People vs. Maceren
Facts: Respondents assailed the validity Fisheries Administrative
Order No. 84 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.
Respondents contend that theFisheries Administrative Order No.
84penalizing electro fishing in fresh water fisheries. Whereby,
Fisheries under the old Fisheries Law and the law creating the
Fisheries Commission does not clearly prohibit electro fishing, the
executive and judicial departments cannot consider it unlawful.
Section 11 of the Fisheries Law prohibits the use of any obnoxious or
poisonous substance in fishing.
Issue: Whether the Fisheries Administrative Order No. 84 is valid?
Ruling: No, the court held that the the law making body cannot
delegate to an executive official the power to declare what acts should
constitute a criminal offense. It can authorize the issuance of
regulations and the imposition of the penalty provided for in the law
itself. Here, Secretary of Agriculture and Natural Resources and the
Commissioner of Fisheries exceeded their authority in issuing
Fisheries Administrative Orders Nos. 84 and 841 and that those
orders are not warranted under the Fisheries Law, Act No. 4003, and
under the law creating 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. Hence,
Administrative Orders Nos. 84, in penalizing electro fishing, are
devoid of any legal basis.
Doctrine: The lawmaking body cannot delegate to an executive official
the power to declare what acts should constitute a criminal offense. It
can authorize the issuance of regulations and the imposition of the
penalty provided for in the law itself.
Republic v. Drugmakers Laboratories,
FACTS:
The FDA was created pursuant to RA 3720,4 otherwise known as the
"Food, Drug, and Cosmetic Act," primarily in order "to establish safety
or efficacy standards and quality measures for foods, drugs and
devices, and cosmetic product[s]."The DOH, issued AO 67, s.
1989,Revised Rules and Regulations on Registration of
Pharmaceutical Products. It required drug manufacturers to register
certain drug and medicine products with the FDA before they may
release the same to the market for sale. In this relation, a satisfactory
bioavailability/bioequivalence (BA/BE) test is needed for a
manufacturer to secure a CPR for these products. However, the
implementation of the BA/BE testing requirement was put on hold
because there was no local facility capable of conducting the same.
Respondents manufacture and trade a "multisource pharmaceutical
product" branded as Refam for the treatment of adults and children
suffering from pulmonary and extra-pulmonary tuberculosis. On
November 15, 1996, respondents applied for and were issued a CPR
for such drug, valid for five (5) years, or until November 15, 2001.14
At the time of the CPRs issuance, Refam did not undergo BA/BE
testing since there was still no facility capable of conducting BA/BE
testing. Sometime in 2001, respondents applied for and were granted
numerous yearly renewals of their CPR for Refam, which lasted until
November 15, 2006, albeit with the condition that they submit
satisfactory BA/BE test results for said drug.
The issuance of the Circular No. 1, s. 1997 resumed the FDAs
implementation of the BA/BE testing requirement with the
establishment of BA/BE testing facilities in the country. Thereafter, the
FDA issued Circular No. 8, s. 1997 which provided additional
implementation details concerning the BA/BE testing requirement on
drug products.
Accordingly, respondents engaged the services of the UP Manila
Department of Pharmacology and Toxicology, College of Medicine to
conduct BA/BE testing on Refam, the results of which were submitted
to the FDA. In turn, the FDA sent a letter dated July 31, 2006 to
respondents, stating that Refam is "not bioequivalent with the
reference drug." This notwithstanding, the FDA still revalidated
respondents CPR for Refam two (2) more times, effective until
November 15, 2008, the second of which came with a warning that no
more further revalidations shall be granted until respondents submit
satisfactory BA/BE test results for Refam.
Instead of submitting satisfactory BA/BE test results for Refam,
respondents filed a petition for prohibition and annulment of Circular
Nos. 1 and 8, s. 1997 before the RTC, alleging that it is the DOH, and
not the FDA, which was granted the authority to issue and implement
rules concerning RA 3720. As such, the issuance of the aforesaid
circulars and the manner of their promulgation contravened the law
and the Constitution. They further averred that that the non-renewal of
the CPR due to failure to submit satisfactory BA/BE test results would
not only affect Refam, but their other products as well.
RTC ruled in favor of respondents, and thereby declared Circular Nos.
1 and 8, s. 1997 null and void. RTC held that there is nothing in RA
3720 which granted either the FDA the authority to issue and
implement the subject circulars, or the Secretary of Health the
authority to delegate his powers to the FDA. For these reasons, it
concluded that the issuance of Circular Nos. 1 and 8, s 1997
constituted an illegal exercise of legislative and administrative powers
and, hence, must be struck down.
The FDA contends that it has the authority to issue Circular Nos. 1
and 8, s. 1997 as it is the agency mandated by law to administer and
enforce laws, including rules and regulations issued by the DOH, that
pertain to the registration of pharmaceutical products.
For their part, respondents maintain that under RA 3720, the power to
make rules to implement the law is lodged with the Secretary of
Health, not with the FDA.28 They also argue that the assailed
circulars are void for lack of prior hearing, consultation, and
publication.
ISSUE:
Who has the power to validly issue and implement Circular Nos. 1 and
8, s. 1997: Secretary of Health or FDA?
Do the assailed circulars partake of administrative rules and
regulations and, as such, must comply with the requirements of prior
hearing, consultation and publication?
RULING:
In general, an administrative regulation needs to comply with the
requirements laid down by Executive Order No. 292, s. 1987,
otherwise known as the "Administrative Code of 1987," on prior
notice, hearing, and publication in order to be valid and binding,
except when the same is merely an interpretative rule.
In the case at bar, it is undisputed that RA 3720, prohibits, the
manufacture and sale of pharmaceutical products without obtaining
the proper CPR from the FDA. In this regard, the FDA has been
deputized by the same law to accept applications for registration of
pharmaceuticals and, after due course, grant or reject such
applications. To this end, the said law expressly authorized the
Secretary of Health, upon the recommendation of the FDA Director, to
issue rules and regulations that pertain to the registration of
pharmaceutical products.
In accordance with his rule-making power under RA 3720, the
Secretary of Health issued AO 67, in order to provide a
comprehensive set of guidelines covering the registration of
pharmaceutical products. AO 67, required, among others, that certain
pharmaceutical products undergo BA/BE testing prior to the issuance
of CPR, contrary to respondents assertion that it was Circular Nos. 1
and 8, s. 1997 that required such tests.
Despite the fact that the BA/BE testing requirement was already in
place as early as the date of effectivity of AO 67, its implementation
was indefinitely shelved due to lack of facilities capable of conducting
the same. It was only sometime in 1997 when technological advances
in the country paved the way for the establishment of BA/BE testing
facilities, thus allowing the rules enforcement. Owing to these
developments, the FDA (then, the BFAD) issued Circular No. 1, s.
1997
Wherefore, all drugs manufacturers, traders, distributor-importers of
products contained or identified in the list b (prime) provided for by
BFAD, a copy of which is made part of this circular, are advised that
all pending initial and renewal registration of the products
aforementioned, as well as all applications for initial and renewal
registration of the same, shall henceforth be required to submit
bioavailability test with satisfactory results on the products sought to
be registered or renewed conducted by any bioavailability testing units
here or abroad, duly recognized by the BFAD under the Dept. of
Health.
A careful scrutiny of the foregoing issuances would reveal that AO 67
is actually the rule that originally introduced the BA/BE testing
requirement as a component of applications for the issuance of CPRs
covering certain pharmaceutical products. As such, it is considered an
administrative regulation a legislative rule to be exact issued by
the Secretary of Health in consonance with the express authority
granted to him by RA 3720 to implement the statutory mandate that all
drugs and devices should first be registered with the FDA prior to their
manufacture and sale. Considering that neither party contested the
validity of its issuance, the Court deems that AO 67, s. 1989 complied
with the requirements of prior hearing, notice, and publication
pursuant to the presumption of regularity accorded to the government
in the exercise of its official duties.
On the other hand, the circulars would not affect the substantive rights
of the parties that they seek to govern, as they are not administrative
regulations, no prior hearing, consultation, and publication are needed
for their validity. Circular Nos. 1 and 8, s. 1997 cannot be considered
as administrative regulations because they do not: (a) implement a
primary legislation by providing the details thereof; (b) interpret, clarify,
or explain existing statutory regulations under which the FDA
operates; and/or (c) ascertain the existence of certain facts or things
upon which the enforcement of RA 3720 depends. The only purpose
of the circulars is for the FDA to administer and supervise the
implementation of the provisions of AO 67, s. 1989, including those
covering the BA/BE testing requirement, consistent with and pursuant
to RA 3720.
Note
1. Administrative agencies may exercise quasi-legislative or rule-
making powers only if there exists a law which delegates these
powers to them. Accordingly, the rules so promulgated must
be within the confines of the granting statute and must involve
no discretion as to what the law shall be, but merely the
authority to fix the details in the execution or enforcement of
the policy set out in the law itself, so as to conform with the
doctrine of separation of powers and, as an adjunct, the
doctrine of non-delegability of legislative power.
2. An administrative regulation may be classified as a legislative
rule, an interpretative rule, or a contingent rule.
a. Legislative rules are in the nature of subordinate
legislation and designed to implement a primary
legislation by providing the details thereof. They usually
implement existing law, imposing general, extra-
statutory obligations pursuant to authority properly
delegated by Congress and effect a change in existing
law or policy which affects individual rights and
obligations.
b. Interpretative rules are intended to interpret, clarify or
explain existing statutory regulations under which the
administrative body operates. Their purpose or
objective is merely to construe the statute being
administered and purport to do no more than interpret
the statute. Simply, they try to say what the statute
means and refer to no single person or party in
particular but concern all those belonging to the same
class which may be covered by the said rules.
c. Contingent rules are those issued by an administrative
authority based on the existence of certain facts or
things upon which the enforcement of the law depends.
ASTEC vs ERC
Facts:
The Petitioners BATELEC I, QUEZELCO I, QUEZELCO II, and
PRESCO are rural electric cooperatives established under P.D. 269 or
the National Electrification Administration Decree. The Petitioners are
non-profit organizations engaged in the distribution of electricity. On 8
December 1994, R.A. 7832 was enacted, which imposed a cap on the
recoverable rate of system loss that the rural electric cooperatives
may charge to their customers. Pursuant to said law, the Energy
Regulatory Board issued Orders on 19 February 1997 and 25 April
1997 provisionally authorizing the petitioners and other rural electric
cooperatives to use a prescribed formula or the computation of the
Purchased Power Adjustment (PPA).
On 8 June 2001, R.A. 9136 or the Electric Power Industry
Reform Act of 2001 (EPIRA) was enacted. Section 38 of the EPIRA
abolished the ERB, and created the Energy Regulatory Commission
(ERC). In an Order dated 17 June 2003, the ERC noted that the PPA
formula which was approved by the ERB was silent on whether the
PPA formula approved by the ERB was based on gross or net
of discounts. For uniformity, the ERC ruled that for past PPAs, power
cost shall still be based on gross while for future PPAs, power cost
shall be based on net.
Several rural electric cooperatives filed motions for
reconsideration on the following grounds: 1) that they are non-profit
organizations such that their rates do not include any possible extra
revenue except the discounts; and 2) that they are burdened with
expenses in their continuing expansion programs for rural
electrification. On 14 January 2005, the ERC issued an Order, in
which it stressed that the purchased power cost is a pass though cost
to customers and, therefore, the rural electric cooperatives should
only recover from their members and patrons the actual cost of power
purchased from power suppliers. Consistent with this, any discounts
extended to rural electric cooperatives mustnecessarily be extended
to end-users by charging only the net cost of purchased power.
The ERC then directed the Petitioners to refund their
respective over-recoveries to end-users arising from the
implementation of R.A. 7832. The motions for reconsideration filed by
the Petitioners were denied by the ERC.
Issue: Whether the policy guidelines issued by the ERC on the
treatment of discounts extended by power suppliers are ineffective
and invalid for lack of 1) publication, 2) non-submission to the U.P.
Law Center, and their 3) retroactive application.
Ruling: No, publication is not necessary for the effectivity of the
policy guidelines.
The policy guidelines of the ERC on the treatment of discounts
extended by power suppliers give no real consequence more than
what the law itself has already prescribed.
Publication is a basic postulate of procedural due process. The
purpose of publication is to duly inform the public of the contents of
the laws which govern them and regulate their activities. Art. 2 of the
Civil Code, as amended by E.O. No. 200, as well as E.O. 292 or the
Administrative Code of 1987 both provide that Laws shall take effect
after fifteen (15) days following the completion of their publication in
the Official Gazette or in anewspaper of general circulation, unless it
is otherwise provided
Procedural due process demands that administrative rules and
regulations bepublished in order to be effective. InTaada vs. Tuvera,
the S.C. held: ALL statutes, including those of local application
andprivate laws, shall be published as a condition for their effectivity,
which shall begin fifteen days after publication unless a different
effectivity date is fixed by the legislature. Covered by this rule are
presidential decrees and executive orders promulgated by the
President in the exercise of legislative powers whenever the same are
validly delegated by the legislatureor, at present, directly conferred by
the Constitution.
Administrative rules and regulations must also be
published if their purpose is to enforce or implement existing law
pursuantalso to a valid delegation
Exceptions to the requirement of publication:
3.1. An interpretative regulation, to be effective, needs nothing
more than its bareissuance for it gives no real consequence more
than what the law itself has already prescribed. Itadds nothing to the
law and does not affect the substantial rights of any person.
3.2 A regulation that is merely internal in nature. It seeks to
regulate only the personnel of the administrative agency and not the
general public.
3.3 Letter of instruction issued by an administrative agency
concerning rules or guidelinesto be followed by subordinates in the
performance of their duties.
As interpretative regulations, the policy guidelines of the ERC
on the treatment of discounts extended by power suppliers are also
not required to be filed with the U.P. Law Center in order to be
effective.
 The Administrative Code of 1987 requires every rule adopted
by an agency to be filedwith the U.P. Law Center to be effective.2)
However, in Board of Trustees of the GSIS v. Velasco, it was held that
not all rules and regulations adopted by every government agency are
to be filed with the UP Law Center. Interpretative regulations and
those merely internal in nature are not required to be filed with theU.P.
Law Center. (Paragraph 9 (a) of the Guidelines for Receiving and
Publication of Rules andRegulations Filed with the U.P. Law Center).
Manila Jockey Club v CA
FACTS
On June 18, 1948, Congress approved Republic Act No. 309, entitled
An Act to Regulate Horse Racing in the Philippines. This Act
consolidated all existing laws and amended inconsistent provisions
relative to horse racing. It provided for the distribution of gross
receipts from the sale of betting tickets, but is silent on the allocation
of so-called breakages. Thus the practice, according to the
petitioners, was to use the breakages for the anti-bookies drive and
other sales promotions activities of the horse racing clubs.
On March 20, 1974, Presidential Decree No. 420 was issued creating
the Philippine Racing Commission (PHILRACOM), giving it exclusive
jurisdiction and control over every aspect of the conduct of horse
racing, including the framing and scheduling of races. By virtue of this
power, the PHILRACOM authorized the holding of races on
Wednesdays starting on December 22, 1976.
Petitioners made a joint query regarding the ownership of breakages
accumulated during Wednesday races. In response to the query,
PHILRACOM rendered its opinion in a letter dated September 20,
1978. It declared that the breakages belonged to the racing clubs
concerned.
On December 16, 1986 President Corazon Aquino amended certain
provisions Sec. 4 of R.A. 6631 and Sec. 6 of R.A. 6632 through
Executive Orders No. 88 and 89. On April 23, 1987, PHILRACOM
itself addressed a query to the Office of the President asking which
agency is entitled to dispose of the proceeds of the breakages derived
from the Tuesday and Wednesday races.
In a letter dated May 21, 1987, the Office of the President, through
then Deputy Executive Secretary Catalino Macaraig, Jr., replied that
the disposition of the breakages rightfully belongs to PHILRACOM,
not only those derived from the Saturday, Sunday and holiday races,
but also from the Tuesday and Wednesday races in accordance with
the distribution scheme prescribed in said Executive Orders.
Controversy arose when herein respondent PHILRACOM, sent a
series of demand letters to petitioners MJCI and PRCI, requesting its
share in the breakages of mid week-races and proof of remittances to
other legal beneficiaries as provided under the franchise laws.
ISSUE
Who are the rightful beneficiaries of the breakages derived from mid-
week races?
This issue also carries an ancillary question: assuming PHILRACOM
is entitled to the mid-week breakages under the law, should the
petitioners remit the money from the time the mid-week races started,
or only upon the promulgation of E.O. Nos. 88 and 89?
HELD
A reasonable reading of the horse racing laws favors the
determination that the entities enumerated in the distribution scheme
provided under R.A. Nos. 6631 and 6632, as amended by Executive
Orders 88 and 89, are the rightful beneficiaries of breakages from
mid-week races. Petitioners should therefore remit the proceeds of
breakages to those benefactors designated by the aforesaid laws.
The holding of horse races on Wednesdays is in addition to the
existing schedule of races authorized by law. Since this new schedule
became part of R.A. 6631 and 6632 the set of procedures in the
franchise laws applicable to the conduct of horse racing business
must likewise be applicable to Wednesday or other mid-week races. A
fortiori, the granting of the mid-week races does not require another
legislative act to reiterate the manner of allocating the proceeds of
betting tickets. Neither does the allocation of breakages under the
same provision need to be isolated to construe another distribution
scheme. No law can be viewed in a condition of isolation or as the
beginning of a new legal system.
Proceeding to the subsidiary issue, the period for the remittance of
breakages to the beneficiaries should have commenced from the time
PHILRACOM authorized the holding of mid-week races because R.A.
Nos. 6631 and 6632 were already in effect then. The petitioners
contend that they cannot be held retroactively liable to respondent
PHILRACOM for breakages prior to the effectivity of E.O. Nos. 88 and
89. They assert that the real intent behind E.O. Nos. 88 and 89 was to
favor the respondent PHILRACOM anew with the benefits which
formerly had accrued in favor of Philippine Amateur Athletic
Federation (PAAF). They opine that since laws operate prospectively
unless the legislator intends to give them retroactive effect, the
accrual of these breakages should start on December 16, 1986, the
date of effectivity of E.O. Nos. 88 and 89. Now, even if one of the
benefactors of breakages, the PAAF, as provided by R.A. 6631 and
6632 had ceased operation, it is still not proper for the petitioners to
presume that they were entitled to PAAFs share. When the petitioners
mistakenly appropriated the breakages for themselves, they became
the implied trustees for those legally entitled to the proceeds.
While herein petitioners might have relied on a prior opinion issued by
an administrative body, the well-entrenched principle is that the State
could not be estopped by a mistake committed by its officials or
agents. Although there was an initial interpretation of the law by
PHILRACOM, a court of law could not be precluded from setting that
interpretation aside if later on it is shown to be inappropriate.
ABAKADA v Ermita
Facts: On May 24, 2005, the President signed into law Republic Act
9337 or the VAT Reform Act. Before the law took effect on July 1,
2005, the Court issued a TRO enjoining government from
implementing the law in response to a slew of petitions for certiorari
and prohibition questioning the constitutionality of the new law.
The challenged section of R.A. No. 9337 is the common proviso in
Sections 4, 5 and 6: That the President, upon the recommendation of
the Secretary of Finance, shall, effective January 1, 2006, raise the
rate of value-added tax to 12%, after any of the following conditions
has been satisfied:
(i) Value-added tax collection as a percentage of
Gross DomesticProduct (GDP) of the previous year exceeds two and
four-fifth percent (2 4/5%);
or (ii) National government deficit as a percentage of GDP of the
previous year exceeds one and one-half percent (1%)
Petitioners allege that the grant of stand-by authority to the President
to increase the VAT rate is an abdication by Congress of its exclusive
power to tax because such delegation is not covered by Section 28
(2), Article VI Consti. They argue that VAT is a tax levied on the sale
or exchange of goods and services which cant be included within the
purview of tariffs under the exemption delegation since this refers to
customs duties, tolls or tribute payable upon merchandise to the
government and usually imposed on imported/exported goods. They
also said that the President has powers to cause, influence or create
the conditions provided by law to bring about the conditions
precedent. Moreover, they allege that no guiding standards are made
by law as to how the Secretary of Finance will make the
recommendation.
Issue: Whether or not the RA 9337's stand-by authority to the
Executive to increase the VAT rate, especially on account of the
recommendatory power granted to the Secretary of Finance,
constitutes undue delegation of legislative power
Ruling: No. With respect to the Legislature, Section 1 of Article VI of
the Constitution provides that the Legislative power shall be vested in
the Congress of the Philippines which shall consist of a Senate and a
House of Representatives. The powers which Congress is prohibited
from delegating are those which are strictly, or inherently and
exclusively, legislative. Purely legislative power, which can never be
delegated, has been described as the authority to make a complete
law complete as to the time when it shall take effect and as to
whom it shall be applicable and to determine the expediency of
its enactment.[40] Thus, the rule is that in order that a court may be
justified in holding a statute unconstitutional as a delegation of
legislative power, it must appear that the power involved is purely
legislative in nature that is, one appertaining exclusively to the
legislative department. It is the nature of the power, and not the
liability of its use or the manner of its exercise, which determines the
validity of its delegation.
Nonetheless, the general rule barring delegation of legislative
powers is subject to the following recognized limitations or exceptions:
 (1) Delegation of tariff powers to the President under
Section 28 (2) of Article VI of the Constitution;
(2) Delegation of emergency powers to the President
under Section 23 (2) of Article VI of the
Constitution;
(3) Delegation to the people at large;
(4) Delegation to local governments; and
(5) Delegation to administrative bodies.
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;[41] and (b) fixes a
standard the limits of which are sufficiently determinate and
determinable to which the delegate must conform in the performance
of his functions.[42] 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. [43] 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.
What cannot be delegated is the authority under the Constitution to
make laws and to alter and repeal them; the test is the completeness
of the statute in all its terms and provisions when it leaves the hands
of the legislature. To determine whether or not there is an undue
delegation of legislative power, the inquiry must be directed to the
scope and definiteness of the measure enacted. The legislative does
not abdicate its functions when it describes what job must be
done, who is to do it, and what is the scope of his authority. For a
complex economy, that may be the only way in which the legislative
process can go forward. A distinction has rightfully been made
between delegation of power to make the laws which necessarily
involves a discretion as to what it shall be, which constitutionally
may not be done, and delegation of authority or discretion as to
its execution to be exercised under and in pursuance of the law,
to which no valid objection can be made. The Constitution is thus
not to be regarded as denying the legislature the necessary resources
of flexibility and practicability.
Clearly, the legislature may delegate to executive officers or bodies
the power to determine certain facts or conditions, or the happening of
contingencies, on which the operation of a statute is, by its terms,
made to depend, but the legislature must prescribe sufficient
standards, policies or limitations on their authority.[49] While the power
to tax cannot be delegated to executive agencies, details as to the
enforcement and administration of an exercise of such power may be
left to them, including the power to determine the existence of facts on
which its operation depends.
The case before the Court is not a delegation of legislative
power. It is simply a delegation of ascertainment of facts upon which
enforcement and administration of the increase rate under the law is
contingent. The legislature has made the operation of the 12% rate
effective January 1, 2006, contingent upon a specified fact or
condition. It leaves the entire operation or non-operation of the 12%
rate upon factual matters outside of the control of the executive.
Thus, it is the ministerial duty of the President to immediately
impose the 12% rate upon the existence of any of the conditions
specified by Congress. This is a duty which cannot be evaded by the
President. Inasmuch as the law specifically uses the word shall, the
exercise of discretion by the President does not come into play. It is a
clear directive to impose the 12% VAT rate when the specified
conditions are present. The time of taking into effect of the 12% VAT
rate is based on the happening of a certain specified contingency, or
upon the ascertainment of certain facts or conditions by a person or
body other than the legislature itself.
In making his recommendation to the President on the existence of
either of the two conditions, the Secretary of Finance is not acting as
the alter ego of the President or even her subordinate. He is acting as
the agent of the legislative department, to determine and declare the
event upon which its expressed will is to take effect. The Secretary of
Finance becomes the means or tool by which legislative policy is
determined and implemented, considering that he possesses all the
facilities to gather data and information and has a much broader
perspective to properly evaluate them. His function is to gather and
collate statistical data and other pertinent information and verify if any
of the two conditions laid out byCongress is present.
Congress simply granted the Secretary of Finance the authority to
ascertain the existence of a fact, namely, whether by December 31,
2005, the value-added tax collection as a percentage of Gross
Domestic Product (GDP) of the previous year exceeds two and four-
fifth percent (24/5%) or the national government deficit as a percentage
of GDP of the previous year exceeds one and one-half percent (1%).
If either of these two instances has occurred, the Secretary of
Finance, by legislative mandate, must submit such information to the
President. Then the 12% VAT rate must be imposed by the President
effective January 1, 2006. There is no undue delegation of
legislative power but only of the discretion as to the execution of
a law. This is constitutionally permissible. Congress does not
abdicate its functions or unduly delegate power when it describes
what job must be done, who must do it, and what is the scope of his
authority; in our complex economy that is frequently the only way in
which the legislative process can go forward.
SM land vs BCDA
Facts: For reconsideration is the Decision of this Court dat.ed August
13, 2014, which granted the petition for certiorari filed by SM Land,
Inc. (SMLI) and directed respondent Bases Conversion Development
Authority (BCDA) and its president to, among other things, subject
SMLI's duly accepted unsolicited proposal for the development of the
Bonifacio South Property to a competitive challenge.
The gravamen of respondents' motion is that BCDA and SMLI do not
have a contract that would bestow upon the latter the right to demand
that its unsolicited proposal be subjected to a competitive challenge.
Assuming arguendo the existence of such an agreement between the
parties, respondents contend that the same may be terminated by
reasons of public interest.
Respondent contends that the NEDA JV Guidelines is just a mere
guidelines and not a law.
Issue: Whether NEDA JV Guidelines hasthe force and effect of law?
Ruling: Yes. The court held that acts of the President providing for
rules of a general or permanent character in implementation or
execution of constitutional or statutory powers shall be promulgated in
Executive Orders (EOs).
For government contracts and procurement in the Philippines, then
President Gloria Macapagal-Arroyo, adopting the recommendation of
the NEDA, issued EO 109. As its title indicates, EO 109 streamlined
the rules and procedures on the review and approval of all contracts
of departments, bureaus, offices and agencies of the government,
including government-owned and controlled corporations and their
subsidiaries. This executive issuance was, however, later amended by
EO 109-A, to conform to RA 9184 which was enacted barely two
months after the issuance of EO 109. Two years later, EO 42321 was
issued, repealing EO 109-A and simplifying the procurement process.
Section 4 of EO 423 was later amended by EO 645.
Section 8 of EO 423, the President effectively delegated her inherent
executive power to issue rules and regulations on procurement to her
subordinate executive officials, her alter egos.
Here, NEDA JV Guidelines is an issuance in compliance with Section
8 of EO 423. Hence, it has the same binding effect as if it were issued
by the President himself.
Doctrine: President effectively delegated her inherent executive power
to issue rules and regulations on procurement to her subordinate
executive officials, her alter egos.
Eastern Shipping v POEA
FACTS:
A Chief Officer of a ship was killed in an accident in Japan. The widow
filed a complaint for charges against the Eastern Shipping Lines with
POEA, based on a Memorandum Circular No. 2, issued by the POEA
which stipulated death benefits and burial for the family of overseas
workers. ESL questioned the validity of the memorandum circular as
violative of the principle of non-delegation of legislative power. It
contends that no authority had been given the POEA to promulgate
the said regulation; and even with such authorization, the regulation
represents an exercise of legislative discretion which, under the
principle, is not subject to delegation. Nevertheless, POEA assumed
jurisdiction and decided the case.
ISSUE: Whether or not the Issuance of Memorandum Circular No. 2 is
a violation of non-delegation of powers.
RULING:
SC held that there was valid delegation of powers.

In questioning the validity of the memorandum circular, Eastern
Shipping Lines contended that POEA was given no authority to
promulgate the regulation, and even with such authorization, the
regulation represents an exercise of legislative discretion which, under
the principle, is not subject to delegation.
GENERAL RULE: Non-delegation of powers; exception
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.
Two Tests of Valid Delegation of Legislative Power
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 to enforce it. Under the sufficient standard test, there must be
adequate guidelines or stations in the law to map out the boundaries
of the delegates authority and prevent the delegation from running
riot.
Both tests are intended to prevent a total transference of legislative
authority to the delegate, who is not allowed to step into the shoes of
the legislature and exercise a power essentially legislative.
Xxx The delegation of legislative power has become the rule and its
non-delegation the exception.
Rationale for Delegation of Legislative Power
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 to reasonably comprehend.
Specialization even in legislation has become necessary. Too 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.
Power of Subordinate Legislation
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 statute by filling in the details which the
Congress may not have the opportunity or competence to provide.
Memorandum Circular No. 2 is one such administrative regulation.
KMU vs Garcia
Facts:
Public utilities privately owned and operated businesses
whose service are essential to
the general public; enterprises which specially cater to the needs of th
e public and conducive to their comfort and convenience.
DOTC Sec. issued Memorandum Circular No. 90-395 to then
LTFRB Chairman allowingprovincial bus operators to charge
passengers rates within a range of 15% above and 15%below the
LTFRB official rate for a period of 1 year. PBOAP pursuant to Memo.
Cir. it filed an application for fare rate increase. An across-the-
board increase of eight and a half centavos (P0.085) per
kilometer for all types of provincial buses with a minimum-maximum
fare range of fifteen (15%) percent over and below the proposed basic
per kilometer fare rate, with the said minimum-maximum fare range
applying only to ordinary, first class and premium class buses and a
fifty-centavo(P0.50) minimum per kilometer fare for aircon buses, was
sought. Respondent LTFRB rendered a decision granting the fare rate
increase in accordance with aspecified schedule of fares on a straight
computation method
DOTC Sec. issued Department Order No. 92-587 defining the
policy framework on the regulation of transport services. It provides
inter alia that Passenger fares shall also be
deregulated, except for the lowest class of passenger service (normall
y third class passenger transport) for which the government will
fix indicative or reference fares. Operators of particular services may
fix their own fares within a range 15% above andbelow the indicative
or reference rate.
LTFRB issued Memorandum Circular No. 92-009 promulgating
the guidelines for theimplementation of DOTC Department Order No.
92-587, which provides, among others, that:The issuance of a
Certificate of Public Convenience is determined by public need. The
presumption of public need for a service shall be deemed in favor of
the applicant, while burden of proving that there is no need for the
proposed service shall be the oppositors.The existing authorized
fare range system of plus or minus 15 per cent for provincial buses
and jeepneys shall be widened to 20% and -25% limit in 1994 with the
authorized fare to be replaced by an indicative or reference rate as
the basis for the expanded farerange
PBOAP - availing itself of the deregulation policy of the
DOTC allowing provincial bus operators to collect plus 20% and
minus 25% of the prescribed fare without first havingfiled a petition for
the purpose and without the benefit of a public hearing, announced a
fare increase of twenty (20%) percent of the existing fares
KMU filed a petition before the LTFRB opposing the upward
adjustment of bus fares.
Issue:Whether or not the above memoranda, circulars and/or orders
of the DOTC and the LTFRB which, among others, (a)
authorize provincial bus and jeepney operators to increase or
decrease the prescribed transportation fares without application
therefor with the LTFRB and without hearing and approval thereof by
said agency is in violation of Sec. 16(c) of CA
146,and in derogation of LTFRBs duty to fix and determine
just and reasonable fares by delegating that function to bus operators,
and (b) establish a presumption of public need infavor of applicants
for certificates of public convenience and place on the oppositor the
burden of proving that there is no need for the proposed service, in
patent violation not onlyof Sec. 16(c) of CA 146, as amended, but also
of Sec. 20(a) of the same Act mandating thatfares should be just and
reasonable
Ruling:Yes. Section 16(c) of the Public Service Act, as amended,
reads:
Sec. 16. Proceedings of the Commission, upon notice
and hearing. The Commission shall have power, upon proper
notice and hearing in accordance with the rules and provisions of this
Act, subject to the limitations and exceptions mentioned and saving
provisions to the contrary:xxx xxx xxx
(c) To fix and determine individual or joint rates, tolls, charges,
classifications, or schedules thereof, as well as commutation, mileage
kilometrage, and other special rates which shall be imposed,
observed, and followed thereafter by any public service:
Provided, That the Commission may, in its discretion, approve
rates proposed by public services provisionally and without necessity
of any hearing; but it shall call a hearing thereon within
thirty days thereafter, upon publication and notice to the concerns ope
rating in theterritory affected:
Provided, further, That in case the
public service equipment of an operator is used principally or
secondarily for the promotion of a private business, the net profits of
said private business shall be considered in relation with the public
service of such operator for the purpose of fixing the rates.
LTFRB is authorized under EO 202, s. 1987 to determine, pres
cribe, approve and periodically review and adjust, reasonable fares,
rates and other related charges, relative to the operation of public
land transportation services provided by motorized vehicles
LTFRB not authorized to delegate that power to a common
carrier, a transport operator,or other public service;
Authority given by the LTFRB to the provincial bus operators to
set a fare range over and above the authorized existing fare, is illegal
and invalid as it is tantamount to an undue delegation of legislative
authority;
Rate should not be confiscatory as would place an operator in
a situation where he will continue to operate at a loss; rate should
enable public utilities to generate revenues sufficient to cover
operational costs and provide reasonable return on the investments
CPC - authorization granted by the LTFRB for the operation of
land transportation services for public use as required by law.
Pursuant to Section 16(a) of the Public Service Act, as amended, the
following requirements must be met before a CPC may be granted, to
wit:
(i) the applicant must be a citizen of the
Philippines, or a corporation or co-partnership,association or joint-
stock company constituted and organized under the laws of thePhilipp
ines, at least 60 per centum of its stock or paid-up capital must belong
entirely tocitizens of the Philippines;
(ii) the applicant must be financially capable of undertaking
theproposed service and meeting the responsibilities incident to its
operation; and
(iii)the
applicant must prove that the operation of the public service proposed
and theauthorization to do business will promote the public interest
in a proper and suitablemanner; there must be proper notice and
hearing before the PSC can exercise its power toissue a CPC.
LTFRB Memorandum Circular No. 92-009, Part IV is
incompatible and inconsistent withSection 16(c)(iii) of the Public
Service Act which requires that before a CPC will be issued, the
applicant must prove by proper notice and hearing that the operation
of the public service proposed will promote public interest in a proper
and suitable manner. On thecontrary, the policy guideline states that
the presumption of public need for a public service shall be deemed in
favor of the applicant.
Cervantes v Auditor Gen
FACTS:
This is a petition for review of a decision of Auditor General denying
petitioners claim for quarters allowance as manager of the National
Abaca and other Fibers Corp. (NAFCO).
Petitioner was the manager of NAFCO in 1949 with an annual salary
of P15,000.00. By a resolution of the Board of Directors, he was
granted quarter allowance of not exceeding P400 a month effective
the first of that month. This allowance was disapproved by the Central
Committee of the government enterprise council on the strength of the
recommendation of the NAFCO auditor, concurred in by the Auditor
General,
(1) that quarters allowance constituted additional
compensation prohibited by the charter of the NAFCO, which fixes the
salary of the general manager thereof at the sum not to exceed
P15,000 a year, and
(2) that the precarious financial condition of the corporation did
not warrant the granting of such allowance.
Petitioner asked the Control Committee to reconsider its action and
approve his claim for allowance which was again referred by the
Control Committee to the auditor General for comment. The
Committee in turn referred it to the NAFCO auditor, who reaffirmed his
previous recommendation and emphasized that the fact that the
corporation's finances had not improved.

ISSUE:
Whether or not RA No. 51 is null and void
HELD:
NEGATIVE. The rule is that so long as the Legislature "lays down a
policy and a standard is established by the statute" there is no undue
delegation. Republic Act No. 51 in authorizing the President of the
Philippines, among others, to make reforms and changes in
government-controlled corporations, lays down a standard and policy
that the purpose shall be to meet the exigencies attendant upon the
establishment of the free and independent government of the
Philippines and to promote simplicity, economy and efficiency in their
operations. The standard was set and the policy fixed. The President
had to carry the mandate. This he did by promulgating the executive
order in question which, tested by the rule above cited, does not
constitute an undue delegation of legislative power.
NOTE: RA No. 51 authorizes the President of the Philippines, among
other things, to effect such reforms and changes in government
owned and controlled corporations for the purpose of promoting
simplicity, economy and efficiency in their operation.
Pelaez v Auditor General
Facts: In 1964, President Ferdinand Marcos issued executive orders
creating 33 municipalities this was purportedly pursuant to Section
68 of the Revised Administrative Code which provides in part: The
President may by executive order define the boundary of
any municipality and may change the seat of government within
any subdivision to such place therein as the public welfare may
require
The then Vice President, Emmanuel Pelaez, as a taxpayer, filed a
special civil action to prohibit the auditor general from disbursing
funds to be appropriated for the said municipalities. Pelaez claims that
the EOs were unconstitutional. He said that Section 68 of the RAC
had been impliedly repealed by Section 3 of RA 2370 which provides
that barrios may not be created or their boundaries altered nor their
names changed except by Act of Congress. Pelaez argues: If the
President, under this new law, cannot even create a barrio, how can
he create a municipality which is composed of several barrios, since
barrios are units of municipalities?
The Auditor General countered that there was no repeal and that only
barrios were barred from being created by the President.
Municipalities are exempt from the bar and that a municipality can be
created without creating barrios. He further maintains that through
Sec. 68 of the RAC, Congress has delegated such power to create
municipalities to the President.
ISSUE: Whether or not Congress has delegated the power to create
barrios to the President by virtue of Sec. 68 of the RAC.
HELD: No. Although1a Congress may delegate to another branch of
the Government the power to fill in the details in the execution,
enforcement or administration of a law, it is essential, to forestall a
violation of the principle of separation of powers, that said law: (a) be
complete in itself it must set forth therein the policy to be executed,
carried out or implemented by the delegate2 and (b) fix a standard
the limits of which are sufficiently determinate or determinable to
which the delegate must conform in the performance of his
functions.2aIndeed, without a statutory declaration of policy, the
delegate would in effect, make or formulate such policy, which is the
essence of every law; and, without the aforementioned standard,
there would be no means to determine, with reasonable certainty,
whether the delegate has acted within or beyond the scope of his
authority.2b Hence, he could thereby arrogate upon himself the power,
not only to make the law, but, also and this is worse to unmake
it, by adopting measures inconsistent with the end sought to be
attained by the Act of Congress, thus nullifying the principle of
separation of powers and the system of checks and balances, and,
consequently, undermining the very foundation of our Republican
system.
Section 68 of the Revised Administrative Code does not meet these
well settled requirements for a valid delegation of the power to fix the
details in the enforcement of a law. It does not enunciate any policy to
be carried out or implemented by the President. Neither does it give a
standard sufficiently precise to avoid the evil effects above referred to.
As above indicated, the creation of municipalities, is not
an administrative function, but one which is essentially and eminently
legislative in character. The question of whether or not "public
interest" demands the exercise of such power is not one of fact. it is
"purely a legislative question ".
Further, although Sec. 68 provides the qualifying clause as the public
welfare may require which would mean that the President may
exercise such power as the public welfare may require is present,
still, such will not replace the standard needed for a proper delegation
of power. In the first place, what the phrase as the public welfare may
require qualifies is the text which immediately precedes hence, the
proper interpretation is the President may change the seat of
government within any subdivision to such place therein as the public
welfare may require. Only the seat of government may be changed
by the President when public welfare so requires and NOT the
creation of municipality. If the President could create a
municipality, he could, in effect, remove any of its officials, by
creating a new municipality and including therein the barrio in
which the official concerned resides, for his office would thereby
become vacant. Thus, by merely brandishing the power to create
a new municipality (if he had it), without actually creating it, he
could compel local officials to submit to his dictation, thereby, in
effect, exercising over them the power of control denied to him
by the Constitution.
The Supreme Court declared that the power to create municipalities is
essentially and eminently legislative in character not administrative
(not executive).
Balbuena vs Sec
Facts: Section 1 of R.A. No. 1265 requires all educational institutions
to observe daily flag ceremony, which shall be simple and dignified
and shall include the playing or singing of the Philippine National
Anthem. Section 2 thereof authorizes and directs the Secretary of
Education to issue or cause to be issued rules and regulations for the
proper conduct of the flag ceremony.
Petitioners, members of the religious sect "Jehovah's Witnesses,"
challenged the constitutionality of the Act by virtue of which the
Secretary of Education issued Department Order No. 8 which
prescribing compulsory flag ceremony in all schools, as an undue
delegation of legislative power.
Issue: Whether the requirements of simplicity and dignity of the flag
ceremony and the singing of the national anthem constitute an
adequate standard?
Ruling: Yes. the requirements above-quoted constitute an adequate
standard, to wit, simplicity and dignity of the flag ceremony and the
singing of the National Anthem specially when contrasted with
other standards heretofore upheld by the Courts: "public interest",
"public welfare", interest of law and order, "justice and equity" and the
substantial merits of the case", or "adequate and efficient instruction."
That the Legislature did not specify the details of the flag ceremony is
no objection to the validity of the statute, for all that is required of it is
the laying down of standards and policy that will limit the discretion of
the regulatory agency. To require the statute to establish in detail the
manner of exercise of the delegated power would be to destroy the
administrative flexibility that the delegation is intended to achieve.
Doctrine: Simplicity and dignity is a suficient standard.
BOCEA v. TEVES
 penalty of removal upon employees who do not meet their revenue
R.A. No. 9335, otherwise known as the Attrition Act of 2005 and its targets.
IRR are constitutional.

HELD:

Former President Gloria Macapagal-Arroyo enacted R.A. No. Petition DISMISSED.

9335, otherwise known as the Attrition Act of 2005 to optimize the
revenue-generation capability and collection of the Bureau of Internal Delegation of Legislative power
Revenue (BIR) and the Bureau of Customs (BOC). The law intends to
encourage BIR and BOC officials and employees to exceed their
revenue targets by providing a system of rewards and sanctions
In Abakada, the Court held,
through the creation of a Rewards and Incentives Fund (Fund) and a
Revenue Performance Evaluation Board (Board). It covers all officials
and employees of the BIR and the BOC with at least six months of
service, regardless of employment status.
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
Contending that the enactment and implementation of R.A.
implemented by the delegate. It lays down a sufficient
No. 9335 are tainted with constitutional infirmities in violation of the
standard when it provides adequate guidelines or
fundamental rights of its members, petitioner Bureau of Customs
limitations in the law to map out the boundaries of the
Employees Association (BOCEA), directly filed the present petition
delegates authority and prevent the delegation from
before this Court against respondents.
running riot. To be sufficient, the standard must specify
the limits of the delegates authority, announce the
legislative policy and identify the conditions under
In essence, BOCEA contends that R.A. No. 9335 and its IRR which it is to be implemented.
(1) gives an undue delegation of legislative power to the Board; (2)
violates the rights of BOCEAs members to: (a) equal protection of
laws, (b) security of tenure and (c) due process because R.A. No.
RA [No.] 9335 adequately states the policy and standards to
9335 and its IRR unduly discriminates against BIR and BOC
guide the President in fixing revenue targets and the implementing
employees as compared to employees of other revenue generating
agencies in carrying out the provisions of the law. In sum, the Court
government agencies which are not subject to attrition, (2) that the
finds that R.A. No. 9335, read and appreciated in its entirety, is
assailed law because it inflicts punishment upon a particular group or
complete in all its essential terms and conditions, and that it contains
class of officials and employees without trial. This is evident from the
sufficient standards as to negate BOCEAs supposition of undue
fact that the law confers upon the Board the power to impose the
delegation of legislative power to the Board.
Equal protection of the laws
Equal protection simply provides that all persons or things
similarly situated should be treated in a similar manner, both as to
rights conferred and responsibilities imposed.
Both the BIR and the BOC are bureaus under the DOF. They
principally perform the special function of being the instrumentalities
through which the State 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 [No.] 9335
fully satisfy the demands of equal protection.
Moreover, RA [No.] 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. In the case
of RA [No.] 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. The action for removal is
also subject to civil service laws, rules and regulations and
compliance with substantive and procedural due process.
R.A. No. 9335 is not a bill of attainder
A bill of attainder is a legislative act which inflicts punishment
on individuals or members of a particular group without a judicial trial.
Essential to a bill of attainder are a specification of certain individuals
or a group of individuals, the imposition of a punishment, penal or
otherwise, and the lack of judicial trial
R.A. No. 9335 does not possess the elements of a bill of
attainder. It does not seek to inflict punishment without a judicial trial.
R.A. No. 9335 merely lays down the grounds for the termination of a
BIR or BOC official or employee and provides for the consequences
thereof. The democratic processes are still followed and the
constitutional rights of the concerned employee are amply protected.
US vs Ang Tang Ho
Facts:
In July 1919, the Philippine Legislature (during special
session) passed and approved Act No. 2868 entitled An Act
Penalizing the Monopoly and Hoarding of Rice, Palay and Corn. The
said act, under extraordinary circumstances, authorizes the Governor
General (GG) to issue the necessary Rules and Regulations in
regulating the distribution of such products. Pursuant to this Act,
in August 1919, the GG issued Executive Order No. 53 which was
published on August 20, 1919.
The said EO fixed the price at which rice should be sold. On
the other hand, Ang Tang Ho, a rice dealer, sold a ganta of rice to
Pedro Trinidad at the price of eighty centavos. The said amount was
way higher than that prescribed by the EO.
The sale was done on the 6th of August 1919. On August 8,
1919, he was charged for violation of the said EO. He was found
guilty as charged and was sentenced to 5 months imprisonment plus
a P500.00 fine. He appealed the sentence countering that there is an
undue delegation of power to the Governor General.
Issue: Whether or not there is undue delegation to the Governor
General?
Ruling: First of, Ang Tang Hos conviction must be reversed because
he committed the act prior to the publication of the EO. Hence, he
cannot be ex post facto charged of the crime. Further, one cannot be
convicted of a violation of a law or of an order issued pursuant to the
law when both the law and the order fail to set up an ascertainable
standard of guilt.
Anent the issue of undue delegation, the said Act wholly fails
to provide definitely and clearly what the standard policy should
contain, so that it could be put in use as a uniform policy required to
take the place of all others without the determination of the insurance substance, it is a law in all its details in presenti, but which may be
commissioner in respect to matters involving the exercise of a left to take effect in future, if necessary, upon the ascertainment of
legislative discretion that could not be delegated, and without which any prescribed fact or event.
the act could not possibly be put in use. The law must be complete in
all its terms and provisions when it leaves the legislative branch of the
government and nothing must be left to the judgment of the electors
or other appointee or delegate of the legislature, so that, in form and