1.

COMMISSIONER OF INTERNAL REVENUE, PETITIONER,

VS.
AVON PRODUCTS MANUFACTURING, INC., RESPONDENT.

FACTS:

Avon filed its Value Added Tax (VAT) Returns and Monthly Remittance Returns of Income Tax Withheld
for the taxable year 1999. CIR served a Collection Letter which required it to pay P80,246,459.15.
These deficiency assessments were the same deficiency taxes covered by the Preliminary Assessment
Notice received by Avon. Avon filed a letter protesting against the Preliminary Assessment Notice.

Without ruling on Avon's protest, the Commissioner prepared the Formal Letter of Demand and Final
Assessment Notices which was protested by Avon.

A conference was allegedly held where Avon informed the revenue officers that all the documents
necessary to support its defenses had already been submitted. Another meeting was held, where it
showed the original General Ledger Book as previously directed by the revenue officers.

During these meetings, the revenue officers allegedly expressed that they would cancel the
assessments resulting from the alleged discrepancy in sales if Avon would pay part of the assessments.
Thus, Avon paid portions of the Final Assessment Notices.

However, in a Memorandum, the Bureau of Internal Revenue's officers recommended the enforcement
and collection of the assessments on the sole justification that Avon failed to submit supporting
documents within the 60-day period as required under Section 228 of the Tax Code.

Avon asserted that even the items already paid were still included in the deficiency tax assessments
covered by the Collection Letter. It argued that it was devoid of legal and factual basis, and was
premature as the Commissioner of Internal Revenue had not yet acted on its protest against the Final
Assessment Notices.

The Commissioner did not act on Avon's request for reconsideration. Thus, Avon was constrained to
treat the Collection Letter as denial of its protest. Avon filed a Petition for Review before the Court of
Tax Appeals.

The Court of Tax Appeals held that there was no deprivation of due process in the issuance by the CIR
of the assessment for deficiency income tax, deficiency excise tax, deficiency VAT, deficiency final
withholding tax on compensation and deficiency expanded withholding tax against AVON for the latter
was afforded an opportunity to explain and present its evidence.
Respondent was ordered by the CTA to cancel/withdraw the Final Demand and Final Assessment
Notices, however, petitioner was ordered to pay respondent the deficiency Income Tax in the amount
of P357,345.88 for taxable year 1999.

Petition for Review was filed before the CTA En Banc to which the latter affirmed the decision of CTA
First Division and upon filing of MR of both parties. It was denied En Banc. Hence, this petition.

Issue: Whether or not the Commissioner of Internal Revenue failed to observe administrative due process
rendering the assessments void

RULING: Yes, the Commissioner of CIR failed to observe administrative due process rendering the
assessments void.

The Bureau of Internal Revenue is the primary agency tasked to assess and collect proper taxes, and to
administer and enforce the Tax Code.
To perform its functions of tax assessment and collection properly, it is given ample powers under the Tax
Code, such as the power to examine tax returns and books of accounts, to issue a subpoena, and to assess
based on best evidence obtainable, among others.

However, these powers must "be exercised reasonably and [under] the prescribed procedure.” The
Commissioner and revenue officers must strictly comply with the requirements of the law, with the Bureau
of Internal Revenue's own rules, and with due regard to taxpayers' constitutional rights.

The Commissioner exercises administrative adjudicatory power or quasi-judicial function in

adjudicating the rights and liabilities of persons under the Tax Code.

Quasi-judicial power has been described as:

Quasi-judicial or administrative adjudicatory power on the other hand is the power of the administrative
agency to adjudicate the rights of persons before it. It is the power to hear and determine questions of
fact to which the legislative policy is to apply and to decide in accordance with the standards laid
down by the law itself in enforcing and administering the same law. 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. (Emphasis supplied,
citations omitted)

In carrying out these quasi-judicial functions, the Commissioner is 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."

Tax investigation and assessment necessarily demand the observance of due process because they affect
the proprietary rights of specific persons.

This Court has stressed the importance of due process in administrative proceedings:
The principle of due process furnishes a standard to which governmental action should conform in order to
impress it with the stamp of validity. Fidelity to such standard must of necessity be the overriding concern
of government agencies exercising quasi-judicial functions. Although a speedy administration of action
implies a speedy trial, speed is not the chief objective of a trial. Respect for the rights of all parties and the
requirements of procedural due process equally apply in proceedings before administrative agencies with
quasi-judicial perspective in administrative decision making and for maintaining the vision which led to the
creation of the administrative office.

It then enumerated the fundamental requirements of due process that must be respected in administrative
proceedings:
(1) The party interested or affected must be able to present his or her own case and submit evidence in
support of it.
(2) The administrative tribunal or body must consider the evidence presented.

(3) There must be evidence supporting the tribunal's decision.

(4) The evidence must be substantial or "such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion."[74]
(5) The administrative tribunal's decision must be rendered on the evidence presented, or at least
contained in the record and disclosed to the parties affected.
(6) The administrative tribunal's decision must be based on the deciding authority's own independent
consideration of the law and facts governing the case.
(7) The administrative tribunal's decision is rendered in a manner that the parties may know the
various issues involved and the reasons for the decision.
Administrative due process is anchored on fairness and equity in procedure. It is satisfied if the party is
properly notified of the charge against it and is given a fair and reasonable opportunity to explain or defend
itself. Moreover, it demands that the party's defenses be considered by the administrative body in making
its conclusions, and that the party be sufficiently informed of the reasons for its conclusions.

IB
Section 228 of the Tax Code, as implemented by Revenue Regulations No. 12-99, provides certain
procedures to ensure that the right of the taxpayer to procedural due process is observed in tax
assessments.

The taxpayers shall be informed in writing of the law and the facts on which the assessment is made;
otherwise, the assessment shall be void.

Avon asserts feigned compliance by the Bureau of Internal Revenue officials and agents of their duties
under the law and revenue regulation. It adds that the administrative proceeding conducted by the Bureau
of Internal Revenue was "a farce," an idle ritual tantamount to a denial of its right to be heard. It specifies
the Bureau of Internal Revenue's inaction throughout the proceedings as follows:

Avon refuted all the claims of the Commissioner by diligently submitting its replies and answers and the
needed documents to prove its claims against findings of the BIR but it was all disregarded by the latter
and was not taken into consideration.

Avon further submits that the presumption of correctness of the assessments cannot apply in the face of
compelling proof that they were issued without due process. It adds that "[h]ad the administrative process
been conducted with fairness and in accordance with the prescribed procedure, [it] need not have incurred
[filing fees and other litigation expenses to defend against a bloated deficiency tax assessment]." [118]

Against these claims of Avon, the Commissioner did not submit any refutation either in her Comment [119] or
Memorandum,[120] and even in her pleadings before the Court of Tax Appeals.

Instead, she could only give out a perfunctory resistance that "tax assessments . . . are presumed correct
and made in good faith."[121]

The Court of Tax Appeals ruled that the difference in the appreciation by the Commissioner of
Avon's supporting documents, which led to the deficiency tax assessments, was not violative of
due process. While the Commissioner has the duty to receive the taxpayer's clarifications and
explanations, she does not have the duty to accept them on face value.
This Court disagrees.

The facts demonstrate that Avon was deprived of due process. It was not fully apprised of the legal and
factual bases of the assessments issued against it.

The Details of Discrepancy attached to the Preliminary Assessment Notice, as well as the Formal Letter of
Demand with the Final Assessment Notices, did not even comment or address the defenses and documents
submitted by Avon.

Thus, Avon was left unaware on how the Commissioner or her authorized representatives appreciated the
explanations or defenses raised in connection with the assessments. There was clear inaction of the
Commissioner at every stage of the proceedings.

There was no comment whatsoever on the matters raised by Avon, or discussion of the Bureau of Internal
Revenue's findings in a manner that Avon may know the various issues involved and the reasons for the
assessments.
Under the Bureau of Internal Revenue's own procedures, the taxpayer is required to respond to the Notice
of Informal Conference and to the Preliminary Assessment Notice within 15 days from receipt.

Despite Avon's timely submission of a Reply to the Notice of Informal Conference and protest to the
Preliminary Assessment Notice, together with supporting documents, the Commissioner and her agents
violated their own procedures by refusing to answer or even acknowledge the submitted Reply and protest.

The Notice of Informal Conference and the Preliminary Assessment Notice are a part of due
process. They give both the taxpayer and the Commissioner the opportunity to settle the case at the
earliest possible time without the need for the issuance of a Final Assessment Notice. However, this
purpose is not served in this case because of the Bureau of Internal Revenue's inaction or failure to consider
Avon's explanations.

It is true that the Commissioner is not obliged to accept the taxpayer's explanations, as explained by the
Court of Tax Appeals. However, when he or she rejects these explanations, he or she must give some
reason for doing so. He or she must give the particular facts upon which his or her conclusions are
based, and those facts must appear in the record.

Indeed, the Commissioner's inaction and omission to give due consideration to the arguments and
evidence submitted before her by Avon are deplorable transgressions of Avon's right to due
process. The right to be heard, which includes the right to present evidence, is meaningless if the
Commissioner can simply ignore the evidence without reason.

Similarly, in this case, despite Avon's submission of its explanations and pieces of evidence to the
assessments, the Commissioner failed to acknowledge these submissions and instead issued identical
Preliminary Assessment Notice, Final Letter of Demand with the Final Assessment Notices, and Collection
Letter, the latter being premised on Avon's alleged failure to submit supporting documents to its protest.

Had the Commissioner performed her functions properly and considered the explanations and pieces of
evidence submitted by Avon, this case could have been settled at the earliest possible time. For instance,
all the evidence needed to settle the issue on under-declared sales, which constituted the bulk of the
deficiency tax assessments, have been submitted to the Bureau of Internal Revenue. Indeed, from these
same submissions, the Court of Tax Appeals concluded that there was no under-declaration of sales. As
aptly pointed out by Avon, "The [Commissioner could not] feign simple mistake or misappreciation of the
evidence . . . because [the issue was] plain and simple." [140]

I.C
The Commissioner's total disregard of due process rendered the identical Preliminary Assessment
Notice, Final Assessment Notices, and Collection Letter null and void, and of no force and effect.

This Court has, in several cases, declared void any assessment that failed to strictly comply with
the due process requirements set forth in Section 228 of the Tax Code and Revenue Regulation No.
12-99.

In this case, Avon was able to amply demonstrate the Commissioner's disregard of the due process
standards raised in Ang Tibay and subsequent cases, and of the Commissioner's own rules of procedure.
Her disregard of the standards and rules renders the deficiency tax assessments null and void.
2.CIR VS V.Y DOMINGO JEWELLERS

FACTS:

The Bureau of Internal Revenue (BIR) issued a Preliminary Assessment Notice3 (PAN) against VY.
Domingo, a corporation primarily engaged in manufacturing and selling emblematic jewelry, assessing the
latter the total amount of P2,781,844.21 representing deficiency income tax and value-added tax, inclusive
of interest, for the taxable year 2006.

VY. Domingo filed a Request for Re-evaluation/Re-investigation and Reconsideration with the Regional
Director of BIR – Region 6 requesting a "thorough re-evaluation and reinvestigation to verify the accuracy
of the computation as well as the accounts included in the Preliminary Assessment Notice."

VY. Domingo then received a Preliminary Collection Letter (PCL) from the Revenue District Office (RDO)
No. 28 - Novaliches, informing it of the existence of Assessment Notices for collection of its tax liabilities in
the amounts of 1,798,889.80 and Pl,365,727.63, respectively, for a total amount. of P3,164,617.43.

VY. Domingo sent a letter to the BIR Revenue District Office No. 28 in Quezon City, requesting certified
true copies of Assessment Notices. Upon receipt of the requested copies of the notices on, VY. Domingo
filed a Petition for Review with the CTA in Division, praying that Assessment Notices given and the PCL be
declared null and void, cancelled, withdrawn, and with no force and effect, for allegedly having been issued
beyond the prescriptive period for assessment and collection of internal revenue taxes.

During trial, the CIR filed her Motion to Dismiss for lack of jurisdiction. She argued that under Republic Act
(R.A) No. 1125 ("An Act Creating the Court of Tax Appeals ''), as amended, and the RRCTA, it is neither
the assessment nor the formal letter of demand that is appealable to the CTA but the decision of
the CIR on a disputed assessment.

Claiming that V.Y. Domingo's petition was anchored on its receipt of the PCL, which it treated as a denial
of its Request for Re-evaluation/Re-investigation and Reconsideration, the CIR further argued that there
was no disputed assessment to speak of, and that the CTA had no jurisdiction to entertain the said Petition
for Review.

the CTA First Division granted the CIR's motion and dismissed V.Y. Domingo's Petition for Review. It held
that it was without jurisdiction to entertain the petition, as the rule is that for the CTA to acquire jurisdiction,
as assessment must first be disputed by the taxpayer and either ruled upon by the CIR to warrant a decision,
or denied by the CIR through inaction.

The CTA ·First Division ruled that what were appealed to it were the subject assessments, not a decision
or the CIR's denial of its protest; thus, the said assessments had attained finality, and the CTA in Division
was without jurisdiction to entertain the appeal.

V.Y. Domingo argued that the CTA First Division erred when it upheld the CIR's position that V.Y. Domingo
should have administratively protested the Assessment Notices first before filing its Petition for Review.

Furthermore, V.Y. Domingo claimed that it was denied due process when the CIR failed to send the Notice
of Final Assessment to it.

the CTA En Banc granted V.Y. Domingo's Petition for Review, reversing and setting·aside the Resolutions
of the CTA First Division. It remanded the case to the CTA First Division for further proceedings to afford
the CIR full opportunity to present her evidence.

The CIR argues that assessment notices are not appealable to the CTA as the power to decide disputed
assessments is vested in the CIR, subject only to the exclusive appellate jurisdiction of the CTA. The CIR
adds that a thorough review of V.Y. Domingo's petition for review before the CTA First Division would readily
show that it was an original protest on the assessment made by the petitioner, a matter that, under R.A.
No. 1125, is not within the jurisdiction of the CTA.

The CIR likewise claims that a close scrutiny of V. Y. Domingo's petition for review before the CTA would
reveal that it was anchored on its receipt of the PCL issued by the BIR, which V. Y. Domingo mistakenly
treated as a denial of its motion for reinvestigation of the PAN. 11 Before V.Y. Domingo filed its petition for
review before the CTA First Division on September 16, 2011, it had already received copies of Assessment
Notice Nos. 32-06-IT-0242 and 32-06-VT-0243 and the Formal Letter of Demand (FLD) dated September
9, 2010.

However, instead of challenging the contents of the said assessment notices by filing the appropriate
protest or motion for reinvestigation within thirty (30) days from September 15, 2011, the date it received
the copies of the notices, the CIR laments that V.Y. Domingo opted to immediately institute a petition for
review on the basis of the PCL. 12 This, argues· the CIR, is in clear violation of the doctrine of exhaustion
of administrative remedies.

V. Y. Domingo also claims that the tenor of the PCL forecloses any opportunity for it to file its administrative
protest as a reading of the same will show that the CIR had already decided to deny any protest as regards
the assessment made against the respondent taxpayer

ISSUE: W/N the CTA has jurisdiction to entertain V.Y. Domingo's petition for review.
W/N V.Y DOMINGO VIOLATES THE DOCTRINE OF EXHAUSTION OF ADMINITRATIVE
REMEDIES?

RULING: NO. BIR IS CORRECT CTA HAD NO JURISDICTION. V.Y. DOMINGO FAILED TO EXHAUST
ADMINISTRATIVE REMEDIES.

It is clear from the said provisions of the law that a protesting taxpayer like V.Y. Domingo has only three
options to dispute an assessment:

1. If the protest is wholly or partially denied by the CIR or his authorized representative, then the taxpayer
may appeal to the CTA within 30 days from receipt of the whole or partial denial of the protest;

2. If the protest is wholly or partially denied by the CIR's authorized representative, then the taxpayer may
appeal to the CIR within 30 days from receipt of the whole or partial denial of the protest;

3. If the CIR or his authorized representative failed to act upon the protest within 180 days from submission
of the required supporting documents, then the taxpayer may appeal to the CTA within 30 days from the
lapse of the 180-day period.

That V.Y. Domingo believed that the PCL "undeniably shows" the intention of the CIR to make it as its final
"decision" did not give it cause of action to disregard the procedure set forth by the law in protesting tax
assessments and act prematurely by filing a petition for review before the courts. The word "decisions" in
the aforementioned provision of R.A. No. 9282 has been interpreted to mean the decisions of the CIR on
the protest of the taxpayer against the assessments.

Definitely, said word does not signify the assessment itself. Where a taxpayer questions an assessment
and asks the Collector to reconsider or cancel the same because he (the taxpayer) believes he is not liable
therefor, the assessment becomes a "disputed assessment" that the Collector must decide, and the
taxpayer can appeal to the CTA only upon receipt of the decision of the Collector on the disputed
assessment.

DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES

Evidently, V. Y. Domingo's immediate recourse to the CTA First Division was in violation of the doctrine of
exhaustion of administrative remedies.
Under the doctrine of exhaustion of administrative remedies, before a party is allowed to seek the
intervention of the court, he or she should have availed himself or herself of all the means of administrative
processes afforded him or her.

Section 228 of the Tax Code requires taxpayers to exhaust administrative remedies by filing a request for
reconsideration or reinvestigation within 30 days from receipt of the assessment.

Exhaustion of administrative remedies is required prior to resort to the CTA precisely to give the
Commissioner the opportunity to "re-examine its findings and conclusions" and to decide the issues raised
within her competence.

V. Y. Domingo posits that its case is an exception to the rule on exhaustion of administrative remedies and
the rule on primary jurisdiction as it cannot be expected to be able to file an administrative protest to the
Assessment Notices which it never received.

It expressly admitted that it did not file an administrative protest, based on its alleged non-receipt of the
same.

If you disagree, you may appeal the final decision within thirty (30) days from receipt hereof, otherwise said
deficiency tax assessment shall become final, executory and demandable. The ruling of this Court in the
said case was grounded on the language used and the tenor of the demand letter, which indicate that it
was the final decision of the CIR on the matter.

The words used, specifically the words "final decision" and "appeal," taken together led therein petitioner
to believe that the Formal Letter of Demand with Assessment Notices was, in fact, the final decision of the
CIR on the letter-protest it filed and that the available remedy was to appeal the same to the CTA.

Comparing the wording of the above-quoted demand letter with that sent by the CIR to VY. Domingo in the
instant case, it becomes apparent that the latter's invocation of the ruling in the Allied Banking Corporation
case in misguided as the foregoing statements and terms are not present in the subject PCL.

What is evident in the instant case is that Assessment Notice Nos. 32- 06-IT-0242 and 32-06-VT-0243 have
not been disputed by VY. Domingo at the administrative level without any valid basis therefor, in violation
of the doctrine of exhaustion of administrative remedies.

To reiterate, what is appealable to the CTA are decisions of the CIR on the protest of the taxpayer against
the assessments. There being no protest ruling by the CIR when VY. Domingo's petition for review was
filed, the dismissal of the same by the CTA First Division was proper.

As correctly put by Associate Justice Roman G. Del Rosario in his Dissenting Opinion, "(C)learly, petitioner
did not exhaust the administrative remedy provided under Section 228 of the NIRC of 1997, as amended,
and RR No. 12-99 which is fatal to its cause. Consequently, the non-filing of the protest against the
FLD let to the finality of the assessment.
3.REPUBLIC OF THE PHILIPPINES
v.
MICHELLE SORIANO GALLO

LEONEN, J.:

FACTS:

Gallo has never been known as "Michael Soriano Gallo." She has always been female. Her parents, married
on May 23, 1981, have never changed their names. For her, in her petition before the Regional Trial Court,
her Certificate of Live Birth contained errors, which should be corrected. For her, she was not changing the
name that was given to her; she was merely correcting its entry.

To accurately reflect these facts in her documents, Gallo prayed before the Regional Trial Court of Ilagan
City, Isabela in for the correction of her name from "Michael" to "Michelle" and of her biological sex from
"Male" to "Female" under Rule 108 of the Rules of Court.

In addition, Gallo asked for the inclusion of her middle name, "Soriano"; her mother's middle name,
"Angangan"; her father's middle name, "Balingao"; and her parent's marriage date, May 23, 1981, in her
Certificate of Live Birth, as these were not recorded. As proof, she attached to her petition copies of her
diploma, voter's certification, official transcript of records, medical certificate, mother's birth certificate, and
parents' marriage certificate.

The RTC having found Gallo's petition sufficient in form and substance and ordered the publication of the
Notice of Hearing once a week for three (3) consecutive weeks in a newspaper of general circulation in the
Province of Isabela.

The RTC granted her petition however the OSG appealed alleging that Gallo did not comply with the
jurisdictional requirements under Rule 103 because the title of her Petition and the published Order did not
state her official name, "Michael Gallo." Furthermore, the published Order was also defective for not stating
the cause of the change of name.

The Court of Appeals denied the OSG’s appeal and found that Gallo availed of the proper remedy under
Rule 108 as the corrections sought were clerical, harmless, and innocuous.

ISSUE: W/N MICHELLE SORIANO GALLO FAILED TO EXHAUST ADMINISTRATIVE REMEDIES AND
OBSERVE THE DOCTRINE OF PRIMARY JURISDICTION?

RULING: NO, This Court rules in favor of Gallo.

Under the doctrine of exhaustion of administrative remedies, a party must first avail of all administrative
processes available before seeking the courts' intervention. The administrative officer concerned must be
given every opportunity to decide on the matter within his or her jurisdiction. Failing to exhaust
administrative remedies affects the party's cause of action as these remedies refer to a precedent condition
which must be complied with prior to filing a case in court.

However, failure to observe the doctrine of exhaustion of administrative remedies does not affect the court's
jurisdiction. Thus, the doctrine may be waived. The only effect of non compliance with this rule is that it will
deprive the complainant of a cause of action, which is a ground for a motion to dismiss. If not invoked at
the proper time, this ground is deemed waived and the court can then take cognizance of the case and try
it.

Meanwhile, under the doctrine of primary administrative jurisdiction, if an administrative tribunal has
jurisdiction over a controversy, courts should not resolve the issue even if it may be within its proper
jurisdiction. This is especially true when the question involves its sound discretion requiring special
knowledge, experience, and services to determine technical and intricate matters of fact.

Thus, the doctrine of primary administrative jurisdiction refers to the competence of a court to take
cognizance of a case at first instance. Unlike the doctrine of exhaustion of administrative remedies, it cannot
be waived.

Where a party participated in the proceedings and the issue of non-compliance was raised only as an
afterthought at the final stage of appeal, the party invoking it may be estopped from doing so.

Nonetheless, the doctrine of exhaustion of administrative remedies and the corollary doctrine of primary
jurisdiction, which are based on sound public policy and practical considerations, are not inflexible rules.

There are many accepted exceptions, such as:

(a) where there is estoppel on the part of the party invoking the doctrine;
(b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c) where
there is unreasonable delay or official inaction that will irretrievably prejudice the complainant;
(d) where the amount involved is relatively small so as to make the rule impractical and oppressive;
(e) where the question involved is purely legal and will ultimately have to be decided by the courts of justice;
(f) where judicial intervention is urgent;
(g) when its application may cause great and irreparable damage;
(h) where the controverted acts violate due process;
(i) when the issue of non-exhaustion of administrative remedies has been rendered moot;
(j) when there is no other plain, speedy and adequate remedy;
(k) when strong public interest is involved; and,
(l) in quo warranto proceedings . .

Petitioner does not deny that the issue of non-compliance with these two (2) doctrines was only raised in
this Court. Thus, in failing to invoke these contentions before the Regional Trial Court, it is estopped
from invoking these doctrines as grounds for dismissal.

WHEREFORE, premises considered, the petition is DENIED.

4.The Provincial Bus Operators Association of the Philippines (PBOAP) et al
v
Department of Labor and Employment (DOLE) And Land Transportation Franchising and
Regulatory Board (LTFRB)

En Banc (Leonen, J.:)

Doctrine: As previously discussed on the part on due process, Department Order No. 118-12 was issued
to grant bus drivers and conductors minimum wages and social welfare benefits. Further, petitioners
repeatedly admitted that in paying their bus drivers and conductors, they employ the boundary system or
commission basis, payment schemes which cause drivers to drive recklessly. Not only does Department
Order No. 118-12 aim to uplift the economic status of bus drivers and conductors; it also promotes road
and traffic safety.

FACTS:

To ensure road safety and address the risk-taking behavior of bus drivers as its declared objective, the
LTFRB issued Memorandum Circular No. 2012-001 requiring "all Public Utility Bus (PUB) operators to
secure Labor Standards Compliance Certificates" under pain of revocation of their existing certificates of
public convenience or denial of an application for a new certificate.

Five (5) days later or on January 9, 2012, the DOLE issued Department Order No. 118-12, elaborating on
the part-fixed-part-performance-based compensation system referred to in the LTFRB Memorandum
Circular No. 2012-001. Department Order No. 118-12, among others, provides for the rule for computing
the fixed and the performance-based component of a public utility bus driver's or conductor's wage.

On January 28, 2012, Atty. Emmanuel A. Mahipus, on behalf of the Provincial Bus Operators Association
of the Philippines, Integrated Metro Manila Bus Operators Association, Inter City Bus Operators Association,
the City of San Jose Del Monte Bus Operators Association, and Pro-Bus, wroteto then Secretary of Labor
and Employment Rosalinda Dimapilis-Baldoz, requesting to defer the implementation of Department Order
No. 118-12. The request, however, was not acted upon.

Meanwhile, on February 27, 2012 and in compliance with Rule III, Section 3 of Department Order No. 118-
12, the National Wages and Productivity Commission issued NWPC Guidelines No. 1 to serve as
Operational Guidelines on Department Order No. 118-12. NWPC Guidelines No. 1 suggested formulae for
computing the fixed-based and the performance-based components of a bus driver's or conductor's wage.

On July 4, 2012, petitioners filed before this Court a Petition with Urgent Request for Immediate Issuance
of a Temporary Restraining Order and/or a Writ of Preliminary Injunction, impleading the DOLE and the
LTFRB as respondents.

Petitioners assail the constitutionality of Department Order No. 118-12 and Memorandum Circular No.
2012-001, arguing that these issuances violate petitioners' rights to non-impairment of obligation of
contracts, due process of law, and equal protection of the laws. Particularly with respect to Department
Order No. 118-12, its provisions on the payment of part-fixed-part-performance based wage allegedly
impair petitioners' obligations under their existing collective bargaining agreements where they agreed with
their bus drivers and conductors on a commission or boundary basis. Respondents counter that petitioners
have no legal standing to file the present Petition considering that Department Order No. 118-12 and
Memorandum Circular No. 2012-001 are directed against bus operators, not against associations of bus
operators such as petitioners.

Issue: W/N DOLE’s Department Order No. 118-12 and LTFRB’s Memorandum Circular No. 2012-001 are
valid issuances promulgated by the DOLE and the LTFRB in the exercise of their quasi-legislative powers.

Rulling: Yes, DOLE’s DO 118-12 and LTFRB’s Memo. Cir. 2012-001 are valid issuances in the
exercise of their quasi-legislative powers.
Article III, Section 1 of the Constitution provides that, no person shall be deprived of life, liberty, or property
without due process of law, nor shall any person be denied the equal protection of the laws.

The values congealed in the fundamental principle prohibiting the deprivation of life, liberty, and property
"without due process of law" may be those derived within our own cultures even though the current text is
but an incarnation from foreign jurisdictions.

Currently, this Court reads the due process clause as requiring both procedural and substantive elements.

Despite the debate on the historical meaning of "due process of law," compliance with both procedural and
substantive due process is required in this jurisdiction.

The first aspect of due process—procedural due process—"concerns itself with government action adhering
to the established process when it makes an intrusion into the private sphere." [130] It requires notice and
hearing, and, as further clarified in Medenilla v. Civil Service Commission:[131]

It is said that due process means "a law which hears before it condemns." [133] The "law" in the due process
clause includes not only statute but also rules issued in the valid exercise of an administrative agency's
quasi-legislative power.

Given the foregoing, this Court finds that Department Order No. 118-12 and Memorandum Circular No.
2012-001 are not violative of due process, either procedural or substantive.

Department Order No. 118-12 and Memorandum Circular No. 2012-001 were issued in the exercise of
quasi-legislative powers of the DOLE and the LTFRB, respectively. As such, notice and hearing are not
required for their validity.
Neither are Department Order No. 118-12 and Memorandum Circular No. 2012-001 offensive of substantive
due process.

Department Order No. 118-12 and Memorandum Circular No. 2012-001 are reasonable and are valid police
power issuances.

The pressing need for Department Order No. 118-12 is obvious considering petitioners' admission that the
payment schemes prior to the Order's promulgation consisted of the "payment by results," the "commission
basis," or the boundary system. These payment schemes do not guarantee the payment of minimum wages
to bus drivers and conductors. There is also no mention of payment of social welfare benefits to bus drivers
and conductors under these payment schemes which have allegedly been in effect since "time
immemorial."

There can be no meaningful implementation of Department Order No. 118-12 if violating it has no
consequence. As such, the LTFRB was not unreasonable when it required bus operators to comply with
the part-fixed-part-performance-based payment scheme under pain of revocation of their certificates of
public convenience. The LTFRB has required applicants or current holders of franchises to comply with
labor standards as regards their employees, and bus operators must be reminded that certificates of public
convenience are not property. Certificates of public convenience are franchises always subject to
amendment, repeal, or cancellation. Additional requirements may be added for their issuance, and there
can be no violation of due process when a franchise is cancelled for non-compliance with the new
requirement.

In sum, Department Order No. 118-12 and Memorandum Circular No. 2012-001 are in the nature of social
legislations to enhance the economic status of bus drivers and conductors, and to promote the general
welfare of the riding public. They are reasonable and are not violative of due process.

IX
In constitutional litigation, this Court presumes that official acts of the other branches of government are
constitutional.

This Court proceeds on the theory that "before the act was done or the law was enacted, earnest studies
were made by Congress or the President, or both, to insure that the Constitution would not be
breached."[202] Absent a clear showing of breach of constitutional text, the validity of the law or action shall
be sustained.
5.DANILO A. LIHAYLIHAY, Petitioner,
-versus-
THE TREASURER OF THE PHILIPPINES ROBERTO C. TAN, SECRETARY OF FINANCE MARGARITO
B. TEVES, SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES,
AND THE GOVERNOR OF BANGKO SENTRAL NG PILIPINAS (BSP), Respondents.
G.R. No. 192223, THIRD DIVISION, July 23, 2018, LEONEN, J.

FACTS:

This resolves a Petition for Mandamus and Damages, with a Prayer for a Writ of Garnishment praying that
former Treasurer of the Philippines Roberto C. Tan (Treasurer Tan), former Secretary of Finance Margarito
B. Teves (Secretary Teves), the Governor of BangkoSentral ng Pilipinas, and the Secretary of the
Department of Environment and Natural Resources (collectively, respondents) be ordered to deliver to
Danilo A. Lihaylihay (Lihaylihay) the amounts of P11,875,000,000,000.00 and P50,000,000,000.00, and
several government lands as informer's rewards owing to Lihaylihay's alleged instrumental role in the
recovery of ill-gotten wealth from former President Ferdinand E. Marcos (President Marcos), his family, and
their cronies.

Lihaylihay identified himself as a "Confidential Informant of the State (CIS) pursuant to Republic Act No.
2338, duly accredited and registered as such with the Bureau of Internal Revenue (BIR) and Presidential
Commission on Good Government (PCGG)." Lihaylihay particularly recalled sending two (2) letters, both
dated March 11, 1987, to Atty. Eliseo Pitargue (Atty. Pitargue), the former head of the Bureau of
Internal Revenue-Presidential Commission on Good Government Task Force, concerning information on
former President Marcos' ill-gotten wealth.

Almost 20 years later, on November 29, 2006, Lihaylihay wrote to then Commissioner of Internal Revenue,
Jose Mario C. Buñag (Commissioner Buñag), demanding payment of 25% informer's reward on the
P118,270,243,259.00 supposedly recovered by the Philippine government through compromise
agreements with the Marcoses. He also insisted on the need for the government to collect Fortune Tobacco
Corporation's tax deficiencies

On January 10, 2008, Lihaylihay wrote to then President Gloria Macapagal-Arroyo (President Macapagal-
Arroyo), insisting on the need to recover the Marcos' wealth that he identified and his corresponding
entitlement to an informer's reward. Lihaylihay wrote to then Department of Finance Secretary Teves
on August 11, 2009, reiterating his entitlement to an informer's reward.

On May 31, 2010, without waiting for Secretary Teves' and Treasurer Tan's official actions on his letters,
Lihaylihay filed the present Petition, dubbed a Petition for "Mandamus and Damages, with a Prayer for
a Writ of Garnishment." Insisting on his entitlement to informer's rewards, he prays that Treasurer
Tan and Secretary Teves be ordered to deliver to him the amount of P11,875,000,000,000.00; that the
Secretary of Environment and Natural Resources be ordered to transfer to him several government
lands; and that the Governor of BangkoSentral ng Pilipinas be ordered to garnish in his favor
P50,000,000,000.00 worth of jewelry recovered from former First Lady Imelda Romualdez Marcos.
ISSUE: W/N in filing a writ for mandamus, the petitioner failed to exhaust administrative remedies?

RULING: Yes.

A writ of mandamus is equally unavailing because there is evidently another "plain, speedy and adequate
remedy in the ordinary course of law." This, of course, is the processing of his claims by the Bureau of
Internal Revenue and the Department of Finance, and their final resolution by the Secretary of Finance.

Petitioner's own recollection of antecedents reveals his initial attempt at complying with the prescribed
procedure with the Bureau of Internal Revenue, but also his own impatience for these pending
proceedings.

This Court cannot indulge his impetuosity for proceedings in progress.

It cannot legitimize a manifest attempt at infringing statutorily institutionalized processes.

The availability of a more basic recourse ahead of a Petition for Mandamus before this Court
similarly demonstrates that petitioner failed to exhaust administrative remedies.

Apart from his non-compliance with the specific requirements of Rule 65, Section 3, petitioner's failure to
exhaust administrative remedies represents a distinct ground for dismissing the present Petition as it
effectively lacks a cause of action:

Under the doctrine of exhaustion of administrative remedies, recourse through court action cannot
prosper until after all such administrative remedies have first been exhausted.

If remedy is available within the administrative machinery, this should be resorted to before resort can be
made to courts.

It is settled that non-observance of the doctrine of exhaustion of administrative remedies results in lack of
cause of action, which is one of the grounds in the Rules of Court justifying the dismissal of the complaint.

The need for petitioner to have previously exhausted administrative remedies is congruous with the
Bureau of Internal Revenue's and the Finance Secretary's preeminent competence to consider the merits
of his claims.

Indeed, between this Court on the one hand, and the Bureau of Internal Revenue and the Department of
Finance on the other, the latter are in a better position to ascertain whether or not the information
supplied by an informer has actually been pivotal to the discovery of tax offenses, and the conviction and
punishment of offenders.
Having direct access to their own records, they are in the best position to know if the information supplied
to them is novel, not having been previously within their knowledge or not otherwise having been the
subject of previous proceedings.

Petitioner's direct recourse to this Court is an invitation for it to run afoul with the doctrine of primary
jurisdiction:

In cases involving specialized disputes, the practice has been to refer the same to an administrative
agency of special competence in observance of the doctrine of primary jurisdiction.

The Court has ratiocinated that it cannot or 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 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.

WHEREFORE, the Petition is DISMISSED for lack of merit.

6.MMDA
VS
D.M. CONSUNJI INC AND R-II BUILDERS INC

FACTS:

MMDA, in coordination with the Greater Metro Manila Solid Waste Management Committee, conducted
a selection process for the development and operation by a private entity of a new sanitary landfill for
the next 25 years under the Build-Operate-Own (BOO) scheme.

The facility was intended to replace the San Mateo landfill after it was closed on 31 December 2000.
The process, however, was stymied by legal actions filed by some concerned sectors of the society,
particularly, those groups in the affected area. MMDA was thus restrained from proceeding with the
new sanitary landfill project.

In the meantime, MMDA and the Metro Manila mayors agreed to choose the interim waste disposal site
(controlled dump site) and the possible contractor/proponent therefor for a period of two (2) years. To
implement this interim project, then MMDA Chairman Jejomar C. Binay (Binay) endorsed the matter to
the Presidential Committee on Flagship Programs and Projects for favorable recommendation.

The matter was then endorsed for approval by the Committee, through its then Chairman Roberto N.
Aventajado, to the Office of the President. MMDA’s request was approved by then President Joseph E.
Estrada in an undated memorandum subject to the condition that “the negotiated contract to be entered
by MMDA shall be subject to the approval of the Office of the President,” among others.

The project was then opened for public bidding and was awarded to respondents as winning joint
bidders. In their bid, respondents proposed the construction of an integrated solid waste management
facility/sanitary landfill in Barangay Semirara, Semirara Island, Caluya, Antique.

This would entail the ferrying out of garbage from a temporary transfer station in Pier 18 Vitas, Tondo,
Manila to a pre-arranged site in the northernmost part of Semirara Island.

Consequently, the parties executed a contract denominated as “Contract for the Development,
Operation and Maintenance of Interim Integrated Waste Management Facility for Metropolitan Manila”
on 4 January 2001. The contract was signed by then MMDA Chairman Binay, Isidro A. Consunji for
respondent DMCI and Leopoldo T. Sanchez for respondent R-II Builders. The contract was also signed
by Roberto N. Aventajado.

Thereafter, then MMDA Chairman Binay allegedly instructed respondents to proceed with the
preparation of the transfer station in Vitas and the landfill site in Semirara although the contract had not
yet been approved and signed by then President Estrada.

Allegedly, from 2 to 5 January 2001, respondents worked under the contract with the supervision of the
MMDA’s Office of the Assistant General Manager for Operations.

Meanwhile, two temporary restraining orders (TROs) were issued by the Regional Trial Court, Antique
placing the operation on hold. Pending hearing on the prayer for the issuance of a writ of injunction,
then President Estrada resigned from office.

To recover their alleged incurred expenses under the contract, respondents formally demanded from
the MMDA the amount of P20,123,190.00 as reasonable reimbursement, claiming that they spent said
amount until they were forced to stop their operations due to the TROs.

When respondents’ claim for reimbursement was addressed to the MMDA’s legal service, then MMDA
consultant, Atty. Vincent S. Tagoc (Atty. Tagoc), opined that respondents may be compensated based
on the principle of quantum meruit.
 Notably, in his Opinion dated 28 March 2001, Atty. Tagoc opined that the benefit which allegedly inured
to the government, particularly the MMDA, must be considered in applying said principle. Pertinently,
he observed that the records failed to show any benefit derived by the MMDA from respondents’
performance.

However, Director Leopoldo V. Parumog, Head of the Solid Waste Management Office of the MMDA,
recommended that respondents be reimbursed of their expenses.

When the recommendation of the Solid Waste Management Office was sent to the Office of then MMDA
Chairman Bayani F. Fernando for his approval, the latter rejected the same. Respondents filed with the
trial court a Complaint dated 12 September 2007 for sum of money based on quantum meruit with
damages against MMDA.

On 15 January 2008, the MMDA, thru the Office of the Solicitor General, filed an Answer. The MMDA
averred that the contract involves a project under the BOO scheme for which the approval of the
President of the Philippines is required pursuant to paragraph (d), Section 2 of Republic Act No. 7718.

Corollarily, paragraph 16 of the negotiated contract provides that it shall be valid, binding and effective
upon approval by the President pursuant to existing laws. Since the negotiated contract was not signed
and approved by the President, the same never became effective and binding.

Moreover, paragraph 13 of the negotiated contract provides that the failure to carry out, observe and/or
perform any of the terms of the contract caused by or arising from mass actions and/or court actions
shall not give rise to any claim by one party against the other. Assuming arguendo that the claim for
reimbursement may be recognized under the principle of quantum meruit, the direct enforcement of
liability against MMDA would violate the law.

Respondents stressed that MMDA is a public corporation created under Presidential Decree No. 824
which can sue and be sued.

The Issue: whether the COA has primary jurisdiction over the present case.

The Court’s Ruling

YES.

There is no dispute that MMDA is a government agency in charge of “those services which have metro-
wide impact and transcend local political boundaries or entail huge expenditures such that it would not
be viable for said services to be provided by the individual local government units (LGUs) comprising
Metropolitan Manila.”

There is also no dispute that respondents are claiming from MMDA the total amount of P19,920,936.17
representing expenses allegedly incurred for the partial execution of the interim waste management
project for Metro Manila.

Since what is involved is a specific money claim against a government agency, it is clearly
within the jurisdiction of the COA.

Under Commonwealth Act No. 327, as amended by Section 26 of Presidential Decree No. 1445, it is
the COA which has primary jurisdiction over money claims against government agencies and
instrumentalities.

Pursuant to its rule-making authority conferred by the 1987 Constitution and existing laws, the COA
promulgated the 2009 Revised Rules of Procedure of the Commission on Audit. Section 1 of Rule II
 specifically enumerated those matters falling under COA’s exclusive jurisdiction, which include “money
claims due from or owing to any government agency.”

In Euro-Med Laboratories Phil., Inc. v. Province of Batangas, the Court held that it is the COA, and not
the Regional Trial Court, which has primary jurisdiction to pass upon petitioner’s money claim against
respondent local government unit. Such jurisdiction may not be waived by the parties’ failure to argue
the issue or by their active participation in the proceedings.

This brought the case within the COA’s domain to pass upon money claims against the government or any
subdivision thereof under Section 26 of the Government Auditing Code of the Philippines:

The authority and powers of the Commission [on Audit] shall extend to and comprehend all matters relating
to x x x the examination, audit, and settlement of all debts and claims of any sort due from or owing to the
Government or any of its subdivisions, agencies, and instrumentalities.

Notably, in several cases, involving money claims against government agencies based on quantum meruit,
the claims were properly filed or referred to the COA.

The first Whereas clause explicitly recognizes the existence of money claims against the government on
the ground of quantum meruit , to wit:

WHEREAS, in the adjudication of claims arising from void government contracts, the issue that is
sometimes presented to the Commission on Audit for resolution is whether or not recovery against the
government under such contracts may be allowed on the basis of the quantum meruit principle[.]

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are SET ASIDE. Respondents’
money claim against petitioner based on quantum meruit should be filed with the Commission on Audit.

SO ORDERED.
7.GSIS
VS.
HEIRS OF APOLINARIO DAYMIEL

FACTS:
• Apolinario Daymiel served as a casual laborer of the Provincial Engineering Office of Zamboanga del
Norte.
• Eventually, he assumed the position of Accounting Clerk III until his retirement.
• Thereupon, respondent applied for retirement benefits before the GSIS. A tentative computation was
made pursuant to respondent’s application.
• Initially, GSIS granted respondent a total of 33.65678 years of creditable service. This lump sum
payment was equivalent to P542,325.00 and the monthly pension amounted to P9,038.75.
• However, a re-computation was made where GSIS credited respondent only with 23.85082 years of
service. Accordingly, respondent’s lumps sum payment and monthly pension was decreased.
• It appears that the re-computation was made as a result of the implementation of Policy and
Procedural Guidelines No. 171-03 issued by then GSIS President and General Manager. PPG 171-
03 was subsequently approved by the GSIS Board of Trustees in Resolution 90.
• Respondent interpreted the provisions of PPG 171-03 as gravely prejudicial to him since the starting
point in the computation of the creditable service of a retiree shall be the date of the payment of
monthly contributions, whereas the starting point as regards the GSIS Act is the date of original
appointment.
• RTC dismissed the petition for lack of jurisdiction – that the GSIS has jurisdiction over the subject
matter as the computation of respondent’s retirement benefits was in the exercise of its quasi-judicial
function.
• CA reversed such and declared PPG 171-03 and Resolution 90 as null and void – not published in
the OG or in any newspaper of general circulation.

ISSUES:
1. W/N GSIS HAS THE PRIMARY JURISDICTION? NO.
2. W/N THE ISUANCES PPG 171-03 and Resolution 90 are valid and constitutional. No

The Court's Ruling

• Jurisdiction over a subject matter is conferred by the Constitution or the law, and rules of procedure
yield to substantive law. Otherwise stated, jurisdiction must exist as a matter of law. Only a statute can
confer jurisdiction on courts and administrative agencies.
• Administrative agencies may be bestowed with quasi-judicial or quasi-legislative powers.
•
• In the exercise of an administrative agency's quasi-judicial powers, the doctrine of primary jurisdiction
may be invoked. In the case of Smart Communications, Inc. v. National Telecommunications
Commission,23 we explained the import of this doctrine, to wit:
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. x x x

• In this case, Section 30 of R.A. No. 8291 vests upon the GSIS the original and exclusive jurisdiction to
hear disputes arising from said law or related issuances.
• Section 14.3 (now Section 27.1) of the Implementing Rules and Regulations (IRR) of R.A. No. 8291
provides that such quasi-judicial power lies with the GSIS Board of Trustees, An appeal of the decision
of the GSIS Board of Trustees may be filed with the CA via Rule 43 of the Rules of Court.24
• However, the records of the case reveal that what the respondent is seeking for is the nullification of
PPG No. 171-03 and Resolution No. 90 on the ground of illegality. While respondent's contention deals
 with a dispute as to the computation of his retirement benefits, his petition mainly attacks the legality of
the assailed issuances.
• Consistent with the petition filed, the allegations partake of a petition for declaratory relief under Rule
63 of the Rules of Court, to wit:
•
• The requirements of an action for declaratory relief are as follows: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party
seeking declaratory relief must have a legal interest in the controversy; and (4) the issue involved must
be ripe for judicial determination.26
• Certainly, it is the RTC which is vested with jurisdiction to try such petition. In the case of Commissioner
of Customs v. Hypermix Feeds Corporation,27 we reiterated that the determination of whether a rule is
issued by an administrative agency contravenes the law or the Constitution is within the jurisdiction of
the regular courts.

We find that respondent's petition is sufficient to meet all the requirements.

Firstly, there is justiciable controversy as respondent questions the legality and constitutionality of PPG No.
171-03 and Resolution No. 90, both of which were issued by the GSIS. On this note, we emphasize that
the courts are vested by the Constitution with the power of judicial review, including the authority of the
regular courts to determine in an appropriate action the validity of the acts of political departments. 28
Secondly, the issue is between the GSIS, which implements the assailed issuances and the respondent
who seeks to claim his retirement benefits.
Thirdly, respondent has legal interest over the case since the amount he seeks to claim would differ
because the implementation of R.A. No. 8291 and PPG No. 171-03 and Regulation No. 90 provide for
different starting point for the computation of retirement benefits. Application of the latter would decrease
his retirement benefits from P542,325.00 to P342,295.80 considering the varying starting point for the
computation of retirement benefits. Under R.A. No. 8291, the reckoning period is the date of original
appointment while in PPG No. 171-03 and Resolution No. 90, the starting point is the date of the payment
of monthly contributions by a member who was receiving a fixed basic monthly compensation for his
services rendered.

Finally, the issue is ripe for judicial determination because litigation is inevitable for the reason that
respondent's retirement benefits would be substantially reduced by the implementation of the assailed
issuances.29

• GSIS tried to brush aside the issue of legality of the assailed issuances by focusing on the ultimate
consequence should such issuances be declared invalid, i.e., the re-computation of the retirement
benefits.
• However, this is pure incidental to the outcome of the relief prayed for in the action for declaratory relief.
It is so precisely because the primary issue was the starting point of the computation of the retirement
benefits.

As to the invalidity of the issuances, we affirm the ruling of the CA.

• Administrative issuances may be classified into two, i.e., legislative rule and administrative rule.
• The former is in the matter of subordinate legislation, designed to implement a primary legislation by
providing the details thereof.
• On the other hand, the latter is designed to provide guidelines to the law which the administrative
agency is in charge of enforcing.
•
• As to the import of these issuances, the case of Commissioner of Internal Revenue v. Michel J. Lhuillier
Pawnshop, Inc.31 is instructive:
When an administrative rule is merely interpretative in nature, its applicability needs nothing further than its
bare issuance, for it gives no real consequence more than what the law itself has already prescribed. When,
on the other hand, the administrative rule goes beyond merely providing for the means that can facilitate or
render least cumbersome the implementation of the law but substantially increases the burden of those
governed, it behooves the agency to accord at least to those directly affected a chance to be heard, and
thereafter to be duly informed, before that new issuance is given the force and effect of law.
•
• Clearly, PPG No. 171-03 is a legislative rule.
• It does not merely provide guidelines to R.A. No. 8291, but in fact creates a burden upon those who
are governed in its implementation.
• Specifically, PPG No. 171-03 supplies the conditions for the starting point when services are rendered,
for the purposes of computing all benefits under R.A. No. 8291 and the same requires: (a) the member
was receiving a fixed basic monthly compensation; and (b) monthly contributions were timely and
correctly paid or remitted.
• However, there was no condition and definition provided under R.A. No. 8291; "services" was neither
defined nor delineated for the purposes of computing benefits.
• In other words, PPG No. 171-03 provides the details for the starting point of the computation of GSIS
benefits. It effectively supplants the period prescribed under R.A. No. 8291. Parenthetically, Regulation
No. 90, which approved PPG No. 171-03 is, likewise, of the same character.
•
• As PPG No. 171-03 and the subsequent Resolution No. 90 are legislative rules, publication is
indispensable.
• Publication of statutes satisfies the constitutional right of the people to due process. It keeps the
citizenry informed and notified of various laws which are to regulate their actions and conduct. Without
such notice and publication, there would be no basis for the application of the ignorantia legis non
excusat.
•
• Considering that PPG No. 171-03 and the subsequent Resolution No. 90 are legislative issuances,
necessitating publication for their effectivity and the undisputed fact of their non-publication, the
assailed issuances must be struck down for being unconstitutional.

WHEREFORE, premises considered, the instant petition is hereby DENIED.

8. JAKA CORPORATION
VS.
URDANETA VILLAGE ASSOC AND AYALA LAND INC.

FACTS:

• Ayala Land, Inc. (Ayala Land), the successor-iln-interest of Makati Development Corporation, is the
developer and seller of lots in Urdaneta Village, Makati City. The Urdaneta Village Association, Inc. (the
Association) is its duly organized homeowners' association.
• All parcels of land sold by Ayala Land in Urdaneta Village are subject to uniform restrictions, which are
annotated on the transfer certificates of title covering the lots.
• Jaka Investments bought three (3) lots in Urdaneta Village, which were covered by Transfer Certificate
of Title Nos. S-10603, S-10604, and S- 74957.
•
• the Association's Board of Governors held a meeting, where it approved the extension of the
Association's corporate life and the term of the Deed Restrictions, both for another 25 years
• the Association held a general membership meeting to vote on the changes. Of its 331 members, 267
approved the corporate life extension while 257 approved the Deed Restrictions' term extension. Jaka
Investments, represented through proxy Estela Malabanan (Malabanan), voted in favor of both
extensions.
• the Housing and Land Use Regulatory Board issued a certificate ofthe Association's amended Articles
of Incorporation.
•
• Jaka Investments filed before the Regional Trial Court a Petition for the cancellation of restrictions
annotated in Transfer Certificate of Title Nos. S-10603, S-10604, and S-74957.
•
• Jaka Investments claimed that upon the expiration of the term of restrictions on June 1, 2008, the legal
or contractual basis for the restrictions ceased. Since the annotations became unlawful limitations on
petitioner's rights as the lots' owner, they should be canceled under Section 10818 of Presidential
Decree No. 1529, or the Property Registration Decree.
•
• the Association filed its Opposition to the Petition with Motion to Dismiss.
• Maintaining that this was an intra- corporate dispute on the validity of the uniform restrictions' term
extension, the Association argued that the Housing and Land Use Regulatory Board, not the trial court,
had exclusive and original jurisdiction over the case.
• Moreover, even if the trial court had jurisdiction, Jaka Investments was still estopped from questioning
the term extension since it had already voted in favor of it via proxy in the general membership meeting.
• Ayala Land filed its Opposition to the Petition.It argued that the uniform restrictions had already been
validly extended by a majority vote of the Association's members.

DECISION OF THE RTC

• the Regional Trial Court ruled against the Association's and Ayala Land's oppositions.
• Despite agreeing that the issue was intra-corporate, the trial court still held that it had jurisdiction over
the case.
• The trial court noted that in Cezar Yatco, the Office of the President held that the word "however" in the
second sentence of the term only meant that the restrictions may be amended, increased, or abolished
within the 50- year period. It, however, did not imply that the term of restrictions may be extended.
• As such, the trial court ruled that the term of restrictions in Jaka Investments' case had already expired.
Thus, the matter would already fall under the jurisdiction of the regional trial courts, which may act as
land registration courts.
• The Association and Ayala Land separately moved for reconsideration, but both their motions were
denied

Thus, the Association and Ayala Land separately filed before the Court of Appeals petitions for certiorari
assailing the trial court’s decision.
CA’S DECISION
• the Court of Appeals reversed and set aside the trial court's rulings and dismissed Jaka Investments'
Petition for lack ofjurisdiction.
• It held that the trial court should have dismissed Jaka Investments' Petition since it had already found
that the issue raised in it was an intra-corporate controversy. Since the case's controversy is between
the homeowners' association and its member, Jaka Investments, its jurisdiction lies with the Housing
and Land Use Regulatory Board.

Issue: w/n THE RTC HAS JURISDICTION OVER THE CASE and not the HOUSING AND LAND USE
REGULATORY BOARD.

RULLING: NO.

To determine if this case falls under the agency's jurisdiction, it 1s necessary to examine whether the
controversy arose "from any of the following intra-corporate relations: (1) between and among members of
the association; (2) between any and/or all of them and the association of which they are members; and (3)
between the association and the state insofar as the controversy concerns its right to exist as a corporate
entity."

This Court first resolves whether petitioner is a member of respondent Association.

Petitioner did not deny its membership in the Association. Despite its non-disclosure of its membership
status in its Petition for Cancellation before the Regional Trial Court, it impliedly admitted the same when it
mentioned in its later pleadings that it was filing its Petition for Cancellation as an owner, and not as a
member ofrespondent Association. Hence, this Court finds that petitioner is its member.
Second, this Court resolves whether the controversy arose from the parties' intra-corporate relation.
In its Petition before the trial court, petitioner sought for the cancellation of the Deed Restrictions annotated
in its lot titles. Petitioner claimed that with the Deed Restrictions' term expiration, its legal or contractual
basis no longer existed.

However, petitioner failed to disclose that the same Deed Restrictions had already been extended by a vote
of more than two-thirds (2/3) of respondent Association's members on September 6, 2007, or 10 months
before it filed its Petition. Petitioner, then, cannot have the restrictions canceled without first invalidating the
act of respondent Association in extending the Deed Restrictions' term.

Here, respondent Association maintains that the extension is valid, while petitioner insists on its invalidity.

Clearly, the controversy arose from an intra-corporate relation between an association and its member.
Even the Regional Trial Court, despite proceeding with the case, acknowledged in its July 19, 2010 Order
that the Housing and Land Use Regulatory Board had jurisdiction over the controversy:

Moreover, the Office of the President later reversed its Decision in Cezar Yatco. As the Court of Appeals
found

Assuming arguendo that the RTC has jurisdiction over the case, it still erred when it ruled that the Deed
Restrictions cannot be extended by virtue of the Bel-Air case. The Office of the President on December 29,
2009 reversed and set aside the decision of the HLURB and ruled that Bel- Air's Deed Restrictions cannot
be extended by amendment under Article VI of the Deed Restrictions. However, on May 19, 2011, the said
office issued a Resolution reversing and setting aside its December 29, 2009 decision and reinstated the
decision ofthe HLURB. Hence, the basis of the decision by the RTC has now become ineffective and the
Orders of the RTC should be disregarded.79 (Emphasis supplied)

Accordingly, it is the Housing and Land Use Regulatory Board, not the Regional Trial Court, which has
jurisdiction over the case.
The Housing and Land Use Regulatory Board is the appropriate government agency to resolve whether
the extension of the Deed Restrictions is valid, and whether petitioner is estopped to question it. It has the
technical expertise to analyze contracts between petitioner and respondent Association. In Spouses Chua
v. Ang,82 this Court declared that the agency, "[i]n the exercise of its powers, . . . is empowered to interpret
and apply contracts, and determine the rights of private parties under these contracts.

This Court reminds litigants, counsels, and judges alike on the doctrine of primary administrative jurisdiction.

[U]nder the doctrine of primary administrative jurisdiction, courts cannot or will not determine a controversy
where the issues for resolution demand 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.

PETITION DENIED.
9.KILUSANG MAYO UNO
VS.
BENIGNO AQUINO III

FACTS:

• On April 19, 2013, the Social Security Commission issued Resolution No. 262-s. 2013, which provided
an increase in:
o (1) the Social Security System members' contribution rate from 10.4% to 11 %; and
o (2) the maximum monthly salary credit from Pl5,000.00 to Pl6,000.00. The increase was made
subject to the approval of the President of the Philippines.
In a September 6, 2013 Memorandum, the President approved the increase.
•
• On September 20, 2013, the Social Security Commission issued Resolution No. 711-s. 2013, which
approved, among others, the increase in contribution rate and maximum monthly salary credit.
• On October 2, 2013, the Social Security System, through President and Chief Executive Officer Emilio
S. De Quiros, Jr., issued Circular No. / 2013-010, which provided the revised schedule of contributions
that would be in effect in January 2014.
• Per the circular, the employer and the employee shall equally shoulder the 0.6% increase in
contributions. Thus, the employer would pay a contribution rate of 7.37% (from 7.07%); the employee,
3.63% (from 3.33%).
•
• Kilusang Mayo Uno, et al. filed this Petition for Certiorari and Prohibition, questioning the validity of the
assailed issuances
• Maintaining that a majority of them are Social Security System members directly affected by the
premium hike, petitioners assert having the requisite locus standi to file the Petition.
• they further argue that the other petitioners' legal personality arises from the transcendental importance
of the Petition's issues.
•
• Petitioners claim that the assailed issuances were issued per an unlawful delegation of power to
respondent Social Security Commission based on Republic Act No. 8282, or the Social Security Act.
• In particular, Section 18 allegedly offers vague and unclear standards, and are incomplete in its terms
and conditions.
• This provision, they claim, has allowed respondent Social Security Commission to fix contribution rates
from time to time, subject to the President's approval.
• Petitioners claim that the delegation of the power had no adequate legal guidelines to map out the
boundaries of the delegate's authority.
• In addition, petitioners claim that the increase in contribution rate violates Section 4(b )(2) of the Social
Security Act, which states that the "increases in benefits shall not require any increase in the rate of
contribution[.]"
• They argue that this proviso prohibits the increase in contributions if there was no corresponding
increase in benefits.
• Petitioners then argue that the increase in contributions is an invalid exercise of police power for not
being reasonably necessary for the attainment of the purpose sought, as well as for being unduly
oppressive on the labor sector.
• According to them, the Social Security System can extend actuarial life and decrease its unfunded
liability without increasing the premiums they pay.
•
• Petitioners further insist that the revised ratio of contributions between employers and employees, per
the assailed issuances, is grossly unjust to the working class and is beyond respondents' powers.
• They claim that for the purposes of justice and consistency, respondents should have maintained the
70%-30% ratio in the premium increase. Changing it, they add, is grossly unfair and detrimental to
employees.
• Petitioners further emphasize that the State is required to protect the rights of workers and promote
their welfare under the Constitution.
• Lastly, petitioners pray that a temporary restraining order and/or writ of preliminary injunction be issued
to stop the implementation of the increase in contributions.
• They aver that stopping it is necessary to protect their substantive rights and interests. They point out
that their earnings for food and other basic needs would be reduced and allocated instead to defraying
the amount needed for contributions.

Issues:
1. W/N THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES APPLIES?
2. W/N the assailed issuances were issued per an unlawful delegation of power to respondent Social
Security Commission based on Republic Act No. 8282, or the Social Security Act.

RULING:

1. YES. it is clear that petitioners failed to exhaust their administrative remedies.

• A case is ripe for adjudication when the challenged governmental act is a completed action such that
there is a direct, concrete, and adverse effect on the petitioner.
• It is, thus, required that something had been performed by the government branch or instrumentality
before the court may step in, and the petitioner must allege the existence of an immediate or threatened
injury to itself as a result of the challenged action.
• In connection with acts of administrative agencies, ripeness is ensured under the doctrine of exhaustion
of administrative remedies.
• Courts may only take cognizance of a case or controversy if the petitioner has exhausted all remedies
available to it under the law.
• The doctrine ensures that the administrative agency exercised its power to its full extent, including its
authority to correct or reconsider its actions. It would, thus, be premature for courts to take cognizance
of the case prior to the exhaustion of remedies, not to mention it would violate the principle of separation
of powers.
• Thus, in Rule 65 petitions, it is required that no other plain, speedy, or adequate remedy is available to
the party.

Here, it is clear that petitioners failed to exhaust their administrative remedies.

• Petitioners allege that they "have no appeal nor any plain, speedy[,] and adequate remedy under the
ordinary course of law except through the instant Petition. "
•
• However, Sections 4 and 5 of the Social Security Act are clear that the Social Security Commission
has jurisdiction over any dispute arising from the law regarding coverage, benefits, contributions, and
penalties.
• The law further provides that the aggrieved party must first exhaust all administrative remedies available
before seeking review from the courts
•
• In the long line of cases the Supreme Court upheld the jurisdiction and competence of the Social
Security Commission with regard to the grant of authority under the unambiguous provisions of the
Republic Act No. 8282.
•
• Furthermore, jurisdiction is determined by laws enacted by Congress. The doctrine of exhaustion of
administrative remedies ensures that this legislative power is respected by courts.
• Courts cannot ignore Congress' determination that the Social Security Commission is the entity with
jurisdiction over any dispute arising from the Social Security Act with respect to coverage, benefits,
contributions, and penalties.
• Here, nothing in the records shows that petitioners filed a case before the Social Security Commission
or asked for a reconsideration of the assailed issuances.
• Moreover, petitioners did not even try to show that their Petition falls under one ( 1) of the exceptions
to the doctrine of exhaustion of administrative remedies:
• The doctrine of exhaustion of administrative remedies is settled in jurisprudence. As early as 1967, this
Court has recognized the requirement that parties must exhaust all administrative remedies available
before the Social Security Commission.
• The Social Security Commission, then, must be given a chance to render a decision on the issue, or to
correct any alleged mistake or error, before the courts can exercise their power of judicial review.
• Thus, petitioners have prematurely invoked this Court's power of judicial review in violation of the
doctrine of exhaustion of administrative remedies.
• Notably, petitioners failed to abide by the principle of primary administrative jurisdiction.
• This principle states that: ... courts cannot or 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.

• Here, respondent Social Security Commission qualifies as an administrative tribunal, given sound
administrative discretion requiring the special knowledge, experience, and services of the
administrative tribunal to determine technical and intricate matters of fact. This is evident from the
qualifications of its members and its powers and duties under Sections 3 and 4 of the Social Security
Act:

• Thus, under the doctrine of primary administrative jurisdiction, petitioners should have first filed their
case before respondent Social Security Commission.

2. No. PETITIONERS’ ARGUMENT LACKS MERIT.

• Petitioners' attack on the increase in contribution rate and maximum monthly salary credit is two (2)-
tiered:
o (1) they assail the validity of the exercise of respondents Social Security System and Social
Security Commission's power under the law; and
o (2) they assail the validity of the delegation of power to respondent Social Security
Commission.
• Petitioners argue that the assailed issuances are void for being issued under vague and unclear
standards under the Social Security Act.
• They admit that Section 18 allows the Social Security Commission to fix the contribution rate subject
to several conditions.
• However, petitioners claim that the term "actuarial calculations" is too vague and general, and the
relationship between the rate of benefits and actuarial calculations is not clearly defined.
• Thus, they conclude that the delegation of power to fix the contribution rate is incomplete in all its
terms and conditions.
Petitioners' argument lacks merit. Petitioners are putting in issue not only the validity of the exercise of
the delegated power, but also the validity of the delegation itself. They are, thus, collaterally attacking the
validity of the Social Security Act's provisions.

• The SC stressed that collateral attacks on a presumably valid law are NOT ALLOWED and that
petitioners in this case are collaterally attacking the validity of Social Security Act (RA 8282) by putting
in issue not only the validity of the exercise of respondents SSS and SSC’s power under the said law
but also the validity of the delegation of power to the SSC under the said law to fix the
contribution rate by claiming the said delegation to be incomplete in all its terms and conditions.
• The SC held that not only is the Social Security Act complete in its terms but it also contains a sufficient
standard for the SSC to fix the monthly contribution rate and the minimum and maximum monthly salary
credits.
• It found that Section 18 in relation to Section 4 (a) of the Social Security Act has vested the necessary
powers in the SSC to fix the minimum and maximum amounts of monthly salary credits and the
contribution rate.
• It likewise found the legislature has specified the factors that should be considered—“actual
calculations and rates of benefits”—in Section 18 of the Social Security Act as well as required the
approval of the President of the Philippines as an additional limit to the SSC’s rate fixing power.
• “To question the use of ‘actual calculations’ as [a] factor for fixing rates is to question the policy or
wisdom of the legislature, which is a co-equal branch of the government,“ the SC declared.
•
• As to petitioners’ argument that that the increase in contribution is in violation of Section 4(b) of the of
the Social Security Act providing that increases in benefits shall not require any increase in the rate of
contribution,
• the SC ruled “that an examination of the provision and the assailed issuances reveals that the
questioned increase in contribution rate was not solely for the increase in members’ benefits, but also
to extend actuarial life….To disregard the actuarial soundness of the reserves would be to go against
the policy of the law on maintaining a sustainable social security system,” referring to the policy laid
down in Section 2 of the Social Security Act
•
• The SC also held the increases reflected in the assailed issuances to be a valid exercise of police
power as they are reasonably necessary to observe the constitutional mandate of promoting
social justice under the Social Security Act.
• “Given the past increases since the inception of the law, the contribution rate increase of 0.6% applied
to the corresponding monthly salary credit does not scream of unreasonableness or injustice.”
• It ruled that respondents were only complying with their duties under the Social Security Act and that
there was no showing they went beyond their powers under the law amounting to lack of or in excess
of their jurisdiction.
• Nor did it find grave abuse of respondents’ discretion as petitioner’s claims are unsubstantiated.

The SC likewise found the petition to suffer several procedural infirmities, including the
impleading of the then incumbent president.