ADMINISTRATIVE LAW

I. GENERAL PRINCIPLES
A. Definition
B. Kinds
C. Administrative Bodies and Agencies
D. Creation
E. Types

II. POWERS OF ADMINISTRATIVE AGENCIES

A. Quasi Legislative or Rule Making Power

B. Quasi-Judicial or Adjudicatory Power
C. Determinative Powers
1. Enabling
2. Directing
3. Dispensing
4. Examining
5. Summary

Quasi Legislative
a. Nature
b. Kinds of Administrative rules or regulations
c. Requisites for Validity

Quasi-Judicial

-Administrative Due Process

III. EXHAUSTION OF ADMINISTRATIVE REMEDIES

-Exemptions
-Doctrine of Prior Resort/Primary Jurisdiction

IV. Judicial Review of Administrative Decisions

CASES IN ADMINISTRATIVE LAW

DOCTRINE OF FINALITY
Ramon Yap v COA, April 23, 2010
 QUASI-JUDICIAL POWER
Atty. Alice Bondoc v Tan Tiong Bio Aka Henry Tan, October 6, 2010

ADMINISTRATIVE PROCEEDINGS
Dr. Castor de Jesus vs Rafael Guerrero, et. Al., Sept. 4, 2009

1. In issuing EO 156, particularly the prohibition on importation under Article 2, Section

3.1, the President envisioned to rationalize the importation of used motor vehicles and to
enhance the capabilities of the Philippine motor manufacturing firms to be globally
competitive producers of completely build-up units and their parts and components for the
local and export markets. In justifying the issuance of EO 156, petitioners alleged that
there has been a decline in the sales of new vehicles and a remarkable growth of the sales of
imported used motor vehicles. To address the same, the President issued the questioned
EO to prevent further erosion of the already depressed market base of the local motor
vehicle industry and to curtail the harmful effects of the increase in the importation of used
motor vehicles.

Taking our bearings from the foregoing discussions, we hold that the importation
ban runs afoul the third requisite for a valid administrative order. To be valid, an
administrative issuance must not be ultra vires or beyond the limits of the authority
conferred. It must not supplant or modify the Constitution, its enabling statute and other
existing laws, for such is the sole function of the legislature which the other branches of the
government cannot usurp. As held in United BF Homeowner’s Association v. BF Homes,
Inc.:

The rule-making power of a public administrative body is a delegated legislative

power, which it may not use either to abridge the authority given it by Congress or the
Constitution or to enlarge its power beyond the scope intended. Constitutional and
statutory provisions control what rules and regulations may be promulgated by such a
body, as well as with respect to what fields are subject to regulation by it. It may not make
rules and regulations which are inconsistent with the provisions of the Constitution or a
statute, particularly the statute it is administering or which created it, or which are in
derogation of, or defeat, the purpose of a statute.

In the instant case, the subject matter of the laws authorizing the President to
regulate or forbid importation of used motor vehicles, is the domestic industry. EO 156,
however, exceeded the scope of its application by extending the prohibition on the
importation of used cars to the Freeport, which RA 7227, considers to some extent, a
foreign territory. The domestic industry which the EO seeks to protect is actually the
“customs territory” which is defined under the Rules and Regulations Implementing RA
7227, as follows:
“the portion of the Philippines outside the Subic Bay Freeport where the Tariff and
Customs Code of the Philippines and other national tariff and customs laws are in force
and effect.”

The proscription in the importation of used motor vehicles should be operative only
outside the Freeport and the inclusion of said zone within the ambit of the prohibition is an
invalid modification of RA 7227. Indeed, when the application of an administrative
issuance modifies existing laws or exceeds the intended scope, as in the instant case, the
issuance becomes void, not only for being ultra vires, but also for being unreasonable.

This brings us to the fourth requisite. It is an axiom in administrative law that

administrative authorities should not act arbitrarily and capriciously in the issuance of
rules and regulations. To be valid, such rules and regulations must be reasonable and
fairly adapted to secure the end in view. If shown to bear no reasonable relation to the
purposes for which they were authorized to be issued, then they must be held to be invalid.

There is no doubt that the issuance of the ban to protect the domestic industry is a
reasonable exercise of police power. The deterioration of the local motor manufacturing
firms due to the influx of imported used motor vehicles is an urgent national concern that
needs to be swiftly addressed by the President. In the exercise of delegated police power,
the executive can therefore validly proscribe the importation of these vehicles. Thus, in
Taxicab Operators of Metro Manila, Inc. v. Board of Transportation, the Court held that a
regulation phasing out taxi cabs more than six years old is a valid exercise of police power.
The regulation was sustained as reasonable holding that the purpose thereof was to
promote the convenience and comfort and protect the safety of the passengers.

The problem, however, lies with respect to the application of the importation ban to
the Freeport. The Court finds no logic in the all encompassing application of the assailed
provision to the Freeport which is outside the customs territory. As long as the used motor
vehicles do not enter the customs territory, the injury or harm sought to be prevented or
remedied will not arise. The application of the law should be consistent with the purpose of
and reason for the law. Ratione cessat lex, et cessat lex. When the reason for the law
ceases, the law ceases. It is not the letter alone but the spirit of the law also that gives it life.
To apply the proscription to the Freeport would not serve the purpose of the EO. Instead
of improving the general economy of the country, the application of the importation ban in
the Freeport would subvert the avowed purpose of RA 7227 which is to create a market
that would draw investors and ultimately boost the national economy.

In similar cases, we also declared void the administrative issuance or ordinances

concerned for being unreasonable. To illustrate, in De la Cruz v. Paras, the Court
held as unreasonable and unconstitutional an ordinance characterized by
overbreadth. In that case, the Municipality of Bocaue, Bulacan, prohibited the
operation of all night clubs, cabarets and dance halls within its jurisdiction for the
protection of public morals. As explained by the Court:
x x x It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue
could qualify under the term reasonable. The objective of fostering public morals, a
worthy and desirable end can be attained by a measure that does not encompass too wide a
field. Certainly the ordinance on its face is characterized by overbreadth. The purpose
sought to be achieved could have been attained by reasonable restrictions rather than by
an absolute prohibition. The admonition in Salaveria should be heeded: “The Judiciary
should not lightly set aside legislative action when there is not a clear invasion of personal
or property rights under the guise of police regulation.” It is clear that in the guise of a
police regulation, there was in this instance a clear invasion of personal or property rights,
personal in the case of those individuals desirous of patronizing those night clubs and
property in terms of the investments made and salaries to be earned by those therein
employed.

Lupangco v. Court of Appeals, is a case involving a resolution issued by the

Professional Regulation Commission which prohibited examinees from attending review
classes and receiving handout materials, tips, and the like three days before the date of
examination in order to preserve the integrity and purity of the licensure examinations in
accountancy. Besides being unreasonable on its face and violative of academic freedom, the
measure was found to be more sweeping than what was necessary, viz:

Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the
alleged leakages in the licensure examinations will be eradicated or at least minimized.
Making the examinees suffer by depriving them of legitimate means of review or
preparation on those last three precious days — when they should be refreshing themselves
with all that they have learned in the review classes and preparing their mental and
psychological make-up for the examination day itself — would be like uprooting the tree to
get rid of a rotten branch. What is needed to be done by the respondent is to find out the
source of such leakages and stop it right there. If corrupt officials or personnel should be
terminated from their loss, then so be it. Fixers or swindlers should be flushed out. Strict
guidelines to be observed by examiners should be set up and if violations are committed,
then licenses should be suspended or revoked. x x x

In Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc., the Court likewise
struck down as unreasonable and overbreadth a city ordinance granting an exclusive
franchise for 25 years, renewable for another 25 years, to one entity for the construction
and operation of one common bus and jeepney terminal facility in Lucena City. While
professedly aimed towards alleviating the traffic congestion alleged to have been caused by
the existence of various bus and jeepney terminals within the city, the ordinance was held
to be beyond what is reasonably necessary to solve the traffic problem in the city.

By parity of reasoning, the importation ban in this case should also be declared void
for its too sweeping and unnecessary application to the Freeport which has no bearing on
the objective of the prohibition. If the aim of the EO is to prevent the entry of used motor
vehicles from the Freeport to the customs territory, the solution is not to forbid entry of
these vehicles into the Freeport, but to intensify governmental campaign and measures to
thwart illegal ingress of used motor vehicles into the customs territory.

At this juncture, it must be mentioned that on June 19, 1993, President Fidel V.
Ramos issued Executive Order No. 97-A, “Further Clarifying The Tax And Duty-Free
Privilege Within The Subic Special Economic And Free Port Zone,” Section 1 of which
provides:

SECTION 1. The following guidelines shall govern the tax and duty-free privilege
within the Secured Area of the Subic Special Economic and Free Port Zone:

1.1. The Secured Area consisting of the presently fenced-in former Subic Naval Base
shall be the only completely tax and duty-free area in the SSEFPZ. Business enterprises
and individuals (Filipinos and foreigners) residing within the Secured Area are free to
import raw materials, capital goods, equipment, and consumer items tax and dutry-free.
Consumption items, however, must be consumed within the Secured Area. Removal of raw
materials, capital goods, equipment and consumer items out of the Secured Area for sale to
non-SSEFPZ registered enterprises shall be subject to the usual taxes and duties, except as
may be provided herein.

In Tiu v. Court of Appeals as reiterated in Coconut Oil Refiners Association, Inc. v.

Torres,[47] this provision limiting the special privileges on tax and duty-free importation in
the presently fenced-in former Subic Naval Base has been declared valid and constitutional
and in accordance with RA 7227. Consistent with these rulings and for easier management
and monitoring of activities and to prevent fraudulent importation of merchandise and
smuggling, the free flow and importation of used motor vehicles shall be operative only
within the “secured area.”

In sum, the Court finds that Article 2, Section 3.1 of EO 156 is void insofar as it is
made applicable to the presently secured fenced-in former Subic Naval Base area as stated
in Section 1.1 of EO 97-A. Pursuant to the separability clause[48] of EO 156, Section 3.1
is declared valid insofar as it applies to the customs territory or the Philippine territory
outside the presently secured fenced-in former Subic Naval Base area as stated in Section
1.1 of EO 97-A. Hence, used motor vehicles that come into the Philippine territory via the
secured fenced-in former Subic Naval Base area may be stored, used or traded therein, or
exported out of the Philippine territory, but they cannot be imported into the Philippine
territory outside of the secured fenced-in former Subic Naval Base area.

HON. EXECUTIVE SECRETARY, HON. SECRETARY OF THE DEPARTMENT OF

TRANSPORTATION AND COMMUNICATIONS (DOTC), COMMISSIONER OF
CUSTOMS, ASSISTANT SECRETARY, LAND TRANSPORTATION OFFICE (LTO),
COLLECTOR OF CUSTOMS, SUBIC BAY FREE PORT ZONE, AND CHIEF OF LTO,
SUBIC BAY FREE PORT ZONE, Petitioners, versus SOUTHWING HEAVY
INDUSTRIES, INC., represented by its President JOSE T. DIZON, UNITED
AUCTIONEERS, INC., represented by its President DOMINIC SYTIN, and MICROVAN,
INC., represented by its President MARIANO C. SONON, Respondents., G.R. No. 164171,
2006 Feb 20, En Banc)

2. Philippine jurisprudence on the right to privacy, not to mention informational privacy,

is at its infancy. There are very few occasions that Philippine courts are given the
opportunity to resolve and expound on issues relating to the right to privacy as a
constitutional guarantee. One reason given by Justice Jorge R. Coquia, in his treatise on
the matter is that the Philippine Constitution expressly guarantees only the privacy of
communication and jurisprudence.

With the exception of Ople v. Torres, the more notable case is Morfe v. Mutuc
where the Court first recognized the constitutional right to privacy as laid down in
Griswold v. Connecticut. The case of Ramirez v. Court of Appeals arose from petitioner’s
act of secretly tape recording an event in direct violation of Republic Act (R.A.) No. 4200 or
the Anti-Wiretapping Act. Therein, the court clarified that even a person privy to a
communication who records his private conversation with another without the knowledge
of the latter will qualify as a violator under Section 1 of R.A. No. 4200.

The basic attribute of an effective right to informational privacy is the individual’s

ability to control the flow of information concerning or describing him, which however
must be overbalanced by legitimate public concerns. To deprive an individual of his power
to control or determine whom to share information of his personal details would deny him
of his right to his own personhood. For the essence of the constitutional right to
informational privacy goes to the very heart of a person’s individuality, a sphere as
exclusive and as personal to an individual which the state has no right to intrude without
any legitimate public concern.

As the erosion of personal privacy by computer technology and advanced

information systems accelerate, the individual’s ability to control its use has diminished.
Sharing of data among government agencies and private and public organizations are not
uncommon. Aside from the chilling prospect that one’s profile is being formed from the
gathering of data from various sources, there is also the unsettling thought that these data
may be inaccurate, outdated or worse, misused. There is therefore a pressing need to define
the parameters on the use of electronic files or information, to be properly initiated by a
legislative act and not formulated in a mere executive order masquerading as an internal
regulation, as in the case of E.O. No. 420.

Even granting that E.O. No. 420 constitutes a valid exercise of executive power, it
must still be struck down because it falls short of the guarantees laid down in Whalen v.
Roe and Ople v. Torres. There is no specific and foolproof provision against the invasion
of the right to privacy, particularly, those dealing with indiscriminate disclosure, the
procedure for the gathering, storage, and retrieval of the information, an enumeration of
the persons who may be authorized to access the data; and the sanctions to be imposed
against unauthorized use and disclosure. Although it was mentioned in Section 3 of E.O.
No. 420 that the data to be collected will be limited to the enumeration therein, yet it failed
to provide the yardstick on how to handle the subsequent and additional data that will be
accumulated when the ID is used for future governmental and private transactions.

Thus, we reiterate the caveat enunciated in Ople v. Torres that “the right to privacy
does not bar all incursions into individual privacy. The right is not intended to stifle
scientific and technological advancements that enhance public service and the common
good. It merely requires that the law be narrowly focused and a compelling interest
justifies such intrusions. Intrusions into the right must be accompanied by proper
safeguards and well-defined standards to prevent unconstitutional invasions. We reiterate
that any law or order that invades individual privacy will be subjected by this Court to
strict scrutiny.”

In fine, E.O. No. 420 is unconstitutional for lack of constitutional and statutory
basis; its subject matter is not appropriate subject of an executive order; and it violates the
constitutionally guaranteed right to privacy.

KILUSANG MAYO UNO, NATIONAL FEDERATION OF LABOR UNIONS-

KILUSANG MAYO UNO (NAFLU-KMU), JOSELITO V. USTAREZ, EMILIA P.
DAPULANG, SALVADOR T. CARRANZA, MARTIN T. CUSTODIO, JR. and ROQUE
M. TAN, Petitioners, versus THE DIRECTOR-GENERAL, NATIONAL ECONOMIC
DEVELOPMENT AUTHORITY, and THE SECR ETARY, DEPARTMENT OF
BUDGET and MANAGEMENT, Respondents.,
G.R. No. 167798, 2006 Apr 19, En Banc)

3. While it is doctrinal in administrative law that the rules and regulations of

administrative bodies interpreting the law they are entrusted to enforce have the force of
law, these issuances are by no means iron-clad norms. Administrative bodies themselves
can and have in fact “bent the rules” for reasons of public interest. On September 15,
1998, for instance, petitioner issued Philhealth Circular No. 31-A:[16]

IN ORDER to allow members of the National Health Insurance Program (NHIP)

sufficient time to complete all documents to support their medical care claims, Philhealth is
temporarily suspending the sixty (60)-day reglementary period for filing claims.

While Section 52 (b), Rule VIII of the Implementing Rules and Regulations of R.A.
7875 provides that all claims for payment of services shall be filed within 60 calendar days
from the day of discharge of a patient, there is a need to extend this period to minimize the
incidence of late filing due to members’ personal difficulties and circumstances beyond
their control. (emphasis ours)

And then again, on April 20, 1999, Philhealth Circular No. 50 was issued:
 TO MINIMIZE the incidence of late filing of claims due to members’ personal difficulties
in preparing the needed documents, Philhealth is extending the period for filing of claims
xxx (emphasis ours)

The above circulars indubitably recognized the necessity of extending the 60-day
period because of the difficulties encountered by members in completing the required
documents, often due to circumstances beyond their control. Petitioner appeared to be
well aware of the problems encountered by its members in complying with the 60-day rule.
Furthermore, implicit in the wording of the circulars was the cognition of the fact that the
fault was not always attributable to the health care providers like CGH but to the members
themselves.

Delay on the part of members is an ordinary occurrence. There is no need to make

a mountain out of a molehill as far as this particular point is concerned. To this day,
members continue to encounter delay in submitting their documents. There was therefore
no compelling reason for the exacting and meticulous enforcement of the rule when, in at
least two instances, petitioner itself implemented it liberally and on the same ground that it
was using against respondent.

Petitioner likewise contends that respondent failed to exhaust administrative

remedies before resorting to judicial intervention. We disagree.

Under the doctrine of exhaustion of administrative remedies, an administrative

decision must first be appealed to the administrative superiors at the highest level before it
may be elevated to a court of justice for review.

This doctrine, however, is a relative one and its flexibility is conditioned on the
peculiar circumstances of a case. There are a number of instances when the doctrine has
been held to be inapplicable. Among the established exceptions are:

1) when the question raised is purely legal;

2) when the administrative body is in estoppel;

3) when the act complained of is patently illegal;

4) when there is urgent need for judicial intervention;

5) when the claim involved is small;

6) when irreparable damage will be suffered;

7) when there is no other plain, speedy and adequate remedy;

8) when strong public interest is involved;

9) when the subject of the controversy is private land;

10) in quo warranto proceedings.[18]

As explained by the appellate court:

It is Our view that the instant case falls as one of the exceptions, concerning as it
does public interest. As mentioned earlier, although they were not made parties to the
instant case, the rights of millions of Filipinos who are members of PHILHEALTH and
who obviously rely on it for their health care, are considered, nonetheless, parties to the
present case. This Court is mandated herein to take conscious and detailed consideration
of the interplay of the interests of the state, the health care giver and the members. With
these in mind, We hold that the greater interest of the greater number of people, mostly
members of PHILHEALTH, is paramount.

Furthermore, when the representatives of herein petitioner met with Dr. Enrique
Zalamea, PHILHEALTH’s President and Chief Executive Officer, he informed them that,
in lieu of protest to be filed directly with him, the representatives could make
representations with the Office of the President, which petitioner did to no avail,
considering that the formal protest filed was referred back by the Office of the President to
Dr. Zalamea. Being then the head of PHILHEALTH, and expected to have an intimate
knowledge of the law and the rules creating the National Health Insurance Program, under
which PHILHEALTH was created, he instructed herein petitioner to pursue a remedy not
sanctioned by the rules and not in accord with the rule of exhaustion of administrative
remedies. In so doing, PHILHEALTH is deemed estopped from assailing the instant
petition for failure to exhaust administrative remedies when PHILHEALTH itself, through
its president, does not subscribe to it.

There is no need to belabor the fact that the baseless denial of respondent’s claims
will be gravely disturbing to the health care industry, specially the providers whose claims
will be unpaid. The unfortunate reality is that there are today some health care providers
who admit numbers for treatment and/or confinement yet require them to pay the portion
which ought to be shouldered by Philhealth. A refund is made only if their claim is first
paid, due to the apprehension of not being reimbursed. Simply stated, a member cannot
avail of his benefits under the NHIP at the time he needs it most.
 We cannot turn a deaf ear to respondent’s plea for fairness which essentially
demands that its claims for services already rendered be honored as the National Health
Insurance Program law intended.

PHILIPPINE HEALTH INSURANCE CORPORATION, Petitioner, versus CHINESE

GENERAL HOSPITAL AND MEDICAL CENTER, Respondent., G.R. No. 163123, 2005
Apr 15, 3rd Division)

4. In accordance with settled principles of administrative law, primary jurisdiction is

vested in the DAR to determine in a preliminary manner the just compensation for the
lands taken under the agrarian reform program, but such determination is subject to
challenge before the courts. The resolution of just compensation cases for the taking of
lands under agrarian reform is, after all, essentially a judicial function.

Thus, the trial did not err in taking cognizance of the case as the determination of
just compensation is a function addressed to the courts of justice.

Land Bank’s contention that the property was acquired for purposes of agrarian
reform on October 21, 1972, the time of the effectivity of PD 27, ergo just compensation
should be based on the value of the property as of that time and not at the time of
possession in 1993, is likewise erroneous. In Office of the President, Malacañang, Manila v.
Court of Appeals,[21] we ruled that the seizure of the landholding did not take place on the
date of effectivity of PD 27 but would take effect on the payment of just compensation.

Under the factual circumstances of this case, the agrarian reform process is still
incomplete as the just compensation to be paid private respondents has yet to be settled.
Considering the passage of Republic Act No. 6657 (RA 6657)[22] before the completion of
this process, the just compensation should be determined and the process concluded under
the said law. Indeed, RA 6657 is the applicable law, with PD 27 and EO 228 having only
suppletory effect, conformably with our ruling in Paris v. Alfeche.

Section 17 of RA 6657 which is particularly relevant, providing as it does the

guideposts for the determination of just compensation, reads as follows:

Sec. 17. Determination of Just Compensation.—In determining just compensation, the cost
of acquisition of the land, the current value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax declarations, and the assessment made
by government assessors shall be considered. The social and economic benefits contributed
by the farmers and the farm-workers and by the Government to the property as well as the
non-payment of taxes or loans secured from any government financing institution on the
said land shall be considered as additional factors to determine its valuation.
It would certainly be inequitable to determine just compensation based on the guideline
provided by PD 27 and EO 228 considering the DAR’s failure to determine the just
compensation for a considerable length of time. That just compensation should be
determined in accordance with RA 6657, and not PD 27 or EO 228, is especially
imperative considering that just compensation should be the full and fair equivalent of the
property taken from its owner by the expropriator, the equivalent being real, substantial,
full and ample.

In this case, the trial court arrived at the just compensation due private respondents
for their property, taking into account its nature as irrigated land, location along the
highway, market value, assessor’s value and the volume and value of its produce. This
Court is convinced that the trial court correctly determined the amount of just
compensation due private respondents in accordance with, and guided by, RA 6657 and
existing jurisprudence.

LAND BANK OF THE PHILIPPINES, Petitioner, versus HON. ELI G. C. NATIVIDAD,

Presiding Judge of the Regional Trial Court, Branch 48, San Fernando, Pampanga, and
JOSE R. CAGUIAT represented by Attorneys-in-fact JOSE T. BARTOLOME and
VICTORIO MANGALINDAN, Respondents., G.R. No. 127198, 20
2005 May 16, 2nd Division)05 May 16, 2nd Division).

5. Instead, assuming administrative review were available, it is the NEDA that may
conduct such review following the principles of administrative law, and the NEDA’s
decision in turn is reviewable by the Office of the President. The decision of the Office of
the President then effectively substitutes as the determination of the Tariff Commission,
which now forms the basis of the DTI Secretary’s decision, which now would be ripe for
judicial review by the CTA under Section 29 of the SMA. This is the only way that
administrative review of the Tariff Commission’s determination may be sustained without
violating the SMA and its constitutional restrictions and limitations, as well as
administrative law.

In bare theory, the NEDA may review, alter or modify the Tariff Commission’s
final determination, the Commission being an attached agency of the NEDA. Admittedly,
there is nothing in the SMA or any other statute that would prevent the NEDA to exercise
such administrative review, and successively, for the President to exercise in turn review
over the NEDA’s decision.

SOUTHERN CROSS CEMENT CORPORATION, Petitioner, versus CEMENT

MANUFACTURERS ASSOCIATION OF THE PHILIPPINES, THE SECRETARY OF
THE DEPARTMENT OF TRADE AND INDUSTRY, THE SECRETARY OF THE
DEPARTMENT OF FINANCE and THE COMMISSIONER OF THE BUREAU OF
CUSTOMS, Respondents., G.R. No. 158540, 2005 Aug 3, En Banc)

6.
 Jurisprudential law establishes a clear-cut distinction between suspension as
preventive measure and suspension as penalty. The distinction, by considering the purpose
aspect of the suspensions, is readily cognizable as they have different ends sought to be
achieved.

Preventive suspension is merely a preventive measure, a preliminary step in an

administrative investigation. The purpose of the suspension order is to prevent the accused
from using his position and the powers and prerogatives of his office to influence potential
witnesses or tamper with records which may be vital in the prosecution of the case against
him. If after such investigation, the charge is established and the person investigated is
found guilty of acts warranting his suspension or removal, then he is suspended, removed
or dismissed. This is the penalty.

That preventive suspension is not a penalty is in fact explicitly provided by Section

24 of Rule XIV of the Omnibus Rules Implementing Book V of the Administrative Code of
1987 (Executive Order No. 292) and other Pertinent Civil Service Laws.

SEC. 24. Preventive suspension is not a punishment or penalty for misconduct in

office but is considered to be a preventive measure. emphasis supplied).

Not being a penalty, the period within which one is under preventive suspension is
not considered part of the actual penalty of suspension. So Section 25 of the same Rule
XIV provides:

SEC. 25. The period within which a public officer or employee charged is placed
under preventive suspension shall not be considered part of the actual penalty of
suspension imposed upon the employee found guilty. emphasis supplied).

Clearly, service of the preventive suspension cannot be credited as service of penalty.

To rule otherwise is to disregard above-quoted Sections 24 and 25 of the Administrative
Code of 1987 and render nugatory the substantial distinction between, and purposes of
imposing preventive suspension and suspension as penalty.

Petitioner’s reliance on Gloria fails. In said case, this Court recognized two kinds of
preventive suspension of civil service employees who are charged with offenses punishable
by removal or suspension, to wit: (1) preventive suspension pending investigation
(Section 51 of the Civil Service Law [Book V, Title I, Subtitle A of the Administrative Code
of 1987]), and (2) preventive suspension pending appeal if the penalty imposed by
the disciplining authority is suspension or dismissal and, after review, the respondent is
exonerated (Section 47(4) of The Civil Service Law).
 The foregoing classification has significant implications in determining the
entitlement of the employee to compensation during the period of suspension, and to credit
the preventive suspension to the final penalty of suspension.

Thus, in Gloria, this Court held:

Preventive suspension pending investigation, as already discussed, is not a penalty

but only a means of enabling the disciplining authority to conduct an unhampered
investigation. On the other hand, preventive suspension pending appeal is actually punitive
although it is in effect subsequently considered illegal if respondent is exonerated and the
administrative decision finding him guilty is reversed. Hence, he should be reinstated with
full pay for the period of the suspension. Thus, §47(4) states that respondent “shall be
considered as under preventive suspension during the pendency of the appeal in the event
he wins.” On the other hand, if his conviction is affirmed, i.e., if he is not exonerated, the
period of his suspension becomes part of the final penalty of suspension or dismissal.

In fine, as petitioner’s preventive suspension was carried out pending his

investigation, not while his appeal from his conviction was pending, the same cannot be
credited to form part of the final penalty of suspension.
En passant, neither may the concept of crediting, in criminal law, preventive
imprisonment in the service of a convict’s term of imprisonment be applied to preventive
suspension during investigation in administrative law in the service of a respondent’s final
penalty of suspension. For not only are they distinct in the objective or purpose, or in their
nature as preventive imprisonment involves restriction of personal liberties which is not the
case with preventive suspension; the respective laws covering them are explicit.

Finally, as shown above, since the law explicitly prescribes the rules on crediting of
preventive suspension to the final penalty of suspension, petitioner’s invocation of equity
may not lie.
PRUDENCIO QUIMBO, Petitioner, versus ACTING OMBUDSMAN MARGARITO
GERVACIO and DIRECTRESS MARY SUSAN S. GUILLERMO OF THE
OMBUDSMAN OFFICE, Respondents., G.R. No. 155620, 2005 Aug 9, 3rd Division)

7.
Finally, petitioner argues that he will be placed in double jeopardy if the
administrative case against him will not be dismissed because of the decision of the
Ombudsman finding no probable cause to indict him before the Sandiganbayan for
violation of Section 3(g) of Rep. Act No. 3019, as amended.

We are not convinced. As a general rule, the following requisites must be present for
double jeopardy to attach: (1) a valid indictment, (2) before a court of competent
jurisdiction, (3) the arraignment of the accused, (4) a valid plea entered by him, and (5) the
acquittal or conviction of the accused, or the dismissal or termination of the case against
him without his express consent.[48]
 In the case before us, all the elements necessary to invoke double jeopardy are absent.
Moreover, the fact that the administrative case and the case filed before the Ombudsman
are based on the same subject matter is of no moment. It is a fundamental principle of
administrative law that the administrative case may generally proceed against a
respondent independently of a criminal action for the same act or omission and requires
only a preponderance of evidence to establish administrative guilt as against proof beyond
reasonable doubt of the criminal charge.

LEONCIO A. AMADORE, Petitioner, versus ALBERTO G. ROMULO, MANUEL B.

GAITE, and PRESIDENTIAL ANTI-GRAFT COMMISSION, Respondents., G.R. No.
161608, 2005 Aug 9, 2nd Division)

8.

The Court has consistently held that the Office of the Special Prosecutor is merely a
component of the Office of the Ombudsman and may only act under the supervision and
control and upon authority of the Ombudsman.

Section 38(1), Chapter 7, Book IV of the Administrative Code of 1987 defines

“supervision and control” thus:

(1) Supervision and Control. – Supervision and control shall include authority to act
directly whenever a specific function is entrusted by law or regulation to a subordinate;
direct the performance of duty; restrain the commission of acts; review, approve, reverse
or modify acts and decisions of subordinate officials or units; determine priorities in the
execution of plans and programs; and prescribe standards, guidelines, plans and programs.
Unless a different meaning is explicitly provided in the specific law governing the
relationship of particular agencies, the word “control” shall encompass supervision and
control as defined in this paragraph.

The power of supervision and control has been likewise explained as follows:

In administrative law, supervision means overseeing or the power or authority of an

officer to see that subordinate officers perform their duties. If the latter fail or neglect to
fulfill them, the former may take such action or step as prescribed by law to make them
perform such duties. Control, on the other hand, means the power of an officer to alter or
modify or nullify or set aside what a subordinate officer had done in the performance of his
duties and to substitute the judgment of the former for that of the latter.[33]

OFFICE OF THE OMBUDSMAN and DENNIS M. VILLA-IGNACIO, in his capacity as

Special Prosecutor, Office of the Ombudsman, Petitioners, versus ATTY. GIL A. VALERA
and COURT OF APPEALS (Special First Division), Respondents., G.R. No. 164250, 2005
Sep 30, En Banc)
9.

The fundamental rule in administrative law is that, to be valid, administrative rules

and regulations must be issued by authority of a law and must not contravene the
provisions of the Constitution. The rule-making power of an administrative agency may
not be used to abridge the authority given to it by Congress or by the Constitution. Nor
can it be used to enlarge the power of the administrative agency beyond the scope intended.
Constitutional and statutory provisions control with respect to what rules and regulations
may be promulgated by administrative agencies and the scope of their regulations.

In the case at bar, we find that the impugned A.O. is invalid as it contravenes the
Constitution. The A.O. sought to regulate livestock farms by including them in the
coverage of agrarian reform and prescribing a maximum retention limit for their
ownership. However, the deliberations of the 1987 Constitutional Commission show a
clear intent to exclude, inter alia, all lands exclusively devoted to livestock, swine and
poultry- raising. The Court clarified in the Luz Farms case that livestock, swine and
poultry-raising are industrial activities and do not fall within the definition of
“agriculture” or “agricultural activity.” The raising of livestock, swine and poultry is
different from crop or tree farming. It is an industrial, not an agricultural, activity. A
great portion of the investment in this enterprise is in the form of industrial fixed assets,
such as: animal housing structures and facilities, drainage, waterers and blowers, feedmill
with grinders, mixers, conveyors, exhausts and generators, extensive warehousing facilities
for feeds and other supplies, anti-pollution equipment like bio-gas and digester plants
augmented by lagoons and concrete ponds, deepwells, elevated water tanks, pumphouses,
sprayers, and other technological appurtenances.[15]

Clearly, petitioner DAR has no power to regulate livestock farms which have been
exempted by the Constitution from the coverage of agrarian reform. It has exceeded its
power in issuing the assailed A.O.

The subsequent case of Natalia Realty, Inc. v. DAR reiterated our ruling in the Luz
Farms case. In Natalia Realty, the Court held that industrial, commercial and residential
lands are not covered by the CARL. We stressed anew that while Section 4 of R.A. No.
6657 provides that the CARL shall cover all public and private agricultural lands, the term
“agricultural land” does not include lands classified as mineral, forest, residential,
commercial or industrial. Thus, in Natalia Realty, even portions of the Antipolo Hills
Subdivision, which are arable yet still undeveloped, could not be considered as agricultural
lands subject to agrarian reform as these lots were already classified as residential lands.

A similar logical deduction should be followed in the case at bar. Lands devoted to
raising of livestock, poultry and swine have been classified as industrial, not agricultural,
lands and thus exempt from agrarian reform. Petitioner DAR argues that, in issuing the
impugned A.O., it was seeking to address the reports it has received that some
unscrupulous landowners have been converting their agricultural lands to livestock farms
to avoid their coverage by the agrarian reform. Again, we find neither merit nor logic in
this contention. The undesirable scenario which petitioner seeks to prevent with the
issuance of the A.O. clearly does not apply in this case. Respondents’ family acquired their
landholdings as early as 1948. They have long been in the business of breeding cattle in
Masbate which is popularly known as the cattle-breeding capital of the Philippines.[18]
Petitioner DAR does not dispute this fact. Indeed, there is no evidence on record that
respondents have just recently engaged in or converted to the business of breeding cattle
after the enactment of the CARL that may lead one to suspect that respondents intended to
evade its coverage. It must be stressed that what the CARL prohibits is the conversion of
agricultural lands for non-agricultural purposes after the effectivity of the CARL. There
has been no change of business interest in the case of respondents.

Moreover, it is a fundamental rule of statutory construction that the reenactment of

a statute by Congress without substantial change is an implied legislative approval and
adoption of the previous law. On the other hand, by making a new law, Congress seeks to
supersede an earlier one.[19] In the case at bar, after the passage of the 1988 CARL,
Congress enacted R.A. No. 7881[20] which amended certain provisions of the CARL.
Specifically, the new law changed the definition of the terms “agricultural activity” and
“commercial farming” by dropping from its coverage lands that are devoted to commercial
livestock, poultry and swine-raising.[21] With this significant modification, Congress
clearly sought to align the provisions of our agrarian laws with the intent of the 1987
Constitutional Commission to exclude livestock farms from the coverage of agrarian
reform.

In sum, it is doctrinal that rules of administrative bodies must be in harmony with

the provisions of the Constitution. They cannot amend or extend the Constitution. To be
valid, they must conform to and be consistent with the Constitution. In case of conflict
between an administrative order and the provisions of the Constitution, the latter prevails.
The assailed A.O. of petitioner DAR was properly stricken down as unconstitutional as it
enlarges the coverage of agrarian reform beyond the scope intended by the 1987
Constitution.

DEPARTMENT OF AGRARIAN REFORM, represented by SECRETARY JOSE

MARI B. PONCE (OIC), Petitioner, versus DELIA T. SUTTON, ELLA T. SUTTON-
SOLIMAN and HARRY T. SUTTON, Respondents., G.R. No. 162070, 2005 Oct 19, En
Banc)

10.

In enumerating the penalties which are final and unappealable, Sec. 27 of R.A. No.
6770 states: “[a]ny order, directive or decision imposing the penalty of public censure,
reprimand, suspension of not more than one month’s salary shall be final and
unappealable.” We hold that the phrase “suspension of not more than one month’s salary
includes that imposed upon petitioner, i.e., suspension for one month without pay. There is
no penalty as suspension of salary in our administrative law, rules and regulations. Salaries
are simply not suspended. Rather it is the official or employee concerned who is suspended
with a corresponding withholding of salaries following the principle of “no work, no pay.”
Or, an official or employee may be fined an amount equivalent to his or her monthly salary
as penalty without an accompanying suspension from work.

In truth, the Office of the Ombudsman, pursuant to its authority to promulgate

rules to implement R.A. No. 6770, has clarified this ambiguity of its Sec. 27. Sec. 7, Rule III
of its Rules of Procedure, Administrative Order No. 7, provides, viz:

Where the respondent is absolved of the charge, and in case of conviction where the
penalty imposed is public censure or reprimand, suspension of not more than one month,
or a fine equivalent to one month salary, the decision shall be final and unappealable x x x
x (underscoring ours)

The cited excerpt in the Lapid decision that “the punishment imposed upon
petitioner, i.e., suspension without pay for one month, is not among those listed as final and
unappealable” is of no comfort to the petitioner. A reading of the decision will show that
the penalty imposed upon the petitioner therein, Gov. Manuel M. Lapid of Pampanga, was
not suspension for one month but suspension for one year. In fact, in the statement
immediately preceding the dispositive portion of the decision, the Court, after applying Sec.
27 of R.A. No. 6770 and Sec. 7, Rule III of the Rules of Procedure of the Office of the
Ombudsman, ruled that “the decision imposing a penalty of one year suspension without
pay on petitioner Lapid is not immediately executory.”

Indeed, in the later case of Lopez v. Court of Appeals,[10] the Court, again citing
Sec. 27 of R.A. No. 6770, Sec. 7, Rule III of the Rules of Procedure of the Office of the
Ombudsman and Lapid v. Court of Appeals, reiterated that decisions of the Ombudsman
in administrative cases imposing the penalty of public censure, reprimand, or suspension of
not more than one month, or a fine equivalent to one month salary shall be final and
unappealable. The penalty imposed upon herein petitioner being suspension for one month
without pay, we hold the same final and unappealable, as correctly ruled by the Court of
Appeals.

We shall refrain from delving into the merits of petitioner’s other contentions as
they present factual issues not reviewable on appeal via certiorari. This Court has always
accorded due respect and weight to the factual findings of the Office of the Ombudsman
especially when such findings have been affirmed by the Court of Appeals, as in the instant
case.

RENATO F. HERRERA, petitioner, vs. PLARIDEL ELMER J. BOHOL, respondent., G.

R. No. 155320, 2004 Feb 5, 2nd Division)

11.

The opportunity to adduce evidence is essential in the administrative process, as

decisions must be rendered on the evidence presented, either in the hearing, or at least
contained in the record and disclosed to the parties affected. The requirement that agencies
hold hearings in which parties affected by the agency’s action can be represented by
counsel may be viewed as an effort to regularize this struggle for advantage within a
legislative adversary framework.It necessarily follows that if no evidence is procured
pertinent to a particular issue, any eventual resolution of that issue on substantive grounds
despite the absence of evidence is flawed. Moreover, if the parties did have evidence to
counter the ruling but were wrongfully denied the opportunity to offer the evidence, the
result would be embarrassing on the adjudicato

GLOBE TELECOM, INC., Petitioner, THE NATIONAL TELECOMMUNICATIONS

COMMISSION, COMMISSIONER JOSEPH A. SANTIAGO, DEPUTY
COMMISSIONERS AURELIO M. UMALI and NESTOR DACANAY, and SMART
COMMUNICATIONS, INC. Respondents, G.R. No. 143964, 2004 Jul 26, 2nd Division)

12.

The functions of the COMELEC under the Constitution are essentially executive
and administrative in nature. It is elementary in administrative law that “courts will not
interfere in matters which are addressed to the sound discretion of government agencies
entrusted with the regulation of activities coming under the special technical knowledge
and training of such agencies.”[8] The authority given to COMELEC to declare a failure
of elections and to call for special elections falls under its administrative function.

The marked trend in our laws has been to grant the COMELEC ample latitude so
it can more effectively perform its duty in safeguarding the sanctity of our elections. But
what if, as in this case, the COMELEC refuses to hold elections due to operational,
logistical and financial problems? Did the COMELEC gravely abuse its discretion in
refusing to conduct a second special Barangay and SK elections in the subject barangays?

Neither the candidates nor the voters of the affected barangays caused the failure of
the special elections. The COMELEC’s own acting election officer, EO Maulay, readily
admitted that there were no special elections in these barangays. The COMELEC also
found that the Provincial Election Supervisor of Lanao del Sur and the Regional Election
Director of Region XII did not contest the fact that there were no special elections in these
barangays.

An election is the embodiment of the popular will, the expression of the sovereign
power of the people. It involves the choice or selection of candidates to public office by
popular vote. The right of suffrage is enshrined in the Constitution because through
suffrage the people exercise their sovereign authority to choose their representatives in the
governance of the State. The fact that the elections involved in this case pertain to the
lowest level of our political organization is not a justification to disenfranchise voters.

COMELEC anchored its refusal to call another special election on the last portion
of Section 6 of the Omnibus Election Code ( “Section 6”) which reads:

SEC. 6. Failure of election. – If, on account of force majeure, violence, terrorism, fraud, or
other analogous cases the election in any polling place has not been held on the date fixed,
or had been suspended before the hour fixed by law for the closing of the voting, or after
the voting and during the preparation and the transmission of the election returns or in the
custody or canvass thereof, such election results in a failure to elect, and in any of such
cases the failure or suspension of election would affect the result of the election, the
Commission shall, on the basis of a verified petition by any interested party and after due
notice and hearing, call for the holding or continuation of the election not held, suspended
or which resulted in a failure to elect on a date reasonably close to the date of the election
not held, suspended or which resulted in a failure to elect but not later than thirty days
after the cessation of the cause of such postponement or suspension of the election or
failure to elect. mphasis supplied)

The Court construed Section 6 in Pangandaman v. COMELEC,[12] as follows –

In fixing the date for special elections the COMELEC should see to it that: 1.] it should
not be later than thirty (30) days after the cessation of the cause of the postponement or
suspension of the election or the failure to elect; and, 2.] it should be reasonably close to the
date of the election not held, suspended or which resulted in the failure to elect. The first
involves a question of fact. The second must be determined in the light of the peculiar
circumstances of a case. Thus, the holding of elections within the next few months from the
cessation of the cause of the postponement, suspension or failure to elect may still be
considered “reasonably close to the date of the election not held.” emphasis supplied)

The prohibition on conducting special elections after thirty days from the cessation
of the cause of the failure of elections is not absolute. It is directory, not mandatory, and the
COMELEC possesses residual power to conduct special elections even beyond the deadline
prescribed by law. The deadline in Section 6 cannot defeat the right of suffrage of the
people as guaranteed by the Constitution. The COMELEC erroneously perceived that the
deadline in Section 6 is absolute. The COMELEC has broad power or authority to fix
other dates for special elections to enable the people to exercise their right of suffrage. The
COMELEC may fix other dates for the conduct of special elections when the same cannot
be reasonably held within the period prescribed by law.
More in point is Section 45 of the Omnibus Election Code (“Section 45”) which
specifically deals with the election of barangay officials. Section 45 provides:

SEC. 45. Postponement or failure of election. – When for any serious cause such as
violence, terrorism, loss or destruction of election paraphernalia or records, force majeure,
and other analogous causes of such nature that the holding of a free, orderly and honest
election should become impossible in any barangay, the Commission, upon a verified
petition of an interested party and after due notice and hearing at which the interested
parties are given equal opportunity to be heard, shall postpone the election therein for such
time as it may deem necessary.

If, on account of force majeure, violence, terrorism, fraud or other analogous

causes, the election in any barangay has not been held on the date herein fixed or has been
suspended before the hour fixed by law for the closing of the voting therein and such
failure or suspension of election would affect the result of the election, the Commission, on
the basis of a verified petition of an interested party, and after due notice and hearing, at
which the interested parties are given equal opportunity to be heard shall call for the
holding or continuation of the election within thirty days after it shall have verified and
found that the cause or causes for which the election has been postponed or suspended have
ceased to exist or upon petition of at least thirty percent of the registered voters in the
barangay concerned.

When the conditions in these areas warrant, upon verification by the Commission,
or upon petition of at least thirty percent of the registered voters in the barangay
concerned, it shall order the holding of the barangay election which was postponed or
suspended. mphasis supplied)

Unlike Section 6, Section 45 does not state that special elections should be held on a
date reasonably close to the date of the election not held. Instead, Section 45 states that
special elections should be held within thirty days from the cessation of the causes for
postponement. Logically, special elections could be held anytime, provided the date of the
special elections is within thirty days from the time the cause of postponement has ceased.

Thus, in Basher the COMELEC declared the 27 May 1997 barangay elections a
failure and set special elections on 12 June 1997 which also failed. The COMELEC set
another special election on 30 August 1997 which this Court declared irregular and void.
On 12 April 2000, this Court ordered the COMELEC “to conduct a special election for
punong barangay of Maidan, Tugaya, Lanao del Sur as soon as possible.” This despite the
provision in Section 2[14] of Republic Act No. 6679 (“RA 6679”)[15] stating that the special
barangay election should be held “in all cases not later than ninety (90) days from the date
of all the original election.”

Had the COMELEC resolved to hold special elections in its Resolution dated 8
October 2003, it would not be as pressed for time as it is now. The operational, logistical
and financial problems which COMELEC claims it will encounter with the holding of a
second special election can be solved with proper planning, coordination and cooperation
among its personnel and other deputized agencies of the government. A special election
will require extraordinary efforts, but it is not impossible. In applying election laws, it
would be better to err in favor of popular sovereignty than to be right in complex but little
understood legalisms.[16] In any event, this Court had already held that special elections
under Section 6 would entail minimal costs because it covers only the precincts in the
affected barangays.

In this case, the cause of postponement after the second failure of elections was
COMELEC’s refusal to hold a special election because of (1) its erroneous interpretation
of the law, and (2) its perceived logistical, operational and financial problems. We rule
that COMELEC’s reasons for refusing to hold another special election are void.

Second and Third Issues: Whether the DILG may Appoint the Barangay and SK Officials
 Petitioners contend that the COMELEC gravely abused its discretion in directing
the DILG to proceed with the appointment of Barangay Captains and Barangay Kagawads
as well as SK chairmen and SK Kagawads in the four barangays. Petitioners argue that as
the incumbent elective punong barangays in the four barangays,[18] they should remain in
office in a hold- over capacity until their successors have been elected and qualified.
Section 5 of Republic Act No. 9164 (“RA 9164”) [19] provides:

Sec. 5. Hold Over. – All incumbent barangay officials and sangguniang kabataan officials
shall remain in office unless sooner removed or suspended for cause until their successors
shall have been elected and qualified. The provisions of the Omnibus Election Code
relative to failure of elections and special elections are hereby reiterated in this Act.

RA 9164 is now the law that fixes the date of barangay and SK elections, prescribes the
term of office of barangay and SK officials, and provides for the qualifications of
candidates and voters for the SK elections.

As the law now stands, the language of Section 5 of RA 9164 is clear. It is the duty
of this Court to apply the plain meaning of the language of Section 5. Since there was a
failure of elections in the 15 July 2002 regular elections and in the 13 August 2002 special
elections, petitioners can legally remain in office as barangay chairmen of their respective
barangays in a hold-over capacity. They shall continue to discharge their powers and
duties as punong barangay, and enjoy the rights and privileges pertaining to the office.
True, Section 43(c) of the Local Government Code limits the term of elective barangay
officials to three years. However, Section 5 of RA 9164 explicitly provides that incumbent
barangay officials may continue in office in a hold over capacity until their successors are
elected and qualified.

Section 5 of RA 9164 reiterates Section 4 of RA 6679 which provides that “[A]ll incumbent
barangay officials xxx shall remain in office unless sooner removed or suspended for cause
xxx until their successors shall have been elected and qualified.” Section 8 of the same RA
6679 also states that incumbent elective barangay officials running for the same office
“shall continue to hold office until their successors shall have been elected and qualified.”

The application of the hold-over principle preserves continuity in the transaction of

official business and prevents a hiatus in government pending the assumption of a
successor into office. As held in Topacio Nueno v. Angeles,[21] cases of extreme necessity
justify the application of the hold-over principle.

POLALA SAMBARANI, JAMAL MIRAATO, SAMERA ABUBACAR and

MACABIGUNG MASCARA, versus COMMISSION ON ELECTIONS and EO ESMAEL
MAULAY, Acting Election Officer, Tamparan, Lanao del Sur or whoever is acting on his
behalf, Respondents., G.R. No. 160427, 2004 Sept 15, En Banc)

13.
 Under Rule 13, Section 1(d) of the COMELEC Rules of Procedure, a motion for
reconsideration of an en banc ruling, order or decision of the respondent Commission is
not allowed. Moreover, the issue of what formula applies in determining the additional
seats to be allocated to party-list winners is a pure question of law that is a recognized
exception to the rule on exhaustion of administrative remedies.

([2006V288E] PARTIDO NG MANGGAGAWA (PM) and BUTIL FARMERS PARTY

(BUTIL), Petitioners, versus THE HON. COMMISSION ON ELECTIONS (COMELEC),
REPRESENTED BY ITS HON. CHAIRMAN BENJAMIN ABALOS, SR., Respondent.,
G.R. No. 164702, 2006 Mar 15, En Banc)

14.

Under the doctrine of exhaustion of administrative remedies, a litigant cannot go to

court without first pursuing his administrative remedies, otherwise his action is premature
and his case is not ripe for judicial determination. A litigant should first exhaust the
administrative remedies provided by law before seeking judicial intervention in order to
give the administrative agency an opportunity to decide correctly the matter and prevent
unnecessary and premature resort to the court.

However, the Court recognizes some exceptions to the rule of exhaustion of

administrative remedies. As held in Paat v. Court of Appeals:

x x x However, we are not amiss to reiterate that the principle of exhaustion of

administrative remedies as tested by a battery of cases is not an ironclad rule. This doctrine
is a relative one and its flexibility is called upon by the peculiarity and uniqueness of the
factual and circumstantial settings of a case. Hence, it is disregarded (1) when there is a
violation of due process, (2) when the issue involved is purely a legal question, (3) when
the administrative action is patently illegal amounting to lack or excess of jurisdiction, (4)
when there is estoppel on the part of the administrative agency concerned, (5) when there is
irreparable injury, (6) when the respondent is a department secretary whose acts as an
alter ego of the President bears the implied and assumed approval of the latter, (7) when to
require exhaustion of administrative remedies would be unreasonable, (8) when it would
amount to a nullification of a claim, (9) when the subject matter is a private land in land
case proceedings, (10) when the rule does not provide a plain, speedy and adequate
remedy, and (11) when there are circumstances indicating the urgency of judicial
intervention.

The requirement of prior exhaustion of administrative remedies may likewise be

dispensed with in the following instances: (1) when the claim involved is small; (2) when
strong public interest is involved; and (3) in quo warranto proceedings.[15]
 In this case, Mayor Vargas filed the petition for certiorari with the Court of Appeals
alleging that Secretary Gaite issued the Resolution dated 8 July 2003 with grave abuse of
discretion. Mayor Vargas raised the following issues: (1) whether it was proper for
Secretary Gaite to have ruled that Mayor Vargas is considered in default pursuant to
Article 126, Rule XIX of the Rules Implementing the Local Government Code of 1991;
(2) whether the civil case filed by Mayor Vargas before the Cabanatuan RTC for
annulment of falsified minutes of session and appropriation ordinance with damages is a
prejudicial question which warrants the suspension of the proceedings in the
administrative case; (3) whether the Sangguniang Panlalawigan has jurisdiction to hear the
administrative case filed against Mayor Vargas, when the relief sought is her removal
from office.

The issues raised are questions of law which involve the interpretation and
application of laws. Resolution of such questions constitutes essentially an exercise of
judicial power which is exclusively allocated to the Supreme Court and such courts as the
Legislature may establish. Since the issues involve purely legal questions which the court
may review, exhaustion of administrative remedies may be dispensed with.

HON. TOMAS N. JOSON III, in his capacity as Governor of the Province of Nueva Ecija,
andThe SANGGUNIANG PANLALAWIGAN OF NUEVA ECIJA, Petitioners, versus
COURT OF APPEALS and ELIZABETH R. VARGAS,
Respondent., G.R. No. 160652, 2006 Feb 13, 3rd Division)

15.

Consequently, the only matter that was properly elevated to this Court was the issue
of whether or not the Board had jurisdiction over respondents’ demands. We did not
resolve the issue of whether or not the deductions were valid under Section 39 of RA 8291,
for the simple reason that the Board, as well as the appellate court, did not tackle the issue.
The doctrine of primary jurisdiction would ordinarily preclude us from resolving the
matter, which calls for a ruling to be first made by the Board. It is the latter that is vested
by law with exclusive and original jurisdiction to settle any dispute arising under RA 8291,
as well as other matters related thereto.

However, both the GSIS and respondents have extensively discussed the merits of
the case in their respective pleadings and did not confine their arguments to the issue of
jurisdiction. Respondents, in fact, submit that we should resolve the main issue on the
ground that it is a purely legal question. Respondents further state that a remand of the
case to the Board would merely result in unnecessary delay and needless expense for the
parties. They thus urge the Court to decide the main question in order to finally put an end
to the controversy.
 Indeed, the principal issue pending before the Board does not involve any factual
question, as it concerns only the correct application of the last paragraph of Section 39, RA
8291. The parties agreed that the lone issue is whether COA disallowances could be legally
deducted from retirement benefits on the ground that these were respondents’ monetary
liabilities to the GSIS under the said provision. There is no dispute that the amounts
deducted by GSIS represented COA disallowances. Thus, the only question left for the
Board to decide is whether the deductions are allowed under RA 8291.

Under certain exceptional circumstances, we have taken cognizance of questions of

law even in the absence of an initial determination by a lower court or administrative body.
In China Banking Corporation v. Court of Appeals, the Court held:

At the outset, the Court’s attention is drawn to the fact that since the filing of this
suit before the trial court, none of the substantial issues have been resolved. To avoid and
gloss over the issues raised by the parties, as what the trial court and respondent Court of
Appeals did, would unduly prolong this litigation involving a rather simple case of
foreclosure of mortgage. Undoubtedly, this will run counter to the avowed purpose of the
rules, i.e., to assist the parties in obtaining just, speedy and inexpensive determination of
every action or proceeding. The Court, therefore, feels that the central issues of the case,
albeit unresolved by the courts below, should now be settled specially as they involved pure
questions of law. Furthermore, the pleadings of the respective parties on file have amply
ventilated their various positions and arguments on the matter necessitating prompt
adjudication.

In Roman Catholic Archbishop of Manila v. Court of Appeals, the Court likewise

held that the remand of a case is not necessary where the court is in a position to resolve
the dispute based on the records before it. The Court will decide actions on the merits in
order to expedite the settlement of a controversy and if the ends of justice would not be
subserved by a remand of the case.

Here, the primary issue calls for an application of a specific provision of RA 8291 as
well as relevant jurisprudence on the matter. No useful purpose will indeed be served if we
remand the matter to the Board, only for its decision to be elevated again to the Court of
Appeals and subsequently to this Court. Hence, we deem it sound to rule on the merits of
the controversy rather than to remand the case for further proceedings.

The last paragraph of Section 39, RA 8291 specifically provides:

SEC. 39. Exemption from Tax, Legal Process and Lien.-

xx xxx xxx

The funds and/or the properties referred to herein as well as the benefits, sums or
monies corresponding to the benefits under this Act shall be exempt from attachment,
garnishment, execution, levy or other processes issued by the courts, quasi-judicial agencies
or administrative bodies including Commission on Audit (COA) disallowances and from all
financial obligations of the members, including his pecuniary accountability arising from
or caused or occasioned by his exercise or performance of his official functions or duties, or
incurred relative to or in connection with his position or work except when his monetary
liability, contractual or otherwise, is in favor of the GSIS.

It is clear from the above provision that COA disallowances cannot be deducted
from benefits under RA 8291, as the same are explicitly made exempt by law from such
deductions. Retirement benefits cannot be diminished by COA disallowances in view of the
clear mandate of the foregoing provision. It is a basic rule in statutory construction that if a
statute is clear, plain and free from ambiguity, it must be given its literal meaning and
applied without interpretation. This is what is known as plain-meaning rule or verba legis.
[20]
Accordingly, the GSIS’ interpretation of Section 39 that COA disallowances have
become monetary liabilities of respondents to the GSIS and therefore fall under the
exception stated in the law is wrong. No interpretation of the said provision is necessary
given the clear language of the statute. A meaning that does not appear nor is intended or
reflected in the very language of the statute cannot be placed therein by construction.
Moreover, if we are to accept the GSIS’ interpretation, then it would be unnecessary
to single out COA disallowances as among those from which benefits under RA 8291 are
exempt. In such a case, the inclusion of COA disallowances in the enumeration of
exemptions would be a mere surplusage since the GSIS could simply consider COA
disallowances as monetary liabilities in its favor. Such a construction would empower the
GSIS to withdraw, at its option, an exemption expressly granted by law. This could not
have been the intention of the statute.
That retirement pay accruing to a public officer may not be withheld and applied to
his indebtedness to the government has been settled in several cases. In Cruz v. Tantuico,
Jr., the Court, citing Hunt v. Hernandez, explained the reason for such policy thus:

x x x we are of the opinion that the exemption should be liberally construed in favor
of the pensioner. Pension in this case is a bounty flowing from the graciousness of the
Government intended to reward past services and, at the same time, to provide the
pensioner with the means with which to support himself and his family. Unless otherwise
clearly provided, the pension should inure wholly to the benefit of the pensioner. It is true
that the withholding and application of the amount involved was had under section 624 of
the Administrative Code and not by any judicial process, but if the gratuity could not be
attached or levied upon execution in view of the prohibition of section 3 of Act No. 4051,
the appropriation thereof by administrative action, if allowed, would lead to the same
prohibited result and enable the respondents to do indirectly what they can not do directly
under section 3 of Act No. 4051. Act No. 4051 is a later statute having been approved on
February 21, 1933, whereas the Administrative Code of 1917 which embodies section 624
relied upon by the respondents was approved on March 10 of that year. Considering
section 3 of Act No. 4051 as an exception to the general authority granted in section 624 of
the Administrative Code, antagonism between the two provisions is avoided. underscoring
supplied)
 The above ruling was reiterated in Tantuico, Jr. v. Domingo, where the Court
similarly declared that benefits under retirement laws cannot be withheld regardless of the
petitioner’s monetary liability to the government.

The policy of exempting retirement benefits from attachment, levy and execution, as
well as unwarranted deductions, has been embodied in a long line of retirement statutes.
Act No. 4051, which provides for the payment of gratuity to officers and employees of the
Insular Government upon retirement due to reorganization, expressly provides in its
Section 3 that “(t)he gratuity provided for in this Act shall not be attached or levied upon
execution.”

The law which established the GSIS, Commonwealth Act No. 186 (“CA No. 186”),
went further by providing as follows:

SEC. 23. Exemptions from legal process and liens. – No policy of life insurance issued
under this Act, or the proceeds thereof, except those corresponding to the annual premium
thereon in excess of five hundred pesos per annum, when paid to any member thereunder,
shall be liable to attachment, garnishment, or other process, or to be seized, taken,
appropriated, or applied by any legal or equitable process or operation of law to pay any
debt or liability of such member, or his beneficiary, or any other person who may have a
right thereunder, either before or after payment; nor shall the proceeds thereof, when not
made payable to a named beneficiary, constitute a part of the estate of the member for
payment of his debt.

Presidential Decree No. 1146, which amended CA No. 186, likewise contained a
provision exempting benefits from attachment, garnishment, levy or other processes.
However, the exemption was expressly made inapplicable to “obligations of the member to
the System, or to the employer, or when the benefits granted are assigned by the member
with the authority of the System.”

The latest GSIS enactment, RA 8291, provides for a more detailed and wider range
of exemptions under Section 39. Aside from exempting benefits from judicial processes, it
likewise unconditionally exempts benefits from quasi-judicial and administrative processes,
including COA disallowances, as well as all financial obligations of the member. The latter
includes any pecuniary accountability of the member which arose out of the exercise or
performance of his official functions or duties or incurred relative to his position or work.
The only exception to such pecuniary accountability is when the same is in favor of the
GSIS.

Thus, “monetary liability in favor of GSIS” refers to indebtedness of the member to

the System other than those which fall under the categories of pecuniary accountabilities
exempted under the law. Such liability may include unpaid social insurance premiums and
balances on loans obtained by the retiree from the System, which do not arise in the
performance of his duties and are not incurred relative to his work. The general policy, as
reflected in our retirement laws and jurisprudence, is to exempt benefits from all legal
processes or liens, but not from outstanding obligations of the member to the System. This
is to ensure maintenance of the GSIS’ fund reserves in order to guarantee fulfillment of all
its obligations under RA 8291.

Notwithstanding the foregoing, however, we find it necessary to nonetheless

differentiate between those benefits which were properly disallowed by the COA and those
which were not.

Anent the benefits which were improperly disallowed, the same rightfully belong to
respondents without qualification. As for benefits which were justifiably disallowed by the
COA, the same were erroneously granted to and received by respondents who now have
the obligation to return the same to the System.

It cannot be denied that respondents were recipients of benefits that were properly
disallowed by the COA. These COA disallowances would otherwise have been deducted
from their salaries, were it not for the fact that respondents retired before such deductions
could be effected. The GSIS can no longer recover these amounts by any administrative
means due to the specific exemption of retirement benefits from COA disallowances.
Respondents resultantly retained benefits to which they were not legally entitled which, in
turn, gave rise to an obligation on their part to return the amounts under the principle of
solutio indebiti.

Under Article 2154 of the Civil Code, if something is received and unduly delivered
through mistake when there is no right to demand it, the obligation to return the thing
arises. Payment by reason of mistake in the construction or application of a doubtful or
difficult question of law also comes within the scope of solutio indebiti.

In the instant case, the confusion about the increase and payment of benefits to GSIS
employees and executives, as well as its subsequent disallowance by the COA, arose on
account of the application of RA 6758 or the Salary Standardization Law and its
implementing rules, CCC No. 10. The complexity in the application of these laws is
manifested by the several cases that have reached the Court since its passage in 1989. The
application of RA 6758 was made even more difficult when its implementing rules were
nullified for non-publication.Consequently, the delivery of benefits to respondents under
an erroneous interpretation of RA 6758 gave rise to an actionable obligation for them to
return the same.

While the GSIS cannot directly proceed against respondents’ retirement benefits, it
can nonetheless seek restoration of the amounts by means of a proper court action for its
recovery. Respondents themselves submit that this should be the case, although any
judgment rendered therein cannot be enforced against retirement benefits due to the
exemption provided in Section 39 of RA 8291. However, there is no prohibition against
enforcing a final monetary judgment against respondents’ other assets and properties.
This is only fair and consistent with basic principles of due process.
 As such, a proper accounting of the amounts due and refundable is in order. In
rendering such accounting, the parties must observe the following guidelines:

(1) All deductions from respondents’ retirement benefits should be refunded except
those amounts which may properly be defined as “monetary liability to the GSIS”;

(2) Any other amount to be deducted from retirement benefits must be agreed upon by
and between the parties; and

(3) Refusal on the part of respondents to return disallowed benefits shall give rise to a
right of action in favor of GSIS before the courts of law.

Conformably, any fees due to Atty. Sundiam for his professional services may be
charged against respondents’ retirement benefits. The arrangement, however, must be
covered by a proper agreement between him and his clients under (2) above.

As to whether respondents are entitled to dividends on the provident fund

contributions, the same is not within the issues raised before the Court. The second petition
refers only to the legality of the deductions made by GSIS from respondents’ retirement
benefits. There are factual matters that need to be threshed out in determining
respondents’ right to the payment of dividends, in view of the GSIS’ assertion that the
management contributions were not actually remitted to the fund. Thus, the payment of
dividends should be the subject of a separate claim where the parties can present evidence
to prove their respective assertions. The Court is in no position to resolve the matter since
the material facts that would prove or disprove the claim are not on record.

In the interest of clarity, we reiterate herein our ruling that there is no identity of
subject matter between the COA proceedings, from which the first petition stemmed, and
respondents’ claim of refund before the Board. While the first petition referred to the
propriety of the COA disallowances per se, respondents’ claim before the Board pertained
to the legality of deducting the COA disallowances from retirement benefits under Section
39 of RA 8291.

Finally, on respondents claim that the GSIS acted in bad faith when it deducted the
COA disallowances from their retirement benefits, except for bare allegations, there is no
proof or evidence of the alleged bad faith and partiality of the GSIS. Moreover, the latter
cannot be faulted for taking measures to ensure recovery of the COA disallowances since
respondents have already retired and would be beyond its administrative reach. The GSIS
merely acted upon its best judgment and chose to err in the side of prudence rather than
suffer the consequence of not being able to account for the COA disallowances. It
concededly erred in taking this recourse but it can hardly be accused of malice or bad faith
in doing so.

WHEREFORE, in view of the foregoing, the April 16, 2002 Decision in G.R. Nos.
138381 and 141625 is AMENDED. In addition to the refund of amounts corresponding to
benefits allowed in G.R. No. 138381, the GSIS is ordered to REFUND all deductions from
retirement benefits EXCEPT amounts representing monetary liability of the respondents
to the GSIS as well as all other amounts mutually agreed upon by the parties.

GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner, versus COMMISSION

ON AUDIT, Respondent., G.R. No. 138381, 2004 Nov 10, En Banc)

16.
The doctrine of primary jurisdiction precludes the courts from resolving a
controversy over which jurisdiction has initially been lodged with an administrative body
of special competence. For agrarian reform cases, jurisdiction is vested in the Department
of Agrarian Reform (DAR); more specifically, in the Department of Agrarian Reform
Adjudication Board (DARAB).

Executive Order 229[12] vested the DAR with (1) quasi-judicial powers to
determine and adjudicate agrarian reform matters; and (2) jurisdiction over all matters
involving the implementation of agrarian reform, except those falling under the exclusive
original jurisdiction of the Department of Agriculture and the Department of Environment
and Natural Resources.[13] This law divested the regional trial courts of their general
jurisdiction to try agrarian reform matters.

EUGENIO BAUTISTA, ROMEO CRUZ and CARMENCITA B. CRUZ, Petitioners,

versus SUSANA MAG-ISA Vda. DE VILLENA, Respondent., G.R. No. 152564, 2004 Sept
13, 3rd Division)

17.

Assuming there was even a grain of truth to the petitioners’ claims regarding the
legality of what are alleged to be the corporations’ true purposes, we are still precluded
from granting them relief. We cannot address here their concerns regarding
circumvention of land reform laws, for the doctrine of primary jurisdiction precludes a
court from arrogating unto itself the authority to resolve a controversy the jurisdiction
over which is initially lodged with an administrative body of special competence. Since
primary jurisdiction over any violation of Section 13 of Republic Act No. 3844 that may
have been committed is vested in the Department of Agrarian Reform Adjudication Board
(DARAB), then it is with said administrative agency that the petitioners must first plead
their case. With regard to their claim that Ellice and Margo were meant to be used as
mere tools for the avoidance of estate taxes, suffice it say that the legal right of a taxpayer
to reduce the amount of what otherwise could be his taxes or altogether avoid them, by
means which the law permits, cannot be doubted.

ALICIA E. GALA, GUIA G. DOMINGO and RITA G. BENSON, petitioners, vs.

ELLICE AGRO-INDUSTRIAL CORPORATION, MARGO MANAGEMENT AND
DEVELOPMENT CORPORATION, RAUL E. GALA, VITALIANO N. AGUIRRE II,
ADNAN V. ALONTO, ELIAS N. CRESENCIO, MOISES S. MANIEGO, RODOLFO B.
REYNO, RENATO S. GONZALES, VICENTE C. NOLAN, NESTOR N. BATICULON,
respondents., G.R. No. 156819, 2003 Dec 11, 1st Division)

18.
The complaint for replevin itself states that the shipment of tanbark as well as the vessel on
which it was loaded were seized by the NBI for verification of supporting documents. It
also states that the NBI turned over the seized items to the DENR “for official disposition
and appropriate action.”A copy of the document evidencing the turnover to DENR was
attached to the complaint as Annex “D”.To our mind, these allegations would have been
sufficient to alert respondent judge that the DENR has custody of the seized items and that
administrative proceedings may have already been commenced concerning the shipment.
Under the doctrine of primary jurisdiction, courts cannot take cognizance of cases pending
before administrative agencies of special competence.Note, too, that the plaintiff in the
replevin suit who seeks to recover the shipment from the DENR had not exhausted the
administrative remedies available to him.[18] The prudent thing for respondent judge to
have done was to dismiss the replevin suit outright.

Under Section 78-A of the Revised Forestry Code, the DENR secretary or his
authorized representatives may order the confiscation of forest products illegally cut,
gathered, removed, or possessed or abandoned, including the conveyances used in the
commission of the offense.

In this regard, we declared in Paat v. Court of Appeals:

“…the enforcement of forestry laws, rules and regulations and the protection, development
and management of forest lands fall within the primary and special responsibilities of the
Department of Environment and Natural Resources. By the very nature of its function, the
DENR should be given a free hand unperturbed by judicial intrusion to determine a
controversy which is well within its jurisdiction. The assumption by the trial court,
therefore, of the replevin suit filed by private respondents constitutes an unjustified
encroachment into the domain of the administrative agency’s prerogative. The doctrine of
primary jurisdiction does not warrant a court to arrogate unto itself the authority to
resolve a controversy the jurisdiction over which is initially lodged with an administrative
body of special competence. xxx”

Respondent judge’s act of taking cognizance of the subject replevin suit clearly
demonstrates ignorance of the law. He has fallen short of the standard set forth in Canon
1, Rule 1.01 of the Code of Judicial Conduct, that a judge must be the embodiment of
competence, integrity, and independence. To measure up to this standard, judges are
expected to keep abreast of all laws and prevailing jurisprudence.[20] Judges are duty
bound to have more than just a cursory acquaintance with laws and jurisprudence.
Failure to follow basic legal commands constitutes gross ignorance of the law from which
no one may be excused, not even a judge.

PROSECUTOR LEO C. TABAO, Regional Chairman, Special Task Force on

Environment and Natural Resources (STF-ENR) of Region 8, Tacloban City, complainant,
vs. JUDGE FRISCO T. LILAGAN, Presiding Judge, Regional Trial Court, Leyte, Branch
34, and SHERIFF IV LEONARDO V. AGUILAR, Office of the Clerk of Court, Regional
Trial Court, Tacloban City, respondents., A.M. No. RTJ-01-1651, 2001 Sep 4, 2nd Division)

19.
As repeatedly held, we accord great respect to the findings of administrative
agencies because they have acquired expertise in their jurisdiction, and we will refrain
from questioning their findings, particularly when these are affirmed by the appellate
tribunal. We are not inclined to re-examine and re-evaluate the probative value of the
evidence proffered in the concerned forum, which had formed the basis of the latter’s
impugned decision, resolution or order, absent a clear showing of arbitrariness and want of
any rational basis therefor.

ROMEO E. CABALITAN, Petitioner, versus DEPARTMENT OF AGRARIAN REFORM

and CIVIL SERVICE COMMISSION, Respondents., G.R. No. 162805, 2006 Jan 23, En
Banc)

20.

This Court generally accords respect to the factual findings of the NLRC. However,
the rule is equally settled that this Court will not uphold erroneous conclusions of the
NLRC if the NLRC’s findings of fact on which its conclusions are based are not supported
by substantial evidence. Substantial evidence, which is the quantum of evidence required to
establish a fact in cases before administrative or quasi-judicial bodies, is that level of
relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion. Factual findings of administrative agencies will be set aside if found arbitrary.

PHILEMPLOY SERVICES AND RESOURCES, INC., Petitioner, versus ANITA

RODRIGUEZ, Respondent., G.R. No. 152616, 2006 Mar 31, 3rd Division)

21. Contrary to petitioners’ claim, they were not denied due process. The essence of due
process in administrative proceedings is simply an opportunity to explain one’s side or an
opportunity to present evidence in support of one’s defense. In this case, petitioners
submitted their respective pleadings to controvert the allegations of respondents.

RONALDO B. CASIMIRO, ELISA M. LAT, JOSE L. LALAP, CELESTIN S, LACHICA,

REYNALDO S. MALLILLIN, LEONILA G. ROJO, JULIE H. SEBASTIAN, EDITHA M.
SOLOMON, EMILIANO T. TAMBAOAN III, FERNANDO G. TROZADO, Petitioners,
versus STERN REAL ESTATE INC. REMBRANDT HOTEL and/or GRACE KRISTIN
MEEHAN (General Manager), and ERIC SINGSON (Owner), Respondents., G.R. No.
162233, 2006 Mar 10, 1st Division)

We have put forth both the rule and the exception on the publication of administrative
rules and regulations in the case of Tañada v. Tuvera:
 x x x Administrative rules and regulations must also be published if their purpose is
to enforce or implement existing law pursuant also to a valid delegation.

Interpretative regulations and those merely internal in nature, that is, regulating
only the personnel of the administrative agency and not the public, need not be published.
Neither is publication required of the so-called letters of instructions issued by
administrative superiors concerning the rules on guidelines to be followed by their
subordinates in the performance of their duties.

Even assuming that the assailed circular was not published, its validity is not affected
by such non-publication for the reason that its provisions fall under two of the exceptions
enumerated in Tañada.

Department Circular No. 04 is an internal regulation. As we have ruled, they are meant to
regulate a public corporation under the control of DND, and not the public in general. As
likewise discussed above, what has been created as a body corporate by Rep. Act No. 2640
is not the individual membership of the affiliate organizations of the VFP, but merely the
aggregation of the heads of the affiliate organizations. Consequently, the individual
members of the affiliate organizations, who are not public officers, are beyond the
regulation of the circular.

Sections 2, 3 and 6 of the assailed circular are additionally merely interpretative in nature.
They add nothing to the law. They do not affect the substantial rights of any person,
whether party to the case at bar or not. In Sections 2 and 3, control and supervision are
defined, mentioning actions that can be performed as consequences of such control and
supervision, but without specifying the particular actions that shall be rendered to control
and supervise the VFP. Section 6, in the same vein, merely state what the drafters of the
circular perceived to be consequences of being an attached agency to a regular department
of the government, enumerating sanctions and remedies provided by law that may be
availed of whenever desired.

Petitioner then objects to the implementation of Sec. 3.4 of the assailed Department
Circular, which provides that –
 3.4 Financial transactions of the Federation shall follow the provisions of the
government auditing code (PD 1445) i.e. government funds shall be spent or used for public
purposes; trust funds shall be available and may be spent only for the specific purpose for
which the trust was created or the funds received; fiscal responsibility shall, to the greatest
extent, be shared by all those exercising authority over the financial affairs, transactions,
and operations of the federation; disbursements or dispositions of government funds or
property shall invariably bear the approval of the proper officials.

Since we have also previously determined that VFP funds are public funds, there is likewise
no reason to declare this provision invalid. Section 3.4 is correct in requiring the VFP funds
to be used for public purposes, but only insofar the term “public purposes” is construed to
mean “public purposes enumerated in Rep. Act No. 2640.”

Having in their possession public funds, the officers of the VFP, especially its fiscal officers,
must indeed share in the fiscal responsibility to the greatest extent.

As to petitioner’s allegation that VFP was intended as a self-governing autonomous body

with a Supreme Council as governing authority, we find that the provisions of Rep. Act No.
2640 concerning the control and supervision of the Secretary of National Defense clearly
withholds from the VFP complete autonomy. To say, however, that such provisions render
the VFP inutile is an exaggeration. An office is not rendered inutile by the fact that it is
placed under the control of a higher office. These subordinate offices, such as the executive
offices under the control of the President, exercise discretion at the first instance. While
their acts can be altered or even set aside by the superior, these acts are effective and are
deemed the acts of the superior until they are modified. Surely, we cannot say that the
offices of all the Department Secretaries are worthless positions.

In sum, the assailed DND Department Circular No. 04 does not supplant nor modify and is,
on the contrary, perfectly in consonance with Rep. Act No. 2640. Petitioner VFP is a public
corporation. As such, it can be placed under the control and supervision of the Secretary of
National Defense, who consequently has the power to conduct an extensive management
audit of petitioner corporation.

THE VETERANS FEDERATION OF THE PHILIPPINES represented by Esmeraldo R.

Acorda, Petitioner, versus Hon. ANGELO T. REYES in his capacity as Secretary of
National Defense; and Hon. EDGARDO E. BATENGA in his capacity as Undersecretary
for Civil Relations and Administration of the Department of National Defense,
Respondents., G. R. No. 155027, 2006 Feb 28, En Banc)

23.
“Sec. 2. Creation of the Metropolitan Manila Development Authority. -- -x x x.

The MMDA shall perform planning, monitoring and coordinative functions, and in
the process exercise regulatory and supervisory authority over the delivery of metro-wide
services within Metro Manila, without diminution of the autonomy of the local government
units concerning purely local matters.”

Clearly, the MMDA is not a political unit of government. The power delegated to
the MMDA is that given to the Metro Manila Council to promulgate administrative rules
and regulations in the implementation of the MMDA’s functions. There is no grant of
authority to enact ordinances and regulations for the general welfare of the inhabitants of
the metropolis.

Therefore, insofar as Sec. 5(f) of Rep. Act No. 7924 is understood by the lower court and by
the petitioner to grant the MMDA the power to confiscate and suspend or revoke drivers’
licenses without need of any other legislative enactment, such is an unauthorized exercise of
police power.

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, Petitioner, versus DANTE

O. GARIN, Respondent., G.R. No. 130230, 2005 Apr 15, 2nd Division)