 Penal rules and regulations

o Refer to rules and regulations carrying penal and criminal sanctions

o Requisites for validity
 Law authorizing promulgation of rules must itself provide for the imposition of a
penalty for a violation
 It mut fix or define a penalty
 Violation must be punishable or made a crime under law
 Rules and regulation mut be published in the official gazette
o Law making bodies cannot delegate to an administrative body the power to declare what
shall constitute a criminal offense and how it shall be punished
o Violation of law is punished and not violation of the rules
 Legal force and effect of administrative rules and regulations
o Valid legislative rules have the force and effect of law
 Valid if duly promulgated in pursuance of properly delegated authority
 They receive statutory force upon going into effect
o Interpretative rules do not have the force of law
 Can still be challenged in court, since the statute itself remains the sole criterion of
what it means
o Rules prescribing methods of procedure have the effect of law
 Yet these rules do not prevent courts from doing what justice requires
 Can be held void if found to be in conflict with statutory requirements
 Principles of administrative construction
o It is the intention and purpose that is controlling, expressio unius ext exclusio alterius may
be resorted to
 When one or more things in a class are expressly mentioned, the others are excluded
o Give construction that sustains its validity and that which is more reasonable
o Administrative regulations providing punishment should be strictly construed, but not as to
defeat the obvious intention for which it was adopted
o Where a rule is clear and unambiguous it does not admit of judicial interpretation
 Effect of reliance on rules
o Peron who relies in good faith on agency rules should be held harmless from loss if that rule
is later held invalid or amended
 An unconstitutional rules vests no rights
 An amended rule may not be applied retrospectively to periods during which the old
law was in effect
o Whether rules can be made to operate retroactively depends on the provision of the
authorizing statute
 It must not conflict with restrictions on the legislative power to make retroactive laws
 Will not be construed to operate retrospectively if the rule does not show that
intention
 Will not apply retrospectively if to do so is unreasonable
 Amendment or repeal of administrative rules (Just because a rule was changed does not mean
the old rule was unreasonable)
o In order to be valid , a change must be in accordance with statutory procedural
requirements (Notice and vote requirements)
o Should not be amended to have retroactive effect except when it is in disharmony with law
it sought to interpret and is amended to correctly apply the statute
 o Not bound by res judicata since rules may be amended to conform to the requirements of
the law or public interest
 However it should still recognize the validity of a rule prescribed by it and not repel
with retroactive effect
o Parties may voluntary waive compliance with procedural rules
 May be founded on acts and verbal declarations
 Disregard of procedural niceties will be tolerated where it clearly appears that no
prejudice resulted
 If a rule was established for the agency's sole convenience the it may be waived by the
agency
 Agencies cannot adopt a procedure to affect the outcome of a particular case OR
willfully ignore a rule in a particular case
o Separate opinion
 Procedural rules may be subverted for the interests of justice
 That the power of the president to suspend a procedural rule is in exercise of his
power to control
 Estoppel applies in the active participation of proceedings
 Formal requirements in the promulgation of rules and regulations
o Administrative code of 1987

SEC. 3. Filing.

(1) Every agency shall file with the University of the Philippines Law Center three (3)
certified copies of every rule adopted by it. Rules in force on the date of effectivity of
this Code which are not filed within three months from that date shall not thereafter
be subject to any sanction against any party or persons.

(2) The records officer of the agency, or his equivalent functionary, shall carry out the
requirements of this section under pain of disciplinary action.

(3) A permanent register of all rules shall be kept by the issuing agency and shall be
open to public inspection

SEC. 4. Effectivity.

In addition to other rule-making requirements provided by law not inconsistent with

this Book, each rule shall become effective fifteen (15) days from the date of filing as
above provided unless a different date is fixed by law, or specified in the rule in cases
of imminent danger to public health, safety and welfare, the existence of which must
be expressed in a statement accompanying the rule. The agency shall take appropriate
measures to make emergency rules known to persons who may be affected by them

SEC. 5. Publication and Reading. — The University of the Philippines Law Center shall:
(1) Publish a monthly bulletin setting forth the text of rules filed with it during the
preceding quarter; and
 (2) Keep an up-to-date codification of rules thus published and remaining in effect,
together with a complete index and appropriate tables.

SEC. 6. Omission of Some Rules.

(1) The University of the Philippines Law Center may omit from the bulletin or the
codification of any rule if its publications would be unduly cumbersome, expensive or
otherwise inexpedient, but copies of that rule shall be made available on application to
the agency which adopted it, and the bulletin shall contain a notice stating the general
subject matter of the omitted rule and new copies thereof may be obtained.

(2) Every rule establishing an offense or defining an act which, pursuant to law, is
punishable as a crime or subject to a penalty shall in all cases be published in full text.

SEC. 7. Distribution of Bulletin and Codified Rules.

The University of the Philippines Law Center shall furnish one free copy each of every
issue of the bulletin and of the codified rules or supplements to the Office of the
President, Congress, all appellate courts, and the National Library. The bulletin and the
codified rules shall be made available free of charge to such public officers or agencies
as the Congress may select, and to other persons at a price sufficient to cover
publication and mailing or distribution costs.

SEC. 8. Judicial Notice.

The court shall take judicial notice of the certified copy of each rule duly filed or as
published in the bulletin or the codified rules.

SEC. 9. Public Participation.

(1) If not otherwise required by law, an agency shall, as far as practicable, publish or
circulate notices of proposed rules and afford interested parties the opportunity to
submit their views prior to the adoption of any rule.

(2) In the fixing of rates,97 no rule or final order shall be valid unless the proposed
rates shall have been published in a newspaper of general circulation at least two (2)
weeks before the first hearing thereon.

(3) In case of opposition, the rules on contested cases98 shall be observed."

The above provisions are applicable to all agencies as defined (see note 89), except the
Congress, the Judiciary, the Constitutional Commissions, military establishments in all
matters relating exclusively to Armed Forces personnel, the Board of Pardons and
Parole, and state universities and colleges

 Requirement of notice, hearing, and publication

 o Prior notice to and hearing of every affected party is not required since there is no
determination of past events or facts that have to be established or ascertained. As a
general rule, prior notice and hearing are not essential to the validity of rules and
regulations promulgated to govern future conduct
o Where such rules and/or rates apply exclusively to a particular party and are predicated
upon a finding of fact, the agency in making such finding of fact, performs a function
partaking of a quasi-judicial character the valid exercise of which demands a previous notice
and hearing to satisfy the requirement of due process
o Notices of proposed rules must be given when required by law; otherwise, such notices shall
be circulated as far as practicable to afford interested parties the opportunity to submit
their views prior to the adoption of any rule. But any rule which fixes rates shall not be valid
unless the proposed rates shall have been published and hearings conducted with the rules
on contested cases to be observed in case of opposition
o Issuances by an administrative agency to enforce or implement an existing law have the
force and effect of law. Corollarily, when the issuances are of "general applicability,"
publication in the Official Gazette or in a newspaper of general circulation in the Philippines
is necessary as a requirement of due process. subsequent publication thereof would not
cure the defect.
o Interpretative regulations and those merely internal in nature, that is, regulating only the
personnel of the administrative agency and not the public, need not be published. Neither is
publication required of so-called letters of instructions issued by administrative superiors
concerning the rules or guidelines to be followed by their subordinates in the performance
of their duties

VICTORIAS MILLING COMPANY, INC., v. SOCIAL SECURITY COMMISSION

FACTS:

On October 15, 1958, the Social Security Commission issued its Circular No. 22
mandating that employers in computing the premiums due the System, will take into
consideration and include in the Employee’s remuneration all bonuses and overtime
pay, as well as the cash value of other media of remuneration, upon which employee’s
contributions to SSS will be based up to a maximum of P500 for any one month.

Victorias Milling Company, Inc., wrote the Social Security Commission protesting
against the circular as contradictory to a previous Circular No. 7, dated October 7,
1957 expressly excluding overtime pay and bonus in the computation of the
employers’ and employees’ respective monthly premium contributions, and
submitting, "In order to assist your System in arriving at a proper interpretation of
the term `compensation’ for the purposes of" such computation, their observations
on Republic Act 1161 and its amendment and on the general interpretation of the
words "compensation", "remuneration" and "wages." It further questioned the
validity of the circular for lack of authority on the part of the Social Security
Commission to promulgate it without the approval of the President and for lack of
publication in the Official Gazette.
Social Security Commission : objections overruled. Circular No. 22 is not a rule or
regulation that needed the approval of the President and publication in the Official
Gazette to be effective, but a mere administrative interpretation of the statute, a
mere statement of general policy or opinion as to how the law should be construed.
Hence, this appeal.

ISSUE: WON Circular No. 22 is a rule or regulation, as contemplated in Section 4(a)

of Republic Act 1161 empowering the Social Security Commission "to adopt, amend
and repeal subject to the approval of the President such rules and regulations as may
be necessary to carry out the provisions and purposes of this Act."

RULING: No. Circular No. 22 is merely an advisory opinion aimed to interpret

Republic Act 1161. As such it need not be approved by the President.

Administrative Rule/Regulation or Administrative Interpretation

When an administrative agency promulgates rules and regulations, it "makes" a new
law with the force and effect of a valid law, while when it renders an opinion or gives
a statement of policy, it merely interprets a pre-existing law.

Nature of Rules and Regulations

Rules and regulations when promulgated in pursuance of the procedure or authority
conferred upon the administrative agency by law, partake of the nature of a statute,
and compliance therewith may be enforced by a penal sanction provided in the law.
This is so because statutes are usually couched in general terms, after expressing
the policy, purposes, objectives, remedies and sanctions intended by the legislature.
The details and the manner of carrying out the law are often times left to the
administrative agency entrusted with its enforcement.

Requisites for Administrative Rules and Regulations to be binding

A rule is binding on the courts so long as the procedure fixed for its promulgation is
followed and its scope is within the statutory authority granted by the legislature,
even if the courts are not in agreement with the policy stated therein or its innate
wisdom. In contradiction, administrative interpretation of the law is at best merely
advisory, for it is the courts that finally determine what the law means.

In this case, RA 1161, which states that compensation “excludes the bonuses”, was
amended by RA 1792. The latter law changed the definition of compensation where
it omits the “exclusion of bonuses” in its definition. It thus became necessary for the
Social Security Commission to interpret the effect of such deletion. Circular No. 22
purports merely to advise employers-members of the System of what, in the light of
the amendment of the law, they should include in determining the monthly
compensation of their employees upon which the social security contributions should
be based. It did not add any duty or detail that was not already in the law as
amended. It merely stated and circularized the opinion of the Commission as to how
the law should be construed. Such circular, therefore, did not require presidential
approval and publication in the Official Gazette for its effectivity.
Rules on Interpretation when the word is specifically defined in the statute:
While the rule is that terms or words are to be interpreted in accordance with their
well-accepted meaning in law, nevertheless, when such term or word is specifically
defined in a particular law, such interpretation must be adopted in enforcing that
particular law, for it can not be gainsaid that a particular phrase or term may have
one meaning for one purpose and another meaning for some other purpose.

Such is the case that is now before us. Republic Act 1161 specifically defined what
"compensation" should mean "For the purposes of this Act." Republic Act 1792
amended such definition by deleting some exceptions authorized in the original Act.
By virtue of this express substantial change in the phraseology of the law, whatever
prior executive or judicial construction may have been given to the phrase in question
should give way to the clear mandate of the new law.

Tayug Rural Bank v Central Bank to Pesigan v Angeles

PRINCIPLE: Construction and Administrative Interpretation

o Rules and regulations partake of the nature of a statute, and compliance
therewith may be enforced by a penal sanction provided in the law.
o Administrative interpretation of the law is at best merely advisory, for it is the
courts that finally determine what the law means.
FACTS
• Plaintiff Tayug Rural Bank is a banking corporation which obtained 13 loans
from defendant Central Bank, by way of discounting from 1962-1963. The loans were
covered by promissory notes which prescribed the terms and conditions.
• In 1964, the defendant issued Memorandum Circular No. DLC-8 informing all
rural banks that an additional penalty interest rate of 10% per annum would be
assessed on past due loans beginning January 4, 1965. The said memorandum took
effect in 1965.
• In 1969, plaintiff sued defendant to recover 10% penalty imposed and to
restrain defendant from imposing the said penalty.
• In response, defendant filed a counterclaim for the outstanding balance of
about P444K plus interest and penalty at 10% per annum. Defendant justified the
penalty imposed citing the provisions of Sec 147 and 148 of the Rules and Regulations
Governing Rural Banks which provide that Central Bank may impose additional
reasonable penalties in case the rural bank fails its duty to turn over payment
received for papers discounted, or in case of default or violation of obligations by
Rural Bank.
• The said regulations were promulgated by the Monetary Board of the Central
Bank in 1958, under authority of Section 3 of RA 720 (or Rural Banks’ Act), as
amended.
• In its answer, plaintiff prayed for the dismissal of the counterclaim on the
ground that the unpaid obligations were due to defendant’s double standard
rediscounting privileges and the subsequent and illegal imposition of the penalty. In
addition, defendant had no basis to impose such penalty because the promissory
notes executed did not provide penalty interest at 10% per annum on loans starting
January 4, 1965.
• CFI Manila favored of the plaintiff on the ground that the memorandum circular
which was imposed retroactively on past due loans, impairs the obligations of
contracts and deprives the plaintiff of its property without due process of law.
• Defendant appealed the decision to the CA which in turn ruled that the
resolution of the appeal will depend on the legal issue of whether or not the Monetary
Board had authority to authorize defendant bank to impose the penalty.
• The case was later on forwarded to the First Division of SC for decision.
ISSUE: Whether or not the Central Bank can validly impose the 10% penalty on
plaintiff’s past due loans by virtue of the memorandum circular
RULING:
No because the Monetary Board of the Central Banks is not authorized under RA 720
to impose an additional penalty rate on plaintiff’s past due account. Although under
RA 720 the Monetary Board has supervisory powers, SC held that the retroactive
imposition of the penalty is not supervisory in character.
SC held that administrative rules and regulations partake of the nature of a statute,
and compliance therewith may be enforced by a penal sanction provided in the law.
In other words, an administrative agency cannot impose a penalty not found in the
law authorizing the promulgation of the rules and regulation.
SC discussed on construction and administrative interpretation. Important points are
the following:
a) The rule-making power of administrative agencies has limitations such as when
Congress authorizes promulgation of administrative rules and regulations to
implement a law, it is required that the regulations must not be contrary but conform
to the standards of the law;
b) In Teoxon vs the Member of the Board of Administrators where SC held “A rule
is binding on the courts so long as the procedure fixed for its promulgation is followed
and its scope is within the statute granted by the legislature, even if the courts are
not in agreement with the policy stated therein or its innate wisdom. . .” On the other
hand, “administrative interpretation of the law is at best merely advisory, for it is the
courts that finally determine what the law means.”
c) In case of discrepancy between a law and a rule or regulation, the former
prevails because the latter cannot go beyond the terms of the former.
SC affirmed the decision of the trial court with modification that plaintiff shall pay a
sum equivalent to 10% of the outstanding balance of its past overdue account. This
is because it is provided in the promissory notes that in case of a suit for the collection
of the amount of note or unpaid balance, plaintiff shall pay the Central Bank 10% of
the amount unpaid.

Pharmaceutical v. Duque
PRINCIPLE: Construction and Administrative Interpretation-
• The express grant of rule making power necessarily includes the power to
amend, revise, alter, or repeal the same. The purpose of which is to allow
administrative agencies flexibility in formulating and adjusting the details and manner
by which they are to implement the provisions of the law in order to make it more
responsive to the times.
FACTS
In 1986, President Corazon Aquino issued E.O. 51 or Milk Code by virtue of
legislative power granted to the president under the Freedom Constitution. One of
the Code’s objective is to give effect to Article 11 of the International Code of
Marketing of Breastmilk Substitute (ICMBS), a code adopted by the World Health
Assembly in 1981. The WHA adopted several Resolutions to promote breastfeeding
and to prohibit on advertising and other forms of promotion of breastmilk substitute.
In 2006, the respondents (DOH Secretary, Undersecretaries) promulgated
Administrative Order No. 2006-00012 entitled Revised Implementing Rules
and Regulation (RIRR) which implements not only the Milk Code but also various
international instruments which are deemed part of the law of the land.
In response, petitioner, representing its members that are manufactures of
breastmilk substitutes filed a Petition for Certiorari and Prohibition with Prayer for the
issuance of TRO or writ of preliminary injunction. Petitioner alleged that the RIRR is
amending and expanding the average of the Milk Code. The TRO was granted.
Ultimately, before the Court is a petition for Certiorari under Rule 65 of the Rules of
Court to nullify RIRR which has provisions that are unconstitutional and ultra vires.
ISSUES:
A. RELATED TO THE TOPIC (Construction and Administrative Interpretation)
(1) Whether or not Section 57 of the RIRR repeals existing laws that are contrary to
the RIRR
B. AS TO THE MERITS OF THE CASE
(1) Whether the provisions of the ICMBS and WHA Resolutions can be considered as
part of the law of the land as what the respondents argued
(2) Whether the DOH may implement the provisions of the WHA Resolutions by virtue
of its powers and functions under the Revised Administrative Code even in the
absence of a domestic law
(3) Whether the provisions of the RIRR are in accordance with those of the Milk Code
RULINGS:
A. RELATED TO THE TOPIC (Construction and Administrative Interpretation)
No, Section 57 does not provide for the repeal of laws but only orders, issuances
and rules and regulations. Thus, the said provision is valid and is within the DOH’s
ruling-making power.

• Section 57 states: “Repealing Clause — All orders, issuances, and rules and
regulations or parts thereof inconsistent with these revised rules and implementing
regulations are hereby repealed or modified accordingly.”

An administrative agency like DOH possesses quasi-legislative or rule-making power

or the power to make rules and regulations which results in delegated legislation that
is within the confines of the granting statues and the Constitution, and subject to the
doctrine of non-delegability and separability of powers. Such express grant of rule
making power necessarily includes the power to amend, revise, alter, or repeal the
same. The purpose of which is to allow administrative agencies flexibility in
formulating and adjusting the details and manner by which they are to implement
the provisions of the law in order to make it more responsive to the times. Hence, it
is a standard provision in administrative rules that prior issuances of administrative
agencies that are inconsistent therewith are declared repeal or modified.

B. AS TO THE MERITS THE CASE

(1) No because respondents failed to establish that the WHA Resolutions are
customary international law that may be deemed part of the law of the land. Hence,
legislation is necessary to transform the provisions of the WHA Resolutions into
domestic law. Notably, under the 1987 Constitution, international law can become
part of the domestic law whether by transformation or incorporation. The former
requires that an international law be transformed into a domestic law through a
constitutional mechanism such as local legislation. The latter applies when, by mere
constitutional declaration, international law is deemed to have the force of domestic
law.
Treaties become part of the law of the land through transformation. However, ICMBS
and WHA Resolutions are not treaties since these are not concurred in by at least
two-thirds of all members of the Senate as required by the Constitution. Notably,
ICMBS which was adopted by WHA had been transformed into a domestic law through
local legislation (transformation), the Milk Code. Hence, the Milk Code has the force
and effect of the law and not the ICMBS.
Importantly, the Milk Code did not adopt the ICMBS provision which absolutely
prohibiting advertising or other forms of promotion rather, the Code provides that
advertising, promotion, or other marketing materials may be allowed if such
materials are approved by the Inter-Agency Committee (IAC).
As to WHA Resolutions adopting ICMBS and urging member states to implement
ICMBS are merely recommendatory and not legally binding. The WHA resolutions
providing for exclusive breastfeeding form 0-6 months, continued breastfeeding up
to 24 months, and absolutely prohibiting advertisements and promotions of
breastmilk substitutes, are not adopted as a domestic law.
(2) No, only the provisions of the Milk Code but not the WHA Resolutions can be
validly implemented by the DOH through the RIRR. Section 3, Chapter 1, Title IX of
the Revised Administrative Code provides that DOH shall define the national health
policy and implement a national health plan within the framework of the
government's general policies and plans, and issue orders and regulations concerning
the implementation of established health policies. SC held that nowhere in RIRR is it
declared that the advertisement or promotion of breastmilk substitutes should be
absolutely prohibited as part of health policy.
(3) Yes, provisions of the RIRR are in accordance with those of the Milk Code except
Sections 4 (f), 11 and 46 of the RIRR which are void for being ultra vires.
• Sections 4(f)-“advertising, promotions, or sponsorships of infant formula,
breastmilk substitutes and other related products are prohibited”
• Section 11- “No advertising, promotions, sponsorships, or marketing
materials and activities for breastmilk substitutes intended for infants and young
children up to twenty-four (24) months, shall be allowed, because they tend to
convey or give subliminal messages or impressions that undermine breastmilk and
breastfeeding or otherwise exaggerate breastmilk substitutes and/or replacements,
as well as related products covered within the scope of this Code.”
• Section 46- provides the administrative sanctions to be imposed if any person
violated the provision of the Code and its implementing rules and regulations.

Dispositive portion: WHEREFORE, the petition is PARTIALLY GRANTED.

Sections 4 (f), 11 and 46 of Administrative Order No. 2006-0012 dated May
12, 2006 are declared NULL and VOID for being ultra vires. The Department
of Health and respondents are PROHIBITED from implementing said
provisions. The Temporary Restraining Order issued on August 15, 2006 is
LIFTED insofar as the rest of the provisions of Administrative Order No.
2006-0012 is concerned.
[G.R. No. L-9408. October 31, 1956.]
EMILIO Y. HILADO, Petitioner, vs. THE COLLECTOR OF INTERNAL REVENUE and THE COURT OF TAX
APPEALS, Respondents.

FACTS:
1. Petitioner claimed in his 1951 income tax return the deduction of the sum of P12,837.65 as a loss consisting
in a portion of his war damage claim which had been duly approved by the Philippine War Damage
Commission under the Philippine Rehabilitation Act of 1946 but which was not paid and never been paid
pursuant to a notice served upon him by said Commission that said part of his claim will not be paid until the
United States Congress should make further appropriation. He claims that said amount of P12,837.65
represents a “business asset” within the meaning of said Act which he is entitled to deduct as a loss in his
return for 1951.
2. March 31, 1952- Petitioner filed his income tax return for 1951 with the treasurer of Bacolod City wherein he
claimed the amount of P12,837.65 as a deductible item from his gross income pursuant to General Circular
No. V-123 issued by the Collector of Internal Revenue. This circular was issued pursuant to certain rules laid
down by the Secretary of Finance
3. An assessment notice demanding the payment of P9,419 was sent to Petitioner, who paid the tax in monthly
installments, the last payment having been made on January 2, 1953
4. August 30, 1952- the Secretary of Finance, through the Collector of Internal Revenue, issued General
Circular No. V-139, which not only revoked and declared void his general Circular No. V- 123 but laid down
the rule that losses of property which occurred during the period of World War II from fires, storms, shipwreck
or other casualty, or from robbery, theft, or embezzlement are deductible in the year of actual loss or
destruction of said property.
5. The amount of P12,837.65 was disallowed as a deduction from the gross income of Petitioner for 1951 and
the Collector of Internal Revenue demanded from him the payment of the sum of P3,546 as deficiency income
tax for said year.
6. When the petition for reconsideration filed by Petitioner was denied, he filed a petition for review with the Court
of Tax Appeals. In due time, this court rendered decision affirming the assessment made by Respondent
Collector of Internal Revenue. This is an appeal from said decision
ISSUE #1: Whether or not claim for losses of property during the war period for the year 1950 may be deducted from
the income tax of the petitioner for 1951 as declared in the circular issued by the Secretary of Finance

HELD. NO.

A. First, assuming that said amount represents a portion of the 75% of his war damage claim which was not paid,
the same would not be deductible as a loss in 1951 because the last installment he received from the War
Damage Commission, together with the notice that no further payment would be made on his claim, was in
1950. In the circumstance, said amount would at most be a proper deduction from his 1950 gross income.
B. Said amount cannot be considered as a “business asset” which can be deducted as a loss in contemplation
of law because its collection is not enforceable as a matter of right, but is dependent merely upon the
generosity and magnanimity of the U. S. government. There was absolutely no law under which Petitioner
could claim compensation for the destruction of his properties during the battle for the liberation of the
Philippines. The payments of claims by the War Damage Commission merely depended upon its discretion to
be exercised in the manner it may see fit, but the non-payment of which cannot give rise to any enforceable
right,
a. The Philippine Rehabilitation Act which authorized the payment by the United States Government of
war losses suffered by property owners in the Philippines was passed only on August 30, 1946, long
after the losses were sustained. It cannot be said therefore, that the property owners had any
conclusive assurance during the years said losses were sustained, that the compensation was to be
paid therefor. As diligent property owners, they should adopt the safest alternative by considering
such losses deductible during the year when they were sustained
C. Petitioner’s contention that during the last war and as a consequence of enemy occupation in the Philippines
“there was no taxable year” within the meaning of our internal revenue laws because during that period they
were unenforceable, is without merit. It is well known that our internal revenue laws are not political in
nature and as such were continued in force during the period of enemy occupation and in effect were
actually enforced by the occupation government. As a matter of fact, income tax returns were filed
during that period and income tax payment were effected and considered valid and legal. Such tax
laws are deemed to be the laws of the occupied territory and not of the occupying enemy.
a. ‘Law once established continues until changed by some competent legislative power. It is not
changed merely by change of sovereignty. ‘There can be no break or interregnun in law. From
the time the law comes into existence with the first-felt corporateness of a primitive people it must
last until the final disappearance of human society. Once created, it persists until a change takes
 place, and when changed it continues in such changed condition until the next change and so forever.
Conquest or colonization is impotent to bring law to an end; inspite of change of constitution, the law
continues unchanged until the new sovereign by legislative act creates a change.’“

ISSUE #2: Whether or not the Secretary of Finance has the authority to issue such circular

HELD: YES. The Secretary of Finance is vested with authority to revoke, repeal or abrogate the acts or previous rulings
of his predecessor in office because the construction of a statute by those administering it is not binding on their
successors if thereafter the latter become satisfied that a different construction should be given. It is true that under the
authority of section 338 of the National Internal Revenue Code the Secretary of Finance, in the exercise of his
administrative powers, caused the issuance of General Circular No. V-123 as an implementation or interpretative
regulation of section 30 of the same Code, under which the amount of P12,837.65 was allowed to be deducted “in the
year the last installment was received with notice that no further payment would be made until the United States
Congress makes further appropriation therefor”, but such circular was found later to be wrong and was revoked. Thus,
when doubts arose as to the soundness or validity of such circular, the Secretary of Finance sought the advice of the
Secretary of Justice.

ISSUE #3: Whether or not General Circular No. V-139 cannot be given retroactive effect because that would affect and
obliterate the vested right acquired by Petitioner under the previous circular

HELD: NO. General Circular No. V-123, having been issued on a wrong construction of the law, cannot give rise to a
vested right that can be invoked by a taxpayer. The reason is obvious; a vested right cannot spring from a wrong
interpretation. This is too clear to require elaboration.

“It seems too clear for serious argument that an administrative officer cannot change a law enacted by Congress. A
regulation that is merely an interpretation of the statute when once determined to have been erroneous becomes
nullity. An erroneous construction of the law by the Treasury Department or the collector of internal revenue does not
preclude or estop the government from collecting a tax which is legally due.”

“Art. 2254. — No vested or acquired right can arise from acts or omissions which are against the law or which infringe
upon the rights of others.”

Wherefore, the decision appealed from is affirmed Without pronouncement as to costs.

ABS-CBN Broadcasting Corp. v. Court of Tax Appeals

G.R. No. 52306, October 12, 1981

DOCTRINE: Any rulings or circulars promulgated by the CIR have no retroactive application when it would
be prejudicial to taxpayers.

Any revocation, modification, or reversal of and of the rules and regulations promulgated in accordance
with the preceding section or any of the rulings or circulars promulgated by the Commissioner of Internal
Revenue shall not be given retroactive application if the relocation, modification, or reversal will be
prejudicial to the taxpayers, except in the following cases: (a) where the taxpayer deliberately mis-states or
omits material facts from his return or any document required of him by the Bureau of Internal Revenue:
(b) where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from
the facts on which the ruling is based; or (c) where the taxpayer acted in bad faith.
FACTS:

ABS-CBN Broadcasting Corporation was engaged in the business of telecasting local as well as foreign films
acquired from foreign corporations not engaged in trade or business with the Philippines for which ABS-
CBN paid rentals after withholding income tax of 30% of one-half of the film rentals. In implementing
Section 4(b) of the Tax Code, the Commissioner issued General Circular V-334. Pursuant thereto, ABS-CBN
Broadcasting Corp. dutifully withheld and turned over to the BIR 30% of ½ of the film rentals paid by it to
foreign corporations not engaged in trade or business in the Philippines. The last year that the company
withheld taxes pursuant to the Circular was in 1968.

On 27 June 1968, RA 5431 amended Section 24 (b) of the Tax Code increasing the tax rate from 30% to
35% and revising the tax basis from “such amount” referring to rents, etc. to “gross income.”

On February 8, 1971, the Commissioner of Internal Revenue issued Revenue Memorandum Circular No. 4-
71, revoking General Circular No. V-334, and holding that the latter was "erroneous for lack of legal basis,"
because "the tax therein prescribed should be based on gross income without deduction whatever.

In 1971, the Commissioner issued a letter of assessment and demand for deficiency withholding income
tax for years 1965 to 1968. The company requested for reconsideration; where the Commissioner did not
act upon.

ISSUE:

Whether Revenue Memorandum Circular 4-71, revoking General Circular V-334, may be retroactively
applied.

RULING:

No. Any rulings or circulars promulgated by the CIR have no retroactive application when it would be
prejudicial to taxpayers. The retroactive application of Memorandum Circular No. 4-71 prejudices ABS-
CBN since (1) the assessment and demand on petitioner to pay deficiency withholding income tax was also
made three years after 1968 for a period of time commencing in 1965; and, (2) ABS-CBN was no longer in
a position to withhold taxes due from foreign corporations because it had already remitted all film rentals
and no longer had any control over them when the new Circular was issued.

G.R. No. L-9876

US VS. PANLILIO

Doctrine:

The orders, rules and regulations of an administrative officers or body issued pursuant to a statute have the force of
law but are not penal in nature and a violation of such orders is not a offense punishable by law unless the statute
expressly penalizes such violation.
FACTS:

In Feb. 1913, all of the carabaos belonging to accused, Panlilio having been exposed to the dangerous and
contagious disease known as rinderpest, were, in accordance with an order of duly-authorized agent of the
Director of Agriculture, duly quarantined in a corral in the barrio of Masamat, Pampanga; that, on said place,
Panlilio, illegally and voluntarily and without being authorized so to do, and while the quarantine against said
carabaos was still in force, permitted and ordered said carabaos to be taken from the corral in which they were
then quarantined and conducted from one place to another; that by virtue of said orders of the accused, his
servants and agents took the said carabaos from the said corral and drove them from one place to another for the
purpose of working them.

The accused was convicted of violation of Act 1760 relating to the quarantining of animals suffering from
dangerous communicable or contagious diseases and sentencing him to pay a fine of P40 with subsidiary
imprisonment in case of insolvency and to pay the costs of trial. The accused contends that the facts alleged in the
information and proved on the trial do not constitute a violation of Act No. 1760

ISSUE:

Whether accused can be penalized for violation of the order of the Bureau of Agriculture?

HELD:

NO. Nowhere in the law is the violation of the orders of the Bureau of Agriculture prohibited or made unlawful,
nor is there provided any punishment for a violation of such orders. Section 8 of Act No. 1760 provides that any
person violating any of the provisions of the Act shall, upon conviction, be punished. However, the only sections of
the Act which prohibit acts and pronounce them as unlawful are Sections 3, 4 and 5. This case does not fall within
any of them. A violation of the orders of the Bureau of Agriculture, as authorized by paragraph, is not a violation of
the provision of the Act. The orders of the Bureau of Agriculture, while they may possibly be said to have the force
of law, are statutes and particularly not penal statutes, and a violation of such orders is not a penal offense unless
the statute itself somewhere makes a violation thereof unlawful and penalizes it. Nowhere in Act No. 1760 is a
violation of the orders of the Bureau of Agriculture made a penal offense, nor is such violation punished in any way
therein. However, the accused did violate Art. 581, par 2 of the Penal Code which punishes any person who
violates regulations or ordinances with reference to epidemic disease among animals.

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellant,

vs.
AUGUSTO A. SANTOS, defendant-appellee.

63 PHIL 300

FACTS: 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 IIand Malabon III, did then and there willfully, unlawfully and
criminally have his said boats, manned and operated by his fishermen, fish, loiter and anchor
without permission from the Secretary of Agriculture and Commerce within three (3)
kilometers from the shore line of the Island of Corregidor over which the naval and military
authorities of the United States exercise jurisdiction.

Contrary to law.

Cavite, Cavite, June 18, 1935.

Section 28 of Administrative Order No. 2 relative to fish and game, issued by the Secretary of
Agriculture and Commerce, provides as follows:

28. Prohibited fishing areas.

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

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.
ISSUE: WON THE SECRETARY OF AGRICULTURE AND COMMERCE HAS JURISDICTION TO
CHARGE THE ACCUSED.
HELD: NO.

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.

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.

ANSELMO L. PESIGAN vs.

JUDGE DOMINGO MEDINA ANGELES

FACTS:

Anselmo L. Pesigan and Marcelo L. Pesigan, carabao dealers, transported in the

evening of April 2, 1982 twenty-six carabaos and a calf from Sipocot, Camarines
Sur to Padre Garcia, Batangas. With them are: a health certificate from the
provincial veterinarian, a permit to transport large cattle, and three certificates of
inspection – one from the Constabulary command, one from the Bureau of
Animal Industry and one from the mayor of Sipocot.

In spite of the permit to transport and the said four certificates, the carabaos,
while passing at Basud, Camarines Norte, were confiscated by Lieutenant Arnulfo
V. Zenarosa, the town's police station commander, and by Doctor Bella S.
Miranda, provincial veterinarian. The confiscation was based on the Executive
Order No. 626-A which provides "that henceforth, no carabao, regardless of age,
sex, physical condition or purpose and no carabeef shall be transported from one
province to another. The carabaos or carabeef transported in violation of this
Executive Order as amended shall be subject to confiscation and forfeiture by the
government to be distributed... to deserving farmers through dispersal as the
Director of Animal Industry may see fit, in the case of carabaos."

ISSUE:

Whether or not Presidential Executive Order No. 626-A, which provides for the
confiscation and forfeiture by the government of carabaos transported from one
province to another, may be enforced before publication in the Official Gazette.

RULING:

No. The Supreme Court held that the said executive order should not be enforced
against the Pesigans on April 2, 1982 because, as already noted, it is a penal
regulation published more than two months later in the Official Gazette dated
June 14, 1982. It became effective only fifteen days thereafter as provided in
article 2 of the Civil Code and section 11 of the Revised Administrative Code.
The word "laws" in article 2 (article 1 of the old Civil Code) includes circulars and
regulations which prescribe penalties. Publication is necessary to apprise the
public of the contents of the regulations and make the said penalties binding on
the persons affected thereby

That ruling applies to a violation of Executive Order No. 626-A because its
confiscation and forfeiture provision or sanction makes it a penal statute. Justice
and fairness dictate that the public must be informed of that provision by means
of publication in the Gazette before violators of the executive order can be bound
thereby.

Indeed, the practice has always been to publish executive orders in the Gazette.
Section 551 of the Revised Administrative Code provides that even bureau
"regulations and orders shall become effective only when approved by the
Department Head and published in the Official Gazette or otherwise publicly
promulgated".

In the instant case, the livestock inspector and the provincial veterinarian of
Camarines Norte and the head of the Public Affairs Office of the Ministry of
Agriculture were unaware of Executive Order No. 626-A. The Pesigans could not
have been expected to be cognizant of such an executive order.

Tanada v Tuvera
Facts:

Invoking the people's right to be informed on matters of public concern

(Section 6, Article IV of the Constitution), as well as the principle that laws to be valid
and enforceable must be published in the Official Gazette or otherwise effectively
promulgated, petitioners seek a writ of mandamus to compel respondent public
officials to publish, and/or cause the publication in the Official Gazette of various
presidential decrees, letters of instructions, general orders, proclamations, executive
orders, letter of implementation and administrative orders.

Respondents contend that publication in the Official Gazette is not a sine qua
non requirement for the effectivity of laws where the laws themselves provide for
their own effectivity dates.

Issue: Whether or not publication is indispensable.

Ruling: Yes, publication is indispensable.

 Article 2 does not preclude the requirement of publication in the Official
Gazette, even if the law itself provides for the date of its effectivity. Thus, Section 1
of Commonwealth Act 638 provides as follows:
Section 1. There shall be published in the Official Gazette [1] all
important legisiative acts and resolutions of a public nature of the,
Congress of the Philippines; [2] all executive and administrative orders
and proclamations, except such as have no general applicability; [3]
decisions or abstracts of decisions of the Supreme Court and the Court
of Appeals as may be deemed by said courts of sufficient importance to
be so published; [4] such documents or classes of documents as may
be required so to be published by law; and [5] such documents or
classes of documents as the President of the Philippines shall determine
from time to time to have general applicability and legal effect, or which
he may authorize so to be published. …

The clear object of the above-quoted provision is to give the general public
adequate notice of the various laws which are to regulate their actions and conduct
as citizens. Without such notice and publication, there would be no basis for the
application of the maxim "ignorantia legis non excusat." It would be the height of
injustice to punish or otherwise burden a citizen for the transgression of a law of
which he had no notice whatsoever, not even a constructive one.
The word "shall" used therein imposes upon respondent officials an imperative
duty. That duty must be enforced if the Constitutional right of the people to be
informed on matters of public concern is to be given substance and reality.

The publication of all presidential issuances "of a public nature" or "of general
applicability" is mandated by law. Obviously, presidential decrees that provide for
fines, forfeitures or penalties for their violation or otherwise impose a burden or. the
people, such as tax and revenue measures, fall within this category. Other
presidential issuances which apply only to particular persons or class of persons such
as administrative and executive orders need not be published on the assumption that
they have been circularized to all concerned.

Republic vs Pilipinas Shell Petroleum Corp

Facts:
On 10 October 1984, the Oil Price Stabilization Fund (OPSF) was created under
Presidential Decree No. 1956.
On 4 December 1991, the Office of Energy Affairs (OEA), now the DOE,
informed the respondent that respondent’s contributions to the OPSF for foreign
exchange risk charge for the period December 1989 to March 1991 were insufficient.
OEA Audit Task Force noted a total underpayment of P14,414,860.75 by respondent
to the OPSF. As a consequence of the underpayment, a surcharge of P11,654,782.31
was imposed upon respondent. The said surcharge was imposed pursuant to MOF
Circular No. 1-85, as amended by Department of Finance (DOF) Circular No. 2-94.
On 9 December 1991, the OEA wrote another letter to respondent advising the
latter of its additional underpayment to the OPSF of the foreign exchange risk fee in
the amount of P10,139,526.56 for the period April 1991 to October 1991. In addition,
surcharges in the amount of P2,806,656.65 were imposed thereon.
In a letter dated 20 January 1992 addressed to the OEA, respondent justified
that its calculations for the transactions in question were based on a valid
interpretation of MOF Order NO. 11-85 dated 12 April 1985 and MOE Circular No. 85-
05-82 dated 16 May 1985.
The DOE reiterated its demand for respondent to settle the surcharges due.
Otherwise, the DOE warned that it would proceed against the respondent’s
Irrevocable Standby Letter of Credit to recover its unpaid surcharges.
On 19 July 1996, respondent filed a Notice of Appeal before the Office of the
President. The Office of the President affirmed the conclusion of the DOE.
The Court of Appeals reversed the decision of the Office of the President.
Issue:
Whether or not MOF Circular No. 1-85 has no force and effect due to lack of
publication.
Ruling:
Yes.
As early as 1986, this Court in Tañada v. Tuvera enunciated that publication is
indispensable in order that all statutes, including administrative rules that are
intended to enforce or implement existing laws, attain binding force and effect.
Thereafter, the Administrative Code of 1987 was enacted, with Section 3 of
Chapter 2, Book VII thereof specifically providing that:
Filing. — (1) Every agency shall file with the University of the Philippines Law Center
three (3) certified copies of every rule adopted by it. Rules in force on the date of
effectivity of this Code which are not filed within three (3) months from the date shall
not thereafter be the basis of any sanction against any party or persons.
(2) The records officer of the agency, or his equivalent functionary, shall carry out
the requirements of this section under pain of disciplinary action.
(3) A permanent register of all rules shall be kept by the issuing agency and shall be
open to public inspection. (Emphasis provided.)
Under the doctrine of Tanada v. Tuvera, the MOF Circular No. 1-85, as
amended, is one of those issuances which should be published before it becomes
effective since it is intended to enforce Presidential Decree No. 1956. The said circular
should also comply with the requirement stated under Section 3 of Chapter 2, Book
VII of the Administrative Code of 1987 – filing with the ONAR in the University of the
Philippines Law Center – for rules that are already in force at the time the
Administrative Code of 1987 became effective. These requirements of publication and
filing were put in place as safeguards against abuses on the part of lawmakers and
as guarantees to the constitutional right to due process and to information on matters
of public concern and, therefore, require strict compliance.
In the present case, the Certifications dated 11 February 2004 and 9 February
2004 issued by ONAR prove that MOF Circular No. 1-85 and its amendatory rule, DOF
Circular No. 2-94, have not been filed before said office. Moreover, petitioner was
unable to controvert respondent’s allegation that neither of the aforementioned
circulars were published in the Official Gazette or in any newspaper of general
circulation. Thus, failure to comply with the requirements of publication and filing of
administrative issuances renders MOF Circular No. 1-85, as amended, ineffective.

Board of Trustees of GSIS vs. Velasco

Facts:

On 23 May 2002, petitioners charged respondents administratively with grave

misconduct and placed them under preventive suspension for 90 days. Respondents
were charged for their alleged participation in the demonstration held by some GSIS
employees denouncing the alleged corruption in the GSIS and calling for the ouster
of its president and general manager, petitioner Winston F. Garcia.

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. On 22 April 2003, SVP Madarang denied
the request citing GSIS Board Resolution No. 372 (Resolution No. 372) 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.

On 27 August 2003, petitioner GSIS Board issued Board Resolution No. 197
(Resolution No. 197) approving the disqualification of those employees with pending
administrative cases from promotion, step increment, performance-based bonus, and
other benefits and privileges.

Respondent claimed that the Resolution denied him of due process, violated
his right to be presumed innocent, and that the resolutions were ineffective because
they were not registered in the University of the Philippines (UP) Law Center pursuant
to the Revised Administrative Code of 1987.

The trial court ruled in favor of respondent and held that the resolutions were
ineffective due to lack of registration with the UP Law Center.

Issue:

Whether or not the resolutions are ineffective.

Ruling:

No, the resolutions are not ineffective.

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.
The petition is denied. The Court declared the assailed provisions on step
increment in GSIS Board Resolution Nos. 197 and 372 VOID (based on the merits of
the case). The Court also ruled that GSIS Board Resolution Nos. 197, 306 and
372 need not be filed with the University of the Philippines Law Center.