Admin Law FULL TEXT Cases Set 3

Administrative Law Set 3 Full Text Cases
EN BANC
G.R. No. 166715 August 14, 2008
ABAKADA GURO PARTY LIST (formerly AASJS)1 OFFICERS/MEMBERS SAMSON S.

ALCANTARA, ED VINCENT S. ALBANO, ROMEO R. ROBISO, RENE B. GOROSPE and EDWIN R.
SANDOVAL, petitioners,
vs.
HON. CESAR V. PURISIMA, in his capacity as Secretary of Finance, HON. GUILLERMO L.
PARAYNO, JR., in his capacity as Commissioner of the Bureau of Internal Revenue, and HON.
ALBERTO D. LINA, in his Capacity as Commissioner of Bureau of Customs, respondents.
DECISION
CORONA, J.:
This petition for prohibition1 seeks to prevent respondents from implementing and enforcing Republic Act
(RA) 93352 (Attrition Act of 2005).
RA 9335 was enacted to optimize the revenue-generation capability and collection of the Bureau of
Internal Revenue (BIR) and the Bureau of Customs (BOC). The law intends to encourage BIR and BOC
officials and employees to exceed their revenue targets by providing a system of rewards and sanctions
through the creation of a Rewards and Incentives Fund (Fund) and a Revenue Performance Evaluation
Board (Board).3 It covers all officials and employees of the BIR and the BOC with at least six months of
service, regardless of employment status.4
The Fund is sourced from the collection of the BIR and the BOC in excess of their revenue targets for the
year, as determined by the Development Budget and Coordinating Committee (DBCC). Any incentive or
reward is taken from the fund and allocated to the BIR and the BOC in proportion to their contribution in
the excess collection of the targeted amount of tax revenue. 5
The Boards in the BIR and the BOC are composed of the Secretary of the Department of Finance (DOF)
or his/her Undersecretary, the Secretary of the Department of Budget and Management (DBM) or his/her
Undersecretary, the Director General of the National Economic Development Authority (NEDA) or his/her
Deputy Director General, the Commissioners of the BIR and the BOC or their Deputy Commissioners, two
representatives from the rank-and-file employees and a representative from the officials nominated by
their recognized organization.6
Each Board has the duty to (1) prescribe the rules and guidelines for the allocation, distribution and
release of the Fund; (2) set criteria and procedures for removing from the service officials and employees
whose revenue collection falls short of the target; (3) terminate personnel in accordance with the criteria
adopted by the Board; (4) prescribe a system for performance evaluation; (5) perform other functions,
including the issuance of rules and regulations and (6) submit an annual report to Congress. 7
The DOF, DBM, NEDA, BIR, BOC and the Civil Service Commission (CSC) were tasked to promulgate
and issue the implementing rules and regulations of RA 9335,8 to be approved by a Joint Congressional
Oversight Committee created for such purpose.9
Petitioners, invoking their right as taxpayers filed this petition challenging the constitutionality of RA 9335,
a tax reform legislation. They contend that, by establishing a system of rewards and incentives, the law
"transform[s] the officials and employees of the BIR and the BOC into mercenaries and bounty hunters"
as they will do their best only in consideration of such rewards. Thus, the system of rewards and
1
incentives invites corruption and undermines the constitutionally mandated duty of these officials and
employees to serve the people with utmost responsibility, integrity, loyalty and efficiency.
Petitioners also claim that limiting the scope of the system of rewards and incentives only to officials and
employees of the BIR and the BOC violates the constitutional guarantee of equal protection. There is no
valid basis for classification or distinction as to why such a system should not apply to officials and
employees of all other government agencies.
In addition, petitioners assert that the law unduly delegates the power to fix revenue targets to the
President as it lacks a sufficient standard on that matter. While Section 7(b) and (c) of RA 9335 provides
that BIR and BOC officials may be dismissed from the service if their revenue collections fall short of the
target by at least 7.5%, the law does not, however, fix the revenue targets to be achieved. Instead, the
fixing of revenue targets has been delegated to the President without sufficient standards. It will therefore
be easy for the President to fix an unrealistic and unattainable target in order to dismiss BIR or BOC
personnel.
Finally, petitioners assail the creation of a congressional oversight committee on the ground that it
violates the doctrine of separation of powers. While the legislative function is deemed accomplished and
completed upon the enactment and approval of the law, the creation of the congressional oversight
committee permits legislative participation in the implementation and enforcement of the law.
In their comment, respondents, through the Office of the Solicitor General, question the petition for being
premature as there is no actual case or controversy yet. Petitioners have not asserted any right or claim
that will necessitate the exercise of this Court’s jurisdiction. Nevertheless, respondents acknowledge that
public policy requires the resolution of the constitutional issues involved in this case. They assert that the
allegation that the reward system will breed mercenaries is mere speculation and does not suffice to
invalidate the law. Seen in conjunction with the declared objective of RA 9335, the law validly classifies
the BIR and the BOC because the functions they perform are distinct from those of the other government
agencies and instrumentalities. Moreover, the law provides a sufficient standard that will guide the
executive in the implementation of its provisions. Lastly, the creation of the congressional oversight
committee under the law enhances, rather than violates, separation of powers. It ensures the fulfillment of
the legislative policy and serves as a check to any over-accumulation of power on the part of the
executive and the implementing agencies.
After a careful consideration of the conflicting contentions of the parties, the Court finds that petitioners
have failed to overcome the presumption of constitutionality in favor of RA 9335, except as shall hereafter
be discussed.
Actual Case And Ripeness
An actual case or controversy involves a conflict of legal rights, an assertion of opposite legal claims
susceptible of judicial adjudication.10 A closely related requirement is ripeness, that is, the question must
be ripe for adjudication. And a constitutional question is ripe for adjudication when the governmental act
being challenged has a direct adverse effect on the individual challenging it. 11 Thus, to be ripe for judicial
adjudication, the petitioner must show a personal stake in the outcome of the case or an injury to himself
that can be redressed by a favorable decision of the Court.12
In this case, aside from the general claim that the dispute has ripened into a judicial controversy by the
mere enactment of the law even without any further overt act,13 petitioners fail either to assert any specific
and concrete legal claim or to demonstrate any direct adverse effect of the law on them. They are unable
to show a personal stake in the outcome of this case or an injury to themselves. On this account, their
petition is procedurally infirm.
2
This notwithstanding, public interest requires the resolution of the constitutional issues raised by
petitioners. The grave nature of their allegations tends to cast a cloud on the presumption of
constitutionality in favor of the law. And where an action of the legislative branch is alleged to have
infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary to settle the
dispute.14
Accountability of
Public Officers
Section 1, Article 11 of the Constitution states:
Sec. 1. Public office is a public trust. Public officers and employees must at all times be
accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency,
act with patriotism, and justice, and lead modest lives.
Public office is a public trust. It must be discharged by its holder not for his own personal gain but for the
benefit of the public for whom he holds it in trust. By demanding accountability and service with
responsibility, integrity, loyalty, efficiency, patriotism and justice, all government officials and employees
have the duty to be responsive to the needs of the people they are called upon to serve.
Public officers enjoy the presumption of regularity in the performance of their duties. This presumption
necessarily obtains in favor of BIR and BOC officials and employees. RA 9335 operates on the basis
thereof and reinforces it by providing a system of rewards and sanctions for the purpose of encouraging
the officials and employees of the BIR and the BOC to exceed their revenue targets and optimize their
revenue-generation capability and collection.15
The presumption is disputable but proof to the contrary is required to rebut it. It cannot be overturned by
mere conjecture or denied in advance (as petitioners would have the Court do) specially in this case
where it is an underlying principle to advance a declared public policy.
Petitioners’ claim that the implementation of RA 9335 will turn BIR and BOC officials and employees into
"bounty hunters and mercenaries" is not only without any factual and legal basis; it is also purely
speculative.
A law enacted by Congress enjoys the strong presumption of constitutionality. To justify its nullification,
there must be a clear and unequivocal breach of the Constitution, not a doubtful and equivocal one.16 To
invalidate RA 9335 based on petitioners’ baseless supposition is an affront to the wisdom not only of the
legislature that passed it but also of the executive which approved it.
Public service is its own reward. Nevertheless, public officers may by law be rewarded for exemplary and
exceptional performance. A system of incentives for exceeding the set expectations of a public office is
not anathema to the concept of public accountability. In fact, it recognizes and reinforces dedication to
duty, industry, efficiency and loyalty to public service of deserving government personnel.
In United States v. Matthews,17 the U.S. Supreme Court validated a law which awards to officers of the
customs as well as other parties an amount not exceeding one-half of the net proceeds of forfeitures in
violation of the laws against smuggling. Citing Dorsheimer v. United States,18 the U.S. Supreme Court
said:
The offer of a portion of such penalties to the collectors is to stimulate and reward their zeal and
industry in detecting fraudulent attempts to evade payment of duties and taxes.
3
In the same vein, employees of the BIR and the BOC may by law be entitled to a reward when, as a
consequence of their zeal in the enforcement of tax and customs laws, they exceed their revenue targets.
In addition, RA 9335 establishes safeguards to ensure that the reward will not be claimed if it will be
either the fruit of "bounty hunting or mercenary activity" or the product of the irregular performance of
official duties. One of these precautionary measures is embodied in Section 8 of the law:
SEC. 8. Liability of Officials, Examiners and Employees of the BIR and the BOC. – The officials,
examiners, and employees of the [BIR] and the [BOC] who violate this Act or who are guilty of
negligence, abuses or acts of malfeasance or misfeasance or fail to exercise extraordinary
diligence in the performance of their duties shall be held liable for any loss or injury suffered by
any business establishment or taxpayer as a result of such violation, negligence, abuse,
malfeasance, misfeasance or failure to exercise extraordinary diligence.
Equal Protection
Equality guaranteed under the equal protection clause is equality under the same conditions and among
persons similarly situated; it is equality among equals, not similarity of treatment of persons who are
classified based on substantial differences in relation to the object to be accomplished. 19 When things or
persons are different in fact or circumstance, they may be treated in law differently. In Victoriano v.
Elizalde Rope Workers’ Union,20 this Court declared:
The guaranty of equal protection of the laws is not a guaranty of equality in the application of the
laws upon all citizens of the [S]tate. It is not, therefore, a requirement, in order to avoid the
constitutional prohibition against inequality, that every man, woman and child should be affected
alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on
persons merely as such, but on persons according to the circumstances surrounding them. It
guarantees equality, not identity of rights. The Constitution does not require that things which
are different in fact be treated in law as though they were the same. The equal protection
clause does not forbid discrimination as to things that are different. It does not prohibit
legislation which is limited either in the object to which it is directed or by the territory within
which it is to operate.
The equal protection of the laws clause of the Constitution allows classification. Classification in
law, as in the other departments of knowledge or practice, is the grouping of things in speculation
or practice because they agree with one another in certain particulars. A law is not invalid
because of simple inequality. The very idea of classification is that of inequality, so that it goes
without saying that the mere fact of inequality in no manner determines the matter of
constitutionality. All that is required of a valid classification is that it be reasonable, which
means that the classification should be based on substantial distinctions which make for
real differences, that it must be germane to the purpose of the law; that it must not be
limited to existing conditions only; and that it must apply equally to each member of the
class. This Court has held that the standard is satisfied if the classification or distinction is
based on a reasonable foundation or rational basis and is not palpably arbitrary.
In the exercise of its power to make classifications for the purpose of enacting laws over matters
within its jurisdiction, the state is recognized as enjoying a wide range of discretion. It is not
necessary that the classification be based on scientific or marked differences of things or in their
relation. Neither is it necessary that the classification be made with mathematical nicety. Hence,
legislative classification may in many cases properly rest on narrow distinctions, for the equal
protection guaranty does not preclude the legislature from recognizing degrees of evil or harm,
and legislation is addressed to evils as they may appear.21 (emphasis supplied)
The equal protection clause recognizes a valid classification, that is, a classification that has a reasonable
foundation or rational basis and not arbitrary.22 With respect to RA 9335, its expressed public policy is the
4
optimization of the revenue-generation capability and collection of the BIR and the BOC.23 Since the
subject of the law is the revenue- generation capability and collection of the BIR and the BOC, the
incentives and/or sanctions provided in the law should logically pertain to the said agencies. Moreover,
the law concerns only the BIR and the BOC because they have the common distinct primary function of
generating revenues for the national government through the collection of taxes, customs duties, fees and
charges.
The BIR performs the following functions:
Sec. 18. The Bureau of Internal Revenue. – The Bureau of Internal Revenue, which shall be
headed by and subject to the supervision and control of the Commissioner of Internal Revenue,
who shall be appointed by the President upon the recommendation of the Secretary [of the DOF],
shall have the following functions:
(1) Assess and collect all taxes, fees and charges and account for all revenues collected;
(2) Exercise duly delegated police powers for the proper performance of its functions and duties;
(3) Prevent and prosecute tax evasions and all other illegal economic activities;
(4) Exercise supervision and control over its constituent and subordinate units; and
(5) Perform such other functions as may be provided by law.24
xxx xxx xxx (emphasis supplied)
On the other hand, the BOC has the following functions:
Sec. 23. The Bureau of Customs. – The Bureau of Customs which shall be headed and subject to
the management and control of the Commissioner of Customs, who shall be appointed by the
President upon the recommendation of the Secretary[of the DOF] and hereinafter referred to as
Commissioner, shall have the following functions:
(1) Collect custom duties, taxes and the corresponding fees, charges and penalties;
(2) Account for all customs revenues collected;
(3) Exercise police authority for the enforcement of tariff and customs laws;
(4) Prevent and suppress smuggling, pilferage and all other economic frauds within all ports of
entry;
(5) Supervise and control exports, imports, foreign mails and the clearance of vessels and
aircrafts in all ports of entry;
(6) Administer all legal requirements that are appropriate;
(7) Prevent and prosecute smuggling and other illegal activities in all ports under its jurisdiction;
(8) Exercise supervision and control over its constituent units;
(9) Perform such other functions as may be provided by law.25
5
Both the BIR and the BOC are bureaus under the DOF. They principally perform the special function of
being the instrumentalities through which the State exercises one of its great inherent functions –
taxation. Indubitably, such substantial distinction is germane and intimately related to the purpose of the
law. Hence, the classification and treatment accorded to the BIR and the BOC under RA 9335 fully satisfy
the demands of equal protection.
Undue Delegation
Two tests determine the validity of delegation of legislative power: (1) the completeness test and (2) the
sufficient standard test. A law is complete when it sets forth therein the policy to be executed, carried out
or implemented by the delegate.26 It lays down a sufficient standard when it provides adequate guidelines
or limitations in the law to map out the boundaries of the delegate’s authority and prevent the delegation
from running riot.27 To be sufficient, the standard must specify the limits of the delegate’s authority,
announce the legislative policy and identify the conditions under which it is to be implemented. 28
RA 9335 adequately states the policy and standards to guide the President in fixing revenue targets and
the implementing agencies in carrying out the provisions of the law. Section 2 spells out the policy of the
law:
SEC. 2. Declaration of Policy. – It is the policy of the State to optimize the revenue-generation
capability and collection of the Bureau of Internal Revenue (BIR) and the Bureau of Customs
(BOC) by providing for a system of rewards and sanctions through the creation of a Rewards and
Incentives Fund and a Revenue Performance Evaluation Board in the above agencies for the
purpose of encouraging their officials and employees to exceed their revenue targets.
Section 4 "canalized within banks that keep it from overflowing"29 the delegated power to the President to
fix revenue targets:
SEC. 4. Rewards and Incentives Fund. – A Rewards and Incentives Fund, hereinafter referred to
as the Fund, is hereby created, to be sourced from the collection of the BIR and the BOC in
excess of their respective revenue targets of the year, as determined by the Development
Budget and Coordinating Committee (DBCC), in the following percentages:
Excess of Collection of the Percent (%) of the Excess Collection to

Excess the Revenue Targets Accrue to the Fund
30% or below – 15%
More than 30% – 15% of the first 30% plus 20% of the
remaining excess
The Fund shall be deemed automatically appropriated the year immediately following the year
when the revenue collection target was exceeded and shall be released on the same fiscal year.
Revenue targets shall refer to the original estimated revenue collection expected of the
BIR and the BOC for a given fiscal year as stated in the Budget of Expenditures and
Sources of Financing (BESF) submitted by the President to Congress. The BIR and the
BOC shall submit to the DBCC the distribution of the agencies’ revenue targets as allocated
among its revenue districts in the case of the BIR, and the collection districts in the case of the
BOC.
6
Revenue targets are based on the original estimated revenue collection expected respectively of the BIR
and the BOC for a given fiscal year as approved by the DBCC and stated in the BESF submitted by the
President to Congress.30 Thus, the determination of revenue targets does not rest solely on the President
as it also undergoes the scrutiny of the DBCC.
On the other hand, Section 7 specifies the limits of the Board’s authority and identifies the conditions
under which officials and employees whose revenue collection falls short of the target by at least 7.5%
may be removed from the service:
SEC. 7. Powers and Functions of the Board. – The Board in the agency shall have the following
powers and functions:
xxx xxx xxx
(b) To set the criteria and procedures for removing from service officials and employees
whose revenue collection falls short of the target by at least seven and a half percent
(7.5%), with due consideration of all relevant factors affecting the level of collection as
provided in the rules and regulations promulgated under this Act, subject to civil service laws,
rules and regulations and compliance with substantive and procedural due process:
Provided, That the following exemptions shall apply:
1. Where the district or area of responsibility is newly-created, not exceeding two years in
operation, as has no historical record of collection performance that can be used as basis
for evaluation; and
2. Where the revenue or customs official or employee is a recent transferee in the middle
of the period under consideration unless the transfer was due to nonperformance of
revenue targets or potential nonperformance of revenue targets: Provided, however, That
when the district or area of responsibility covered by revenue or customs officials or
employees has suffered from economic difficulties brought about by natural calamities
or force majeure or economic causes as may be determined by the Board, termination
shall be considered only after careful and proper review by the Board.
(c) To terminate personnel in accordance with the criteria adopted in the preceding paragraph:
Provided, That such decision shall be immediately executory: Provided, further, That the
application of the criteria for the separation of an official or employee from service under
this Act shall be without prejudice to the application of other relevant laws on
accountability of public officers and employees, such as the Code of Conduct and Ethical
Standards of Public Officers and Employees and the Anti-Graft and Corrupt Practices Act;
Clearly, RA 9335 in no way violates the security of tenure of officials and employees of the BIR and the
BOC. The guarantee of security of tenure only means that an employee cannot be dismissed from the
service for causes other than those provided by law and only after due process is accorded the
employee.31 In the case of RA 9335, it lays down a reasonable yardstick for removal (when the revenue
collection falls short of the target by at least 7.5%) with due consideration of all relevant factors affecting
the level of collection. This standard is analogous to inefficiency and incompetence in the performance of
official duties, a ground for disciplinary action under civil service laws.32 The action for removal is also
subject to civil service laws, rules and regulations and compliance with substantive and procedural due
process.
At any rate, this Court has recognized the following as sufficient standards: "public interest," "justice and
equity," "public convenience and welfare" and "simplicity, economy and welfare." 33 In this case, the
7
declared policy of optimization of the revenue-generation capability and collection of the BIR and the BOC
is infused with public interest.
Separation Of Powers
Section 12 of RA 9335 provides:
SEC. 12. Joint Congressional Oversight Committee. – There is hereby created a Joint
Congressional Oversight Committee composed of seven Members from the Senate and seven
Members from the House of Representatives. The Members from the Senate shall be appointed
by the Senate President, with at least two senators representing the minority. The Members from
the House of Representatives shall be appointed by the Speaker with at least two members
representing the minority. After the Oversight Committee will have approved the implementing
rules and regulations (IRR) it shall thereafter become functus officio and therefore cease to exist.
The Joint Congressional Oversight Committee in RA 9335 was created for the purpose of approving the
implementing rules and regulations (IRR) formulated by the DOF, DBM, NEDA, BIR, BOC and CSC. On
May 22, 2006, it approved the said IRR. From then on, it became functus officio and ceased to exist.
Hence, the issue of its alleged encroachment on the executive function of implementing and enforcing the
law may be considered moot and academic.
This notwithstanding, this might be as good a time as any for the Court to confront the issue of the
constitutionality of the Joint Congressional Oversight Committee created under RA 9335 (or other similar
laws for that matter).
The scholarly discourse of Mr. Justice (now Chief Justice) Puno on the concept of congressional
oversight in Macalintal v. Commission on Elections34 is illuminating:
Concept and bases of congressional oversight
Broadly defined, the power of oversight embraces all activities undertaken by Congress to
enhance its understanding of and influence over the implementation of legislation it has
enacted. Clearly, oversight concerns post-enactment measures undertaken by Congress:
(a) to monitor bureaucratic compliance with program objectives, (b) to determine whether
agencies are properly administered, (c) to eliminate executive waste and dishonesty, (d) to
prevent executive usurpation of legislative authority, and (d) to assess executive
conformity with the congressional perception of public interest.
The power of oversight has been held to be intrinsic in the grant of legislative power itself and
integral to the checks and balances inherent in a democratic system of government. x x x x x x x
xx
Over the years, Congress has invoked its oversight power with increased frequency to check the
perceived "exponential accumulation of power" by the executive branch. By the beginning of the
20th century, Congress has delegated an enormous amount of legislative authority to the
executive branch and the administrative agencies. Congress, thus, uses its oversight power to
make sure that the administrative agencies perform their functions within the authority delegated
to them. x x x x x x x x x
Categories of congressional oversight functions
The acts done by Congress purportedly in the exercise of its oversight powers may be divided
into three categories, namely: scrutiny, investigation and supervision.
8
a. Scrutiny
Congressional scrutiny implies a lesser intensity and continuity of attention to

administrative operations. Its primary purpose is to determine economy and efficiency of
the operation of government activities. In the exercise of legislative scrutiny, Congress
may request information and report from the other branches of government. It can give
recommendations or pass resolutions for consideration of the agency involved.
xxx xxx xxx
b. Congressional investigation
While congressional scrutiny is regarded as a passive process of looking at the facts that
are readily available, congressional investigation involves a more intense digging of facts.
The power of Congress to conduct investigation is recognized by the 1987 Constitution
under section 21, Article VI, xxx xxx xxx
c. Legislative supervision
The third and most encompassing form by which Congress exercises its oversight power is thru
legislative supervision. "Supervision" connotes a continuing and informed awareness on the part
of a congressional committee regarding executive operations in a given administrative area.
While both congressional scrutiny and investigation involve inquiry into past executive branch
actions in order to influence future executive branch performance, congressional supervision
allows Congress to scrutinize the exercise of delegated law-making authority, and permits
Congress to retain part of that delegated authority.
Congress exercises supervision over the executive agencies through its veto power. It typically
utilizes veto provisions when granting the President or an executive agency the power to
promulgate regulations with the force of law. These provisions require the President or an agency
to present the proposed regulations to Congress, which retains a "right" to approve or disapprove
any regulation before it takes effect. Such legislative veto provisions usually provide that a
proposed regulation will become a law after the expiration of a certain period of time, only if
Congress does not affirmatively disapprove of the regulation in the meantime. Less frequently,
the statute provides that a proposed regulation will become law if Congress affirmatively
approves it.
Supporters of legislative veto stress that it is necessary to maintain the balance of power between
the legislative and the executive branches of government as it offers lawmakers a way to
delegate vast power to the executive branch or to independent agencies while retaining the
option to cancel particular exercise of such power without having to pass new legislation or to
repeal existing law. They contend that this arrangement promotes democratic accountability as it
provides legislative check on the activities of unelected administrative agencies. One proponent
thus explains:
It is too late to debate the merits of this delegation policy: the policy is too deeply
embedded in our law and practice. It suffices to say that the complexities of modern
government have often led Congress-whether by actual or perceived necessity- to
legislate by declaring broad policy goals and general statutory standards, leaving the
choice of policy options to the discretion of an executive officer. Congress articulates
legislative aims, but leaves their implementation to the judgment of parties who may or
may not have participated in or agreed with the development of those aims.
Consequently, absent safeguards, in many instances the reverse of our constitutional
scheme could be effected: Congress proposes, the Executive disposes. One safeguard,
9
of course, is the legislative power to enact new legislation or to change existing law. But
without some means of overseeing post enactment activities of the executive branch,
Congress would be unable to determine whether its policies have been implemented in
accordance with legislative intent and thus whether legislative intervention is appropriate.
Its opponents, however, criticize the legislative veto as undue encroachment upon the
executive prerogatives. They urge that any post-enactment measures undertaken by the
legislative branch should be limited to scrutiny and investigation; any measure beyond
that would undermine the separation of powers guaranteed by the Constitution. They
contend that legislative veto constitutes an impermissible evasion of the President’s veto authority
and intrusion into the powers vested in the executive or judicial branches of government.
Proponents counter that legislative veto enhances separation of powers as it prevents the
executive branch and independent agencies from accumulating too much power. They submit
that reporting requirements and congressional committee investigations allow Congress to
scrutinize only the exercise of delegated law-making authority. They do not allow Congress to
review executive proposals before they take effect and they do not afford the opportunity for
ongoing and binding expressions of congressional intent. In contrast, legislative veto permits
Congress to participate prospectively in the approval or disapproval of "subordinate law" or those
enacted by the executive branch pursuant to a delegation of authority by Congress. They further
argue that legislative veto "is a necessary response by Congress to the accretion of policy control
by forces outside its chambers." In an era of delegated authority, they point out that legislative
veto "is the most efficient means Congress has yet devised to retain control over the evolution
and implementation of its policy as declared by statute."
In Immigration and Naturalization Service v. Chadha, the U.S. Supreme Court resolved the
validity of legislative veto provisions. The case arose from the order of the immigration judge
suspending the deportation of Chadha pursuant to § 244(c)(1) of the Immigration and Nationality
Act. The United States House of Representatives passed a resolution vetoing the suspension
pursuant to § 244(c)(2) authorizing either House of Congress, by resolution, to invalidate the
decision of the executive branch to allow a particular deportable alien to remain in the United
States. The immigration judge reopened the deportation proceedings to implement the House
order and the alien was ordered deported. The Board of Immigration Appeals dismissed the
alien’s appeal, holding that it had no power to declare unconstitutional an act of Congress. The
United States Court of Appeals for Ninth Circuit held that the House was without constitutional
authority to order the alien’s deportation and that § 244(c)(2) violated the constitutional doctrine
on separation of powers.
On appeal, the U.S. Supreme Court declared § 244(c)(2) unconstitutional. But the Court shied
away from the issue of separation of powers and instead held that the provision violates the
presentment clause and bicameralism. It held that the one-house veto was essentially legislative
in purpose and effect. As such, it is subject to the procedures set out in Article I of the
Constitution requiring the passage by a majority of both Houses and presentment to the
President. x x x x x x x x x
Two weeks after the Chadha decision, the Court upheld, in memorandum decision, two lower
court decisions invalidating the legislative veto provisions in the Natural Gas Policy Act of 1978
and the Federal Trade Commission Improvement Act of 1980. Following this precedence, lower
courts invalidated statutes containing legislative veto provisions although some of these
provisions required the approval of both Houses of Congress and thus met the bicameralism
requirement of Article I. Indeed, some of these veto provisions were not even
exercised.35 (emphasis supplied)
In Macalintal, given the concept and configuration of the power of congressional oversight and
considering the nature and powers of a constitutional body like the Commission on Elections, the Court
struck down the provision in RA 9189 (The Overseas Absentee Voting Act of 2003) creating a Joint
10
Congressional Committee. The committee was tasked not only to monitor and evaluate the
implementation of the said law but also to review, revise, amend and approve the IRR promulgated by the
Commission on Elections. The Court held that these functions infringed on the constitutional
independence of the Commission on Elections.36
With this backdrop, it is clear that congressional oversight is not unconstitutional per se, meaning, it
neither necessarily constitutes an encroachment on the executive power to implement laws nor
undermines the constitutional separation of powers. Rather, it is integral to the checks and balances
inherent in a democratic system of government. It may in fact even enhance the separation of powers as
it prevents the over-accumulation of power in the executive branch.
However, to forestall the danger of congressional encroachment "beyond the legislative sphere," the
Constitution imposes two basic and related constraints on Congress. 37 It may not vest itself, any of its
committees or its members with either executive or judicial power.38 And, when it exercises its legislative
power, it must follow the "single, finely wrought and exhaustively considered, procedures" specified under
the Constitution,39 including the procedure for enactment of laws and presentment.
Thus, any post-enactment congressional measure such as this should be limited to scrutiny and
investigation. In particular, congressional oversight must be confined to the following:
(1) scrutiny based primarily on Congress’ power of appropriation and the budget hearings
conducted in connection with it, its power to ask heads of departments to appear before and be
heard by either of its Houses on any matter pertaining to their departments and its power of
confirmation40 and
(2) investigation and monitoring41 of the implementation of laws pursuant to the power of
Congress to conduct inquiries in aid of legislation.42
Any action or step beyond that will undermine the separation of powers guaranteed by the Constitution.
Legislative vetoes fall in this class.
Legislative veto is a statutory provision requiring the President or an administrative agency to present the
proposed implementing rules and regulations of a law to Congress which, by itself or through a committee
formed by it, retains a "right" or "power" to approve or disapprove such regulations before they take effect.
As such, a legislative veto in the form of a congressional oversight committee is in the form of an inward-
turning delegation designed to attach a congressional leash (other than through scrutiny and
investigation) to an agency to which Congress has by law initially delegated broad powers.43 It radically
changes the design or structure of the Constitution’s diagram of power as it entrusts to Congress a direct
role in enforcing, applying or implementing its own laws.44
Congress has two options when enacting legislation to define national policy within the broad horizons of
its legislative competence.45 It can itself formulate the details or it can assign to the executive branch the
responsibility for making necessary managerial decisions in conformity with those standards.46 In the
latter case, the law must be complete in all its essential terms and conditions when it leaves the hands of
the legislature.47 Thus, what is left for the executive branch or the concerned administrative agency when
it formulates rules and regulations implementing the law is to fill up details (supplementary rule-making) or
ascertain facts necessary to bring the law into actual operation (contingent rule-making).48
Administrative regulations enacted by administrative agencies to implement and interpret the law which
they are entrusted to enforce have the force of law and are entitled to respect.49 Such rules and
regulations partake of the nature of a statute50 and are just as binding as if they have been written in the
statute itself. As such, they have the force and effect of law and enjoy the presumption of constitutionality
and legality until they are set aside with finality in an appropriate case by a competent court. 51 Congress,
in the guise of assuming the role of an overseer, may not pass upon their legality by subjecting them to its
11
stamp of approval without disturbing the calculated balance of powers established by the Constitution. In
exercising discretion to approve or disapprove the IRR based on a determination of whether or not they
conformed with the provisions of RA 9335, Congress arrogated judicial power unto itself, a power
exclusively vested in this Court by the Constitution.
Considered Opinion of
Mr. Justice Dante O. Tinga
Moreover, the requirement that the implementing rules of a law be subjected to approval by Congress as
a condition for their effectivity violates the cardinal constitutional principles of bicameralism and the rule
on presentment.52
Section 1, Article VI of the Constitution states:
Section 1. The legislative power shall be vested in the Congress of the Philippines which
shall consist of a Senate and a House of Representatives, except to the extent reserved to
the people by the provision on initiative and referendum. (emphasis supplied)
Legislative power (or the power to propose, enact, amend and repeal laws) 53 is vested in Congress which
consists of two chambers, the Senate and the House of Representatives. A valid exercise of legislative
power requires the act of both chambers. Corrollarily, it can be exercised neither solely by one of the two
chambers nor by a committee of either or both chambers. Thus, assuming the validity of a legislative veto,
both a single-chamber legislative veto and a congressional committee legislative veto are invalid.
Additionally, Section 27(1), Article VI of the Constitution provides:
Section 27. (1) Every bill passed by the Congress shall, before it becomes a law, be
presented to the President. If he approves the same, he shall sign it, otherwise, he shall veto it
and return the same with his objections to the House where it originated, which shall enter the
objections at large in its Journal and proceed to reconsider it. If, after such reconsideration, two-
thirds of all the Members of such House shall agree to pass the bill, it shall be sent, together with
the objections, to the other House by which it shall likewise be reconsidered, and if approved by
two-thirds of all the Members of that House, it shall become a law. In all such cases, the votes of
each House shall be determined by yeas or nays, and the names of the members voting for or
against shall be entered in its Journal. The President shall communicate his veto of any bill to the
House where it originated within thirty days after the date of receipt thereof; otherwise, it shall
become a law as if he had signed it. (emphasis supplied)
Every bill passed by Congress must be presented to the President for approval or veto. In the absence of
presentment to the President, no bill passed by Congress can become a law. In this sense, law-making
under the Constitution is a joint act of the Legislature and of the Executive. Assuming that legislative veto
is a valid legislative act with the force of law, it cannot take effect without such presentment even if
approved by both chambers of Congress.
In sum, two steps are required before a bill becomes a law. First, it must be approved by both Houses of
Congress.54 Second, it must be presented to and approved by the President.55 As summarized by Justice
Isagani Cruz56 and Fr. Joaquin G. Bernas, S.J.57, the following is the procedure for the approval of bills:
A bill is introduced by any member of the House of Representatives or the Senate except for
some measures that must originate only in the former chamber.
The first reading involves only a reading of the number and title of the measure and its referral by
the Senate President or the Speaker to the proper committee for study.
12
The bill may be "killed" in the committee or it may be recommended for approval, with or without
amendments, sometimes after public hearings are first held thereon. If there are other bills of the
same nature or purpose, they may all be consolidated into one bill under common authorship or
as a committee bill.
Once reported out, the bill shall be calendared for second reading. It is at this stage that the bill is
read in its entirety, scrutinized, debated upon and amended when desired. The second reading is
the most important stage in the passage of a bill.
The bill as approved on second reading is printed in its final form and copies thereof are
distributed at least three days before the third reading. On the third reading, the members merely
register their votes and explain them if they are allowed by the rules. No further debate is allowed.
Once the bill passes third reading, it is sent to the other chamber, where it will also undergo the
three readings. If there are differences between the versions approved by the two chambers, a
conference committee58 representing both Houses will draft a compromise measure that if ratified
by the Senate and the House of Representatives will then be submitted to the President for his
consideration.
The bill is enrolled when printed as finally approved by the Congress, thereafter authenticated
with the signatures of the Senate President, the Speaker, and the Secretaries of their respective
chambers…59
The President’s role in law-making.
The final step is submission to the President for approval. Once approved, it takes effect as law
after the required publication.60
Where Congress delegates the formulation of rules to implement the law it has enacted pursuant to
sufficient standards established in the said law, the law must be complete in all its essential terms and
conditions when it leaves the hands of the legislature. And it may be deemed to have left the hands of the
legislature when it becomes effective because it is only upon effectivity of the statute that legal rights and
obligations become available to those entitled by the language of the statute. Subject to the indispensable
requisite of publication under the due process clause, 61 the determination as to when a law takes effect is
wholly the prerogative of Congress.62 As such, it is only upon its effectivity that a law may be executed
and the executive branch acquires the duties and powers to execute the said law. Before that point, the
role of the executive branch, particularly of the President, is limited to approving or vetoing the law. 63
From the moment the law becomes effective, any provision of law that empowers Congress or any of its
members to play any role in the implementation or enforcement of the law violates the principle of
separation of powers and is thus unconstitutional. Under this principle, a provision that requires Congress
or its members to approve the implementing rules of a law after it has already taken effect shall be
unconstitutional, as is a provision that allows Congress or its members to overturn any directive or ruling
made by the members of the executive branch charged with the implementation of the law.
Following this rationale, Section 12 of RA 9335 should be struck down as unconstitutional. While there
may be similar provisions of other laws that may be invalidated for failure to pass this standard, the Court
refrains from invalidating them wholesale but will do so at the proper time when an appropriate case
assailing those provisions is brought before us.64
The next question to be resolved is: what is the effect of the unconstitutionality of Section 12 of RA 9335
on the other provisions of the law? Will it render the entire law unconstitutional? No.
13
Section 13 of RA 9335 provides:
SEC. 13. Separability Clause. – If any provision of this Act is declared invalid by a competent
court, the remainder of this Act or any provision not affected by such declaration of invalidity shall
remain in force and effect.
In Tatad v. Secretary of the Department of Energy,65 the Court laid down the following rules:
The general rule is that where part of a statute is void as repugnant to the Constitution, while
another part is valid, the valid portion, if separable from the invalid, may stand and be enforced.
The presence of a separability clause in a statute creates the presumption that the legislature
intended separability, rather than complete nullity of the statute. To justify this result, the valid
portion must be so far independent of the invalid portion that it is fair to presume that the
legislature would have enacted it by itself if it had supposed that it could not constitutionally enact
the other. Enough must remain to make a complete, intelligible and valid statute, which carries
out the legislative intent. x x x
The exception to the general rule is that when the parts of a statute are so mutually dependent
and connected, as conditions, considerations, inducements, or compensations for each other, as
to warrant a belief that the legislature intended them as a whole, the nullity of one part will vitiate
the rest. In making the parts of the statute dependent, conditional, or connected with one another,
the legislature intended the statute to be carried out as a whole and would not have enacted it if
one part is void, in which case if some parts are unconstitutional, all the other provisions thus
dependent, conditional, or connected must fall with them.
The separability clause of RA 9335 reveals the intention of the legislature to isolate and detach any
invalid provision from the other provisions so that the latter may continue in force and effect. The valid
portions can stand independently of the invalid section. Without Section 12, the remaining provisions still
constitute a complete, intelligible and valid law which carries out the legislative intent to optimize the
revenue-generation capability and collection of the BIR and the BOC by providing for a system of rewards
and sanctions through the Rewards and Incentives Fund and a Revenue Performance Evaluation Board.
To be effective, administrative rules and regulations must be published in full if their purpose is to enforce
or implement existing law pursuant to a valid delegation. The IRR of RA 9335 were published on May 30,
2006 in two newspapers of general circulation66 and became effective 15 days thereafter.67 Until and
unless the contrary is shown, the IRR are presumed valid and effective even without the approval of the
Joint Congressional Oversight Committee.
WHEREFORE, the petition is hereby PARTIALLY GRANTED. Section 12 of RA 9335 creating a Joint
Congressional Oversight Committee to approve the implementing rules and regulations of the law is
declared UNCONSTITUTIONAL and therefore NULL and VOID. The constitutionality of the remaining
provisions of RA 9335 is UPHELD. Pursuant to Section 13 of RA 9335, the rest of the provisions remain
in force and effect.
SO ORDERED.
14
EN BANC
G.R. No. 153266 March 18, 2010
VICTORIA C. GUTIERREZ, JOEL R. PEREZ, ARACELI L. YAMBOT, CORAZON F. SORIANO,

LORNA P. TAMOR, ROMEO S. CONSIGNADO, DIVINA R. SULIT, ESTRELITA F. IRESARE,
ROSALINDA L. ALPAY, AUREA L. ILAGAN AND ALL THE OTHER CONCERNED EMPLOYEES
OF THE OFFICE OF THE SOLICITOR GENERAL, Petitioners,
vs.
DEPARTMENT OF BUDGET AND MANAGEMENT, HONORABLE SECRETARY EMILIA T.
BONCODIN AND DIRECTOR LUZ M. CANTOR, Respondents,
UNIVERSITY OF THE PHILIPPINES, AMADO EUROPA, MERCEDITA REYES, CONCHITA
ABARCAR, LUCIO ABERIN, BIENVENIDO BIONG, SOLOMON CELIZ, WILFREDO CORNEL,
TOMAS FORIO, ROGELIO JUNTERIAL, JAIME PERALTA, PILAR RILLAS, WILFREDO SAGUN,
JESUS SUGUITAN, LUIS TORRES, JOSE VERSOZA AND ALL THE OTHER CONCERNED
INCUMBENT AND RETIRED EMPLOYEES OF THE SOCIAL SECURITY SYSTEM v. SOCIAL
SECURITY SYSTEM*** CONSUELO A. TAGARO, REYNALDO S. CALLANO, AIDA A.
MARTINEZ, PRISCILLA P. COSTES, RICELI C. MENDOZA, ARISTON CALVO, SAMSON L.
MOLAO, MANUEL SABUTAN, VILMA GONZALES, RUTH C. MAPANAO, NELSON M. BELGIRA,
JESUS ANTONIO G. DERIJE v. UNIVERSITY OF SOUTHERN MINDANAO*** CONFEDERATION
OF INDEPENDENT UNIONS IN THE PUBLIC SECTOR (CIU) ESTHER I. ABADIANO AND
OTHER FORTY ONE THOUSAND INDIVIDUAL TEACHERS INTERVENORS ELPIDIO F.
FERRER, MARIKINA CITY FEDERATION OF PUBLIC SCHOOL TEACHERS, INC.,
REPRESENTED BY ITS PRESIDENT ELPIDIO F. FERRER, AND ALL OTHER INDIVIDUAL
PUBLIC SCHOOL TEACHERS IN CENTRAL LUZON, NORTHERN LUZON, SOUTHERN
TAGALOG, NATIONAL CENTRAL REGION, CARR AND MINDANAO REPRESENTED BY THEIR
RESPECTIVE ATTORNEYS-IN-FACT, ATTORNEYS DANTE ILAYA AND VIRGINIA SUAREZ-
PINLAC AND ACTION AND SOLIDARITY FOR THE EMPOWERMENT OF TEACHERS
(ASSERT), REPRESENTED BY ITS PRESIDENT AMABLE TUIBEIO, ET AL. HARRIS M.
SINOLINDING, KALANTONGAN P. AKIL, DAUNDI B. BAKONG, TERESITA C. DE GUZMAN,
QUEENIE A. HABIBUN, JOSE T. MAUN, VIVIENLE P. MARAGGUN, SAAVEDRA M.
MANTIKAYAN, GIJIT C. PARON, IRWIN R. QUINAIN, DATUMANONG O. TAGITICAN AND
HYDIE P. WONG, AND ALL OTHER CONCERNED EMPLOYEES OF THE COTABATO
FOUNDATION COLLEGE OF SCIENCE AND TECHNOLOGY (CFCST) v. COTABATO
FOUNDATION COLLEGE OF SCIENCE AND TECHNOLOGY AND DEPARTMENT OF BUDGET
AND MANAGEMENT*** FRANCISCA C. CASTRO, DARIO C. VARGAS, MA. DEBBIE M. RESMA,
RAMON P. CASIL, TERESITA C. BUSADRE, CRISTINA V. MANALO, SAUL SAN RAMON,
ALEXIS R. REBURIANO, ROSALITO D. ROSA, DR. FERNANDO C. JAVIER, DR. ROSEMARIE
M. YAGUIE, DR. GIL T. MAGBANUA, AND ALL OTHER CONCERNED PUBLIC SCHOOL
TEACHERS OF QUEZON CITY v. DEPARTMENT OF BUDGET AND MANAGEMENT*** WILMA
Q. NOBLEZA, ELEANOR M. CASTRO, JOSE B. BUSTILLO, JR., ABELARDO E. DE GUZMAN,
EDWIN F. FABRIQUIER, ET AL. v. DBM SECRETARY ROMULO NERI AND DEPARTMENT OF
BUDGET AND MANAGEMENT*** EVA VALDEZ FERIA, WILHELMINA BALDO, ROSE MARIE L.
YCASA, GLORIA G. IGNACIO AND HJI. AKMAD A. ALSAD AND OTHER TWELVE THOUSAND
FIVE HUNDRED INDIVIDUAL TEACHERS BUREAU OF PLANT INDUSTRY EMPLOYEES
ASSOCIATION, MARY ANN GUERRERO, ET AL. Intervenors.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 159007
15
ESTRELLITA C. AMPONIN, JUDITH A. CUDAL, ROMEO A. PAGALAN, MARISSA F. PARIÑAS,

AND RAYMOND F. FLORES, ET AL., Petitioners,
vs.
COMMISSION ON AUDIT, GUILERMO N. CARAGUE, IN HIS CAPACITY AS CHAIRMAN, RAUL
C. FLORES, IN HIS CAPACITY AS COMMISSIONER, COMMISSION ON AUDIT, AND
EMMANUEL M. DALMAN, IN HIS CAPACITY AS COMMISSIONER, COMMISSION ON
AUDIT, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 159029
AUGUSTO R. NIEVES, BONIFACIO H. ATIVO, TARCELA P. DETERA, NILDA G. CIELO,

ANTHONY M. BRAVO, MARIA LOURDES G. BARROZO, ANTONIO E. FUENTES, ALFREDO D.
DONOR, RICO B. NAVA, SR., DOLORES C. HUIDEM AND ALL THE OTHER CONCERNED
EMPLOYEES OF THE SORSOGON STATE COLLEGE, Petitioners,
vs.
DEPARTMENT OF BUDGET AND MANAGEMENT AND HONORABLE SECRETARY EMILIA T.
BONCODIN, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 170084
KAPISANAN NG MGA MANGGAGAWA SA BUREAU OF AGRICULTURAL STATISTICS (KMB),

EVELYN C. TIDON, RIPOL O. ABALOS, BEATRIZ L. HUBILLA, MA. CHERYL J. TAJONERA,
LOLITA DE HERNANDEZ, FLORA M. MABAMBA, DELILAH G. BASSIG AND ALL CONCERNED
INCUMBENT AND RETIRED EMPLOYEES OF THE BUREAU OF AGRICULTURAL STATISTICS,
DEPARTMENT OF AGRICULTURE, Petitioners,
vs.
DEPARTMENT OF BUDGET AND MANAGEMENT AND HONORABLE SECRETARY ROMULO
NERI***, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 172713
NATIONAL HOUSING AUTHORITY, Petitioner,

vs.
EPIFANIO P. RECANA, MERCEDES AMURAO, ERASMO APOSTOL, FLORENDO ASUNCION,
FIORELLO JOSEFINA BALTAZAR, ET AL., Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 173119
INSURANCE COMMISSION OFFICERS AND EMPLOYEES, REPRESENTED BY INSURANCE

COMMISSION EMPLOYEES WELFARE ASSOCIATION (ICEWA), ET AL., Petitioners,
vs.
DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HONORABLE SECRETARY
ROLANDO G. ANDAYA, JR., Respondents.
16
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 176477
FIBER INDUSTRY DEVELOPMENT AUTHORITY EMPLOYEES ASSOCIATION (FIDAEA),

REMEDIOS V.J. ABGONA, CELERINA T. HILARIO, QUIRINO U. SANTOS, GRACE AURORA F.
PASTORES, RHISA V. PEGENIA, ET AL., Petitioners,
vs.
ROLANDO G. ANDAYA, JR.***, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 177990
BUREAU OF ANIMAL INDUSTRY EMPLOYEES ASSOCIATION (BAIEA), LORY C.

BANGALISAN, EDGARDO VINCULADO, LORENZO J. ABARCA, ROLANDO M. VASQUEZ,
ALFREDO B. DUCUSIN, ET AL., Petitioners,
vs.
ROLANDO G. ANDAYA, JR.***, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
A.M. No. 06-4-02-SB
RE: REQUEST OF SANDIGANBAYAN FOR AUTHORITY TO USE THEIR SAVINGS TO PAY

THEIR COLA DIFFERENTIAL FROM JULY 1, 1989 TO MARCH 16, 1999,
DECISION
ABAD, J.:
These consolidated cases question the inclusion of certain allowances and fringe benefits into the
standardized salary rates for offices in the national government, state universities and colleges, and
local government units as required by the Compensation and Position Classification Act of 1989 and
implemented through the challenged National Compensation Circular 59 (NCC 59).
The Facts and the Case
Congress enacted in 1989 Republic Act (R.A.) 6758, called the Compensation and Position
Classification Act of 1989 to rationalize the compensation of government employees. Its Section 12
directed the consolidation of allowances and additional compensation already being enjoyed by
employees into their standardized salary rates. But it exempted certain additional compensations
that the employees may be receiving from such consolidation. Thus:
Section 12. Consolidation of Allowances and Compensation. -- All allowances, except for
representation and transportation allowances; clothing and laundry allowances; subsistence
allowance of marine officers and crew on board government vessels and hospital personnel;
hazard pay; allowances of foreign service personnel stationed abroad; and such other
additional compensation not otherwise specified herein as may be determined by the DBM,
17
shall be deemed included in the standardized salary rates herein prescribed. Such other
additional compensation, whether in cash or in kind, being received by incumbents only as of
July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.
Pursuant to the above, the Department of Budget and Management (DBM) issued NCC 59 dated
September 30, 1989,1 covering the offices of the national government, state universities and
colleges, and local government units. NCC 59 enumerated the specific allowances and additional
compensations which were deemed integrated in the basic salaries and these included the Cost of
Living Allowance (COLA) and Inflation Connected Allowance (ICA). The DBM re-issued and
published NCC 59 on May 3, 2004.2
The DBM also issued Corporate Compensation Circular (CCC) 10 dated October 2, 1989,3 covering
all government-owned or controlled corporations and government financial institutions. The DBM re-
issued this circular on February 15, 19994 and published it on March 16, 1999. Accordingly, the
Commission on Audit (COA) disallowed the payments of honoraria and other allowances which were
deemed integrated into the standardized salary rates. Employees of government-owned or
controlled corporations questioned the validity of CCC 10 due to its non-publication. In De Jesus v.
Commission on Audit,5 this Court declared CCC 10 ineffective because of such non-publication. Until
then, it ordered the COA to pass on audit the employees’ honoraria which they were receiving prior
to the effectivity of R.A. 6758.
Meanwhile, the DBM also issued Budget Circular 2001-03 dated November 12, 2001,6 clarifying that
only the exempt allowances under Section 12 of R.A. 6758 may continue to be granted the
employees; all others were deemed integrated in the standardized salary rates. Thus, the payment
of allowances and compensation such as COLA, amelioration allowance, and ICA, among others,
which were already deemed integrated in the basic salary were unauthorized. The Court’s ruling in
subsequent cases involving government-owned or controlled corporations followed the De
Jesus ruling.
On May 16, 2002 employees of the Office of the Solicitor General filed a petition
for certiorari and mandamus in G.R. 153266, questioning the propriety of integrating their COLA into
their standardized salary rates. Employees of other offices of the national government followed suit.
In addition, petitioners in G.R. 159007 questioned the disallowance of the allowances and fringe
benefits that the COA auditing personnel assigned to the Government Service Insurance System
(GSIS) used to get. Petitioners in G.R. 173119 questioned the disallowance of the ICA that used to
be paid to the officials and employees of the Insurance Commission.
The Court caused the consolidation of the petitions and treated them as a class suit for all
government employees, excluding the employees of government-owned or controlled corporations
and government financial institutions.7
On October 26, 2005 the DBM issued National Budget Circular 2005-5028 which provided that all
Supreme Court rulings on the integration of allowances, including COLA, of government employees
under R.A. 6758 applied only to specific government-owned or controlled corporations since the
consolidated cases covering the national government employees are still pending with this Court.
Consequently, the payment of allowances and other benefits to them, such as COLA and ICA,
remained prohibited until otherwise provided by law or ruled by this Court. The circular further said
that all agency heads and other responsible officials and employees found to have authorized the
grant of COLA and other allowances and benefits already integrated in the basic salary shall be
personally held liable for such payment.
The Issues Presented
18
The common issues presented in these consolidated cases are:
1. Whether or not the COLA should be deemed integrated into the standardized salary rates
of the concerned government employees by virtue of Section 12 of R.A. 6758;
2. Whether or not the ICA may still be paid to officials and employees of the Insurance
Commission;
3. Whether or not the GSIS may still pay the allowances and fringe benefits to COA auditing
personnel assigned to it;
4. Whether or not the non-publication of NCC 59 dated September 30, 1989 in the Official
Gazette or newspaper of general circulation nullifies the integration of the COLA into the
standardized salary rates; and
5. Whether or not the grant of COLA to military and police personnel to the exclusion of other
government employees violates the equal protection clause.
The Court’s Ruling
One. Petitioners espouse the common theory that the DBM needs to promulgate rules and
regulations before the COLA that they were getting prior to the passage of R.A. 6758 can be
deemed integrated in their standardized salary rates. Respondent DBM counters that R.A. 6758
already specified the allowances and benefits that were not to be integrated in the new salary rates.
All other allowances, DBM adds, such as COLA, are deemed integrated into those salary rates.
At the heart of the present controversy is Section 12 of R.A. 6758 which is quoted anew for clarity:
Section 12. Consolidation of Allowances and Compensation. -- All allowances, except for
representation and transportation allowances; clothing and laundry allowances; subsistence
allowance of marine officers and crew on board government vessels and hospital personnel;
hazard pay; allowances of foreign service personnel stationed abroad; and such other
additional compensation not otherwise specified herein as may be determined by the DBM,
shall be deemed included in the standardized salary rates herein prescribed. Such other
additional compensation, whether in cash or in kind, being received by incumbents only as of
July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.
As will be noted from the first sentence above, "all allowances" were deemed integrated into the
standardized salary rates except the following:
(1) representation and transportation allowances;
(2) clothing and laundry allowances;
(3) subsistence allowances of marine officers and crew on board government vessels;
(4) subsistence allowances of hospital personnel;
(5) hazard pay;
(6) allowances of foreign service personnel stationed abroad; and
19
(7) such other additional compensation not otherwise specified in Section 12 as may be
determined by the DBM.
But, while the provision enumerated certain exclusions, it also authorized the DBM to identify such
other additional compensation that may be granted over and above the standardized salary rates. In
Philippine Ports Authority Employees Hired After July 1, 1989 v. Commission on Audit,9 the Court
has ruled that while Section 12 could be considered self-executing in regard to items (1) to (6), it was
not so in regard to item (7). The DBM still needed to amplify item (7) since one cannot simply
assume what other allowances were excluded from the standardized salary rates. It was only upon
the issuance and effectivity of the corresponding implementing rules and regulations that item (7)
could be deemed legally completed.
Delegated rule-making is a practical necessity in modern governance because of the increasing

complexity and variety of public functions. Congress has endowed administrative agencies like
respondent DBM with the power to make rules and regulations to implement a given legislation and
effectuate its policies.10 Such power is, however, necessarily limited to what the law provides.
Implementing rules and regulations cannot extend the law or expand its coverage, as the power to
amend or repeal a statute belongs to the legislature. Administrative agencies implement the broad
policies laid down in a law by "filling in" only its details. The regulations must be germane to the
objectives and purposes of the law and must conform to the standards prescribed by law.11
In this case, the DBM promulgated NCC 59 [and CCC 10]. But, instead of identifying some of the
additional exclusions that Section 12 of R.A. 6758 permits it to make, the DBM made a list of what
allowances and benefits are deemed integrated into the standardized salary rates. More specifically,
NCC 59 identified the following allowances/additional compensation that are deemed integrated:
(1) Cost of Living Allowance (COLA);
(2) Inflation connected allowance;
(3) Living Allowance;
(4) Emergency Allowance;
(5) Additional Compensation of Public Health Nurses assigned to public health nursing;
(6) Additional Compensation of Rural Health Physicians;
(7) Additional Compensation of Nurses in Malacañang Clinic;
(8) Nurses Allowance in the Air Transportation Office;
(9) Assignment Allowance of School Superintendents;
(10) Post allowance of Postal Service Office employees;
(11) Honoraria/allowances which are regularly given except the following:
a. those for teaching overload;
b. in lieu of overtime pay;
20
c. for employees on detail with task forces/special projects;
d. researchers, experts and specialists who are acknowledged authorities in their

field of specialization;
e. lecturers and resource persons;
f. Municipal Treasurers deputized by the Bureau of Internal Revenue to collect and

remit internal revenue collections; and
g. Executive positions in State Universities and Colleges filled by designation from

among their faculty members.
(12) Subsistence Allowance of employees except those authorized under EO [Executive

Order] 346 and uniformed personnel of the Armed Forces of the Philippines and Integrated
National Police;
(13) Laundry Allowance of employees except those hospital/sanitaria personnel who attend
directly to patients and who by the nature of their duties are required to wear uniforms, prison
guards and uniformed personnel of the Armed Forces of the Philippines and Integrated
National Police; and
(14) Incentive allowance/fee/pay except those authorized under the General Appropriations
Act and Section 33 of P.D. 807.
The drawing up of the above list is consistent with Section 12 above. R.A. 6758 did not prohibit the
DBM from identifying for the purpose of implementation what fell into the class of "all allowances."
With respect to what employees’ benefits fell outside the term apart from those that the law
specified, the DBM, said this Court in a case,12 needed to promulgate rules and regulations
identifying those excluded benefits. This leads to the inevitable conclusion that until and unless the
DBM issues such rules and regulations, the enumerated exclusions in items (1) to (6) remain
exclusive. Thus so, not being an enumerated exclusion, COLA is deemed already incorporated in
the standardized salary rates of government employees under the general rule of integration.
In any event, the Court finds the inclusion of COLA in the standardized salary rates proper. In
National Tobacco Administration v. Commission on Audit,13 the Court ruled that the enumerated
fringe benefits in items (1) to (6) have one thing in common—they belong to one category of
privilege called allowances which are usually granted to officials and employees of the government
to defray or reimburse the expenses incurred in the performance of their official functions.
Consequently, if these allowances are consolidated with the standardized salary rates, then the
government official or employee will be compelled to spend his personal funds in attending to his
duties. On the other hand, item (7) is a "catch-all proviso" for benefits in the nature of allowances
similar to those enumerated.14
Clearly, COLA is not in the nature of an allowance intended to reimburse expenses incurred by
officials and employees of the government in the performance of their official functions. It is not
payment in consideration of the fulfillment of official duty.15 As defined, cost of living refers to "the
level of prices relating to a range of everyday items"16 or "the cost of purchasing those goods and
services which are included in an accepted standard level of consumption."17 Based on this premise,
COLA is a benefit intended to cover increases in the cost of living. Thus, it is and should be
integrated into the standardized salary rates.
21
Two. Petitioning officials and employees of the Insurance Commission question the disallowance of
their ICA on the ground that it is a benefit similar to the educational assistance granted by the Court
in National Tobacco Administration18 based on the second sentence of Section 12 of R.A. 6758 that
reads:
Such other additional compensation, whether in cash or in kind, being received by incumbents only
as of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.
In National Tobacco Administration, the Court interpreted this provision as referring to benefits in the
nature of financial assistance, or a bonus or other payment made to employees in addition to
guaranteed hourly wages, as contradistinguished from the allowance in the first sentence, which
cannot, strictly speaking, be treated as a bonus or additional income. In financial assistance,
reimbursement is not necessary, while in the case of allowance, reimbursement is required.19
To be entitled to the financial assistance under this provision, the following requisites must concur:
(1) the recipients were incumbents when R.A. 6758 took effect on July 1, 1989; (2) they were in fact,
receiving the same, at the time; and (3) such additional compensation is distinct and separate from
the excepted allowances under CCC 10, as it is not integrated into the standardized salary rates.20 1aw ph!1
In this case, ICA, like COLA, falls under the general rule of integration. The DBM specifically
identified it as an allowance or additional compensation integrated into the standardized salary rates.
By its very nature, ICA is granted due to inflation and upon determination that the current salary of
officials and employees of the Insurance Commission is insufficient to address the problem. The
DBM determines whether a need for ICA exists and the fund from which it will be taken. The
Insurance Commission cannot, on its own, determine what allowances are necessary and then grant
them to its officials and employees without the approval of the DBM.
Moreover, ICA does not qualify under the second sentence of Section 12 of R.A. 6758 since the
employees failed to show that they were actually receiving it as of June 30, 1989 or immediately
prior to the implementation of R.A. 6758. The Commissioner of the Insurance Commission
requested for authority to grant ICA from the DBM for the years 198121 and 198422 only. There is no
evidence that the ICA were paid in subsequent years. In the absence of a subsequent authorization
granting or restoring ICA to the officials and employees of the Insurance Commission, there can be
no valid legal basis for its continued grant from July 1, 1986.
Three. Petitioners COA auditing personnel assigned to the GSIS question the disallowance of their
allowances and fringe benefits based on the allowances given to GSIS personnel, namely:
5.6. Payment of other allowances/fringe benefits and all other forms of compensation granted
on top of basic salary, whether in cash or in kind, x x x shall be discontinued effective
November 1, 1989. Payment made for such allowances/fringe benefits after said date shall be
considered as illegal disbursement of public funds.
They alleged that since CCC 10 was declared ineffective, the disallowance should be lifted until the
issuance was published on March 16, 1999.
But, although petitioners alleged that the subject benefits were withheld from them on the basis of
CCC 10, it is clear that the benefits were actually withheld from them on the basis of Section 18 of
R.A. 6758, which reads:
Section 18. Additional Compensation of Commission on Audit Personnel and of Other

Agencies. - In order to preserve the independence and integrity of the Commission on Audit
22
(COA), its officials and employees are prohibited from receiving salaries, honoraria, bonuses,
allowances or other emoluments from any government entity, local government unit, and
government-owned and controlled corporations, and government financial institution, except
those compensation paid directly by the COA out of its appropriations and contributions. 1avvph i1
Government entities, including government-owned or controlled corporations including

financial institutions and local government units are hereby prohibited from assessing or
billing other government entities, government-owned or controlled corporations including
financial institutions or local government units for services rendered by its officials and
employees as part of their regular functions for purposes of paying additional compensation
to said officials and employees.
As aptly pointed out by the COA, Section 18 of R.A. 6758 was complete in itself and was operative
without the aid of any supplementary or enabling legislation.23 The implementing rules and
regulations were necessary only for those provisions, such as item (7) of Section 12, which requires
further clarification and interpretation. Thus, notwithstanding the initial non-publication of CCC 10,
the disallowance of petitioners’ allowances and fringe benefits as COA auditing personnel assigned
to the GSIS was valid upon the effectivity of R.A. 6758.
In Tejada v. Domingo,24 this Court explained that COA personnel assigned to auditing units of
government-owned or controlled corporations or government financial institutions can receive only
such salaries, allowances or fringe benefits paid directly by the COA out of its appropriations and
contributions. The contributions referred to are the cost of audit services which did not include the
extra emoluments or benefits, such as bank equity pay, longevity pay, amelioration allowance, and
meal allowance, which petitioners claim. The COA is further barred from assessing or billing
government-owned or controlled corporations and government financial institutions for services
rendered by its personnel as part of their regular audit functions for purposes of paying additional
compensation to such personnel.
In upholding the disallowance, the Court ruled in Villareña v. Commission on Audit25 that valid
reasons exist to treat COA officials differently from other national government officials. The primary
function of an auditor is to prevent irregular, unnecessary, excessive or extravagant expenditures of
government funds. To be able to properly perform their constitutional mandate, COA officials need to
be insulated from unwarranted influences, so that they can act with independence and integrity.
Rightly so, the disallowance in this case is valid.
Four. Petitioners argue that since CCC 10 dated October 2, 1989 covering all government-owned or
controlled corporations and government financial institutions was ineffective until its re-issuance and
publication on March 16, 1999, its counterpart, NCC 59 dated September 30, 1989 covering the
offices of the national government, state universities and colleges, and local government units
should also be regarded as ineffective until its re-issuance and publication on May 3, 2004. Thus,
the COLA should not be deemed integrated into the standardized salary rates from 1989 to 2004.
Respondents counter that the fact that NCC 59 was not published should not be considered as an
obstacle to the integration of COLA into the standardized salary rates. Accordingly, Budget Circular
2001-03, insofar as it reiterates NCC 59, should not be treated as ineffective since it merely reaffirms
the fact of consolidation of COLA into the employees’ salary as mandated by Section 12 of R.A.
6758.
It is a settled rule that publication is required as a condition precedent to the effectivity of a law to
inform the public of its contents before their rights and interests are affected by the
23
same.26 Administrative rules and regulations must also be published if their purpose is to enforce or
implement existing law pursuant also to a valid delegation.27
Nonetheless, as previously discussed, the integration of COLA into the standardized salary rates is
not dependent on the publication of CCC 10 and NCC 59. This benefit is deemed included in the
standardized salary rates of government employees since it falls under the general rule of
integration—"all allowances."
More importantly, the integration was not by mere legal fiction since it was factually integrated into
the employees’ salaries. Records show that the government employees were informed by their
respective offices of their new position titles and their corresponding salary grades when they were
furnished with the Notices of Position Allocation and Salary Adjustment (NPASA). The NPASA
provided the breakdown of the employee’s gross monthly salary as of June 30, 1989 and the
composition of his standardized pay under R.A. 6758.28 Notably, the COLA was considered part of
the employee’s monthly income.
In truth, petitioners never really suffered any diminution in pay as a consequence of the
consolidation of COLA into their standardized salary rates. There is thus nothing in these cases
which can be the subject of a back pay since the amount corresponding to COLA was never
withheld from petitioners in the first place.29
Consequently, the non-publication of CCC 10 and NCC 59 in the Official Gazette or newspaper of
general circulation does not nullify the integration of COLA into the standardized salary rates upon
the effectivity of R.A. 6758. As the Court has said in Philippine International Trading Corporation v.
Commission on Audit,30 the validity of R.A. 6758 should not be made to depend on the validity of its
implementing rules.
Five. Petitioners contend that the continued grant of COLA to military and police personnel under
CCC 10 and NCC 59 to the exclusion of other government employees violates the equal protection
clause of the Constitution.
But as respondents pointed out, while it may appear that petitioners are questioning the
constitutionality of these issuances, they are in fact attacking the very constitutionality of Section 11
of R.A. 6758. It is actually this provision which allows the uniformed personnel to continue receiving
their COLA over and above their basic pay, thus:
Section 11. Military and Police Personnel. - The base pay of uniformed personnel of the
Armed Forces of the Philippines and the Integrated National Police shall be as prescribed in
the salary schedule for these personnel in R.A. 6638 and R.A. 6648. The longevity pay of
these personnel shall be as prescribed under R.A. 6638, and R.A. 1134 as amended by R.A.
3725 and R.A. 6648: Provided, however, That the longevity pay of uniformed personnel of the
Integrated National Police shall include those services rendered as uniformed members of
the police, jail and fire departments of the local government units prior to the police
integration.
All existing types of allowances authorized for uniformed personnel of the Armed Forces of
the Philippines and Integrated National Police such as cost of living allowance, longevity pay,
quarters allowance, subsistence allowance, clothing allowance, hazard pay and other
allowances shall continue to be authorized.
Nothing is more settled than that the constitutionality of a statute cannot be attacked collaterally
because constitutionality issues must be pleaded directly and not collaterally.31
24
In any event, the Court is not persuaded that the continued grant of COLA to the uniformed
personnel to the exclusion of other national government officials run afoul the equal protection
clause of the Constitution. The fundamental right of equal protection of the laws is not absolute, but
is subject to reasonable classification. If the groupings are characterized by substantial distinctions
that make real differences, one class may be treated and regulated differently from another. The
classification must also be germane to the purpose of the law and must apply to all those belonging
to the same class.32
To be valid and reasonable, the classification must satisfy the following requirements: (1) it must rest
on substantial distinctions; (2) it must be germane to the purpose of the law; (3) it must not be limited
to existing conditions only; and (4) it must apply equally to all members of the same class.33
It is clear from the first paragraph of Section 11 that Congress intended the uniformed personnel to
be continually governed by their respective compensation laws. Thus, the military is governed by
R.A. 6638,34 as amended by R.A. 916635 while the police is governed by R.A. 6648,36 as amended by
R.A. 6975.37
Certainly, there are valid reasons to treat the uniformed personnel differently from other national
government officials. Being in charged of the actual defense of the State and the maintenance of
internal peace and order, they are expected to be stationed virtually anywhere in the country. They
are likely to be assigned to a variety of low, moderate, and high-cost areas. Since their basic pay
does not vary based on location, the continued grant of COLA is intended to help them offset the
effects of living in higher cost areas.38
WHEREFORE, the Court GRANTS the petition in G.R. No. 172713 and DENIES the petitions in
G.R. 153266, 159007, 159029, 170084, 173119, 176477, 177990 and A.M. 06-4-02-SB.
SO ORDERED.
FIRST DIVISION
G.R. No. 127624 November 18, 2003
BPI LEASING CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, COURT OF TAX APPEAL AND COMMISSIONER OF
INTERNAL REVENUE, respondents.
AZCUNA, J.:
The present petition for review on certiorari assails the decision1 of the Court of Appeals in CA-G.R.
SP No. 38223 and its subsequent resolution2 denying the motion for reconsideration. The assailed
decision and resolution affirmed the decision of the Court of Tax Appeals (CTA) which denied
petitioner BPI Leasing Corporation’s (BLC) claim for tax refund in CTA Case No. 4252.
The facts are not disputed.
BLC is a corporation engaged in the business of leasing properties.3 For the calendar year 1986,
BLC paid the Commissioner of Internal Revenue (CIR) a total of P1,139,041.49 representing 4%
25
"contractor’s percentage tax" then imposed by Section 205 of the National Internal Revenue Code
(NIRC), based on its gross rentals from equipment leasing for the said year amounting to
P27,783,725.42.4
On November 10, 1986, the CIR issued Revenue Regulation 19-86. Section 6.2 thereof provided
that finance and leasing companies registered under Republic Act 5980 shall be subject to gross
receipt tax of 5%-3%-1% on actual income earned. This means that companies registered under
Republic Act 5980, such as BLC, are not liable for "contractor’s percentage tax" under Section 205
but are, instead, subject to "gross receipts tax" under Section 260 (now Section 122) of the NIRC.
Since BLC had earlier paid the aforementioned "contractor’s percentage tax," it re-computed its tax
liabilities under the "gross receipts tax" and arrived at the amount of P361,924.44.
On April 11, 1988, BLC filed a claim for a refund with the CIR for the amount of P777,117.05,
representing the difference between the P1,139,041.49 it had paid as "contractor’s percentage tax"
and P361,924.44 it should have paid for "gross receipts tax."5 Four days later, to stop the running of
the prescriptive period for refunds, petitioner filed a petition for review with the CTA.6
In a decision dated May 13, 1994,7 the CTA dismissed the petition and denied BLC’s claim of refund.
The CTA held that Revenue Regulation 19-86, as amended, may only be applied prospectively such
that it only covers all leases written on or after January 1, 1987, as stated under Section 7 of said
revenue regulation:
Section 7. Effectivity – These regulations shall take effect on January 1, 1987 and shall be
applicable to all leases written on or after the said date.
The CTA ruled that, since BLC’s rental income was all received prior to 1986, it follows that this was
derived from lease transactions prior to January 1, 1987, and hence, not covered by the revenue
regulation.
A motion for reconsideration of the CTA’s decision was filed, but was denied in a resolution dated
July 26, 1995.8 BLC then appealed the case to the Court of Appeals, which issued the
aforementioned assailed decision and resolution.9 Hence, the present petition.
In seeking to reverse the denial of its claim for tax refund, BLC submits that the Court of Appeals
and the CTA erred in not ruling that Revenue Regulation 19-86 may be applied retroactively so as to
allow BLC’s claim for a refund of P777,117.05.
Respondents, on the other hand, maintain that the provision on the date of effectivity of Revenue
Regulation 19-86 is clear and unequivocal, leaving no room for interpretation on its prospective
application. In addition, respondents argue that the petition should be dismissed on the ground that
the Verification/Certification of Non-Forum Shopping was signed by the counsel of record and not by
BLC, through a duly authorized representative, in violation of Supreme Court Circular 28-91.
In a resolution dated March 29, 2000,10 the petition was given due course and the Court required the
parties to file their respective Memoranda. Upon submission of the Memoranda, the issues in this
case were delineated, as follows:11
WHETHER THE INSTANT PETITION FOR REVIEW ON CERTIORARI SUBSTANTIALLY

COMPLIES WITH SUPREME COURT CIRCULAR 28-91.
26
WHETHER REVENUE REGULATION 19-86, AS AMENDED, IS LEGISLATIVE OR

INTERPRETATIVE IN NATURE.
WHETHER REVENUE REGULATION 19-86, AS AMENDED, IS PROSPECTIVE OR

RETROACTIVE IN ITS APPLICATION.
WHETHER PETITIONER, AS FOUND BY THE COURT OF APPEALS, FAILED TO MEET

THE QUANTUM OF EVIDENCE REQUIRED IN REFUND CASES.
WHETHER PETITIONER, AS FOUND BY THE COURT OF APPEALS, IS ESTOPPED

FROM CLAIMING ITS PRESENT REFUND.
As to the first issue, the Court agrees with respondents’ contention that the petition should be
dismissed outright for failure to comply with Supreme Court Circular 28-91, now incorporated as
Section 2 of Rule 42 of the Rules of Court. The records plainly show, and this has not been denied
by BLC, that the certification was executed by counsel who has not been shown to have specific
authority to sign the same for BLC.
In BA Savings Bank v. Sia,12 it was held that the certificate of non-forum shopping may be signed, for
and on behalf of a corporation, by a specifically authorized lawyer who has personal knowledge of
the facts required to be disclosed in such document. This ruling, however, does not mean that any
lawyer, acting on behalf of the corporation he is representing, may routinely sign a certification of
non-forum shopping. The Court emphasizes that the lawyer must be "specifically authorized" in order
validly to sign the certification.
Corporations have no powers except those expressly conferred upon them by the Corporation Code
and those that are implied by or are incidental to its existence. These powers are exercised through
their board of directors and/or duly authorized officers and agents. Hence, physical acts, like the
signing of documents, can be performed only by natural persons duly authorized for the purpose by
corporate bylaws or by specific act of the board of directors.13
The records are bereft of the authority of BLC’s counsel to institute the present petition and to sign
the certification of non-forum shopping. While said counsel may be the counsel of record for BLC,
the representation does not vest upon him the authority to execute the certification on behalf of his
client. There must be a resolution issued by the board of directors that specifically authorizes him to
institute the petition and execute the certification, for it is only then that his actions can be legally
binding upon BLC.
BLC however insists that there was substantial compliance with SC Circular No. 28-91 because the
verification/certification was issued by a counsel who had full personal knowledge that no other
petition or action has been filed or is pending before any other tribunal. According to BLC, said
counsel’s law firm has handled this case from the very beginning and could very well attest and/or
certify to the absence of an instituted or pending case involving the same or similar issues.
The argument of substantial compliance deserves no merit, given the Court’s ruling in Mendigorin v.
Cabantog:14
…The CA held that there was substantial compliance with the Rules of Court, citing
Dimagiba vs. Montalvo, Jr. [202 SCRA 641] to the effect that a lawyer who assumes
responsibility for a client's cause has the duty to know the entire history of the case,
especially if any litigation is commenced. This view, however, no longer holds authoritative
value in the light of Digital Microwave Corporation vs. CA [328 SCRA 286], where it was held
27
that the reason the certification against forum shopping is required to be accomplished by
petitioner himself is that only the petitioner himself has actual knowledge of whether or not
he has initiated similar actions or proceedings in other courts or tribunals. Even counsel of
record may be unaware of such fact. To our mind, this view is more in accord with the intent
and purpose of Revised Circular No. 28-91.
Clearly, therefore, the present petition lacks the proper certification as strictly required by
jurisprudence and the Rules of Court.
Even if the Court were to ignore the aforesaid procedural infirmity, a perusal of the arguments raised
in the petition indicates that a resolution on the merits would nevertheless yield the same outcome.
BLC attempts to convince the Court that Revenue Regulation 19-86 is legislative rather than
interpretative in character and hence, should retroact to the date of effectivity of the law it seeks to
interpret.
Administrative issuances may be distinguished according to their nature and substance: legislative
and interpretative. A legislative rule is in the matter of subordinate legislation, designed to implement
a primary legislation by providing the details thereof. An interpretative rule, on the other hand, is
designed to provide guidelines to the law which the administrative agency is in charge of enforcing.15
The Court finds the questioned revenue regulation to be legislative in nature. Section 1 of Revenue
Regulation 19-86 plainly states that it was promulgated pursuant to Section 277 of the NIRC. Section
277 (now Section 244) is an express grant of authority to the Secretary of Finance to promulgate all
needful rules and regulations for the effective enforcement of the provisions of the NIRC. In Paper
Industries Corporation of the Philippines v. Court of Appeals,16 the Court recognized that the
application of Section 277 calls for none other than the exercise of quasi-legislative or rule-making
authority. Verily, it cannot be disputed that Revenue Regulation 19-86 was issued pursuant to the
rule-making power of the Secretary of Finance, thus making it legislative, and not interpretative as
alleged by BLC.
BLC further posits that, assuming the revenue regulation is legislative in nature, it is invalid for want
of due process as no prior notice, publication and public hearing attended the issuance thereof. To
support its view, BLC cited CIR v. Fortune Tobacco, et al.,17 wherein the Court nullified a revenue
memorandum circular which reclassified certain cigarettes and subjected them to a higher tax rate,
holding it invalid for lack of notice, publication and public hearing.
The doctrine enunciated in Fortune Tobacco, and reiterated in CIR v. Michel J. Lhuillier Pawnshop,
Inc.,18 is that when an administrative rule goes beyond merely providing for the means that can
facilitate or render less cumbersome the implementation of the law and substantially increases the
burden of those governed, it behooves the agency to accord at least to those directly affected a
chance to be heard and, thereafter, to be duly informed, before the issuance is given the force and
effect of law. In Lhuillier and Fortune Tobacco, the Court invalidated the revenue memoranda
concerned because the same increased the tax liabilities of the affected taxpayers without affording
them due process. In this case, Revenue Regulation 19-86 would be beneficial to the taxpayers as
they are subjected to lesser taxes. Petitioner, in fact, is invoking Revenue Regulation 19-86 as the
very basis of its claim for refund. If it were invalid, then petitioner all the more has no right to a
refund.
After upholding the validity of Revenue Regulation 19-86, the Court now resolves whether its
application should be prospective or retroactive.
28
The principle is well entrenched that statutes, including administrative rules and regulations, operate
prospectively only, unless the legislative intent to the contrary is manifest by express terms or by
necessary implication.19 In the present case, there is no indication that the revenue regulation may
operate retroactively. Furthermore, there is an express provision stating that it "shall take effect on
January 1, 1987," and that it "shall be applicable to all leases written on or after the said date." Being
clear on its prospective application, it must be given its literal meaning and applied without further
interpretation.20 Thus, BLC is not in a position to invoke the provisions of Revenue Regulation 19-86
for lease rentals it received prior to January 1, 1987.
It is also apt to add that tax refunds are in the nature of tax exemptions. As such, these are regarded
as in derogation of sovereign authority and are to be strictly construed against the person or entity
claiming the exemption. The burden of proof is upon him who claims the exemption and he must be
able to justify his claim by the clearest grant under Constitutional or statutory law, and he cannot be
permitted to rely upon vague implications.21 Nothing that BLC has raised justifies a tax refund.
It is not necessary to rule on the remaining issues.
WHEREFORE, the petition for review is hereby DENIED, and the assailed decision and resolution of
the Court of Appeals are AFFIRMED. No pronouncement as to costs.
SO ORDERED.
SECOND DIVISION
G.R. No. 170463 February 2, 2011
THE BOARD OF TRUSTEES OF THE GOVERNMENT SERVICE INSURANCE SYSTEM and

WINSTON F. GARCIA, in his capacity as GSIS President and General Manager, Petitioners,
vs.
ALBERT M. VELASCO and MARIO I. MOLINA, Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the 24 September 2004 Decision2 and the 7 October 2005 Order3 of
the Regional Trial Court of Manila, Branch 19 (trial court), in Civil Case No. 03-108389. In its 24
September 2004 Decision, the trial court granted respondents Albert M. Velasco4 and Mario I.
Molina’s5 (respondents) petition for prohibition. In its 7 October 2005 Order, the trial court denied
petitioners Board of Trustees of the Government Service Insurance System (GSIS) and Winston F.
Garcia’s (petitioners) motion for reconsideration.
The Facts
On 23 May 2002, petitioners charged respondents administratively with grave misconduct and
placed them under preventive suspension for 90 days.6 Respondents were charged for their alleged
participation in the demonstration held by some GSIS employees denouncing the alleged corruption
29
in the GSIS and calling for the ouster of its president and general manager, petitioner Winston F.
Garcia.7
In a letter dated 4 April 2003, respondent Mario I. Molina (respondent Molina) requested GSIS
Senior Vice President Concepcion L. Madarang (SVP Madarang) for the implementation of his step
increment.8 On 22 April 2003, SVP Madarang denied the request citing GSIS Board Resolution No.
372 (Resolution No. 372)9 issued by petitioner Board of Trustees of the GSIS (petitioner GSIS
Board) which approved the new GSIS salary structure, its implementing rules and regulations, and
the adoption of the supplemental guidelines on step increment and promotion.10 The pertinent
provision of Resolution No. 372 provides:
A. Step Increment
xxxx
III. Specific Rules:
x x xx
3. The step increment adjustment of an employee who is on preventive suspension shall be withheld
until such time that a decision on the case has been rendered. x x x x
Respondents also asked that they be allowed to avail of the employee privileges under GSIS Board
Resolution No. 306 (Resolution No. 306) approving Christmas raffle benefits for all GSIS officials
and employees effective year 2002.11 Respondents’ request was again denied because of their
pending administrative case.
On 27 August 2003, petitioner GSIS Board issued Board Resolution No. 197 (Resolution No. 197)
approving the following policy recommendations:
B. On the disqualification from promotion of an employee with a pending administrative case
To adopt the policy that an employee with pending administrative case shall be disqualified from the
following during the pendency of the case:
a) Promotion;
b) Step Increment;
c) Performance-Based Bonus; and
d) Other benefits and privileges.
On 14 November 2003, respondents filed before the trial court a petition for prohibition with prayer
for a writ of preliminary injunction.12 Respondents claimed that they were denied the benefits which
GSIS employees were entitled under Resolution No. 306. Respondents also sought to restrain and
prohibit petitioners from implementing Resolution Nos. 197 and 372. Respondents claimed that the
denial of the employee benefits due them on the ground of their pending administrative cases
violates their right to be presumed innocent and that they are being punished without hearing.
Respondent Molina also added that he had already earned his right to the step increment before
Resolution No. 372 was enacted. Respondents also argued that the three resolutions were
30
ineffective because they were not registered with the University of the Philippines (UP) Law Center
pursuant to the Revised Administrative Code of 1987.13
On 24 November 2003, petitioners filed their comment with motion to dismiss and opposition.14 On 2
December 2003, respondents filed their opposition to the motion to dismiss.15 On 5 December 2003,
petitioners filed their reply.16
On 16 January 2004, the trial court denied petitioners’ motion to dismiss and granted respondents’
prayer for a writ of preliminary injunction.17
Petitioners filed a motion for reconsideration.18 In its 26 February 2004 Order, the trial court denied
petitioners’ motion.19
In its 24 September 2004 Decision, the trial court granted respondents’ petition for prohibition. The
dispositive portion of the 24 September 2004 Decision provides:
WHEREFORE, the petition is GRANTED and respondents’ Board Resolution No. 197 of August 27,
2003 and No. 372 of November 21, 2000 are hereby declared null and void. The writ of preliminary
injunction issued by this Court is hereby made permanent.
SO ORDERED.20
Petitioners filed a motion for reconsideration. In its 7 October 2005 Order, the trial court denied
petitioners’ motion.
Hence, this petition.
The Ruling of the Trial Court
On the issue of jurisdiction, the trial court said it can take cognizance of the petition because the
"territorial area" referred to in Section 4, Rule 65 of the Rules of Court "does not necessarily delimit
to a particular locality but rather to the judicial region where the office or agency is situated so that
the prohibitive writ can be enforced."
On the merits of the case, the trial court ruled that respondents were entitled to all employee benefits
as provided under the law by reason of their employment. According to the trial court, to deny
respondents these employee benefits for the reason alone that they have pending administrative
cases is unjustified since it would deprive them of what is legally due them without due process of
law, inflict punishment on them without hearing, and violate their right to be presumed innocent.
The trial court also found that the assailed resolutions were not registered with the UP Law Center,
per certification of the Office of the National Administrative Register (ONAR).21 Since they were not
registered, the trial court declared that the assailed resolutions have not become effective citing
Sections 3 and 4, Chapter 2, Book 7 of the Revised Administrative Code of 1987.22
The Issues
Petitioners raise the following issues:
31
Whether the jurisdiction over the subject matter of Civil Case No. 03-108389 (Velasco, et al.
vs. The Board of Trustees of GSIS, et al., RTC-Manila, Branch 19) lies with the Civil Service
Commission (CSC) and not with the Regional Trial Court of Manila, Branch 19.
II
Whether a Special Civil Action for Prohibition against the GSIS Board or its President and
General Manager exercising quasi-legislative and administrative functions in Pasay City is
outside the territorial jurisdiction of RTC-Manila, Branch 19.
III
Whether internal rules and regulations need not require publication with the Office of the
National [Administrative] Register for their effectivity, contrary to the conclusion of the RTC-
Manila, Branch 19.
IV
Whether a regulation, which disqualifies government employees who have pending

administrative cases from the grant of step increment and Christmas raffle benefits is
unconstitutional.
Whether the nullification of GSIS Board Resolutions is beyond an action for prohibition, and
a writ of preliminary injunction cannot be made permanent without a decision ordering the
issuance of a writ of prohibition.23
The Ruling of the Court
The petition is partly meritorious.
Petitioners argue that the Civil Service Commission (CSC), not the trial court, has jurisdiction over
Civil Case No. 03-108389 because it involves claims of employee benefits. Petitioners point out that
the trial court should have dismissed the case for lack of jurisdiction.
Sections 2 and 4, Rule 65 of the Rules of Court provide:
Sec. 2. Petition for Prohibition. - When the proceedings of any tribunal, corporation, board, officer or
person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of
its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there
is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered commanding the respondent to desist from
further proceedings in the action or matter specified therein, or otherwise granting such
incidental reliefs as law and justice may require.
Sec. 4. Where petition filed. - The petition may be filed not later than sixty (60) days from notice of
the judgment, order or resolution sought to be assailed in the Supreme Court or, if it related to acts
or omissions of a lower court or of a corporation, board, officer or person in the Regional
Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It
32
may also be filed in the Court of Appeals whether or not the same is in aid of its appellate
jurisdiction, or in the Sandiganbayan if it is in aid of its jurisdiction. If it involves the acts or omissions
of a quasi-judicial agency, and unless otherwise provided by law or these Rules, the petition shall be
filed in and cognizable only by the Court of Appeals. (Emphasis supplied)
Civil Case No. 03-108389 is a petition for prohibition with prayer for the issuance of a writ of
preliminary injunction. Respondents prayed that the trial court declare all acts emanating from
Resolution Nos. 372, 197, and 306 void and to prohibit petitioners from further enforcing the said
resolutions.24 Therefore, the trial court, not the CSC, has jurisdiction over respondents’ petition for
prohibition.
Petitioners also claim that the petition for prohibition was filed in the wrong territorial jurisdiction
because the acts sought to be prohibited are the acts of petitioners who hold their principal office in
Pasay City, while the petition for prohibition was filed in Manila.
Section 18 of Batas Pambansa Blg. 129 (BP 129)25 provides:
SEC. 18. Authority to define territory appurtenant to each branch. - The Supreme Court shall
define the territory over which a branch of the Regional Trial Court shall exercise its
authority. The territory thus defined shall be deemed to be the territorial area of the branch
concerned for purposes of determining the venue of all suits, proceedings or actions,
whether civil or criminal, as well as determining the Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts over which the said branch may exercise appellate
jurisdiction. The power herein granted shall be exercised with a view to making the courts readily
accessible to the people of the different parts of the region and making attendance of litigants and
witnesses as inexpensive as possible. (Emphasis supplied)
In line with this, the Supreme Court issued Administrative Order No. 326 defining the territorial
jurisdiction of the regional trial courts in the National Capital Judicial Region, as follows:
a. Branches I to LXXXII, inclusive, with seats at Manila – over the City of Manila only.
b. Branches LXXXIII to CVII, inclusive, with seats at Quezon City – over Quezon City only.
c. Branches CVIII to CXIX, inclusive, with seats at Pasay City – over Pasay City only.
xxxx
The petition for prohibition filed by respondents is a special civil action which may be filed in the
Supreme Court, the Court of Appeals, the Sandiganbayan or the regional trial court, as the case may
be.27 It is also a personal action because it does not affect the title to, or possession of real property,
or interest therein. Thus, it may be commenced and tried where the plaintiff or any of the principal
plaintiffs resides, or where the defendant or any of the principal defendants resides, at the election of
the plaintiff.28 Since respondent Velasco, plaintiff before the trial court, is a resident of the City of
Manila,29 the petition could properly be filed in the City of Manila.30 The choice of venue is sanctioned
by Section 2, Rule 4 of the Rules of Court.
Moreover, Section 21(1) of BP 129 provides:
Sec. 21. Original jurisdiction in other cases. - Regional Trial Courts shall exercise original
jurisdiction:
33
(1) In the issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas
corpus and injunction, which may be enforced in any part of their respective regions; x x x
(Emphasis supplied)
Since the National Capital Judicial Region is comprised of the cities of Manila, Quezon, Pasay,
Caloocan, Malabon, Mandaluyong, Makati, Pasig, Marikina, Parañaque, Las Piñas, Muntinlupa, and
Valenzuela and the municipalities of Navotas, San Juan, Pateros, and Taguig, a writ of prohibition
issued by the regional trial court sitting in the City of Manila, is enforceable in Pasay City. Clearly,
the RTC did not err when it took cognizance of respondents’ petition for prohibition because it had
jurisdiction over the action and the venue was properly laid before it.
Petitioners also argue that Resolution Nos. 372, 197, and 306 need not be filed with the UP Law
Center ONAR since they are, at most, regulations which are merely internal in nature – regulating
only the personnel of the GSIS and not the public.
Not all rules and regulations adopted by every government agency are to be filed with the UP Law
Center. Only those of general or of permanent character are to be filed. According to the UP Law
Center’s guidelines for receiving and publication of rules and regulations, "interpretative regulations
and those merely internal in nature, that is, regulating only the personnel of the Administrative
agency and not the public," need not be filed with the UP Law Center.
Resolution No. 372 was about the new GSIS salary structure, Resolution No. 306 was about the
authority to pay the 2002 Christmas Package, and Resolution No. 197 was about the GSIS merit
selection and promotion plan. Clearly, the assailed resolutions pertained only to internal rules meant
to regulate the personnel of the GSIS. There was no need for the publication or filing of these
resolutions with the UP Law Center.
Petitioners insist that petitioner GSIS Board has the power to issue the assailed resolutions.
According to petitioners, it was within the power of petitioner GSIS Board to disqualify respondents
for step increment and from receiving GSIS benefits from the time formal administrative charges
were filed against them until the cases are resolved.
The Court notes that the trial court only declared Resolution Nos. 197 and 372 void. The trial court
made no ruling on Resolution No. 306 and respondents did not appeal this matter. Therefore, we will
limit our discussion to Resolution Nos. 197 and 372, particularly to the effects of preventive
suspension on the grant of step increment because this was what respondents raised before the trial
court.
First, entitlement to step increment depends on the rules relative to the grant of such benefit. In point
are Section 1(b), Rule II and Section 2, Rule III of Joint Circular No. 1, series of 1990, which provide:
Rule II. Selection Criteria
Section 1. Step increments shall be granted to all deserving officials and employees x x x
(b) Length of Service – For those who have rendered continuous satisfactory service in a particular
position for at least three (3) years.
Rule III. Step Increments
xxxx
34
Section 2. Length of Service – A one (1) step increment shall be granted officials and employees for
every three (3) years of continuous satisfactory service in the position. Years of service in the
position shall include the following:
(a) Those rendered before the position was reclassified to a position title with a lower or the same
salary grade allocation; and
(b) Those rendered before the incumbent was transferred to another position within the same
agency or to another agency without a change in position title and salary grade allocation.
In the initial implementation of step increments in 1990, an incumbent shall be granted step
increments equivalent to one (1) step for every three (3) years of continuous satisfactory service in a
given position occupied as of January 1, 1990.
A grant of step increment on the basis of length of service requires that an employee must have
rendered at least three years of continuous and satisfactory service in the same position to which he
is an incumbent.31 To determine whether service is continuous, it is necessary to define what actual
service is.32 "Actual service" refers to the period of continuous service since the appointment of the
official or employee concerned, including the period or periods covered by any previously approved
leave with pay.33
Second, while there are no specific rules on the effects of preventive suspension on step increment,
we can refer to the CSC rules and rulings on the effects of the penalty of suspension and approved
vacation leaves without pay on the grant of step increment for guidance.
Section 56(d), Rule IV of the Uniform Rules on Administrative Cases in the Civil Service provides:
Section 56. Duration and effect of administrative penalties. - The following rules shall govern in the
imposition of administrative penalties: x x x
(d) The penalty of suspension shall result in the temporary cessation of work for a period not
exceeding one (1) year.
Suspension of one day or more shall be considered a gap in the continuity of service. During the
period of suspension, respondent shall not be entitled to all money benefits including leave credits.
If an employee is suspended as a penalty, it effectively interrupts the continuity of his government

service at the commencement of the service of the said suspension. This is because a person under
penalty of suspension is not rendering actual service. The suspension will undoubtedly be
considered a gap in the continuity of the service for purposes of the computation of the three year
period in the grant of step increment.34 However, this does not mean that the employee will only be
entitled to the step increment after completing another three years of continuous satisfactory service
reckoned from the time the employee has fully served the penalty of suspension.35 The CSC has
taken this to mean that the computation of the three year period requirement will only be extended
by the number of days that the employee was under suspension.36 In other words, the grant of step
increment will only be delayed by the same number of days that the employee was under
suspension.
This is akin to the status of an employee who incurred vacation leave without pay for purposes of the
grant of step increment.37 Employees who were on approved vacation leave without pay enjoy the
35
liberal application of the rule on the grant of step increment under Section 60 of CSC Memorandum
Circular No. 41, series of 1998, which provides:
Section 60. Effect of vacation leave without pay on the grant of length of service step increment. -
For purposes of computing the length of service for the grant of step increment, approved vacation
leave without pay for an aggregate of fifteen (15) days shall not interrupt the continuity of the three-
year service requirement for the grant of step increment. However, if the total number of authorized
vacation leave without pay included within the three-year period exceeds fifteen (15) days, the grant
of one-step increment will only be delayed for the same number of days that an official or
employee was absent without pay. (Emphasis supplied)
Third, on preventive suspension, Sections 51 and 52, Chapter 7, Subtitle A, Title I, Book V of the
Revised Administrative Code of 1987 provide:
SEC. 51. Preventive Suspension. - The proper disciplining authority may preventively suspend any
subordinate officer or employee under his authority pending an investigation, if the charge against
such officer or employee involves dishonesty, oppression or grave misconduct, or neglect in the
performance of duty, or if there are reasons to believe that the respondent is guilty of charges which
would warrant his removal from the service.
SEC. 52. Lifting of Preventive Suspension. Pending Administrative Investigation. - When the
administrative case against the officer or employee under preventive suspension is not
finally decided by the disciplining authority within the period of ninety (90) days after the date
of suspension of the respondent who is not a presidential appointee, the respondent shall be
automatically reinstated in the service: Provided, That when the delay in the disposition of the
case is due to the fault, negligence or petition of the respondent, the period of delay shall not be
counted in computing the period of suspension herein provided. (Emphasis supplied)
Preventive suspension pending investigation is not a penalty.38 It is a measure intended to enable

the disciplining authority to investigate charges against respondent by preventing the latter from
intimidating or in any way influencing witnesses against him.39 If the investigation is not finished and
a decision is not rendered within that period, the suspension will be lifted and the respondent will
automatically be reinstated.
Therefore, on the matter of step increment, if an employee who was suspended as a penalty will be
treated like an employee on approved vacation leave without pay,40 then it is only fair and
reasonable to apply the same rules to an employee who was preventively suspended, more so
considering that preventive suspension is not a penalty. If an employee is preventively suspended,
the employee is not rendering actual service and this will also effectively interrupt the continuity of
his government service. Consequently, an employee who was preventively suspended will still be
entitled to step increment after serving the time of his preventive suspension even if the pending
administrative case against him has not yet been resolved or dismissed. The grant of step increment
will only be delayed for the same number of days, which must not exceed 90 days, that an official or
employee was serving the preventive suspension.
Fourth, the trial court was correct in declaring that respondents had the right to be presumed
innocent until proven guilty. This means that an employee who has a pending administrative case
filed against him is given the benefit of the doubt and is considered innocent until the contrary is
proven.41
In this case, respondents were placed under preventive suspension for 90 days beginning on 23
May 2002. Their preventive suspension ended on 21 August 2002. Therefore, after serving the
1avv phi 1
36
period of their preventive suspension and without the administrative case being finally resolved,
respondents should have been reinstated and, after serving the same number of days of their
suspension, entitled to the grant of step increment.
On a final note, social legislation like the circular on the grant of step increment, being remedial in
character, should be liberally construed and administered in favor of the persons to be benefited.
The liberal approach aims to achieve humanitarian purposes of the law in order that the efficiency,
security and well-being of government employees may be enhanced.42
WHEREFORE, we DENY the petition. We AFFIRM with MODIFICATION the 24 September 2004
Decision and the 7 October 2005 Order of the Regional Trial Court of Manila, Branch 19 in Civil
Case No. 03-108389. We DECLARE the assailed provisions on step increment in GSIS Board
Resolution Nos. 197 and 372 VOID. We MODIFY the 24 September 2004 Decision of the Regional
Trial Court of Manila, Branch 19 and rule that GSIS Board Resolution Nos. 197, 306 and 372 need
not be filed with the University of the Philippines Law Center.
SO ORDERED.
EN BANC
G.R. No. 175220 February 12, 2009
WILLIAM C. DAGAN, CARLOS H. REYES, NARCISO MORALES, BONIFACIO MANTILLA,

CESAR AZURIN, WEITONG LIM, MA. TERESA TRINIDAD, MA. CARMELITA
FLORENTINO, Petitioners,
vs.
PHILIPPINE RACING COMMISSION, MANILA JOCKEY CLUB, INC., and PHILIPPINE RACING
CLUB, INC., Respondents.
DECISION
TINGA, J.:
The subject of this petition for certiorari is the decision1 of the Court of Appeals in CA-G.R. SP No.
95212, affirming in toto the judgment2 of the Regional Trial Court of Makati in Civil Case No. 04-
1228.
The controversy stemmed from the 11 August 2004 directive3 issued by the Philippine Racing
Commission (Philracom) directing the Manila Jockey Club, Inc. (MJCI) and Philippine Racing Club,
Inc. (PRCI) to immediately come up with their respective Clubs’ House Rule to address Equine
Infectious Anemia (EIA)4 problem and to rid their facilities of horses infected with EIA. Said directive
was issued pursuant to Administrative Order No. 55 dated 28 March 1994 by the Department of
Agriculture declaring it unlawful for any person, firm or corporation to ship, drive, or transport horses
from any locality or place except when accompanied by a certificate issued by the authority of the
Director of the Bureau of Animal Industry (BAI).6
In compliance with the directive, MJCI and PRCI ordered the owners of racehorses stable in their
establishments to submit the horses to blood sampling and administration of the Coggins Test to
37
determine whether they are afflicted with the EIA virus. Subsequently, on 17 September 2004,
Philracom issued copies of the guidelines for the monitoring and eradication of EIA.7
Petitioners and racehorse owners William Dagan (Dagan), Carlos Reyes, Narciso Morales, Bonifacio
Montilla, Cezar Azurin, Weitong Lim, Ma. Teresa Trinidad and Ma. Carmelita Florentino refused to
comply with the directive. First, they alleged that there had been no prior consultation with horse
owners. Second, they claimed that neither official guidelines nor regulations had been issued relative
to the taking of blood samples. And third, they asserted that no documented case of EIA had been
presented to justify the undertaking.8
Despite resistance from petitioners, the blood testing proceeded. The horses, whose owners refused
to comply were banned from the races, were removed from the actual day of race, prohibited from
renewing their licenses or evicted from their stables.
When their complaint went unheeded, the racehorse owners lodged a complaint before the Office of
the President (OP) which in turn issued a directive instructing Philracom to investigate the matter.
For failure of Philracom to act upon the directive of the OP, petitioners filed a petition for injunction
with application for the issuance of a temporary restraining order (TRO). In an order9 dated 11
November 2004, the trial court issued a TRO.
Dagan refused to comply with the directives because, according to him, the same are unfair as there
are no implementing rules on the banning of sick horses from races. Consequently, his horses were
evicted from the stables and transferred to an isolation area. He also admitted that three of his
horses had been found positive for EIA.10
Confronted with two issues, namely: whether there were valid grounds for the issuance of a writ of
injunction and whether respondents had acted with whim and caprice in the implementation of the
contested guideline, the trial court resolved both queries in the negative.
The trial court found that most racehorse owners, except for Dagan, had already subjected their
racehorses to EIA testing. Their act constituted demonstrated compliance with the contested
guidelines, according to the trial court. Hence, the acts sought to be enjoined had been rendered
moot and academic.
With respect to the subject guidelines, the trial court upheld their validity as an exercise of police
power, thus:
The Petitioner’s submission that the subject guidelines are oppressive and hence confiscatory of
proprietary rights is likewise viewed by this Court to be barren of factual and legal support. The
horseracing industry, needless to state, is imbued with public interest deserving of utmost concern if
not constant vigilance. The Petitioners do not dispute this. It is because of this basic fact that
respondents are expected to police the concerned individuals and adopt measures that will promote
and protect the interests of all the stakeholders starting from the moneyed horse-owners, gawking
bettors down to the lowly maintainers of the stables. This is a clear and valid exercise of police
power with the respondents acting for the State. Participation in the business of horseracing is but a
privilege; it is not a right. And no clear acquiescence to this postulation can there be than the
Petitioners' own undertaking to abide by the rules and conditions issued and imposed by the
respondents as specifically shown by their contracts of lease with MCJI.11 1avvphi1
Petitioners appealed to the Court of Appeals. In its Decision dated 27 October 2006, the appellate
court affirmed in toto the decision of the trial court.
38
The appellate court upheld the authority of Philracom to formulate guidelines since it is vested with
exclusive jurisdiction over and control of the horse-racing industry per Section 8 of Presidential
Decree (P.D.) No. 8. The appellate court further pointed out that P.D. No. 420 also endows
Philracom with the power to prescribe additional rules and regulations not otherwise inconsistent
with the said presidential decree12 and to perform such duties and exercise all powers incidental or
necessary to the accomplishment of its aims and objectives.13 It similarly concluded that the petition
for prohibition should be dismissed on the ground of mootness in light of evidence indicating that
petitioners had already reconsidered their refusal to have their horses tested and had, in fact,
subsequently requested the administration of the test to the horses.14
Aggrieved by the appellate court’s decision, petitioners filed the instant certiorari petition15 imputing
grave abuse of discretion on the part of respondents in compelling petitioners to subject their
racehorses to blood testing.
In their amended petition,16 petitioners allege that Philracom’s unsigned and undated implementing
guidelines suffer from several infirmities. They maintain that the assailed guidelines do not comply
with due process requirements. Petitioners insist that racehorses already in the MJCI stables were
allowed to be so quartered because the individual horse owners had already complied with the
Philracom regulation that horses should not bear any disease. There was neither a directive nor a
rule that racehorses already lodged in the stables of the racing clubs should again be subjected to
the collection of blood samples preparatory to the conduct of the EIA tests,17 petitioners note. Thus, it
came as a surprise to horse owners when told about the administration of a new Coggins Tests on
old horses since the matter had not been taken up with them.18 No investigation or at least a
summary proceeding was conducted affording petitioners an opportunity to be heard.19 Petitioners
also aver that the assailed guidelines are ultra vires in that the sanctions imposed for refusing to
submit to medical examination are summary eviction from the stables or arbitrary banning of
participation in the races, notwithstanding the penalties prescribed in the contract of lease.20
In its Comment,21 the PRCI emphasizes that it merely obeyed the terms of its franchise and abided
by the rules enacted by Philracom.22 For its part, Philracom, through the Office of the Solicitor-
General (OSG), stresses that the case has become moot and academic since most of petitioners
had complied with the guidelines by subjecting their race horses to EIA testing. The horses found
unafflicted with the disease were eventually allowed to join the races.23 Philracom also justified its
right under the law to regulate horse racing.24 MJCI adds that Philracom need
not delegate its rule-making power to the former since MJCI’s right to formulate its internal rules is
subsumed under the franchise granted to it by Congress.25
In their Reply,26 petitioners raise for the first time the issue that Philracom had unconstitutionally
delegated its rule-making power to PRCI and MJCI in issuing the directive for them to come up with
club rules. In response to the claim that respondents had merely complied with their duties under
their franchises, petitioners counter that the power granted to PRCI and MJCI under their respective
franchises is limited to: (1) the construction, operation and maintenance of racetracks; (2) the
establishment of branches for booking purposes; and (3) the conduct of horse races.
It appears on record that only Dagan had refused to comply with the orders of respondents.
Therefore, the case subsists as regards Dagan.
Petitioners essentially assail two issuances of Philracom; namely: the Philracom directive27 and the
subsequent guidelines addressed to MJCI and PRCI.
39
The validity of an administrative issuance, such as the assailed guidelines, hinges on compliance
with the following requisites:
1. Its promulgation must be authorized by the legislature;
2. It must be promulgated in accordance with the prescribed procedure;
3. It must be within the scope of the authority given by the legislature;
4. It must be reasonable.28
All the prescribed requisites are met as regards the questioned issuances. Philracom’s authority is
drawn from P.D. No. 420. The delegation made in the presidential decree is valid. Philracom did not
exceed its authority. And the issuances are fair and reasonable.
The rule is that what has been delegated cannot be delegated, or as expressed in the Latin maxim:
potestas delegate non delegare potest. This rule is based upon the ethical principle that such
delegated power constitutes not only a right but a duty to be performed by the delegate by the
instrumentality of his own judgment acting immediately upon the matter of legislation and not
through the intervening mind of another.29 This rule however admits of recognized exceptions30 such
as the grant of rule-making power to administrative agencies. They have been granted by Congress
with the authority to issue rules to regulate the implementation of a law entrusted to them. Delegated
rule-making has become a practical necessity in modern governance due to the increasing
complexity and variety of public functions.31
However, in every case of permissible delegation, there must be a showing that the delegation itself
is valid. It is valid only if the law (a) is complete in itself, setting forth therein the policy to be
executed, carried out, or implemented by the delegate; and (b) fixes a standard—the limits of which
are sufficiently determinate and determinable—to which the delegate must conform in the
performance of his functions. A sufficient standard is one which defines legislative policy, marks its
limits, maps out its boundaries and specifies the public agency to apply it. It indicates the
circumstances under which the legislative command is to be effected.32
P.D. No. 420 hurdles the tests of completeness and standards sufficiency.
Philracom was created for the purpose of carrying out the declared policy in Section 1 which is "to
promote and direct the accelerated development and continued growth of horse racing not only in
pursuance of the sports development program but also in order to insure the full exploitation of the
sport as a source of revenue and employment." Furthermore, Philracom was granted exclusive
jurisdiction and control over every aspect of the conduct of horse racing, including the framing and
scheduling of races, the construction and safety of race tracks, and the security of racing. P.D. No.
420 is already complete in itself.
Section 9 of the law fixes the standards and limitations to which Philracom must conform in the
performance of its functions, to wit:
Section 9. Specific Powers. Specifically, the Commission shall have the power:
a. To enforce all laws, decrees and executive orders relating to horse-racing that are not
expressly or implied repealed or modified by this Decree, including all such existing rules and
regulations until otherwise modified or amended by the Commission;
40
b. To prescribe additional rules and regulations not otherwise inconsistent with this Decree;
c. To register race horses, horse owners or associations or federations thereof, and to

regulate the construction of race tracks and to grant permit for the holding of races;
d. To issue, suspend or revoke permits and licenses and to impose or collect fees for the
issuance of such licenses and permits to persons required to obtain the same;
e. To review, modify, approve or disapprove the rules and regulations issued by any person
or entity concerning the conduct of horse races held by them;
f. To supervise all such race meeting to assure integrity at all times. It can order the
suspension of any racing event in case of violation of any law, ordinance or rules and
regulations;
g. To prohibit the use of improper devices, drugs, stimulants or other means to enhance or
diminish the speed of horse or materially harm their condition;
h. To approve the annual budget of the omission and such supplemental budgets as may be
necessary;
i. To appoint all personnel, including an Executive Director of the Commission, as it may be

deem necessary in the exercise and performance of its powers and duties; and
j. To enter into contracts involving obligations chargeable to or against the funds of the
Commission. (Emphasis supplied)
Clearly, there is a proper legislative delegation of rule-making power to Philracom. Clearly too, for its
part Philracom has exercised its rule-making power in a proper and reasonable manner. More
specifically, its discretion to rid the facilities of MJCI and PRCI of horses afflicted with EIA is aimed at
preserving the security and integrity of horse races.
Petitioners also question the supposed delegation by Philracom of its rule-making powers to MJCI
and PRCI.
There is no delegation of power to speak of between Philracom, as the delegator and MJCI and
PRCI as delegates. The Philracom directive is merely instructive in character. Philracom had
instructed PRCI and MJCI to "immediately come up with Club’s House Rule to address the problem
and rid their facilities of horses infected with EIA." PRCI and MJCI followed-up when they ordered
the racehorse owners to submit blood samples and subject their race horses to blood testing.
Compliance with the Philracom’s directive is part of the mandate of PRCI and MJCI under Sections
133 of R.A. No. 795334 and Sections 135 and 236 of 8407.37
As correctly proferred by MJCI, its duty is not derived from the delegated authority of Philracom but
arises from the franchise granted to them by Congress allowing MJCI "to do and carry out all such
acts, deeds and things as may be necessary to give effect to the foregoing."38 As justified by PRCI,
"obeying the terms of the franchise and abiding by whatever rules enacted by Philracom is its
duty."39
More on the second, third and fourth requisites.
41
As to the second requisite, petitioners raise some infirmities relating to Philracom’s guidelines. They
question the supposed belated issuance of the guidelines, that is, only after the collection of blood
samples for the Coggins Test was ordered. While it is conceded that the guidelines were issued a
month after Philracom’s directive, this circumstance does not render the directive nor the guidelines
void. The directive’s validity and effectivity are not dependent on any supplemental guidelines.
Philracom has every right to issue directives to MJCI and PRCI with respect to the conduct of horse
racing, with or without implementing guidelines.
Petitioners also argue that Philracom’s guidelines have no force and effect for lack of publication and
failure to file copies with the University of the Philippines (UP) Law Center as required by law.
As a rule, the issuance of rules and regulations in the exercise of an administrative agency of its
quasi-legislative power does not require notice 7and hearing.40 In Abella, Jr. v. Civil Service
Commission,41 this Court had the occasion to rule that prior notice and hearing are not essential to
the validity of rules or regulations issued in the exercise of quasi-legislative powers since there is no
determination of past events or facts that have to be established or ascertained.42
The third requisite for the validity of an administrative issuance is that it must be within the limits of
the powers granted to it. The administrative body may not make rules and regulations which are
inconsistent with the provisions of the Constitution or a statute, particularly the statute it is
administering or which created it, or which are in derogation of, or defeat, the purpose of a statute.43
The assailed guidelines prescribe the procedure for monitoring and eradicating EIA. These
guidelines are in accord with Philracom’s mandate under the law to regulate the conduct of horse
racing in the country.
Anent the fourth requisite, the assailed guidelines do not appear to be unreasonable or
discriminatory. In fact, all horses stabled at the MJCI and PRCI’s premises underwent the same
procedure. The guidelines implemented were undoubtedly reasonable as they bear a reasonable
relation to the purpose sought to be accomplished, i.e., the complete riddance of horses infected
with EIA.
It also appears from the records that MJCI properly notified the racehorse owners before the test
was conducted.44 Those who failed to comply were repeatedly warned of certain consequences and
sanctions.
Furthermore, extant from the records are circumstances which allow respondents to determine from
time to time the eligibility of horses as race entries. The lease contract executed between petitioner
and MJC contains a proviso reserving the right of the lessor, MJCI in this case, the right to determine
whether a particular horse is a qualified horse. In addition, Philracom’s rules and regulations on
horse racing provide that horses must be free from any contagious disease or illness in order to be
eligible as race entries.
All told, we find no grave abuse of discretion on the part of Philracom in issuing the contested
guidelines and on the part MJCI and PRCI in complying with Philracom’s directive.
WHEREFORE, the petition is DISMISSED. Costs against petitioner William Dagan.
SO ORDERED.
42
FIRST DIVISION
G.R. No. 151908 August 12, 2003
SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE CORPORATION

(PILTEL), petitioners,
vs.
NATIONAL TELECOMMUNICATIONS COMMISSION (NTC), respondent.
x---------------------------------------------------------x
G.R. No. 152063 August 12, 2003
GLOBE TELECOM, INC. (GLOBE) and ISLA COMMUNICATIONS CO., INC.

(ISLACOM), petitioners,
vs.
COURT OF APPEALS (The Former 6th Division) and the NATIONAL TELECOMMUNICATIONS
COMMISSION, respondents.
YNARES-SANTIAGO, J.:
Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission
(NTC) issued on June 16, 2000 Memorandum Circular No. 13-6-2000, promulgating rules and
regulations on the billing of telecommunications services. Among its pertinent provisions are the
following:
(1) The billing statements shall be received by the subscriber of the telephone service not
later than 30 days from the end of each billing cycle. In case the statement is received
beyond this period, the subscriber shall have a specified grace period within which to pay the
bill and the public telecommunications entity (PTEs) shall not be allowed to disconnect the
service within the grace period.
(2) There shall be no charge for calls that are diverted to a voice mailbox, voice prompt,
recorded message or similar facility excluding the customer's own equipment.
(3) PTEs shall verify the identification and address of each purchaser of prepaid SIM cards.
Prepaid call cards and SIM cards shall be valid for at least 2 years from the date of first use.
Holders of prepaid SIM cards shall be given 45 days from the date the prepaid SIM card is
fully consumed but not beyond 2 years and 45 days from date of first use to replenish the
SIM card, otherwise the SIM card shall be rendered invalid. The validity of an invalid SIM
card, however, shall be installed upon request of the customer at no additional charge except
the presentation of a valid prepaid call card.
(4) Subscribers shall be updated of the remaining value of their cards before the start of
every call using the cards.
(5) The unit of billing for the cellular mobile telephone service whether postpaid or prepaid
shall be reduced from 1 minute per pulse to 6 seconds per pulse. The authorized rates per
minute shall thus be divided by 10.1
43
The Memorandum Circular provided that it shall take effect 15 days after its publication in a
newspaper of general circulation and three certified true copies thereof furnished the UP Law
Center. It was published in the newspaper, The Philippine Star, on June 22, 2000.2 Meanwhile, the
provisions of the Memorandum Circular pertaining to the sale and use of prepaid cards and the unit
of billing for cellular mobile telephone service took effect 90 days from the effectivity of the
Memorandum Circular.
On August 30, 2000, the NTC issued a Memorandum to all cellular mobile telephone service
(CMTS) operators which contained measures to minimize if not totally eliminate the incidence of
stealing of cellular phone units. The Memorandum directed CMTS operators to:
a. strictly comply with Section B(1) of MC 13-6-2000 requiring the presentation and
verification of the identity and addresses of prepaid SIM card customers;
b. require all your respective prepaid SIM cards dealers to comply with Section B(1) of MC
13-6-2000;
c. deny acceptance to your respective networks prepaid and/or postpaid customers using
stolen cellphone units or cellphone units registered to somebody other than the applicant
when properly informed of all information relative to the stolen cellphone units;
d. share all necessary information of stolen cellphone units to all other CMTS operators in
order to prevent the use of stolen cellphone units; and
e. require all your existing prepaid SIM card customers to register and present valid
identification cards.3
This was followed by another Memorandum dated October 6, 2000 addressed to all public
telecommunications entities, which reads:
This is to remind you that the validity of all prepaid cards sold on 07 October 2000 and
beyond shall be valid for at least two (2) years from date of first use pursuant to MC 13-6-
2000.
In addition, all CMTS operators are reminded that all SIM packs used by subscribers of
prepaid cards sold on 07 October 2000 and beyond shall be valid for at least two (2) years
from date of first use. Also, the billing unit shall be on a six (6) seconds pulse effective 07
October 2000.
For strict compliance.4
On October 20, 2000, petitioners Isla Communications Co., Inc. and Pilipino Telephone Corporation
filed against the National Telecommunications Commission, Commissioner Joseph A. Santiago,
Deputy Commissioner Aurelio M. Umali and Deputy Commissioner Nestor C. Dacanay, an action for
declaration of nullity of NTC Memorandum Circular No. 13-6-2000 (the Billing Circular) and the NTC
Memorandum dated October 6, 2000, with prayer for the issuance of a writ of preliminary injunction
and temporary restraining order. The complaint was docketed as Civil Case No. Q-00-42221 at the
Regional Trial Court of Quezon City, Branch 77.5
Petitioners Islacom and Piltel alleged, inter alia, that the NTC has no jurisdiction to regulate the sale
of consumer goods such as the prepaid call cards since such jurisdiction belongs to the Department
44
of Trade and Industry under the Consumer Act of the Philippines; that the Billing Circular is
oppressive, confiscatory and violative of the constitutional prohibition against deprivation of property
without due process of law; that the Circular will result in the impairment of the viability of the prepaid
cellular service by unduly prolonging the validity and expiration of the prepaid SIM and call cards;
and that the requirements of identification of prepaid card buyers and call balance announcement
are unreasonable. Hence, they prayed that the Billing Circular be declared null and void ab initio.
Soon thereafter, petitioners Globe Telecom, Inc and Smart Communications, Inc. filed a joint Motion
for Leave to Intervene and to Admit Complaint-in-Intervention.6 This was granted by the trial court.
On October 27, 2000, the trial court issued a temporary restraining order enjoining the NTC from
implementing Memorandum Circular No. 13-6-2000 and the Memorandum dated October 6, 2000.7
In the meantime, respondent NTC and its co-defendants filed a motion to dismiss the case on the
ground of petitioners' failure to exhaust administrative remedies.
Subsequently, after hearing petitioners' application for preliminary injunction as well as respondent's
motion to dismiss, the trial court issued on November 20, 2000 an Order, the dispositive portion of
which reads:
WHEREFORE, premises considered, the defendants' motion to dismiss is hereby denied for
lack of merit. The plaintiffs' application for the issuance of a writ of preliminary injunction is
hereby granted. Accordingly, the defendants are hereby enjoined from implementing NTC
Memorandum Circular 13-6-2000 and the NTC Memorandum, dated October 6, 2000,
pending the issuance and finality of the decision in this case. The plaintiffs and intervenors
are, however, required to file a bond in the sum of FIVE HUNDRED THOUSAND PESOS
(P500,000.00), Philippine currency.
SO ORDERED.8
Defendants filed a motion for reconsideration, which was denied in an Order dated February 1,
2001.9
Respondent NTC thus filed a special civil action for certiorari and prohibition with the Court of
Appeals, which was docketed as CA-G.R. SP. No. 64274. On October 9, 2001, a decision was
rendered, the decretal portion of which reads:
WHEREFORE, premises considered, the instant petition for certiorari and prohibition is
GRANTED, in that, the order of the court a quo denying the petitioner's motion to dismiss as
well as the order of the court a quo granting the private respondents' prayer for a writ of
preliminary injunction, and the writ of preliminary injunction issued thereby, are hereby
ANNULLED and SET ASIDE. The private respondents' complaint and complaint-in-
intervention below are hereby DISMISSED, without prejudice to the referral of the private
respondents' grievances and disputes on the assailed issuances of the NTC with the said
agency.
SO ORDERED.10
Petitioners' motions for reconsideration were denied in a Resolution dated January 10, 2002 for lack
of merit.11
45
Hence, the instant petition for review filed by Smart and Piltel, which was docketed as G.R. No.
151908, anchored on the following grounds:
A.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE

NATIONAL TELECOMMUNICATIONS COMMISSION (NTC) AND NOT THE REGULAR
COURTS HAS JURISDICTION OVER THE CASE.
B.
THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN HOLDING THAT

THE PRIVATE RESPONDENTS FAILED TO EXHAUST AN AVAILABLE ADMINISTRATIVE
REMEDY.
C.
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BILLING
CIRCULAR ISSUED BY THE RESPONDENT NTC IS UNCONSTITUTIONAL AND
CONTRARY TO LAW AND PUBLIC POLICY.
D.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PRIVATE

RESPONDENTS FAILED TO SHOW THEIR CLEAR POSITIVE RIGHT TO WARRANT THE
ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION.12
Likewise, Globe and Islacom filed a petition for review, docketed as G.R. No. 152063, assigning the
following errors:
1. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE THE

DOCTRINES OF PRIMARY JURISDICTION AND EXHAUSTION OF ADMINISTRATIVE
REMEDIES DO NOT APPLY SINCE THE INSTANT CASE IS FOR LEGAL NULLIFICATION
(BECAUSE OF LEGAL INFIRMITIES AND VIOLATIONS OF LAW) OF A PURELY
ADMINISTRATIVE REGULATION PROMULGATED BY AN AGENCY IN THE EXERCISE
OF ITS RULE MAKING POWERS AND INVOLVES ONLY QUESTIONS OF LAW.

DOCTRINE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES NOT APPLY
WHEN THE QUESTIONS RAISED ARE PURELY LEGAL QUESTIONS.

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

PETITIONERS IN FACT EXHAUSTED ALL ADMINISTRATIVE REMEDIES AVAILABLE TO
THEM.
46
5. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED IN ISSUING ITS

QUESTIONED RULINGS IN THIS CASE BECAUSE GLOBE AND ISLA HAVE A CLEAR
RIGHT TO AN INJUNCTION.13
The two petitions were consolidated in a Resolution dated February 17, 2003.14
On March 24, 2003, the petitions were given due course and the parties were required to submit
their respective memoranda.15
We find merit in the petitions.
Administrative agencies possess quasi-legislative or rule-making powers and quasi-judicial or

administrative adjudicatory powers. Quasi-legislative or rule-making power is the power to make
rules and regulations which results in delegated legislation that is within the confines of the granting
statute and the doctrine of non-delegability and separability of powers.16
The rules and regulations that administrative agencies promulgate, which are the product of a
delegated legislative power to create new and additional legal provisions that have the effect of law,
should be within the scope of the statutory authority granted by the legislature to the administrative
agency. It is required that the regulation be germane to the objects and purposes of the law, and be
not in contradiction to, but in conformity with, the standards prescribed by law.17 They must conform
to and be consistent with the provisions of the enabling statute in order for such rule or regulation to
be valid. Constitutional and statutory provisions control with respect to what rules and regulations
may be promulgated by an administrative body, as well as with respect to what fields are subject to
regulation by it. It may not make rules and regulations which are inconsistent with the provisions of
the Constitution or a statute, particularly the statute it is administering or which created it, or which
are in derogation of, or defeat, the purpose of a statute. In case of conflict between a statute and an
administrative order, the former must prevail.18
Not to be confused with the quasi-legislative or rule-making power of an administrative agency is its
quasi-judicial or administrative adjudicatory power. This is the power to hear and determine
questions of fact to which the legislative policy is to apply and to decide in accordance with the
standards laid down by the law itself in enforcing and administering the same law. The administrative
body exercises its quasi-judicial power when it performs in a judicial manner an act which is
essentially of an executive or administrative nature, where the power to act in such manner is
incidental to or reasonably necessary for the performance of the executive or administrative duty
entrusted to it. In carrying out their quasi-judicial functions, the administrative officers or bodies are
required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and
draw conclusions from them as basis for their official action and exercise of discretion in a judicial
nature.19
In questioning the validity or constitutionality of a rule or regulation issued by an administrative

agency, a party need not exhaust administrative remedies before going to court. This principle
applies only where the act of the administrative agency concerned was performed pursuant to its
quasi-judicial function, and not when the assailed act pertained to its rule-making or quasi-legislative
power. In Association of Philippine Coconut Dessicators v. Philippine Coconut Authority,20 it was
held:
The rule of requiring exhaustion of administrative remedies before a party may seek judicial review,
so strenuously urged by the Solicitor General on behalf of respondent, has obviously no application
here. The resolution in question was issued by the PCA in the exercise of its rule- making or
47
legislative power. However, only judicial review of decisions of administrative agencies made in the
exercise of their quasi-judicial function is subject to the exhaustion doctrine.
Even assuming arguendo that the principle of exhaustion of administrative remedies apply in this
case, the records reveal that petitioners sufficiently complied with this requirement. Even during the
drafting and deliberation stages leading to the issuance of Memorandum Circular No. 13-6-2000,
petitioners were able to register their protests to the proposed billing guidelines. They submitted their
respective position papers setting forth their objections and submitting proposed schemes for the
billing circular.21 After the same was issued, petitioners wrote successive letters dated July 3,
200022 and July 5, 2000,23 asking for the suspension and reconsideration of the so-called Billing
Circular. These letters were not acted upon until October 6, 2000, when respondent NTC issued the
second assailed Memorandum implementing certain provisions of the Billing Circular. This was
taken by petitioners as a clear denial of the requests contained in their previous letters, thus
prompting them to seek judicial relief.
In like manner, the doctrine of primary jurisdiction applies only where the administrative agency
exercises its quasi-judicial or adjudicatory function. Thus, in cases involving specialized disputes, the
practice has been to refer the same to an administrative agency of special competence pursuant to
the doctrine of primary jurisdiction. The courts will not determine a controversy involving a question
which is within the jurisdiction of the administrative tribunal prior to the resolution of that question by
the administrative tribunal, where the question demands the exercise of sound administrative
discretion requiring the special knowledge, experience and services of the administrative tribunal to
determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with
the premises of the regulatory statute administered. The objective of the doctrine of primary
jurisdiction is to guide a court in determining whether it should refrain from exercising its jurisdiction
until after an administrative agency has determined some question or some aspect of some question
arising in the proceeding before the court. It applies where the claim is originally cognizable in the
courts and comes into play whenever enforcement of the claim requires the resolution of issues
which, under a regulatory scheme, has been placed within the special competence of an
administrative body; in such case, the judicial process is suspended pending referral of such issues
to the administrative body for its view.24
However, where what is assailed is the validity or constitutionality of a rule or regulation issued by
the administrative agency in the performance of its quasi-legislative function, the regular courts have
jurisdiction to pass upon the same. The determination of whether a specific rule or set of rules
issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of
the regular courts. Indeed, the Constitution vests the power of judicial review or the power to declare
a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance,
or regulation in the courts, including the regional trial courts.25 This is within the scope of judicial
power, which includes the authority of the courts to determine in an appropriate action the validity of
the acts of the political departments.26 Judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally demandable and enforceable, and to
determine whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government.27
In the case at bar, the issuance by the NTC of Memorandum Circular No. 13-6-2000 and its
Memorandum dated October 6, 2000 was pursuant to its quasi-legislative or rule-making power. As
such, petitioners were justified in invoking the judicial power of the Regional Trial Court to assail the
constitutionality and validity of the said issuances. In Drilon v. Lim,28 it was held:
We stress at the outset that the lower court had jurisdiction to consider the constitutionality of
Section 187, this authority being embraced in the general definition of the judicial power to
48
determine what are the valid and binding laws by the criterion of their conformity to the
fundamental law. Specifically, B.P. 129 vests in the regional trial courts jurisdiction over all
civil cases in which the subject of the litigation is incapable of pecuniary estimation, even as
the accused in a criminal action has the right to question in his defense the constitutionality
of a law he is charged with violating and of the proceedings taken against him, particularly as
they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests
in the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in
all cases in which the constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order, instruction, ordinance, or
regulation is in question.29
In their complaint before the Regional Trial Court, petitioners averred that the Circular contravened
Civil Code provisions on sales and violated the constitutional prohibition against the deprivation of
property without due process of law. These are within the competence of the trial judge. Contrary to
the finding of the Court of Appeals, the issues raised in the complaint do not entail highly technical
matters. Rather, what is required of the judge who will resolve this issue is a basic familiarity with the
workings of the cellular telephone service, including prepaid SIM and call cards – and this is
judicially known to be within the knowledge of a good percentage of our population – and expertise
in fundamental principles of civil law and the Constitution.
Hence, the Regional Trial Court has jurisdiction to hear and decide Civil Case No. Q-00-42221. The
Court of Appeals erred in setting aside the orders of the trial court and in dismissing the case.
WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The decision of
the Court of Appeals in CA-G.R. SP No. 64274 dated October 9, 2001 and its Resolution dated
January 10, 2002 are REVERSED and SET ASIDE. The Order dated November 20, 2000 of the
Regional Trial Court of Quezon City, Branch 77, in Civil Case No. Q-00-42221 is REINSTATED. This
case is REMANDED to the court a quo for continuation of the proceedings.
SO ORDERED.
EN BANC
G.R. No. 116422 November 4, 1996
AVELINA B. CONTE and LETICIA BOISER-PALMA, petitioners,

vs.
COMMISSION ON AUDIT (COA), respondent.
PANGANIBAN, J.:
Are the benefits provided for under Social Security System Resolution No. 56 to be
considered simply as "financial assistance" for retiring employees, or does such scheme
constitute a supplementary retirement plan proscribed by Republic Act No. 4968?
49
The foregoing question is addressed by this Court in resolving the instant petition
for certiorari which seeks to reverse and set aside Decision No. 94-
1261 dated March 15, 1994 of respondent Commission on Audit, which denied petitioners'
request for reconsideration of its adverse ruling disapproving claims for financial assistance
under SSS Resolution No. 56.
The Facts
Petitioners Avelina B. Conte and Leticia Boiser-Palma were former employees of the Social
Security System (SSS) who retired from government service on May 9, 1990 and September
13, 1992, respectively. They availed of compulsory retirement benefits under Republic Act
No. 660.2
In addition to retirement benefits provided under R.A. 660, petitioners also claimed SSS
"financial assistance" benefits granted under SSS Resolution No. 56, series of 1971.
A brief historical backgrounder is in order. SSS Resolution No. 56,3 approved on January 21,
1971, provides financial incentive and inducement to SSS employees qualified to retire to
avail of retirement benefits under RA 660 as amended, rather than the retirement benefits
under RA 1616 as amended, by giving them "financial assistance" equivalent in amount to
the difference between what a retiree would have received under RA 1616, less what he was
entitled to under RA 660. The said SSS Resolution No. 56 states:
RESOLUTION NO. 56
WHEREAS, the retirement benefits of SSS employees are provided for under
Republic Acts 660 and 1616 as amended;.
WHEREAS, SSS employees who are qualified for compulsory retirement at age 65
or for optional retirement at a lower age are entitled to either the life annuity under
R.A. 660, as amended, or the gratuity under R.A. 1616, as amended;
WHEREAS, a retirement benefit to be effective must be a periodic income as close

as possible to the monthly income that would have been due to the retiree during the
remaining years of his life were he still employed;
WHEREAS, the life annuity under R.A. 660, as amended, being closer to the monthly
income that was lost on account of old age than the gratuity under R.A. 1616, as
amended, would best serve the interest of the retiree;
WHEREAS, it is the policy of the Social Security Commission to promote and to

protect the interest of all SSS employees, with a view to providing for their well-being
during both their working and retirement years;
WHEREAS, the availment of life annuities built up by premiums paid on behalf of

SSS employees during their working years would mean more savings to the SSS;
WHEREAS, it is a duty of the Social Security Commission to effect savings in every

possible way for economical and efficient operations;
50
WHEREAS, it is the right of every SSS employee to choose freely and voluntarily the
benefit he is entitled to solely for his own benefit and for the benefit of his family;
NOW, THEREFORE, BE IT RESOLVED, That all the SSS employees who are
simultaneously qualified for compulsory retirement at age 65 or for optional
retirement at a lower age be encouraged to avail for themselves the life annuity
under R.A. 660, as amended;
RESOLVED, FURTHER, That SSS employees who availed themselves of the said
life annuity, in appreciation and recognition of their long and faithful service, be
granted financial assistance equivalent to the gratuity plus return of contributions
under R.A. 1616, as amended, less the five year guaranteed annuity under R.A. 660,
as amended;
RESOLVED, FINALLY, That the Administrator be authorized to act on all

applications for retirement submitted by SSS employees and subject to availability of
funds, pay the corresponding benefits in addition to the money value of all
accumulated leaves. (emphasis supplied)
Long after the promulgation of SSS Resolution No. 56, respondent Commission on Audit
(COA) issued a ruling, captioned as "3rd Indorsement" dated July 10, 1989,4 disallowing in
audit "all such claims for financial assistance under SSS Resolution No. 56", for the reason
that: —
. . . the scheme of financial assistance authorized by the SSS is similar to those

separate retirement plan or incentive/separation pay plans adopted by other
government corporate agencies which results in the increase of benefits beyond
what is allowed under existing retirement laws. In this regard, attention . . . is invited
to the view expressed by the Secretary of Budget and Management dated February
17, 1988 to the COA General Counsel against the proliferation of retirement
plans which, in COA Decision No. 591 dated August 31, 1988, was concurred in by
this Commission. . . .
Accordingly, all such claims for financial assistance under SSS Resolution No. 56
dated January 21, 1971 should be disallowed in audit. (emphasis supplied)
Despite the aforequoted ruling of respondent COA, then SSS Administrator Jose L. Cuisia,
Jr. nevertheless wrote5 on February 12, 1990 then Executive Secretary Catalino Macaraig,
Jr., seeking "presidential authority for SSS to continue implementing its Resolution No. 56
dated January 21, 1971 granting financial assistance to its qualified retiring employees".
However, in a letter-reply dated May 28, 1990,6 then Executive Secretary Macaraig advised
Administrator Cuisia that the Office of the President "is not inclined to favorably act on the
herein request, let alone over-rule the disallowance by COA" of such claims, because, aside
from the fact that decisions, order or actions of the COA in the exercise of its audit functions
are appealable to the Supreme Court7 pursuant to Sec. 50 of PD 1445, the benefits under
said Res. 56, though referred to as "financial assistance", constituted additional retirement
benefits, and the scheme partook of the nature of a supplementary pension/retirement plan
proscribed by law.
51
The law referred to above is RA 4968 (The Teves Retirement Law), which took effect June
17, 1967 and amended CA 186 (otherwise known as the Government Service Insurance Act,
or the GSIS Charter), making Sec. 28 (b) of the latter act read as follows:
(b) Hereafter, no insurance or retirement plan for officers or employees shall be

created by employer. All supplementary retirement or pension plans heretofore in
force in any government office. agency or instrumentality or corporation owned or
controlled by the government, are hereby declared in operative or abolished;
Provided, That the rights of those who are already eligible to retire there under shall
not be affected." (emphasis supplied)
On January 12, 1993, herein petitioners filed with respondent COA their "letter-
appeal/protest"8 seeking reconsideration of COA's ruling of July 10, 1989 disallowing claims
for financial assistance under Res. 56.
On November 15, 1993, petitioner Conte sought payment from SSS of the benefits under
Res. 56. On December 9, 1993, SSS Administrator Renato C. Valencia denied9 the request
in consonance with the previous disallowance by respondent COA, but assured petitioner
that should the COA change its position, the SSS will resume the grant of benefits under said
Res. 56.
On March 15, 1994, respondent COA rendered its COA Decision No. 94-126 denying
petitioners' request for reconsideration.
Thus this petition for certiorari under Rule 65 of the Rules of Court.
The Issues
The issues10 submitted by petitioners may be simplified and restated thus: Did public
respondent abuse its discretion when it disallowed in audit petitioners' claims for benefits
under SSS Res. 562?
Petitioners argue that the financial assistance under Res. 56 is not a retirement plan
prohibited by RA 4968, and that Res. 56 provides benefits different from and "aside from"
what a retiring SSS employee would be entitled to under RA 660. Petitioners contend that it
"is a social amelioration and economic upliftment measure undertaken not only for the
benefit of the SSS but more so for the welfare of its qualified retiring employees." As such, it
"should be interpreted in a manner that would give the . . . most advantage to the recipient —
the retiring employees whose dedicated, loyal, lengthy and faithful service to the agency of
government is recognized and amply rewarded — the rationale for the financial assistance
plan." Petitioners reiterate the argument in their letter dated January 12, 1993 to COA that:
Motivation can be in the form of financial assistance, during their stay in the service
or upon retirement, as in the SSS Financial Assistance Plan. This is so, because
Government has to have some attractive remuneration programs to encourage well-
qualified personnel to pursue a career in the government service, rather than in the
private sector or in foreign countries . . .
A more developmental view of the financial institutions' grant of certain forms of

financial assistance to its personnel, we believe, would enable government
administrators to see these financial forms of remuneration as contributory to the
52
national developmental efforts for effective and efficient administration of the

personnel programs in different institutions.11
The Court's Ruling
Petitioners' contentions are not supported by law. We hold that Res. 56 constitutes a
supplementary retirement plan.
A cursory examination of the preambular clauses and provisions of Res. 56 provides a

number of clear indications that its financial assistance plan constitutes a supplemental
retirement/pension benefits plan. In particular, the fifth preambular clause which provides
that "it is the policy of the Social Security Commission to promote and to protect the interest
of all SSS employees, with a view to providing for their well-being during both their working
and retirement years", and the wording of the resolution itself which states "Resolved,
further, that SSS employees who availed themselves of the said life annuity (under RA
660), in appreciation and recognition of their long and faithful service, be granted financial
assistance . . . can only be interpreted to mean that the benefit being granted is none other
than a kind of amelioration to enable the retiring employee to enjoy (or survive) his retirement
years and a reward for his loyalty and service. Moreover, it is plain to see that the grant of
said financial assistance is inextricably linked with and inseparable from the approval of
retirement benefits under RA 660, i.e., that availment of said financial assistance under Res.
56 may not be done independently of but only in conjunction with the availment of retirement
benefits under RA 660, and that the former is in augmentation or supplementation of the
latter benefits.
Likewise, then SSS Administrator Cuisia's historical overview of the origins and purpose of
Res. 56 is very instructive and sheds much light on the controversy:12
Resolution No. 56, . . ., applies where a retiring SSS employee is qualified to claim
under either RA 660 (pension benefit, that is, 5 year lump sum pension and after 5
years, lifetime pension), or RA 1616 (gratuity benefit plus return of contribution), at
his option. The benefits under RA 660 are entirely payable by GSIS while those
under RA 1616 are entirely shouldered by SSS except the return of contribution by
GSIS.
Resolution No. 56 came about upon observation that qualified SSS employees have
invariably opted to retire under RA 1616 instead of RA 660 because the total benefit
under the former is much greater than the 5-year lump sum under the latter. As a
consequence, the SSS usually ended up virtually paying the entire retirement benefit,
instead of GSIS which is the main insurance carrier for government employees.
Hence, the situation has become so expensive for SSS that a study of the problem
became inevitable.
As a result of the study and upon the recommendation of its Actuary, the SSS
Management recommended to the Social Security Commission that retiring
employees who are qualified to claim under either RA 660 or 1616 should be
"encouraged" to avail for themselves the life annuity under RA 660, as amended,
with the SSS providing a "financial assistance" equivalent to the difference between
the benefit under RA 1616 (gratuity plus return of contribution) and the 5-year lump
sum pension under RA 660.
53
The Social Security Commission, as the policy-making body of the SSS approved the
recommendation in line with its mandate to "insure the efficient, honest and
economical administration of the provisions and purposes of this Act. (Section 3 (c)
of the Social Security Law).
Necessarily, the situation was reversed with qualified SSS employees opting to retire
under RA No. 660 or RA 1146 instead of RA 1616, resulting in substantial savings for
the SSS despite its having to pay "financial assistance".
Until Resolution No. 56 was questioned by COA. (emphasis part of original text;
emphasis ours).
Although such financial assistance package may have been instituted for noble, altruistic
purposes as well as from self-interest and a desire to cut costs on the part of the SSS,
nevertheless, it is beyond any dispute that such package effectively constitutes a
supplementary retirement plan. The fact that it was designed to equalize the benefits
receivable from RA 1616 with those payable under RA 660 and make the latter program
more attractive, merely confirms the foregoing finding.
That the Res. 56 package is labelled "financial assistance" does not change its essential
nature. Retirement benefits are, after all, a form of reward for an employee's loyalty and
service to the employer, and are intended to help the employee enjoy the remaining years of
his life, lessening the burden of worrying about his financial support or upkeep.13 On the other
hand, a pension partakes of the nature of "retained wages" of the retiree for a dual purpose:
to entice competent people to enter the government service, and to permit them to retire
from the service with relative security, not only for those who have retained their vigor, but
more so for those who have been incapacitated by illness or accident.14
Is SSS Resolution No. 56 then within the ambit of and thus proscribed by Sec. 28 (b) of CA
186 as amended by RA 4968?
We answer in the affirmative. Said Sec. 28 (b) as amended by RA 4968 in no uncertain

terms bars the creation of any insurance or retirement plan — other than the GSIS — for
government officers and employees, in order to prevent the undue and inequitous
proliferation of such plans. It is beyond cavil that Res. 56 contravenes the said provision of
law and is therefore invalid, void and of no effect. No ignore this and rule otherwise would be
tantamount to permitting every other government office or agency to put up its own
supplementary retirement benefit plan under the guise of such "financial assistance".
We are not unmindful of the laudable purposes for promulgating Res. 56, and the positive
results it must have had, not only in reducing costs and expenses on the part of the SSS in
connection with the pay-out of retirement benefits and gratuities, but also in improving the
quality of life for scores of retirees. But it is simply beyond dispute that the SSS had no
authority to maintain and implement such retirement plan, particularly in the face of the
statutory prohibition. The SSS cannot, in the guise of rule-making, legislate or amend laws or
worse, render them nugatory.
It is doctrinal that in case of conflict between a statute and an administrative order, the
former must prevail.15 A rule or regulation must conform to and be consistent with the
provisions of the enabling statute in order for such rule or regulation to be valid.16 The rule-
making power of a public administrative body is a delegated legislative power, which it may
not use either to abridge the authority given it by the Congress or the Constitution or to
54
enlarge its power beyond the scope intended. Constitutional and statutory provisions control
with respect to what rules and regulations may be promulgated by such a body, as well as
with respect to what fields are subject to regulation by it. It may not make rules and
regulations which are inconsistent with the provisions of the Constitution or a statute,
particularly the statute it is administering or which created it, or which are in derogation of, or
defeat, the purpose of a statute.17 Though well-settled is the rule that retirement laws are
liberally interpreted in favor of the retiree,18 nevertheless, there is really nothing to interpret in
either RA 4968 or Res. 56, and correspondingly, the absence of any doubt as to the ultra-
vires nature and illegality of the disputed resolution constrains us to rule against petitioners.
As a necessary consequence of the invalidity of Res. 56, we can hardly impute abuse of
discretion of any sort to respondent Commission for denying petitioners' request for
reconsideration of the 3rd Indorsement of July 10, 1989. On the contrary, we hold that public
respondent in its assailed Decision acted with circumspection in denying petitioners claim. It
reasoned thus:
After a careful evaluation of the facts herein obtaining, this Commission finds the
instant request to be devoid of merit. It bears stress that the financial assistance
contemplated under SSS Resolution No. 56 is granted to SSS employees who opt to
retire under R.A. No. 660. In fact, by the aggrieved parties' own admission (page 2 of
the request for reconsideration dated January 12, 1993), it is a financial assistance
granted by the SSS management to its employees. in addition to the retirement
benefits under Republic Act. No. 660." (underscoring supplied for emphasis) There is
therefore no question, that the said financial assistance partakes of the nature of a
retirement benefit that has the effect of modifying existing retirement laws particularly
R.A. No. 660.
Petitioners also asseverate that the scheme of financial assistance under Res. 56 may be
likened to the monetary benefits of government officials and employees who are paid, over
and above their salaries and allowances as provided by statute, an additional honorarium in
varying amounts. We find this comparison baseless and misplaced. As clarified by the
Solicitor General:19
Petitioners' comparison of SSS Resolution No. 56 with the "honoraria" given to

government officials and employees of the "National Prosecution Service of the
Department of Justice", Office of the Government Corporate Counsel and even in the
"Office of the Solicitor General" is devoid of any basis. The monetary benefits or
"honoraria" given to these officials or employees are categorized as travelling and/or
representation expenses which are incurred by them in the course of handling cases,
attending court/administrative hearings, or performing other field work. These
monetary benefits are given upon rendition of service while the "financial benefits"
under SSS Resolution No. 56 are given upon retirement from service.
In a last-ditch attempt to convince this Court that their position is tenable, petitioners invoke
equity. They "believe that they are deserving of justice and equity in their quest for financial
assistance under SSS Resolution No. 56, not so much because the SSS is one of the very
few stable agencies of government where no doubt this recognition and reputation is earned
. . . but more so due to the miserable scale of compensation granted to employees in various
agencies to include those obtaining in the SSS."20
We must admit we sympathize with petitioners in their financial predicament as a result of

their misplaced decision to avail of retirement benefits under RA 660, with the false
55
expectation that "financial assistance" under the disputed Res. 56 will also materialize.
Nevertheless, this Court has always held that equity, which has been aptly described as
"justice outside legality," is applied only in the absence of, and never against, statutory law or
judicial rules of procedure.21 In this case, equity cannot be applied to give validity and effect
to Res. 56, which directly contravenes the clear mandate of the provisions of RA 4968.
Likewise, we cannot but be aware that the clear imbalance between the benefits available
under RA 660 and those under RA 1616 has created an unfair situation for it has shifted the
burden of paying such benefits from the GSIS (the main insurance carrier of government
employees) to the SSS. Without the corrective effects of Res. 56, all retiring SSS employees
without exception will be impelled to avail of benefits under RA 1616. The cumulative effect
of such availments on the financial standing and stability of the SSS is better left to
actuarians. But the solution or remedy for such situation can be provided only by Congress.
Judicial hands cannot, on the pretext of showing concern for the welfare of government
employees, bestow equity contrary to the clear provisions of law.
Nevertheless, insofar as herein petitioners are concerned, this Court cannot just sit back and
watch as these two erstwhile government employees, who after spending the best parts of
their lives in public service have retired hoping to enjoy their remaining years, face a
financially dismal if not distressed future, deprived of what should have been due them by
way of additional retirement benefits, on account of a bureaucratic boo-boo improvidently
hatched by their higher-ups. It is clear to our mind that petitioners applied for benefits under
RA 660 only because of the incentives offered by Res. 56, and that absent such incentives,
they would have without fall availed of RA 1616 instead. We likewise have no doubt that
petitioners are simply innocent bystanders in this whole bureaucratic rule-making/financial
scheme-making drama, and that therefore, to the extent possible, petitioners ought not be
penalized or made to suffer as a result of the subsequently determined invalidity of Res. 56,
the promulgation and implementation of which they had nothing to do with.
And here is where "equity" may properly be invoked: since "SSS employees who are
qualified for compulsory retirement at age 65 or for optional retirement at a lower age are
entitled to either the life annuity under R.A. 660, as amended, or the gratuity under R.A.
1616, as amended",22 it appears that petitioners, being qualified to avail of benefits under RA
660, may also readily qualify under RA 1616. It would therefore not be misplaced to enjoin
the SSS to render all possible assistance to petitioners for the prompt processing and
approval of their applications under RA 1616, and in the meantime, unless barred by existing
regulations, to advance to petitioners the difference between the amounts due under RA
1616, and the amounts they already obtained, if any, under RA 660.
WHEREFORE, the petition is hereby DISMISSED for lack of merit, there having been no
grave abuse of discretion on the part of respondent Commission. The assailed Decision of
public respondent is AFFIRMED, and SSS Resolution No. 56 is hereby declared ILLEGAL,
VOID AND OF NO EFFECT. The SSS is hereby urged to assist petitioners and facilitate their
applications under RA 1616, and to advance to them, unless barred by existing regulations,
the corresponding amounts representing the difference between the two benefits programs.
No costs.
SO ORDERED.
56
EN BANC
G.R. No. L-44291 August 15, 1936
THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellant,

vs.
AUGUSTO A. SANTOS, defendant-appellee.
Office of the Solicitor-General Hilado for appellant.

Arsenio Santos for appellee.
VILLA-REAL, J.:
This case is before us by virtue of an appeal taken by the prosecuting attorney from the order of the
Court of First Instance of Cavite which reads as follows:
ORDER
When this case was called for trial for the arraignment, counsel for the accused appeared
stating that in view of the ruling laid down by this court in criminal case No. 6785 of this court,
holding that the penalty applicable is under section 83 of Act No. 4003 which falls within the
original jurisdiction of the justice of the peace court he requests that the case be remanded
to the justice of the peace court of Cavite which conducted the preliminary investigation, so
that the latter may try it, being within its original jurisdiction.
We agree that it falls within the jurisdiction of the corresponding justice of the peace court,
but it being alleged in the information that the infraction was committed within the waters of
the Island of Corregidor, the competent justice of the peace court is that of Corregidor, not
Cavite.
Wherefore, we decree the dismissal of this case, cancelling the bond filed by the accused,
with costs de oficio, without prejudice to the filing by the prosecuting attorney of a new
information in the justice of the peace court of Corregidor, if he so deems convenient. It is so
ordered.
In support of his appeal the appellant assigns as the sole alleged error committed by the court a
quo its having dismissed the case on the ground that it does not fall within its original jurisdiction.
On June 18, 1930, the provincial fiscal of Cavite filed against the accused -appellee Augusta A.
Santos an information which reads as follows:
The undersigned Provincial Fiscal accuses Augusta A. Santos of violation of section 28 of

Fish and Game Administrative Order No. 2 and penalized by section 29 thereof committed
as follows:
That on or about April 29, 1935, within 1,500 yards north of Cavalry Point, Corregidor Island,
Province of Cavite, P.I., the said accused Augusta A. Santos, the registered owner of two
fishing motor boats Malabon II and Malabon III, did then and there willfully, unlawfully and
criminally have his said boats, manned and operated by his fishermen, fish, loiter and anchor
without permission from the Secretary of Agriculture and Commerce within three (3)
57
kilometers from the shore line of the Island of Corregidor over which the naval and military
authorities of the United States exercise jurisdiction.
Contrary to law.
Cavite, Cavite, June 18, 1935.
Section 28 of Administrative Order No. 2 relative to fish and game, issued by the Secretary of
Agriculture and Commerce, provides as follows:
28. Prohibited fishing areas. — No boats licensed in accordance with the provisions of Act
No. 4003 and this order to catch, collect, gather, take, or remove fish and other sea products
from Philippine waters shall be allowed to fish, loiter, or anchor within 3 kilometers of the
shore line of islands and reservations over which jurisdiction is exercised by naval or military
authorities of the United States, particularly Corregidor, Pulo Caballo, La Monja, El Fraile,
and Carabao, and all other islands and detached rocks lying between Mariveles Reservation
on the north side of the entrance to Manila Bay and Calumpan Point Reservation on the
south side of said entrance: Provided, That boats not subject to license under Act No. 4003
and this order may fish within the areas mentioned above only upon receiving written
permission therefor, which permission may be granted by the Secretary of Agriculture and
Commerce upon recommendation of the military or naval authorities concerned.
A violation of this paragraph may be proceeded against under section 45 of the Federal
Penal Code.
The above quoted provisions of Administrative, Order No. 2 were issued by the then Secretary of
Agriculture and Natural Resources, now Secretary of Agriculture and Commerce, by virtue of the
authority vested in him by section 4 of Act No. 4003 which reads as follows:
SEC. 4. Instructions, orders, rules and regulations. — The Secretary of Agriculture and
Natural Resources shall from time to time issue such instructions, orders, rules and
regulations consistent with this Act, as may be necessary and proper to carry into effect the
provisions thereof and for the conduct of proceedings arising under such provisions.
The herein accused and appellee Augusto A. Santos is charged with having ordered his fishermen
to manage and operate the motor launches Malabon II and Malabon Ill registered in his name and to
fish, loiter and anchor within three kilometers of the shore line of the Island of Corregidor over which
jurisdiction is exercised by naval and military authorities of the United States, without permission
from the Secretary of Agriculture and Commerce.
These acts constitute a violation of the conditional clause of section 28 above quoted, which reads
as follows:
Provided, That boats not subject to license under Act No. 4003 and this order may fish within
the areas mentioned above (within 3 kilometers of the shore line of islands and reservations
over which jurisdiction is exercised by naval and military authorities of the United States,
particularly Corregidor) only upon receiving written permission therefor, which permission
may be granted by the Secretary of Agriculture and Commerce upon recommendation of the
military and naval authorities of concerned. (Emphasis supplied.)
58
Act No. 4003 contains no similar provision prohibiting boats not subject to license from fishing within
three kilometers of the shore line of islands and reservations over which jurisdiction is exercised by
naval and military authorities of the United States, without permission from the Secretary of
Agriculture and Commerce upon recommendation of the military and naval authorities concerned.
Inasmuch as the only authority granted to the Secretary of Agriculture and Commerce, by section 4
of Act No. 4003, is to issue from time to time such instructions, orders, rules, and regulations
consistent with said Act, as may be necessary and proper to carry into effect the provisions thereof
and for the conduct of proceedings arising under such provisions; and inasmuch as said Act No.
4003, as stated, contains no provisions similar to those contained in the above quoted conditional
clause of section 28 of Administrative Order No. 2, the conditional clause in question supplies a
defect of the law, extending it. This is equivalent to legislating on the matter, a power which has not
been and cannot be delegated to him, it being exclusively reserved to the then Philippine Legislature
by the Jones Law, and now to the National Assembly by the Constitution of the Philippines. Such act
constitutes not only an excess of the regulatory power conferred upon the Secretary of Agriculture
and Commerce, but also an exercise of a legislative power which he does not have, and therefore
said conditional clause is null and void and without effect (12 Corpus Juris, 845; Rubi vs. Provincial
Board of Mindoro, 39 Phil., 660; U.S. vs. Ang Tang Ho, 43 Phil., 1; U.S. vs. Barrias, 11 Phil., 327).
For the foregoing considerations, we are of the opinion and so hold that the conditional clause of
section 28 of Administrative Order No. 2. issued by the Secretary of Agriculture and Commerce, is
null and void and without effect, as constituting an excess of the regulatory power conferred upon
him by section 4 of Act No. 4003 and an exercise of a legislative power which has not been and
cannot be delegated to him.
Wherefore, inasmuch as the facts with the commission of which Augusto A. Santos is charged do
not constitute a crime or a violation of some criminal law within the jurisdiction of the civil courts, the
information filed against him is dismissed, with the costs de oficio. So ordered.
EN BANC
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
59
required by Circular No. 20. the appeal is based on the claim that said circular No. 20 was not
published in the Official Gazette prior to the act or omission imputed to the appellant, and that
consequently, said circular had no force and effect. It is contended that Commonwealth Act. No.,
638 and Act 2930 both require said circular to be published in the Official Gazette, it being an order
or notice of general applicability. The Solicitor General answering this contention says that
Commonwealth Act. No. 638 and 2930 do not require the publication in the Official Gazette of said
circular issued for the implementation of a law in order to have force and effect.
We agree with the Solicitor General that the laws in question do not require the publication of the
circulars, regulations and notices therein mentioned in order to become binding and effective. All that
said two laws provide is that laws, resolutions, decisions of the Supreme Court and Court of
Appeals, notices and documents required by law to be of no force and effect. In other words, said
two Acts merely enumerate and make a list of what should be published in the Official Gazette,
presumably, for the guidance of the different branches of the Government issuing same, and of the
Bureau of Printing.
However, section 11 of the Revised Administrative Code provides that statutes passed by Congress
shall, in the absence of special provision, take effect at the beginning of the fifteenth day after the
completion of the publication of the statute in the Official Gazette. Article 2 of the new Civil Code
(Republic Act No. 386) equally provides that laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette, unless it is otherwise provided. It is true that
Circular No. 20 of the Central Bank is not a statute or law but being issued for the implementation of
the law authorizing its issuance, it has the force and effect of law according to settled jurisprudence.
(See U.S. vs. Tupasi Molina, 29 Phil., 119 and authorities cited therein.) Moreover, as a rule,
circulars and regulations especially like the Circular No. 20 of the Central Bank in question which
prescribes a penalty for its violation should be published before becoming effective, this, on the
general principle and theory that before the public is bound by its contents, especially its penal
provisions, a law, regulation or circular must first be published and the people officially and
specifically informed of said contents and its penalties.
Our Old Civil code, ( Spanish Civil Code of 1889) has a similar provision about the effectivity of laws,
(Article 1 thereof), namely, that laws shall be binding twenty days after their promulgation, and that
their promulgation shall be understood as made on the day of the termination of the publication of
the laws in the Gazette. Manresa, commenting on this article is of the opinion that the word "laws"
include regulations and circulars issued in accordance with the same. He says:
El Tribunal Supremo, ha interpretado el articulo 1. del codigo Civil en Sentencia de 22 de

Junio de 1910, en el sentido de que bajo la denominacion generica de leyes, se comprenden
tambien los Reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordenes
dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. Tambien el
poder ejecutivo lo ha venido entendiendo asi, como lo prueba el hecho de que muchas de
sus disposiciones contienen la advertencia de que empiezan a regir el mismo dia de su
publicacion en la Gaceta, advertencia que seria perfectamente inutil si no fuera de aplicacion
al caso el articulo 1.o del Codigo Civil. (Manresa, Codigo Civil Español, Vol. I. p. 52).
In the present case, although circular No. 20 of the Central Bank was issued in the year 1949, it was
not published until November 1951, that is, about 3 months after appellant's conviction of its
violation. It is clear that said circular, particularly its penal provision, did not have any legal effect and
bound no one until its publication in the Official Gazzette or after November 1951. In other words,
appellant could not be held liable for its violation, for it was not binding at the time he was found to
have failed to sell the foreign exchange in his possession thereof.
60
But the Solicitor General also contends that this question of non-publication of the Circular is being
raised for the first time on appeal in this Court, which cannot be done by appellant. Ordinarily, one
may raise on appeal any question of law or fact that has been raised in the court below and which is
within the issues made by the parties in their pleadings. (Section 19, Rule 48 of the Rules of Court).
But the question of non-publication is fundamental and decisive. If as a matter of fact Circular No. 20
had not been published as required by law before its violation, then in the eyes of the law there was
no such circular to be violated and consequently appellant committed no violation of the circular or
committed any offense, and the trial court may be said to have had no jurisdiction. This question
may be raised at any stage of the proceeding whether or not raised in the court below.
In view of the foregoing, we reverse the decision appealed from and acquit the appellant, with
costs de oficio.
SECOND DIVISION
G.R. No. L-32166 October 18, 1977
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,

vs.
HON. MAXIMO A. MACEREN CFI, Sta. Cruz, Laguna, JOSE BUENAVENTURA, GODOFREDO
REYES, BENJAMIN REYES, NAZARIO AQUINO and CARLO DEL ROSARIO, accused-appellees.
Office of the Solicitor General for appellant.
Rustics F. de los Reyes, Jr. for appellees.
AQUINO, J.: têñ .£îhqwâ£
This is a case involving the validity of a 1967 regulation, penalizing electro fishing in fresh water
fisheries, promulgated by the Secretary of Agriculture and Natural Resources and the Commissioner
of Fisheries under the old Fisheries Law and the law creating the Fisheries Commission.
On March 7, 1969 Jose Buenaventura, Godofredo Reyes, Benjamin Reyes, Nazario Aquino and
Carlito del Rosario were charged by a Constabulary investigator in the municipal court of Sta. Cruz,
Laguna with having violated Fisheries Administrative Order No. 84-1.
It was alleged in the complaint that the five accused in the morning of March 1, 1969 resorted to
electro fishing in the waters of Barrio San Pablo Norte, Sta. Cruz by "using their own motor banca,
equipped with motor; with a generator colored green with attached dynamo colored gray or
somewhat white; and electrocuting device locally known as sensored with a somewhat webbed
copper wire on the tip or other end of a bamboo pole with electric wire attachment which was
attached to the dynamo direct and with the use of these devices or equipments catches fish thru
electric current, which destroy any aquatic animals within its cuffed reach, to the detriment and
prejudice of the populace" (Criminal Case No. 5429).
61
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+ .£ªw ph!1
SUBJECT: PROHIBITING ELECTRO FISHING IN ALL WATERS ñé+.£ªw ph!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+.£ªw ph!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.
(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
62
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
63
treated as a direct appeal from the municipal court to this Court. (See People vs. Del Rosario, 97
Phil. 67).
In this appeal, the prosecution argues that Administrative Orders Nos. 84 and 84-1 were not issued
under section 11 of the Fisheries Law which, as indicated above, punishes fishing by means of an
obnoxious or poisonous substance. This contention is not well-taken because, as already stated, the
Penal provision of Administrative Order No. 84 implies that electro fishing is penalized as a form of
fishing by means of an obnoxious or poisonous substance under section 11.
The prosecution cites as the legal sanctions for the prohibition against electro fishing in fresh water
fisheries (1) the rule-making power of the Department Secretary under section 4 of the Fisheries
Law; (2) the function of the Commissioner of Fisheries to enforce the provisions of the Fisheries Law
and the regulations Promulgated thereunder and to execute the rules and regulations consistent with
the purpose for the creation of the Fisheries Commission and for the development of fisheries (Sec.
4[c] and [h] Republic Act No. 3512; (3) the declared national policy to encourage, Promote and
conserve our fishing resources (Sec. 1, Republic Act No. 3512), and (4) section 83 of the Fisheries
Law which provides that "any other violation of" the Fisheries Law or of any rules and regulations
promulgated thereunder "shall subject the offender to a fine of not more than two hundred pesos, or
imprisonment for not more than six months, or both, in the discretion of the court."
As already pointed out above, the prosecution's reference to section 83 is out of place because the
penalty for electro fishing under Administrative order No. 84 is not the same as the penalty fixed in
section 83.
We are of the opinion that the Secretary of Agriculture and Natural Resources and the
Commissioner of Fisheries exceeded their authority in issuing Fisheries Administrative Orders Nos.
84 and 84-1 and that those orders are not warranted under the Fisheries Commission, Republic Act
No. 3512.
The reason is that the Fisheries Law does not expressly prohibit electro fishing. As electro fishing is
not banned under that law, the Secretary of Agriculture and Natural Resources and the
Commissioner of Fisheries are powerless to penalize it. In other words, Administrative Orders Nos.
84 and 84-1, in penalizing electro fishing, are devoid of any legal basis.
Had the lawmaking body intended to punish electro fishing, a penal provision to that effect could
have been easily embodied in the old Fisheries Law.
That law punishes (1) the use of obnoxious or poisonous substance, or explosive in fishing; (2)
unlawful fishing in deepsea fisheries; (3) unlawful taking of marine molusca, (4) illegal taking of
sponges; (5) failure of licensed fishermen to report the kind and quantity of fish caught, and (6) other
violations.
Nowhere in that law is electro fishing specifically punished. Administrative Order No. 84, in punishing
electro fishing, does not contemplate that such an offense fails within the category of "other
violations" because, as already shown, the penalty for electro fishing is the penalty next lower to the
penalty for fishing with the use of obnoxious or poisonous substances, fixed in section 76, and is not
the same as the penalty for "other violations" of the law and regulations fixed in section 83 of the
Fisheries Law.
The lawmaking body cannot delegate to an executive official the power to declare what acts should
constitute an offense. It can authorize the issuance of regulations and the imposition of the penalty
64
provided for in the law itself. (People vs. Exconde 101 Phil. 11 25, citing 11 Am. Jur. 965 on p. 11
32).
Originally, Administrative Order No. 84 punished electro fishing in all waters. Later, the ban against
electro fishing was confined to fresh water fisheries. The amendment created the impression that
electro fishing is not condemnable per se. It could be tolerated in marine waters. That circumstances
strengthens the view that the old law does not eschew all forms of electro fishing.
However, at present, there is no more doubt that electro fishing is punishable under the Fisheries
Law and that it cannot be penalized merely by executive revolution because Presidential Decree No.
704, which is a revision and consolidation of all laws and decrees affecting fishing and fisheries and
which was promulgated on May 16, 1975 (71 O.G. 4269), expressly punishes electro fishing in fresh
water and salt water areas.
That decree provides: 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).
65
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 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."
66
As noted by Justice Fernando, "except for constitutional officials who can trace their competence to
act to the fundamental law itself, a public office must be in the statute relied upon a grant of power
before he can exercise it." "department zeal may not be permitted to outrun the authority conferred
by statute." (Radio Communications of the Philippines, Inc. vs. Santiago, L-29236, August 21, 1974,
58 SCRA 493, 496-8).
"Rules and regulations when promulgated in pursuance of the procedure or authority conferred upon
the administrative agency by law, partake of the nature of a statute, and compliance therewith may
be enforced by a penal sanction provided in the law. This is so because statutes are usually
couched in general terms, after expressing the policy, purposes, objectives, remedies and sanctions
intended by the legislature. The details and the manner of carrying out the law are oftentimes left to
the administrative agency entrusted with its enforcement. In this sense, it has been said that rules
and regulations are the product of a delegated power to create new or additional legal provisions
that have the effect of law." The rule or regulation should be within the scope of the statutory
authority granted by the legislature to the administrative agency. (Davis, Administrative Law, p. 194,
197, cited in Victories Milling Co., Inc. vs. Social Security Commission, 114 Phil. 555, 558).
In case of discrepancy between the basic law and a rule or regulation issued to implement said law,
the basic law prevails because said rule or regulation cannot go beyond the terms and provisions of
the basic law (People vs. Lim, 108 Phil. 1091).
This Court in its decision in the Lim case, supra, promulgated on July 26, 1960, called the attention
of technical men in the executive departments, who draft rules and regulations, to the importance
and necessity of closely following the legal provisions which they intend to implement so as to avoid
any possible misunderstanding or confusion.
The rule is that the violation of a regulation prescribed by an executive officer of the government in
conformity with and based upon a statute authorizing such regulation constitutes an offense and
renders the offender liable to punishment in accordance with the provisions of the law (U.S. vs.
Tupasi Molina, 29 Phil. 119, 124).
In other words, a violation or infringement of a rule or regulation validly issued can constitute a crime
punishable as provided in the authorizing statute and by virtue of the latter (People vs. Exconde 101
Phil. 1125, 1132).
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
67
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).
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.
68
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.
EN BANC
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
69
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
70
themselves on a Friday or Monday in order to have a prolonged weekend, resulting

in the prejudice of the government and the public in general. 3
Petitioner filed a motion for reconsideration and in Resolution No. 90-797, the respondent
Commission denied said motion for lack of merit. The respondent Commission in explaining its
action held:
The Primer on the Civil Service dated February 21, 1978, embodies the Civil Service
Commission rulings to be observed whenever an employee of the government who
has no more leave credits, is absent on a Friday and/or a Monday is enough basis
for the deduction of his salaries corresponding to the intervening Saturdays and
Sundays. What the Commission perceived to be without basis is the demand of
Peralta for the payment of his salaries corresponding to Saturdays and Sundays
when he was in fact on leave of absence without pay on a Friday prior to the said
days. A reading of Republic Act No. 2260 (sic) does not show that a government
employee who is on leave of absence without pay on a day before or immediately
preceding Saturdays, Sunday or legal holiday is entitled to payment of his salary for
said days. Further, a reading of Senate Journal No. 67 dated May 4, 1960 of House
Bill No. 41 (Republic Act No. 2625) reveals that while the law excludes Saturdays,
Sundays and holidays in the computation of leave credits, it does not, however,
include a case where the leave of absence is without pay. Hence, applying the
principle of inclusio unius est exclusio alterius, the claim of Peralta has no merit.
Moreover, to take a different posture would be in effect giving more premium to
employees who are frequently on leave of absence without pay, instead of
discouraging them from incurring further absence without
pay. 4
Petitioner's motion for reconsideration having been denied, petitioner filed the present petition.
What is primarily questioned by the petitioner is the validity of the respondent Commission's policy
mandating salary deductions corresponding to the intervening Saturdays, Sundays or Holidays
where an employee without leave credits was absent on the immediately preceding working day.
During the pendency of this petition, the respondent Commission promulgated Resolution No. 91-
540 dated 23 April 1991 amending the questioned policy, considering that employees paid on a
monthly basis are not required to work on Saturdays, Sunday or Holidays. In said amendatory
Resolution, the respondent Commission resolved "to adopt the policy that when an employee,
regardless of whether he has leave credits or not, is absent without pay on day immediately
preceding or succeeding Saturday, Sunday or holiday, he shall not be considered absent on those
days." Memorandum Circular No. 16 Series of 1991 dated 26 April 1991, was also issued by CSC
Chairman Sto. Tomas adopting and promulgating the new policy and directing the Heads of
Departments, Bureaus and Agencies in the national and local governments, including government-
owned or controlled corporations with original charters, to oversee the strict implementation of the
circular.
Because of these developments, it would seem at first blush that this petition has become moot and
academic since the very CSC policy being questioned has already been amended and, in effect,
Resolutions No. 90-497 and 90-797, subject of this petition for certiorari, have already been set
aside and superseded. But the issue of whether or not the policy that had been adopted and in force
since 1965 is valid or not, remains unresolved. Thus, for reasons of public interest and public policy,
it is the duty of the Court to make a formal ruling on the validity or invalidity of such questioned
policy.
71
The Civil Service Act of 1959 (R.A. No. 2260) conferred upon the Commissioner of Civil Service the
following powers and duties:
Sec. 16 (e) with the approval by the President to prescribe, amend and enforce
suitable rules and regulations for carrying into effect the provisions of this Civil
Service Law, and the rules prescribed pursuant to the provisions of this law shall
become effective thirty days after publication in the Official Gazette;
xxx xxx xxx
(k) To perform other functions that properly belong to a central personnel agency. 5
Pursuant to the foregoing provisions, the Commission promulgated the herein challenged policy.
Said policy was embodied in a 2nd Indorsement dated 12 February 1965 of the respondent
Commission involving the case of a Mrs. Rosalinda Gonzales. The respondent Commission ruled
that an employee who has no leave credits in his favor is not entitled to the payment of salary on
Saturdays, Sundays or Holidays unless such non-working days occur within the period of service
actually rendered. The same policy is reiterated in the Handbook of Information on the Philippine
Civil Service. 6 Chapter Five on leave of absence provides that:
5.51. When intervening Saturday, Sunday or holiday considered as leave without pay
— when an employee is on leave without pay on a day before or on a day
immediately preceding a Saturday, Sunday or holiday, such Saturday, Sunday or
holiday shall also be without pay. (CSC, 2nd Ind., Feb. 12, 1965).
It is likewise illustrated in the Primer on the Civil Service 7 in the section referring to Questions and
Answers on Leave of Absences, which states the following:
27. How is leave of an employee who has no more leave credits computed if:
(1) he is absent on a Friday and the

following Monday?
(2) if he is absent on Friday but

reports to work the following Monday?
(3) if he is absent on a Monday but

present the preceding Friday?
- (1) He is considered on leave without

pay for 4 days covering Friday to
Monday;

pay for 3 days from Friday to Sunday;

pay for 3 days from Saturday to
Monday.
72
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
We find this petition to be impressed with merit.
73
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?
74
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
. . . . 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.
EN BANC
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.
75
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, 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
76
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:
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.
L
U
I
S
T
.
S
A
N
T
O
S
77
e
c
r
e
t
a
r
y
.
(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
of public officials . . . now prescribed in the Constitution and existing laws, the
following shall constitute prohibited acts and transactions of any public officials . . .
and are hereby declared to be unlawful: . . . (b) Public Officials . . . during their
incumbency shall not: (1) . . . accept employment as officer, employee, consultant,
counsel, broker, agent, trustee or nominee in any private enterprise regulated,
supervised or licensed by their office unless expressly allowed by law; (2) Engage in
the private practice of their profession unless authorized by the Constitution or law,
provided that such practice will not conflict or tend to conflict with their official
functions: . . .
xxx xxx xxx
Under Memorandum Circular No. 17 of the Office of the President dated September
4, 1986, the authority to grant any permission, to accept private employment in any
capacity and to exercise profession, to any government 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 prohibition will be absolute in the
case of those officers . . . whose duties and responsibilities require
that their entire time be at the disposal of the Government: Provided,
further, That if an employee is granted permission to engage in
outside activities, the time so devoted outside of office should be
fixed by the Chief of the agency to the end that it will not impair in
anyway the efficiency of the officer or employee . . . subject to any
additional conditions which the head of the office deems necessary in
78
each particular case in the interest of the service, as expressed in the

various issuances of the Civil Service Commission.
Conformably with the foregoing, the following guidelines are to be observed in the
grant of permission to the practice of profession and to the acceptance of private
employment of local elective officials, to wit:
1) The permission shall be granted by the Secretary of Local

Government;
2) Provincial Governors, City and Municipal Mayors whose duties and

responsibilities require that their entire time be at the disposal of the
government in conformity with Sections 141, 171 and 203 of the
Local Government Code (BP 337), are prohibited to engage in the
practice of their profession and to accept private employment during
their incumbency:
3) Other local elective officials may be allowed to practice their

profession or engage in private employment on a limited basis at the
discretion of the Secretary of Local Government, subject to existing
laws and to the following conditions:
a) That the time so devoted outside of office hours

should be fixed by the local chief executive concerned
to the end that it will not impair in any way the
efficiency of the officials concerned;
b) That no government time, personnel, funds or

supplies shall be utilized in the pursuit of one's
profession or private employment;
c) That no conflict of interests between the practice of

profession or engagement in private employment and
the official duties of the concerned official shall arise
thereby;
d) Such other conditions that the Secretary deems

necessary to impose on each particular case, in the
interest of public service. (Emphasis supplied, pp. 31-
32, Rollo.)
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:
79
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
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]).
80
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.
81

Admin Law FULL TEXT Cases Set 3

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Admin Law FULL TEXT Cases Set 3

Uploaded by

Copyright:

Available Formats

Administrative Law Set 3 Full Text Cases

G.R. No. 166715 August 14, 2008

ABAKADA GURO PARTY LIST (formerly AASJS)1 OFFICERS/MEMBERS SAMSON S.

Actual Case And Ripeness

Section 1, Article 11 of the Constitution states:

The BIR performs the following functions:

(5) Perform such other functions as may be provided by law.24

xxx xxx xxx (emphasis supplied)

On the other hand, the BOC has the following functions:

(2) Account for all customs revenues collected;

(6) Administer all legal requirements that are appropriate;

(8) Exercise supervision and control over its constituent units;

(9) Perform such other functions as may be provided by law.25

xxx xxx xxx (emphasis supplied)

Excess of Collection of the Percent (%) of the Excess Collection to

xxx xxx xxx (emphasis supplied)

xxx xxx xxx

xxx xxx xxx (emphasis supplied)

Section 12 of RA 9335 provides:

Concept and bases of congressional oversight

Categories of congressional oversight functions

Congressional scrutiny implies a lesser intensity and continuity of attention to

xxx xxx xxx

Section 1, Article VI of the Constitution states:

Additionally, Section 27(1), Article VI of the Constitution provides:

The President’s role in law-making.

Section 13 of RA 9335 provides:

G.R. No. 153266 March 18, 2010

VICTORIA C. GUTIERREZ, JOEL R. PEREZ, ARACELI L. YAMBOT, CORAZON F. SORIANO,

G.R. No. 159007

ESTRELLITA C. AMPONIN, JUDITH A. CUDAL, ROMEO A. PAGALAN, MARISSA F. PARIÑAS,

G.R. No. 159029

AUGUSTO R. NIEVES, BONIFACIO H. ATIVO, TARCELA P. DETERA, NILDA G. CIELO,

G.R. No. 170084

KAPISANAN NG MGA MANGGAGAWA SA BUREAU OF AGRICULTURAL STATISTICS (KMB),

G.R. No. 172713

NATIONAL HOUSING AUTHORITY, Petitioner,

G.R. No. 173119

INSURANCE COMMISSION OFFICERS AND EMPLOYEES, REPRESENTED BY INSURANCE

G.R. No. 176477

FIBER INDUSTRY DEVELOPMENT AUTHORITY EMPLOYEES ASSOCIATION (FIDAEA),

G.R. No. 177990

BUREAU OF ANIMAL INDUSTRY EMPLOYEES ASSOCIATION (BAIEA), LORY C.

A.M. No. 06-4-02-SB

RE: REQUEST OF SANDIGANBAYAN FOR AUTHORITY TO USE THEIR SAVINGS TO PAY

The Facts and the Case

The Issues Presented

The common issues presented in these consolidated cases are:

The Court’s Ruling

(1) representation and transportation allowances;

(2) clothing and laundry allowances;

(4) subsistence allowances of hospital personnel;

(5) hazard pay;

(6) allowances of foreign service personnel stationed abroad; and

Delegated rule-making is a practical necessity in modern governance because of the increasing

(1) Cost of Living Allowance (COLA);

(2) Inflation connected allowance;

(3) Living Allowance;

(4) Emergency Allowance;

(6) Additional Compensation of Rural Health Physicians;

(7) Additional Compensation of Nurses in Malacañang Clinic;

(8) Nurses Allowance in the Air Transportation Office;

(9) Assignment Allowance of School Superintendents;