clause,

unconstitutional, as is a provision that allows Congress

[61]

the determination as to when a law takes effect is

or its members to overturn any directive or ruling

wholly the prerogative of Congress.[62] As such, it is

made by the members of the executive branch

only upon its effectivity that a law may be executed

charged with the implementation of the law.

after

it

has

already

taken

effect

shall

be

and the executive branch acquires the duties and

Following this rationale, Section 12 of RA 9335
powers to execute the said law. Before that point, the
should be struck down as unconstitutional. While there
role of the executive branch, particularly of the
may be similar provisions of other laws that may be
President, is limited to approving or vetoing the law.

[63]

invalidated for failure to pass this standard, the Court

From the moment the law becomes effective,
refrains from invalidating them wholesale but will do
any provision of law that empowers Congress or any of
so at the proper time when an appropriate case
its members to play any role in the implementation or

assailing those provisions is brought before us. [64]

enforcement of the law violates the principle of

separation of powers and is thus unconstitutional.
Under this principle, a provision that requires Congress

The next question to be resolved is: what is the

effect of the unconstitutionality of Section 12 of RA

9335 on the other provisions of the law? Will it render

the entire law unconstitutional? No.
Section 13 of RA 9335 provides:
SEC. 13. Separability Clause. If any
provision of this Act is declared invalid by
a competent court, the remainder of this
Act or any provision not affected by such
declaration of invalidity shall remain in
force and effect.

In Tatad v. Secretary of the Department of

Energy,[65] the Court laid down the following rules:
The general rule is that where part
of a statute is void as repugnant to the
Constitution, while another part is valid,
the valid portion, if separable from the
invalid, may stand and be enforced. The
presence of a separability clause in a
statute creates the presumption that the
legislature intended separability, rather
than complete nullity of the statute. To
justify this result, the valid portion must
be so far independent of the invalid
portion that it is fair to presume that the
legislature would have enacted it by itself
if it had supposed that it could not
constitutionally enact the other. Enough
must remain to make a complete,

intelligible and valid statute, which carries

out the legislative intent. x x x
The exception to the general rule is
that when the parts of a statute are so
mutually dependent and connected, as
conditions, considerations, inducements,
or compensations for each other, as to
warrant a belief that the legislature
intended them as a whole, the nullity of
one part will vitiate the rest. In making
the parts of the statute dependent,
conditional, or connected with one
another, the legislature intended the
statute to be carried out as a whole and
would not have enacted it if one part is
void, in which case if some parts are
unconstitutional, all the other provisions
thus
dependent,
conditional,
or
connected must fall with them.

The separability clause of RA 9335 reveals the

intention of the legislature to isolate and detach any
invalid provision from the other provisions so that the
latter may continue in force and effect. The valid
portions

can

stand

independently of

the

invalid

section. Without Section 12, the remaining provisions

still constitute a complete, intelligible and valid law

which carries out the legislative intent to optimize the

implementing rules and regulations of the law is

revenue-generation capability and collection of the BIR

declared UNCONSTITUTIONAL and

and the BOC by providing for a system of rewards and

therefore NULL and VOID. The constitutionality of the

sanctions through the Rewards and Incentives Fund

remaining provisions of RA 9335 is UPHELD. Pursuant

and a Revenue Performance Evaluation Board.

to Section 13 of RA 9335, the rest of the provisions

remain in force and effect.

To

be

effective,

administrative

rules

and

SO ORDERED.

regulations must be published in full if their purpose is

to enforce or implement existing law pursuant to a
valid delegation. The IRR of RA 9335 were published
on May 30, 2006 in two newspapers of general
circulation[66] and became effective 15 days thereafter.
[67]

Until and unless the contrary is shown, the IRR are

presumed
approval

valid
of

and

the

effective

Joint

even

without

Congressional

Guitierrez vs. DBM G.R. No. 153266

These consolidated cases question the inclusion

the

Oversight

Committee.

of certain allowances and fringe benefits into the

standardized salary rates for offices in the national
government, state universities and colleges, and local
government units as required by the Compensation

WHEREFORE, the petition is hereby PARTIALLY

GRANTED. Section 12 of RA 9335 creating a Joint
Congressional Oversight Committee to approve the

and

Position

implemented

Classification
through

the

Act

of

1989

challenged

Compensation Circular 59 (NCC 59).

and

National

deemed
included
in
the
standardized salary
rates
herein
prescribed. Such other additional
compensation, whether in cash or in
kind, being received by incumbents
only as of July 1, 1989 not integrated
into the standardized salary rates
shall continue to be authorized.

The Facts and the Case

Congress enacted in 1989 Republic Act (R.A.)

6758,

called

Classification

the
Act

Compensation
of

1989

to

and

Position

rationalize

the

compensation of government employees. Its Section

12 directed the consolidation of allowances and
additional compensation already being enjoyed by
employees into their standardized salary rates. But it

Pursuant to the above, the Department of

exempted certain additional compensations that the

Budget and Management (DBM) issued NCC 59 dated

employees

September 30, 1989,[1] covering the offices of the

may

be

receiving

from

consolidation. Thus:

such

national government, state universities and colleges,

and local government units. NCC 59 enumerated the
specific

Section 12. Consolidation of

Allowances and Compensation. -- All
allowances,
except
for
representation and transportation
allowances; clothing and laundry
allowances; subsistence allowance of
marine officers and crew on board
government vessels and hospital
personnel; hazard pay; allowances of
foreign service personnel stationed
abroad; and such other additional
compensation
not
otherwise
specified
herein
as
may
be
determined by the DBM, shall be

allowances

and

additional

compensations

which were deemed integrated in the basic salaries

and these included the Cost of Living Allowance
(COLA) and Inflation Connected Allowance (ICA). The
DBM re-issued and published NCC 59 on May 3, 2004.
[2]

The DBM also issued Corporate Compensation

Circular (CCC) 10 dated October 2, 1989, [3] covering all
government-owned or controlled corporations and
government financial institutions. The DBM re-issued
this circular on February 15, 1999 [4] and published it on

March 16, 1999. Accordingly, the Commission on Audit

On May 16, 2002 employees of the Office of the

(COA) disallowed the payments of honoraria and other

Solicitor

allowances which were deemed integrated into the

for certiorari and mandamus in

standardized salary rates. Employees of government-

questioning the propriety of integrating their COLA into

owned or controlled

the

their standardized salary rates. Employees of other

validity of CCC 10 due to its non-publication. In De

offices of the national government followed suit. In

corporations questioned

Jesus v. Commission on Audit,

CCC

10

ineffective

[5]

because

this Court declared

of

such

non-

General

filed

petition

G.R.

153266,

addition, petitioners in G.R. 159007 questioned the

disallowance of the allowances and fringe benefits that

publication.Until then, it ordered the COA to pass on

the

COA auditing

audit the employees honoraria which they were

Government Service Insurance System (GSIS) used to

receiving prior to the effectivity of R.A. 6758.

get. Petitioners

in

personnel
G.R.

assigned

173119

to

questioned

the
the

disallowance of the ICA that used to be paid to the

officials and employees of the Insurance Commission.
Meanwhile, the DBM also issued Budget Circular
2001-03 dated November 12, 2001, [6] clarifying that
only the exempt allowances under Section 12 of R.A.

The Court caused the consolidation of the

6758 may continue to be granted the employees; all

petitions and treated them as a class suit for all

others were deemed integrated in the standardized

government employees, excluding the employees of

salary rates. Thus, the payment of allowances and

government-owned or controlled corporations and

compensation such as COLA, amelioration allowance,

government financial institutions. [7]

and ICA, among others, which were already deemed

integrated in the basic salary were unauthorized. The
Courts

ruling

in

subsequent

cases

involving

On October 26, 2005 the DBM issued National

government-owned or controlled corporations followed

Budget Circular 2005-502[8] which provided that all

the De Jesus ruling.

Supreme

Court

rulings

on

the

integration

of

allowances, including COLA, of government employees

under R.A. 6758 applied only to specific government-

owned

or

controlled

corporations

since

the

consolidated cases covering the national government

employees

are

still

pending

with

this

Court. Consequently, the payment of allowances and

2. Whether or not the ICA may still be paid to

officials and employees of the Insurance Commission;

other benefits to them, such as COLA and ICA,

remained prohibited until otherwise provided by law or
3. Whether or not the GSIS may still pay the

ruled by this Court. The circular further said that all

agency heads and other responsible officials and

allowances

and

fringe

employees found to have authorized the grant of COLA

personnel assigned to it;

benefits

to

COA

auditing

and other allowances and benefits already integrated

in the basic salary shall be personally held liable for
4. Whether or not the non-publication of NCC 59

such payment.

dated September 30, 1989 in the Official Gazette or

newspaper

of

general

circulation

nullifies

the

integration of the COLA into the standardized salary

rates; and
The Issues Presented
5. Whether or not the grant of COLA to military
The

common

issues

presented

in

these

consolidated cases are:

and

police

personnel

1. Whether or not the COLA should be deemed

concerned government employees by virtue of Section
12 of R.A. 6758;

the

exclusion

of

other

government employees violates the equal protection

clause.

integrated into the standardized salary rates of the

to

The Courts Ruling

One. Petitioners espouse the common theory

that

the

DBM

needs

to

promulgate

rules

and

regulations before the COLA that they were getting

prior to the passage of R.A. 6758 can be deemed
integrated

in

rates. Respondent

their
DBM

standardized
counters

that

R.A.

salary
6758

already specified the allowances and benefits that

were not to be integrated in the new salary rates. All
other allowances, DBM adds, such as COLA, are

specified
herein
as
may
be
determined by the DBM, shall be
deemed
included
in
the
standardized salary
rates
herein
prescribed. Such other additional
compensation, whether in cash or in
kind, being received by incumbents
only as of July 1, 1989 not integrated
into the standardized salary rates
shall continue to be authorized.

deemed integrated into those salary rates.

As
At the heart of the present controversy is
Section 12 of R.A. 6758 which is quoted anew for

will

be

noted

from

the

first

sentence

above, all allowances were deemed integrated into

the standardized salary rates except the following:

clarity:

Section 12. Consolidation of

Allowances and Compensation. -- All
allowances,
except
for
representation and transportation
allowances; clothing and laundry
allowances; subsistence allowance of
marine officers and crew on board
government vessels and hospital
personnel; hazard pay; allowances of
foreign service personnel stationed
abroad; and such other additional
compensation
not
otherwise

(1) representation and

allowances;

transportation

(2) clothing and laundry allowances;

(3) subsistence allowances of marine officers
and crew on board government vessels;
(4) subsistence allowances
personnel;

of

hospital

(5) hazard pay;

(6) allowances of foreign service
stationed abroad; and

personnel

(7) such other additional compensation not

otherwise specified in Section 12 as may
be determined by the DBM.

implement a given legislation and effectuate its

policies.[10] Such power is, however, necessarily limited
to what the law provides. Implementing rules and
regulations cannot extend the law or expand its
coverage, as the power to amend or repeal a statute

But, while the provision enumerated certain

belongs to the legislature. Administrative agencies

exclusions, it also authorized the DBM to identify such

implement the broad policies laid down in a law by

other additional compensation that may be granted

filling in only its details. The regulations must be

over

germane to the objectives and purposes of the law and

and

above

the

standardized

salary

rates. In Philippine Ports Authority Employees Hired

After July 1, 1989 v. Commission on Audit,

[9]

must conform to the standards prescribed by law. [11]

the Court

has ruled that while Section 12 could be considered

self-executing in regard to items (1) to (6), it was not
so in regard to item (7). The DBM still needed to
amplify item (7) since one cannot simply assume what
other allowances were excluded from the standardized
salary

rates. It

and effectivity of

was
the

only

upon

corresponding

the

issuance

implementing

rules and regulations that item (7) could be deemed

legally completed.

governance

10]. But, instead of identifying some of the additional

exclusions that Section 12 of R.A. 6758 permits it to
make, the DBM made a list of what allowances and
benefits are deemed integrated into the standardized
salary

rates. More

the following

specifically,

NCC

allowances/additional

59

identified

compensation

that are deemed integrated:

Delegated rule-making is a practical necessity in

modern

In this case, the DBM promulgated NCC 59 [and CCC

because

of

the

(1)

Cost of Living Allowance

(COLA);

(2)

Inflation
allowance;

increasing

complexity and variety of public functions. Congress

has endowed administrative agencies like respondent
DBM with the power to make rules and regulations to

(3)

connected

Living Allowance;

(4)

Emergency Allowance;

(5)

Additional Compensation
of
Public
Health
Nurses
assigned
to
public
health
nursing;

(6)

Additional Compensation
of Rural Health Physicians;

(7)

Additional Compensation
of Nurses in Malacaang Clinic;

(8)

Nurses Allowance in the

Air Transportation Office;

(9)

Assignment Allowance of
School Superintendents;

(10)

Post allowance of Postal

Service Office employees;

(11)

Honoraria/allowances
which
are
regularly
given
except the following:
a.

those for teaching

overload;

b.

in lieu of overtime
for employees on
detail
with
task
forces/special projects;

researchers,
experts and specialists
who are acknowledged
authorities in their field
of specialization;

e.

lecturers
resource persons;

f.

Municipal
Treasurers deputized by
the Bureau of Internal
Revenue to collect and
remit internal revenue
collections; and

g.

Executive positions
in State Universities and
Colleges
filled
by
designation from among
their faculty members.

and

(12)

Subsistence Allowance of
employees
except
those
authorized under EO [Executive
Order] 346 and uniformed
personnel of the Armed Forces
of
the Philippines and
Integrated National Police;

(13)

Laundry
Allowance
of
employees
except
those
hospital/sanitaria
personnel

pay;
c.

d.

(14)

who attend directly to patients

and who by the nature of their
duties are required to wear
uniforms, prison guards and
uniformed personnel of the
Armed
Forces
of
the
Philippines
and
Integrated
National Police; and

incorporated in the standardized salary rates of

Incentive
allowance/fee/pay except those
authorized under the General
Appropriations Act and Section
33 of P.D. 807.

proper. In National

government employees under the general rule of

integration.

In any event, the Court finds the inclusion of

COLA

in

the

standardized
Tobacco

Commission on Audit,

[13]

salary

rates

Administration

v.

the Court ruled that the

enumerated fringe benefits in items (1) to (6) have one

thing in commonthey belong to one category of
privilege called allowances which are usually granted
to officials and employees of the government to defray
or reimburse the expenses incurred in the performance

The drawing up of the above list is consistent

of

their

official

functions. Consequently,

if

these

with Section 12 above. R.A. 6758 did not prohibit the

allowances are consolidated with the standardized

DBM

purpose

of

salary rates, then the government official or employee

class

all

will be compelled to spend his personal funds in

allowances. With respect to what employees benefits

attending to his duties. On the other hand, item (7) is a

fell outside the term apart from those that the law

catch-all

specified, the DBM, said this Court in a case, [12] needed

allowances similar to those enumerated.[14]

from

identifying

implementation

what

for

fell

the

into

the

of

proviso

for

benefits

in

the

nature

of

to promulgate rules and regulations identifying those

excluded

benefits. This

leads

to

the

inevitable

conclusion that until and unless the DBM issues such

Clearly, COLA is not in the nature of an allowance

rules and regulations, the enumerated exclusions in

intended to reimburse expenses incurred by officials

items (1) to (6) remain exclusive. Thus so, not being an

and employees of the government in the performance

enumerated

of

exclusion,

COLA

is

deemed

already

their

official

functions. It

is

not

payment

in

consideration of the fulfillment of official duty. [15] As

In National Tobacco Administration, the Court

defined, cost of living refers to the level of prices

interpreted this provision as referring to benefits in the

relating to a range of everyday items

purchasing those
included

in

consumption.

an
[17]

goods and
accepted

[16]

or the cost of

services which
standard

level

are
of

nature of financial assistance, or a bonus or other

payment made to employees in addition to guaranteed
hourly

wages,

as

contradistinguished

from

the

Based on this premise, COLA is a

allowance in the first sentence, which cannot, strictly

benefit intended to cover increases in the cost of

speaking, be treated as a bonus or additional income.

living. Thus, it is and should be integrated into the

In

standardized salary rates.

necessary,

financial

assistance,
while

in

reimbursement

the

reimbursement is required.

case

of

is

not

allowance,

[19]

Two. Petitioning officials and employees of the

Insurance Commission question the disallowance of

To be entitled to the financial assistance under

their ICA on the ground that it is a benefit similar to

this provision, the following requisites must concur: (1)

the educational assistance granted by the Court

the recipients were incumbents when R.A. 6758 took

in National Tobacco Administration[18] based on the

effect on July 1, 1989; (2) they were in fact, receiving

second sentence of Section 12 of R.A. 6758 that reads:

the same, at the time; and (3) such additional

compensation

is distinct

and

separate

from

the

excepted allowances under CCC 10, as it is not

Such other additional compensation,
whether in cash or in kind, being
received by incumbents only as of
July 1, 1989 not integrated into the
standardized
salary
rates
shall
continue to be authorized.

integrated into the standardized salary rates. [20]

In this case, ICA, like COLA, falls under the

general
identified

rule
it

of

integration. The
as

an allowance

DBM

specifically

or

additional

compensation integrated into the standardized salary

rates. By its very nature, ICA is granted due to inflation

and upon determination that the current salary of

their allowances and fringe benefits based on the

officials and employees of the Insurance Commission is

allowances given to GSIS personnel, namely:

insufficient

to

address

the

problem. The

DBM

determines whether a need for ICA exists and the fund

5.6. Payment of
other
allowances/fringe benefits and all
other forms of compensation granted
on top of basic salary, whether in
cash
or
in
kind, x x x shall
be
discontinued effective November 1,
1989. Payment made for such
allowances/fringe benefits after said
date shall be considered as illegal
disbursement of public funds.

from which it will be taken. The Insurance Commission

cannot, on its own, determine what allowances are
necessary and then grant them to its officials and
employees without the approval of the DBM.

Moreover, ICA does not qualify under the second

sentence of Section 12 of R.A. 6758 since the
employees failed to show that they were actually
receiving it as of June 30, 1989 or immediately prior to
the implementation of R.A. 6758. The Commissioner of
the Insurance Commission requested for authority to
grant ICA from the DBM for the years 1981
1984
paid

[22]

[21]

and

only. There is no evidence that the ICA were

in

subsequent

years. In

the

absence

of

They

alleged

that

since

CCC

10

was

declared

ineffective, the disallowance should be lifted until the

issuance was published on March 16, 1999.

subsequent authorization granting or restoring ICA to

the

officials

and

employees

of

the

Insurance

But,

although

petitioners

alleged

that

the

Commission, there can be no valid legal basis for its

subject benefits were withheld from them on the basis

continued grant from July 1, 1986.

of CCC 10, it is clear that the benefits were actually

withheld from them on the basis of Section 18 of R.A.
6758, which reads:

Three. Petitioners

COA auditing

personnel

assigned to the GSIS question the disallowance of

Section
18. Additional
Compensation of Commission on
Audit
Personnel
and
of
Other
Agencies. - In order to preserve the
independence and integrity of the
Commission on Audit (COA), its
officials
and
employees
are
prohibited from receiving salaries,
honoraria, bonuses, allowances or
other
emoluments
from
any
government entity, local government
unit, and government-owned and
controlled
corporations,
and
government
financial
institution,
except those compensation paid
directly by the COA out of its
appropriations and contributions.

functions for purposes of paying

additional compensation to said
officials and employees.

As aptly pointed out by the COA, Section 18 of

R.A. 6758 was complete in itself and was operative
without the aid of any supplementary or enabling
legislation.[23] Theimplementing rules and regulations
were necessary only for those provisions, such as item
(7) of Section 12, which requires further clarification
and interpretation. Thus, notwithstanding the initial
non-publication
petitioners

of

CCC

allowances

10,
and

the

disallowance

fringe

benefits

of
as

COA auditing personnel assigned to the GSIS was valid

upon the effectivity of R.A. 6758.

Government entities, including

government-owned
or
controlled
corporations
including
financial
institutions and local government
units are hereby prohibited from
assessing
or
billing
other
government entities, governmentowned or controlled corporations
including financial institutions or
local government units for services
rendered
by
its
officials
and
employees as part of their regular

In Tejada v.

Domingo,[24] this

Court

explained

that COA personnel assigned to auditing units of

government-owned

or

controlled

corporations

or

government financial institutions can receive only such

salaries, allowances or fringe benefits paid directly by
the

COA

out

of

its

appropriations

and

contributions. The contributions referred to are the

cost of audit services which did not include the extra
emoluments or benefits, such as bank equity pay,

longevity

pay,

amelioration

meal

institutions was ineffective until its re-issuance and

allowance, which petitioners claim. The COA is further

publication on March 16, 1999, its counterpart, NCC 59

barred from assessing or billing government-owned or

dated September 30, 1989 covering the offices of the

controlled

financial

national government, state universities and colleges,

institutions for services rendered by its personnel as

and local government units should also be regarded as

part of their regular audit functions for purposes of

ineffective until its re-issuance and publication on May

paying additional compensation to such personnel.

3, 2004. Thus, the COLA should not be deemed

corporations

and

allowance,

and

government

integrated into the standardized salary rates from

1989 to 2004. Respondents counter that the fact that
In upholding the disallowance, the Court ruled

NCC 59 was not published should not be considered as

in Villarea v. Commission on Audit[25] that valid reasons

an obstacle to the integration of COLA into the

exist to treat COA officials differently from other

standardized salary rates. Accordingly, Budget Circular

national government officials. The primary function of

2001-03, insofar as it reiterates NCC 59, should not be

an

unnecessary,

treated as ineffective since it merely reaffirms the fact

excessive or extravagant expenditures of government

of consolidation of COLA into the employees salary as

funds. To

mandated by Section 12 of R.A. 6758.

auditor

is
be

to

prevent

able

to

irregular,

properly

perform

their

constitutional mandate, COA officials need to be

insulated from unwarranted influences, so that they
can act with independence and integrity.

It is a settled rule that publication is required as

a condition precedent to the effectivity of a law to
inform the public of its contents before their rights and

Rightly so, the disallowance in this case is valid.

interests are affected by the same. [26] Administrative

rules and regulations must also be published if their
purpose is to enforce or implement existing law

Four. Petitioners argue that since CCC 10 dated

October 2, 1989 covering all government-owned or
controlled

corporations

and

government

financial

pursuant also to a valid delegation.[27]

Nonetheless,

the

rates. There is thus nothing in these cases which can

integration of COLA into the standardized salary rates

be the subject of a back pay since the amount

is not dependent on the publication of CCC 10 and NCC

corresponding to COLA was never withheld from

59. This

petitioners in the first place. [29]

benefit

as

is

previously

deemed

discussed,

included

in

the

standardized salary rates of government employees

since it falls under the general rule of integrationall
allowances.

Consequently, the non-publication of CCC 10

and NCC 59 in the Official Gazette or newspaper of
general circulation does not nullify the integration of

More importantly, the integration was not by

COLA

into

the

standardized

salary

rates upon

mere legal fiction since it was factually integrated into

the effectivity of R.A. 6758. As the Court has said

the

in Philippine

employees

government

salaries. Records

employees

were

show

informed

that
by

the
their

International

Commission on Audit,

[30]

Trading

Corporation

v.

the validity of R.A. 6758

respective offices of their new position titles and their

should not be made to depend on the validity of its

corresponding salary grades when they were furnished

implementing rules.

with the Notices of Position Allocation and Salary

Adjustment

(NPASA). The

NPASA

provided

the

breakdown of the employees gross monthly salary as

of

June

30,

1989

and

the

composition

of

Five. Petitioners

contend

that the

continued

his

grant of COLA to military and police personnel under

standardized pay under R.A. 6758. [28] Notably, the

CCC 10 and NCC 59 to the exclusion of other

COLA was considered part of the employees monthly

government employees violates the equal protection

income.

clause of the Constitution.

In truth, petitioners never really suffered any

diminution

in

pay

as

consequence

of

the

consolidation of COLA into their standardized salary

But as respondents pointed out, while it may

appear

that

petitioners

are

questioning

the

constitutionality of these issuances, they are in fact

allowance, longevity pay, quarters

allowance, subsistence allowance,
clothing allowance, hazard pay and
other allowances shall continue to be
authorized.

attacking the very constitutionality of Section 11 of

R.A. 6758. It is actually this provision which allows the
uniformed personnel to continue receiving their COLA
over and above their basic pay, thus:

Section 11. Military and Police

Personnel. The
base
pay
of
uniformed personnel of the Armed
Forces of the Philippines and the
Integrated National Police shall be as
prescribed in the salary schedule for
these personnel in R.A. 6638 and
R.A. 6648. The longevity pay of these
personnel shall be as prescribed
under R.A. 6638, and R.A. 1134 as
amended by R.A. 3725 and R.A.
6648: Provided, however, That the
longevity pay of uniformed personnel
of the Integrated National Police
shall include those services rendered
as uniformed members of the police,
jail and fire departments of the local
government units prior to the police
integration.
All existing types of allowances
authorized for uniformed personnel
of
the
Armed
Forces
of
the
Philippines and Integrated National
Police such as cost of living

Nothing

is

more

settled

than

that

the

constitutionality of a statute cannot be attacked

collaterally because constitutionality issues must be
pleaded directly and not collaterally.[31]

In any event, the Court is not persuaded that

the

continued

personnel

to

grant
the

of

COLA to

exclusion

of

the
other

uniformed
national

government officials run afoul the equal protection

clause of the Constitution. The fundamental right of
equal protection of the laws is not absolute, but is
subject to reasonable classification. If the groupings
are characterized by substantial distinctions that make
real differences, one class may be treated and
regulated differently from another. The classification
must also be germane to the purpose of the law and
must apply to all those belonging to the same class. [32]

To be valid and reasonable, the classification

must satisfy the following requirements: (1) it must
rest on substantial distinctions; (2) it must be germane
to the purpose of the law; (3) it must not be limited to
existing conditions only; and (4) it must apply equally
to all members of the same class.[33]

It is clear from the first paragraph of Section 11

WHEREFORE, the Court GRANTS the petition

in G.R. No. 172713 and DENIES the petitions in G.R.
153266, 159007, 159029, 170084, 173119, 176477,
177990 and A.M. 06-4-02-SB.

SO ORDERED.

that Congress intended the uniformed personnel to be

continually governed by their respective compensation
laws. Thus, the military is governed by R.A. 6638, [34] as
amended by R.A. 9166[35] while the police is governed
by R.A. 6648,[36] as amended by R.A. 6975.[37]

Certainly, there are valid reasons to treat the

uniformed personnel differently from other national
government officials. Being in charged of the actual
defense of the State and the maintenance of internal
peace

and

order,

they

are

expected

to

be

stationed virtually anywhere in the country. They are

likely to be assigned to a variety of low, moderate, and
high-cost areas. Since their basic pay does not vary
based on location, the continued grant of COLA is
intended to help them offset the effects of living in
higher cost areas.[38]

G.R. No. 127624

November 18, 2003

BPI
LEASING
CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, COURT OF
TAX APPEAL AND COMMISSIONER OF INTERNAL
REVENUE, respondents.
AZCUNA, J.:

The present petition for review on certiorari assails the

decision1 of the Court of Appeals in CA-G.R. SP No.
38223 and its subsequent resolution2 denying the
motion for reconsideration. The assailed decision and
resolution affirmed the decision of the Court of Tax
Appeals (CTA) which denied petitioner BPI Leasing
Corporations (BLC) claim for tax refund in CTA Case
No. 4252.
The facts are not disputed.
BLC is a corporation engaged in the business of leasing
properties.3 For the calendar year 1986, BLC paid the
Commissioner of Internal Revenue (CIR) a total of
P1,139,041.49
representing
4%
"contractors
percentage tax" then imposed by Section 205 of the
National Internal Revenue Code (NIRC), based on its
gross rentals from equipment leasing for the said year
amounting to P27,783,725.42.4

On November 10, 1986, the CIR issued Revenue

Regulation 19-86. Section 6.2 thereof provided that
finance and leasing companies registered under
Republic Act 5980 shall be subject to gross receipt tax
of 5%-3%-1% on actual income earned. This means
that companies registered under Republic Act 5980,
such as BLC, are not liable for "contractors percentage
tax" under Section 205 but are, instead, subject to
"gross receipts tax" under Section 260 (now Section
122) of the NIRC. Since BLC had earlier paid the
aforementioned "contractors percentage tax," it recomputed its tax liabilities under the "gross receipts
tax" and arrived at the amount of P361,924.44.
On April 11, 1988, BLC filed a claim for a refund with
the CIR for the amount of P777,117.05, representing
the difference between the P1,139,041.49 it had paid
as "contractors percentage tax" and P361,924.44 it
should have paid for "gross receipts tax." 5 Four days
later, to stop the running of the prescriptive period for
refunds, petitioner filed a petition for review with the
CTA.6
In a decision dated May 13, 1994, 7 the CTA dismissed
the petition and denied BLCs claim of refund. The CTA
held that Revenue Regulation 19-86, as amended, may
only be applied prospectively such that it only covers
all leases written on or after January 1, 1987, as stated
under Section 7 of said revenue regulation:
Section 7. Effectivity These regulations shall
take effect on January 1, 1987 and shall be

applicable to all leases written on or after the

said date.
The CTA ruled that, since BLCs rental income was all
received prior to 1986, it follows that this was derived
from lease transactions prior to January 1, 1987, and
hence, not covered by the revenue regulation.
A motion for reconsideration of the CTAs decision was
filed, but was denied in a resolution dated July 26,
1995.8 BLC then appealed the case to the Court of
Appeals, which issued the aforementioned assailed
decision and resolution.9 Hence, the present petition.
In seeking to reverse the denial of its claim for tax
refund, BLC submits that the Court of Appeals and the
CTA erred in not ruling that Revenue Regulation 19-86
may be applied retroactively so as to allow BLCs claim
for a refund of P777,117.05.
Respondents, on the other hand, maintain that the
provision on the date of effectivity of Revenue
Regulation 19-86 is clear and unequivocal, leaving no
room for interpretation on its prospective application.
In addition, respondents argue that the petition should
be
dismissed
on
the
ground
that
the
Verification/Certification of Non-Forum Shopping was
signed by the counsel of record and not by BLC,
through a duly authorized representative, in violation
of Supreme Court Circular 28-91.

In a resolution dated March 29, 2000, 10 the petition

was given due course and the Court required the
parties to file their respective Memoranda. Upon
submission of the Memoranda, the issues in this case
were delineated, as follows:11
WHETHER THE INSTANT PETITION FOR REVIEW
ON CERTIORARI SUBSTANTIALLY COMPLIES WITH
SUPREME COURT CIRCULAR 28-91.
WHETHER REVENUE REGULATION 19-86, AS
AMENDED, IS LEGISLATIVE OR INTERPRETATIVE
IN NATURE.
WHETHER REVENUE REGULATION 19-86, AS
AMENDED, IS PROSPECTIVE OR RETROACTIVE IN
ITS APPLICATION.
WHETHER PETITIONER, AS FOUND BY THE
COURT OF APPEALS, FAILED TO MEET THE
QUANTUM OF EVIDENCE REQUIRED IN REFUND
CASES.
WHETHER PETITIONER, AS FOUND BY THE
COURT OF APPEALS, IS ESTOPPED FROM
CLAIMING ITS PRESENT REFUND.
As to the first issue, the Court agrees with
respondents contention that the petition should be
dismissed outright for failure to comply with Supreme
Court Circular 28-91, now incorporated as Section 2 of
Rule 42 of the Rules of Court. The records plainly show,

and this has not been denied by BLC, that the

certification was executed by counsel who has not
been shown to have specific authority to sign the same
for BLC.
In BA Savings Bank v. Sia,12 it was held that the
certificate of non-forum shopping may be signed, for
and on behalf of a corporation, by a specifically
authorized lawyer who has personal knowledge of the
facts required to be disclosed in such document. This
ruling, however, does not mean that any lawyer,
acting on behalf of the corporation he is representing,
may routinely sign a certification of non-forum
shopping. The Court emphasizes that the lawyer must
be "specifically authorized" in order validly to sign the
certification.
Corporations have no powers except those expressly
conferred upon them by the Corporation Code and
those that are implied by or are incidental to its
existence. These powers are exercised through their
board of directors and/or duly authorized officers and
agents. Hence, physical acts, like the signing of
documents, can be performed only by natural persons
duly authorized for the purpose by corporate bylaws or
by specific act of the board of directors. 13
The records are bereft of the authority of BLCs counsel
to institute the present petition and to sign the
certification of non-forum shopping. While said counsel
may be the counsel of record for BLC, the
representation does not vest upon him the authority to

execute the certification on behalf of his client. There

must be a resolution issued by the board of directors
that specifically authorizes him to institute the petition
and execute the certification, for it is only then that his
actions can be legally binding upon BLC.
BLC however insists that there was substantial
compliance with SC Circular No. 28-91 because the
verification/certification was issued by a counsel who
had full personal knowledge that no other petition or
action has been filed or is pending before any other
tribunal. According to BLC, said counsels law firm has
handled this case from the very beginning and could
very well attest and/or certify to the absence of an
instituted or pending case involving the same or
similar issues.
The argument of substantial compliance deserves no
merit, given the Courts ruling in Mendigorin v.
Cabantog:14
The CA held that there was substantial
compliance with the Rules of Court, citing
Dimagiba vs. Montalvo, Jr. [202 SCRA 641] to the
effect that a lawyer who assumes responsibility
for a client's cause has the duty to know the
entire history of the case, especially if any
litigation is commenced. This view, however, no
longer holds authoritative value in the light of
Digital Microwave Corporation vs. CA [328 SCRA
286], where it was held that the reason the
certification against forum shopping is required

to be accomplished by petitioner himself is that

only the petitioner himself has actual knowledge
of whether or not he has initiated similar actions
or proceedings in other courts or tribunals. Even
counsel of record may be unaware of such fact.
To our mind, this view is more in accord with the
intent and purpose of Revised Circular No. 2891.
Clearly, therefore, the present petition lacks the proper
certification as strictly required by jurisprudence and
the Rules of Court.
Even if the Court were to ignore the aforesaid
procedural infirmity, a perusal of the arguments raised
in the petition indicates that a resolution on the merits
would nevertheless yield the same outcome.
BLC attempts to convince the Court that Revenue
Regulation
19-86
is
legislative
rather
than
interpretative in character and hence, should retroact
to the date of effectivity of the law it seeks to
interpret.
Administrative issuances may be distinguished
according to their nature and substance: legislative
and interpretative. A legislative rule is in the matter of
subordinate legislation, designed to implement a
primary legislation by providing the details thereof. An
interpretative rule, on the other hand, is designed to
provide guidelines to the law which the administrative
agency is in charge of enforcing.15

The Court finds the questioned revenue regulation to

be legislative in nature. Section 1 of Revenue
Regulation 19-86 plainly states that it was
promulgated pursuant to Section 277 of the NIRC.
Section 277 (now Section 244) is an express grant of
authority to the Secretary of Finance to promulgate all
needful rules and regulations for the effective
enforcement of the provisions of the NIRC. In Paper
Industries Corporation of the Philippines v. Court of
Appeals,16 the Court recognized that the application of
Section 277 calls for none other than the exercise of
quasi-legislative or rule-making authority. Verily, it
cannot be disputed that Revenue Regulation 19-86
was issued pursuant to the rule-making power of the
Secretary of Finance, thus making it legislative, and
not interpretative as alleged by BLC.
BLC further posits that, assuming the revenue
regulation is legislative in nature, it is invalid for want
of due process as no prior notice, publication and
public hearing attended the issuance thereof. To
support its view, BLC cited CIR v. Fortune Tobacco, et
al.,17 wherein
the
Court
nullified
a
revenue
memorandum circular which reclassified certain
cigarettes and subjected them to a higher tax rate,
holding it invalid for lack of notice, publication and
public hearing.
The doctrine enunciated in Fortune Tobacco, and
reiterated in CIR v. Michel J. Lhuillier Pawnshop,
Inc.,18 is that when an administrative rule goes
beyond merely providing for the means that can

facilitate
or
render
less
cumbersome
the
implementation
of
the
law
and substantially
increases the burden of those governed, it
behooves the agency to accord at least to those
directly affected a chance to be heard and, thereafter,
to be duly informed, before the issuance is given the
force and effect of law. In Lhuillier and Fortune
Tobacco,
the
Court
invalidated
the
revenue
memoranda concerned because the same increased
the tax liabilities of the affected taxpayers without
affording them due process. In this case, Revenue
Regulation 19-86 would be beneficial to the taxpayers
as they are subjected to lesser taxes. Petitioner, in
fact, is invoking Revenue Regulation 19-86 as the very
basis of its claim for refund. If it were invalid, then
petitioner all the more has no right to a refund.

further interpretation.20 Thus, BLC is not in a position

to invoke the provisions of Revenue Regulation 19-86
for lease rentals it received prior to January 1, 1987.

After upholding the validity of Revenue Regulation 1986, the Court now resolves whether its application
should be prospective or retroactive.

WHEREFORE, the
petition
for
review
is
hereby DENIED, and the assailed decision and
resolution of the Court of Appeals are AFFIRMED. No
pronouncement as to costs.

The principle is well entrenched that statutes,

including administrative rules and regulations, operate
prospectively only, unless the legislative intent to the
contrary is manifest by express terms or by necessary
implication.19 In the present case, there is no indication
that the revenue regulation may operate retroactively.
Furthermore, there is an express provision stating that
it "shall take effect on January 1, 1987," and that it
"shall be applicable to all leases written on or after the
said date." Being clear on its prospective application, it
must be given its literal meaning and applied without

It is also apt to add that tax refunds are in the nature

of tax exemptions. As such, these are regarded as in
derogation of sovereign authority and are to be strictly
construed against the person or entity claiming the
exemption. The burden of proof is upon him who
claims the exemption and he must be able to justify
his claim by the clearest grant under Constitutional or
statutory law, and he cannot be permitted to rely upon
vague implications.21 Nothing that BLC has raised
justifies a tax refund.
It is not necessary to rule on the remaining issues.

SO ORDERED.
Davide, Jr., C.J., Panganiban, Ynares-Santiago, and
Carpio, JJ., concur.

The Facts

G.R. No. 170463

February 2, 2011

THE BOARD OF TRUSTEES OF THE GOVERNMENT

SERVICE INSURANCE SYSTEM and WINSTON F.
GARCIA, in his capacity as GSIS President and
General
Manager, Petitioners,
vs.
ALBERT
M.
VELASCO
and
MARIO
I.
MOLINA, Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the 24 September 2004
Decision2 and the 7 October 2005 Order3 of the
Regional Trial Court of Manila, Branch 19 (trial court),
in Civil Case No. 03-108389. In its 24 September 2004
Decision, the trial court granted respondents Albert M.
Velasco4 and Mario I. Molinas5 (respondents) petition
for prohibition. In its 7 October 2005 Order, the trial
court denied petitioners Board of Trustees of the
Government Service Insurance System (GSIS) and
Winston
F.
Garcias
(petitioners)
motion
for
reconsideration.

On 23 May 2002, petitioners charged respondents

administratively with grave misconduct and placed
them
under
preventive
suspension
for
90
days.6 Respondents were charged for their alleged
participation in the demonstration held by some GSIS
employees denouncing the alleged corruption in the
GSIS and calling for the ouster of its president and
general manager, petitioner Winston F. Garcia. 7
In a letter dated 4 April 2003, respondent Mario I.
Molina (respondent Molina) requested GSIS Senior Vice
President Concepcion L. Madarang (SVP Madarang) for
the implementation of his step increment. 8 On 22 April
2003, SVP Madarang denied the request citing GSIS
Board Resolution No. 372 (Resolution No. 372)9 issued
by petitioner Board of Trustees of the GSIS (petitioner
GSIS Board) which approved the new GSIS salary
structure, its implementing rules and regulations, and
the adoption of the supplemental guidelines on step
increment and promotion.10 The pertinent provision of
Resolution No. 372 provides:
A. Step Increment
xxxx
III. Specific Rules:
x x xx

3. The step increment adjustment of an employee who

is on preventive suspension shall be withheld until
such time that a decision on the case has been
rendered. x x x x
Respondents also asked that they be allowed to avail
of the employee privileges under GSIS Board
Resolution No. 306 (Resolution No. 306) approving
Christmas raffle benefits for all GSIS officials and
employees effective year 2002.11Respondents request
was again denied because of their pending
administrative case.
On 27 August 2003, petitioner GSIS Board issued
Board Resolution No. 197 (Resolution No. 197)
approving the following policy recommendations:
B. On the disqualification from promotion of an
employee with a pending administrative case
To adopt the policy that an employee with pending
administrative case shall be disqualified from the
following during the pendency of the case:
a) Promotion;
b) Step Increment;
c) Performance-Based Bonus; and
d) Other benefits and privileges.

On 14 November 2003, respondents filed before the

trial court a petition for prohibition with prayer for a
writ of preliminary injunction.12 Respondents claimed
that they were denied the benefits which GSIS
employees were entitled under Resolution No. 306.
Respondents also sought to restrain and prohibit
petitioners from implementing Resolution Nos. 197 and
372. Respondents claimed that the denial of the
employee benefits due them on the ground of their
pending administrative cases violates their right to be
presumed innocent and that they are being punished
without hearing. Respondent Molina also added that he
had already earned his right to the step increment
before Resolution No. 372 was enacted. Respondents
also argued that the three resolutions were ineffective
because they were not registered with the University
of the Philippines (UP) Law Center pursuant to the
Revised Administrative Code of 1987.13
On 24 November 2003, petitioners filed their comment
with motion to dismiss and opposition. 14 On 2
December 2003, respondents filed their opposition to
the motion to dismiss.15 On 5 December 2003,
petitioners filed their reply. 16
On 16 January 2004, the trial court denied petitioners
motion to dismiss and granted respondents prayer for
a writ of preliminary injunction.17
Petitioners filed a motion for reconsideration. 18 In its 26
February 2004 Order, the trial court denied petitioners
motion.19

In its 24 September 2004 Decision, the trial court

granted respondents petition for prohibition. The
dispositive portion of the 24 September 2004 Decision
provides:
WHEREFORE,
the
petition
is
GRANTED
and
respondents Board Resolution No. 197 of August 27,
2003 and No. 372 of November 21, 2000 are hereby
declared null and void. The writ of preliminary
injunction issued by this Court is hereby made
permanent.

provided under the law by reason of their employment.

According to the trial court, to deny respondents these
employee benefits for the reason alone that they have
pending administrative cases is unjustified since it
would deprive them of what is legally due them
without due process of law, inflict punishment on them
without hearing, and violate their right to be presumed
innocent.

Petitioners filed a motion for reconsideration. In its 7

October 2005 Order, the trial court denied petitioners
motion.

The trial court also found that the assailed resolutions

were not registered with the UP Law Center, per
certification of the Office of the National Administrative
Register (ONAR).21 Since they were not registered, the
trial court declared that the assailed resolutions have
not become effective citing Sections 3 and 4, Chapter
2, Book 7 of the Revised Administrative Code of
1987.22

Hence, this petition.

The Issues

The Ruling of the Trial Court

Petitioners raise the following issues:

SO ORDERED.20

On the issue of jurisdiction, the trial court said it can

take cognizance of the petition because the "territorial
area" referred to in Section 4, Rule 65 of the Rules of
Court "does not necessarily delimit to a particular
locality but rather to the judicial region where the
office or agency is situated so that the prohibitive writ
can be enforced."
On the merits of the case, the trial court ruled that
respondents were entitled to all employee benefits as

I
Whether the jurisdiction over the subject matter
of Civil Case No. 03-108389 (Velasco, et al. vs.
The Board of Trustees of GSIS, et al., RTC-Manila,
Branch 19) lies with the Civil Service
Commission (CSC) and not with the Regional
Trial Court of Manila, Branch 19.
II

Whether a Special Civil Action for Prohibition

against the GSIS Board or its President and
General Manager exercising quasi-legislative
and administrative functions in Pasay City is
outside the territorial jurisdiction of RTC-Manila,
Branch 19.
III
Whether internal rules and regulations need not
require publication with the Office of the
National [Administrative] Register for their
effectivity, contrary to the conclusion of the RTCManila, Branch 19.
IV
Whether a regulation, which disqualifies
government employees who have pending
administrative cases from the grant of step
increment and Christmas raffle benefits is
unconstitutional.
V
Whether the nullification of GSIS Board
Resolutions is beyond an action for prohibition,
and a writ of preliminary injunction cannot be
made permanent without a decision ordering
the issuance of a writ of prohibition.23
The Ruling of the Court

The petition is partly meritorious.

Petitioners argue that the Civil Service Commission
(CSC), not the trial court, has jurisdiction over Civil
Case No. 03-108389 because it involves claims of
employee benefits. Petitioners point out that the trial
court should have dismissed the case for lack of
jurisdiction.
Sections 2 and 4, Rule 65 of the Rules of Court provide:
Sec. 2. Petition for Prohibition. - When the proceedings
of any tribunal, corporation, board, officer or person,
whether exercising judicial, quasi-judicial or ministerial
functions, are without or in excess of its jurisdiction, or
with grave abuse of discretion amounting to lack or
excess of jurisdiction, and there is no appeal or any
other plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby
may file a verified petition in the proper court, alleging
the facts with certainty and praying that judgment
be rendered commanding the respondent to
desist from further proceedings in the action or
matter specified therein, or otherwise granting such
incidental reliefs as law and justice may require.
Sec. 4. Where petition filed. - The petition may be filed
not later than sixty (60) days from notice of the
judgment, order or resolution sought to be assailed in
the Supreme Court or, if it related to acts or
omissions of a lower court or of a corporation,
board, officer or person in the Regional Trial

Court exercising jurisdiction over the territorial

area as defined by the Supreme Court. It may also
be filed in the Court of Appeals whether or not the
same is in aid of its appellate jurisdiction, or in the
Sandiganbayan if it is in aid of its jurisdiction. If it
involves the acts or omissions of a quasi-judicial
agency, and unless otherwise provided by law or these
Rules, the petition shall be filed in and cognizable only
by the Court of Appeals. (Emphasis supplied)
Civil Case No. 03-108389 is a petition for prohibition
with prayer for the issuance of a writ of preliminary
injunction. Respondents prayed that the trial court
declare all acts emanating from Resolution Nos. 372,
197, and 306 void and to prohibit petitioners from
further enforcing the said resolutions. 24 Therefore, the
trial court, not the CSC, has jurisdiction over
respondents petition for prohibition.

territory thus defined shall be deemed to be the

territorial area of the branch concerned for
purposes of determining the venue of all suits,
proceedings or actions, whether civil or criminal,
as well as determining the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts
over which the said branch may exercise appellate
jurisdiction. The power herein granted shall be
exercised with a view to making the courts readily
accessible to the people of the different parts of the
region and making attendance of litigants and
witnesses as inexpensive as possible. (Emphasis
supplied)
In line with this, the Supreme Court issued
Administrative Order No. 326 defining the territorial
jurisdiction of the regional trial courts in the National
Capital Judicial Region, as follows:

Petitioners also claim that the petition for prohibition

was filed in the wrong territorial jurisdiction because
the acts sought to be prohibited are the acts of
petitioners who hold their principal office in Pasay City,
while the petition for prohibition was filed in Manila.

a. Branches I to LXXXII, inclusive, with seats at

Manila over the City of Manila only.

Section 18 of
129)25 provides:

c. Branches CVIII to CXIX, inclusive, with seats at

Pasay City over Pasay City only.

Batas

Pambansa

Blg.

129

(BP

SEC. 18. Authority to define territory appurtenant to

each branch. - The Supreme Court shall define the
territory over which a branch of the Regional
Trial Court shall exercise its authority. The

b. Branches LXXXIII to CVII, inclusive, with seats

at Quezon City over Quezon City only.

xxxx
The petition for prohibition filed by respondents is a
special civil action which may be filed in the Supreme

Court, the Court of Appeals, the Sandiganbayan or the

regional trial court, as the case may be. 27 It is also a
personal action because it does not affect the title to,
or possession of real property, or interest therein.
Thus, it may be commenced and tried where the
plaintiff or any of the principal plaintiffs resides, or
where the defendant or any of the principal defendants
resides, at the election of the plaintiff.28 Since
respondent Velasco, plaintiff before the trial court, is a
resident of the City of Manila, 29 the petition could
properly be filed in the City of Manila.30 The choice of
venue is sanctioned by Section 2, Rule 4 of the Rules
of Court.
Moreover, Section 21(1) of BP 129 provides:
Sec. 21. Original jurisdiction in other cases. - Regional
Trial Courts shall exercise original jurisdiction:
(1)
In
the
issuance
of writs
of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction, which may
be enforced in any part of their respective
regions; x x x (Emphasis supplied)
Since the National Capital Judicial Region is comprised
of the cities of Manila, Quezon, Pasay, Caloocan,
Malabon, Mandaluyong, Makati, Pasig, Marikina,
Paraaque, Las Pias, Muntinlupa, and Valenzuela and
the municipalities of Navotas, San Juan, Pateros, and
Taguig, a writ of prohibition issued by the regional trial
court sitting in the City of Manila, is enforceable in

Pasay City. Clearly, the RTC did not err when it took
cognizance of respondents petition for prohibition
because it had jurisdiction over the action and the
venue was properly laid before it.
Petitioners also argue that Resolution Nos. 372, 197,
and 306 need not be filed with the UP Law Center
ONAR since they are, at most, regulations which are
merely internal in nature regulating only the
personnel of the GSIS and not the public.
Not all rules and regulations adopted by every
government agency are to be filed with the UP Law
Center. Only those of general or of permanent
character are to be filed. According to the UP Law
Centers guidelines for receiving and publication of
rules and regulations, "interpretative regulations and
those merely internal in nature, that is, regulating only
the personnel of the Administrative agency and not
the public," need not be filed with the UP Law Center.
Resolution No. 372 was about the new GSIS salary
structure, Resolution No. 306 was about the authority
to pay the 2002 Christmas Package, and Resolution
No. 197 was about the GSIS merit selection and
promotion plan. Clearly, the assailed resolutions
pertained only to internal rules meant to regulate the
personnel of the GSIS. There was no need for the
publication or filing of these resolutions with the UP
Law Center.

Petitioners insist that petitioner GSIS Board has the

power to issue the assailed resolutions. According to
petitioners, it was within the power of petitioner GSIS
Board to disqualify respondents for step increment and
from receiving GSIS benefits from the time formal
administrative charges were filed against them until
the cases are resolved.

xxxx

The Court notes that the trial court only declared

Resolution Nos. 197 and 372 void. The trial court made
no ruling on Resolution No. 306 and respondents did
not appeal this matter. Therefore, we will limit our
discussion to Resolution Nos. 197 and 372, particularly
to the effects of preventive suspension on the grant of
step increment because this was what respondents
raised before the trial court.

(a) Those rendered before the position was reclassified

to a position title with a lower or the same salary
grade allocation; and

First, entitlement to step increment depends on the

rules relative to the grant of such benefit. In point are
Section 1(b), Rule II and Section 2, Rule III of Joint
Circular No. 1, series of 1990, which provide:

In the initial implementation of step increments in

1990, an incumbent shall be granted step increments
equivalent to one (1) step for every three (3) years of
continuous satisfactory service in a given position
occupied as of January 1, 1990.

Section 2. Length of Service A one (1) step increment

shall be granted officials and employees for every
three (3) years of continuous satisfactory service in the
position. Years of service in the position shall include
the following:

(b) Those rendered before the incumbent was

transferred to another position within the same agency
or to another agency without a change in position title
and salary grade allocation.

Rule II. Selection Criteria

Section 1. Step increments shall be granted to all
deserving officials and employees x x x
(b) Length of Service For those who have rendered
continuous satisfactory service in a particular position
for at least three (3) years.
Rule III. Step Increments

A grant of step increment on the basis of length of

service requires that an employee must have rendered
at least three years of continuous and satisfactory
service in the same position to which he is an
incumbent.31 To
determine
whether
service
is
continuous, it is necessary to define what actual
service is.32 "Actual service" refers to the period of
continuous service since the appointment of the
official or employee concerned, including the period or

periods covered by any previously approved leave with

pay.33
Second, while there are no specific rules on the effects
of preventive suspension on step increment, we can
refer to the CSC rules and rulings on the effects of the
penalty of suspension and approved vacation leaves
without pay on the grant of step increment for
guidance.
Section 56(d), Rule IV of the Uniform Rules on
Administrative Cases in the Civil Service provides:
Section 56. Duration and effect of administrative
penalties. - The following rules shall govern in the
imposition of administrative penalties: x x x
(d) The penalty of suspension shall result in the
temporary cessation of work for a period not
exceeding one (1) year.
Suspension of one day or more shall be considered a
gap in the continuity of service. During the period of
suspension, respondent shall not be entitled to all
money benefits including leave credits.
If an employee is suspended as a penalty, it effectively
interrupts the continuity of his government service at
the commencement of the service of the said
suspension. This is because a person under penalty of
suspension is not rendering actual service. The
suspension will undoubtedly be considered a gap in

the continuity of the service for purposes of the

computation of the three year period in the grant of
step increment.34 However, this does not mean that
the employee will only be entitled to the step
increment after completing another three years of
continuous satisfactory service reckoned from the time
the employee has fully served the penalty of
suspension.35 The CSC has taken this to mean that the
computation of the three year period requirement will
only be extended by the number of days that the
employee was under suspension.36 In other words, the
grant of step increment will only be delayed by the
same number of days that the employee was under
suspension.
This is akin to the status of an employee who incurred
vacation leave without pay for purposes of the grant of
step increment.37 Employees who were on approved
vacation leave without pay enjoy the liberal
application of the rule on the grant of step increment
under Section 60 of CSC Memorandum Circular No. 41,
series of 1998, which provides:
Section 60. Effect of vacation leave without pay on the
grant of length of service step increment. - For
purposes of computing the length of service for the
grant of step increment, approved vacation leave
without pay for an aggregate of fifteen (15) days shall
not interrupt the continuity of the three-year service
requirement for the grant of step increment. However,
if the total number of authorized vacation leave
without pay included within the three-year period

exceeds fifteen (15) days, the grant of one-step

increment will only be delayed for the same
number of days that an official or employee was
absent without pay. (Emphasis supplied)
Third, on preventive suspension, Sections 51 and 52,
Chapter 7, Subtitle A, Title I, Book V of the Revised
Administrative Code of 1987 provide:
SEC. 51. Preventive Suspension. - The proper
disciplining authority may preventively suspend any
subordinate officer or employee under his authority
pending an investigation, if the charge against such
officer or employee involves dishonesty, oppression or
grave misconduct, or neglect in the performance of
duty, or if there are reasons to believe that the
respondent is guilty of charges which would warrant
his removal from the service.

SEC. 52. Lifting of Preventive Suspension. Pending

Administrative
Investigation. - When
the
administrative case against the officer or
employee under preventive suspension is not
finally decided by the disciplining authority
within the period of ninety (90) days after the
date of suspension of the respondent who is not
a presidential appointee, the respondent shall
be
automatically
reinstated
in
the
service: Provided, That when the delay in the
disposition of the case is due to the fault, negligence
or petition of the respondent, the period of delay shall
not be counted in computing the period of suspension
herein provided. (Emphasis supplied)
Preventive suspension pending investigation is not a
penalty.38 It is a measure intended to enable the
disciplining authority to investigate charges against
respondent by preventing the latter from intimidating
or in any way influencing witnesses against him. 39 If
the investigation is not finished and a decision is not
rendered within that period, the suspension will be
lifted and the respondent will automatically be
reinstated.
Therefore, on the matter of step increment, if an
employee who was suspended as a penalty will be
treated like an employee on approved vacation leave
without pay,40 then it is only fair and reasonable to
apply the same rules to an employee who was
preventively suspended, more so considering that
preventive suspension is not a penalty. If an employee

is preventively suspended, the employee is not

rendering actual service and this will also effectively
interrupt the continuity of his government service.
Consequently, an employee who was preventively
suspended will still be entitled to step increment after
serving the time of his preventive suspension even if
the pending administrative case against him has not
yet been resolved or dismissed. The grant of step
increment will only be delayed for the same number of
days, which must not exceed 90 days, that an official
or employee was serving the preventive suspension.
Fourth, the trial court was correct in declaring that
respondents had the right to be presumed innocent
until proven guilty. This means that an employee who
has a pending administrative case filed against him is
given the benefit of the doubt and is considered
innocent until the contrary is proven.41

administered in favor of the persons to be benefited.

The liberal approach aims to achieve humanitarian
purposes of the law in order that the efficiency,
security and well-being of government employees may
be enhanced.42
WHEREFORE, we DENY the petition. We AFFIRM
with MODIFICATION the 24 September 2004
Decision and the 7 October 2005 Order of the Regional
Trial Court of Manila, Branch 19 in Civil Case No. 03108389. We DECLARE the assailed provisions on step
increment in GSIS Board Resolution Nos. 197 and
372 VOID. We MODIFY the 24 September 2004
Decision of the Regional Trial Court of Manila, Branch
19 and rule that GSIS Board Resolution Nos. 197, 306
and 372 need not be filed with the University of the
Philippines Law Center.
SO ORDERED.

In this case, respondents were placed under

preventive suspension for 90 days beginning on 23
May 2002.1avvphi1 Their preventive suspension ended
on 21 August 2002. Therefore, after serving the period
of their preventive suspension and without the
administrative case being finally resolved, respondents
should have been reinstated and, after serving the
same number of days of their suspension, entitled to
the grant of step increment.
On a final note, social legislation like the circular on
the grant of step increment, being remedial in
character, should be liberally construed and

G.R. No. 175220

February 12, 2009

WILLIAM C. DAGAN, CARLOS H. REYES, NARCISO

MORALES, BONIFACIO MANTILLA, CESAR AZURIN,
WEITONG LIM, MA. TERESA TRINIDAD, MA.
CARMELITA
FLORENTINO, Petitioners,
vs.
PHILIPPINE
RACING
COMMISSION,
MANILA
JOCKEY CLUB, INC., and PHILIPPINE RACING
CLUB, INC.,Respondents.
DECISION
TINGA, J.:
The subject of this petition for certiorari is the
decision1 of the Court of Appeals in CA-G.R. SP No.
95212, affirming in toto the judgment 2 of the Regional
Trial Court of Makati in Civil Case No. 04-1228.
The controversy stemmed from the 11 August 2004
directive3 issued by the Philippine Racing Commission
(Philracom) directing the Manila Jockey Club, Inc. (MJCI)
and Philippine Racing Club, Inc. (PRCI) to immediately
come up with their respective Clubs House Rule to
address Equine Infectious Anemia (EIA) 4 problem and

to rid their facilities of horses infected with EIA. Said

directive was issued pursuant to Administrative Order
No. 55 dated 28 March 1994 by the Department of
Agriculture declaring it unlawful for any person, firm or
corporation to ship, drive, or transport horses from any
locality or place except when accompanied by a
certificate issued by the authority of the Director of the
Bureau of Animal Industry (BAI).6
In compliance with the directive, MJCI and PRCI ordered
the
owners
of
racehorses
stable
in
their
establishments to submit the horses to blood sampling
and administration of the Coggins Test to determine
whether they are afflicted with the EIA virus.
Subsequently, on 17 September 2004, Philracom
issued copies of the guidelines for the monitoring and
eradication of EIA.7
Petitioners and racehorse owners William Dagan
(Dagan), Carlos Reyes, Narciso Morales, Bonifacio
Montilla, Cezar Azurin, Weitong Lim, Ma. Teresa
Trinidad and Ma. Carmelita Florentino refused to
comply with the directive. First, they alleged that there
had been no prior consultation with horse owners.
Second, they claimed that neither official guidelines
nor regulations had been issued relative to the taking
of blood samples. And third, they asserted that no
documented case of EIA had been presented to justify
the undertaking.8
Despite resistance from petitioners, the blood testing
proceeded. The horses, whose owners refused to

comply were banned from the races, were removed

from the actual day of race, prohibited from renewing
their licenses or evicted from their stables.
When their complaint went unheeded, the racehorse
owners lodged a complaint before the Office of the
President (OP) which in turn issued a directive
instructing Philracom to investigate the matter.
For failure of Philracom to act upon the directive of the
OP, petitioners filed a petition for injunction with
application for the issuance of a temporary restraining
order (TRO). In an order9 dated 11 November 2004, the
trial court issued a TRO.
Dagan refused to comply with the directives because,
according to him, the same are unfair as there are no
implementing rules on the banning of sick horses from
races. Consequently, his horses were evicted from the
stables and transferred to an isolation area. He also
admitted that three of his horses had been found
positive for EIA.10
Confronted with two issues, namely: whether there
were valid grounds for the issuance of a writ of
injunction and whether respondents had acted with
whim and caprice in the implementation of the
contested guideline, the trial court resolved both
queries in the negative.
The trial court found that most racehorse owners,
except for Dagan, had already subjected their

racehorses to EIA testing. Their act constituted

demonstrated
compliance
with
the
contested
guidelines, according to the trial court. Hence, the acts
sought to be enjoined had been rendered moot and
academic.
With respect to the subject guidelines, the trial court
upheld their validity as an exercise of police power,
thus:
The Petitioners submission that the subject guidelines
are oppressive and hence confiscatory of proprietary
rights is likewise viewed by this Court to be barren of
factual and legal support. The horseracing industry,
needless to state, is imbued with public interest
deserving of utmost concern if not constant vigilance.
The Petitioners do not dispute this. It is because of this
basic fact that respondents are expected to police the
concerned individuals and adopt measures that will
promote and protect the interests of all the
stakeholders starting from the moneyed horse-owners,
gawking bettors down to the lowly maintainers of the
stables. This is a clear and valid exercise of police
power with the respondents acting for the State.
Participation in the business of horseracing is but a
privilege; it is not a right. And no clear acquiescence to
this postulation can there be than the Petitioners' own
undertaking to abide by the rules and conditions
issued and imposed by the respondents as specifically
shown by their contracts of lease with MCJI. 111avvphi1

Petitioners appealed to the Court of Appeals. In its

Decision dated 27 October 2006, the appellate court
affirmed in toto the decision of the trial court.
The appellate court upheld the authority of Philracom
to formulate guidelines since it is vested with exclusive
jurisdiction over and control of the horse-racing
industry per Section 8 of Presidential Decree (P.D.) No.
8. The appellate court further pointed out that P.D. No.
420 also endows Philracom with the power to prescribe
additional rules and regulations not otherwise
inconsistent with the said presidential decree 12 and to
perform such duties and exercise all powers incidental
or necessary to the accomplishment of its aims and
objectives.13 It similarly concluded that the petition for
prohibition should be dismissed on the ground of
mootness in light of evidence indicating that
petitioners had already reconsidered their refusal to
have their horses tested and had, in fact, subsequently
requested the administration of the test to the
horses.14
Aggrieved by the appellate courts decision, petitioners
filed the instant certiorari petition 15 imputing grave
abuse of discretion on the part of respondents in
compelling petitioners to subject their racehorses to
blood testing.
In their amended petition,16 petitioners allege that
Philracoms unsigned and undated implementing
guidelines suffer from several infirmities. They
maintain that the assailed guidelines do not comply

with due process requirements. Petitioners insist that

racehorses already in the MJCI stables were allowed to
be so quartered because the individual horse owners
had already complied with the Philracom regulation
that horses should not bear any disease. There was
neither a directive nor a rule that racehorses already
lodged in the stables of the racing clubs should again
be subjected to the collection of blood samples
preparatory
to
the
conduct
of
the
EIA
17
tests, petitioners note. Thus, it came as a surprise to
horse owners when told about the administration of a
new Coggins Tests on old horses since the matter had
not been taken up with them.18 No investigation or at
least a summary proceeding was conducted affording
petitioners an opportunity to be heard. 19 Petitioners
also aver that the assailed guidelines are ultra vires in
that the sanctions imposed for refusing to submit to
medical examination are summary eviction from the
stables or arbitrary banning of participation in the
races, notwithstanding the penalties prescribed in the
contract of lease.20
In its Comment,21 the PRCI emphasizes that it merely
obeyed the terms of its franchise and abided by the
rules enacted by Philracom.22 For its part, Philracom,
through the Office of the Solicitor-General (OSG),
stresses that the case has become moot and academic
since most of petitioners had complied with the
guidelines by subjecting their race horses to EIA
testing. The horses found unafflicted with the disease
were eventually allowed to join the races. 23 Philracom

also justified its right under the law to regulate horse

racing.24 MJCI adds that Philracom need

1. Its promulgation must be authorized by the

legislature;

not delegate its rule-making power to the former since

MJCIs right to formulate its internal rules is subsumed
under the franchise granted to it by Congress. 25

2. It must be promulgated in accordance with

the prescribed procedure;

In their Reply,26 petitioners raise for the first time the

issue that Philracom had unconstitutionally delegated
its rule-making power to PRCI and MJCI in issuing the
directive for them to come up with club rules. In
response to the claim that respondents had merely
complied with their duties under their franchises,
petitioners counter that the power granted to PRCI and
MJCI under their respective franchises is limited to: (1)
the construction, operation and maintenance of
racetracks; (2) the establishment of branches for
booking purposes; and (3) the conduct of horse races.
It appears on record that only Dagan had refused to
comply with the orders of respondents. Therefore, the
case subsists as regards Dagan.
Petitioners essentially assail two issuances of
Philracom; namely: the Philracom directive27 and the
subsequent guidelines addressed to MJCI and PRCI.
The validity of an administrative issuance, such as the
assailed guidelines, hinges on compliance with the
following requisites:

3. It must be within the scope of the authority

given by the legislature;
4. It must be reasonable.28
All the prescribed requisites are met as regards the
questioned issuances. Philracoms authority is drawn
from P.D. No. 420. The delegation made in the
presidential decree is valid. Philracom did not exceed
its authority. And the issuances are fair and
reasonable.
The rule is that what has been delegated cannot be
delegated, or as expressed in the Latin maxim:
potestas delegate non delegare potest. This rule is
based upon the ethical principle that such delegated
power constitutes not only a right but a duty to be
performed by the delegate by the instrumentality of
his own judgment acting immediately upon the matter
of legislation and not through the intervening mind of
another.29 This rule however admits of recognized
exceptions30 such as the grant of rule-making power to
administrative agencies. They have been granted by
Congress with the authority to issue rules to regulate
the implementation of a law entrusted to them.
Delegated rule-making has become a practical

necessity in modern governance due to the increasing

complexity and variety of public functions. 31
However, in every case of permissible delegation,
there must be a showing that the delegation itself is
valid. It is valid only if the law (a) is complete in itself,
setting forth therein the policy to be executed, carried
out, or implemented by the delegate; and (b) fixes a
standardthe limits of which are sufficiently
determinate and determinableto which the delegate
must conform in the performance of his functions. A
sufficient standard is one which defines legislative
policy, marks its limits, maps out its boundaries and
specifies the public agency to apply it. It indicates the
circumstances under which the legislative command is
to be effected.32
P.D. No. 420 hurdles the tests of completeness and
standards sufficiency.
Philracom was created for the purpose of carrying out
the declared policy in Section 1 which is "to promote
and direct the accelerated development and continued
growth of horse racing not only in pursuance of the
sports development program but also in order to
insure the full exploitation of the sport as a source of
revenue and employment." Furthermore, Philracom
was granted exclusive jurisdiction and control over
every aspect of the conduct of horse racing, including
the framing and scheduling of races, the construction
and safety of race tracks, and the security of racing.
P.D. No. 420 is already complete in itself.

Section 9 of the law fixes the standards and limitations

to which Philracom must conform in the performance
of its functions, to wit:
Section
9.
Specific
Powers.
Commission shall have the power:

Specifically,

the

a. To enforce all laws, decrees and executive

orders relating to horse-racing that are not
expressly or implied repealed or modified by this
Decree, including all such existing rules and
regulations until otherwise modified or amended
by the Commission;
b. To prescribe additional rules and regulations
not otherwise inconsistent with this Decree;
c. To register race horses, horse owners or
associations or federations thereof, and to
regulate the construction of race tracks and to
grant permit for the holding of races;
d. To issue, suspend or revoke permits and
licenses and to impose or collect fees for the
issuance of such licenses and permits to
persons required to obtain the same;
e. To review, modify, approve or disapprove the
rules and regulations issued by any person or
entity concerning the conduct of horse races
held by them;

f. To supervise all such race meeting to assure

integrity at all times. It can order the suspension
of any racing event in case of violation of any
law, ordinance or rules and regulations;
g. To prohibit the use of improper devices,
drugs, stimulants or other means to enhance or
diminish the speed of horse or materially harm
their condition;
h. To approve the annual budget of the omission
and such supplemental budgets as may be
necessary;
i. To appoint all personnel, including an
Executive Director of the Commission, as it may
be deem necessary in the exercise and
performance of its powers and duties; and
j. To enter into contracts involving obligations
chargeable to or against the funds of the
Commission. (Emphasis supplied)
Clearly, there is a proper legislative delegation of rulemaking power to Philracom. Clearly too, for its part
Philracom has exercised its rule-making power in a
proper and reasonable manner. More specifically, its
discretion to rid the facilities of MJCI and PRCI of horses
afflicted with EIA is aimed at preserving the security
and integrity of horse races.

Petitioners also question the supposed delegation by

Philracom of its rule-making powers to MJCI and PRCI.
There is no delegation of power to speak of between
Philracom, as the delegator and MJCI and PRCI as
delegates. The Philracom directive is merely
instructive in character. Philracom had instructed PRCI
and MJCI to "immediately come up with Clubs House
Rule to address the problem and rid their facilities of
horses infected with EIA." PRCI and MJCI followed-up
when they ordered the racehorse owners to submit
blood samples and subject their race horses to blood
testing. Compliance with the Philracoms directive is
part of the mandate of PRCI and MJCI under Sections
133 of R.A. No. 795334and Sections 135 and 236 of 8407.37
As correctly proferred by MJCI, its duty is not derived
from the delegated authority of Philracom but arises
from the franchise granted to them by Congress
allowing MJCI "to do and carry out all such acts, deeds
and things as may be necessary to give effect to the
foregoing."38 As justified by PRCI, "obeying the terms of
the franchise and abiding by whatever rules enacted
by Philracom is its duty."39
More on the second, third and fourth requisites.
As to the second requisite, petitioners raise some
infirmities relating to Philracoms guidelines. They
question the supposed belated issuance of the
guidelines, that is, only after the collection of blood
samples for the Coggins Test was ordered. While it is

conceded that the guidelines were issued a month

after Philracoms directive, this circumstance does not
render the directive nor the guidelines void. The
directives validity and effectivity are not dependent
on any supplemental guidelines. Philracom has every
right to issue directives to MJCI and PRCI with respect
to the conduct of horse racing, with or without
implementing guidelines.
Petitioners also argue that Philracoms guidelines have
no force and effect for lack of publication and failure to
file copies with the University of the Philippines (UP)
Law Center as required by law.
As a rule, the issuance of rules and regulations in the
exercise of an administrative agency of its quasilegislative power does not require notice 7and
hearing.40 In
Abella,
Jr.
v.
Civil
Service
41
Commission, this Court had the occasion to rule that
prior notice and hearing are not essential to the
validity of rules or regulations issued in the exercise of
quasi-legislative
powers
since
there
is
no
determination of past events or facts that have to be
established or ascertained.42
The third requisite for the validity of an administrative
issuance is that it must be within the limits of the
powers granted to it. The administrative body may not
make rules and regulations which are inconsistent with
the provisions of the Constitution or a statute,
particularly the statute it is administering or which

created it, or which are in derogation of, or defeat, the

purpose of a statute.43
The assailed guidelines prescribe the procedure for
monitoring and eradicating EIA. These guidelines are in
accord with Philracoms mandate under the law to
regulate the conduct of horse racing in the country.
Anent the fourth requisite, the assailed guidelines do
not appear to be unreasonable or discriminatory. In
fact, all horses stabled at the MJCI and PRCIs premises
underwent the same procedure. The guidelines
implemented were undoubtedly reasonable as they
bear a reasonable relation to the purpose sought to be
accomplished, i.e., the complete riddance of horses
infected with EIA.
It also appears from the records that MJCI properly
notified the racehorse owners before the test was
conducted.44 Those who failed to comply were
repeatedly warned of certain consequences and
sanctions.
Furthermore,
extant
from
the
records
are
circumstances which allow respondents to determine
from time to time the eligibility of horses as race
entries. The lease contract executed between
petitioner and MJC contains a proviso reserving the
right of the lessor, MJCI in this case, the right to
determine whether a particular horse is a qualified
horse. In addition, Philracoms rules and regulations on
horse racing provide that horses must be free from any

contagious disease or illness in order to be eligible as

race entries.
All told, we find no grave abuse of discretion on the
part of Philracom in issuing the contested guidelines
and on the part MJCI and PRCI in complying with
Philracoms directive.
WHEREFORE, the petition is DISMISSED. Costs against
petitioner William Dagan.
SO ORDERED.

G.R. No. 151908

August 12, 2003

SMART COMMUNICATIONS, INC. (SMART) and

PILIPINO
TELEPHONE
CORPORATION
(PILTEL), petitioners,
vs.
NATIONAL TELECOMMUNICATIONS COMMISSION
(NTC), respondent.
x---------------------------------------------------------x
G.R. No. 152063 August 12, 2003
GLOBE TELECOM, INC. (GLOBE) and ISLA
COMMUNICATIONS
CO.,
INC.
(ISLACOM), petitioners,
vs.
COURT OF APPEALS (The Former 6th Division)
and
the
NATIONAL
TELECOMMUNICATIONS
COMMISSION,respondents.
YNARES-SANTIAGO, J.:
Pursuant to its rule-making and regulatory powers, the
National Telecommunications Commission (NTC) issued
on June 16, 2000 Memorandum Circular No. 13-6-2000,
promulgating rules and regulations on the billing of

telecommunications services. Among its pertinent

provisions are the following:
(1) The billing statements shall be received by
the subscriber of the telephone service not later
than 30 days from the end of each billing cycle.
In case the statement is received beyond this
period, the subscriber shall have a specified
grace period within which to pay the bill and the
public telecommunications entity (PTEs) shall
not be allowed to disconnect the service within
the grace period.
(2) There shall be no charge for calls that are
diverted to a voice mailbox, voice prompt,
recorded message or similar facility excluding
the customer's own equipment.
(3) PTEs shall verify the identification and
address of each purchaser of prepaid SIM cards.
Prepaid call cards and SIM cards shall be valid
for at least 2 years from the date of first use.
Holders of prepaid SIM cards shall be given 45
days from the date the prepaid SIM card is fully
consumed but not beyond 2 years and 45 days
from date of first use to replenish the SIM card,
otherwise the SIM card shall be rendered invalid.
The validity of an invalid SIM card, however,
shall be installed upon request of the customer
at no additional charge except the presentation
of a valid prepaid call card.

(4) Subscribers shall be updated of the

remaining value of their cards before the start of
every call using the cards.
(5) The unit of billing for the cellular mobile
telephone service whether postpaid or prepaid
shall be reduced from 1 minute per pulse to 6
seconds per pulse. The authorized rates per
minute shall thus be divided by 10.1
The Memorandum Circular provided that it shall take
effect 15 days after its publication in a newspaper of
general circulation and three certified true copies
thereof furnished the UP Law Center. It was published
in the newspaper, The Philippine Star, on June 22,
2000.2 Meanwhile, the provisions of the Memorandum
Circular pertaining to the sale and use of prepaid cards
and the unit of billing for cellular mobile telephone
service took effect 90 days from the effectivity of the
Memorandum Circular.
On August 30, 2000, the NTC issued a Memorandum to
all cellular mobile telephone service (CMTS) operators
which contained measures to minimize if not totally
eliminate the incidence of stealing of cellular phone
units. The Memorandum directed CMTS operators to:
a. strictly comply with Section B(1) of MC 13-62000 requiring the presentation and verification
of the identity and addresses of prepaid SIM
card customers;

b. require all your respective prepaid SIM cards

dealers to comply with Section B(1) of MC 13-62000;
c. deny acceptance to your respective networks
prepaid and/or postpaid customers using stolen
cellphone units or cellphone units registered to
somebody other than the applicant when
properly informed of all information relative to
the stolen cellphone units;
d. share all necessary information of stolen
cellphone units to all other CMTS operators in
order to prevent the use of stolen cellphone
units; and
e. require all your existing prepaid SIM card
customers to register and present valid
identification cards.3
This was followed by another Memorandum dated
October
6,
2000
addressed
to
all
public
telecommunications entities, which reads:
This is to remind you that the validity of all
prepaid cards sold on 07 October 2000 and
beyond shall be valid for at least two (2) years
from date of first use pursuant to MC 13-6-2000.
In addition, all CMTS operators are reminded
that all SIM packs used by subscribers of
prepaid cards sold on 07 October 2000 and

beyond shall be valid for at least two (2) years

from date of first use. Also, the billing unit shall
be on a six (6) seconds pulse effective 07
October 2000.
For strict compliance.4
On October 20, 2000, petitioners Isla Communications
Co., Inc. and Pilipino Telephone Corporation filed
against the National Telecommunications Commission,
Commissioner
Joseph
A.
Santiago,
Deputy
Commissioner
Aurelio
M.
Umali
and
Deputy
Commissioner Nestor C. Dacanay, an action for
declaration of nullity of NTC Memorandum Circular No.
13-6-2000 (the Billing Circular) and the NTC
Memorandum dated October 6, 2000, with prayer for
the issuance of a writ of preliminary injunction and
temporary restraining order. The complaint was
docketed as Civil Case No. Q-00-42221 at the Regional
Trial Court of Quezon City, Branch 77.5
Petitioners Islacom and Piltel alleged, inter alia, that
the NTC has no jurisdiction to regulate the sale of
consumer goods such as the prepaid call cards since
such jurisdiction belongs to the Department of Trade
and Industry under the Consumer Act of the
Philippines; that the Billing Circular is oppressive,
confiscatory and violative of the constitutional
prohibition against deprivation of property without due
process of law; that the Circular will result in the
impairment of the viability of the prepaid cellular
service by unduly prolonging the validity and

expiration of the prepaid SIM and call cards; and that

the requirements of identification of prepaid card
buyers
and
call
balance
announcement
are
unreasonable. Hence, they prayed that the Billing
Circular be declared null and void ab initio.
Soon thereafter, petitioners Globe Telecom, Inc and
Smart Communications, Inc. filed a joint Motion for
Leave to Intervene and to Admit Complaint-inIntervention.6 This was granted by the trial court.
On October 27, 2000, the trial court issued a
temporary restraining order enjoining the NTC from
implementing Memorandum Circular No. 13-6-2000
and the Memorandum dated October 6, 2000. 7
In the meantime, respondent NTC and its codefendants filed a motion to dismiss the case on the
ground of petitioners' failure to exhaust administrative
remedies.
Subsequently, after hearing petitioners' application for
preliminary injunction as well as respondent's motion
to dismiss, the trial court issued on November 20,
2000 an Order, the dispositive portion of which reads:
WHEREFORE,
premises
considered,
the
defendants' motion to dismiss is hereby denied
for lack of merit. The plaintiffs' application for
the issuance of a writ of preliminary injunction is
hereby granted. Accordingly, the defendants are
hereby enjoined from implementing NTC

Memorandum Circular 13-6-2000 and the NTC

Memorandum, dated October 6, 2000, pending
the issuance and finality of the decision in this
case. The plaintiffs and intervenors are,
however, required to file a bond in the sum of
FIVE
HUNDRED
THOUSAND
PESOS
(P500,000.00), Philippine currency.
SO ORDERED.8
Defendants filed a motion for reconsideration, which
was denied in an Order dated February 1, 2001. 9
Respondent NTC thus filed a special civil action for
certiorari and prohibition with the Court of Appeals,
which was docketed as CA-G.R. SP. No. 64274. On
October 9, 2001, a decision was rendered, the decretal
portion of which reads:
WHEREFORE, premises considered, the instant
petition for certiorari and prohibition is
GRANTED, in that, the order of the court a
quo denying the petitioner's motion to dismiss
as well as the order of the court a quo granting
the private respondents' prayer for a writ of
preliminary injunction, and the writ of
preliminary injunction issued thereby, are
hereby ANNULLED and SET ASIDE. The private
respondents'
complaint
and
complaint-inintervention below are hereby DISMISSED,
without prejudice to the referral of the private
respondents' grievances and disputes on the

assailed issuances of the NTC with the said

agency.

UNCONSTITUTIONAL AND CONTRARY TO LAW

AND PUBLIC POLICY.

SO ORDERED.10

D.

Petitioners' motions for reconsideration were denied in

a Resolution dated January 10, 2002 for lack of merit. 11
Hence, the instant petition for review filed by Smart
and Piltel, which was docketed as G.R. No. 151908,
anchored on the following grounds:
A.
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT THE NATIONAL
TELECOMMUNICATIONS COMMISSION (NTC) AND
NOT THE REGULAR COURTS HAS JURISDICTION
OVER THE CASE.
B.
THE HONORABLE COURT OF APPEALS ALSO
GRAVELY ERRED IN HOLDING THAT THE PRIVATE
RESPONDENTS
FAILED
TO
EXHAUST
AN
AVAILABLE ADMINISTRATIVE REMEDY.
C.
THE HONORABLE COURT OF APPEALS ERRED IN
NOT HOLDING THAT THE BILLING CIRCULAR
ISSUED
BY
THE
RESPONDENT
NTC
IS

THE HONORABLE COURT OF APPEALS ERRED IN

HOLDING THAT THE PRIVATE RESPONDENTS
FAILED TO SHOW THEIR CLEAR POSITIVE RIGHT
TO WARRANT THE ISSUANCE OF A WRIT OF
PRELIMINARY INJUNCTION.12
Likewise, Globe and Islacom filed a petition for review,
docketed as G.R. No. 152063, assigning the following
errors:
1. THE HONORABLE COURT OF APPEALS SO
GRAVELY ERRED BECAUSE THE DOCTRINES OF
PRIMARY JURISDICTION AND EXHAUSTION OF
ADMINISTRATIVE REMEDIES DO NOT APPLY
SINCE THE INSTANT CASE IS FOR LEGAL
NULLIFICATION (BECAUSE OF LEGAL INFIRMITIES
AND VIOLATIONS OF LAW) OF A PURELY
ADMINISTRATIVE REGULATION PROMULGATED
BY AN AGENCY IN THE EXERCISE OF ITS RULE
MAKING
POWERS
AND
INVOLVES
ONLY
QUESTIONS OF LAW.
2. THE HONORABLE COURT OF APPEALS SO
GRAVELY ERRED BECAUSE THE DOCTRINE ON
EXHAUSTION OF ADMINISTRATIVE REMEDIES
DOES NOT APPLY WHEN THE QUESTIONS RAISED
ARE PURELY LEGAL QUESTIONS.

3. THE HONORABLE COURT OF APPEALS SO

GRAVELY ERRED BECAUSE THE DOCTRINE OF
EXHAUSTION OF ADMINISTRATIVE REMEDIES
DOES NOT APPLY WHERE THE ADMINISTRATIVE
ACTION IS COMPLETE AND EFFECTIVE, WHEN
THERE IS NO OTHER REMEDY, AND THE
PETITIONER STANDS TO SUFFER GRAVE AND
IRREPARABLE INJURY.

regulations which results in delegated legislation that

is within the confines of the granting statute and the
doctrine of non-delegability and separability of
powers.16

We find merit in the petitions.

The rules and regulations that administrative agencies

promulgate, which are the product of a delegated
legislative power to create new and additional legal
provisions that have the effect of law, should be within
the scope of the statutory authority granted by the
legislature to the administrative agency. It is required
that the regulation be germane to the objects and
purposes of the law, and be not in contradiction to, but
in conformity with, the standards prescribed by
law.17 They must conform to and be consistent with the
provisions of the enabling statute in order for such rule
or regulation to be valid. Constitutional and statutory
provisions control with respect to what rules and
regulations may be promulgated by an administrative
body, as well as with respect to what fields are subject
to regulation by it. It may not make rules and
regulations which are inconsistent with the provisions
of the Constitution or a statute, particularly the statute
it is administering or which created it, or which are in
derogation of, or defeat, the purpose of a statute. In
case of conflict between a statute and an
administrative order, the former must prevail.18

Administrative
rule-making
administrative
or rule-making

Not to be confused with the quasi-legislative or rulemaking power of an administrative agency is its quasijudicial or administrative adjudicatory power. This is
the power to hear and determine questions of fact to

4. THE HONORABLE COURT OF APPEALS SO

GRAVELY ERRED BECAUSE PETITIONERS IN FACT
EXHAUSTED ALL ADMINISTRATIVE REMEDIES
AVAILABLE TO THEM.
5. THE HONORABLE COURT OF APPEALS SO
GRAVELY ERRED IN ISSUING ITS QUESTIONED
RULINGS IN THIS CASE BECAUSE GLOBE AND
ISLA HAVE A CLEAR RIGHT TO AN INJUNCTION.13
The two petitions were consolidated in a Resolution
dated February 17, 2003.14
On March 24, 2003, the petitions were given due
course and the parties were required to submit their
respective memoranda.15

agencies possess quasi-legislative or

powers
and
quasi-judicial
or
adjudicatory powers. Quasi-legislative
power is the power to make rules and

which the legislative policy is to apply and to decide in

accordance with the standards laid down by the law
itself in enforcing and administering the same law. The
administrative body exercises its quasi-judicial power
when it performs in a judicial manner an act which is
essentially of an executive or administrative nature,
where the power to act in such manner is incidental to
or reasonably necessary for the performance of the
executive or administrative duty entrusted to it. In
carrying out their quasi-judicial functions, the
administrative officers or bodies are required to
investigate facts or ascertain the existence of facts,
hold hearings, weigh evidence, and draw conclusions
from them as basis for their official action and exercise
of discretion in a judicial nature.19

exercise of its rule- making or legislative power.

However, only judicial review of decisions of
administrative agencies made in the exercise of their
quasi-judicial function is subject to the exhaustion
doctrine.

In questioning the validity or constitutionality of a rule

or regulation issued by an administrative agency, a
party need not exhaust administrative remedies before
going to court. This principle applies only where the
act of the administrative agency concerned was
performed pursuant to its quasi-judicial function, and
not when the assailed act pertained to its rule-making
or quasi-legislative power. In Association of Philippine
Coconut Dessicators v. Philippine Coconut Authority,20it
was held:

Even assuming arguendo that the principle of

exhaustion of administrative remedies apply in this
case, the records reveal that petitioners sufficiently
complied with this requirement. Even during the
drafting and deliberation stages leading to the
issuance of Memorandum Circular No. 13-6-2000,
petitioners were able to register their protests to the
proposed billing guidelines. They submitted their
respective position papers setting forth their
objections and submitting proposed schemes for the
billing circular.21 After the same was issued, petitioners
wrote successive letters dated July 3, 200022 and July
5,
2000,23 asking
for
the
suspension
and
reconsideration of the so-called Billing Circular. These
letters were not acted upon until October 6, 2000,
when respondent NTC issued the second assailed
Memorandum implementing certain provisions of the
Billing Circular. This was taken by petitioners as a clear
denial of the requests contained in their previous
letters, thus prompting them to seek judicial relief.

The rule of requiring exhaustion of administrative

remedies before a party may seek judicial review, so
strenuously urged by the Solicitor General on behalf of
respondent, has obviously no application here. The
resolution in question was issued by the PCA in the

In like manner, the doctrine of primary jurisdiction

applies only where the administrative agency
exercises its quasi-judicial or adjudicatory function.
Thus, in cases involving specialized disputes, the
practice has been to refer the same to an

administrative agency of special competence pursuant

to the doctrine of primary jurisdiction. The courts will
not determine a controversy involving a question
which is within the jurisdiction of the administrative
tribunal prior to the resolution of that question by the
administrative tribunal, where the question demands
the exercise of sound administrative discretion
requiring the special knowledge, experience and
services of the administrative tribunal to determine
technical and intricate matters of fact, and a
uniformity of ruling is essential to comply with the
premises of the regulatory statute administered. The
objective of the doctrine of primary jurisdiction is to
guide a court in determining whether it should refrain
from exercising its jurisdiction until after an
administrative agency has determined some question
or some aspect of some question arising in the
proceeding before the court. It applies where the claim
is originally cognizable in the courts and comes into
play whenever enforcement of the claim requires the
resolution of issues which, under a regulatory scheme,
has been placed within the special competence of an
administrative body; in such case, the judicial process
is suspended pending referral of such issues to the
administrative body for its view.24
However, where what is assailed is the validity or
constitutionality of a rule or regulation issued by the
administrative agency in the performance of its quasilegislative function, the regular courts have jurisdiction
to pass upon the same. The determination of whether
a specific rule or set of rules issued by an

administrative agency contravenes the law or the

constitution is within the jurisdiction of the regular
courts. Indeed, the Constitution vests the power of
judicial review or the power to declare a law, treaty,
international or executive agreement, presidential
decree, order, instruction, ordinance, or regulation in
the courts, including the regional trial courts. 25 This is
within the scope of judicial power, which includes the
authority of the courts to determine in an appropriate
action the validity of the acts of the political
departments.26 Judicial power includes the duty of the
courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable,
and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or
instrumentality of the Government.27
In the case at bar, the issuance by the NTC of
Memorandum Circular No. 13-6-2000 and its
Memorandum dated October 6, 2000 was pursuant to
its quasi-legislative or rule-making power. As such,
petitioners were justified in invoking the judicial power
of the Regional Trial Court to assail the constitutionality
and validity of the said issuances. In Drilon v. Lim,28 it
was held:
We stress at the outset that the lower court had
jurisdiction to consider the constitutionality of
Section 187, this authority being embraced in
the general definition of the judicial power to
determine what are the valid and binding laws

by the criterion of their conformity to the

fundamental law. Specifically, B.P. 129 vests in
the regional trial courts jurisdiction over all civil
cases in which the subject of the litigation is
incapable of pecuniary estimation, even as the
accused in a criminal action has the right to
question in his defense the constitutionality of a
law he is charged with violating and of the
proceedings taken against him, particularly as
they contravene the Bill of Rights. Moreover,
Article X, Section 5(2), of the Constitution vests
in the Supreme Court appellate jurisdiction over
final judgments and orders of lower courts in all
cases in which the constitutionality or validity of
any
treaty,
international
or
executive
agreement,
law,
presidential
decree,
proclamation, order, instruction, ordinance, or
regulation is in question.29
In their complaint before the Regional Trial Court,
petitioners averred that the Circular contravened Civil
Code provisions on sales and violated the
constitutional prohibition against the deprivation of
property without due process of law. These are within
the competence of the trial judge. Contrary to the
finding of the Court of Appeals, the issues raised in the
complaint do not entail highly technical matters.
Rather, what is required of the judge who will resolve
this issue is a basic familiarity with the workings of the
cellular telephone service, including prepaid SIM and
call cards and this is judicially known to be within the
knowledge of a good percentage of our population

and expertise in fundamental principles of civil law and

the Constitution.
Hence, the Regional Trial Court has jurisdiction to hear
and decide Civil Case No. Q-00-42221. The Court of
Appeals erred in setting aside the orders of the trial
court and in dismissing the case.
WHEREFORE, in view of the foregoing, the
consolidated petitions are GRANTED. The decision of
the Court of Appeals in CA-G.R. SP No. 64274 dated
October 9, 2001 and its Resolution dated January 10,
2002 are REVERSED and SET ASIDE. The Order dated
November 20, 2000 of the Regional Trial Court of
Quezon City, Branch 77, in Civil Case No. Q-00-42221
is REINSTATED. This case is REMANDED to the court a
quo for continuation of the proceedings.
SO ORDERED.

PANGANIBAN, J.:
Are the benefits provided for under Social
Security System Resolution No. 56 to be
considered simply as "financial assistance" for
retiring employees, or does such scheme
constitute a supplementary retirement plan
proscribed by Republic Act No. 4968?
The foregoing question is addressed by this
Court in resolving the instant petition
for certiorari which seeks to reverse and set
aside
Decision
No.
94126 1 dated March 15, 1994 of respondent
Commission on Audit, which denied petitioners'
request for reconsideration of its adverse ruling
disapproving claims for financial assistance
under SSS Resolution No. 56.
The Facts

G.R. No. 116422 November 4, 1996

AVELINA B. CONTE and LETICIA BOISERPALMA, petitioners,
vs.
COMMISSION ON AUDIT (COA), respondent.

Petitioners Avelina B. Conte and Leticia BoiserPalma were former employees of the Social
Security System (SSS) who retired from
government service on May 9, 1990 and
September 13, 1992, respectively. They availed
of compulsory retirement benefits under
Republic Act No. 660. 2
In addition to retirement benefits provided
under R.A. 660, petitioners also claimed SSS

"financial assistance" benefits granted under

SSS Resolution No. 56, series of 1971.
A brief historical backgrounder is in order. SSS
Resolution No. 56, 3 approved on January 21,
1971,
provides
financial
incentive
and
inducement to SSS employees qualified to retire
to avail of retirement benefits under RA 660 as
amended, rather than the retirement benefits
under RA 1616 as amended, by giving them
"financial assistance" equivalent in amount to
the difference between what a retiree would
have received under RA 1616, less what he was
entitled to under RA 660. The said SSS
Resolution No. 56 states:
RESOLUTION NO. 56
WHEREAS, the retirement benefits of SSS
employees are provided for under
Republic Acts 660 and 1616 as amended;.
WHEREAS, SSS employees who are
qualified for compulsory retirement at age
65 or for optional retirement at a lower
age are entitled to either the life annuity
under R.A. 660, as amended, or the
gratuity under R.A. 1616, as amended;
WHEREAS, a retirement benefit to be
effective must be a periodic income as
close as possible to the monthly income

that would have been due to the retiree

during the remaining years of his life were
he still employed;
WHEREAS, the life annuity under R.A.
660, as amended, being closer to the
monthly income that was lost on account
of old age than the gratuity under R.A.
1616, as amended, would best serve the
interest of the retiree;
WHEREAS, it is the policy of the Social
Security Commission to promote and to
protect the interest of all SSS employees,
with a view to providing for their wellbeing during both their working and
retirement years;
WHEREAS, the availment of life annuities
built up by premiums paid on behalf of
SSS employees during their working years
would mean more savings to the SSS;
WHEREAS, it is a duty of the Social
Security Commission to effect savings in
every possible way for economical and
efficient operations;
WHEREAS, it is the right of every SSS
employee to choose freely and voluntarily
the benefit he is entitled to solely for his

own benefit and for the benefit of his

family;
NOW, THEREFORE, BE IT RESOLVED, That
all the SSS employees who are
simultaneously qualified for compulsory
retirement at age 65 or for optional
retirement at a lower age be encouraged
to avail for themselves the life annuity
under R.A. 660, as amended;
RESOLVED,
FURTHER,
That
SSS
employees who availed themselves of the
said life annuity, in appreciation and
recognition of their long and faithful
service, be granted financial assistance
equivalent to the gratuity plus return of
contributions
under
R.A. 1616,
as
amended, less the five year guaranteed
annuity under R.A. 660, as amended;
RESOLVED,
FINALLY,
That
the
Administrator be authorized to act on all
applications for retirement submitted by
SSS employees and subject to availability
of funds, pay the corresponding benefits
in addition to the money value of all
accumulated leaves. (emphasis supplied)
Long after the promulgation of SSS Resolution
No. 56, respondent Commission on Audit (COA)
issued a ruling, captioned as "3rd Indorsement"

dated July 10, 1989, 4 disallowing in audit "all

such claims for financial assistance under SSS
Resolution No. 56", for the reason that:
. . . the scheme of financial assistance
authorized by the SSS is similar to those
separate
retirement
plan
or
incentive/separation pay plans adopted
by other government corporate agencies
which results in the increase of benefits
beyond what is allowed under existing
retirement laws. In this regard, attention .
. . is invited to the view expressed by the
Secretary of Budget and Management
dated February 17, 1988 to the COA
General Counsel against the proliferation
of retirement plans which, in COA
Decision No. 591 dated August 31, 1988,
was concurred in by this Commission. . . .
Accordingly, all such claims for financial
assistance under SSS Resolution No. 56
dated January 21, 1971 should be
disallowed in audit. (emphasis supplied)
Despite the aforequoted ruling of respondent
COA, then SSS Administrator Jose L. Cuisia, Jr.
nevertheless wrote 5on February 12, 1990 then
Executive Secretary Catalino Macaraig, Jr.,
seeking "presidential authority for SSS to
continue implementing its Resolution No. 56

dated January 21, 1971 granting financial

assistance to its qualified retiring employees".
However, in a letter-reply dated May 28,
1990, 6 then Executive Secretary Macaraig
advised Administrator Cuisia that the Office of
the President "is not inclined to favorably act on
the herein request, let alone over-rule the
disallowance by COA" of such claims, because,
aside from the fact that decisions, order or
actions of the COA in the exercise of its audit
functions are appealable to the Supreme
Court 7 pursuant to Sec. 50 of PD 1445, the
benefits under said Res. 56, though referred to
as "financial assistance", constituted additional
retirement benefits, and the scheme partook of
the
nature
of
a
supplementary
pension/retirement plan proscribed by law.
The law referred to above is RA 4968 (The Teves
Retirement Law), which took effect June 17,
1967 and amended CA 186 (otherwise known as
the Government Service Insurance Act, or the
GSIS Charter), making Sec. 28 (b) of the latter
act read as follows:
(b) Hereafter, no insurance or retirement
plan for officers or employees shall be
created by employer. All supplementary
retirement or pension plans heretofore in
force in any government office. agency or
instrumentality or corporation owned or

controlled by the government, are hereby

declared in operative or abolished;
Provided, That the rights of those who are
already eligible to retire there under shall
not be affected." (emphasis supplied)
On January 12, 1993, herein petitioners filed
with
respondent
COA
their
"letterappeal/protest" 8 seeking
reconsideration
of
COA's ruling of July 10, 1989 disallowing claims
for financial assistance under Res. 56.
On November 15, 1993, petitioner Conte sought
payment from SSS of the benefits under Res. 56.
On December 9, 1993, SSS Administrator
Renato C. Valencia denied 9 the request in
consonance with the previous disallowance by
respondent COA, but assured petitioner that
should the COA change its position, the SSS will
resume the grant of benefits under said Res. 56.
On March 15, 1994, respondent COA rendered
its COA Decision No. 94-126 denying petitioners'
request for reconsideration.
Thus this petition for certiorari under Rule 65 of
the Rules of Court.
The Issues
The issues 10 submitted by petitioners may be
simplified
and restated
thus: Did
public

respondent abuse its discretion when it

disallowed in audit petitioners' claims for
benefits under SSS Res. 562?
Petitioners argue that the financial assistance
under Res. 56 is not a retirement plan prohibited
by RA 4968, and that Res. 56 provides benefits
different from and "aside from" what a retiring
SSS employee would be entitled to under RA
660. Petitioners contend that it "is a social
amelioration and economic upliftment measure
undertaken not only for the benefit of the SSS
but more so for the welfare of its qualified
retiring employees." As such, it "should be
interpreted in a manner that would give the . . .
most advantage to the recipient the retiring
employees whose dedicated, loyal, lengthy and
faithful service to the agency of government is
recognized and amply rewarded the rationale
for the financial assistance plan." Petitioners
reiterate the argument in their letter dated
January 12, 1993 to COA that:

Motivation can be in the form of financial

assistance, during their stay in the
service or upon retirement, as in the SSS
Financial Assistance Plan. This is so,
because Government has to have some
attractive remuneration programs to
encourage well-qualified personnel to
pursue a career in the government
service, rather than in the private sector
or in foreign countries . . .
A more developmental view of the
financial institutions' grant of certain
forms of financial assistance to its
personnel, we believe, would enable
government administrators to see these
financial forms of remuneration as
contributory
to
the
national
developmental efforts for effective and
efficient administration of the personnel
programs in different institutions. 11
The Court's Ruling
Petitioners' contentions are not supported by
law. We hold that Res. 56 constitutes a
supplementary retirement plan.
A cursory examination of the preambular
clauses and provisions of Res. 56 provides a
number of clear indications that its financial
assistance plan constitutes a supplemental

retirement/pension benefits plan. In particular,

the fifth preambular clause which provides that
"it is the policy of the Social Security
Commission to promote and to protect the
interest of all SSS employees, with a view
to providing for their well-being during both
their working andretirement years", and the
wording of the resolution itself which states
"Resolved, further, that SSS employees who
availed themselves of the said life annuity
(under RA 660), in appreciation and recognition
of their long and faithful service, be granted
financial assistance . . . can only be interpreted
to mean that the benefit being granted is none
other than a kind of amelioration to enable the
retiring employee to enjoy (or survive) his
retirement years and a reward for his loyalty
and service. Moreover, it is plain to see that the
grant of said financial assistance isinextricably
linked with and inseparable from the approval of
retirement benefits under RA 660, i.e., that
availment of said financial assistance under Res.
56 may not be done independently of but only
in conjunction with the availment of retirement
benefits under RA 660, and that the former is in
augmentation or supplementation of the latter
benefits.
Likewise, then SSS Administrator Cuisia's
historical overview of the origins and purpose of
Res. 56 is very instructive and sheds much light
on the controversy: 12

Resolution No. 56, . . ., applies where a

retiring SSS employee is qualified to claim
under either RA 660 (pension benefit, that
is, 5 year lump sum pension and after 5
years, lifetime pension), or RA 1616
(gratuity
benefit
plus
return
of
contribution), at his option. The benefits
under RA 660 are entirely payable by
GSIS while those under RA 1616 are
entirely shouldered by SSS except the
return of contribution by GSIS.
Resolution No. 56 came about upon
observation that qualified SSS employees
have invariably opted to retire under RA
1616 instead of RA 660 because the total
benefit under the former is much greater
than the 5-year lump sum under the
latter. As a consequence, the SSS usually
ended up virtually paying the entire
retirement benefit, instead of GSIS which
is the main insurance carrier for
government employees. Hence, the
situation has become so expensive for
SSS that a study of the problem became
inevitable.
As a result of the study and upon the
recommendation of its Actuary, the SSS
Management recommended to the Social
Security
Commission
that retiring
employees who are qualified to claim

under either RA 660 or 1616 should be

"encouraged" to avail for themselves the
life annuity under RA 660, as amended,
with the SSS providing a "financial
assistance" equivalent to the difference
between
the
benefit
under
RA
1616(gratuity plus return of contribution)
and the 5-year lump sum pension under
RA 660.
The Social Security Commission, as the
policy-making body of the SSS approved
the recommendation in line with its
mandate to "insure the efficient, honest
and economical administration of the
provisions and purposes of this Act.
(Section 3 (c) of the Social Security Law).
Necessarily, the situation was reversed
with qualified SSS employees opting to
retire under RA No. 660 or RA 1146
instead of RA 1616, resulting in
substantial savings for the SSS despite its
having to pay "financial assistance".
Until Resolution No. 56 was questioned by
COA. (emphasis part of original text;
emphasis ours).
Although such financial assistance package may
have been instituted for noble, altruistic
purposes as well as from self-interest and a

desire to cut costs on the part of the SSS,

nevertheless, it is beyond any dispute that such
package effectively constitutes a supplementary
retirement plan. The fact that it was designed to
equalize the benefits receivable from RA 1616
with those payable under RA 660 and make the
latter program more attractive, merely confirms
the foregoing finding.
That the Res. 56 package is labelled "financial
assistance" does not change its essential
nature. Retirement benefits are, after all, a form
of reward for an employee's loyalty and service
to the employer, and are intended to help the
employee enjoy the remaining years of his life,
lessening the burden of worrying about his
financial support or upkeep. 13 On the other
hand, a pension partakes of the nature of
"retained wages" of the retiree for a dual
purpose: to entice competent people to enter
the government service, and to permit them to
retire from the service with relative security, not
only for those who have retained their vigor, but
more so for those who have been incapacitated
by illness or accident. 14
Is SSS Resolution No. 56 then within the ambit
of and thus proscribed by Sec. 28 (b) of CA 186
as amended by RA 4968?
We answer in the affirmative. Said Sec. 28 (b) as
amended by RA 4968 in no uncertain terms bars

the creation of any insurance or retirement plan

other than the GSIS for government
officers and employees, in order to prevent the
undue and inequitous proliferation of such
plans. It is beyond cavil that Res. 56
contravenes the said provision of law and is
therefore invalid, void and of no effect. No
ignore this and rule otherwise would be
tantamount
to
permitting
every
other
government office or agency to put up its own
supplementary retirement benefit plan under
the guise of such "financial assistance".
We are not unmindful of the laudable purposes
for promulgating Res. 56, and the positive
results it must have had, not only in reducing
costs and expenses on the part of the SSS in
connection with the pay-out of retirement
benefits and gratuities, but also in improving the
quality of life for scores of retirees. But it is
simply beyond dispute that the SSS had no
authority to maintain and implement such
retirement plan, particularly in the face of the
statutory prohibition. The SSS cannot, in the
guise of rule-making, legislate or amend laws or
worse, render them nugatory.
It is doctrinal that in case of conflict between a
statute and an administrative order, the former
must prevail. 15 A rule or regulation must
conform to and be consistent with the provisions
of the enabling statute in order for such rule or

regulation to be valid. 16 The rule-making power

of a public administrative body is a delegated
legislative power, which it may not use either to
abridge the authority given it by the Congress or
the Constitution or to enlarge its power beyond
the scope intended. Constitutional and statutory
provisions control with respect to what rules and
regulations may be promulgated by such a
body, as well as with respect to what fields are
subject to regulation by it. It may not make rules
and regulations which are inconsistent with the
provisions of the Constitution or a statute,
particularly the statute it is administering or
which created it, or which are in derogation of,
or defeat, the purpose of a statute. 17Though
well-settled is the rule that retirement laws are
liberally
interpreted
in
favor
of
the
18
retiree, nevertheless, there is really nothing to
interpret in either RA 4968 or Res. 56, and
correspondingly, the absence of any doubt as to
the ultra-vires nature and illegality of the
disputed resolution constrains us to rule against
petitioners.
As a necessary consequence of the invalidity of
Res. 56, we can hardly impute abuse of
discretion of any sort to respondent Commission
for
denying
petitioners'
request
for
reconsideration of the 3rd Indorsement of July
10, 1989. On the contrary, we hold that public
respondent in its assailed Decision acted with

circumspection in denying petitioners claim. It

reasoned thus:
After a careful evaluation of the facts
herein obtaining, this Commission finds
the instant request to be devoid of merit.
It bears stress that the financial
assistance contemplated under SSS
Resolution No. 56 is granted to SSS
employees who opt to retire under R.A.
No. 660. In fact, by the aggrieved parties'
own admission (page 2 of the request for
reconsideration
dated
January
12,
1993), it is a financial assistance granted
by
the
SSS
management
to
its
employees. in addition to the retirement
benefits under Republic Act. No. 660."
(underscoring supplied for emphasis)
There is therefore no question, that the
said financial assistance partakes of the
nature of a retirement benefit that has
the effect of modifying existing retirement
laws particularly R.A. No. 660.
Petitioners also asseverate that the scheme of
financial assistance under Res. 56 may be
likened to the monetary benefits of government
officials and employees who are paid, over and
above their salaries and allowances as provided
by statute, an additional honorarium in varying
amounts. We find this comparison baseless and

misplaced.
General: 19

As

clarified

by

the

Solicitor

Petitioners' comparison of SSS Resolution

No. 56 with the "honoraria" given to
government officials and employees of
the "National Prosecution Service of the
Department of Justice", Office of the
Government Corporate Counsel and even
in the "Office of the Solicitor General" is
devoid of any basis. The monetary
benefits or "honoraria" given to these
officials or employees are categorized as
travelling and/or representation expenses
which are incurred by them in the course
of
handling
cases,
attending
court/administrative
hearings,
or
performing other field work. These
monetary benefits are given upon
rendition of service while the "financial
benefits" under SSS Resolution No. 56 are
given upon retirement from service.
In a last-ditch attempt to convince this Court
that their position is tenable, petitioners invoke
equity. They "believe that they are deserving of
justice and equity in their quest for financial
assistance under SSS Resolution No. 56, not so
much because the SSS is one of the very few
stable agencies of government where no doubt
this recognition and reputation is earned . . . but
more so due to the miserable scale of

compensation granted to employees in various

agencies to include those obtaining in the
SSS." 20
We must admit we sympathize with petitioners
in their financial predicament as a result of their
misplaced decision to avail of retirement
benefits under RA 660, with the false
expectation that "financial assistance" under the
disputed Res. 56 will also materialize.
Nevertheless, this Court has always held that
equity, which has been aptly described as
"justice outside legality," is applied only in the
absence of, and never against, statutory law or
judicial rules of procedure. 21 In this case, equity
cannot be applied to give validity and effect to
Res. 56, which directly contravenes the clear
mandate of the provisions of RA 4968.
Likewise, we cannot but be aware that the clear
imbalance between the benefits available under
RA 660 and those under RA 1616 has created an
unfair situation for it has shifted the burden of
paying such benefits from the GSIS (the main
insurance carrier of government employees) to
the SSS. Without the corrective effects of Res.
56, all retiring SSS employees without exception
will be impelled to avail of benefits under RA
1616. The cumulative effect of such availments
on the financial standing and stability of the SSS
is better left to actuarians. But the solution or
remedy for such situation can be provided only

by Congress. Judicial hands cannot, on the

pretext of showing concern for the welfare of
government employees, bestow equity contrary
to the clear provisions of law.
Nevertheless, insofar as herein petitioners are
concerned, this Court cannot just sit back and
watch as these two erstwhile government
employees, who after spending the best parts of
their lives in public service have retired hoping
to enjoy their remaining years, face a financially
dismal if not distressed future, deprived of what
should have been due them by way of additional
retirement
benefits,
on
account
of
a
bureaucratic boo-boo improvidently hatched by
their higher-ups. It is clear to our mind that
petitioners applied for benefits under RA 660
only because of the incentives offered by Res.
56, and that absent such incentives, they would
have without fall availed of RA 1616 instead. We
likewise have no doubt that petitioners are
simply innocent bystanders in this whole
bureaucratic
rule-making/financial
schememaking drama, and that therefore, to the extent
possible, petitioners ought not be penalized or
made to suffer as a result of the subsequently
determined
invalidity
of
Res.
56,
the
promulgation and implementation of which they
had nothing to do with.
And here is where "equity" may properly be
invoked: since "SSS employees who are

qualified for compulsory retirement at age 65 or

for optional retirement at a lower age are
entitled to either the life annuity under R.A.
660, as amended, or the gratuity under R.A.
1616,
as
amended", 22 it
appears
that
petitioners, being qualified to avail of benefits
under RA 660, may also readily qualify under RA
1616. It would therefore not be misplaced to
enjoin the SSS to render all possible assistance
to petitioners for the prompt processing and
approval of their applications under RA 1616,
and in the meantime, unless barred by existing
regulations, to advance to petitioners the
difference between the amounts due under RA
1616, and the amounts they already obtained, if
any, under RA 660.
WHEREFORE, the petition is hereby DISMISSED
for lack of merit, there having been no grave
abuse of discretion on the part of respondent
Commission. The assailed Decision of public
respondent is AFFIRMED, and SSS Resolution No.
56 is hereby declared ILLEGAL, VOID AND OF NO
EFFECT. The SSS is hereby urged to assist
petitioners and facilitate their applications under
RA 1616, and to advance to them, unless barred
by existing regulations, the corresponding
amounts representing the difference between
the two benefits programs. No costs.
SO ORDERED.

G.R. No. L-44291

August 15, 1936

THE
PEOPLE
OF
THE
PHILIPPINE
ISLANDS, plaintiff-appellant,
vs.
AUGUSTO A. SANTOS, defendant-appellee.
Office of the Solicitor-General Hilado for appellant.
Arsenio Santos for appellee.
VILLA-REAL, J.:
This case is before us by virtue of an appeal taken by
the prosecuting attorney from the order of the Court of
First Instance of Cavite which reads as follows:
ORDER
When this case was called for trial for the
arraignment, counsel for the accused appeared
stating that in view of the ruling laid down by
this court in criminal case No. 6785 of this court,
holding that the penalty applicable is under

section 83 of Act No. 4003 which falls within the

original jurisdiction of the justice of the peace
court he requests that the case be remanded to
the justice of the peace court of Cavite which
conducted the preliminary investigation, so that
the latter may try it, being within its original
jurisdiction.
We agree that it falls within the jurisdiction of
the corresponding justice of the peace court, but
it being alleged in the information that the
infraction was committed within the waters of
the Island of Corregidor, the competent justice
of the peace court is that of Corregidor, not
Cavite.
Wherefore, we decree the dismissal of this case,
cancelling the bond filed by the accused, with
costs de oficio, without prejudice to the filing by
the prosecuting attorney of a new information in
the justice of the peace court of Corregidor, if he
so deems convenient. It is so ordered.
In support of his appeal the appellant assigns as the
sole alleged error committed by the court a quo its
having dismissed the case on the ground that it does
not fall within its original jurisdiction.
On June 18, 1930, the provincial fiscal of Cavite filed
against the accused -appellee Augusta A. Santos an
information which reads as follows:

The undersigned Provincial Fiscal accuses

Augusta A. Santos of violation of section 28 of
Fish and Game Administrative Order No. 2 and
penalized by section 29 thereof committed as
follows:
That on or about April 29, 1935, within 1,500
yards north of Cavalry Point, Corregidor Island,
Province of Cavite, P.I., the said accused
Augusta A. Santos, the registered owner of two
fishing motor boats Malabon II and Malabon III,
did then and there willfully, unlawfully and
criminally have his said boats, manned and
operated by his fishermen, fish, loiter and
anchor without permission from the Secretary of
Agriculture and Commerce within three (3)
kilometers from the shore line of the Island of
Corregidor over which the naval and military
authorities of the United States exercise
jurisdiction.
Contrary to law.
Cavite, Cavite, June 18, 1935.
Section 28 of Administrative Order No. 2 relative to fish
and game, issued by the Secretary of Agriculture and
Commerce, provides as follows:
28. Prohibited fishing areas. No boats
licensed in accordance with the provisions of Act
No. 4003 and this order to catch, collect, gather,

take, or remove fish and other sea products

from Philippine waters shall be allowed to fish,
loiter, or anchor within 3 kilometers of the shore
line of islands and reservations over which
jurisdiction is exercised by naval or military
authorities of the United States, particularly
Corregidor, Pulo Caballo, La Monja, El Fraile, and
Carabao, and all other islands and detached
rocks lying between Mariveles Reservation on
the north side of the entrance to Manila Bay and
Calumpan Point Reservation on the south side of
said entrance: Provided, That boats not subject
to license under Act No. 4003 and this order
may fish within the areas mentioned above only
upon receiving written permission therefor,
which permission may be granted by the
Secretary of Agriculture and Commerce upon
recommendation of the military or naval
authorities concerned.
A violation of this paragraph may be proceeded
against under section 45 of the Federal Penal
Code.
The above quoted provisions of Administrative, Order
No. 2 were issued by the then Secretary of Agriculture
and Natural Resources, now Secretary of Agriculture
and Commerce, by virtue of the authority vested in
him by section 4 of Act No. 4003 which reads as
follows:

SEC.
4. Instructions,
orders,
rules
and
regulations. The Secretary of Agriculture and
Natural Resources shall from time to time issue
such instructions, orders, rules and regulations
consistent with this Act, as may be necessary
and proper to carry into effect the provisions
thereof and for the conduct of proceedings
arising under such provisions.
The herein accused and appellee Augusto A. Santos is
charged with having ordered his fishermen to manage
and operate the motor launches Malabon II and
Malabon Ill registered in his name and to fish, loiter
and anchor within three kilometers of the shore line of
the Island of Corregidor over which jurisdiction is
exercised by naval and military authorities of the
United States, without permission from the Secretary
of Agriculture and Commerce.
These acts constitute a violation of the conditional
clause of section 28 above quoted, which reads as
follows:
Provided, That boats not subject to license
under Act No. 4003 and this order may fish
within the areas mentioned above (within 3
kilometers of the shore line of islands and
reservations over which jurisdiction is exercised
by naval and military authorities of the United
States, particularly Corregidor) only upon
receiving written permission therefor, which
permission may be granted by the Secretary of

Agriculture
and
Commerce
upon
recommendation of the military and naval
authorities of concerned. (Emphasis supplied.)
Act No. 4003 contains no similar provision prohibiting
boats not subject to license from fishing within three
kilometers of the shore line of islands and reservations
over which jurisdiction is exercised by naval and
military authorities of the United States, without
permission from the Secretary of Agriculture and
Commerce upon recommendation of the military and
naval authorities concerned. Inasmuch as the only
authority granted to the Secretary of Agriculture and
Commerce, by section 4 of Act No. 4003, is to issue
from time to time such instructions, orders, rules, and
regulations consistent with said Act, as may be
necessary and proper to carry into effect the
provisions thereof and for the conduct of proceedings
arising under such provisions; and inasmuch as said
Act No. 4003, as stated, contains no provisions similar
to those contained in the above quoted conditional
clause of section 28 of Administrative Order No. 2, the
conditional clause in question supplies a defect of the
law, extending it. This is equivalent to legislating on
the matter, a power which has not been and cannot be
delegated to him, it being exclusively reserved to the
then Philippine Legislature by the Jones Law, and now
to the National Assembly by the Constitution of the
Philippines. Such act constitutes not only an excess of
the regulatory power conferred upon the Secretary of
Agriculture and Commerce, but also an exercise of a
legislative power which he does not have, and

therefore said conditional clause is null and void and

without effect (12 Corpus Juris, 845; Rubi vs. Provincial
Board of Mindoro, 39 Phil., 660; U.S. vs. Ang Tang Ho,
43 Phil., 1; U.S. vs. Barrias, 11 Phil., 327).
For the foregoing considerations, we are of the opinion
and so hold that the conditional clause of section 28 of
Administrative Order No. 2. issued by the Secretary of
Agriculture and Commerce, is null and void and
without effect, as constituting an excess of the
regulatory power conferred upon him by section 4 of
Act No. 4003 and an exercise of a legislative power
which has not been and cannot be delegated to him.
Wherefore, inasmuch as the facts with the commission
of which Augusto A. Santos is charged do not
constitute a crime or a violation of some criminal law
within the jurisdiction of the civil courts, the
information filed against him is dismissed, with the
costs de oficio. So ordered.
Avancea, C. J., Abad Santos, Imperial, Diaz, Recto,
and Laurel, JJ., concur.

Que Po Lay is appealing from the decision of the Court

of First Instance of Manila, finding him guilty of
violating Central Bank Circular No. 20 in connection
with section 34 of Republic Act No. 265, and
sentencing him to suffer six months imprisonment, to
pay a fine of P1,000 with subsidiary imprisonment in
case of insolvency, and to pay the costs.

G.R. No. L-6791

March 29, 1954

THE PEOPLE OF THE PHILIPPINES, plaintiffappellee,

vs.
QUE PO LAY, defendant-appellant.
Prudencio
de
Guzman
for
appellant.
First Assistant Solicitor General Ruperto Kapunan, Jr.,
and Solicitor Lauro G. Marquez for appellee.
MONTEMAYOR, J.:

The charge was that the appellant who was in

possession of foreign exchange consisting of U.S.
dollars, U.S. checks and U.S. money orders amounting
to about $7,000 failed to sell the same to the Central
Bank through its agents within one day following the
receipt of such foreign exchange as required by
Circular No. 20. the appeal is based on the claim that
said circular No. 20 was not published in the Official
Gazette prior to the act or omission imputed to the
appellant, and that consequently, said circular had no
force and effect. It is contended that Commonwealth
Act. No., 638 and Act 2930 both require said circular to
be published in the Official Gazette, it being an order
or notice of general applicability. The Solicitor General
answering this contention says that Commonwealth
Act. No. 638 and 2930 do not require the publication in
the Official Gazette of said circular issued for the
implementation of a law in order to have force and
effect.
We agree with the Solicitor General that the laws in
question do not require the publication of the circulars,
regulations and notices therein mentioned in order to
become binding and effective. All that said two laws

provide is that laws, resolutions, decisions of the

Supreme Court and Court of Appeals, notices and
documents required by law to be of no force and
effect. In other words, said two Acts merely enumerate
and make a list of what should be published in the
Official Gazette, presumably, for the guidance of the
different branches of the Government issuing same,
and of the Bureau of Printing.
However, section 11 of the Revised Administrative
Code provides that statutes passed by Congress shall,
in the absence of special provision, take effect at the
beginning of the fifteenth day after the completion of
the publication of the statute in the Official Gazette.
Article 2 of the new Civil Code (Republic Act No. 386)
equally provides that laws shall take effect after fifteen
days following the completion of their publication in
the Official Gazette, unless it is otherwise provided. It
is true that Circular No. 20 of the Central Bank is not a
statute or law but being issued for the implementation
of the law authorizing its issuance, it has the force and
effect of law according to settled jurisprudence. (See
U.S. vs. Tupasi Molina, 29 Phil., 119 and authorities
cited therein.) Moreover, as a rule, circulars and
regulations especially like the Circular No. 20 of the
Central Bank in question which prescribes a penalty for
its violation should be published before becoming
effective, this, on the general principle and theory that
before the public is bound by its contents, especially
its penal provisions, a law, regulation or circular must
first be published and the people officially and
specifically informed of said contents and its penalties.

Our Old Civil code, ( Spanish Civil Code of 1889) has a

similar provision about the effectivity of laws, (Article 1
thereof), namely, that laws shall be binding twenty
days after their promulgation, and that their
promulgation shall be understood as made on the day
of the termination of the publication of the laws in the
Gazette. Manresa, commenting on this article is of the
opinion that the word "laws" include regulations and
circulars issued in accordance with the same. He says:
El Tribunal Supremo, ha interpretado el articulo
1. del codigo Civil en Sentencia de 22 de Junio
de 1910, en el sentido de que bajo la
denominacion
generica
de
leyes,
se
comprenden tambien los Reglamentos, Reales
decretos,
Instrucciones, Circulares y
Reales
ordenes dictadas de conformidad con las
mismas por el Gobierno en uso de su potestad.
Tambien el poder ejecutivo lo ha venido
entendiendo asi, como lo prueba el hecho de
que muchas de sus disposiciones contienen la
advertencia de que empiezan a regir el mismo
dia de su publicacion en la Gaceta, advertencia
que seria perfectamente inutil si no fuera de
aplicacion al caso el articulo 1.o del Codigo Civil.
(Manresa, Codigo Civil Espaol, Vol. I. p. 52).
In the present case, although circular No. 20 of the
Central Bank was issued in the year 1949, it was not
published until November 1951, that is, about 3
months after appellant's conviction of its violation. It is
clear that said circular, particularly its penal provision,

did not have any legal effect and bound no one until its
publication in the Official Gazzette or after November
1951. In other words, appellant could not be held liable
for its violation, for it was not binding at the time he
was found to have failed to sell the foreign exchange
in his possession thereof.
But the Solicitor General also contends that this
question of non-publication of the Circular is being
raised for the first time on appeal in this Court, which
cannot be done by appellant. Ordinarily, one may raise
on appeal any question of law or fact that has been
raised in the court below and which is within the issues
made by the parties in their pleadings. (Section 19,
Rule 48 of the Rules of Court). But the question of nonpublication is fundamental and decisive. If as a matter
of fact Circular No. 20 had not been published as
required by law before its violation, then in the eyes of
the law there was no such circular to be violated and
consequently appellant committed no violation of the
circular or committed any offense, and the trial court
may be said to have had no jurisdiction. This question
may be raised at any stage of the proceeding whether
or not raised in the court below.
In view of the foregoing, we reverse the decision
appealed from and acquit the appellant, with costs de
oficio.
Paras, C.J., Bengzon, Padilla, Reyes, Bautista Angelo,
Labrador, Concepcion and Diokno, JJ., concur.

G.R. No. L-32166 October 18, 1977

THE PEOPLE OF THE PHILIPPINES, plaintiffappellant,
vs.
HON. MAXIMO A. MACEREN CFI, Sta. Cruz,
Laguna, JOSE BUENAVENTURA, GODOFREDO
REYES, BENJAMIN REYES, NAZARIO AQUINO and
CARLO DEL ROSARIO, accused-appellees.
Office of the Solicitor General for appellant.
Rustics F. de los Reyes, Jr. for appellees.

AQUINO, J.:t.hqw
This is a case involving the validity of a 1967
regulation, penalizing electro fishing in fresh water
fisheries, promulgated by the Secretary of Agriculture
and Natural Resources and the Commissioner of
Fisheries under the old Fisheries Law and the law
creating the Fisheries Commission.
On March 7, 1969 Jose Buenaventura, Godofredo
Reyes, Benjamin Reyes, Nazario Aquino and Carlito del
Rosario were charged by a Constabulary investigator in
the municipal court of Sta. Cruz, Laguna with having
violated Fisheries Administrative Order No. 84-1.
It was alleged in the complaint that the five accused in
the morning of March 1, 1969 resorted to electro
fishing in the waters of Barrio San Pablo Norte, Sta.
Cruz by "using their own motor banca, equipped with
motor; with a generator colored green with attached
dynamo colored gray or somewhat white; and
electrocuting device locally known as sensored with a
somewhat webbed copper wire on the tip or other end
of a bamboo pole with electric wire attachment which
was attached to the dynamo direct and with the use of
these devices or equipments catches fish thru electric
current, which destroy any aquatic animals within its
cuffed reach, to the detriment and prejudice of the
populace" (Criminal Case No. 5429).

Upon motion of the accused, the municipal court

quashed the complaint. The prosecution appealed. The
Court of First Instance of Laguna affirmed the order of
dismissal (Civil Case No. SC-36). The case is now
before this Court on appeal by the prosecution under
Republic Act No. 5440.
The lower court held that electro fishing cannot be
penalize because electric current is not an obnoxious
or poisonous substance as contemplated in section I I
of the Fisheries Law and that it is not a substance at all
but a form of energy conducted or transmitted by
substances. The lower court further held that, since
the law does not clearly prohibit electro fishing, the
executive and judicial departments cannot consider it
unlawful.
As legal background, it should be stated that section
11 of the Fisheries Law prohibits "the use of any
obnoxious or poisonous substance" in fishing.
Section 76 of the same law punishes any person who
uses an obnoxious or poisonous substance in fishing
with a fine of not more than five hundred pesos nor
more than five thousand, and by imprisonment for not
less than six months nor more than five years.
It is noteworthy that the Fisheries Law does not
expressly punish .electro fishing." Notwithstanding the
silence of the law, the Secretary of Agriculture and
Natural Resources, upon the recommendation of the
Commissioner of Fisheries, promulgated Fisheries

Administrative Order No. 84 (62 O.G. 1224), prohibiting

electro fishing in all Philippine waters. The order is
quoted below: +.wph!1
SUBJECT: PROHIBITING ELECTRO FISHING
IN ALL WATERS +.wph!1

(b) Electro Fishing. Electro fishing is the

catching of fish with the use of electric
current. The equipment used are of many
electrical devices which may be battery
or generator-operated and from and
available source of electric current.

OF
THE
PHILIPPINES.

(c) 'Persons' includes firm, corporation,

association, agent or employee.

Pursuant to Section 4 of Act No. 4003, as amended,

and Section 4 of R.A. No. 3512, the following rules and
regulations regarding the prohibition of electro fishing
in all waters of the Philippines are promulgated for the
information and guidance of all concerned.+.wph!
1
SECTION 1. Definition. Words and
terms used in this Order 11 construed as
follows:
(a) Philippine waters or territorial waters
of the Philippines' includes all waters of
the Philippine Archipelago, as defined in
the t between the United States and
Spain, dated respectively the tenth of
December, eighteen hundred ninety eight
and the seventh of November, nineteen
hundred. For the purpose of this order,
rivers, lakes and other bodies of fresh
waters are included.

(d) 'Fish' includes other aquatic products.

SEC. 2. Prohibition. It shall be
unlawful for any person to engage in
electro fishing or to catch fish by the use
of electric current in any portion of the
Philippine waters except for research,
educational and scientific purposes which
must be covered by a permit issued by
the Secretary of Agriculture and Natural
Resources which shall be carried at all
times.
SEC. 3. Penalty. Any violation of the
provisions of this Administrative Order
shall subject the offender to a fine of not
exceeding five hundred pesos (P500.00)
or imprisonment of not extending six (6)
months or both at the discretion of the
Court.

SEC. 4. Repealing Provisions. All

administrative orders or parts thereof
inconsistent with the provisions of this
Administrative Order are hereby revoked.
SEC.
5.
Effectivity.

This
Administrative Order shall take effect six
(60) days after its publication in the Office
Gazette.
On June 28, 1967 the Secretary of Agriculture and
Natural Resources, upon the recommendation of the
Fisheries Commission, issued Fisheries Administrative
Order No. 84-1, amending section 2 of Administrative
Order No. 84, by restricting the ban against electro
fishing to fresh water fisheries (63 O.G. 9963).
Thus, the phrase "in any portion of the Philippine
waters" found in section 2, was changed by the
amendatory order to read as follows: "in fresh water
fisheries in the Philippines, such as rivers, lakes,
swamps, dams, irrigation canals and other bodies of
fresh water."

The Court of First Instance and the prosecution (p. 11

of brief) assumed that electro fishing is punishable
under section 83 of the Fisheries Law (not under
section 76 thereof), which provides that any other
violation of that law "or of any rules and regulations
promulgated thereunder shall subject the offender to a
fine of not more than two hundred pesos (P200), or in t
for not more than six months, or both, in the discretion
of the court."
That assumption is incorrect because 3 of the
aforequoted Administrative Order No. 84 imposes a fm
of not exceeding P500 on a person engaged in electro
fishing, which amount the 83. It seems that the
Department of Fisheries prescribed their own penalty
for swift fishing which penalty is less than the severe
penalty imposed in section 76 and which is not
Identified to the at penalty imposed in section 83.
Had Administrative Order No. 84 adopted the fighter
penalty prescribed in on 83, then the crime of electro
fishing would be within the exclusive original
jurisdiction of the inferior court (Sec. 44 [f], Judiciary
Law; People vs. Ragasi, L-28663, September 22,
We have discussed this pre point, not raised in the
briefs, because it is obvious that the crime of electro
fishing which is punishable with a sum up to P500, falls
within the concurrent original jurisdiction of the inferior
courts and the Court of First instance (People vs.
Nazareno, L-40037, April 30, 1976, 70 SCRA 531 and
the cases cited therein).

And since the instant case was filed in the municipal

court of Sta. Cruz, Laguna, a provincial capital, the
order of d rendered by that municipal court was
directly appealable to the Court, not to the Court of
First Instance of Laguna (Sec. 45 and last par. of
section 87 of the Judiciary Law; Esperat vs. Avila, L25992, June 30, 1967, 20 SCRA 596).
It results that the Court of First Instance of Laguna had
no appellate jurisdiction over the case. Its order
affirming the municipal court's order of dismissal is
void for lack of motion. This appeal shall be treated as
a direct appeal from the municipal court to this Court.
(See People vs. Del Rosario, 97 Phil. 67).
In this appeal, the prosecution argues that
Administrative Orders Nos. 84 and 84-1 were not
issued under section 11 of the Fisheries Law which, as
indicated above, punishes fishing by means of an
obnoxious or poisonous substance. This contention is
not well-taken because, as already stated, the Penal
provision of Administrative Order No. 84 implies that
electro fishing is penalized as a form of fishing by
means of an obnoxious or poisonous substance under
section 11.
The prosecution cites as the legal sanctions for the
prohibition against electro fishing in fresh water
fisheries (1) the rule-making power of the Department
Secretary under section 4 of the Fisheries Law; (2) the
function of the Commissioner of Fisheries to enforce
the provisions of the Fisheries Law and the regulations

Promulgated thereunder and to execute the rules and

regulations consistent with the purpose for the
creation of the Fisheries Commission and for the
development of fisheries (Sec. 4[c] and [h] Republic
Act No. 3512; (3) the declared national policy to
encourage, Promote and conserve our fishing
resources (Sec. 1, Republic Act No. 3512), and (4)
section 83 of the Fisheries Law which provides that
"any other violation of" the Fisheries Law or of any
rules and regulations promulgated thereunder "shall
subject the offender to a fine of not more than two
hundred pesos, or imprisonment for not more than six
months, or both, in the discretion of the court."
As already pointed out above, the prosecution's
reference to section 83 is out of place because the
penalty for electro fishing under Administrative order
No. 84 is not the same as the penalty fixed in section
83.
We are of the opinion that the Secretary of Agriculture
and Natural Resources and the Commissioner of
Fisheries exceeded their authority in issuing Fisheries
Administrative Orders Nos. 84 and 84-1 and that those
orders are not warranted under the Fisheries
Commission, Republic Act No. 3512.
The reason is that the Fisheries Law does not expressly
prohibit electro fishing. As electro fishing is not banned
under that law, the Secretary of Agriculture and
Natural Resources and the Commissioner of Fisheries
are powerless to penalize it. In other words,

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

electro fishing, are devoid of any legal basis.
Had the lawmaking body intended to punish electro
fishing, a penal provision to that effect could have
been easily embodied in the old Fisheries Law.
That law punishes (1) the use of obnoxious or
poisonous substance, or explosive in fishing; (2)
unlawful fishing in deepsea fisheries; (3) unlawful
taking of marine molusca, (4) illegal taking of sponges;
(5) failure of licensed fishermen to report the kind and
quantity of fish caught, and (6) other violations.
Nowhere in that law is electro fishing specifically
punished. Administrative Order No. 84, in punishing
electro fishing, does not contemplate that such an
offense fails within the category of "other violations"
because, as already shown, the penalty for electro
fishing is the penalty next lower to the penalty for
fishing with the use of obnoxious or poisonous
substances, fixed in section 76, and is not the same as
the penalty for "other violations" of the law and
regulations fixed in section 83 of the Fisheries Law.
The lawmaking body cannot delegate to an executive
official the power to declare what acts should
constitute an offense. It can authorize the issuance of
regulations and the imposition of the penalty provided
for in the law itself. (People vs. Exconde 101 Phil. 11
25, citing 11 Am. Jur. 965 on p. 11 32).

Originally, Administrative Order No. 84 punished

electro fishing in all waters. Later, the ban against
electro fishing was confined to fresh water fisheries.
The amendment created the impression that electro
fishing is not condemnable per se. It could be tolerated
in marine waters. That circumstances strengthens the
view that the old law does not eschew all forms of
electro fishing.
However, at present, there is no more doubt that
electro fishing is punishable under the Fisheries Law
and that it cannot be penalized merely by executive
revolution because Presidential Decree No. 704, which
is a revision and consolidation of all laws and decrees
affecting fishing and fisheries and which was
promulgated on May 16, 1975 (71 O.G. 4269),
expressly punishes electro fishing in fresh water and
salt water areas.
That decree provides: +.wph!1
SEC. 33. Illegal fishing, dealing in
illegally caught fish or fishery/aquatic
products. It shall he unlawful for any
person to catch, take or gather or cause
to be caught, taken or gathered fish or
fishery/aquatic products in Philippine
waters with the use of explosives,
obnoxious or poisonous substance, or by
the use of electricity as defined in
paragraphs (1), (m) and (d), respectively,
of Section 3 hereof: ...

The decree Act No. 4003, as amended, Republic Acts

Nos. 428, 3048, 3512 and 3586, Presidential Decrees
Nos. 43, 534 and 553, and all , Acts, Executive Orders,
rules and regulations or parts thereof inconsistent with
it (Sec. 49, P. D. No. 704).
The inclusion in that decree of provisions defining and
penalizing electro fishing is a clear recognition of the
deficiency or silence on that point of the old Fisheries
Law. It is an admission that a mere executive
regulation is not legally adequate to penalize electro
fishing.
Note that the definition of electro fishing, which is
found in section 1 (c) of Fisheries Administrative Order
No. 84 and which is not provided for the old Fisheries
Law, is now found in section 3(d) of the decree. Note
further that the decree penalty electro fishing by
"imprisonment from two (2) to four (4) years", a
punishment which is more severe than the penalty of a
time of not excluding P500 or imprisonment of not
more than six months or both fixed in section 3 of
Fisheries Administrative Order No. 84.
An examination of the rule-making power of executive
officials and administrative agencies and, in particular,
of the Secretary of Agriculture and Natural Resources
(now Secretary of Natural Resources) under the
Fisheries Law sustains the view that he ex his authority
in penalizing electro fishing by means of an
administrative order.

Administrative agent are clothed with rule-making

powers because the lawmaking body finds it
impracticable, if not impossible, to anticipate and
provide for the multifarious and complex situations
that may be encountered in enforcing the law. All that
is required is that the regulation should be germane to
the defects and purposes of the law and that it should
conform to the standards that the law prescribes
(People vs. Exconde 101 Phil. 1125; Director of
Forestry vs. Mu;oz, L-24796, June 28, 1968, 23 SCRA
1183, 1198; Geukeko vs. Araneta, 102 Phil. 706, 712).
The lawmaking body cannot possibly provide for all the
details in the enforcement of a particular statute (U.S.
vs. Tupasi Molina, 29 Phil. 119, 125, citing U.S. vs.
Grimaud 220 U.S. 506; Interprovincial Autobus Co., Inc.
vs. Coll. of Internal Revenue, 98 Phil. 290, 295-6).
The grant of the rule-making power to administrative
agencies is a relaxation of the principle of separation
of powers and is an exception to the nondeleption of
legislative, powers. Administrative regulations or
"subordinate legislation calculated to promote the
public interest are necessary because of "the growing
complexity of modem life, the multiplication of the
subjects of governmental regulations, and the
increased difficulty of administering the law" Calalang
vs. Williams, 70 Phil. 726; People vs. Rosenthal and
Osme;a, 68 Phil. 328).
Administrative regulations adopted under legislative
authority by a particular department must be in

harmony with the provisions of the law, and should be

for the sole purpose of carrying into effect its general
provisions. By such regulations, of course, the law
itself cannot be extended. (U.S. vs. Tupasi Molina,
supra). An administrative agency cannot amend an act
of Congress (Santos vs. Estenzo, 109 Phil. 419, 422;
Teoxon vs. Members of the d of Administrators, L25619, June 30, 1970, 33 SCRA 585; Manuel vs.
General Auditing Office, L-28952, December 29, 1971,
42 SCRA 660; Deluao vs. Casteel, L-21906, August 29,
1969, 29 SCRA 350).
The rule-making power must be confined to details for
regulating the mode or proceeding to carry into effect
the law as it his been enacted. The power cannot be
extended to amending or expanding the statutory
requirements or to embrace matters not covered by
the statute. Rules that subvert the statute cannot be
sanctioned. (University of Santo Tomas vs. Board of Tax
A 93 Phil. 376, 382, citing 12 C.J. 845-46. As to invalid
regulations, see of Internal Revenue vs. Villaflor 69
Phil. 319, Wise & Co. vs. Meer, 78 Phil. 655, 676; Del
March vs. Phil. Veterans Administrative, L-27299, June
27, 1973, 51 SCRA 340, 349).
There is no question that the Secretary of Agriculture
and Natural Resources has rule-making powers.
Section 4 of the Fisheries law provides that the
Secretary "shall from time to time issue instructions,
orders, and regulations consistent" with that law, "as
may be and proper to carry into effect the provisions
thereof." That power is now vested in the Secretary of

Natural Resources by on 7 of the Revised Fisheries law,

Presidential December No. 704.
Section 4(h) of Republic Act No. 3512 empower the Co
of Fisheries "to prepare and execute upon the approval
of the Secretary of Agriculture and Natural Resources,
forms instructions, rules and regulations consistent
with the purpose" of that enactment "and for the
development of fisheries."
Section 79(B) of the Revised Administrative Code
provides that "the Department Head shall have the
power to promulgate, whenever he may see fit do so,
all rules, regulates, orders, memorandums, and other
instructions,not contrary to law, to regulate the proper
working and harmonious and efficient administration
of each and all of the offices and dependencies of his
Department, and for the strict enforcement and proper
execution of the laws relative to matters under the
jurisdiction of said Department; but none of said rules
or orders shall prescribe penalties for the violation
thereof, except as expressly authorized by law."
Administrative regulations issued by a Department
Head in conformity with law have the force of law
(Valerie vs. Secretary of culture and Natural Resources,
117 Phil. 729, 733; Antique Sawmills, Inc. vs. Zayco, L20051, May 30, 1966, 17 SCRA 316). As he exercises
the rule-making power by delegation of the lawmaking
body, it is a requisite that he should not transcend the
bound demarcated by the statute for the exercise of
that power; otherwise, he would be improperly

exercising legislative power in his own right and not as

a surrogate of the lawmaking body.
Article 7 of the Civil Code embodies the basic principle
that administrative or executive acts, orders and
regulations shall be valid only when they are not
contrary to the laws or the Constitution."
As
noted
by Justice
Fernando,
"except
for
constitutional officials who can trace their competence
to act to the fundamental law itself, a public office
must be in the statute relied upon a grant of power
before he can exercise it." "department zeal may not
be permitted to outrun the authority conferred by
statute." (Radio Communications of the Philippines,
Inc. vs. Santiago, L-29236, August 21, 1974, 58 SCRA
493, 496-8).
"Rules and regulations when promulgated in
pursuance of the procedure or authority conferred
upon the administrative agency by law, partake of the
nature of a statute, and compliance therewith may be
enforced by a penal sanction provided in the law. This
is so because statutes are usually couched in general
terms, after expressing the policy, purposes,
objectives, remedies and sanctions intended by the
legislature. The details and the manner of carrying out
the law are oftentimes left to the administrative
agency entrusted with its enforcement. In this sense, it
has been said that rules and regulations are the
product of a delegated power to create new or
additional legal provisions that have the effect of law."

The rule or regulation should be within the scope of

the statutory authority granted by the legislature to
the administrative agency. (Davis, Administrative Law,
p. 194, 197, cited in Victories Milling Co., Inc. vs. Social
Security Commission, 114 Phil. 555, 558).
In case of discrepancy between the basic law and a
rule or regulation issued to implement said law, the
basic law prevails because said rule or regulation
cannot go beyond the terms and provisions of the
basic law (People vs. Lim, 108 Phil. 1091).
This Court in its decision in the Lim case, supra,
promulgated on July 26, 1960, called the attention of
technical men in the executive departments, who draft
rules and regulations, to the importance and necessity
of closely following the legal provisions which they
intend to implement so as to avoid any possible
misunderstanding or confusion.
The rule is that the violation of a regulation prescribed
by an executive officer of the government in
conformity with and based upon a statute authorizing
such regulation constitutes an offense and renders the
offender liable to punishment in accordance with the
provisions of the law (U.S. vs. Tupasi Molina, 29 Phil.
119, 124).
In other words, a violation or infringement of a rule or
regulation validly issued can constitute a crime
punishable as provided in the authorizing statute and

by virtue of the latter (People vs. Exconde 101 Phil.

1125, 1132).

proceeded against under section 45 of the Federal

Penal Code.

It has been held that "to declare what shall constitute

a crime and how it shall be punished is a power vested
exclusively in the legislature, and it may not be
delegated to any other body or agency" (1 Am. Jur.
2nd, sec. 127, p. 938; Texas Co. vs. Montgomery, 73 F.
Supp. 527).

Augusto A. Santos was prosecuted under that provision

in the Court of First Instance of Cavite for having
caused his two fishing boats to fish, loiter and anchor
without permission from the Secretary within three
kilometers from the shoreline of Corrigidor Island.

In the instant case the regulation penalizing electro

fishing is not strictly in accordance with the Fisheries
Law, under which the regulation was issued, because
the law itself does not expressly punish electro fishing.
The instant case is similar to People vs. Santos, 63
Phil. 300. The Santos case involves section 28 of Fish
and Game Administrative Order No. 2 issued by the
Secretary of Agriculture and Natural Resources
pursuant to the aforementioned section 4 of the
Fisheries Law.
Section 28 contains the proviso that a fishing boat not
licensed under the Fisheries Law and under the said
administrative order may fish within three kilometers
of the shoreline of islands and reservations over which
jurisdiction is exercised by naval and military
reservations authorities of the United States only upon
receiving
written
permission
therefor,
which
permission may be granted by the Secretary upon
recommendation of the military or naval authorities
concerned. A violation of the proviso may be

This Court held that the Fisheries Law does not prohibit
boats not subject to license from fishing within three
kilometers of the shoreline of islands and reservations
over which jurisdiction is exercised by naval and
military authorities of the United States, without
permission from the Secretary of Agriculture and
Natural Resources upon recommendation of the
military and naval authorities concerned.
As the said law does not penalize the act mentioned in
section 28 of the administrative order, the
promulgation of that provision by the Secretary "is
equivalent to legislating on the matter, a power which
has not been and cannot be delegated to him, it being
expressly reserved" to the lawmaking body. "Such an
act constitutes not only an excess of the regulatory
power conferred upon the Secretary but also an
exercise of a legislative power which he does not have,
and therefore" the said provision "is null and void and
without effect". Hence, the charge against Santos was
dismiss.

A penal statute is strictly construed. While an

administrative agency has the right to make ranks and
regulations to carry into effect a law already enacted,
that power should not be confused with the power to
enact a criminal statute. An administrative agency can
have only the administrative or policing powers
expressly or by necessary implication conferred upon
it. (Glustrom vs. State, 206 Ga. 734, 58 Second 2d
534; See 2 Am. Jr. 2nd 129-130).
Where the legislature has delegated to executive or
administrative officers and boards authority to
promulgate rules to carry out an express legislative
purpose, the rules of administrative officers and
boards, which have the effect of extending, or which
conflict with the authority granting statute, do not
represent a valid precise of the rule-making power but
constitute an attempt by an administrative body to
legislate (State vs. Miles, Wash. 2nd 322, 105 Pac. 2nd
51).
In a prosecution for a violation of an administrative
order, it must clearly appear that the order is one
which falls within the scope of the authority conferred
upon the administrative body, and the order will be
scrutinized with special care. (State vs. Miles supra).
The Miles case involved a statute which authorized the
State Game Commission "to adopt, promulgate,
amend and/or repeal, and enforce reasonable rules
and
regulations
governing
and/or
prohibiting
the taking of the various classes of game.

Under
that
statute,
the
Game
Commission
promulgated a rule that "it shall be unlawful to offer,
pay or receive any reward, prize or compensation for
the hunting, pursuing, taking, killing or displaying of
any game animal, game bird or game fish or any part
thereof."
Beryl S. Miles, the owner of a sporting goods store,
regularly offered a ten-down cash prize to the person
displaying the largest deer in his store during the open
for hunting such game animals. For that act, he was
charged with a violation of the rule Promulgated by the
State Game Commission.
It was held that there was no statute penalizing
the display of game. What the statute penalized was
the taking of game. If the lawmaking body desired to
prohibit the display of game, it could have readily said
so. It was not lawful for the administrative board to
extend or modify the statute. Hence, the indictment
against Miles was quashed. The Miles case is similar to
this case.
WHEREFORE, the lower court's decision of June 9, 1970
is set aside for lack of appellate jurisdiction and the
order of dismissal rendered by the municipal court of
Sta. Cruz, Laguna in Criminal Case No. 5429 is
affirmed. Costs de oficio. SO ORDERED.
G.R. No. 95832 August 10, 1992

MAYNARD
R.
PERALTA, petitioner,
vs.
CIVIL SERVICE COMMISSION, respondent.

3. 01 October 1989 Sunday

Tranquilino F. Meris Law Office for petitioner.

5. 21 October 1989 Saturday

4. 20 October 1989 Friday

6. 22 October 1989 Sunday

PADILLA, J.:
Petitioner was appointed Trade-Specialist II on 25
September 1989 in the Department of Trade and
Industry (DTI). His appointment was classified as
"Reinstatement/Permanent". Before said appointment,
he was working at the Philippine Cotton Corporation, a
government-owned and controlled corporation under
the Department of Agriculture.
On 8 December 1989, petitioner received his initial
salary, covering the period from 25 September to 31
October 1989. Since he had no accumulated leave
credits, DTI deducted from his salary the amount
corresponding to his absences during the covered
period, namely, 29 September 1989 and 20 October
1989, inclusive of Saturdays and Sundays. More
specifically, the dates of said absences for which
salary deductions were made, are as follows:
1. 29 September 1989 Friday
2. 30 September 1989 Saturday

Petitioner sent a memorandum to Amando T. Alvis

(Chief, General Administrative Service) on 15
December 1989 inquiring as to the law on salary
deductions, if the employee has no leave credits.
Amando T. Alvis answered petitioner's query in a
memorandum dated 30 January 1990 citing Chapter
5.49 of the Handbook of Information on the Philippine
Civil Service which states that "when an employee is
on leave without pay on a day before or on a day
immediately preceding a Saturday, Sunday or Holiday,
such Saturday, Sunday, or Holiday shall also be
without pay (CSC, 2nd Ind., February 12, 1965)."
Petitioner then sent a latter dated 20 February 1990
addressed to Civil Service Commission (CSC) Chairman
Patricia A. Sto. Tomas raising the following question:
Is an employee who was on leave of
absence without pay on a day before or
on a day time immediately preceding a
Saturday, Sunday or Holiday, also
considered on leave of absence without

pay on such
Holiday? 1

Saturday,

Sunday

or

Petitioner in his said letter to the CSC Chairman argued

that a reading of the General Leave Law as contained
in the Revised Administrative Code, as well as the old
Civil Service Law (Republic Act No. 2260), the Civil
Service Decree (Presidential Decree No. 807), and the
Civil Service Rules and Regulation fails to disclose a
specific provision which supports the CSC rule at issue.
That being the case, the petitioner contented that he
cannot be deprived of his pay or salary corresponding
to the intervening Saturdays, Sundays or Holidays (in
the factual situation posed), and that the withholding
(or deduction) of the same is tantamount to a
deprivation of property without due process of law.
On 25 May 1990, respondent Commission promulgated
Resolution No. 90-497, ruling that the action of the DTI
in deducting from the salary of petitioner, a part
thereof corresponding to six (6) days (September 29,
30, October 1, 20, 21, 22, 1989) is in order. 2 The CSC
stated that:
In a 2nd Indorsement dated February 12,
1965 of this Commission, which embodies
the policy on leave of absence without
pay incurred on a Friday and Monday,
reads:
Mrs. Rosalinda Gonzales is
not entitled to payment of

salary
corresponding
to
January 23 and 24, 1965,
Saturday
and
Sunday,
respectively, it appearing
that she was present on
Friday, January 22, 1965 but
was on leave without pay
beginning January 25, the
succeeding Monday. It is the
view of this Office that an
employee who has no more
leave credit in his favor is
not entitled to the payment
of salary on Saturdays,
Sundays or holidays unless
such non-working days occur
within the period of service
actually rendered. (Emphasis
supplied)
The rationale for the above ruling which
applies only to those employees who are
being paid on monthly basis, rests on the
assumption that having been absent on
either Monday or Friday, one who has no
leave credits, could not be favorably
credited with intervening days had the
same been working days. Hence, the
above policy that for an employee on
leave without pay to be entitled to salary
on Saturdays, Sundays or holidays, the
same must occur between the dates

where the said employee actually renders

service. To rule otherwise would allow an
employee who is on leave of absent (sic)
without pay for a long period of time to
be entitled to payment of his salary
corresponding to Saturdays, Sundays or
holidays.
It
also
discourages
the
employees who have exhausted their
leave credits from absenting themselves
on a Friday or Monday in order to have a
prolonged weekend, resulting in the
prejudice of the government and the
public in general. 3
Petitioner filed a motion for reconsideration and in
Resolution No. 90-797, the respondent Commission
denied said motion for lack of merit. The respondent
Commission in explaining its action held:
The Primer on the Civil Service dated
February 21, 1978, embodies the Civil
Service Commission rulings to be
observed whenever an employee of the
government who has no more leave
credits, is absent on a Friday and/or a
Monday is enough basis for the deduction
of his salaries corresponding to the
intervening Saturdays and Sundays. What
the Commission perceived to be without
basis is the demand of Peralta for the
payment of his salaries corresponding to
Saturdays and Sundays when he was in

fact on leave of absence without pay on a

Friday prior to the said days. A reading of
Republic Act No. 2260 (sic) does not show
that a government employee who is on
leave of absence without pay on a day
before
or
immediately
preceding
Saturdays, Sunday or legal holiday is
entitled to payment of his salary for said
days. Further, a reading of Senate Journal
No. 67 dated May 4, 1960 of House Bill
No. 41 (Republic Act No. 2625) reveals
that while the law excludes Saturdays,
Sundays and holidays in the computation
of leave credits, it does not, however,
include a case where the leave of
absence is without pay. Hence, applying
the principle of inclusio unius est exclusio
alterius, the claim of Peralta has no merit.
Moreover, to take a different posture
would be in effect giving more premium
to employees who are frequently on leave
of absence without pay, instead of
discouraging them from incurring further
absence
without
pay. 4
Petitioner's motion for reconsideration having been
denied, petitioner filed the present petition.
What is primarily questioned by the petitioner is the
validity of the respondent Commission's policy
mandating salary deductions corresponding to the

intervening Saturdays, Sundays or Holidays where an

employee without leave credits was absent on the
immediately preceding working day.
During the pendency of this petition, the respondent
Commission promulgated Resolution No. 91-540 dated
23 April 1991 amending the questioned policy,
considering that employees paid on a monthly basis
are not required to work on Saturdays, Sunday or
Holidays. In said amendatory Resolution, the
respondent Commission resolved "to adopt the policy
that when an employee, regardless of whether he has
leave credits or not, is absent without pay on day
immediately preceding or succeeding Saturday,
Sunday or holiday, he shall not be considered absent
on those days." Memorandum Circular No. 16 Series of
1991 dated 26 April 1991, was also issued by CSC
Chairman Sto. Tomas adopting and promulgating the
new policy and directing the Heads of Departments,
Bureaus and Agencies in the national and local
governments,
including
government-owned
or
controlled corporations with original charters, to
oversee the strict implementation of the circular.
Because of these developments, it would seem at first
blush that this petition has become moot and
academic since the very CSC policy being questioned
has already been amended and, in effect, Resolutions
No. 90-497 and 90-797, subject of this petition
for certiorari, have already been set aside and
superseded. But the issue of whether or not the policy
that had been adopted and in force since 1965 is valid

or not, remains unresolved. Thus, for reasons of public

interest and public policy, it is the duty of the Court to
make a formal ruling on the validity or invalidity of
such questioned policy.
The Civil Service Act of 1959 (R.A. No. 2260) conferred
upon the Commissioner of Civil Service the following
powers and duties:
Sec. 16 (e) with the approval by the
President to prescribe, amend and
enforce suitable rules and regulations for
carrying into effect the provisions of this
Civil Service Law, and the rules
prescribed pursuant to the provisions of
this law shall become effective thirty days
after publication in the Official Gazette;
xxx xxx xxx
(k) To perform other functions that
properly belong to a central personnel
agency. 5
Pursuant to the foregoing provisions, the Commission
promulgated the herein challenged policy. Said policy
was embodied in a 2nd Indorsement dated 12
February 1965 of the respondent Commission involving
the case of a Mrs. Rosalinda Gonzales. The respondent
Commission ruled that an employee who has no leave
credits in his favor is not entitled to the payment of
salary on Saturdays, Sundays or Holidays unless such

non-working days occur within the period of service

actually rendered. The same policy is reiterated in the
Handbook of Information on the Philippine Civil
Service. 6 Chapter Five on leave of absence provides
that:
5.51. When intervening Saturday, Sunday
or holiday considered as leave without
pay when an employee is on leave
without pay on a day before or on a day
immediately
preceding
a
Saturday,
Sunday or holiday, such Saturday, Sunday
or holiday shall also be without pay. (CSC,
2nd Ind., Feb. 12, 1965).
It is likewise illustrated in the Primer on the Civil
Service 7 in the section referring to Questions and
Answers on Leave of Absences, which states the
following:
27. How is leave of an employee who has
no more leave credits computed if:
(1)
he
is
ab
se
nt
on
a
Fri

da
y
an
d
th
e
foll
ow
ing
Mo
nd
ay
?
(2)
if
he
is
ab
se
nt
on
Fri
da
y
bu
t
re
po
rts
to
wo

rk
th
e
foll
ow
ing
Mo
nd
ay
?
(3)
if
he
is
ab
se
nt
on
a
Mo
nd
ay
bu
t
pr
es
en
t
th
e
pr

ec
edi
ng
Fri
da
y?
(1)
He
is
co
nsi
de
re
d
on
lea
ve
wit
ho
ut
pa
y
for
4
da
ys
co
ver
ing
Fri

da
y
to
Mo
nd
ay;
(2)
He
is
co
nsi
de
re
d
on
lea
ve
wit
ho
ut
pa
y
for
3
da
ys
fro
m
Fri
da

y
to
Su
nd
ay;
(3)
He
is
co
nsi
de
re
d
on
lea
ve
wit
ho
ut
pa
y
for
3
da
ys
fro
m
Sa
tur
da

y
to
Mo
nd
ay.
When an administrative or executive agency renders
an opinion or issues a statement of policy, it merely
interprets a pre-existing law; and the administrative
interpretation of the law is at best advisory, for it is the
courts that finally determine what the law means. 8 It
has also been held that interpretative regulations need
not be published. 9
In promulgating as early as 12 February 1965 the
questioned policy, the Civil Service Commission
interpreted the provisions of Republic Act No. 2625
(which took effect on 17 June 1960) amending the
Revised Administrative Code, and which stated as
follows:
Sec. 1. Sections two hundred eighty-four
and two hundred eighty-five-A of the
Administrative Code, as amended, are
further amended to read as follows:
Sec. 284. After at least six
months'
continues
(sic)
faithful,
and
satisfactory
service, the President or
proper head of department,
or the chief of office in the

case of municipal employees

may, in his discretion, grant
to an employee or laborer,
whether
permanent
or
temporary, of the national
government, the provincial
government,
the
government of a chartered
city, of a municipality, of a
municipal district or of
government-owned
or
controlled corporations other
than those mentioned in
Section two hundred sixtyeight, two hundred seventyone
and
two
hundred
seventy-four hereof, fifteen
days vacation leave of
absence
with
full
pay,
exclusive
of
Saturdays,
Sundays and holidays, for
each
calendar
year
of
service.
Sec. 285-A. In addition to the
vacation leave provided in
the two preceding sections
each employee or laborer,
whether
permanent
or
temporary, of the national
government, the provincial
government,
the

government of a chartered
city, of a municipality or
municipal district in any
regularly
and
specially
organized province, other
than those mentioned in
Section two hundred sixtyeight, two hundred seventyone
and
two
hundred
seventy-four hereof, shall be
entitled to fifteen days of
sick leave for each year of
service
with
full
pay,
exclusive
of
Saturdays,
Sundays
and
holidays: Provided, Thatsuch
sick leave will be granted by
the
President,
Head
of
Department or independent
office concerned, or the chief
of office in case of municipal
employees, only on account
of sickness on the part of the
employee
or
laborer
concerned or of any member
of his immediate family.
The Civil Service Commission in its here questioned
Resolution No. 90-797 construed R.A. 2625 as referring
only to government employees who have earned leave
credits against which their absences may be charged
with pay, as its letters speak only of leaves of absence

with full pay. The respondent Commission ruled that a

reading of R.A. 2625 does not show that a government
employee who is on leave of absence without pay on a
day before or immediately preceding a Saturday,
Sunday or legal holiday is entitled to payment of his
salary for said days.
Administrative construction, if we may repeat, is not
necessarily binding upon the courts. Action of an
administrative agency may be disturbed or set aside
by the judicial department if there is an error of law, or
abuse of power or lack of jurisdiction or grave abuse of
discretion clearly conflicting with either the letter or
the spirit of a legislative enactment. 10
We find this petition to be impressed with merit.
As held in Hidalgo vs. Hidalgo:

11

. . . . where the true intent of the law is

clear that calls for the application of the
cardinal rule of statutory construction
that such intent or spirit must prevail over
the letter thereof, for whatever is within
the spirit of a statute is within the statute,
since adherence to the letter would result
in absurdity, injustice and contradictions
and would defeat the plain and vital
purpose of the statute.
The intention of the legislature in the enactment of
R.A. 2625 may be gleaned from, among others, the

sponsorship speech of Senator Arturo M. Tolentino

during the second reading of House Bill No. 41 (which
became R.A. 2625). He said:
The law actually provides for sick leave
and vacation leave of 15 days each year
of service to be with full pay. But under
the present law, in computing these
periods of leaves, Saturday, Sunday and
holidays are included in the computation
so that if an employee should become
sick and absent himself on a Friday and
then he reports for work on a Tuesday, in
the computation of the leave the
Saturday and Sunday will be included, so
that he will be considered as having had a
leave of Friday, Saturday, Sunday and
Monday, or four days.
The purpose of the present bill is to
exclude from the computation of the
leave those days, Saturdays and Sundays,
as well as holidays, because actually the
employee is entitled not to go to office
during those days. And it is unfair and
unjust to him that those days should be
counted in the computation of leaves. 12
With this in mind, the construction by the respondent
Commission of R.A. 2625 is not in accordance with the
legislative intent. R.A. 2625 specifically provides that
government employees are entitled to fifteen (15)

days vacation leave of absence with full pay and

fifteen (15) days sick leave with full pay, exclusive of
Saturdays, Sundays and Holidays in both cases. Thus,
the law speaks of the granting of a right and the law
does not provide for a distinction between those who
have accumulated leave credits and those who have
exhausted their leave credits in order to enjoy such
right. Ubi lex non distinguit nec nos distinguere
debemus. The
fact
remains
that
government
employees, whether or not they have accumulated
leave credits, are not required by law to work on
Saturdays, Sundays and Holidays and thus they can
not be declared absent on such non-working days.
They cannot be or are not considered absent on nonworking days; they cannot and should not be deprived
of their salary corresponding to said non-working days
just because they were absent without pay on the day
immediately prior to, or after said non-working days. A
different rule would constitute a deprivation of
property without due process.
Furthermore, before their amendment by R.A. 2625,
Sections 284 and 285-A of the Revised Administrative
Code applied to all government employee without any
distinction. It follows that the effect of the amendment
similarly applies to all employees enumerated in
Sections 284 and 285-A, whether or not they have
accumulated leave credits.
As the questioned CSC policy is here declared invalid,
we are next confronted with the question of what
effect such invalidity will have. Will all government

employees on a monthly salary basis, deprived of their

salaries corresponding to Saturdays, Sundays or legal
holidays (as herein petitioner was so deprived) since
12 February 1965, be entitled to recover the amounts
corresponding to such non-working days?
The general rule vis-a-vis legislation is that an
unconstitutional act is not a law; it confers no rights; it
imposes no duties; it affords no protection; it creates
no office; it is in legal contemplation as inoperative as
though it had never been passed. 13
But, as held
vs. Baxter
Bank: 14

in Chicot

County

Drainage

District
State

. . . . It is quite clear, however, that such

broad statements as to the effect of a
determination of unconstitutionality must
be taken with qualifications. The actual
existence of a statute, prior to such
determination is an operative fact and
may have consequences which cannot
always be ignored. The past cannot
always be erased by a new judicial
declaration. The effect of the subsequent
ruling as to invalidity may have to be
considered in various aspects with
respect to particular relations, individual
and corporate; and particular conduct,
private and official.

To allow all the affected government employees,

similarly situated as petitioner herein, to claim their
deducted salaries resulting from the past enforcement
of the herein invalidated CSC policy, would cause quite
a heavy financial burden on the national and local
governments considering the length of time that such
policy has been effective. Also, administrative and
practical considerations must be taken into account if
this ruling will have a strict restrospective application.
The Court, in this connection, calls upon the
respondent Commission and the Congress of the
Philippines, if necessary, to handle this problem with
justice and equity to all affected government
employees.
It must be pointed out, however, that after CSC
Memorandum Circular No. 16 Series of 1991
amending the herein invalidated policy was
promulgated on 26 April 1991, deductions from
salaries made after said date in contravention of the
new CSC policy must be restored to the government
employees concerned.
WHEREFORE,
the
petition
is
GRANTED,
CSC
Resolutions No. 90-497 and 90-797 are declared NULL
and VOID. The respondent Commission is directed to
take the appropriate action so that petitioner shall be
paid the amounts previously but unlawfully deducted
from his monthly salary as above indicated. No costs.
SO ORDERED.

Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Bidin,

Grio-Aquino, Medialdea, Regalado, Davide, Jr.,
Romero, Nocon and Bellosillo, JJ., concur.

Court of Tax Appeals 2 ("CTA") in C.T.A. Case No. 5015,

entitled "Fortune Tobacco Corporation vs. Liwayway
Vinzons-Chato in her capacity as Commissioner of
Internal Revenue."
The facts, by and large, are not in dispute.
Fortune Tobacco Corporation ("Fortune Tobacco") is
engaged in the manufacture of different brands of
cigarettes.

G.R. No. 119761 August 29, 1996

COMMISSIONER
OF
INTERNAL
REVENUE, petitioner,
vs.
HON. COURT OF APPEALS, HON. COURT OF TAX
APPEALS
and
FORTUNE
TOBACCO
CORPORATION,respondents.

VITUG, J.:p
The Commissioner of Internal Revenue ("CIR") disputes
the decision, dated 31 March 1995, of respondent
Court of Appeals 1 affirming the 10th August 1994
decision and the 11th October 1994 resolution of the

On various dates, the Philippine Patent Office issued to

the corporation separate certificates of trademark
registration over "Champion," "Hope," and "More"
cigarettes. In a letter, dated 06 January 1987, of then
Commissioner of Internal Revenue Bienvenido A. Tan,
Jr., to Deputy Minister Ramon Diaz of the Presidential
Commission on Good Government, "the initial position
of the Commission was to classify 'Champion,' 'Hope,'
and 'More' as foreign brands since they were listed in
the World Tobacco Directory as belonging to foreign
companies. However, Fortune Tobacco changed the
names of 'Hope' to 'Hope Luxury' and 'More' to
'PremiumMore,' thereby removing the said brands from
the foreign brand category. Proof was also submitted
to the Bureau (of Internal Revenue ['BIR']) that
'Champion' was an original Fortune Tobacco
Corporation register and therefore a local brand." 3 Ad
Valorem taxes were imposed on these brands, 4 at the
following rates:
BRAND AD VALOREM TAX RATE
E.O. 22 and E.O. 273 RA 6956
06-23-86
07-25-87
06-18-90
07-01-86 01-01-88 07-05-90

Hope
Luxury
M.
100's
Sec.
142,
(c),
(2)
40%
45%
Hope
Luxury
M.
King
Sec.
142,
(c),
(2)
40%
45%
More
Premium
M.
100's
Sec.
142,
(c),
(2)
40%
45%
More
Premium
International
Sec.
142,
(c),
(2)
40%
45%
Champion
Int'l.
M.
100's
Sec.
142,
(c),
(2)
40%
45%
Champion
M.
100's
Sec.
142,
(c),
(2)
40%
45%
Champion
M.
King
Sec.
142,
(c),
last
par.
15%
20%
Champion
Lights
Sec. 142, (c), last par. 15% 20% 5

actual manufacturer's wholesale price,

whichever is higher:

A bill, which later became Republic Act ("RA")

No. 7654, 6 was enacted, on 10 June 1993, by
the legislature and signed into law, on 14 June
1993, by the President of the Philippines. The
new law became effective on 03 July 1993. It
amended Section 142(c)(1) of the National
Internal Revenue Code ("NIRC") to read; as
follows:

xxx xxx xxx

Sec. 142. Cigars and Cigarettes.

xxx xxx xxx
(c) Cigarettes packed by machine.
There shall be levied, assessed and
collected on cigarettes packed by
machine a tax at the rates prescribed
below
based
on
the
constructive
manufacturer's wholesale price or the

(1) On locally manufactured cigarettes

which are currently classified and taxed
at
fifty-five
percent
(55%) or
the
exportation of which is not authorized by
contract or otherwise, fifty-five (55%)
provided that the minimum tax shall not
be less than Five Pesos (P5.00) per pack.
(2)
On other
cigarettes,
(45%) provided
shall not be less
per pack.

locally
manufactured
forty-five
percent
that the minimum tax
than Three Pesos (P3.00)

When the registered manufacturer's

wholesale
price
or
the
actual
manufacturer's wholesale price whichever
is higher of existing brands of cigarettes,
including the amounts intended to cover
the taxes, of cigarettes packed in
twenties does not exceed Four Pesos and
eighty centavos (P4.80) per pack, the rate
shall
be
twenty
percent
(20%). 7 (Emphasis supplied)
About a month after the enactment and two (2)
days before the effectivity of RA 7654, Revenue
Memorandum Circular No. 37-93 ("RMC 37-93"),
was issued by the BIR the full text of which
expressed:

REPUBLIKA
NG
PILIPINAS
KAGAWARAN
NG
PANANALAPI
KAWANIHAN NG RENTAS INTERNAS
July 1, 1993
REVENUE MEMORANDUM CIRCULAR NO.
37-93
SUBJECT: Reclassification of Cigarettes
Subject to Excise Tax
TO: All Internal Revenue Officers and
Others Concerned.
In view of the issues raised on whether
"HOPE,"
"MORE"
and
"CHAMPION"
cigarettes which are locally manufactured
are appropriately considered as locally
manufactured cigarettes bearing a foreign
brand, this Office is compelled to review
the previous rulings on the matter.
Section 142 (c)(1) National Internal
Revenue Code, as amended by R.A. No.
6956, provides:
On
locally
manufactured
cigarettes bearing a foreign
brand,
fifty-five
percent
(55%) Provided, That this
rate shall apply regardless of
whether or not the right to
use or title to the foreign
brand
was
sold
or

transferred by its owner to

the
local
manufacturer.
Whenever it has to be
determined whether or not a
cigarette bears a foreign
brand, the listing of brands
manufactured
in
foreign
countries appearing in the
current
World
Tobacco
Directory shall govern.
Under the foregoing, the test for
imposition of the 55% ad valorem tax on
cigarettes
is
that
the
locally
manufactured cigarettes bear a foreign
brand regardless of whether or not the
right to use or title to the foreign brand
was sold or transferred by its owner to
the local manufacturer. The brand must
be originally owned by a foreign
manufacturer or producer. If ownership of
the cigarette brand is, however, not
definitely determinable, ". . . the listing of
brands manufactured in foreign countries
appearing in the current World Tobacco
Directory shall govern. . . ."
"HOPE" is listed in the World Tobacco
Directory as being manufactured by (a)
Japan Tobacco, Japan and (b) Fortune
Tobacco, Philippines. "MORE" is listed in
the said directory as being manufactured
by: (a) Fills de Julia Reig, Andorra; (b)
Rothmans, Australia; (c) RJR-Macdonald
Canada; (d) Rettig-Strenberg, Finland; (e)
Karellas, Greece; (f) R.J. Reynolds,

Malaysia; (g) Rothmans, New Zealand; (h)

Fortune Tobacco, Philippines; (i) R.J.
Reynolds, Puerto Rico; (j) R.J. Reynolds,
Spain; (k) Tabacalera, Spain; (l) R.J.
Reynolds, Switzerland; and (m) R.J.
Reynolds, USA. "Champion" is registered
in
the
said
directory
as
being
manufactured by (a) Commonwealth
Bangladesh; (b) Sudan, Brazil; (c) Japan
Tobacco, Japan; (d) Fortune Tobacco,
Philippines; (e) Haggar, Sudan; and (f)
Tabac Reunies, Switzerland.
Since there is no showing who among the
above-listed
manufacturers
of
the
cigarettes bearing the said brands are the
real owner/s thereof, then it follows that
the same shall be considered foreign
brand for purposes of determining the ad
valorem tax pursuant to Section 142 of
the National Internal Revenue Code. As
held in BIR Ruling No. 410-88, dated
August 24, 1988, "in cases where it
cannot be established or there is dearth
of evidence as to whether a brand is
foreign or not, resort to the World Tobacco
Directory should be made."
In view of the foregoing, the aforesaid
brands of cigarettes, viz: "HOPE," "MORE"
and "CHAMPION" being manufactured by
Fortune Tobacco Corporation are hereby
considered
locally
manufactured
cigarettes bearing a foreign brand subject
to the 55% ad valorem tax on cigarettes.

Any ruling inconsistent herewith

revoked or modified accordingly.

is

(SGD)
LIWAYWAY
VINZONSCHATO
Commissione
On 02 July 1993, at about 17:50 hours, BIR
Deputy Commissioner Victor A. Deoferio, Jr.,
sent via telefax a copy of RMC 37-93 to Fortune
Tobacco but it was addressed to no one in
particular. On 15 July 1993, Fortune Tobacco
received, by ordinary mail, a certified xerox
copy of RMC 37-93.
In a letter, dated 19 July 1993, addressed to the
appellate division of the BIR, Fortune Tobacco
requested for a review, reconsideration and
recall of RMC 37-93. The request was denied on
29 July 1993. The following day, or on 30 July
1993, the CIR assessed Fortune Tobacco for ad
valorem tax
deficiency
amounting
to
P9,598,334.00.
On 03 August 1993, Fortune Tobacco filed a
petition for review with the CTA. 8
On 10 August 1994, the CTA upheld the position
of Fortune Tobacco and adjudged:
WHEREFORE,
Revenue
Memorandum
Circular No. 37-93 reclassifying the
brands of cigarettes, viz: "HOPE," "MORE"
and "CHAMPION" being manufactured by

Fortune Tobacco Corporation as locally

manufactured cigarettes bearing a foreign
brand subject to the 55% ad valorem tax
on cigarettes is found to be defective,
invalid and unenforceable, such that
when R.A. No. 7654 took effect on July 3,
1993, the brands in question were not
CURRENTLY CLASSIFIED AND TAXED at
55% pursuant to Section 1142(c)(1) of the
Tax Code, as amended by R.A. No. 7654
and were therefore still classified as other
locally manufactured cigarettes and taxed
at 45% or 20% as the case may be.
Accordingly,
the
deficiency ad
valorem tax
assessment
issued
on
petitioner Fortune Tobacco Corporation in
the amount of P9,598,334.00, exclusive of
surcharge and interest, is hereby
canceled for lack of legal basis.
Respondent Commissioner of Internal
Revenue
is hereby enjoined
from
collecting the deficiency tax assessment
made and issued on petitioner in relation
to the implementation of RMC No. 37-93.
SO ORDERED.

In its resolution, dated 11 October 1994, the CTA

dismissed for lack of merit the motion for
reconsideration.
The CIR forthwith filed a petition for review with
the Court of Appeals, questioning the CTA's 10th
August 1994 decision and 11th October 1994

resolution. On 31 March 1993, the appellate

court's Special Thirteenth Division affirmed in all
respects the assailed decision and resolution.
In the instant petition, the Solicitor General
argues: That
I. RMC 37-93 IS A RULING OR
OPINION
OF
THE
COMMISSIONER
OF
INTERNAL
REVENUE
INTERPRETING
THE
PROVISIONS OF THE TAX
CODE.
II. BEING AN INTERPRETATIVE
RULING OR OPINION, THE
PUBLICATION OF RMC 37-93,
FILING OF COPIES THEREOF
WITH THE UP LAW CENTER
AND PRIOR HEARING ARE
NOT NECESSARY TO ITS
VALIDITY, EFFECTIVITY AND
ENFORCEABILITY.
III. PRIVATE RESPONDENT IS
DEEMED TO HAVE BEEN
NOTIFIED OR RMC 37-93 ON
JULY 2, 1993.
IV. RMC 37-93 IS NOT
DISCRIMINATORY SINCE IT
APPLIES TO ALL LOCALLY
MANUFACTURED
CIGARETTES
SIMILARLY
SITUATED
AS
"HOPE,"

"MORE" AND
CIGARETTES.

"CHAMPION"

V. PETITIONER WAS NOT

LEGALLY PROSCRIBED FROM
RECLASSIFYING
"HOPE,"
"MORE" AND "CHAMPION"
CIGARETTES BEFORE THE
EFFECTIVITY OF R.A. NO.
7654.
VI. SINCE RMC 37-93 IS AN
INTERPRETATIVE RULE, THE
INQUIRY IS NOT INTO ITS
VALIDITY, EFFECTIVITY OR
ENFORCEABILITY BUT INTO
ITS
CORRECTNESS
OR
PROPRIETY; RMC 37-93 IS
CORRECT. 10
In fine, petitioner opines that RMC 37-93 is
merely an interpretative ruling of the BIR which
can thus become effective without any prior
need for notice and hearing, nor publication,
and that its issuance is not discriminatory since
it would apply under similar circumstances to all
locally manufactured cigarettes.
The Court must sustain both the appellate court
and the tax court.
Petitioner stresses on the wide and ample
authority of the BIR in the issuance of rulings for
the effective implementation of the provisions of
the National Internal Revenue Code. Let it be
made clear that such authority of the

Commissioner is not here doubted. Like any

other government agency, however, the CIR
may not disregard legal requirements or
applicable principles in the exercise of its quasilegislative powers.
Let us first distinguish between two kinds of
administrative
issuances

a legislative
rule and aninterpretative rule.
In Misamis Oriental Association of Coco Traders,
Inc., vs. Department of Finance Secretary, 11 the
Court expressed:
. . . a legislative rule is in the nature of
subordinate legislation, designed to
implement a primary legislation by
providing the details thereof . In the same
way that laws must have the benefit of
public hearing, it is generally required
that before a legislative rule is adopted
there must be hearing. In this connection,
the Administrative Code of 1987 provides:
Public Participation. If not otherwise
required by law, an agency shall, as far as
practicable, publish or circulate notices of
proposed rules and afford interested
parties the opportunity to submit their
views prior to the adoption of any rule.

(2) In the fixing of rates, no rule or final

order shall be valid unless the proposed
rates shall have been published in a
newspaper of general circulation at least
two (2) weeks before the first hearing
thereon.
(3) In case of opposition, the rules on
contested cases shall be observed.
In addition such rule must be published.
On the other hand, interpretative rules
are designed to provide guidelines to the
law which the administrative agency is in
charge of enforcing. 12
It should be understandable that when an
administrative rule is merely interpretative in
nature, its applicability needs nothing further
than its bare issuance for it gives no real
consequence more than what the law itself has
already prescribed. When, upon the other hand,
the administrative rule goes beyond merely
providing for the means that can facilitate or
render least cumbersome the implementation of
the law but substantially adds to or increases
the burden of those governed, it behooves the
agency to accord at least to those directly
affected a chance to be heard, and thereafter to
be duly informed, before that new issuance is
given the force and effect of law.
A reading of RMC 37-93, particularly considering
the circumstances under which it has been
issued, convinces us that the circular cannot be
viewed simply as a corrective measure

(revoking in the process the previous holdings of

past Commissioners) or merely as construing
Section 142(c)(1) of the NIRC, as amended, but
has, in fact and most importantly, been made in
order to place "Hope Luxury," "Premium More"
and "Champion" within the classification of
locally manufactured cigarettes bearing foreign
brands and to thereby have them covered by RA
7654. Specifically, the new law would have its
amendatory provisions applied to locally
manufactured cigarettes which at the time of its
effectivity were not so classified as bearing
foreign brands. Prior to the issuance of the
questioned circular, "Hope Luxury," "Premium
More," and "Champion" cigarettes were in the
category
of
locally
manufactured
cigarettes notbearing foreign brand subject to
45% ad valorem tax. Hence, without RMC 37-93,
the enactment of RA 7654, would have had no
new tax rate consequence
on private
respondent's products. Evidently, in order to
place "Hope Luxury," "Premium More," and
"Champion" cigarettes within the scope of the
amendatory law and subject them to an
increased tax rate, the now disputed RMC 37-93
had to be issued. In so doing, the BIR not simply
intrepreted the law; verily, it legislated under its
quasi-legislative authority. The due observance
of the requirements of notice, of hearing, and of
publication should not have been then ignored.
Indeed, the BIR itself, in its RMC 10-86, has
observed and provided:

RMC
NO.
10-86
Effectivity of Internal Revenue Rules and
Regulations

Orders bearing on internal

revenue
tax
rules
and
regulations.

It has been observed that one of the

problem areas bearing on compliance
with Internal Revenue Tax rules and
regulations is lack or insufficiency of due
notice to the tax paying public. Unless
there is due notice, due compliance
therewith may not be reasonably
expected. And most importantly, their
strict enforcement could possibly suffer
from legal infirmity in the light of the
constitutional provision on "due process
of law" and the essence of the Civil Code
provision concerning effectivity of laws,
whereby
due
notice
is
a
basic
requirement (Sec. 1, Art. IV, Constitution;
Art. 2, New Civil Code).

(2) Except when the law

otherwise
expressly
provides,
the
aforesaid
internal
revenue
tax
issuances shall not begin to
be operative until after due
notice thereof may be fairly
presumed.

In order that there shall be a just

enforcement of rules and regulations, in
conformity with the basic element of due
process, the following procedures are
hereby prescribed for the drafting,
issuance and implementation of the said
Revenue Tax Issuances:
(1) This Circular shall apply
only
to
(a)
Revenue
Regulations; (b) Revenue
Audit Memorandum Orders;
and
(c)
Revenue
Memorandum Circulars and
Revenue
Memorandum

Due notice of the said

issuances may be fairly
presumed only after the
following procedures have
been taken;
xxx xxx xxx
(5) Strict compliance with
the foregoing procedures is
enjoined. 13
Nothing on record could tell us that it was either
impossible or impracticable for the BIR to
observe
and
comply
with
the
above
requirements before giving effect to its
questioned circular.
Not insignificantly, RMC 37-93 might have
likewise infringed on uniformity of taxation.

Article VI, Section 28, paragraph 1, of the 1987

Constitution mandates taxation to be uniform
and equitable. Uniformity requires that all
subjects or objects of taxation, similarly
situated, are to be treated alike or put on equal
footing both in privileges and liabilities. 14 Thus,
all taxable articles or kinds of property of the
same class must be taxed at the same
rate 15 and the tax must operate with the same
force and effect in every place where the
subject may be found.
Apparently, RMC 37-93 would only apply to
"Hope
Luxury,"
"Premium
More"
and
"Champion" cigarettes and, unless petitioner
would be willing to concede to the submission of
private respondent that the circular should, as in
fact my esteemed colleague Mr. Justice Bellosillo
so expresses in his separate opinion, be
considered adjudicatory in nature and thus
violative of due process following the Ang
Tibay 16 doctrine, the measure suffers from lack
of uniformity of taxation. In its decision, the CTA
has keenly noted that other cigarettes bearing
foreign brands have not been similarly included
within the scope of the circular, such as
1. Locally manufactured by ALHAMBRA
INDUSTRIES, INC.
(a) "PALM TREE" is listed as
manufactured by office of
Monopoly, Korea (Exhibit
"R")

2. Locally manufactured by LA SUERTE

CIGAR and CIGARETTE COMPANY
(a) "GOLDEN KEY" is listed
being
manufactured
by
United Tobacco, Pakistan
(Exhibit "S")
(b) "CANNON" is listed as
being
manufactured
by
Alpha Tobacco, Bangladesh
(Exhibit "T")
3. Locally manufactured by LA PERLA
INDUSTRIES, INC.
(a) "WHITE HORSE" is listed
as being manufactured by
Rothman's, Malaysia (Exhibit
"U")
(b) "RIGHT" is listed as being
manufactured by SVENSKA,
Tobaks, Sweden (Exhibit "V1")
4. Locally manufactured
CORPORATION

by

MIGHTY

(a) "WHITE HORSE" is listed

as being manufactured by
Rothman's, Malaysia (Exhibit
"U-1")

5. Locally manufactured by STERLING

TOBACCO CORPORATION
(a) "UNION" is listed as being
manufactured by Sumatra
Tobacco,
Indonesia
and
Brown and Williamson, USA
(Exhibit "U-3")
(b) "WINNER" is listed as
being
manufactured
by
Alpha Tobacco, Bangladesh;
Nangyang, Hongkong; Joo
Lan,
Malaysia;
Pakistan
Tobacco
Co.,
Pakistan;
Premier Tobacco, Pakistan
and Haggar, Sudan (Exhibit
"U-4"). 17
The court quoted at length from the transcript of
the hearing conducted on 10 August 1993 by
the Committee on Ways and Means of the House
of Representatives; viz:
THE CHAIRMAN. So you have specific
information on Fortune Tobacco alone. You
don't have specific information on other
tobacco manufacturers. Now, there are
other brands which are similarly situated.
They are locally manufactured bearing
foreign brands. And may I enumerate to
you all these brands, which are also listed
in the World Tobacco Directory . . . Why
were these brand not reclassified at 55 if
your want to give a level playing filed to
foreign manufacturers?

MS. CHATO. Mr. Chairman, in fact, we

have already prepared a Revenue
Memorandum Circular that was supposed
to come after RMC No. 37-93 which have
really named specifically the list of locally
manufactured
cigarettes
bearing
a
foreign brand for excise tax purposes and
includes all these brands that you
mentioned at 55 percent except that at
that time, when we had to come up with
this, we were forced to study the brands
of Hope, More and Champion because we
were given documents that would
indicate the that these brands were
actually being claimed or patented in
other countries because we went by
Revenue Memorandum Circular 1488 and
we wanted to give some rationality to
how it came about but we couldn't find
the rationale there. And we really found
based on our own interpretation that the
only test that is given by that existing law
would be registration in the World
Tobacco Directory. So we came out with
this proposed revenue memorandum
circular which we forwarded to the
Secretary of Finance except that at that
point in time, we went by the Republic Act
7654 in Section 1 which amended Section
142, C-1, it said, that on locally
manufactured
cigarettes
which
are
currently classified and taxed at 55
percent. So we were saying that when
this law took effect in July 3 and if we are
going to come up with this revenue
circular thereafter, then I think our action

would really be subject to question but

we feel that . . . Memorandum Circular
Number 37-93 would really cover even
similarly situated brands. And in fact, it
was really because of the study, the short
time that we were given to study the
matter that we could not include all the
rest of the other brands that would have
been really classified as foreign brand if
we went by the law itself. I am sure that
by the reading of the law, you would
without that ruling by Commissioner Tan
they would really have been included in
the definition or in the classification of
foregoing brands. These brands that you
referred to or just read to us and in fact
just for your information, we really came
out
with
a
proposed
revenue
memorandum circular for those brands.
(Emphasis supplied)
(Exhibit "FF-2-C," pp. V-5 TO V-6, VI-1 to
VI-3).
xxx xxx xxx
MS. CHATO. . . . But I do agree with you
now that it cannot and in fact that is why I
felt that we . . . I wanted to come up with
a more extensive coverage and precisely
why I asked that revenue memorandum
circular that would cover all those
similarly situated would be prepared but
because of the lack of time and I came
out with a study of RA 7654, it would not
have been possible to really come up

with the reclassification or the proper

classification of all brands that are listed
there. . .(emphasis supplied) (Exhibit "FF2d," page IX-1)
xxx xxx xxx
HON. DIAZ. But did you not consider that
there are similarly situated?
MS. CHATO. That is precisely why, Sir,
after we have come up with this Revenue
Memorandum Circular No. 37-93, the
other brands came about the would have
also clarified RMC 37-93 by I was saying
really because of the fact that I was just
recently appointed and the lack of time,
the period that was allotted to us to come
up with the right actions on the matter,
we were really caught by the July 3
deadline. But in fact, We have already
prepared
a
revenue
memorandum
circular clarifying with the other . . . does
not yet, would have been a list of locally
manufactured
cigarettes
bearing
a
foreign brand for excise tax purposes
which would include all the other brands
that were mentioned by the Honorable
Chairman. (Emphasis supplied) (Exhibit
"FF-2-d," par. IX-4). 18
All taken, the Court is convinced that the hastily
promulgated RMC 37-93 has fallen short of a valid and
effective administrative issuance.

WHEREFORE, the decision of the Court of Appeals,

sustaining that of the Court of Tax Appeals, is
AFFIRMED. No costs.
SO ORDERED.
Kapunan, J., concurs.

(1) On locally manufactured cigarettes

which are currently classified and taxed
at
fifty-five
percent
(55%) or
the
exportation of which is not authorized by
contract or otherwise, fifty-five percent
(55%) provided that the minimum tax
shall not be less than Five Pesos (P5.00)
per pack (emphasis supplied).
(2) On other locally manufactured
cigarettes,
forty-five
percent
(45%)
provided that the minimum tax shall not
be less than Three Pesos (P3.00) per
pack.

Separate Opinions

BELLOSILLO, J.: separate opinion:

RA 7654 was enacted by Congress on 10 June 1993,
signed into law by the President on 14 June 1993, and
took effect 3 July 1993. It amended partly Sec. 142,
par. (c), of the National Internal Revenue Code (NIRC)
to read
Sec. 142. Cigars and cigarettes. . . . .
(c) Cigarettes packed by machine.
There shall be levied, assessed and
collected on cigarettes packed by
machine a tax at the rates prescribed
below
based
on
the
constructive
manufacturer's wholesale price or the
actual manufacturer's wholesale price,
whichever is higher.

Prior to the effectivity of RA 7654, cigarette

brands Hope
Luxury, Premium
More and Champion were considered local brands
subjected to an ad valorem tax at the rate of 20-45%.
However, on 1 July 1993 or two (2) days before RA
7654 took effect, petitioner Commissioner of Internal
Revenue
issued
RMC
37-93
reclassifying
"Hope,More and Champion being manufactured by
Fortune Tobacco Corporation . . . . (as) locally
manufactured cigarettes bearing a foreign brand
subject
to
the
55% ad
valorem tax
on
cigarettes." 1 RMC 37-93 in effect subjectedHope
Luxury, Premium More and Champion cigarettes to the
provisions of Sec. 142, par. (c), subpar. (1), NIRC, as
amended by RA 7654, imposing upon these cigarette
brands an ad valorem tax of "fifty-five percent (55%)
provided that the minimum tax shall not be less than
Five Pesos (P5.00) per pack."
On 2 July 1993, Friday, at about five-fifty in the
afternoon, or a few hours before the effectivity of RA

7654, a copy of RMC 37-93 with a cover letter signed

by Deputy Commissioner Victor A. Deoferio of the
Bureau of Internal Revenue was sent by facsimile to
the factory of respondent corporation in Parang,
Marikina, Metro Manila. It appears that the letter
together with a copy of RMC 37-93 did not
immediately come to the knowledge of private
respondent as it was addressed to no one in particular.
It was only when the reclassification of respondent
corporation's cigarette brands was reported in the
column of Fil C. Sionil in Business Bulletin on 4 July
1993 that the president of respondent corporation
learned of the matter, prompting him to inquire into its
veracity and to request from petitioner a copy of RMC
37-93. On 15 July 1993 respondent corporation
received by ordinary mail a certified machine copy of
RMC 37-93.
Respondent
corporation
sought
a
review,
reconsideration and recall of RMC 37-93 but was
forthwith denied by the Appellate Division of the
Bureau of Internal Revenue. As a consequence, on 30
July 1993 private respondent was assessed an ad
valorem tax deficiency amounting to P9,598,334.00.
Respondent corporation went to the Court of Tax
Appeals (CTA) on a petition for review.
On 10 August 1994, after due hearing, the CTA found
the petition meritorious and ruled
Revenue Memorandum Circular No. 37-93
reclassifying
the
brands
of
cigarettes, viz: Hope, Moreand Champion
being manufactured by Fortune Tobacco
Corporation as locally manufactured
cigarettes bearing a foreign brand subject

to the 55% ad valorem tax on cigarettes

is found to be defective, invalid and
unenforceable . . . . Accordingly, the
deficiency ad valorem tax assessment
issued on petitioner Fortune Tobacco
Corporation
in
the
amount
of
P9,598,334.00, exclusive of surcharge
and interest, is hereby cancelled for lack
of legal basis. 2
The CTA held that petitioner Commissioner of
Internal Revenue failed to observe due process
of law in issuing RMC 37-93 as there was no
prior notice and hearing, and that RMC 37-93
was in itself discriminatory. The motion to
reconsider its decision was denied by the CTA
for lack of merit. On 31 March 1995 respondent
Court of Appeals affirmed in toto the decision of
the CTA. 3 Hence, the instant petition for review.
Petitioner now submits through the Solicitor General
that RMC 37-93 reclassifying Hope Luxury, Premium
Moreand Champion as locally manufactured cigarettes
bearing brands is merely an interpretative ruling which
needs no prior notice and hearing as held in Misamis
Oriental
Association
of
Coco
Traders,
Inc. v. Department of Finance Secretary. 4 It maintains
that neither is the assailed revenue memorandum
circular discriminatory as it merely "lays down the test
in determining whether or not a locally manufactured
cigarette bears a foreign brand using (only) the
cigarette brandsHope, More and Champion as specific
examples." 5
Respondent corporation on the other hand contends
that RMC 37-93 is not a mere interpretative ruling but

is adjudicatory in nature where prior notice and

hearing are mandatory, and that Misamis Oriental
Association of Coco Traders, Inc. v. Department of
Finance Secretary on which the Solicitor General relies
heavily is not applicable. Respondent Fortune Tobacco
Corporation also argues that RMC 37-93 discriminates
against its cigarette brands since those of its
competitors which are similarly situated have not been
reclassified.
The main issues before us are (a) whether RMC 37-93
is merely an interpretative rule the issuance of which
needs no prior notice and hearing, or an adjudicatory
ruling which calls for the twin requirements of prior
notice and hearing, and, (b) whether RMC 37-93 is
discriminatory in nature.
A brief discourse on the powers and functions of
administrative bodies may be instructive.
Administrative agencies posses quasi-legislative or
rule
making
powers
and
quasi-judicial
or
administrative adjudicatory powers. Quasi-legislative
or rule making power is the power to make rules and
regulations which results in delegated legislation that
is within the confines of the granting statute and the
doctrine of nondelegability and separability of powers.
Interpretative rule, one of the three (3) types of quasilegislative or rule making powers of an administrative
agency (the other two being supplementary or detailed
legislation, and contingent legislation), is promulgated
by the administrative agency to interpret, clarify or
explain statutory regulations under which the
administrative body operates. The purpose or
objective of an interpretative rule is merely to construe

the statute being administered. It purports to do no

more than interpret the statute. Simply, the rule tries
to say what the statute means. Generally, it refers to
no single person or party in particular but concerns all
those belonging to the same class which may be
covered by the said interpretative rule. It need not be
published and neither is a hearing required since it is
issued by the administrative body as an incident of its
power to enforce the law and is intended merely to
clarify statutory provisions for proper observance by
the people. In Taada v. Tuvera, 6 this Court expressly
said that "[i]interpretative regulations . . . . need not
be published."
Quasi-judicial or administrative adjudicatory power on
the other hand is the power of the administrative
agency to adjudicate the rights of persons before it. It
is the power to hear and determine questions of fact to
which the legislative policy is to apply and to decide in
accordance with the standards laid down by the law
itself in enforcing and administering the same
law. 7 The administrative body exercises its quasijudicial power when it performs in a judicial manner an
act which is essentially of an executive or
administrative nature, where the power to act in such
manner is incidental to or reasonably necessary for the
performance of the executive or administrative duty
entrusted to it. 8 In carrying out their quasi-judicial
functions the administrative officers or bodies are
required to investigate facts or ascertain the existence
of facts, hold hearings, weigh evidence, and draw
conclusions from them as basis for their official action
and exercise of discretion in a judicial nature. Since
rights of specific persons are affected it is elementary
that in the proper exercise of quasi-judicial power due

process must be observed in the conduct of the

proceedings.
The importance of due process cannot be
underestimated. Too basic is the rule that no person
shall be deprived of life, liberty or property without due
process of law. Thus when an administrative
proceeding is quasi-judicial in character, notice and
fair open hearing are essential to the validity of the
proceeding. The right to reasonable prior notice and
hearing embraces not only the right to present
evidence but also the opportunity to know the claims
of the opposing party and to meet them. The right to
submit arguments implies that opportunity otherwise
the right may as well be considered impotent. And
those who are brought into contest with government in
a quasi-judicial proceeding aimed at the control of
their activities are entitled to be fairy advised of what
the government proposes and to be heard upon its
proposal before it issues its final command.
There are cardinal primary rights which must be
respected in administrative proceedings. The landmark
case ofAng Tibay v. The Court of Industrial
Relations 9 enumerated these rights: (1) the right to a
hearing, which includes the right of the party
interested or affected to present his own case and
submit evidence in support thereof; (2) the tribunal
must consider the evidence presented; (3) the decision
must have something to support itself; (4) the
evidence must be substantial; (5) the decision must be
rendered on the evidence presented at the hearing, or
at least contained in the record and disclosed to the
parties affected; (6) the tribunal or any of its judges
must act on its or his own independent consideration
of the law and facts of the controversy, and not simply

accept the views of a subordinate in arriving at a

decision; and, (7) the tribunal should in all
controversial questions render its decision in such
manner that the parties to the proceeding may know
the various issues involved and the reasons for the
decision rendered.
In determining whether RMC No. 37-93 is merely an
interpretative rule which requires no prior notice and
hearing, or an adjudicatory rule which demands the
observance of due process, a close examination of
RMC 37-93 is in order. Noticeably, petitioner
Commissioner of Internal Revenue at first interprets
Sec. 142, par. (c), subpar. (1), of the NIRC, as
amended, by citing the law and clarifying or explaining
what it means
Section 142 (c) (1), National Internal
Revenue Code, as amended by R.A. No.
6956, provides: On locally manufactured
cigarettes bearing a foreign brand, fiftyfive percent (55%) Provided, That this
rate shall apply regardless of whether or
not the right to use or title to the foreign
brand was sold or transferred by its owner
to the local manufacturer. Whenever it
has to be determined whether or not a
cigarette bears a foreign brand, the listing
of brands manufactured in foreign
countries appearing in the current World
Tobacco Directory shall govern.
Under the foregoing, the test for
imposition of the 55% ad valorem tax on
cigarettes
is
that
the
locally
manufactured cigarettes bear a foreign

brand regardless of whether or not the

right to use or title to the foreign brand
was sold or transferred by its owner to
the local manufacturer. The brand must
be originally owned by a foreign
manufacturer or producer. If ownership of
the cigarette brand is, however, not
definitely
determinable,
". . . the listing of brands manufactured in
foreign countries appearing in the current
World Tobacco Directory shall govern . . ."
Then petitioner makes a factual finding by declaring
that Hope (Luxury), (Premium) More and Champion are
manufactured by other foreign manufacturers

Hope is listed in the World Tobacco

Directory as being manufactured by (a)
Japan Tobacco, Japan and (b) Fortune
Tobacco, Philippines. More is listed in the
said directory as being manufactured by:
(a) Fills de Julia Reig, Andorra; (b)
Rothmans, Australia; (c) RJR-MacDonald,
Canada; (d) Rettig-Strenberg, Finland; (e)
Karellas, Greece; (f) R.J. Reynolds,
Malaysia; (g) Rothmans, New Zealand; (h)
Fortune Tobacco, Philippines; (i) R.J.
Reynolds, Puerto Rico; (j) R.J. Reynolds,
Spain; (k) Tabacalera, Spain; (l) R.J.
Reynolds, Switzerland; and (m) R.J.
Reynolds, USA. "Champion" is registered
in
the
said
directory
as
being
manufactured by: (a) Commonwealth
Bangladesh; (b) Sudan, Brazil; (c) Japan
Tobacco, Japan; (d) Fortune Tobacco,
Philippines; (e) Haggar, Sudan; and (f)
Tabac Reunies, Switzerland.
From this finding, petitioner thereafter formulates an
inference that since it cannot be determined who
among the manufacturers are the real owners of the
brands in question, then these cigarette brands should
be considered foreign brands
Since there is no showing who among the
above-listed
manufacturers
of
the
cigarettes bearing the said brands are the
real owner/s thereof, then it follows that
the same shall be considered foreign
brand for purposes of determining the ad
valorem tax pursuant to Section 142 of
the National Internal Revenue Code. As

held in BIR Ruling No. 410-88, dated

August 24, 1988, "in cases where it
cannot be established or there is dearth
of evidence as to whether a brand is
foreign or not, resort to the World Tobacco
Directory should be made."
Finally, petitioner caps RMC 37-93 with a disposition
specifically directed at respondent corporation
reclassifying
its
cigarette
brands
as
locally
manufactured bearing foreign brands
In view of the foregoing, the aforesaid
brands
of
cigarettes, viz: Hope, More and Champion
being manufactured by Fortune Tobacco
Corporation are hereby considered locally
manufactured cigarettes bearing a foreign
brand subject to the 55% ad valorem tax
on cigarettes.
Any ruling inconsistent herewith
revoked or modified accordingly.

is

It is evident from the foregoing that in issuing RMC 3793 petitioner Commissioner of Internal Revenue was
exercising
her
quasi-judicial
or
administrative
adjudicatory power. She cited and interpreted the law,
made a factual finding, applied the law to her given set
of facts, arrived at a conclusion, and issued a ruling
aimed at a specific individual. Consequently prior
notice and hearing are required. It must be
emphasized that even the text alone of RMC 37-93
implies that reception of evidence during a hearing is
appropriate if not necessary since it invokes BIR Ruling
No. 410-88, dated August 24, 1988, which provides

that "in cases where it cannot be established or there

is dearth of evidence as to whether a brand is foreign
or not . . . ." Indeed, it is difficult to determine whether
a brand is foreign or not if it is not established by, or
there is dearth of, evidence because no hearing has
been called and conducted for the reception of such
evidence. In fine, by no stretch of the imagination can
RMC 37-93 be considered purely as an interpretative
rule requiring no previous notice and hearing and
simply interpreting, construing, clarifying or explaining
statutory regulations being administered by or under
which the Bureau of Internal Revenue operates.
It is true that both RMC 47-91 in Misamis Oriental
Association of Coco Traders v. Department of Finance
Secretary, and RMC 37-93 in the instant case reclassify
certain products for purposes of taxation. But the
similarity between the two revenue memorandum
circulars ends there. For in properly determining
whether a revenue memorandum circular is merely an
interpretative rule or an adjudicatory rule, its very
tenor and text, and the circumstances surrounding its
issuance will have no to be considered.
We quote RMC 47-91 promulgated 11 June 1991
Revenue Memorandum Circular No. 47-91
SUBJECT
:
Taxability
of
Copra
TO : All Revenue Officials and Employees
and Others Concerned.
For the information and guidance of all
officials and employees and others
concerned, quoted hereunder in its

entirety is VAT Ruling No. 190-90 dated

August 17, 1990:
COCOFED
MARKETING
RESEARCH
CORPORATION
6th Floor Cocofed Building
144
Amorsolo
Street
Legaspi
Village,
Makati
Metro Manila
Attention:
Ms.
rna
E. Reyes
Vice
President

Finance

In reply, please be informed

that
copra,
being
an
agricultural
non-food
product, is exempt from VAT
only if sale is made by the
primary producer pursuant
to Section 103 (a) of the Tax
Code, as amended. Thus as
a trading company and a
subsequent seller, your sale
of copra is already subject to
VAT pursuant to Section 9(b)
(1) of Revenue Regulations
5-27.
This revokes VAT Ruling Nos.
009-88 and 279-88.

Very truly you

Sirs:
This has reference to your
letter dated January 16,
1990
wherein
you
represented that inspite of
your VAT registration of your
copra trading company, you
are supposed to be exempt
from VAT on the basis of BIR
Ruling dated January 8, 1988
which considered copra as
an agricultural food product
in its original state. In this
connection, you request for
a
confirmation
of
your
opinion as aforestated.

(Sgd.) JOSE
Commissione
Internal Reven
As a clarification, this is the present and
official stand of this Office unless sooner
revoked or amended. All revenue officials
and employees are enjoined to give this
Circular as wide a publicity as possible.

(Sgd.) JOSE
Commissione
Internal Reven
Quite obviously, the very text of RMC 47-91 itself
shows that it is merely an interpretative rule as it

simply quotes a VAT Ruling and reminds those

concerned that the ruling is the present and official
stand of the Bureau of Internal Revenue. Unlike in RMC
37-93 where petitioner Commissioner manifestly
exercised
her
quasi-judicial
or
administrative
adjudicatory power, in RMC 47-91 there were no
factual findings, no application of laws to a given set of
facts, no conclusions of law, and no dispositive portion
directed at any particular party.
Another difference is that in the instant case, the
issuance of the assailed revenue memorandum
circular operated to subject the taxpayer to the new
law which was yet to take effect, while in Misamis, the
disputed revenue memorandum circular was issued
simply to restate and then clarify the prevailing
position and ruling of the administrative agency, and
no new law yet to take effect was involved. It merely
interpreted an existing law which had already been in
effect for some time and which was not set to be
amended. RMC 37-93 is thus prejudicial to private
respondent alone.
A third difference, and this likewise resolves the issue
of discrimination, is that RMC 37-93 was ostensibly
issued to subject the cigarette brands of respondent
corporation to a new law as it was promulgated two
days before the expiration of the old law and a few
hours before the effectivity of the new law. That RMC
37-93 is particularly aimed only at respondent
corporation and its three (3) cigarette brands can be
seen from the dispositive portion of the assailed
revenue memorandum circular
In view of the foregoing, the aforesaid
brands
of
cigarettes, viz: Hope, More,

and Champion being manufactured by

Fortune Tobacco Corporation are hereby
considered
locally
manufactured
cigarettes bearing a foreign brand subject
to the 55% ad valorem tax on cigarettes.
Any ruling inconsistent herewith
revoked or modified accordingly.

is

Thus the argument of the Solicitor General that RMC

37-93 is not discriminatory as "[i]t merely lays down
the test in determining whether or not a locally
manufactured cigarette bears a foreign brand using
the
cigarette
brandsHope, More and Champion as
specific examples," cannot be accepted, much less
sustained. Without doubt, RMC 37-93 has a
tremendous effect on respondent corporation and
solely on respondent corporation as its
deficiency ad valorem tax assessment on its removals
of Hope, Luxury, Premium
More,
and Championcigarettes for six (6) hours alone, i.e.,
from six o'clock in the evening of 2 July 1993 which is
presumably the time respondent corporation was
supposed to have received the facsimile message sent
by Deputy Commissioner Victor A. Deoferio, until
twelve o'clock midnight upon the effectivity of the new
law, was already P9,598,334.00. On the other hand,
RMC 47-91 was issued with no purpose except to state
and declare what has been the official stand of the
administrative agency on the specific subject matter,
and was indiscriminately directed to allcopra traders
with no particular individual in mind.
That petitioner Commissioner of Internal Revenue is an
expert in her filed is not attempted to be disputed;
hence, we do not question the wisdom of her act in

reclassifying the cigarettes. Neither do we deny her

the exercise of her quasi-legislative or quasi-judicial
powers. But most certainly, by constitutional mandate,
the Court must check the exercise of these powers and
ascertain whether petitioner has gone beyond the
legitimate bounds of her authority.
In the final analysis, the issue before us in not the
expertise, the authority to promulgate rules, or the
wisdom of petitioner as Commissioner of Internal
Revenue is reclassifying the cigarettes of private
respondents. It is simply the faithful observance by
government by government of the basic constitutional
right of a taxpayer to due process of law and equal
protection of the laws. This is what distresses me no
end the manner and the circumstances under which
the cigarettes of private respondent were reclassified
and correspondingly taxed under RMC 37-93, and
adjudicatory rule which therefore requires reasonable
notice and hearing before its issuance. It should not be
confused with RMC 47-91, which is a mere
interpretative rule.
In the earlier case of G.R. No. 119322, which
practically involved the same opposing interests, I also
voted to uphold the constitutional right of the taxpayer
concerned to due process and equal protection of the
laws. By a vote of 3-2, that view prevailed. In sequela,
we in the First Division who constituted the majority
found ourselves unjustly drawn into the vortex of a
nightmarish episode. The strong ripples whipped up by
my opinion expressed therein and of the majority
have yet to varnish when we are again in the imbroglio
of a similar dilemma. The unpleasant experience
should be reason enough to simply steer clear of this
controversy and surf on a pretendedloss of judicial

objectivity. Such would have been an easy way out, a

gracious exit, so to speak, albeit lame. But to
camouflage my leave with a sham excuse would be to
turn away from a professional vow I keep at all times; I
would not be true to myself, and to the people I am
committed to serve. Thus, as I have earlier expressed,
if placed under similar circumstances in some future
time, I shall have to brave again the prospect of
anothervilification and a tarnished image if only to
show proudly to the whole world that under the
present dispensation judicial independence in our
country is a true component of our democracy.
In fine, I am greatly perturbed by the manner RMC No.
37-93 was issued as well as the effect of such
issuance. For it cannot be denied that the
circumstances clearly demonstrate that it was hastily
issued without prior notice and hearing, and singling
out private respondent alone when two days before
a new tax law was to take effect petitioner reclassified
and taxed the cigarette brands of private respondent
at a higher rate. Obviously, this was to make it appear
that even before the anticipated date of effectivity of
the statute which was undeniably priorly known to
petitioner these brands were already currently
classified and taxed at fifty-five percent (55%), thus
shoving them into the purview of the law that was to
take effect two days after!
For sure, private respondent was not properly informed
before the issuance of the questioned memorandum
circular
that
its
cigarette
brands Hope
Luxury, Premium
More and Champion were
being
reclassified and subjected to a higher tax rate.
Naturally, the result would be to lose financially
because private respondent was still selling its

cigarettes at a price based on the old, lower tax rate.

Had there been previous notice and hearing, as
claimed by private respondent, it could have very well
presented its side, either by opposing the
reclassification, or by acquiescing thereto but
increasing the price of its cigarettes to adjust to the
higher tax rate. The reclassification and the ensuing
imposition of a tax rate increase therefore could not be
anything but confiscatory if we are also to consider the
claim of private respondent that the new tax is even
higher than the cost of its cigarettes.
Accordingly, I vote to deny the petition.

respondent Court of Appeals, to the effect that the

petitioner Commissioner of Internal Revenue had
indeed blatantly failed to comply with the said twin
requirements of notice and hearing, thereby rendering
the issuance of the questioned Circular to be in
violation of the due process clause of the Constitution.
It is also its dominant opinion that the questioned
Circular discriminates against private respondent
Fortune Tobacco Corporation insofar as it seems to
affect only its "Hope," "More," and "Champion"
cigarettes, to the exclusion of other cigarettes
apparently of the same kind or classification as these
cigarettes manufactured by private respondent.
With all due respect, I disagree with the majority in its
disquisition of the issues and its resulting conclusions.

HERMOSISIMA, JR., J.: dissenting

Private respondent Fortune Tobacco Corporation in the
instant case disputes its liability for deficiency ad
valorem excise taxes on its removals of "Hope,"
"More," and "Champion" cigarettes from 6:00 p.m. to
12:00 midnight of July 2, 1993, in the total amount of
P9,598,334.00. It claims that the circular, upon which
the assessment was based and made, is defective,
invalid and unenforceable for having been issued
without notice and hearing and in violation of the
equal
protection
clause
guaranteed
by
the
Constitution.
The majority upholds these claims of private
respondent, convinced that the Circular in question, in
the first place, did not give prior notice and hearing,
and so, it could not have been valid and effective. It
proceeds to affirm the factual findings of the Court of
Tax Appeals, which findings were considered correct by

Section 245 of the National Internal Revenue

Code,
as amended, empowers the Commissioner of
Internal
Revenue to issue the questioned Circular
Section 245 of the National Internal Revenue Code, as
amended, provides:
Sec. 245. Authority of Secretary of
Finance
to
promulgate
rules
and
regulations. The Secretary of Finance,
upon
recommendation
of
the
Commissioner,
shall
promulgate
all
needful rules and regulations for the
effective enforcement of the provisions of
this Code . . . without prejudice to the
power of the Commissioner of Internal
Revenue to make rulings or opinions in

connection with the implementation of

the provisions of internal revenue laws,
including rulings on the classification of
articles for sales tax and similar purposes.
The subject of the questioned Circular is the
reclassification of cigarettes subject to excise taxes. It
was issued in connection with Section 142 (c) (1) of
the National Internal Revenue Code, as amended,
which imposes ad valorem excise taxes on locally
manufactured cigarettes bearing a foreign brand. The
same provision prescribes the ultimate criterion that
determines which cigarettes are to be considered
"locally manufactured cigarettes bearing a foreign
brand." It provides:
. . . Whenever it has to be determined
whether or not a cigarette bears a foreign
brand, the listing of brands manufactured
in foreign countries appearing in the
current World Tobacco Directory shall
govern.
There is only one World Tobacco Directory for a
given current year, and the same is mandated
by law to be the BIR Commissioner's controlling
basis for determining whether or not a particular
locally manufactured cigarette is one bearing a
foreign brand. In so making a determination,
petitioner should inquire into the entries in the
World Tobacco Directory for the given current
year and shall be held bound by such entries
therein. She is not required to subject the
results of her inquiries to feedback from the
concerned cigarette manufacturers, and it is
doubtlessly not desirable nor managerially

sound to court dispute thereon when the law

does not, in the first place, require debate or
hearing thereon. Petitioner may make such a
determination because she is the Chief
Executive Officer of the administrative agency
that is the Bureau of Internal Revenue in which
are vested quasi-legislative powers entrusted to
it by the legislature in recognition of its more
encompassing and unequalled expertise in the
field of taxation.
The vesture of quasi-legislative and quasijudicial powers in administrative bodies is
not unconstitutional, unreasonable and
oppressive. It has been necessitated by
"the growing complexity of the modern
society" (Solid Homes, Inc. vs. Payawal,
177 SCRA 72, 79). More and more
administrative bodies are necessary to
help in the regulation of society's ramified
activities. "Specialized in the particular
field assigned to them, they can deal with
the problems thereof with more expertise
and dispatch than can be expected from
the
legislature
or
the
courts
of
justice" . . . 1
Statutorily empowered to issue rulings or opinions
embodying the proper determination in respect to
classifying articles, including cigarettes, for purposes
of tax assessment and collection, petitioner was acting
well within her prerogatives when she issued the
questioned Circular. And in the exercise of such
prerogatives under the law, she has in her favor the
presumption of regular performance of official duty
which must be overcome by clearly persuasive

evidence of stark error and grave abuse of discretion

in order to be overturned and disregarded.
It is irrelevant that the Court of Tax Appeals makes
much of the effect of the passing of Republic Act No.
7654 2on petitioner's power to classify cigarettes.
Although the decisions assailed and sought to be
reviewed, as well as the pleadings of private
respondent, are replete with alleged admissions of our
legislators to the effect that the said Act was intended
to freeze the current classification of cigarettes and
make the same an integral part of the said Act,
certainly the repeal, if any, of petitioner's power to
classify cigarettes must be reckoned from the
effectivity of the said Act and not before. Suffice it to
say that indisputable is the plain fact that the
questioned Circular was issued on July 1, 1993, while
the said Act took effect on July 3, 1993.
The contents of the questioned circular have not
been proven to be erroneous or illegal as to
render
issuance thereof an act of grave abuse of
discretion
on
the
part
of
petitioner
Commissioner
Prior to the effectivity of R.A. No. 7654, Section 142 (c)
(1) of the National Internal Revenue Code, as
amended, levies the following ad valorem taxes on
cigarettes in accordance with their predetermined
classifications as established by the Commissioner of
Internal Revenue:
. . . based on the manufacturer's
registered wholesale price:

(1) On locally manufactured cigarettes

bearing a foreign brand, fifty-five percent
(55%) Provided, That this rate shall apply
regardless of whether or not the right to
use or title to the foreign brand was sold
or transferred by its owner to the local
manufacturer. Whenever it has to be
determined whether or not a cigarette
bears a foreign brand, the listing of
brands manufactured in foreign countries
appearing in the current World Tobacco
Directory shall govern.
(2) Other locally manufactured cigarettes,
forty five percent (45%).
xxx xxx xxx
Prior to the issuance of the questioned Circular,
assessed against and paid by private respondent as ad
valoremexcise taxes on their removals of "Hope,"
"More," and "Champion" cigarettes were amounts
based on paragraph (2) above, i.e., the tax rate made
applicable on the said cigarettes was 45% at the most.
The reason for this is that apparently, petitioner's
predecessors have all made determinations to the
effect that the said cigarettes were to be considered
"other locally manufactured cigarettes" and not
"locally manufactured cigarettes bearing a foreign
brand." Even petitioner, until her issuance of the
questioned Circular, adhered to her predecessors'
determination as to the proper classification of the
above-mentioned cigarettes for purposes of ad
valorem excise
taxes.
Apparently,
the
past
determination that the said cigarettes were to be
classified as "other locally manufactured cigarettes"

was based on private respodnent's convenient move of

changing the names of "Hope" to "Hope Luxury" and
"More" to "Premium More." It also submitted proof that
"Champion" was an original Fortune Tobacco
Corporation register and, therefore, a local brand.
Having registered these brands with the Philippine
Patent Office and with corresponding evidence to the
effect, private respondent paid ad valorem excise
taxes computed at the rate of not more than 45%
which is the rate applicable to cigarettes considered as
locally manufactured brands.
How
these
past
determinations
pervaded
notwithstanding their erroneous basis is only tempered
by their innate quality of being merely errors in
interpretative ruling, the formulation of which does not
bind the government. Advantage over such errors may
precipitously be withdrawn from those who have been
benefiting from them once the same have been
discovered and rectified.
Petitioner correctly emphasizes that:
. . . the registration of said brands in the
name of private respondent is proof only
that it is the exclusive owner thereof in
the Philippines; it does not necessarily
follow, however, that it is the exclusive
owner thereof in the whole world.
Assuming
arguendo
that
private
respondent is the exclusive owner of said
brands in the Philippines, it does not
mean that they are local. Otherwise, they
would not have been listed in the WTD as
international brands manufactured by
different entities in different countries.

Moreover, it cannot be said that the

brands registered in the names of private
respondent are not the same brands
listed in the WTD because private
respondent is one of the manufacturers of
said brands listed in the WTD. 3
Private respondent attempts to cast doubt on the
determination made by petitioner in the questioned
Circular that Japan is a manufacturer of "Hope"
cigarettes. Private respondent's own inquiry into the
World Tobacco Directory reveals that Japan is not a
manufacturer of "Hope" cigarettes. In pointing this out,
private respondent concludes that the entire Circular is
erroneous and makes such error the principal proof of
its claim that the nature of the determination
embodied in the questioned Circular requires a hearing
on the facts and a debate on the applicable law. Such
a determination is adjudicatory in nature and,
therefore, requires notice and hearing. Private
respondent is, however, apparently only eager to show
error on the part of petitioner for acting with grave
abuse of discretion. Private respondent conveniently
forgets that petitioner, equipped with the expertise in
taxation, recognized in that expertise by the
legislature that vested in her the power to make rules
respecting classification of articles for taxation
purposes, and presumed to have regularly exercised
her prerogatives within the scope of her statutory
power to issue determinations specifically under
Section 142 (c) (1) in relation to Section 245 of the
National Internal Revenue Code, as amended, simply
followed the law as she understood it. Her task was to
determine which cigarette brands were foreign, and
she was directed by the law to look into the World
Tobacco Directory. Foreign cigarette brands were

legislated to be taxed at higher rates because of their

more extensive public exposure and international
reputation; their competitive edge against local brands
may easily be checked by imposition of higher tax
rates. Private respondent makes a mountain of the
mole hill circumstance that "Hope" is listed, not as
being "manufactured" by Japan but as being "used" by
Japan. Whether manufactured or used by Japan,
however, "Hope" remains a cigarette brand that can
not be said to be limited to local manufacture in the
Philippines. The undeniable fact is that it is a foreign
brand the sales in the Philippines of which are greatly
boosted by its international exposure and reputation.
The petitioner was well within her prerogatives, in the
exercise of her rule-making power, to classify articles
for taxation purposes, to interpret the laws which she
is mandated to administer. In interpreting the same,
petitioner must, in general, be guided by the principles
underlying taxation, i.e., taxes are the lifeblood of
Government, and revenue laws ought to be interpreted
in favor of the Government, for Government can not
survive without the funds to underwrite its varied
operational expenses in pursuit of the welfare of the
society which it serves and protects.
Private respondent claims that its business will be
destroyed by the imposition of additional ad
valorem taxes as a result of the effectivity of the
questioned Circular. It claims that under the vested
rights theory, it cannot now be made to pay higher
taxes after having been assessed for less in the past.
Of course private respondent will trumpet its losses, its
interests, after all, being its sole concern. What private
respondent fails to see is the loss of revenue by the
Government
which,
because
of
erroneous
determinations
made
by
its
past
revenue

commissioners, collected lesser taxes than what it was

entitled to in the first place. It is every citizen's duty to
pay the correct amount of taxes. Private respondent
will not be shielded by any vested rights, for there are
not vested rights to speak of respecting a wrong
construction of the law by administrative officials, and
such wrong interpretation does not place the
Government in estoppel to correct or overrule the
same. 4
The
Questioned
Circular
embodies
an
interpretative
ruling of petitioner Commissioner which as such
does
not require notice and hearing
As one of the public offices of the Government, the
Bureau of Internal Revenue, through its Commissioner,
has grown to be a typical administrative agency
vested with a fusion of different governmental powers:
the power to investigate, initiate action and control the
range of investigation, the power to promulgate rules
and regulations to better carry out statutory policies,
and the power to adjudicate controversies within the
scope of their activities. 5In the realm of administrative
law, we understand that such an empowerment of
administrative agencies was evolved in response to
the needs of a changing society. This development
arose as the need for broad social control over
complex conditions and activities became more and
more pressing, and such complexity could no longer be
dealt with effectivity and directly by the legislature or
the judiciary. The theory which underlies the
empowerment of administrative agencies like the
Bureau of Internal Revenue, is that the issues with
which such agencies deal ought to be decided by

experts, and not be a judge, at least not in the first

instance or until the facts have been sifted and
arranged. 6
One of the powers of administrative agencies like the
Bureau of Internal Revenue, is the power to make
rules. The necessity for vesting administrative
agencies
with
this
power
stems
from
the
impracticability of the lawmakers providing general
regulations for various and varying details pertinent to
a particular legislation. 7
The
rules
that
administrative
agencies
may
promulgate may either be legislative or interpretative.
The former is a form of subordinate legislation
whereby the administrative agency is acting in a
legislative capacity, supplementing the statute, filling
in the details, pursuant to a specific delegation of
legislative power. 8
Interpretative rules, on the other hand, are "those
which purport to do no more than interpret the statute
being administered, to say what it means." 9
There can be no doubt that there is a
distinction between an administrative rule
or regulation and an administrative
interpretation
of
a
law
whose
enforcement
is
entrusted
to
an
administrative
body.
When
an
administrative agency promulgates rules
and regulations, it "makes" a new law
with the force and effect of a valid law,
while when it renders an opinion or gives
a statement of policy, it merely interprets
a pre-existing law (Parker, Administrative

Law, p. 197; Davis Administrative Law, p.

194). 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. (Davis, op. cit. p.
194.)
A rule is binding on the courts as long as
the procedure fixed for its promulgation is
followed and its scope is within the
statutory authority granted by the
legislature, even if the courts are not in
agreement with the policy stated therein
or its innate wisdom (Davis, op. cit. pp.
195-197).
On
the
other
hand,
administrative interpretation of the law is
at best merely advisory, for it is the
courts that finally determine what the law
means. 10

"Whether a given statutory delegation authorizes

legislative or interpretative regulations depends upon
whether the statute places specific 'sanctions' behind
the regulations authorized, as for example, by making
it a criminal offense to disobey them, or by making
conformity with their provisions a condition of the
exercise of legal privileges." 11 This is because
interpretative regulations are by nature simply
statutory interpretations, which have behind them no
statutory sanction. Such regulations, whether so
expressly authorized by statute or issued only as an
incident of statutory administration, merely embody
administrative findings of law which are always subject
to judicial determination as to whether they are
erroneous or not, even when their issuance is
authorized by statute.
The questioned Circular has undisputedly been issued
by petitioner in pursuance of her rule-making powers
under Section 245 of the National Internal Revenue
Code, as amended. Exercising such powers, petitioner
re-classified "Hope," "More" and "Champion" cigarettes
as locally manufactured cigarettes bearing foreign
brands. The re-classification, as previously explained,
is the correct interpretation of Section 142 (c) (1) of
the said Code. The said legal provision is not
accompanied by any penal sanction, and no detail had
to be filled in by petitioner. The basis for the
classification of cigarettes has been provided for by
the legislature, and all petitioner has to do, on behalf
of the government agency she heads, is to proceed to
make the proper determination using the criterion
stipulated by the lawmaking body. In making the
proper determination, petitioner gave it a liberal
construction consistent with the rule that revenue laws
are to be construed in favor of the Government whose

survival depends on the contributions that taxpayers

give to the public coffers that finance public services
and other governmental operations.
The Bureau of Internal Revenue which petitioner
heads, is the government agency charged with the
enforcement of the laws pertinent to this case and so,
the opinion of the Commissioner of Internal Revenue,
in the absence of a clear showing that it is plainly
wrong, is entitled to great weight. Private respondent
claims that its rights under previous interpretations of
Section 142 (c) (1) may not abruptly be cut by a new
interpretation of the said section, but precisely the
said section is subject to various and changing
construction, and hence, any ruling issued by
petitioner thereon is necessarily interpretative and not
legislative. Private respondent insists that the
questioned circular is adjudicatory in nature because it
determined the rights of private respondent in a
controversy involving his tax liability. It also
asseverates that the questioned circular involved
administrative action that is particular and immediate,
thereby rendering it subject to the requirements of
notice and hearing in compliance with the due process
clause of the Constitution.
We find private respondent's arguments to be rather
strained.
Petitioner made a determination as to the classification
of cigarettes as mandated by the aforecited provisions
in the National Internal Revenue Code, as amended.
Such determination was an interpretation by petitioner
of the said legal provisions. If in the course of making
the interpretation and embodying the same in the
questioned circular which the petitioner subsequently

issued after making such a determination, private

respondent's cigarettes products, by their very nature
of being foreign brands as evidenced by their
enlistment in the World Tobacco Directory, which is the
controlling basis for the proper classification of
cigarettes as stipulated by the law itself, have come to
be classified as locally manufactured cigarettes
bearing foreign brands and as such subject to a tax
rate higher than what was previously imposed
thereupon based on past rulings of other revenue
commissioners, such a situation is simply a
consequence of the performance by petitioner of here
duties under the law. No adjudication took place, much
less was there any controversy ripe for adjudication.
The natural consequences of making a classification in
accordance with law may not be used by private
respondent in arguing that the questioned circular is in
fact adjudicatory in nature. Such an exercise in driving
home a point is illogical as it is fallacious and
misplaced.
Private respondent concedes that under general rules
of administrative law, "a ruling which is merely
'interpretative' in character may not require prior
notice to affected parties before its issuance as well as
a hearing" and "for this reason, in most instances,
interpretative regulations are not given the force of
law." 12Indeed, "interpretative regulations and those
merely
internal
in
nature
. . . need not be published." 13 And it is now settled
that only legislative regulations and not interpretative
rulings
must
have
the
benefit
of
public
hearing. 14
Because (1) the questioned circular merely embodied
an interpretation or a way of reading and giving

meaning to Section 142 (c) (1) of the National Internal

Revenue Code, as amended; (2) petitioner did not fill
in any details in the aforecited section but only
classified cigarettes on the basis of the World Tobacco
Directory in the light of the paramount principle of
construing revenue laws in favor of the Government to
the end that Government collects as much tax money
as it is entitled to in order to fulfill its public purposes
for the general good of its citizens; (3) no penal
sanction is provided in the aforecited section that was
construed by petitioner in the questioned circular; and
(4) a similar circular declassifying copra from being an
agricultural food to non-food product for purposes of
the value added tax laws, resulting in the revocation of
an exemption previously enjoyed by copra traders, has
been ruled by us to be merely an interpretative ruling
and not a legislative, much less, an adjudicatory,
action on the part of the revenue commissioner, 15 this
Court must not be blind to the fact that the questioned
Circular is indeed an interpretative ruling not subject
to notice and hearing.
Neither is the questioned Circular tainted by a
violation of the equal protection clause under
the
Constitution
Private respondent anchors its claim of violation of its
equal protection rights upon the too obvious fact that
only its cigarette brands, i.e., "Hope," "More" and
"Champion," are mentioned in the questioned circular.
Because only the cigarettes that they manufacture are
enumerated in the questioned circular, private
respondent proceeded to attack the same as being
discriminatory against it. On the surface, private
respondent seems to have a point there. A scrutiny of

the questioned Circular, however, will show that it is

undisputedly one of general application for all
cigarettes that are similarly situated as private
respondent's brands. The new interpretation of Section
142 (1) (c) has been well illustrated in its application
upon private respondent's brands, which illustration is
properly a subject of the questioned Circular.
Significantly, indicated as the subject of the
questioned circular is the "reclassification of cigarettes
subject to excise taxes." The reclassification resulted in
the foregrounding of private respondent's cigarette
brands, which incidentally is largely due to the
controversy spawned no less by private respondent's
own action of conveniently changing its brand names
to avoid falling under a classification that would
subject it to higher ad valorem tax rates. This caused
then Commissioner Bienvenido Tan to depart from his
initial determination that private respondent's
cigarette brands are foreign brands. The consequent
specific mention of such brands in the questioned
Circular, does not change the fact that the questioned
Circular has always been intended for and did cover,
all cigarettes similarly situated as "Hope," "More" and
"Champion." Petitioner is thus correct in stating that:
. . . RMC 37-93 is not discriminatory. It
lays down the test in determining
whether or not a locally manufactured
cigarette bears a foreign brand using the
cigarette brands "Hope," More and
"Champion" as specific examples. Such
test applies to all locally manufactured
cigarette brands similarly situated as the
cigarette brands aforementioned. While it
is true that only "Hope," "More" and
"Champion"
cigarettes
are
actually

determined as locally manufactured

cigarettes bearing a foreign brand, RMC
37-93 does not state that ONLY cigarettes
fall under such classification to the
exclusion of other cigarettes similarly
situated. Otherwise stated, RMC 37-93
does not exclude the coverage of other
cigarettes similarly situated. Otherwise
stated, RMC 37-93 does not exclude the
coverage of other cigarettes similarly
situated
as
locally
manufactured
cigarettes bearing a foreign brand.
Hence, in itself, RMC 37-93 is not
discriminatory. 16
Both the respondent Court of Appeals and the Court of
Tax Appeals held that the questioned Circular
reclassifying
"Hope,"
"More"
and
"Champion"
cigarettes, is defective, invalid and unenforceable and
has rendered the assessment against private
respondent of deficiency ad valorem excise taxes to be
without legal basis. The majority agrees with private
respondent and respondent Courts. As the foregoing
opinion chronicles the fatal flaws in private
respondent's arguments, it becomes more apparent
that the questioned Circular is in fact a valid and
subsisting interpretative ruling that the petitioner had
power to promulgate and enforce.
WHEREFORE, I vote to grant the petition and set aside
the decisions of the Court of Tax Appeals and the Court
of Appeals, respectively, and to reinstate the decision
of petitioner Commissioner of Internal Revenue
denying private respondent's request for a review,
reconsideration and recall of Revenue Memorandum
Circular No. 37-93 dated July 1, 1993.

Padilla, J., concurs.

G.R. No. 179579

would be classified either as food grade or feed grade.

The corresponding tariff for food grade wheat was 3%,
for feed grade, 7%.
February 1, 2012

COMMISSIONER OF CUSTOMS and the DISTRICT

COLLECTOR OF THE PORT OF SUBIC, Petitioners,
vs.
HYPERMIX FEEDS CORPORATION, Respondent.
DECISION
SERENO, J.:
Before us is a Petition for Review under Rule
45,1 assailing the Decision2 and the Resolution3 of the
Court of Appeals (CA), which nullified the Customs
Memorandum Order (CMO) No. 27-20034 on the tariff
classification
of
wheat
issued
by
petitioner
Commissioner of Customs.
The antecedent facts are as follows:
On 7 November 2003, petitioner Commissioner of
Customs
issued
CMO
27-2003.
Under
the
Memorandum, for tariff purposes, wheat was classified
according to the following: (1) importer or consignee;
(2) country of origin; and (3) port of discharge. 5 The
regulation provided an exclusive list of corporations,
ports of discharge, commodity descriptions and
countries of origin. Depending on these factors, wheat

CMO 27-2003 further provided for the proper

procedure for protest or Valuation and Classification
Review Committee (VCRC) cases. Under this
procedure, the release of the articles that were the
subject of protest required the importer to post a cash
bond to cover the tariff differential.6
A month after the issuance of CMO 27-2003, on 19
December 2003, respondent filed a Petition for
Declaratory Relief7 with the Regional Trial Court (RTC)
of Las Pias City. It anticipated the implementation of
the regulation on its imported and perishable Chinese
milling wheat in transit from China. 8 Respondent
contended that CMO 27-2003 was issued without
following the mandate of the Revised Administrative
Code on public participation, prior notice, and
publication or registration with the University of the
Philippines Law Center.
Respondent also alleged that the regulation summarily
adjudged it to be a feed grade supplier without the
benefit of prior assessment and examination; thus,
despite having imported food grade wheat, it would be
subjected to the 7% tariff upon the arrival of the
shipment, forcing them to pay 133% more than was
proper.

Furthermore, respondent claimed that the equal

protection clause of the Constitution was violated
when the regulation treated non-flour millers
differently from flour millers for no reason at all.
Lastly, respondent asserted that the retroactive
application of the regulation was confiscatory in
nature.
On 19 January 2004, the RTC issued a Temporary
Restraining Order (TRO) effective for twenty (20) days
from notice.9
Petitioners thereafter filed a Motion to Dismiss. 10 They
alleged that: (1) the RTC did not have jurisdiction over
the subject matter of the case, because respondent
was asking for a judicial determination of the
classification of wheat; (2) an action for declaratory
relief was improper; (3) CMO 27-2003 was an internal
administrative rule and not legislative in nature; and
(4) the claims of respondent were speculative and
premature, because the Bureau of Customs (BOC) had
yet to examine respondents products. They likewise
opposed the application for a writ of preliminary
injunction on the ground that they had not inflicted
any injury through the issuance of the regulation; and
that the action would be contrary to the rule that
administrative issuances are assumed valid until
declared otherwise.
On 28 February 2005, the parties agreed that the
matters raised in the application for preliminary

injunction and the Motion to Dismiss would just be

resolved together in the main case. Thus, on 10 March
2005, the RTC rendered its Decision11 without having to
resolve the application for preliminary injunction and
the Motion to Dismiss.
The trial court ruled in favor of respondent, to wit:
WHEREFORE, in view of the foregoing, the Petition is
GRANTED and the subject Customs Memorandum
Order 27-2003 is declared INVALID and OF NO FORCE
AND EFFECT. Respondents Commissioner of Customs,
the District Collector of Subic or anyone acting in their
behalf are to immediately cease and desist from
enforcing the said Customs Memorandum Order 272003.
SO ORDERED.12
The RTC held that it had jurisdiction over the subject
matter, given that the issue raised by respondent
concerned the quasi-legislative powers of petitioners.
It likewise stated that a petition for declaratory relief
was the proper remedy, and that respondent was the
proper party to file it. The court considered that
respondent was a regular importer, and that the latter
would be subjected to the application of the regulation
in future transactions.
With regard to the validity of the regulation, the trial
court found that petitioners had not followed the basic
requirements of hearing and publication in the

issuance of CMO 27-2003. It likewise held that

petitioners
had
"substituted
the
quasi-judicial
determination of the commodity by a quasi-legislative
predetermination."13 The lower court pointed out that a
classification based on importers and ports of
discharge were violative of the due process rights of
respondent.
Dissatisfied with the Decision of the lower court,
petitioners appealed to the CA, raising the same
allegations in defense of CMO 27-2003.14 The appellate
court, however, dismissed the appeal. It held that,
since the regulation affected substantial rights of
petitioners and other importers, petitioners should
have observed the requirements of notice, hearing and
publication.
Hence, this Petition.
Petitioners raise the following
consideration of this Court:

issues

for

the

I. THE COURT OF APPEALS DECIDED A QUESTION

OF SUBSTANCE WHICH IS NOT IN ACCORD WITH
THE LAW AND PREVAILING JURISPRUDENCE.
II. THE COURT OF APPEALS GRAVELY ERRED IN
DECLARING THAT THE TRIAL COURT HAS
JURISDICTION OVER THE CASE.
The Petition has no merit.

We shall first discuss the propriety of an action for

declaratory relief.
Rule 63, Section 1 provides:
Who may file petition. Any person interested under a
deed, will, contract or other written instrument, or
whose rights are affected by a statute, executive order
or regulation, ordinance, or any other governmental
regulation may, before breach or violation thereof,
bring an action in the appropriate Regional Trial Court
to determine any question of construction or validity
arising, and for a declaration of his rights or duties,
thereunder.
The requirements of an action for declaratory relief are
as follows: (1) there must be a justiciable controversy;
(2) the controversy must be between persons whose
interests are adverse; (3) the party seeking
declaratory relief must have a legal interest in the
controversy; and (4) the issue involved must be ripe
for judicial determination.15We find that the Petition
filed by respondent before the lower court meets these
requirements.
First, the subject of the controversy is the
constitutionality of CMO 27-2003 issued by petitioner
Commissioner of Customs. In Smart Communications
v. NTC,16 we held:
The determination of whether a specific rule or set of
rules issued by an administrative agency contravenes

the law or the constitution is within the jurisdiction of

the regular courts. Indeed, the Constitution vests the
power of judicial review or the power to declare a law,
treaty,
international
or
executive
agreement,
presidential decree, order, instruction, ordinance, or
regulation in the courts, including the regional trial
courts. This is within the scope of judicial power, which
includes the authority of the courts to determine in an
appropriate action the validity of the acts of the
political departments. Judicial power includes the duty
of the courts of justice to settle actual controversies
involving rights which are legally demandable and
enforceable, and to determine whether or not there
has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch
or instrumentality of the Government. (Emphasis
supplied)
Meanwhile, in Misamis Oriental Association of Coco
Traders, Inc. v. Department of Finance Secretary, 17 we
said:
xxx [A] legislative rule is in the nature of subordinate
legislation, designed to implement a primary
legislation by providing the details thereof. xxx
In addition such rule must be published. On the other
hand, interpretative rules are designed to provide
guidelines to the law which the administrative agency
is in charge of enforcing.

Accordingly, in considering a legislative rule a court is

free to make three inquiries: (i) whether the rule is
within the delegated authority of the administrative
agency; (ii) whether it is reasonable; and (iii) whether
it was issued pursuant to proper procedure. But the
court is not free to substitute its judgment as to the
desirability or wisdom of the rule for the legislative
body, by its delegation of administrative judgment,
has committed those questions to administrative
judgments and not to judicial judgments. In the case of
an interpretative rule, the inquiry is not into the
validity but into the correctness or propriety of the
rule. As a matter of power a court, when confronted
with an interpretative rule, is free to (i) give the force
of law to the rule; (ii) go to the opposite extreme and
substitute its judgment; or (iii) give some intermediate
degree of authoritative weight to the interpretative
rule. (Emphasis supplied)
Second, the controversy is between two parties that
have adverse interests. Petitioners are summarily
imposing a tariff rate that respondent is refusing to
pay.
Third, it is clear that respondent has a legal and
substantive interest in the implementation of CMO 272003. Respondent has adequately shown that, as a
regular importer of wheat, on 14 August 2003, it has
actually made shipments of wheat from China to Subic.
The shipment was set to arrive in December 2003.
Upon its arrival, it would be subjected to the conditions
of CMO 27-2003. The regulation calls for the imposition

of different tariff rates, depending on the factors

enumerated therein. Thus, respondent alleged that it
would be made to pay the 7% tariff applied to feed
grade wheat, instead of the 3% tariff on food grade
wheat. In addition, respondent would have to go
through the procedure under CMO 27-2003, which
would undoubtedly toll its time and resources. The
lower court correctly pointed out as follows:

flour millers classified as food grade wheat importers.

Thus, as the trial court stated, it would have to file a
protest case each time it imports food grade wheat
and be subjected to the 7% tariff.

xxx As noted above, the fact that petitioner is

precisely into the business of importing wheat, each
and every importation will be subjected to constant
disputes which will result into (sic) delays in the
delivery, setting aside of funds as cash bond required
in the CMO as well as the resulting expenses thereof. It
is easy to see that business uncertainty will be a
constant occurrence for petitioner. That the sums
involved are not minimal is shown by the discussions
during the hearings conducted as well as in the
pleadings filed. It may be that the petitioner can later
on get a refund but such has been foreclosed because
the Collector of Customs and the Commissioner of
Customs are bound by their own CMO. Petitioner
cannot get its refund with the said agency. We believe
and so find that Petitioner has presented such a stake
in the outcome of this controversy as to vest it with
standing to file this petition.18 (Emphasis supplied)

Considering that the questioned regulation would

affect the substantive rights of respondent as
explained above, it therefore follows that petitioners
should have applied the pertinent provisions of Book
VII, Chapter 2 of the Revised Administrative Code, to
wit:

Finally, the issue raised by respondent is ripe for

judicial
determination,
because
litigation
is
19
inevitable for the simple and uncontroverted reason
that respondent is not included in the enumeration of

It is therefore clear that a petition for declaratory relief

is the right remedy given the circumstances of the
case.

Section 3. Filing. (1) Every agency shall file with the

University of the Philippines Law Center three (3)
certified copies of every rule adopted by it. Rules in
force on the date of effectivity of this Code which are
not filed within three (3) months from that date shall
not thereafter be the bases of any sanction against
any party of persons.
xxx

xxx

xxx

Section 9. Public Participation. - (1) If not otherwise

required by law, an agency shall, as far as practicable,
publish or circulate notices of proposed rules and
afford interested parties the opportunity to submit
their views prior to the adoption of any rule.

(2) In the fixing of rates, no rule or final order

shall be valid unless the proposed rates shall
have been published in a newspaper of general
circulation at least two (2) weeks before the first
hearing thereon.
(3) In case of opposition, the rules on contested
cases shall be observed.
When an administrative rule is merely interpretative in
nature, its applicability needs nothing further than its
bare issuance, for it gives no real consequence more
than what the law itself has already prescribed. When,
on the other hand, the administrative rule goes
beyond merely providing for the means that can
facilitate
or
render
least
cumbersome
the
implementation of the law but substantially increases
the burden of those governed, it behooves the agency
to accord at least to those directly affected a chance to
be heard, and thereafter to be duly informed, before
that new issuance is given the force and effect of law. 20
Likewise, in Taada v. Tuvera,21 we held:

The clear object of the above-quoted provision is to

give the general public adequate notice of the various
laws which are to regulate their actions and conduct as
citizens. Without such notice and publication, there
would be no basis for the application of the maxim
"ignorantia legis non excusat." It would be the height
of injustice to punish or otherwise burden a citizen for
the transgression of a law of which he had no notice
whatsoever, not even a constructive one.
Perhaps at no time since the establishment of the
Philippine Republic has the publication of laws taken so
vital significance that at this time when the people
have bestowed upon the President a power heretofore
enjoyed solely by the legislature. While the people are
kept abreast by the mass media of the debates and
deliberations in the Batasan Pambansa and for the
diligent ones, ready access to the legislative records
no such publicity accompanies the law-making process
of the President. Thus, without publication, the people
have no means of knowing what presidential decrees
have actually been promulgated, much less a definite
way of informing themselves of the specific contents
and texts of such decrees. (Emphasis supplied)
Because petitioners failed to follow the requirements
enumerated by the Revised Administrative Code, the
assailed regulation must be struck down.
Going now to the content of CMO 27-3003, we likewise
hold that it is unconstitutional for being violative of the
equal protection clause of the Constitution.

The equal protection clause means that no person or

class of persons shall be deprived of the same
protection of laws enjoyed by other persons or other
classes in the same place in like circumstances. Thus,
the guarantee of the equal protection of laws is not
violated if there is a reasonable classification. For a
classification to be reasonable, it must be shown that
(1) it rests on substantial distinctions; (2) it is germane
to the purpose of the law; (3) it is not limited to
existing conditions only; and (4) it applies equally to all
members of the same class.22
Unfortunately, CMO 27-2003 does not meet these
requirements. We do not see how the quality of wheat
is affected by who imports it, where it is discharged, or
which country it came from.
Thus, on the one hand, even if other millers excluded
from CMO 27-2003 have imported food grade wheat,
the product would still be declared as feed grade
wheat, a classification subjecting them to 7% tariff. On
the other hand, even if the importers listed under CMO
27-2003 have imported feed grade wheat, they would
only be made to pay 3% tariff, thus depriving the state
of the taxes due. The regulation, therefore, does not
become disadvantageous to respondent only, but even
to the state.
It is also not clear how the regulation intends to
"monitor more closely wheat importations and thus
prevent their misclassification." A careful study of CMO
27-2003 shows that it not only fails to achieve this

end, but results in the opposite. The application of the

regulation forecloses the possibility that other
corporations that are excluded from the list import
food grade wheat; at the same time, it creates an
assumption that those who meet the criteria do not
import feed grade wheat. In the first case, importers
are unnecessarily burdened to prove the classification
of their wheat imports; while in the second, the state
carries that burden.
Petitioner Commissioner of Customs also went beyond
his powers when the regulation limited the customs
officers duties mandated by Section 1403 of the Tariff
and Customs Law, as amended. The law provides:
Section 1403. Duties of Customs Officer Tasked to
Examine, Classify, and Appraise Imported Articles.
The customs officer tasked to examine, classify, and
appraise imported articles shall determine whether the
packages designated for examination and their
contents are in accordance with the declaration in the
entry, invoice and other pertinent documents and shall
make return in such a manner as to indicate whether
the articles have been truly and correctly declared in
the entry as regard their quantity, measurement,
weight, and tariff classification and not imported
contrary to law. He shall submit samples to the
laboratory for analysis when feasible to do so and
when such analysis is necessary for the proper
classification, appraisal, and/or admission into the
Philippines of imported articles.

Likewise, the customs officer shall determine the unit

of quantity in which they are usually bought and sold,
and appraise the imported articles in accordance with
Section 201 of this Code.
Failure on the part of the customs officer to comply
with his duties shall subject him to the penalties
prescribed under Section 3604 of this Code.1wphi1
The provision mandates that the customs officer must
first assess and determine the classification of the
imported article before tariff may be imposed.
Unfortunately, CMO 23-2007 has already classified the
article even before the customs officer had the chance
to examine it. In effect, petitioner Commissioner of
Customs diminished the powers granted by the Tariff
and Customs Code with regard to wheat importation
when it no longer required the customs officers prior
examination
and
assessment
of
the
proper
classification of the wheat.
It is well-settled that rules and regulations, which are
the product of a delegated power to create new and

additional legal provisions that have the effect of law,

should be within the scope of the statutory authority
granted by the legislature to the administrative
agency. It is required that the regulation be germane
to the objects and purposes of the law; and that it be
not in contradiction to, but in conformity with, the
standards prescribed by law.23
In summary, petitioners violated respondents right to
due process in the issuance of CMO 27-2003 when
they failed to observe the requirements under the
Revised Administrative Code. Petitioners likewise
violated respondents right to equal protection of laws
when they provided for an unreasonable classification
in the application of the regulation. Finally, petitioner
Commissioner of Customs went beyond his powers of
delegated authority when the regulation limited the
powers of the customs officer to examine and assess
imported articles.
WHEREFORE, in view of the foregoing, the Petition is
DENIED. SO ORDERED.