G.R. No.
L-44291 August 15, 1936 In support of his appeal the appellant assigns as the sole alleged error
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.
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,
1
 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.
2
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.
Avanceña, C. J., Abad Santos, Imperial, Diaz, Recto, and Laurel, JJ.,
concur.
G.R. No. L-6791 March 29, 1954
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
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.:
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.
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
3
laws shall be binding twenty days after their promulgation, and that violation of the circular or committed any offense, and the trial court
their promulgation shall be understood as made on the day of the may be said to have had no jurisdiction. This question may be raised
termination of the publication of the laws in the Gazette. Manresa, at any stage of the proceeding whether or not raised in the court
commenting on this article is of the opinion that the word "laws" below.
include regulations and circulars issued in accordance with the same.
He says: In view of the foregoing, we reverse the decision appealed from and
acquit the appellant, with costs de oficio.
El Tribunal Supremo, ha interpretado el articulo 1. del codigo
Civil en Sentencia de 22 de Junio de 1910, en el sentido de Paras, C.J., Bengzon, Padilla, Reyes, Bautista Angelo, Labrador,
que bajo la denominacion generica de leyes, se comprenden Concepcion and Diokno, JJ., concur.
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 G.R. No. L-32166 October 18, 1977
publicacion en la Gaceta, advertencia que seria perfectamente
inutil si no fuera de aplicacion al caso el articulo 1.o del THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,
Codigo Civil. (Manresa, Codigo Civil Español, Vol. I. p. 52). vs.
HON. MAXIMO A. MACEREN CFI, Sta. Cruz, Laguna, JOSE
In the present case, although circular No. 20 of the Central Bank was BUENAVENTURA, GODOFREDO REYES, BENJAMIN REYES,
issued in the year 1949, it was not published until November 1951, NAZARIO AQUINO and CARLO DEL ROSARIO, accused-appellees.
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 Office of the Solicitor General for appellant.
any legal effect and bound no one until its publication in the Official
Gazzette or after November 1951. In other words, appellant could not Rustics F. de los Reyes, Jr. for appellees.
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.
AQUINO, J.:têñ.£îhqwâ£
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 is a case involving the validity of a 1967 regulation, penalizing
this Court, which cannot be done by appellant. Ordinarily, one may electro fishing in fresh water fisheries, promulgated by the Secretary
raise on appeal any question of law or fact that has been raised in the of Agriculture and Natural Resources and the Commissioner of
court below and which is within the issues made by the parties in their Fisheries under the old Fisheries Law and the law creating the
pleadings. (Section 19, Rule 48 of the Rules of Court). But the Fisheries Commission.
question of non-publication is fundamental and decisive. If as a matter
of fact Circular No. 20 had not been published as required by law
On March 7, 1969 Jose Buenaventura, Godofredo Reyes, Benjamin
before its violation, then in the eyes of the law there was no such
Reyes, Nazario Aquino and Carlito del Rosario were charged by a
circular to be violated and consequently appellant committed no
4
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: ñé+.£ªwph!1
SUBJECT: PROHIBITING ELECTRO FISHING IN ALL
WATERS ñé+.£ªwph!1
OF THE PHILIPPINES.
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.ñé+.£ªwph!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.
(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.
(c) 'Persons' includes firm, corporation, association,
agent or employee.
5
 (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, L-25992, 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
6
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.
7
That decree provides: ñé+.£ªwph!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. Muñ;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 Osmeñ;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, L-25619, 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
8
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, L- 20051, 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.
9
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).
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).
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 proceeded against under section 45 of
the Federal Penal Code.
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.
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).
10
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.
Barredo, Concepcion, Jr., Santos and Guerrero, JJ.,
concur.1äwphï1.ñët
Fernando and Antonio, JJ., took no part.
Guerrero, J., was designated to sit in the Second Division.
G.R. No. 95832 August 10, 1992
MAYNARD R. PERALTA, petitioner,
vs.
CIVIL SERVICE COMMISSION, respondent.
Tranquilino F. Meris Law Office for petitioner.
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
3. 01 October 1989 — Sunday
4. 20 October 1989 — Friday
5. 21 October 1989 — Saturday
6. 22 October 1989 — Sunday
11
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
Saturday, Sunday or Holiday?1
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
12
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
13
 (k) To perform other functions that properly belong to a work the
central personnel agency. 5 following
Monday?
Pursuant to the foregoing provisions, the Commission promulgated
the herein challenged policy. Said policy was embodied in a 2nd (3) if he is
Indorsement dated 12 February 1965 of the respondent Commission absent on
involving the case of a Mrs. Rosalinda Gonzales. The respondent a Monday
Commission ruled that an employee who has no leave credits in his but
favor is not entitled to the payment of salary on Saturdays, Sundays present
or Holidays unless such non-working days occur within the period of the
service actually rendered. The same policy is reiterated in the preceding
Handbook of Information on the Philippine Civil Service. 6 Chapter Friday?
Five on leave of absence provides that:
- (1) He is
5.51. When intervening Saturday, Sunday or holiday considered
considered as leave without pay — when an employee on leave
is on leave without pay on a day before or on a day without
immediately preceding a Saturday, Sunday or holiday, pay for 4
such Saturday, Sunday or holiday shall also be without days
pay. (CSC, 2nd Ind., Feb. 12, 1965). covering
Friday to
It is likewise illustrated in the Primer on the Civil Service 7 in the Monday;
section referring to Questions and Answers on Leave of Absences,
which states the following: - (2) He is
considered
27. How is leave of an employee who has no more on leave
leave credits computed if: without
pay for 3
(1) he is days from
absent on Friday to
a Friday Sunday;
and the
following - (3) He is
Monday? considered
on leave
(2) if he is without
absent on pay for 3
Friday but days from
reports to Saturday

14
 to
Monday.
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 sixty-eight, two
hundred seventy-one 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
sixty-eight, two hundred seventy-one
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, That such 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
15
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 non-working 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 in Chicot County Drainage District vs. Baxter State
Bank:14
16
 . . . . 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, Griño-Aquino,
Medialdea, Regalado, Davide, Jr., Romero, Nocon and Bellosillo, JJ.,
concur.
G.R. No. 102549 August 10, 1992
EDWIN B. JAVELLANA, petitioner,
vs.
DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT AND
LUIS T. SANTOS, SECRETARY, respondents.
Reyes, Lozada and Sabado for petitioner.
GRIÑO-AQUINO, J.:
This petition for review on certiorari involves the right of a public
official to engage in the practice of his profession while employed in
the Government.
Attorney Erwin B. Javellana was an elected City Councilor of Bago
City, Negros Occidental. On October 5, 1989, City Engineer Ernesto
C. Divinagracia filed Administrative Case No. C-10-90 against
Javellana for: (1) violation of Department of Local Government (DLG)
Memorandum Circular No. 80-38 dated June 10, 1980 in relation to
DLG Memorandum Circular No. 74-58 and of Section 7, paragraph b,
No. 2 of Republic Act No. 6713, otherwise known as the "Code of
Conduct and Ethical Standards for Public Officials and Employees,"
and (2) for oppression, misconduct and abuse of authority.
Divinagracia's complaint alleged that Javellana, an incumbent
member of the City Council or Sanggunian Panglungsod of Bago City,
and a lawyer by profession, has continuously engaged in the practice
of law without securing authority for that purpose from the Regional
Director, Department of Local Government, as required by DLG
Memorandum Circular No. 80-38 in relation to DLG Memorandum
Circular No. 74-58 of the same department; that on July 8, 1989,
17
Javellana, as counsel for Antonio Javiero and Rolando Catapang,
filed a case against City Engineer Ernesto C. Divinagracia of Bago
City for "Illegal Dismissal and Reinstatement with Damages" putting
him in public ridicule; that Javellana also appeared as counsel in
several criminal and civil cases in the city, without prior authority of
the DLG Regional Director, in violation of DLG Memorandum Circular
No. 80-38 which provides:
MEMORANDUM CIRCULAR NO. 80-38
TO ALL: PROVINCIAL GOVERNORS, CITY
AND MUNICIPALITY MAYORS, KLGCD
REGIONAL DIRECTORS AND ALL
CONCERNED
SUBJECT: AMENDING MEMORANDUM
CIRCULAR NO. 80-18 ON SANGGUNIAN
SESSIONS, PER DIEMS, ALLOWANCES,
STAFFING AND OTHER RELATED MATTERS
In view of the issuance or Circular No. 5-A by the Joint
Commission on Local Government Personnel
Administration which affects certain provisions of MC
80-18, there is a need to amend said Memorandum
Circular to substantially conform to the pertinent
provisions of Circular No. 9-A.
xxx xxx xxx
C. Practice of Profession
The Secretary (now Minister) of Justice in an Opinion
No. 46 Series of 1973 stated inter alia that "members
of local legislative bodies, other than the provincial
governors or the mayors, do not keep regular office
hours." "They merely attend meetings or sessions of
the provincial board or the city or municipal council"
and that provincial board members are not even
required "to have an office in the provincial building."
Consequently, they are not therefore to required to
report daily as other regular government employees do,
except when they are delegated to perform certain
administrative functions in the interest of public service
by the Governor or Mayor as the case may be. For this
reason, they may, therefore, be allowed to practice
their professions provided that in so doing an authority .
. . first be secured from the Regional Directors pursuant
to Memorandum Circular No. 74-58, provided,
however, that no government personnel, property,
equipment or supplies shall be utilized in the practice of
their professions. While being authorized to practice
their professions, they should as much as possible
attend regularly any and all sessions, which are not
very often, of their Sanggunians for which they were
elected as members by their constituents except in
very extreme cases, e.g., doctors who are called upon
to save a life. For this purpose it is desired that they
always keep a calendar of the dates of the sessions,
regular or special of their Sanggunians so that conflicts
of attending court cases in the case of lawyers and
Sanggunian sessions can be avoided.
As to members of the bar the authority given for them
to practice their profession shall always be subject to
the restrictions provided for in Section 6 of Republic Act
5185. In all cases, the practice of any profession
should be favorably recommended by the Sanggunian
concerned as a body and by the provincial governors,
city or municipal mayors, as the case may be.
(Emphasis ours, pp. 28-30, Rollo.)
On August 13, 1990, a formal hearing of the complaint was held in
Iloilo City in which the complainant, Engineer Divinagracia, and the
respondent, Councilor Javellana, presented their respective evidence.
Meanwhile, on September 10, 1990, Javellana requested the DLG for
a permit to continue his practice of law for the reasons stated in his
letter-request. On the same date, Secretary Santos replied as follows:
18
 1st Indorsement
September 10, 1990
Respectfully returned to Councilor Erwin B. Javellana,
Bago City, his within letter dated September 10, 1990,
requesting for a permit to continue his practice of law
for reasons therein stated, with this information that, as
represented and consistent with law, we interpose no
objection thereto, provided that such practice will not
conflict or tend to conflict with his official functions.
(p. 60, Rollo.)
On September 21, 1991, Secretary Luis T. Santos issued
Memorandum Circular No. 90-81 setting forth guidelines for the
practice of professions by local elective officials as follows:
TO: All Provincial Governors, City and
Municipal Mayors, Regional Directors
and All Concerned.
SUBJECT: Practice of Profession and
Private Employment of Local Elective
Officials
Section 7 of Republic Act No. 6713 (Code of Conduct
and Ethical Standards for Public Officials and
Employees), states, in part, that "In addition to acts and
omission ofLpublic officials . . . now prescribed in the
ConstitutionUand existing laws, the following shall
constitute prohibited
I acts and transactions of any public
officials . . .Sand are hereby declared to be unlawful: . . .
(b) Public Officials
T . . . during their incumbency shall
not: (1) . . . .accept employment as officer, employee,
consultant, Scounsel, broker, agent, trustee or nominee
in any private A enterprise regulated, supervised or
licensed byNtheir office unless expressly allowed by
law; (2) EngageT in the private practice of their
profession unless
O authorized by the Constitution or law,
provided that S such practice will not conflict or tend to
conflict withStheir official functions: . . .
e
c xxx xxx xxx
r
e
Under Memorandum Circular No. 17 of the Office of the
President datedt September 4, 1986, the authority to
a
grant any permission, to accept private employment in
any capacity r and to exercise profession, to any
governmenty official shall be granted by the head of the
.
Ministry (Department) or agency in accordance with
Section 12, Rule XVIII of the Revised Civil Service
Rules, which provides, in part, that:
No officer shall engage directly in any . .
. vocation or profession . . . without a
written permission from the head of the
Department: Provided, that this
19
 prohibition will be absolute in the case of engage in private employment on a
those officers . . . whose duties and limited basis at the discretion of the
responsibilities require that their entire Secretary of Local Government, subject
time be at the disposal of the to existing laws and to the following
Government: Provided, further, That if conditions:
an employee is granted permission to
engage in outside activities, the time so a) That the time so
devoted outside of office should be fixed devoted outside of office
by the Chief of the agency to the end hours should be fixed by
that it will not impair in anyway the the local chief executive
efficiency of the officer or employee . . . concerned to the end that
subject to any additional conditions it will not impair in any
which the head of the office deems way the efficiency of the
necessary in each particular case in the officials concerned;
interest of the service, as expressed in
the various issuances of the Civil b) That no government
Service Commission. time, personnel, funds or
supplies shall be utilized
Conformably with the foregoing, the following in the pursuit of one's
guidelines are to be observed in the grant of profession or private
permission to the practice of profession and to the employment;
acceptance of private employment of local elective
officials, to wit: c) That no conflict of
interests between the
1) The permission shall be granted by practice of profession or
the Secretary of Local Government; engagement in private
employment and the
2) Provincial Governors, City and official duties of the
Municipal Mayors whose duties and concerned official shall
responsibilities require that their entire arise thereby;
time be at the disposal of the
government in conformity with Sections d) Such other conditions
141, 171 and 203 of the Local that the Secretary deems
Government Code (BP 337), are necessary to impose on
prohibited to engage in the practice of each particular case, in
their profession and to accept private the interest of public
employment during their incumbency: service. (Emphasis
supplied, pp. 31-32,
3) Other local elective officials may be Rollo.)
allowed to practice their profession or
20
On March 25, 1991, Javellana filed a Motion to Dismiss the
administrative case against him on the ground mainly that DLG
Memorandum Circulars Nos. 80-38 and 90-81 are unconstitutional
because the Supreme Court has the sole and exclusive authority to
regulate the practice of law.
In an order dated May 2, 1991, Javellana's motion to dismiss was
denied by the public respondents. His motion for reconsideration was
likewise denied on June 20, 1991.
Five months later or on October 10, 1991, the Local Government
Code of 1991 (RA 7160) was signed into law, Section 90 of which
provides:
Sec. 90. Practice of Profession. — (a) All governors,
city and municipal mayors are prohibited from
practicing their profession or engaging in any
occupation other than the exercise of their functions as
local chief executives.
(b) Sanggunian members may practice their
professions, engage in any occupation, or teach in
schools except during session hours: Provided, That
sanggunian members who are members of the Bar
shall not:
(1) Appear as counsel before any court
in any civil case wherein a local
government unit or any office, agency,
or instrumentality of the government is
the adverse party;
(2) Appear as counsel in any criminal
case wherein an officer or employee of
the national or local government is
accused of an offense committed in
relation to his office;
(3) Collect any fee for their appearance
in administrative proceedings involving
the local government unit of which he is
an official; and
(4) Use property and personnel of the
Government except when the
sanggunian member concerned is
defending the interest of the
Government.
(c) Doctors of medicine may practice their profession
even during official hours of work only on occasions of
emergency: Provided, That the officials concerned do
not derive monetary compensation therefrom.
(Emphasis ours.)
Administrative Case No. C-10-90 was again set for hearing on
November 26, 1991. Javellana thereupon filed this petition for
certiorari praying that DLG Memorandum Circulars Nos. 80-38 and
90-81 and Section 90 of the new Local Government Code (RA 7160)
be declared unconstitutional and null void because:
(1) they violate Article VIII, Section 5 of the 1987 Constitution, which
provides:
Sec. 5. The Supreme Court shall have the following
powers:
xxx xxx xxx
(5) Promulgate rules concerning the protection and
enforcement of constitutional rights, pleading, practice,
and procedure in all courts, the admission to the
practice of law, the Integrated Bar, and legal assistance
to the underprivileged. Such rules shall provide a
simplified and inexpensive procedure for the speedy
disposition of cases, shall be uniform for all courts of
the same grade, and shall not diminish, increase, or
21
 modify substantive rights. Rules of procedure of special
courts and quasi-judicial bodies shall remain effective
unless disapproved by the Supreme Court.
(2) They constitute class legislation, being discriminatory against the
legal and medical professions for only sanggunian members who are
lawyers and doctors are restricted in the exercise of their profession
while dentists, engineers, architects, teachers, opticians, morticians
and others are not so restricted (RA 7160, Sec. 90 [b-1]).
In due time, the Solicitor General filed his Comment on the petition
and the petitioner submitted a Reply. After deliberating on the
pleadings of the parties, the Court resolved to dismiss the petition for
lack of merit.
As a matter of policy, this Court accords great respect to the decisions
and/or actions of administrative authorities not only because of the
doctrine of separation of powers but also for their presumed
knowledgeability and expertise in the enforcement of laws and
regulations entrusted to their jurisdiction (Santiago vs. Deputy
Executive Secretary, 192 SCRA 199, citing Cuerdo vs. COA, 166
SCRA 657). With respect to the present case, we find no grave abuse
of discretion on the part of the respondent, Department of Interior and
Local Government (DILG), in issuing the questioned DLG Circulars
Nos. 80-30 and 90-81 and in denying petitioner's motion to dismiss
the administrative charge against him.
In the first place, complaints against public officers and employees
relating or incidental to the performance of their duties are necessarily
impressed with public interest for by express constitutional mandate, a
public office is a public trust. The complaint for illegal dismissal filed
by Javiero and Catapang against City Engineer Divinagracia is in
effect a complaint against the City Government of Bago City, their real
employer, of which petitioner Javellana is a councilman. Hence,
judgment against City Engineer Divinagracia would actually be a
judgment against the City Government. By serving as counsel for the
complaining employees and assisting them to prosecute their claims
against City Engineer Divinagracia, the petitioner violated
Memorandum Circular No. 74-58 (in relation to Section 7[b-2] of RA
6713) prohibiting a government official from engaging in the private
practice of his profession, if such practice would represent interests
adverse to the government.
Petitioner's contention that Section 90 of the Local Government Code
of 1991 and DLG Memorandum Circular No. 90-81 violate Article VIII,
Section 5 of the Constitution is completely off tangent. Neither the
statute nor the circular trenches upon the Supreme Court's power and
authority to prescribe rules on the practice of law. The Local
Government Code and DLG Memorandum Circular No. 90-81 simply
prescribe rules of conduct for public officials to avoid conflicts of
interest between the discharge of their public duties and the private
practice of their profession, in those instances where the law allows it.
Section 90 of the Local Government Code does not discriminate
against lawyers and doctors. It applies to all provincial and municipal
officials in the professions or engaged in any occupation. Section 90
explicitly provides that sanggunian members "may practice their
professions, engage in any occupation, or teach in schools expect
during session hours." If there are some prohibitions that apply
particularly to lawyers, it is because of all the professions, the practice
of law is more likely than others to relate to, or affect, the area of
public service.
WHEREFORE, the petition is DENIED for lack of merit. Costs against
the petitioner.
SO ORDERED.
Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin,
Medialdea, Regalado, Davide, Jr., Romero, Nocon and Bellosillo, JJ.,
concur.
FIRST DIVISION
[G.R. No. 119761. August 29, 1996]
22
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. HON. E.O. 22
COURT OF APPEALS, HON. COURT OF TAX APPEALS and
FORTUNE TOBACCO CORPORATION, respondents. 06-23-86

DECISION 07-01-86 and E.O. 273

VITUG, J.: 07-25-87

The Commissioner of Internal Revenue ("CIR") disputes the decision, 01-01-88 RA 6956
dated 31 March 1995, of respondent Court of Appealsi[1] affirming the
10th August 1994 decision and the 11th October 1994 resolution of 06-18-90
the Court of Tax Appealsii[2] ("CTA") in C.T.A. Case No. 5015,
entitled "Fortune Tobacco Corporation vs. Liwayway Vinzons-Chato in 07-05-90
her capacity as Commissioner of Internal Revenue."

The facts, by and large, are not in dispute.

Hope Luxury M. 100's
Fortune Tobacco Corporation ("Fortune Tobacco") is engaged in the
manufacture of different brands of cigarettes. Sec. 142, (c), (2) 40% 45%
On various dates, the Philippine Patent Office issued to the Hope Luxury M. King
corporation separate certificates of trademark registration over
"Champion," "Hope," and "More" cigarettes. In a letter, dated 06
Sec. 142, (c), (2) 40% 45%
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 More Premium M. 100's
Commission was to classify 'Champion,' 'Hope,' and 'More' as foreign
brands since they were listed in the World Tobacco Directory as Sec. 142, (c), (2) 40% 45%
belonging to foreign companies. However, Fortune Tobacco changed
the names of 'Hope' to Hope Luxury' and 'More' to 'Premium More,' More Premium International
thereby removing the said brands from the foreign brand category.
Proof was also submitted to the Bureau (of Internal Revenue ['BIR']) Sec. 142, (c), (2) 40% 45%
that 'Champion' was an original Fortune Tobacco Corporation register
and therefore a local brand."iii[3] Ad Valorem taxes were imposed on Champion Int'l. M. 100's
these brands,iv[4] at the following rates:
Sec. 142, (c), (2) 40% 45%

Champion M. 100's
"BRAND AD VALOREM TAX RATE

23
Sec. 142, (c), (2) 40% 45% "When the registered manufacturer's wholesale price or the actual
manufacturer's wholesale price whichever is higher of existing brands
Champion M. King of cigarettes, including the amounts intended to cover the taxes, of
cigarettes packed in twenties does not exceed Four Pesos and eighty
Sec. 142, (c), last par. 15% 20% centavos (P4.80) per pack, the rate shall be twenty percent
(20%)."vii[7] (Italics supplied.)
Champion Lights
About a month after the enactment and two (2) days before the
Sec. 142, (c), last par. 15% 20%"v[5] effectivity of RA 7654, Revenue Memorandum Circular No. 37-93
("RMC 37-93"), was issued by the BIR the full text of which
A bill, which later became Republic Act ("RA") No. 7654, vi[6] was expressed:
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 "REPUBLIKA NG PILIPINAS
became effective on 03 July 1993. It amended Section 142(c)(1) of KAGAWARAN NG PANANALAPI
the National Internal Revenue Code ("NIRC") to read; as follows: KAWANIHAN NG RENTAS INTERNAS

"SEC. 142. Cigars and Cigarettes. - July 1, 1993

"x x x xxx x x x. REVENUE MEMORANDUM CIRCULAR NO. 37-93

"(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:
"(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 locally manufactured cigarettes, forty-five percent
(45%) provided that the minimum tax shall not be less than Three
Pesos (P3.00) per pack.
"x x x x x x x x x.
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

24
listing of brands manufactured in foreign countries appearing in the cigarettes bearing a foreign brand subject to the 55% ad valorem tax
current World Tobacco Directory shall govern." on cigarettes.

"Under the foregoing, the test for imposition of the 55% ad valorem "Any ruling inconsistent herewith is revoked or modified accordingly.
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 (S
the foreign brand was sold or transferred by its owner to the local G
manufacturer. The brand must be originally owned by a foreign D)
manufacturer or producer. If ownership of the cigarette brand is, LI
however, not definitely determinable, 'x x x the listing of brands W
manufactured in foreign countries appearing in the current World A
Tobacco Directory shall govern. x x x' Y
W
"'HOPE' is listed in the World Tobacco Directory as being A
manufactured by (a) Japan Tobacco, Japan and (b) Fortune Tobacco, Y
Philippines. 'MORE' is listed in the said directory as being VI
manufactured by: (a) Fills de Julia Reig, Andorra; (b) Rothmans, N
Australia; (c) RJR-Macdonald, Canada; (d) Rettig-Strenberg, Finland; Z
(e) Karellas, Greece; (f) R.J. Reynolds, Malaysia; (g) Rothmans, New O
Zealand; (h) Fortune Tobacco, Philippines; (i) R.J. Reynolds, Puerto N
Rico; (j) R.J. Reynolds, Spain; (k) Tabacalera, Spain; (l) R.J. S-
Reynolds, Switzerland; and (m) R.J. Reynolds, USA. 'Champion' is C
registered in the said directory as being manufactured by (a) H
Commonwealth Bangladesh; (b) Sudan, Brazil; (c) Japan Tobacco, A
Japan; (d) Fortune Tobacco, Philippines; (e) Haggar, Sudan; and (f) T
Tabac Reunies, Switzerland. O
C
"Since there is no showing who among the above-listed o
manufacturers of the cigarettes bearing the said brands are the real m
owner/s thereof, then it follows that the same shall be considered mi
foreign brand for purposes of determining the ad valorem tax pursuant ss
to Section 142 of the National Internal Revenue Code. As held in BIR io
Ruling No. 410-88, dated August 24, 1988, 'in cases where it cannot n
be established or there is dearth of evidence as to whether a brand is er
foreign or not, resort to the World Tobacco Directory should be made.' "

"In view of the foregoing, the aforesaid brands of cigarettes, viz: On 02 July 1993, at about 17:50 hours, BIR Deputy Commissioner
'HOPE,' 'MORE' and 'CHAMPION' being manufactured by Fortune Victor A. Deoferio, Jr., sent via telefax a copy of RMC 37-93 to
Tobacco Corporation are hereby considered locally manufactured Fortune Tobacco but it was addressed to no one in particular. On 15

25
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. viii[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." ix[9]
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 'CHAMPION' CIGARETTES.
"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." x[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
26
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 quasi-
legislative powers.
Let us first distinguish between two kinds of administrative issuances -
a legislative rule and an interpretative rule.
In Misamis Oriental Association of Coco Traders, Inc., vs. Department
of Finance Secretary, xi[11] the Court expressed:
"x x x 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." xii[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 not bearing 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 interpreted 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.
27
Indeed, the BIR itself, in its RMC 10-86, has observed and provided:
"RMC NO. 10-86
Effectivity of Internal Revenue 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).
"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 Orders bearing
on internal revenue tax rules and regulations.
"(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.
"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."
xiii[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.xiv[14]
Thus, all taxable articles or kinds of property of the same class must
be taxed at the same ratexv[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 Tibayxvi[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')
28
"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 `V-1')
"4. Locally manufactured by MIGHTY CORPORATION
(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; Nanyang, Hongkong; Joo Lan, Malaysia; Pakistan
Tobacco Co., Pakistan; Premier Tobacco, Pakistan and Haggar,
Sudan (Exhibit 'U-4')." xvii[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 x x x. Why were these brands not
reclassified at 55 if your want to give a level playing field 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. (Italics supplied)
"Exhibit 'FF-2-C', pp. V-5 TO V-6, VI-1 to VI-3).
"x x x x x x x x x.
"MS. CHATO. x x x 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
29
with the reclassification or the proper classification of all brands that SECOND DIVISION
are listed there. x x x' (italics supplied) (Exhibit 'FF-2d', page IX-1)

"x x x x x x x x x. COMMISSIONER OF G.R. No. 179579

CUSTOMS and the DISTRICT
"HON. DIAZ. But did you not consider that there are similarly COLLECTOR OF THE PORT OF Present:
situated? SUBIC,
CARPIO, J., Chairperson,
"MS. CHATO. That is precisely why, Sir, after we have come up with Petitioners, BRION,
this Revenue Memorandum Circular No. 37-93, the other brands PEREZ,
came about the would have also clarified RMC 37-93 by I was saying SERENO, and
really because of the fact that I was just recently appointed and the REYES, JJ.
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 Promulgated:
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 - versus - February 1, 2012
brand for excise tax purposes which would include all the other
brands that were mentioned by the Honorable Chairman. (Italics
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

HYPERMIX FEEDS
the Court of Tax Appeals, is AFFIRMED. No costs.
CORPORATION,
SO ORDERED.
Respondent.
Kapunan, J., concurs.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
-x
Padilla, J., joins Justice Hermosisima, Jr., in his dissenting opinion.
DECISION
Bellosillo, J., see separate opinion.
SERENO, J.:
Hermosisima, Jr., J., see dissenting opinion.

30
 Before us is a Petition for Review under Rule 45,1[1] assailing
the Decision2[2] and the Resolution3[3] of the Court of Appeals (CA),
which nullified the Customs Memorandum Order (CMO) No. 27-
20034[4] 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[5] The
regulation provided an exclusive list of corporations, ports of discharge,
commodity descriptions and countries of origin. Depending on these
factors, wheat would be classified either as food grade or feed grade.
The corresponding tariff for food grade wheat was 3%, for feed grade,
7%.
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[6]
A month after the issuance of CMO 27-2003, on 19 December
2003, respondent filed a Petition for Declaratory Relief7[7] 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[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.
31
 On 19 January 2004, the RTC issued a Temporary Restraining
Order (TRO) effective for twenty (20) days from notice.9[9]
Petitioners thereafter filed a Motion to Dismiss.10[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[11] 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 27-2003.
SO ORDERED.12[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[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[14] The appellate court, however, dismissed the appeal. It
32
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 issues for the consideration of this
Court:
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.15[15]
We 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[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)
33
 Meanwhile, in Misamis Oriental Association of Coco Traders,
Inc. v. Department of Finance Secretary,17[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 27-2003. 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:
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
34
 controversy as to vest it with standing to file this
petition.18[18] (Emphasis supplied)
Finally, the issue raised by respondent is ripe for judicial
determination, because litigation is inevitable19[19] for the simple and
uncontroverted reason that respondent is not included in the
enumeration of 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.
It is therefore clear that a petition for declaratory relief is the right
remedy given the circumstances of the case.
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:
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[20]
Likewise, in Taada v. Tuvera,21[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
35
 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[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
36
 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.
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[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.
[G.R. No. 163448. March 08, 2005]
NATIONAL FOOD AUTHORITY (NFA), and JUANITO M. DAVID, in
his capacity as Regional Director, NFA Regional Office No. 1, San
Juan, La Union, petitioners, vs. MASADA SECURITY AGENCY, INC.,
represented by its Acting President & General Manager, COL. EDWIN
S. ESPEJO (RET.), respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for review under Rule 45 of the Rules of Court
is the February 12, 2004 decision[1] of the Court of Appeals in CA-
G.R. CV No. 76677, which dismissed the appeal filed by petitioner
National Food Authority (NFA) and its April 30, 2004 resolution
denying petitioners motion for reconsideration.
The antecedent facts show that on September 17, 1996, respondent
MASADA Security Agency, Inc., entered into a one year[2] contract[3]
37
to provide security services to the various offices, warehouses and
installations of NFA within the scope of the NFA Region I, comprised
of the provinces of Pangasinan, La Union, Abra, Ilocos Sur and Ilocos
Norte. Upon the expiration of said contract, the parties extended the
effectivity thereof on a monthly basis under same terms and
condition.[4]
Meanwhile, the Regional Tripartite Wages and Productivity Board
issued several wage orders mandating increases in the daily wage
rate. Accordingly, respondent requested NFA for a corresponding
upward adjustment in the monthly contract rate consisting of the
increases in the daily minimum wage of the security guards as well as
the corresponding raise in their overtime pay, holiday pay, 13th month
pay, holiday and rest day pay. It also claimed increases in Social
Security System (SSS) and Pag-ibig premiums as well as in the
administrative costs and margin. NFA, however, granted the request
only with respect to the increase in the daily wage by multiplying the
amount of the mandated increase by 30 days and denied the same
with respect to the adjustments in the other benefits and
remunerations computed on the basis of the daily wage.
Respondent sought the intervention of the Office of the Regional
Director, Regional Office No. I, La Union, as Chairman of the Regional
Tripartite Wages and Productivity Board and the DOLE Secretary
through the Executive Director of the National Wages and Productivity
Commission. Despite the advisory[5] of said offices sustaining the
claim of respondent that the increase mandated by Republic Act No.
6727 (RA 6727) and the wage orders issued by the RTWPB is not
limited to the daily pay, NFA maintained its stance that it is not liable
to pay the corresponding adjustments in the wage related benefits of
respondents security guards.
On May 4, 2001, respondent filed with the Regional Trial Court of
Quezon, City, Branch 83, a case for recovery of sum of money
against NFA. Docketed as Civil Case No. Q-01-43988, the
complaint[6] sought reimbursement of the following amounts allegedly
paid by respondent to the security guards, to wit: P2,949,302.84, for
unpaid wage related benefits brought about by the effectivity of Wage
Order Nos. RB 1-05 and RB CAR-04;[7] RB 1-06 and RB CAR-05;[8]
RB 1-07 and RB CAR-06;[9] and P975,493.04 for additional cost and
margin, plus interest. It also prayed for damages and litigation
expenses.[10]
In its answer with counterclaim,[11] NFA denied that respondent paid
the security guards their wage related benefits and that it shouldered
the additional costs and margin arising from the implementation of the
wage orders. It admitted, however, that it heeded respondents request
for adjustment only with respect to increase in the minimum wage and
not with respect to the other wage related benefits. NFA argued that
respondent cannot demand an adjustment on said salary related
benefits because it is bound by their contract expressly limiting NFAs
obligation to pay only the increment in the daily wage.
At the pre-trial, the only issue raised was whether or not respondent is
entitled to recover from NFA the wage related benefits of the security
guards.[12]
On September 19, 2002, the trial court rendered a decision[13] in
favor of respondent holding that NFA is liable to pay the security
guards wage related benefits pursuant to RA 6727, because the basis
of the computation of said benefits, like overtime pay, holiday pay,
SSS and Pag-ibig premium, is the increased minimum wage. It also
found NFA liable for the consequential adjustments in administrative
costs and margin. The trial court absolved defendant Juanito M. David
having been impleaded in his official capacity as Regional Director of
NFA Regional Office No. 1, San Juan, La Union. The dispositive
portion thereof, reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff
MASADA Security Agency, Inc., and against defendant National Food
Authority ordering said defendant to make the corresponding
adjustment in the contract price in accordance with the increment
mandated under the various wage orders, particularly Wage Order
Nos. RBI-05, RBCAR-04, RBI-06, RBCAR-05, RBI-07 and RBCAR-06
and to pay plaintiff the amounts representing the adjustments in the
wage-related benefits of the security guards and consequential
increase in its administrative cost and margin upon presentment by
plaintiff of the corresponding voucher claims.
38
Plaintiffs claims for damages and attorneys fees and defendants
counterclaim for damages are hereby DENIED.
Defendant Juanito M. David is hereby absolved from any liability.
SO ORDERED.[14]
NFA appealed to the Court of Appeals but the same was dismissed
on February 12, 2004. The appellate court held that the proper
recourse of NFA is to file a petition for review under Rule 45 with this
Court, considering that the appeal raised a pure question of law.
Nevertheless, it proceeded to discuss the merits of the case for
purposes of academic discussion and eventually sustained the ruling
of the trial court that NFA is under obligation to pay the administrative
costs and margin and the wage related benefits of the respondents
security guards.[15]
On April 30, 2004, the Court of Appeals denied NFAs motion for
reconsideration.[16] Hence, the instant petition.
The issue for resolution is whether or not the liability of principals in
service contracts under Section 6 of RA 6727 and the wage orders
issued by the Regional Tripartite Wages and Productivity Board is
limited only to the increment in the minimum wage.
At the outset, it should be noted that the proper remedy of NFA from
the adverse decision of the trial court is a petition for review under
Rule 45 directly with this Court because the issue involved a question
of law. However, in the interest of justice we deem it wise to overlook
the procedural technicalities if only to demonstrate that despite the
procedural infirmity, the instant petition is impressed with merit.[17]
RA 6727[18] (Wage Rationalization Act), which took effect on July 1,
1989,[19] declared it a policy of the State to rationalize the fixing of
minimum wages and to promote productivity-improvement and gain-
sharing measures to ensure a decent standard of living for the
workers and their families; to guarantee the rights of labor to its just
share in the fruits of production; to enhance employment generation in
the countryside through industrial dispersal; and to allow business and
industry reasonable returns on investment, expansion and growth.[20]
In line with its declared policy, RA 6727, created the National Wages
and Productivity Commission (NWPC),[21] vested, inter alia, with the
power to prescribe rules and guidelines for the determination of
appropriate minimum wage and productivity measures at the regional,
provincial or industry levels;[22] and the Regional Tripartite Wages
and Productivity Boards (RTWPB) which, among others, determine
and fix the minimum wage rates applicable in their respective region,
provinces, or industries therein and issue the corresponding wage
orders, subject to the guidelines issued by the NWPC.[23] Pursuant to
its wage fixing authority, the RTWPB issue wage orders which set the
daily minimum wage rates.[24]
Payment of the increases in the wage rate of workers is ordinarily
shouldered by the employer. Section 6 of RA 6727, however,
expressly lodged said obligation to the principals or indirect employers
in construction projects and establishments providing security,
janitorial and similar services. Substantially the same provision is
incorporated in the wage orders issued by the RTWPB.[25] Section 6
of RA 6727, provides:
SEC. 6. In the case of contracts for construction projects and for
security, janitorial and similar services, the prescribed increases in
the wage rates of the workers shall be borne by the principals or
clients of the construction/service contractors and the contract shall
be deemed amended accordingly. In the event, however, that the
principal or client fails to pay the prescribed wage rates, the
construction/service contractor shall be jointly and severally liable with
his principal or client. (Emphasis supplied)
NFA claims that its additional liability under the aforecited provision is
limited only to the payment of the increment in the statutory minimum
wage rate, i.e., the rate for a regular eight (8) hour work day.
The contention is meritorious.
39
In construing the word wage in Section 6 of RA 6727, reference must
be had to Section 4 (a) of the same Act. It states:
SEC. 4. (a) Upon the effectivity of this Act, the statutory minimum
wage rates for all workers and employees in the private sector,
whether agricultural or non-agricultural, shall be increased by
twenty-five pesos (P25) per day (Emphasis supplied)
The term wage as used in Section 6 of RA 6727 pertains to no other
than the statutory minimum wage which is defined under the Rules
Implementing RA 6727 as the lowest wage rate fixed by law that an
employer can pay his worker.[26] The basis thereof under Section 7 of
the same Rules is the normal working hours, which shall not exceed
eight hours a day. Hence, the prescribed increases or the additional
liability to be borne by the principal under Section 6 of RA 6727 is the
increment or amount added to the remuneration of an employee for
an 8-hour work.
Expresio unius est exclusio alterius. Where a statute, by its terms, is
expressly limited to certain matters, it may not, by interpretation or
construction, be extended to others.[27] Since the increase in wage
referred to in Section 6 pertains to the statutory minimum wage as
defined herein, principals in service contracts cannot be made to pay
the corresponding wage increase in the overtime pay, night shift
differential, holiday and rest day pay, premium pay and other benefits
granted to workers. While basis of said remuneration and benefits is
the statutory minimum wage, the law cannot be unduly expanded as
to include those not stated in the subject provision.
The settled rule in statutory construction is that if the statute is clear,
plain and free from ambiguity, it must be given its literal meaning and
applied without interpretation. This plain meaning rule or verba legis
derived from the maxim index animi sermo est (speech is the index of
intention) rests on the valid presumption that the words employed by
the legislature in a statute correctly express its intention or will and
preclude the court from construing it differently. The legislature is
presumed to know the meaning of the words, to have used words
advisedly, and to have expressed its intent by use of such words as
are found in the statute. Verba legis non est recedendum, or from the
words of a statute there should be no departure.[28]
The presumption therefore is that lawmakers are well aware that the
word wage as used in Section 6 means the statutory minimum wage.
If their intention was to extend the obligation of principals in service
contracts to the payment of the increment in the other benefits and
remuneration of workers, it would have so expressly specified. In not
so doing, the only logical conclusion is that the legislature intended to
limit the additional obligation imposed on principals in service
contracts to the payment of the increment in the statutory minimum
wage.
The general rule is that construction of a statute by an administrative
agency charged with the task of interpreting or applying the same is
entitled to great weight and respect. The Court, however, is not bound
to apply said rule where such executive interpretation, is clearly
erroneous, or when there is no ambiguity in the law interpreted, or
when the language of the words used is clear and plain, as in the
case at bar. Besides, administrative interpretations are at best
advisory for it is the Court that finally determines what the law
means.[29] Hence, the interpretation given by the labor agencies in
the instant case which went as far as supplementing what is otherwise
not stated in the law cannot bind this Court.
It is not within the province of this Court to inquire into the wisdom of
the law for indeed, we are bound by the words of the statute.[30] The
law is applied as it is. At any rate, the interest of the employees will
not be adversely affected if the obligation of principals under the
subject provision will be limited to the increase in the statutory
minimum wage. This is so because all remuneration and benefits
other than the increased statutory minimum wage would be
shouldered and paid by the employer or service contractor to the
workers concerned. Thus, in the end, all allowances and benefits as
computed under the increased rate mandated by RA 6727 and the
wage orders will be received by the workers.
Moreover, the law secures the welfare of the workers by imposing a
solidary liability on principals and the service contractors. Under the
second sentence of Section 6 of RA 6727, in the event that the
principal or client fails to pay the prescribed wage rates, the service
contractor shall be held solidarily liable with the former. Likewise,
Articles 106, 107 and 109 of the Labor Code provides:
40
ART. 106. Contractor or Subcontractor. Whenever an employer enters
into contract with another person for the performance of the formers
work, the employees of the contractor and of the latters subcontractor,
if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wage
of his employees in accordance with this Code, the employer shall be
jointly and severally liable with his contractor or subcontractor to such
employees to the extent of the work performed under the contract, in
the same manner and extent that he is liable to employees directly
employed by him.
ART. 107. Indirect Employer. The provisions of the immediately
preceding Article shall likewise apply to any person, partnership,
association or corporation which, not being an employer, contracts
with an independent contractor for the performance of any work, task,
job or project.
ART. 109. Solidary Liability. The provisions of existing laws to the
contrary notwithstanding, every employer or indirect employer shall be
held responsible with his contractor or subcontractor for any violation
of any provision of this Code. For purposes of determining the extent
of their civil liability under this Chapter, they shall be considered as
direct employers.
Based on the foregoing interpretation of Section 6 of RA 6727, the
parties may enter into stipulations increasing the liability of the
principal. So long as the minimum obligation of the principal, i.e.,
payment of the increased statutory minimum wage is complied with,
the Wage Rationalization Act is not violated.
In the instant case, Article IV.4 of the service contract provides:
IV.4. In the event of a legislated increase in the minimum wage of
security guards and/or in the PADPAO rate, the AGENCY may
negotiate for an adjustment in the contract price. Any adjustment shall
be applicable only to the increment, based on published and
circulated rates and not on mere certification.[31]
In the same vein, paragraph 3 of NFA Memorandum AO-98-03-
states:
3. For purposes of wage adjustments, consider only the rate based on
the wage Order issued by the Regional Tripartite Wage Productivity
Board (RTWPB). Unless otherwise provided in the Wage Order
issued by the RTWPB, the wage adjustment shall be limited to the
increment in the legislated minimum wage;[32]
The parties therefore acknowledged the application to their contract of
the wage orders issued by the RTWPB pursuant to RA 6727. There
being no assumption by NFA of a greater liability than that mandated
by Section 6 of the Act, its obligation is limited to the payment of the
increased statutory minimum wage rates which, as admitted by
respondent, had already been satisfied by NFA.[33] Under Article
1231 of the Civil Code, one of the modes of extinguishing an
obligation is by payment. Having discharged its obligation to
respondent, NFA no longer have a duty that will give rise to a
correlative legal right of respondent. The latters complaint for
collection of remuneration and benefits other than the increased
minimum wage rate, should therefore be dismissed for lack of cause
of action.
The same goes for respondents claim for administrative cost and
margin. Considering that respondent failed to establish a clear
obligation on the part of NFA to pay the same as well as to
substantiate the amount thereof with documentary evidence, the claim
should be denied.
WHEREFORE, the petition is GRANTED. The February 12, 2004
decision and the April 30, 2004 resolution of the Court of Appeals
which dismissed petitioner National Food Authoritys appeal and
motion for reconsideration, respectively, in CA-G.R. CV No. 76677,
are REVERSED and SET ASIDE. The complaint filed by respondent
MASADA Security Agency, Inc., docketed as Civil Case No. Q-01-
43988, before the Regional Trial Court of Quezon, City, Branch 83, is
ordered DISMISSED.
SO ORDERED.
41
Davide Jr., C.J., (Chairman), Quisumbing, Carpio and Azcuna, JJ.,
concur.
G.R. No. L-16704 March 17, 1962
VICTORIAS MILLING COMPANY, INC., petitioner-appellant,
vs.
SOCIAL SECURITY COMMISSION, respondent-appellee.
Ross, Selph and Carrascoso for petitioner-appellant.
Office of the Solicitor General and Ernesto T. Duran for respondent-
appellee.
BARRERA, J.:
On October 15, 1958, the Social Security Commission issued its
Circular No. 22 of the following tenor: .
Effective November 1, 1958, all Employers in computing the
premiums due the System, will take into consideration and
include in the Employee's remuneration all bonuses and
overtime pay, as well as the cash value of other media of
remuneration. All these will comprise the Employee's
remuneration or earnings, upon which the 3-1/2% and 2-1/2%
contributions will be based, up to a maximum of P500 for any
one month.
Upon receipt of a copy thereof, petitioner Victorias Milling Company,
Inc., through counsel, wrote the Social Security Commission in effect
protesting against the circular as contradictory to a previous Circular
No. 7, dated October 7, 1957 expressly excluding overtime pay and
bonus in the computation of the employers' and employees'
respective monthly premium contributions, and submitting, "In order to
assist your System in arriving at a proper interpretation of the term
'compensation' for the purposes of" such computation, their
observations on Republic Act 1161 and its amendment and on the
general interpretation of the words "compensation", "remuneration"
and "wages". Counsel further questioned the validity of the circular for
lack of authority on the part of the Social Security Commission to
promulgate it without the approval of the President and for lack of
publication in the Official Gazette.
Overruling these objections, the Social Security Commission ruled
that Circular No. 22 is not a rule or regulation that needed the
approval of the President and publication in the Official Gazette to be
effective, but a mere administrative interpretation of the statute, a
mere statement of general policy or opinion as to how the law should
be construed.
Not satisfied with this ruling, petitioner comes to this Court on appeal.
The single issue involved in this appeal is whether or not Circular No.
22 is a rule or regulation, as contemplated in Section 4(a) of Republic
Act 1161 empowering the Social Security Commission "to adopt,
amend and repeal subject to the approval of the President such rules
and regulations as may be necessary to carry out the provisions and
purposes of this Act."
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
42
new or additional legal provisions that have the effect of law. (Davis,
op. cit., p. 194.) .
A rule is binding on the courts so 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., 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.
Circular No. 22 in question was issued by the Social Security
Commission, in view of the amendment of the provisions of the Social
Security Law defining the term "compensation" contained in Section 8
(f) of Republic Act No. 1161 which, before its amendment, reads as
follows: .
(f) Compensation — All remuneration for employment include
the cash value of any remuneration paid in any medium other
than cash except (1) that part of the remuneration in excess of
P500 received during the month; (2) bonuses, allowances or
overtime pay; and (3) dismissal and all other payments which
the employer may make, although not legally required to do
so.
Republic Act No. 1792 changed the definition of "compensation" to:
(f) Compensation — All remuneration for employment include
the cash value of any remuneration paid in any medium other
than cash except that part of the remuneration in excess of
P500.00 received during the month.
It will thus be seen that whereas prior to the amendment, bonuses,
allowances, and overtime pay given in addition to the regular or base
pay were expressly excluded, or exempted from the definition of the
term "compensation", such exemption or exclusion was deleted by the
amendatory law. It thus became necessary for the Social Security
Commission to interpret the effect of such deletion or elimination.
Circular No. 22 was, therefore, issued to apprise those concerned of
the interpretation or understanding of the Commission, of the law as
amended, which it was its duty to enforce. It did not add any duty or
detail that was not already in the law as amended. It merely stated
and circularized the opinion of the Commission as to how the law
should be construed. 1äwphï1.ñët
The case of People v. Jolliffe (G.R. No. L-9553, promulgated on May
30, 1959) cited by appellant, does not support its contention that the
circular in question is a rule or regulation. What was there said was
merely that a regulation may be incorporated in the form of a circular.
Such statement simply meant that the substance and not the form of a
regulation is decisive in determining its nature. It does not lay down a
general proposition of law that any circular, regardless of its
substance and even if it is only interpretative, constitutes a rule or
regulation which must be published in the Official Gazette before it
could take effect.
The case of People v. Que Po Lay (50 O.G. 2850) also cited by
appellant is not applicable to the present case, because the penalty
that may be incurred by employers and employees if they refuse to
pay the corresponding premiums on bonus, overtime pay, etc. which
the employer pays to his employees, is not by reason of non-
compliance with Circular No. 22, but for violation of the specific legal
provisions contained in Section 27(c) and (f) of Republic Act No.
1161.
We find, therefore, that Circular No. 22 purports merely to advise
employers-members of the System of what, in the light of the
amendment of the law, they should include in determining the monthly
compensation of their employees upon which the social security
contributions should be based, and that such circular did not require
presidential approval and publication in the Official Gazette for its
effectivity.
It hardly need be said that the Commission's interpretation of the
amendment embodied in its Circular No. 22, is correct. The express
elimination among the exemptions excluded in the old law, of all
bonuses, allowances and overtime pay in the determination of the
"compensation" paid to employees makes it imperative that such
bonuses and overtime pay must now be included in the employee's
43
remuneration in pursuance of the amendatory law. It is true that in
previous cases, this Court has held that bonus is not demandable
because it is not part of the wage, salary, or compensation of the
employee. But the question in the instant case is not whether bonus is
demandable or not as part of compensation, but whether, after the
employer does, in fact, give or pay bonus to his employees, such
bonuses shall be considered compensation under the Social Security
Act after they have been received by the employees. While it is true
that terms or words are to be interpreted in accordance with their well-
accepted meaning in law, nevertheless, when such term or word is
specifically defined in a particular law, such interpretation must be
adopted in enforcing that particular law, for it can not be gainsaid that
a particular phrase or term may have one meaning for one purpose
and another meaning for some other purpose. Such is the case that is
now before us. Republic Act 1161 specifically defined what
"compensation" should mean "For the purposes of this Act". Republic
Act 1792 amended such definition by deleting same exemptions
authorized in the original Act. By virtue of this express substantial
change in the phraseology of the law, whatever prior executive or
judicial construction may have been given to the phrase in question
should give way to the clear mandate of the new law.
IN VIEW OF THE FOREGOING, the Resolution appealed from is
hereby affirmed, with costs against appellant. So ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion,
Reyes, J.B.L., Paredes, Dizon and De Leon, JJ., concur.
[G.R. No. 126999. August 30, 2000]
SGMC REALTY CORPORATION, petitioner, vs. OFFICE OF
THE PRESIDENT (OP), RIDGEVIEW REALTY
CORPORATION, SM INVESTMENTS CORPORATION,
MULTI-REALTY DEVELOPMENT CORP., HENRY SY SR.,
HENRY SY JR., HANS T. SY, MARY UY TY and VICTOR
LIM, respondents.
RESOLUTION
QUISUMBING, J.:
In this special civil action for certiorari, petitioner seeks to set
aside the decision24[1] of public respondent rendered on June
18, 1996, in OP Case No. 95-L-6333, and its order25[2] dated
October 1, 1996, denying the motion for reconsideration.
The records disclose that on March 29, 1994, petitioner filed
before the Housing and Land Use Regulatory Board (HLURB)
a complaint for breach of contract, violation of property rights
and damages against private respondents. After the parties
filed their pleadings and supporting documents, the arbiter
rendered a decision dismissing petitioners complaint as well
as private respondents counterclaim.
Petitioner then filed a petition for review with the Board of
Commissioners of the HLURB which, however, dismissed said
petition. On October 23, 1995, petitioner received a copy of
said decision of the Board of Commissioners. On November
20, 1995, petitioner filed an appeal with public respondent.
After the parties filed their memorandum, they filed their
respective draft decisions as ordered by public respondent.
44
On June 18, 1996, public respondent, without delving into the
merits of the case, rendered the assailed decision which
reads:
"IN VIEW OF THE FOREGOING, the appeal is hereby
DISMISSED for being filed out of time.
"SO ORDERED."26[3]
Petitioner seasonably filed a motion for reconsideration which
was denied. Undaunted, petitioner filed the instant petition,
alleging that public respondent committed grave abuse of
discretion amounting to lack or excess of jurisdiction:
[I]
IN HOLDING THAT THE PERIOD TO APPEAL FROM
THE HOUSING AND LAND USE REGULATORY
BOARD TO THE OFFICE OF THE PRESIDENT IS
FIFTEEN (15) DAYS AND NOT THIRTY (30) DAYS AS
MANDATED IN THE 1994 RULES OF PROCEDURE
ADOPTED BY THE HOUSING AND LAND USE
REGULATORY BOARD, AN ADMINISTRATIVE
AGENCY UNDER THE SUPERVISION AND
CONTROL OF PUBLIC RESPONDENT OFFICE OF
THE PRESIDENT.
[II]
IN DISREGARDING THE 1994 RULES OF
PROCEDURE OF THE HOUSING AND LAND USE
REGULATORY BOARD WITHOUT DECLARING THE
SAME ILLEGAL AND/OR INVALID, AND IN
DISREGARDING THE WELL-ESTABLISHED
DOCTRINE OF LIBERAL CONSTRUCTION OF THE
ADMINISTRATIVE RULES OF PROCEDURE IN
ORDER TO PROMOTE THEIR OBJECT AND TO
ASSIST THE PARTIES IN CLAIMING JUST, SPEEDY
AND INEXPENSIVE DETERMINATION OF THEIR
RESPECTIVE CLAIMS AND DEFENSES.27[4]
The fundamental issue for resolution is whether or not public
respondent committed grave abuse of discretion in ruling that
the reglementary period within which to appeal the decision of
HLURB to public respondent is fifteen days.
Petitioner contends that the period of appeal from the HLURB
to the Office of the President is thirty (30) days from receipt by
the aggrieved party of the decision appealed from in
accordance with Section 27 of the 1994 Rules of Procedure of
HLURB and Section 1 of Administrative Order No. 18, series
of 1987, of the Office of the President.
However, we find petitioners contention bereft of merit,
because of its reliance on a literal reading of cited rules
without correlating them to current laws as well as presidential
decrees on the matter.
Section 27 of the 1994 HLURB Rules of Procedure provides
as follows:
"Section 27. Appeal to the Office of the President. ---
Any party may, upon notice to the Board and the other
party, appeal the decision of the Board of
Commissioners or its division to the Office of the
President within thirty (30) days from receipt thereof
pursuant to and in accordance with Administrative
Order No. 18, of the Office of the President dated
February 12, 1987. Decision of the President shall be
45
 final subject only to review by the Supreme Court on
certiorari or on questions of law."28[5]
On the other hand, Administrative Order No. 18, series of
1987, issued by public respondent reads:
"Section 1. Unless otherwise governed by special laws,
an appeal to the Office of the President shall be taken
within thirty (30) days from receipt by the aggrieved
party of the decision/resolution/order complained of or
appealed from."29[6]
As pointed out by public respondent, the aforecited
administrative order allows aggrieved party to file its appeal
with the Office of the President within thirty (30) days from
receipt of the decision complained of. Nonetheless, such thirty-
day period is subject to the qualification that there are no other
statutory periods of appeal applicable. If there are special laws
governing particular cases which provide for a shorter or
longer reglementary period, the same shall prevail over the
thirty-day period provided for in the administrative order. This
is in line with the rule in statutory construction that an
administrative rule or regulation, in order to be valid, must not
contradict but conform to the provisions of the enabling
law.30[7]
We note that indeed there are special laws that mandate a
shorter period of fifteen (15) days within which to appeal a
case to public respondent. First, Section 15 of Presidential
Decree No. 957 provides that the decisions of the National
Housing Authority (NHA) shall become final and executory
after the lapse of fifteen (15) days from the date of receipt of
the decision. Second, Section 2 of Presidential Decree No.
1344 states that decisions of the National Housing Authority
shall become final and executory after the lapse of fifteen (15)
days from the date of its receipt. The latter decree provides
that the decisions of NHA is appealable only to the Office of
the President. Further, we note that the regulatory functions of
NHA relating to housing and land development has been
transferred to Human Settlements Regulatory Commission,
now known as HLURB.31[8] Thus, said presidential issuances
providing for a reglementary period of appeal of fifteen days
apply in this case. Accordingly, the period of appeal of thirty
(30) days set forth in Section 27 of HLURB 1994 Rules of
Procedure no longer holds true for being in conflict with the
provisions of aforesaid presidential decrees. For it is axiomatic
that administrative rules derive their validity from the statute
that they are intended to implement. Any rule which is not
consistent with statute itself is null and void.32[9]
In this case, petitioner received a copy of the decision of
HLURB on October 23, 1995. Considering that the
reglementary period to appeal is fifteen days, petitioner has
only until November 7, 1995, to file its appeal. Unfortunately,
petitioner filed its appeal with public respondent only on
November 20, 1995 or twenty-eight days from receipt of the
appealed decision, which is obviously filed out of time.
As the appeal filed by petitioner was not taken within the
reglementary period, the prescriptive period for perfecting an
46
appeal continues to run. Consequently, the decision of the
HLURB became final and executory upon the lapse of fifteen
days from receipt of the decision. Hence, the decision became
immutable; it can no longer be amended nor altered by public
respondent. Accordingly, inasmuch as the timely perfection of
an appeal is a jurisdictional requisite, public respondent has no
more authority to entertain the petitioners appeal. Otherwise,
any amendment or alteration made which substantially affects
the final and executory judgment would be null and void for
lack of jurisdiction.33[10]
Thus, in this case public respondent cannot be faulted of grave
abuse of discretion in ruling that the period of appeal is fifteen
days and in forthrightly dismissing petitioners appeal as the
same was clearly filed out of time.
Worth mentioning, just days prior to the promulgation of the
assailed decision of public respondent, the HLURB adopted on
June 10, 1996, its 1996 Rules of Procedure. Significantly,
Section 2, Rule XVIII of said rules provides that any party may,
upon notice to the HLURB and the other party, appeal a
decision rendered by the Board of Commissioners en banc or
by one of its divisions to the Office of the President within
fifteen (15) calendar days from receipt thereof in accordance
with P.D. 1344 and A.O. 18, series of 1987.34[11] Apparently,
the amendment was made pursuant to the pronouncements of
public respondent in earlier cases35[12] it decided that
appeals to the Office of the President from the decision of
HLURB should be filed within fifteen (15) days from receipt
thereof. At present therefore, decisions rendered by HLURB is
appealable to the Office of the President within fifteen (15)
calendar days from receipt thereof.
Finally, we find that the instant petition ought not to have been
directly filed with this Court. For while we have concurrent
jurisdiction with the Regional Trial Courts and the Court of
Appeals to issue writs of certiorari, this concurrence is not to
be taken as an unrestrained freedom of choice concerning the
court to which application for the writ will be directed. There is
after all a hierarchy of courts. That hierarchy is determinative
of the venue of appeals, and should also serve as a general
determinant of the appropriate forum for petitions for the
extraordinary writs.36[13] A direct invocation of the Supreme
Courts original jurisdiction to issue these extraordinary writs is
allowed only when there are special and important reasons
therefor, clearly and specifically set out in the petition.37[14]
WHEREFORE, the instant petition is DISMISSED for utter lack
of merit. Costs against petitioner.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ.,
concur.
47
G.R. No. 159694 January 27, 2006
COMMISSIONER OF INTERNAL REVENUE, Petitioner,
vs.
AZUCENA T. REYES, Respondent.
x -- -- -- -- -- -- -- -- -- -- -- -- -- x
G.R. No. 163581 January 27, 2006
AZUCENA T. REYES, Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
DECISION
PANGANIBAN, CJ.:
Under the present provisions of the Tax Code and pursuant to
elementary due process, taxpayers must be informed in writing of the
law and the facts upon which a tax assessment is based; otherwise,
the assessment is void. Being invalid, the assessment cannot in turn
be used as a basis for the perfection of a tax compromise.
The Case
Before us are two consolidated1 Petitions for Review2 filed under Rule
45 of the Rules of Court, assailing the August 8, 2003 Decision3 of the
Court of Appeals (CA) in CA-GR SP No. 71392. The dispositive
portion of the assailed Decision reads as follows:
"WHEREFORE, the petition is GRANTED. The assailed decision of
the Court of Tax Appeals is ANNULLED and SET ASIDE without
prejudice to the action of the National Evaluation Board on the
proposed compromise settlement of the Maria C. Tancinco estate’s
tax liability."4
The Facts
The CA narrated the facts as follows:
"On July 8, 1993, Maria C. Tancinco (or ‘decedent’) died, leaving a
1,292 square-meter residential lot and an old house thereon (or
‘subject property’) located at 4931 Pasay Road, Dasmariñas Village,
Makati City.
"On the basis of a sworn information-for-reward filed on February 17,
1997 by a certain Raymond Abad (or ‘Abad’), Revenue District Office
No. 50 (South Makati) conducted an investigation on the decedent’s
estate (or ‘estate’). Subsequently, it issued a Return Verification
Order. But without the required preliminary findings being submitted, it
issued Letter of Authority No. 132963 for the regular investigation of
the estate tax case. Azucena T. Reyes (or ‘[Reyes]’), one of the
decedent’s heirs, received the Letter of Authority on March 14, 1997.
"On February 12, 1998, the Chief, Assessment Division, Bureau of
Internal Revenue (or ‘BIR’), issued a preliminary assessment notice
against the estate in the amount of P14,580,618.67. On May 10,
1998, the heirs of the decedent (or ‘heirs’) received a final estate tax
assessment notice and a demand letter, both dated April 22, 1998, for
the amount of P14,912,205.47, inclusive of surcharge and interest.
"On June 1, 1998, a certain Felix M. Sumbillo (or ‘Sumbillo’) protested
the assessment [o]n behalf of the heirs on the ground that the subject
property had already been sold by the decedent sometime in 1990.
"On November 12, 1998, the Commissioner of Internal Revenue (or
‘[CIR]’) issued a preliminary collection letter to [Reyes], followed by a
Final Notice Before Seizure dated December 4, 1998.
"On January 5, 1999, a Warrant of Distraint and/or Levy was served
upon the estate, followed on February 11, 1999 by Notices of Levy on
Real Property and Tax Lien against it.
"On March 2, 1999, [Reyes] protested the notice of levy. However, on
March 11, 1999, the heirs proposed a compromise settlement of
P1,000,000.00.
48
"In a letter to [the CIR] dated January 27, 2000, [Reyes] proposed to
pay 50% of the basic tax due, citing the heirs’ inability to pay the tax
assessment. On March 20, 2000, [the CIR] rejected [Reyes’s] offer,
pointing out that since the estate tax is a charge on the estate and not
on the heirs, the latter’s financial incapacity is immaterial as, in fact,
the gross value of the estate amounting to P32,420,360.00 is more
than sufficient to settle the tax liability. Thus, [the CIR] demanded
payment of the amount of P18,034,382.13 on or before April 15,
2000[;] otherwise, the notice of sale of the subject property would be
published.
"On April 11, 2000, [Reyes] again wrote to [the CIR], this time
proposing to pay 100% of the basic tax due in the amount of
P5,313,891.00. She reiterated the proposal in a letter dated May 18,
2000.
"As the estate failed to pay its tax liability within the April 15, 2000
deadline, the Chief, Collection Enforcement Division, BIR, notified
[Reyes] on June 6, 2000 that the subject property would be sold at
public auction on August 8, 2000.
"On June 13, 2000, [Reyes] filed a protest with the BIR Appellate
Division. Assailing the scheduled auction sale, she asserted that x x x
the assessment, letter of demand[,] and the whole tax proceedings
against the estate are void ab initio. She offered to file the
corresponding estate tax return and pay the correct amount of tax
without surcharge [or] interest.
"Without acting on [Reyes’s] protest and offer, [the CIR] instructed the
Collection Enforcement Division to proceed with the August 8, 2000
auction sale. Consequently, on June 28, 2000, [Reyes] filed a
[P]etition for [R]eview with the Court of Tax Appeals (or ‘CTA’),
docketed as CTA Case No. 6124.
"On July 17, 2000, [Reyes] filed a Motion for the Issuance of a Writ of
Preliminary Injunction or Status Quo Order, which was granted by the
CTA on July 26, 2000. Upon [Reyes’s] filing of a surety bond in the
amount of P27,000,000.00, the CTA issued a [R]esolution dated
August 16, 2000 ordering [the CIR] to desist and refrain from
proceeding with the auction sale of the subject property or from
issuing a [W]arrant of [D]istraint or [G]arnishment of [B]ank
[A]ccount[,] pending determination of the case and/or unless a
contrary order is issued.
"[The CIR] filed a [M]otion to [D]ismiss the petition on the grounds (i)
that the CTA no longer has jurisdiction over the case[,] because the
assessment against the estate is already final and executory; and (ii)
that the petition was filed out of time. In a [R]esolution dated
November 23, 2000, the CTA denied [the CIR’s] motion.
"During the pendency of the [P]etition for [R]eview with the CTA,
however, the BIR issued Revenue Regulation (or ‘RR’) No. 6-2000
and Revenue Memorandum Order (or ‘RMO’) No. 42-2000 offering
certain taxpayers with delinquent accounts and disputed assessments
an opportunity to compromise their tax liability.
"On November 25, 2000, [Reyes] filed an application with the BIR for
the compromise settlement (or ‘compromise’) of the assessment
against the estate pursuant to Sec. 204(A) of the Tax Code, as
implemented by RR No. 6-2000 and RMO No. 42-2000.
"On December 26, 2000, [Reyes] filed an Ex-Parte Motion for
Postponement of the hearing before the CTA scheduled on January 9,
2001, citing her pending application for compromise with the BIR. The
motion was granted and the hearing was reset to February 6, 2001.
"On January 29, 2001, [Reyes] moved for postponement of the
hearing set on February 6, 2001, this time on the ground that she had
already paid the compromise amount of P1,062,778.20 but was still
awaiting approval of the National Evaluation Board (or ‘NEB’). The
CTA granted the motion and reset the hearing to February 27, 2001.
"On February 19, 2001, [Reyes] filed a Motion to Declare Application
for the Settlement of Disputed Assessment as a Perfected
Compromise. In said motion, she alleged that [the CIR] had not yet
signed the compromise[,] because of procedural red tape requiring
the initials of four Deputy Commissioners on relevant documents
before the compromise is signed by the [CIR]. [Reyes] posited that the
49
absence of the requisite initials and signature[s] on said documents
does not vitiate the perfected compromise.
"Commenting on the motion, [the CIR] countered that[,] without the
approval of the NEB, [Reyes’s] application for compromise with the
BIR cannot be considered a perfected or consummated compromise.
"On March 9, 2001, the CTA denied [Reyes’s] motion, prompting her
to file a Motion for Reconsideration Ad Cautelam. In a [R]esolution
dated April 10, 2001, the CTA denied the [M]otion for
[R]econsideration with the suggestion that[,] for an orderly
presentation of her case and to prevent piecemeal resolutions of
different issues, [Reyes] should file a [S]upplemental [P]etition for
[R]eview[,] setting forth the new issue of whether there was already a
perfected compromise.
"On May 2, 2001, [Reyes] filed a Supplemental Petition for Review
with the CTA, followed on June 4, 2001 by its Amplificatory
Arguments (for the Supplemental Petition for Review), raising the
following issues:
‘1. Whether or not an offer to compromise by the [CIR], with the
acquiescence by the Secretary of Finance, of a tax liability pending in
court, that was accepted and paid by the taxpayer, is a perfected and
consummated compromise.
‘2. Whether this compromise is covered by the provisions of Section
204 of the Tax Code (CTRP) that requires approval by the BIR [NEB].’
"Answering the Supplemental Petition, [the CIR] averred that an
application for compromise of a tax liability under RR No. 6-2000 and
RMO No. 42-2000 requires the evaluation and approval of either the
NEB or the Regional Evaluation Board (or ‘REB’), as the case may
be.
"On June 14, 2001, [Reyes] filed a Motion for Judgment on the
Pleadings; the motion was granted on July 11, 2001. After submission
of memoranda, the case was submitted for [D]ecision.
"On June 19, 2002, the CTA rendered a [D]ecision, the decretal
portion of which pertinently reads:
‘WHEREFORE, in view of all the foregoing, the instant [P]etition for
[R]eview is hereby DENIED. Accordingly, [Reyes] is hereby
ORDERED to PAY deficiency estate tax in the amount of Nineteen
Million Five Hundred Twenty Four Thousand Nine Hundred Nine and
78/100 (P19,524,909.78), computed as follows:
xxxxxxxxx
‘[Reyes] is likewise ORDERED to PAY 20% delinquency interest on
deficiency estate tax due of P17,934,382.13 from January 11, 2001
until full payment thereof pursuant to Section 249(c) of the Tax Code,
as amended.’
"In arriving at its decision, the CTA ratiocinated that there can only be
a perfected and consummated compromise of the estate’s tax
liability[,] if the NEB has approved [Reyes’s] application for
compromise in accordance with RR No. 6-2000, as implemented by
RMO No. 42-2000.
"Anent the validity of the assessment notice and letter of demand
against the estate, the CTA stated that ‘at the time the questioned
assessment notice and letter of demand were issued, the heirs knew
very well the law and the facts on which the same were based.’ It also
observed that the petition was not filed within the 30-day reglementary
period provided under Sec. 11 of Rep. Act No. 1125 and Sec. 228 of
the Tax Code."5
Ruling of the Court of Appeals
In partly granting the Petition, the CA said that Section 228 of the Tax
Code and RR 12-99 were mandatory and unequivocal in their
requirement. The assessment notice and the demand letter should
have stated the facts and the law on which they were based;
otherwise, they were deemed void.6 The appellate court held that
while administrative agencies, like the BIR, were not bound by
procedural requirements, they were still required by law and equity to
50
observe substantive due process. The reason behind this
requirement, said the CA, was to ensure that taxpayers would be duly
apprised of -- and could effectively protest -- the basis of tax
assessments against them.7 Since the assessment and the demand
were void, the proceedings emanating from them were likewise void,
and any order emanating from them could never attain finality.
The appellate court added, however, that it was premature to declare
as perfected and consummated the compromise of the estate’s tax
liability. It explained that, where the basic tax assessed exceeded P1
million, or where the settlement offer was less than the prescribed
minimum rates, the National Evaluation Board’s (NEB) prior
evaluation and approval were the conditio sine qua non to the
perfection and consummation of any compromise.8 Besides, the CA
pointed out, Section 204(A) of the Tax Code applied to all
compromises, whether government-initiated or not.9 Where the law
did not distinguish, courts too should not distinguish.
Hence, this Petition.10
The Issues
In GR No. 159694, petitioner raises the following issues for the
Court’s consideration:
"I.
Whether petitioner’s assessment against the estate is valid.
"II.
Whether respondent can validly argue that she, as well as the other
heirs, was not aware of the facts and the law on which the
assessment in question is based, after she had opted to propose
several compromises on the estate tax due, and even prematurely
acting on such proposal by paying 20% of the basic estate tax due."11
The foregoing issues can be simplified as follows: first, whether the
assessment against the estate is valid; and, second, whether the
compromise entered into is also valid.
The Court’s Ruling
The Petition is unmeritorious.
First Issue:
Validity of the Assessment Against the Estate
The second paragraph of Section 228 of the Tax Code12 is clear and
mandatory. It provides as follows:
"Sec. 228. Protesting of Assessment. --
xxxxxxxxx
"The taxpayers shall be informed in writing of the law and the facts on
which the assessment is made: otherwise, the assessment shall be
void."
In the present case, Reyes was not informed in writing of the law and
the facts on which the assessment of estate taxes had been made.
She was merely notified of the findings by the CIR, who had simply
relied upon the provisions of former Section 22913 prior to its
amendment by Republic Act (RA) No. 8424, otherwise known as the
Tax Reform Act of 1997.
First, RA 8424 has already amended the provision of Section 229 on
protesting an assessment. The old requirement of merely notifying the
taxpayer of the CIR’s findings was changed in 1998 to informing the
taxpayer of not only the law, but also of the facts on which an
assessment would be made; otherwise, the assessment itself would
be invalid.
It was on February 12, 1998, that a preliminary assessment notice
was issued against the estate. On April 22, 1998, the final estate tax
51
assessment notice, as well as demand letter, was also issued. During
those dates, RA 8424 was already in effect. The notice required under
the old law was no longer sufficient under the new law.
To be simply informed in writing of the investigation being conducted
and of the recommendation for the assessment of the estate taxes
due is nothing but a perfunctory discharge of the tax function of
correctly assessing a taxpayer. The act cannot be taken to mean that
Reyes already knew the law and the facts on which the assessment
was based. It does not at all conform to the compulsory requirement
under Section 228. Moreover, the Letter of Authority received by
respondent on March 14, 1997 was for the sheer purpose of
investigation and was not even the requisite notice under the law.
The procedure for protesting an assessment under the Tax Code is
found in Chapter III of Title VIII, which deals with remedies. Being
procedural in nature, can its provision then be applied retroactively?
The answer is yes.
The general rule is that statutes are prospective. However, statutes
that are remedial, or that do not create new or take away vested
rights, do not fall under the general rule against the retroactive
operation of statutes.14 Clearly, Section 228 provides for the
procedure in case an assessment is protested. The provision does not
create new or take away vested rights. In both instances, it can surely
be applied retroactively. Moreover, RA 8424 does not state, either
expressly or by necessary implication, that pending actions are
excepted from the operation of Section 228, or that applying it to
pending proceedings would impair vested rights.
Second, the non-retroactive application of Revenue Regulation (RR)
No. 12-99 is of no moment, considering that it merely implements the
law.
A tax regulation is promulgated by the finance secretary to implement
the provisions of the Tax Code.15 While it is desirable for the
government authority or administrative agency to have one
immediately issued after a law is passed, the absence of the
regulation does not automatically mean that the law itself would
become inoperative.
At the time the pre-assessment notice was issued to Reyes, RA 8424
already stated that the taxpayer must be informed of both the law and
facts on which the assessment was based. Thus, the CIR should have
required the assessment officers of the Bureau of Internal Revenue
(BIR) to follow the clear mandate of the new law. The old regulation
governing the issuance of estate tax assessment notices ran afoul of
the rule that tax regulations -- old as they were -- should be in
harmony with, and not supplant or modify, the law.16
It may be argued that the Tax Code provisions are not self-executory.
It would be too wide a stretch of the imagination, though, to still issue
a regulation that would simply require tax officials to inform the
taxpayer, in any manner, of the law and the facts on which an
assessment was based. That requirement is neither difficult to make
nor its desired results hard to achieve.
Moreover, an administrative rule interpretive of a statute, and not
declarative of certain rights and corresponding obligations, is given
retroactive effect as of the date of the effectivity of the statute.17 RR
12-99 is one such rule. Being interpretive of the provisions of the Tax
Code, even if it was issued only on September 6, 1999, this regulation
was to retroact to January 1, 1998 -- a date prior to the issuance of
the preliminary assessment notice and demand letter.
Third, neither Section 229 nor RR 12-85 can prevail over Section 228
of the Tax Code.
No doubt, Section 228 has replaced Section 229. The provision on
protesting an assessment has been amended. Furthermore, in case
of discrepancy between the law as amended and its implementing but
old regulation, the former necessarily prevails.18 Thus, between
Section 228 of the Tax Code and the pertinent provisions of RR 12-
85, the latter cannot stand because it cannot go beyond the provision
of the law. The law must still be followed, even though the existing tax
regulation at that time provided for a different procedure. The
regulation then simply provided that notice be sent to the respondent
in the form prescribed, and that no consequence would ensue for
failure to comply with that form.
52
Fourth, petitioner violated the cardinal rule in administrative law that
the taxpayer be accorded due process. Not only was the law here
disregarded, but no valid notice was sent, either. A void assessment
bears no valid fruit.
The law imposes a substantive, not merely a formal, requirement. To
proceed heedlessly with tax collection without first establishing a valid
assessment is evidently violative of the cardinal principle in
administrative investigations: that taxpayers should be able to present
their case and adduce supporting evidence.19 In the instant case,
respondent has not been informed of the basis of the estate tax
liability. Without complying with the unequivocal mandate of first
informing the taxpayer of the government’s claim, there can be no
deprivation of property, because no effective protest can be made.20
The haphazard shot at slapping an assessment, supposedly based on
estate taxation’s general provisions that are expected to be known by
the taxpayer, is utter chicanery.
Even a cursory review of the preliminary assessment notice, as well
as the demand letter sent, reveals the lack of basis for -- not to
mention the insufficiency of -- the gross figures and details of the
itemized deductions indicated in the notice and the letter. This Court
cannot countenance an assessment based on estimates that appear
to have been arbitrarily or capriciously arrived at. Although taxes are
the lifeblood of the government, their assessment and collection
"should be made in accordance with law as any arbitrariness will
negate the very reason for government itself."21
Fifth, the rule against estoppel does not apply. Although the
government cannot be estopped by the negligence or omission of its
agents, the obligatory provision on protesting a tax assessment
cannot be rendered nugatory by a mere act of the CIR .
Tax laws are civil in nature.22 Under our Civil Code, acts executed
against the mandatory provisions of law are void, except when the law
itself authorizes the validity of those acts.23 Failure to comply with
Section 228 does not only render the assessment void, but also finds
no validation in any provision in the Tax Code. We cannot condone
errant or enterprising tax officials, as they are expected to be vigilant
and law-abiding.
Second Issue:
Validity of Compromise
It would be premature for this Court to declare that the compromise on
the estate tax liability has been perfected and consummated,
considering the earlier determination that the assessment against the
estate was void. Nothing has been settled or finalized. Under Section
204(A) of the Tax Code, where the basic tax involved exceeds one
million pesos or the settlement offered is less than the prescribed
minimum rates, the compromise shall be subject to the approval of the
NEB composed of the petitioner and four deputy commissioners.
Finally, as correctly held by the appellate court, this provision applies
to all compromises, whether government-initiated or not. Ubi lex non
distinguit, nec nos distinguere debemos. Where the law does not
distinguish, we should not distinguish.
WHEREFORE, the Petition is hereby DENIED and the assailed
Decision AFFIRMED. No pronouncement as to costs.
SO ORDERED.
ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson, First Division
ROSARIO L. DADULO, G.R. No. 175451
Petitioner,
Present:
53
 Ynares-Santiago, J.
(Chairperson),

- versus - Austria-Martinez,
For resolution is the motion for reconsideration filed by petitioner
Chico-Nazario, Rosario Dadulo of the Decision dated April 13, 2007 which disposed of
the case as follows:
Nachura, and

Reyes, JJ.
WHEREFORE, the petition is DENIED. The
THE HON. COURT OF APPEALS, Decision of the Court of Appeals in CA-G.R. SP No.
89909 affirming the March 4, 2003 Decision of the Office
OFFICE OF THE OMBUDSMAN, of the Ombudsman in OMB-C-A-0470-J which found
petitioner Rosario Dadulo guilty of conduct prejudicial to
HON. FELICIANO BELMONTE, JR., Promulgated: the best interest of the service and imposed upon her
the penalty of suspension for six months is AFFIRMED.
in his capacity as City Mayor of Quezon
SO ORDERED.38[1]
City and GLORIA PATANGUI,

Respondents. September 28, 2007

x ---------------------------------------------------------------------------------------- x
Petitioner insists that the decision of the Office of the
Ombudsman which found her guilty of conduct prejudicial to the best
interest of the service and imposed upon her the penalty of suspension
for six months, which was affirmed by the Court of Appeals in the
assailed April 13, 2007 Decision, was not supported by substantial
evidence and that the implementation of the suspension Order is
premature.

RESOLUTION

We deny the motion for reconsideration.

YNARES-SANTIAGO, J.:

54
 The factual findings of the Office of the Ombudsman upon which
its decision on petitioners administrative liability was based are
supported by the evidence on record. These include the affidavits of the
parties to the instant case including those of respondent Gloria
Patangui and Jessica Patangui, and the counter-affidavits of petitioner
and of the other Barangay Security Development Officers (BSDO).
Respondent Gloria Patangui testified that on September 22,
2002, the construction materials were taken from her house and were
brought to the barangay outpost. Patangui was informed by a BSDO
that petitioner ordered the seizure.
Jessica, respondents 9 year-old daughter, testified that she
witnessed the actual taking of the construction materials; that she saw
two men enter their premises and take the construction materials while
a woman was supervising the activity. She later identified these men as
the co-accused of petitioner.
Efren Pagabao, one of the BSDO administratively charged with
petitioner, admitted that they went to the residence of respondent upon
orders of petitioner on September 22, 2002 to verify whether
respondent has a barangay permit for the house construction they were
undertaking. This established the presence of the barangay officials at
the respondents residence and that they were there upon orders of
petitioner.
On the other hand, other than a sweeping general denial of the
charges against her, petitioner merely alleged that respondent was a
professional squatter. She did not specifically deny any of the acts
imputed against her nor did she explain why the construction materials
were later found at the barangay outpost.
Thus, contrary to petitioners claim, there is substantial evidence
on record sufficient to hold her administratively liable.
As to the alleged premature implementation of the suspension
order, the same is likewise bereft of merit.
Petitioner argues that her appeal has the effect of staying the
execution of the decision of the Ombudsman hence, the immediate
implementation of the suspension order before it has become final and
executory, was premature. She cited the cases of Lapid v. Court of
Appeals39[2] and Laxina v. Court of Appeals40[3] where this Court ruled
against the immediate implementation of the Ombudsmans dismissal
orders in view of Section 2741[4] of Republic Act No. 6770.42[5]
55
 As correctly observed by the Solicitor General, at the time the
Lapid and Laxina cases were decided, Section 7, Rule III of the Rules
of Procedure of the Office of the Ombudsman was silent as to the
execution of its decisions pending appeal. This was later amended by
Administrative Order No. 17 and Administrative Order No. 14-A as
implemented by Memorandum Circular No. 1 s. 2006. Hence, as
amended, Section 7 of Rule III now reads:
Section 7. Finality and execution of decision.
Where the respondent is absolved of the charge, and in
case of conviction where the penalty imposed is public
censure or reprimand, suspension of not more than one
month, or a fine equivalent to one month salary, the
decision shall be final, executory and unappealable. In
all other cases, the decision may be appealed to the
Court of Appeals on a verified petition for review under
the requirements and conditions set forth in Rule 43 of
the Rules of Court, within fifteen (15) days from receipt
of the written Notice of the Decision or Order denying
the Motion for Reconsideration.
An appeal shall not stop the decision from
being executory. In case the penalty is suspension
or removal and the respondent wins such appeal, he
shall be considered as having been under
preventive suspension and shall be paid the salary
and such other emoluments that he did not receive
by reason of the suspension or removal.
A decision of the Office of the Ombudsman in
administrative cases shall be executed as a matter
of course. The Office of the Ombudsman shall ensure
that the decision shall be strictly enforced and properly
implemented. The refusal or failure by any officer without
just cause to comply with an order of the Office of the
Ombudsman to remove, suspend, demote, fine, or
censure shall be a ground for disciplinary action against
said officer.
In the case of In the Matter to Declare in Contempt of Court Hon.
Simeon A. Datumanong, Secretary of DPWH,43[6] we held that:
The Rules of Procedure of the Office of the Ombudsman
are clearly procedural and no vested right of the
petitioner is violated as he is considered preventively
suspended while his case is on appeal. Moreover, in the
event he wins on appeal, he shall be paid the salary and
such other emoluments that he did not receive by reason
of the suspension or removal. Besides, there is no such
thing as a vested interest in an office, or even an
absolute right to hold office. Excepting constitutional
offices which provide for special immunity as regards
salary and tenure, no one can be said to have any
vested right in an office.44[7]
Well-settled is the rule that procedural laws are
construed to be applicable to actions pending and
undetermined at the time of their passage, and are
deemed retroactive in that sense and to that extent. As
a general rule, the retroactive application of procedural
laws cannot be considered violative of any personal
rights because no vested right may attach to nor arise
therefrom.45[8]
56

Following the ruling in the above cited case, this Court, in
Buencamino v. Court of Appeals,46[9] upheld the resolution of the
Court of Appeals denying Buencaminos application for preliminary
injunction against the immediate implementation of the suspension
order against him. The Court stated therein that considering that an
appeal under Administrative Order No. 17, the amendatory rule, shall
not stop the Decision of the Office of the Ombudsman from being
executory, the Court of Appeals did not commit grave abuse of
discretion in denying petitioners application for injunctive relief.
Finally, the appeal of the decision of the Ombudsman to the
Court of Appeals is through a Petition for Review under Rule 43 of the
Rules of Court, Section 12 of which categorically provides that the
appeal shall not stay the award, judgment, final order or resolution
sought to be reviewed unless the Court of Appeals shall direct
otherwise upon such terms as it may deem just.
WHEREFORE, the instant motion for reconsideration is
DENIED with FINALITY.
SO ORDERED.
[G.R. No. 147096. January 15, 2002]
REPUBLIC OF THE PHILIPPINES, represented by NATIONAL
TELECOMMUNICATIONS COMMISSION, petitioner, vs. EXPRESS
TELECOMMUNICATION CO., INC. and BAYAN
TELECOMMUNICATIONS CO., INC., respondents.
[G.R. No. 147210. January 15, 2002]
BAYAN TELECOMMUNICATIONS (Bayantel), INC., petitioner, vs.
EXPRESS TELECOMMUNICATION CO., INC. (Extelcom),
respondent.
DECISION
YNARES-SANTIAGO, J.:
On December 29, 1992, International Communications Corporation
(now Bayan Telecommunications, Inc. or Bayantel) filed an
application with the National Telecommunications Commission (NTC)
for a Certificate of Public Convenience or Necessity (CPCN) to install,
operate and maintain a digital Cellular Mobile Telephone
System/Service (CMTS) with prayer for a Provisional Authority (PA).
The application was docketed as NTC Case No. 92-486.xviii[1]
Shortly thereafter, or on January 22, 1993, the NTC issued
Memorandum Circular No. 4-1-93 directing all interested applicants
for nationwide or regional CMTS to file their respective applications
before the Commission on or before February 15, 1993, and deferring
the acceptance of any application filed after said date until further
orders.xix[2]
On May 6, 1993, and prior to the issuance of any notice of hearing by
the NTC with respect to Bayantels original application, Bayantel filed
an urgent ex-parte motion to admit an amended application.xx[3] On
May 17, 1993, the notice of hearing issued by the NTC with respect to
this amended application was published in the Manila Chronicle.
Copies of the application as well as the notice of hearing were mailed
to all affected parties. Subsequently, hearings were conducted on the
57
amended application. But before Bayantel could complete the
presentation of its evidence, the NTC issued an Order dated
December 19, 1993 stating:
In view of the recent grant of two (2) separate Provisional Authorities
in favor of ISLACOM and GMCR, Inc., which resulted in the closing
out of all available frequencies for the service being applied for by
herein applicant, and in order that this case may not remain pending
for an indefinite period of time, AS PRAYED FOR, let this case be, as
it is, hereby ordered ARCHIVED without prejudice to its reinstatement
if and when the requisite frequency becomes available.
SO ORDERED.xxi[4]
On June 18, 1998, the NTC issued Memorandum Circular No. 5-6-98
re-allocating five (5) megahertz (MHz) of the radio frequency
spectrum for the expansion of CMTS networks. The re-allocated 5
MHz were taken from the following bands: 1730-1732.5 / 1825-1827.5
MHz and 1732.5-1735 / 1827.5-1830 MHz.xxii[5]
Likewise, on March 23, 1999, Memorandum Circular No. 3-3-99 was
issued by the NTC re-allocating an additional five (5) MHz frequencies
for CMTS service, namely: 1735-1737.5 / 1830-1832.5 MHz; 1737.5-
1740 / 1832.5-1835 MHz; 1740-1742.5 / 1835-1837.5 MHz; and
1742.5-1745 / 1837.5-1840 MHz.xxiii[6]
On May 17, 1999, Bayantel filed an Ex-Parte Motion to Revive
Case,xxiv[7] citing the availability of new frequency bands for CMTS
operators, as provided for under Memorandum Circular No. 3-3-99.
On February 1, 2000, the NTC granted BayanTels motion to revive
the latters application and set the case for hearings on February 9, 10,
15, 17 and 22, 2000.xxv[8] The NTC noted that the application was
ordered archived without prejudice to its reinstatement if and when the
requisite frequency shall become available.
Respondent Express Telecommunication Co., Inc. (Extelcom) filed in
NTC Case No. 92-486 an Opposition (With Motion to Dismiss) praying
for the dismissal of Bayantels application.xxvi[9] Extelcom argued that
Bayantels motion sought the revival of an archived application filed
almost eight (8) years ago. Thus, the documentary evidence and the
allegations of respondent Bayantel in this application are all outdated
and should no longer be used as basis of the necessity for the
proposed CMTS service. Moreover, Extelcom alleged that there was
no public need for the service applied for by Bayantel as the present
five CMTS operators --- Extelcom, Globe Telecom, Inc., Smart
Communication, Inc., Pilipino Telephone Corporation, and Isla
Communication Corporation, Inc. --- more than adequately addressed
the market demand, and all are in the process of enhancing and
expanding their respective networks based on recent technological
developments.
Extelcom likewise contended that there were no available radio
frequencies that could accommodate a new CMTS operator as the
frequency bands allocated in NTC Memorandum Circular No. 3-3-99
were intended for and had in fact been applied for by the existing
CMTS operators. The NTC, in its Memorandum Circular No. 4-1-93,
declared it its policy to defer the acceptance of any application for
CMTS. All the frequency bands allocated for CMTS use under the
NTCs Memorandum Circular No. 5-11-88 and Memorandum Circular
No. 2-12-92 had already been allocated to the existing CMTS
operators. Finally, Extelcom pointed out that Bayantel is its substantial
stockholder to the extent of about 46% of its outstanding capital stock,
and Bayantels application undermines the very operations of
Extelcom.
On March 13, 2000, Bayantel filed a Consolidated
Reply/Comment,xxvii[10] stating that the opposition was actually a
motion seeking a reconsideration of the NTC Order reviving the
instant application, and thus cannot dwell on the material allegations
or the merits of the case. Furthermore, Extelcom cannot claim that
frequencies were not available inasmuch as the allocation and
assignment thereof rest solely on the discretion of the NTC.
In the meantime, the NTC issued on March 9, 2000 Memorandum
Circular No. 9-3-2000, re-allocating the following radio frequency
bands for assignment to existing CMTS operators and to public
telecommunication entities which shall be authorized to install,
operate and maintain CMTS networks, namely: 1745-1750MHz /
58
1840-1845MHz; 1750-1775MHz / 1845-1850MHz; 1765-1770MHz /
1860-1865MHz; and 1770-1775MHz / 1865-1870MHz.xxviii[11]
On May 3, 2000, the NTC issued an Order granting in favor of
Bayantel a provisional authority to operate CMTS service.xxix[12] The
Order stated in pertinent part:
On the issue of legal capacity on the part of Bayantel, this
Commission has already taken notice of the change in name of
International Communications Corporation to Bayan
Telecommunications, Inc. Thus, in the Decision entered in NTC Case
No. 93-284/94-200 dated 19 July 1999, it was recognized that Bayan
Telecommunications, Inc., was formerly named International
Communications Corp. Bayantel and ICC Telecoms, Inc. are one and
the same entity, and it necessarily follows that what legal capacity ICC
Telecoms has or has acquired is also the legal capacity that Bayantel
possesses.
On the allegation that the Commission has committed an error in
allowing the revival of the instant application, it appears that the Order
dated 14 December 1993 archiving the same was anchored on the
non-availability of frequencies for CMTS. In the same Order, it was
expressly stated that the archival hereof, shall be without prejudice to
its reinstatement if and when the requisite frequency becomes
available. Inherent in the said Order is the prerogative of the
Commission in reviving the same, subject to prevailing conditions.
The Order of 1 February 2001, cited the availability of frequencies for
CMTS, and based thereon, the Commission, exercising its
prerogative, revived and reinstated the instant application. The fact
that the motion for revival hereof was made ex-parte by the applicant
is of no moment, so long as the oppositors are given the opportunity
to be later heard and present the merits of their respective oppositions
in the proceedings.
On the allegation that the instant application is already obsolete and
overtaken by developments, the issue is whether applicant has the
legal, financial and technical capacity to undertake the proposed
project. The determination of such capacity lies solely within the
discretion of the Commission, through its applicable rules and
regulations. At any rate, the oppositors are not precluded from
showing evidence disputing such capacity in the proceedings at hand.
On the alleged non-availability of frequencies for the proposed service
in view of the pending applications for the same, the Commission
takes note that it has issued Memorandum Circular 9-3-2000,
allocating additional frequencies for CMTS. The eligibility of existing
operators who applied for additional frequencies shall be treated and
resolved in their respective applications, and are not in issue in the
case at hand.
Accordingly, the Motions for Reconsideration filed by SMARTCOM
and GLOBE TELECOMS/ISLACOM and the Motion to Dismiss filed
by EXTELCOM are hereby DENIED for lack of merit.xxx[13]
The grant of the provisional authority was anchored on the following
findings:
COMMENTS:
1. Due to the operational mergers between Smart
Communications, Inc. and Pilipino Telephone Corporation (Piltel) and
between Globe Telecom, Inc. (Globe) and Isla Communications, Inc.
(Islacom), free and effective competition in the CMTS market is
threatened. The fifth operator, Extelcom, cannot provide good
competition in as much as it provides service using the analog AMPS.
The GSM system dominates the market.
2. There are at present two applicants for the assignment of the
frequencies in the 1.7 Ghz and 1.8 Ghz allocated to CMTS, namely
Globe and Extelcom. Based on the number of subscribers Extelcom
has, there appears to be no congestion in its network - a condition
that is necessary for an applicant to be assigned additional
frequencies. Globe has yet to prove that there is congestion in its
network considering its operational merger with Islacom.
3. Based on the reports submitted to the Commission, 48% of the
total number of cities and municipalities are still without telephone
service despite the more than 3 million installed lines waiting to be
subscribed.
59
CONCLUSIONS:
1. To ensure effective competition in the CMTS market
considering the operational merger of some of the CMTS operators,
new CMTS operators must be allowed to provide the service.
2. The re-allocated frequencies for CMTS of 3 blocks of 5 Mhz x
2 is sufficient for the number of applicants should the applicants be
qualified.
3. There is a need to provide service to some or all of the
remaining cities and municipalities without telephone service.
4. The submitted documents are sufficient to determine
compliance to the technical requirements. The applicant can be
directed to submit details such as channeling plans, exact locations of
cell sites, etc. as the project implementation progresses, actual area
coverage ascertained and traffic data are made available. Applicant
appears to be technically qualified to undertake the proposed project
and offer the proposed service.
IN VIEW OF THE FOREGOING and considering that there is prima
facie evidence to show that Applicant is legally, technically and
financially qualified and that the proposed service is technically
feasible and economically viable, in the interest of public service, and
in order to facilitate the development of telecommunications services
in all areas of the country, as well as to ensure healthy competition
among authorized CMTS providers, let a PROVISIONAL
AUTHORITY (P.A.) be issued to Applicant BAYAN
TELECOMMUNICATIONS, INC. authorizing it to construct, install,
operate and maintain a Nationwide Cellular Mobile Telephone
Systems (CMTS), subject to the following terms and conditions
without prejudice to a final decision after completion of the hearing
which shall be called within thirty (30) days from grant of authority, in
accordance with Section 3, Rule 15, Part IV of the Commissions
Rules of Practice and Procedure. xxx.xxxi[14]
Extelcom filed with the Court of Appeals a petition for certiorari and
prohibition,xxxii[15] docketed as CA-G.R. SP No. 58893, seeking the
annulment of the Order reviving the application of Bayantel, the Order
granting Bayantel a provisional authority to construct, install, operate
and maintain a nationwide CMTS, and Memorandum Circular No. 9-3-
2000 allocating frequency bands to new public telecommunication
entities which are authorized to install, operate and maintain CMTS.
On September 13, 2000, the Court of Appeals rendered the assailed
Decision,xxxiii[16] the dispositive portion of which reads:
WHEREFORE, the writs of certiorari and prohibition prayed for are
GRANTED. The Orders of public respondent dated February 1, 2000
and May 3, 2000 in NTC Case No. 92-486 are hereby ANNULLED
and SET ASIDE and the Amended Application of respondent
Bayantel is DISMISSED without prejudice to the filing of a new CMTS
application. The writ of preliminary injunction issued under our
Resolution dated August 15, 2000, restraining and enjoining the
respondents from enforcing the Orders dated February 1, 2000 and
May 3, 2000 in the said NTC case is hereby made permanent. The
Motion for Reconsideration of respondent Bayantel dated August 28,
2000 is denied for lack of merit.
SO ORDERED.xxxiv[17]
Bayantel filed a motion for reconsideration of the above
decision.xxxv[18] The NTC, represented by the Office of the Solicitor
General (OSG), also filed its own motion for reconsideration.xxxvi[19]
On the other hand, Extelcom filed a Motion for Partial
Reconsideration, praying that NTC Memorandum Circular No. 9-3-
2000 be also declared null and void.xxxvii[20]
On February 9, 2001, the Court of Appeals issued the assailed
Resolution denying all of the motions for reconsideration of the parties
for lack of merit.xxxviii[21]
Hence, the NTC filed the instant petition for review on certiorari,
docketed as G.R. No. 147096, raising the following issues for
resolution of this Court:
60
A. Whether or not the Order dated February 1, 2000 of the
petitioner which revived the application of respondent Bayantel in
NTC Case No. 92-486 violated respondent Extelcoms right to
procedural due process of law;
B. Whether or not the Order dated May 3, 2000 of the petitioner
granting respondent Bayantel a provisional authority to operate a
CMTS is in substantial compliance with NTC Rules of Practice and
Procedure and Memorandum Circular No. 9-14-90 dated September
4, 1990.xxxix[22]
Subsequently, Bayantel also filed its petition for review, docketed as
G.R. No. 147210, assigning the following errors:
I. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS
INTERPRETATION OF THE PRINCIPLE OF EXHAUSTION OF
ADMINISTRATIVE REMEDIES WHEN IT FAILED TO DISMISS
HEREIN RESPONDENTS PETITION FOR CERTIORARI DESPITE
ITS FAILURE TO FILE A MOTION FOR RECONSIDERATION.
II. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS
FINDING THAT THE REVIVAL OF NTC CASE NO. 92-486
ANCHORED ON A EX-PARTE MOTION TO REVIVE CASE WAS
TANTAMOUNT TO GRAVE ABUSE OF DISCRETION ON THE
PART OF THE NTC.
III. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT
DENIED THE MANDATE OF THE NTC AS THE AGENCY OF
GOVERNMENT WITH THE SOLE DISCRETION REGARDING
ALLOCATION OF FREQUENCY BAND TO
TELECOMMUNICATIONS ENTITIES.
IV. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS
INTERPRETATION OF THE LEGAL PRINCIPLE THAT
JURISDICTION ONCE ACQUIRED CANNOT BE LOST WHEN IT
DECLARED THAT THE ARCHIVED APPLICATION SHOULD BE
DEEMED AS A NEW APPLICATION IN VIEW OF THE
SUBSTANTIAL CHANGE IN THE CIRCUMSTANCES ALLEGED IN
ITS AMENDMENT APPLICATION.
V. CONTRARY TO THE FINDING OF THE COURT OF
APPEALS, THE ARCHIVING OF THE BAYANTEL APPLICATION
WAS A VALID ACT ON THE PART OF THE NTC EVEN IN THE
ABSENCE OF A SPECIFIC RULE ON ARCHIVING OF CASES
SINCE RULES OF PROCEDURE ARE, AS A MATTER OF COURSE,
LIBERALLY CONSTRUED IN PROCEEDINGS BEFORE
ADMINISTRATIVE BODIES AND SHOULD GIVE WAY TO THE
GREATER HIERARCHY OF PUBLIC WELFARE AND PUBLIC
INTEREST.
VI. CONTRARY TO THE FINDING OF THE COURT OF
APPEALS, THE ARCHIVING OF BAYANTELS
APPLICATION WAS NOT VIOLATIVE OF THE SUMMARY
NATURE OF THE PROCEEDINGS IN THE NTC UNDER
SEC. 3, RULE 1 OF THE NTC REVISED RULES OF
PROCEDURE.
VII. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS
FINDING THAT THE ARCHIVING OF BAYANTELS
APPLICATION WAS VIOLATIVE OF THE ALLEGED
DECLARED POLICY OF THE GOVERNMENT ON THE
TRANSPARENCY AND FAIRNESS OF ADMINISTRATIVE
PROCESS IN THE NTC AS LAID DOWN IN SEC 4(1) OF
R.A. NO. 7925.
VIII. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS
FINDING THAT THE NTC VIOLATED THE PROVISIONS
OF THE CONSTITUTION PERTAINING TO DUE
PROCESS OF LAW.
IX. THE COURT OF APPEALS SERIOUSLY ERRED IN
DECLARING THAT THE MAY 3, 2000 ORDER GRANTING
BAYANTEL A PROVISIONAL AUTHORITY SHOULD BE
SET ASIDE AND REVERSED.
i. Contrary to the finding of the Court of Appeals, there was no
violation of the NTC Rule that the legal, technical, financial and
economic documentations in support of the prayer for provisional
authority should first be submitted.
61
ii. Contrary to the finding of the Court of Appeals, there was no
violation of Sec. 3, Rule 15 of the NTC Rules of Practice and
Procedure that a motion must first be filed before a provisional
authority could be issued.
iii. Contrary to the finding of the Court of Appeals that a plea for
provisional authority necessitates a notice and hearing, the very rule
cited by the petitioner (Section 5, Rule 4 of the NTC Rules of Practice
and Procedure) provides otherwise.
iv. Contrary to the finding of the Court of Appeals, urgent public
need is not the only basis for the grant of a provisional authority to an
applicant;
v. Contrary to the finding of the Court of Appeals, there was no
violation of the constitutional provision on the right of the public to
information when the Common Carrier Authorization Department
(CCAD) prepared its evaluation report.xl[23]
Considering the identity of the matters involved, this Court resolved to
consolidate the two petitions.xli[24]
At the outset, it is well to discuss the nature and functions of the NTC,
and analyze its powers and authority as well as the laws, rules and
regulations that govern its existence and operations.
The NTC was created pursuant to Executive Order No. 546,
promulgated on July 23, 1979. It assumed the functions formerly
assigned to the Board of Communications and the
Telecommunications Control Bureau, which were both abolished
under the said Executive Order. Previously, the NTCs functions were
merely those of the defunct Public Service Commission (PSC),
created under Commonwealth Act No. 146, as amended, otherwise
known as the Public Service Act, considering that the Board of
Communications was the successor-in-interest of the PSC. Under
Executive Order No. 125-A, issued in April 1987, the NTC became an
attached agency of the Department of Transportation and
Communications.
In the regulatory telecommunications industry, the NTC has the sole
authority to issue Certificates of Public Convenience and Necessity
(CPCN) for the installation, operation, and maintenance of
communications facilities and services, radio communications
systems, telephone and telegraph systems. Such power includes the
authority to determine the areas of operations of applicants for
telecommunications services. Specifically, Section 16 of the Public
Service Act authorizes the then PSC, upon notice and hearing, to
issue Certificates of Public Convenience for the operation of public
services within the Philippines whenever the Commission finds that
the operation of the public service proposed and the authorization to
do business will promote the public interests in a proper and suitable
manner.xlii[25] The procedure governing the issuance of such
authorizations is set forth in Section 29 of the said Act, the pertinent
portion of which states:
All hearings and investigations before the Commission shall be
governed by rules adopted by the Commission, and in the conduct
thereof, the Commission shall not be bound by the technical rules of
legal evidence. xxx.
In granting Bayantel the provisional authority to operate a CMTS, the
NTC applied Rule 15, Section 3 of its 1978 Rules of Practice and
Procedure, which provides:
Sec. 3. Provisional Relief. --- Upon the filing of an application,
complaint or petition or at any stage thereafter, the Board may grant
on motion of the pleader or on its own initiative, the relief prayed for,
based on the pleading, together with the affidavits and supporting
documents attached thereto, without prejudice to a final decision after
completion of the hearing which shall be called within thirty (30) days
from grant of authority asked for. (underscoring ours)
Respondent Extelcom, however, contends that the NTC should have
applied the Revised Rules which were filed with the Office of the
National Administrative Register on February 3, 1993. These Revised
Rules deleted the phrase on its own initiative; accordingly, a
provisional authority may be issued only upon filing of the proper
motion before the Commission.
62
In answer to this argument, the NTC, through the Secretary of the
Commission, issued a certification to the effect that inasmuch as the
1993 Revised Rules have not been published in a newspaper of
general circulation, the NTC has been applying the 1978 Rules.
The absence of publication, coupled with the certification by the
Commissioner of the NTC stating that the NTC was still governed by
the 1978 Rules, clearly indicate that the 1993 Revised Rules have not
taken effect at the time of the grant of the provisional authority to
Bayantel. The fact that the 1993 Revised Rules were filed with the UP
Law Center on February 3, 1993 is of no moment. There is nothing in
the Administrative Code of 1987 which implies that the filing of the
rules with the UP Law Center is the operative act that gives the rules
force and effect. Book VII, Chapter 2, Section 3 thereof merely states:
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 the date shall not thereafter be
the basis of any sanction against any party or persons.
(2) The records officer of the agency, or his equivalent
functionary, shall carry out the requirements of this section under pain
or disciplinary action.
(3) A permanent register of all rules shall be kept by the issuing
agency and shall be open to public inspection.
The National Administrative Register is merely a bulletin of codified
rules and it is furnished only to the Office of the President, Congress,
all appellate courts, the National Library, other public offices or
agencies as the Congress may select, and to other persons at a price
sufficient to cover publication and mailing or distribution costs.xliii[26]
In a similar case, we held:
This does not imply however, that the subject Administrative Order is
a valid exercise of such quasi-legislative power. The original
Administrative Order issued on August 30, 1989, under which the
respondents filed their applications for importations, was not
published in the Official Gazette or in a newspaper of general
circulation. The questioned Administrative Order, legally, until it is
published, is invalid within the context of Article 2 of Civil Code, which
reads:
Article 2. Laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette (or in a
newspaper of general circulation in the Philippines), unless it is
otherwise provided. x x x
The fact that the amendments to Administrative Order No. SOCPEC
89-08-01 were filed with, and published by the UP Law Center in the
National Administrative Register, does not cure the defect related to
the effectivity of the Administrative Order.
This Court, in Taada vs. Tuvera (G.R. No. L-63915, December 29,
1986, 146 SCRA 446) stated, thus:
We hold therefore that all statutes, including those of local application
and private laws, shall be published as a condition for their effectivity,
which shall begin fifteen days after publication unless a different
effectivity is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders
promulgated by the President in the exercise of legislative power or,
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 pursuant also to a valid delegation.
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 published. Neither is publication required of the
so-called letters of instructions issued by administrative superiors
concerning the rules or guidelines to be followed by their subordinates
in the performance of their duties.
xxx
63
We agree that the publication must be in full or it is no publication at
all since its purpose is to inform the public of the contents of the laws.
The Administrative Order under consideration is one of those
issuances which should be published for its effectivity, since its
purpose is to enforce and implement an existing law pursuant to a
valid delegation, i.e., P.D. 1071, in relation to LOI 444 and EO
133.xliv[27]
Thus, publication in the Official Gazette or a newspaper of general
circulation is a condition sine qua non before statutes, rules or
regulations can take effect. This is explicit from Executive Order No.
200, which repealed Article 2 of the Civil Code, and which states that:
Laws shall take effect after fifteen days following the completion of
their publication either in the Official Gazette or in a newspaper of
general circulation in the Philippines, unless it is otherwise
provided.xlv[28]
The Rules of Practice and Procedure of the NTC, which implements
Section 29 of the Public Service Act (C.A. 146, as amended), fall
squarely within the scope of these laws, as explicitly mentioned in the
case Taada v. Tuvera.xlvi[29]
Our pronouncement in Taada vs. Tuvera is clear and categorical.
Administrative rules and regulations must be published if their
purpose is to enforce or implement existing law pursuant to a valid
delegation. The only exceptions are interpretative regulations, those
merely internal in nature, or those so-called letters of instructions
issued by administrative superiors concerning the rules and guidelines
to be followed by their subordinates in the performance of their
duties.xlvii[30]
Hence, the 1993 Revised Rules should be published in the Official
Gazette or in a newspaper of general circulation before it can take
effect. Even the 1993 Revised Rules itself mandates that said Rules
shall take effect only after their publication in a newspaper of general
circulation.xlviii[31] In the absence of such publication, therefore, it is
the 1978 Rules that governs.
In any event, regardless of whether the 1978 Rules or the 1993
Revised Rules should apply, the records show that the amended
application filed by Bayantel in fact included a motion for the issuance
of a provisional authority. Hence, it cannot be said that the NTC
granted the provisional authority motu proprio. The Court of Appeals,
therefore, erred when it found that the NTC issued its Order of May 3,
2000 on its own initiative. This much is acknowledged in the Decision
of the Court of Appeals:
As prayer, ICC asked for the immediate grant of provisional authority
to construct, install, maintain and operate the subject service and to
charge the proposed rates and after due notice and hearing, approve
the instant application and grant the corresponding certificate of public
convenience and necessity.xlix[32]
The Court of Appeals also erred when it declared that the NTCs Order
archiving Bayantels application was null and void. The archiving of
cases is a widely accepted measure designed to shelve cases in
which no immediate action is expected but where no grounds exist for
their outright dismissal, albeit without prejudice. It saves the petitioner
or applicant from the added trouble and expense of re-filing a
dismissed case. Under this scheme, an inactive case is kept alive but
held in abeyance until the situation obtains wherein action thereon
can be taken.
In the case at bar, the said application was ordered archived because
of lack of available frequencies at the time, and made subject to
reinstatement upon availability of the requisite frequency. To be sure,
there was nothing irregular in the revival of the application after the
condition therefor was fulfilled.
While, as held by the Court of Appeals, there are no clear provisions
in the Rules of the NTC which expressly allow the archiving of any
application, this recourse may be justified under Rule 1, Section 2 of
the 1978 Rules, which states:
Sec. 2. Scope.--- These rules govern pleadings, practice and
procedure before the Board of Communications (now NTC) in all
matters of hearing, investigation and proceedings within the
jurisdiction of the Board. However, in the broader interest of justice
64
and in order to best serve the public interest, the Board may, in any
particular matter, except it from these rules and apply such suitable
procedure to improve the service in the transaction of the public
business. (underscoring ours)
The Court of Appeals ruled that the NTC committed grave abuse of
discretion when it revived Bayantels application based on an ex-parte
motion. In this regard, the pertinent provisions of the NTC Rules:
Sec. 5. Ex-parte Motions. --- Except for motions for provisional
authorization of proposed services and increase of rates, ex-parte
motions shall be acted upon by the Board only upon showing of
urgent necessity therefor and the right of the opposing party is not
substantially impaired.l[33]
Thus, in cases which do not involve either an application for rate
increase or an application for a provisional authority, the NTC may
entertain ex-parte motions only where there is an urgent necessity to
do so and no rights of the opposing parties are impaired.
The Court of Appeals ruled that there was a violation of the
fundamental right of Extelcom to due process when it was not
afforded the opportunity to question the motion for the revival of the
application. However, it must be noted that said Order referred to a
simple revival of the archived application of Bayantel in NTC Case No.
92-426. At this stage, it cannot be said that Extelcoms right to
procedural due process was prejudiced. It will still have the
opportunity to be heard during the full-blown adversarial hearings that
will follow. In fact, the records show that the NTC has scheduled
several hearing dates for this purpose, at which all interested parties
shall be allowed to register their opposition. We have ruled that there
is no denial of due process where full-blown adversarial proceedings
are conducted before an administrative body.li[34] With Extelcom
having fully participated in the proceedings, and indeed, given the
opportunity to file its opposition to the application, there was clearly no
denial of its right to due process.
In Zaldivar vs. Sandiganbayan (166 SCRA 316 [1988]), we held that
the right to be heard does not only refer to the right to present verbal
arguments in court. A party may also be heard through his pleadings.
where opportunity to be heard is accorded either through oral
arguments or pleadings, there is no denial of procedural due process.
As reiterated in National Semiconductor (HK) Distribution, Ltd. vs.
NLRC (G.R. No. 123520, June 26, 1998), the essence of due process
is simply an opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain one's side. Hence, in Navarro
III vs. Damaso (246 SCRA 260 [1995]), we held that a formal or trial-
type hearing is not at all times and not in all instances essential.
Plainly, petitioner was not denied due process.lii[35]
Extelcom had already entered its appearance as a party and filed its
opposition to the application. It was neither precluded nor barred from
participating in the hearings thereon. Indeed, nothing, not even the
Order reviving the application, bars or prevents Extelcom and the
other oppositors from participating in the hearings and adducing
evidence in support of their respective oppositions. The motion to
revive could not have possibly caused prejudice to Extelcom since the
motion only sought the revival of the application. It was merely a
preliminary step towards the resumption of the hearings on the
application of Bayantel. The latter will still have to prove its capability
to undertake the proposed CMTS. Indeed, in its Order dated February
1, 2000, the NTC set several hearing dates precisely intended for the
presentation of evidence on Bayantels capability and qualification.
Notice of these hearings were sent to all parties concerned, including
Extelcom.
As regards the changes in the personal circumstances of Bayantel,
the same may be ventilated at the hearings during Bayantels
presentation of evidence. In fact, Extelcom was able to raise its
arguments on this matter in the Opposition (With Motion to Dismiss)
anent the re-opening and re-instatement of the application of
Bayantel. Extelcom was thus heard on this particular point.
Likewise, the requirements of notice and publication of the application
is no longer necessary inasmuch as the application is a mere revival
of an application which has already been published earlier. At any
rate, the records show that all of the five (5) CMTS operators in the
country were duly notified and were allowed to raise their respective
oppositions to Bayantels application through the NTCs Order dated
February 1, 2000.
65
It should be borne in mind that among the declared national policies
under Republic Act No. 7925, otherwise known as the Public
Telecommunications Policy Act of the Philippines, is the healthy
competition among telecommunications carriers, to wit:
A healthy competitive environment shall be fostered, one in which
telecommunications carriers are free to make business decisions and
to interact with one another in providing telecommunications services,
with the end in view of encouraging their financial viability while
maintaining affordable rates.liii[36]
The NTC is clothed with sufficient discretion to act on matters solely
within its competence. Clearly, the need for a healthy competitive
environment in telecommunications is sufficient impetus for the NTC
to consider all those applicants who are willing to offer competition,
develop the market and provide the environment necessary for
greater public service. This was the intention that came to light with
the issuance of Memorandum Circular 9-3-2000, allocating new
frequency bands for use of CMTS. This memorandum circular
enumerated the conditions prevailing and the reasons which
necessitated its issuance as follows:
- the international accounting rates are rapidly declining,
threatening the subsidy to the local exchange service as mandated in
EO 109 and RA 7925;
- the public telecommunications entities which were obligated to
install, operate and maintain local exchange network have performed
their obligations in varying degrees;
- after more than three (3) years from the performance of the
obligations only 52% of the total number of cities and municipalities
are provided with local telephone service.
- there are mergers and consolidations among the existing
cellular mobile telephone service (CMTS) providers threatening the
efficiency of competition;
- there is a need to hasten the installation of local exchange
lines in unserved areas;
- there are existing CMTS operators which are experiencing
congestion in the network resulting to low grade of service;
- the consumers/customers shall be given the freedom to
choose CMTS operators from which they could get the service.liv[37]
Clearly spelled out is the need to provide enhanced competition and
the requirement for more landlines and telecommunications facilities
in unserved areas in the country. On both scores, therefore, there was
sufficient showing that the NTC acted well within its jurisdiction and in
pursuance of its avowed duties when it allowed the revival of
Bayantels application.
We now come to the issue of exhaustion of administrative remedies.
The rule is well-entrenched that a party must exhaust all
administrative remedies before resorting to the courts. The premature
invocation of the intervention of the court is fatal to ones cause of
action. This rule would not only give the administrative agency an
opportunity to decide the matter by itself correctly, but would also
prevent the unnecessary and premature resort to courts.lv[38] In the
case of Lopez v. City of Manila,lvi[39] we held:
As a general rule, where the law provides for the remedies against the
action of an administrative board, body or officer, relief to courts can
be sought only after exhausting all remedies provided. The reason
rests upon the presumption that the administrative body, if given the
chance to correct its mistake or error, may amend its decision on a
given matter and decide it properly. Therefore, where a remedy is
available within the administrative machinery, this should be resorted
to before resort can be made to the courts, not only to give the
administrative agency the opportunity to decide the matter by itself
correctly, but also to prevent unnecessary and premature resort to
courts.
Clearly, Extelcom violated the rule on exhaustion of administrative
remedies when it went directly to the Court of Appeals on a petition for
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certiorari and prohibition from the Order of the NTC dated May 3,
2000, without first filing a motion for reconsideration. It is well-settled
that the filing of a motion for reconsideration is a prerequisite to the
filing of a special civil action for certiorari.
The general rule is that, in order to give the lower court the
opportunity to correct itself, a motion for reconsideration is a
prerequisite to certiorari. It also basic that petitioner must exhaust all
other available remedies before resorting to certiorari. This rule,
however, is subject to certain exceptions such as any of the following:
(1) the issues raised are purely legal in nature, (2) public interest is
involved, (3) extreme urgency is obvious or (4) special circumstances
warrant immediate or more direct action.lvii[40]
This case does not fall under any of the recognized exceptions to this
rule. Although the Order of the NTC dated May 3, 2000 granting
provisional authority to Bayantel was immediately executory, it did not
preclude the filing of a motion for reconsideration. Under the NTC
Rules, a party adversely affected by a decision, order, ruling or
resolution may within fifteen (15) days file a motion for
reconsideration. That the Order of the NTC became immediately
executory does not mean that the remedy of filing a motion for
reconsideration is foreclosed to the petitioner.lviii[41]
Furthermore, Extelcom does not enjoy the grant of any vested interest
on the right to render a public service. The Constitution is quite
emphatic that the operation of a public utility shall not be exclusive.
Thus:
No franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted to citizens of the
Philippines or to corporations organized under the laws of the
Philippines at least sixty per centum of whose capital is owned by
such citizens, nor shall such franchise, certificate or authorization be
exclusive in character or for a longer period than fifty years. Neither
shall any such franchise or right be granted except under the
condition that it shall be subject to amendment, alteration, or repeal by
the Congress when the common good so requires. xxx xxx
xxx.lix[42]
In Radio Communications of the Phils., Inc. v. National
Telecommunications Commission,lx[43] we held:
It is well within the powers of the public respondent to authorize the
installation by the private respondent network of radio
communications systems in Catarman, Samar and San Jose,
Mindoro. Under the circumstances, the mere fact that the petitioner
possesses a franchise to put up and operate a radio communications
system in certain areas is not an insuperable obstacle to the public
respondents issuing the proper certificate to an applicant desiring to
extend the same services to those areas. The Constitution mandates
that a franchise cannot be exclusive in nature nor can a franchise be
granted except that it must be subject to amendment, alteration, or
even repeal by the legislature when the common good so requires.
(Art. XII, sec. 11 of the 1986 Constitution). There is an express
provision in the petitioners franchise which provides compliance with
the above mandate (RA 2036, sec. 15).
Even in the provisional authority granted to Extelcom, it is expressly
stated that such authority is not exclusive. Thus, the Court of Appeals
erred when it gave due course to Extelcoms petition and ruled that it
constitutes an exception to the rule on exhaustion of administrative
remedies.
Also, the Court of Appeals erred in annulling the Order of the NTC
dated May 3, 2000, granting Bayantel a provisional authority to install,
operate and maintain CMTS. The general rule is that purely
administrative and discretionary functions may not be interfered with
by the courts. Thus, in Lacuesta v. Herrera,lxi[44] it was held:
xxx (T)he powers granted to the Secretary of Agriculture and
Commerce (natural resources) by law regarding the disposition of
public lands such as granting of licenses, permits, leases and
contracts, or approving, rejecting, reinstating, or canceling
applications, are all executive and administrative in nature. It is a well
recognized principle that purely administrative and discretionary
functions may not be interfered with by the courts. (Coloso vs. Board
of Accountancy, G.R. No. L-5750, April 20, 1953) In general, courts
have no supervising power over the proceedings and actions of the
administrative departments of the government. This is generally true
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with respect to acts involving the exercise of judgement or discretion
and findings of fact. (54 Am. Jur. 558-559) xxx.
The established exception to the rule is where the issuing authority
has gone beyond its statutory authority, exercised unconstitutional
powers or clearly acted arbitrarily and without regard to his duty or
with grave abuse of discretion.lxii[45] None of these obtains in the
case at bar.
Moreover, in petitions for certiorari, evidentiary matters or matters of
fact raised in the court below are not proper grounds nor may such be
ruled upon in the proceedings. As held in National Federation of Labor
v. NLRC:lxiii[46]
At the outset, it should be noted that a petition for certiorari under
Rule 65 of the Rules of Court will prosper only if there is a showing of
grave abuse of discretion or an act without or in excess of jurisdiction
on the part of the National Labor Relations Commission. It does not
include an inquiry as to the correctness of the evaluation of evidence
which was the basis of the labor official or officer in determining his
conclusion. It is not for this Court to re-examine conflicting evidence,
re-evaluate the credibility of witnesses nor substitute the findings of
fact of an administrative tribunal which has gained expertise in its
special field. Considering that the findings of fact of the labor arbiter
and the NLRC are supported by evidence on record, the same must
be accorded due respect and finality.
This Court has consistently held that the courts will not interfere in
matters which are addressed to the sound discretion of the
government agency entrusted with the regulation of activities coming
under the special and technical training and knowledge of such
agency.lxiv[47] It has also been held that the exercise of
administrative discretion is a policy decision and a matter that can
best be discharged by the government agency concerned, and not by
the courts.lxv[48] In Villanueva v. Court of Appeals,lxvi[49] it was held
that findings of fact which are supported by evidence and the
conclusion of experts should not be disturbed. This was reiterated in
Metro Transit Organization, Inc. v. National Labor Relations
Commission,lxvii[50] wherein it was ruled that factual findings of
quasi-judicial bodies which have acquired expertise because their
jurisdiction is confined to specific matters are generally accorded not
only respect but even finality and are binding even upon the Supreme
Court if they are supported by substantial evidence.
Administrative agencies are given a wide latitude in the evaluation of
evidence and in the exercise of its adjudicative functions. This latitude
includes the authority to take judicial notice of facts within its special
competence.
In the case at bar, we find no reason to disturb the factual findings of
the NTC which formed the basis for awarding the provisional authority
to Bayantel. As found by the NTC, Bayantel has been granted several
provisional and permanent authorities before to operate various
telecommunications services.lxviii[51] Indeed, it was established that
Bayantel was the first company to comply with its obligation to install
local exchange lines pursuant to E.O. 109 and R.A. 7925. In
recognition of the same, the provisional authority awarded in favor of
Bayantel to operate Local Exchange Services in Quezon City,
Malabon, Valenzuela and the entire Bicol region was made
permanent and a CPCN for the said service was granted in its favor.
Prima facie evidence was likewise found showing Bayantels legal,
financial and technical capacity to undertake the proposed cellular
mobile telephone service.
Likewise, the May 3, 2000 Order did not violate NTC Memorandum
Circular No. 9-14-90 dated September 4, 1990, contrary to the ruling
of the Court of Appeals. The memorandum circular sets forth the
procedure for the issuance of provisional authority thus:
EFFECTIVE THIS DATE, and as part of the Commissions drive to
streamline and fast track action on applications/petitions for CPCN
other forms of authorizations, the Commission shall be evaluating
applications/petitions for immediate issuance of provisional
authorizations, pending hearing and final authorization of an
application on its merit.
For this purpose, it is hereby directed that all applicants/petitioners
seeking for provisional authorizations, shall submit immediately to the
Commission, either together with their application or in a Motion all
their legal, technical, financial, economic documentations in support of
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their prayer for provisional authorizations for evaluation. On the basis
of their completeness and their having complied with requirements,
the Commission shall be issuing provisional authorizations.
Clearly, a provisional authority may be issued even pending hearing
and final determination of an application on its merits.
Finally, this Court finds that the Manifestations of Extelcom alleging
forum shopping on the part of the NTC and Bayantel are not
impressed with merit. The divisions of the Supreme Court are not to
be considered as separate and distinct courts. The Supreme Court
remains a unit notwithstanding that it works in divisions. Although it
may have three divisions, it is but a single court. Actions considered in
any of these divisions and decisions rendered therein are, in effect, by
the same Tribunal. The divisions of this Court are not to be
considered as separate and distinct courts but as divisions of one and
the same court.lxix[52]
Moreover, the rules on forum shopping should not be literally
interpreted. We have stated thus:
It is scarcely necessary to add that Circular No. 28-91 must be so
interpreted and applied as to achieve the purposes projected by the
Supreme Court when it promulgated that circular. Circular No. 28-91
was designed to serve as an instrument to promote and facilitate the
orderly administration of justice and should not be interpreted with
such absolute literalness as to subvert its own ultimate and legitimate
objection or the goal of all rules of procedure which is to achieve
substantial justice as expeditiously as possible.lxx[53]
Even assuming that separate actions have been filed by two different
parties involving essentially the same subject matter, no forum
shopping was committed as the parties did not resort to multiple
judicial remedies. The Court, therefore, directed the consolidation of
the two cases because they involve essentially the same issues. It
would also prevent the absurd situation wherein two different divisions
of the same court would render altogether different rulings in the
cases at bar.
We rule, likewise, that the NTC has legal standing to file and initiate
legal action in cases where it is clear that its inaction would result in
an impairment of its ability to execute and perform its functions.
Similarly, we have previously held in Civil Service Commission v.
Dacoycoylxxi[54] that the Civil Service Commission, as an aggrieved
party, may appeal the decision of the Court of Appeals to this Court.
As correctly stated by the NTC, the rule invoked by Extelcom is Rule
65 of the Rules of Civil Procedure, which provides that public
respondents shall not appear in or file an answer or comment to the
petition or any pleading therein.lxxii[55] The instant petition, on the
other hand, was filed under Rule 45 where no similar proscription
exists.
WHEREFORE, in view of the foregoing, the consolidated petitions are
GRANTED. The Court of Appeals Decision dated September 13,
2000 and Resolution dated February 9, 2001 are REVERSED and
SET ASIDE. The permanent injunction issued by the Court of Appeals
is LIFTED. The Orders of the NTC dated February 1, 2000 and May 3,
2000 are REINSTATED. No pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.
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