G.R. No.

85439 January 13, 1992

KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA NG BAGONG PAMILIHANG

BAYAN NG MUNTINLUPA, INC. (KBMBPM)
VS.
HON. CARLOS G. DOMINGUEZ

G.R. No. 91927 January 13, 1992

IGNACIO R. BUNYE, JAIME R. FRESNEDI, CARLOS G. TENSUAN, VICTOR E. AGUINALDO,
ALEJANDRO I. MARTINEZ, EPIFANIO A. ESPELETA, REY E. BULAY, LUCIO B.
CONSTANTINO, ROMAN E. NIEFES, NEMESIO O. MOZO, ROGER SMITH, RUFINO B.
JOAQUIN, NOLASCO I. DIAZ, RUFINO IBE and NESTOR SANTOS, petitioners,
vs.
THE SANDIGANBAYAN, THE OMBUDSMAN and ROGER C. BERBANO, Special Prosecutor
III, respondents.

Doctrine: An administrative officer has only such powers as are expressly granted to him
and those necessarily implied in the exercise thereof. These powers should not be
extended by implication beyond what may to necessary for their just and reasonable
execution.
The power to summarily disband the board of directors may not be inferred from any of
the foregoing as both P.D. No. 175 and the by-laws of the KBMBPM explicitly mandate
the manner by which directors and officers are to be removed. Firstly, neither suspension
nor cancellation includes the take-over and ouster of incumbent directors and officers,
otherwise the law itself would have expressly so stated. Secondly, even granting that
the law intended such as postulated, there is the requirement of a hearing. None
was conducted.

Facts:
This is a consolidation of two cases. The first case, G.R. No. 85439 (Kilusang
Bayan case) questions the validity of the order of then Secretary of Agriculture Hon.
Carlos G. Dominguez. The second case. G.R. No. 91927 (Bunye case), seeks the
nullification of the Resolution of the Sandiganbayan admitting the Amended Information
against petitioners in a criminal case and denying their motion to order or direct
preliminary investigation.

Both cases precipitated from a contract which the LGU of Muntinlupa, thru Mayor Carlos,
Jr., entered with the KBMBPM for the management and operation of the new Muntinlupa
public market. The contract covers a 25-year term renewable for a like period, at a
monthly consideration of P35,000 to be paid by the KBMBPM each month, which amount
to be increased by 10% each year for the first 5 years.

However, succeeding mayor Ignacio Bunye, who was “scandalized” by the 50-year term
of the agreement, and the "patently inequitable rental," consulted the Commission on
Audit and the Metro Manila Commission (MMC) on the validity of the instrument. The LGU
was then granted authority "to take the necessary legal steps for the cancellation
/recission of the contract and for the immediate transfer/takeover of the possession,
management and operation of the New Muntinlupa Market to the Municipal Government
of Muntinlupa.

The KBMBPM then filed with the RTC of Makati a complaint for breach of contract,
specific performance and writ of preliminary injunction against the Municipality and its
officers. The RTC denied the writ. Nevertheless, the KBMBPM officers resisted the
attempts of Bunye and company to complete the take-over; they continued holding office
in the KBS building, under their respective official capacities.

Amado Perez (Kilusan representative) filed a complaint before the OMB charging Bunye
and his co-petitioners with oppression, harassment, abuse of authority and violation of
the Anti-Graft and Corrupt Practices Act for taking over the management and operation
of the public market from KBMBPM. Prosecutor Onos of the Office of the Special
Prosecutor directed Bunye and his co-petitioners to submit within ten days from receipt
thereof their counter-affidavits. However, instead of the required documents, Bunye, et
al. filed by mail an urgent motion for extension two days before the expiration of the 10
day period.

In the Kilusang Bayan case, Bunye and his officials forcibly served upon petitioners the
Order of respondent Secretary of Agriculture.

The order indicates that the general membership of the KBMBPM (not the officers) had
requested the Department for assistance "in the removal of the members of the Board of
Directors who were not elected by the general membership" of the cooperative. Moreover,
it was alleged that the management of KBMBPM is not operating the cooperative in
accordance with P.D. 175, LOI 23, the Circulars issued by DA/BACOD and the provisions
and by-laws of KBMBPM." The order also directs the taking over of the management of
KBMBPM, disbanding the then incumbent Board of Directors for that purpose and
excluding and prohibiting the General Manager and the other officers from exercising their
lawful functions as such

It is also professed therein that the Order was issued by the Department "in the
exercise of its regulatory and supervisory powers under Section 8 of P.D. 175, as
amended, and Section 4 of Executive Order No. 113."

In 1988, petitioners filed the instant petition, praying that respondents be ordered to cease
and desist from enforcing the Order, to immediately restore the management and
operation of the public market to petitioners, order respondents to vacate the premises
and, thereafter, preserve the status quo; and that, finally, the challenged Order be
declared null and void.

Respondents challenge the personality of the petitioners to bring this action, set up the
defense of non-exhaustion of administrative remedies, and assert that the Order was
lawfully and validly issued under the above decree and Executive Order.

As for the Bunye Case, petitioners Bunye claim that Prosecutor Onos failed to consider
their motion for extension to file their counter-affidavits before recommending the filing of
the corresponding information against them before the Sandiganbayan. Petitioners also
claim that they submitted their counter-affidavits on 9 November 1988.
On the Sandiganbayan, Bunye filed a motion for the quashal of the information on the
ground that they were deprived of their right to a preliminary investigation and that the
information did not charge an offense. It was denied by the Sandiganbayan.

Relevant Issue:
Whether or not the Order of the Secretary of Agriculture was valid. (Kilusang Bayan Case)

Ruling: No, the order is not valid.

Regulation 34 (implementing P.D. No. 175) provides the procedure for the removal of
directors or officers of cooperatives. An identical provision was also found in the
KBMBPM's by-laws. Under the same article are found the requirements for the holding of
both the annual general assembly and a special general assembly.
The procedure was not followed in this case. Respondent Secretary of Agriculture
arrogated unto himself the power of the members of the KBMBPM who are authorized to
vote to remove the petitioning directors and officers. He cannot take refuge under Section
8 of P.D. No. 175 which grants him authority to supervise and regulate all cooperatives.
This section does not give him that right.
An administrative officer has only such powers as are expressly granted to him and those
necessarily implied in the exercise thereof. These powers should not be extended by
implication beyond what may to necessary for their just and reasonable execution.

Supervision and control include only the authority to:

(a) act directly whenever a specific function is entrusted by law or regulation to a
subordinate;
(b) direct the performance of duty; restrain the commission of acts;
(c) review, approve, reverse or modify acts and decisions of subordinate officials or units;
(d) determine priorities in the execution of plans and programs; and
(e) prescribe standards, guidelines, plans and programs.

Specifically, administrative supervision is limited to the authority of the department

or its equivalent to:
(1) generally oversee the operations of such agencies and insure that they are managed
effectively, efficiently and economically but without interference with day-to-day activities;
(2) require the submission of reports and cause the conduct of management audit,
performance evaluation and inspection to determine compliance with policies, standards
and guidelines of the department;
(3) take such action as may be necessary for the proper performance of official functions,
including rectification of violations, abuses and other forms of mal-administration;
(4) review and pass upon budget proposals of such agencies but may not increase or add
to them.

The power to summarily disband the board of directors may not be inferred from any of
the foregoing as both P.D. No. 175 and the by-laws of the KBMBPM explicitly mandate
the manner by which directors and officers are to be removed. Firstly, neither suspension
nor cancellation includes the take-over and ouster of incumbent directors and officers,
otherwise the law itself would have expressly so stated. Secondly, even granting that the
law intended such as postulated, there is the requirement of a hearing. None was
conducted.

Likewise, even if We grant, for the sake of argument, that said power includes the power
to disband the board of directors and remove the officers of the KBMBPM, and that
a hearing was not expressly required in the law, still the Order can be validly issued only
after giving due process to the affected parties, herein petitioners.
Be that as it may, petitioners cannot, however, be restored to their positions. Their terms
expired in 1989, thereby rendering their prayer for reinstatement moot and academic. The
affairs of the cooperative are presently being managed by a new board of directors duly
elected in accordance with the cooperative's by-laws.
DISPOSITIVE:
WHEREFORE, judgment is hereby rendered:
1. GRANTING the petition in G.R. No. 85439; declaring null and void the challenged Order
of 28 October 1988 of the respondent Secretary of Agriculture; but denying, for having
become moot and academic, the prayer of petitioners that they be restored to their
positions in the KBMBPM.
2. DISMISSING, for lack of merit, the petition in G.R. No. 91927
No pronouncement as to costs.

Other rulings:
First, Petitioners as the ousted directors, have the personality to file the instant
petition and ask, in effect, for their reinstatement.

As to failure to exhaust administrative remedies, the rule is well-settled that this

requirement does not apply where the respondent is a department secretary whose acts,
as an alter ego of the President, bear the implied approval of the latter, unless actually
disapproved by him. This doctrine of qualified political agency ensures speedy access to
the courts when most needed. There was no need then to appeal the decision to the office
of the President; recourse to the courts could be had immediately. Moreover, the doctrine
also yields to other exceptions, such as when the question involved is purely legal, as in
the instant case, or where the questioned act is patently illegal, arbitrary or oppressive.
Power of administrative agencies

G.R. No. 85439, January 13, 1992

KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA NG BAGONG

PAMILIHANG BAYAN NG MUNTINLUPA, INC., (KBMBPM), TERESITA A. FAJARDO,
NADYESDA B. PONSONES, MA. FE V. BOMBASE, LOIDA D. LUCES, MARIO S.
FRANCISCO, AMADO V. MANUEL, and ROLANDO G. GARCIA, incumbent members
of the Board; AMADO G. PEREZ and MA. FE V. BOMBASE, incumbent General
Manager and Secretary-Treasurer, respectively, petitioners,
vs.
HON. CARLOS G. DOMINGUEZ, Secretary of Agriculture, Regional Director of
Region IV of the Department of Agriculture, ROGELIO P. MADRIAGA, RECTO
CORONADO and Municipal Mayor IGNACIO R. BUNYE, both in his capacity as
Municipal Mayor of Muntinlupa, Metro Manila and as Presiding Officer of
Sangguniang Bayan ng Muntinlupa and John Does, respondents.

DAVIDE, JR., J.:

Doctrine:

An administrative officer has only such powers as are expressly granted to him and those
necessarily implied in the exercise thereof. These powers should not be extended by
implication beyond what may be necessary for their just and reasonable execution.

Supervision and control include only the authority to: (a) act directly whenever a specific
function is entrusted by law or regulation to a subordinate; (b) direct the performance of
duty; restrain the commission of acts; (c) review, approve, reverse or modify acts and
decisions of subordinate officials or units; (d) determine priorities in the execution of plans
and programs; and (e) prescribe standards, guidelines, plans and programs.

Facts:

KBMBPM, a service cooperative organized by and composed of vendors occupying the

New Muntinlupa Market, entered into a rental contract with the Municipal Government of
Muntinlupa for a 25-year period renewal for the same period for a monthly consideration
of Php35,000 that shall increase by 10% each year during the first five years.

Ignacio Bunye, new mayor, claimed that the said contract is patently inequitable rental
and directed a review of the said contract. Commission on Audit (COA) and Metro Manila
Commission (MMC) urged that appropriate legal steps be taken towards its rescission.

In the early morning of October 29, 1988, Mayor Bunye accompanied by heavily armed
men, allegedly thru force , violence and intimidation forcibly broke open the doors of the
offices of petitioners located at the second floor of the KBS Building, purportedly to serve
upon petitioners the Order of the respondent Secretary of Agriculture and to implement
the same, by taking over and assuming the management of KBMBPM, disbanding the
then incumbent Board of Directors for that purpose and excluding and prohibiting the
General Manager and the other officers from exercising their lawful functions as such.

KBMBPM questions the validity of the Order of October 28, 1988 of the then Secretary of
Agriculture Hon. Carlos G. Dominguez which ordered: (1) the take-over by the
Department of Agriculture of the management of the petitioner Kilusang Bayan sa
Paglilingkod Ng Mga Magtitinda Ng Bagong Pamilihang Bayan ng Muntinlupa, Inc.
(KBMBPM) pursuant to the Department's regulatory and supervisory powers under
Section 8 of P.D. No. 175, as amended, and Section 4 of Executive Order No. 13, (2) the
creation of a Management Committee which shall assume the management of KBMBPM
upon receipt of the order, (3) the disbandment of the Board of Directors, and (4) the turn-
over of all assets, properties and records of the KBMBPM to the Management Committee.

Respondents challenged the personality of the petitioners, set-up the defense of non-
exhaustion of administrative remedies, and assert that the Order was lawfully and validly
issued under the above decree and Executive Order.

Issue:

Whether or not Secretary of Agriculture Hon. Carlos G. Dominguez has the power to
remove the directors and officers of KBMBPM.

Ruling: No, Secretary Dominguez do not have such power.

An administrative officer has only such powers as are expressly granted to him and those
necessarily implied in the exercise thereof. These powers should not be extended by
implication beyond what may be necessary for their just and reasonable execution.

Supervision and control include only the authority to: (a) act directly whenever a specific
function is entrusted by law or regulation to a subordinate; (b) direct the performance of
duty; restrain the commission of acts; (c) review, approve, reverse or modify acts and
decisions of subordinate officials or units; (d) determine priorities in the execution of plans
and programs; and (e) prescribe standards, guidelines, plans and programs. Specifically,
administrative supervision is limited to the authority of the department or its equivalent to:
(1) generally oversee the operations of such agencies and insure that they are managed
effectively, efficiently and economically but without interference with day-to- day activities;
(2) require the submission of reports and cause the conduct of management audit,
performance evaluation and inspection to determine compliance with policies, standards
and guidelines of the department; (3) take such action as may be necessary for the proper
performance of official functions, including rectification of violations, abuses and other
forms of mal- administration; (4) review and pass upon budget proposals of such agencies
but may not increase or add to them.
The power to summarily disband the board of directors may not be inferred from any of
the foregoing as both P.D. No. 175 and the by-laws of the KBMBPM explicitly mandate
the manner by which directors and officers are to be removed. The Secretary should have
known better than to disregard these procedures and rely on a mere petition by the
general membership of the KBMBPM and an on- going audit by Department of Agriculture
auditors in exercising a power which he does not have, expressly or impliedly.

Likewise, even if We grant, for the sake of argument, that said power includes the power
to disband the board of directors and remove the officers of the KBMBPM, and that a
hearing was not expressly required in the law, still the Order can be validly issued only
after giving due process to the affected parties, herein petitioners.

Due process is guaranteed by the Constitution administrative proceedings. In the

landmark case of Ang Tibay vs. Court of Industrial Relations, this Court, through Justice
Laurel, laid down the cardinal primary requirements of due process in administrative
proceedings, foremost of which is the right to a hearing, which includes the right to present
one's case and submit evidence in support thereof. The need for notice and the
opportunity to be heard is the heart of procedural due process, be it in either
judicial or administrative proceedings. Nevertheless, a plea of a denial of procedural
due process does not lie where a defect consisting in an absence of notice of hearing
was thereafter cured by the aggrieved party himself as when he had the opportunity to be
heard on a subsequent motion for reconsideration. This is consistent with the principle
that what the law prohibits is not the absence of previous notice but the absolute absence
thereof and lack of an opportunity to be heard.

In the instant case, there was no notice of a hearing on the alleged petition of the general
membership of the KBMBPM; there was, as well, not even a semblance of a hearing. The
Order was based solely on an alleged petition by the general membership of the
KBMBPM. There was then a clear denial of due process. It is most unfortunate that it was
done after democracy was restored through the peaceful people revolt at EDSA and the
overwhelming ratification of a new Constitution thereafter, which preserves for the
generations to come the gains of that historic struggle which earned for this Republic
universal admiration.

Be that as it may, petitioners cannot, however, be restored to their positions. Their terms
expired in 1989, thereby rendering their prayer for reinstatement moot and academic.

Fallo:

WHEREFORE, the challenged Order of 28 October 1988 of the respondent

Secretary of Agriculture is null and void; but denying, for having become moot and
academic, the prayer of petitioners that they be restored to their positions in KBMBPM.
Crisostomo, Frances Kristine M.

G.R. No. 4349, September 24, 1908

The United States, plaintiff and appellee

vs.

Aniceto Barrias, defendant and appellant

TRACEY, J.:

Doctrine: The fixing of penalties for criminal offenses is the exercise of a legislative power
which cannot be delegated to a subordinate authority.

Facts: Act No. 1136 was promulgated giving the Customs authority to make and publish
suitable rules and regulations in implementing the law. The same Act provides that
persons who are guilty of violating its provisions shall be found guilty of misdemeanor,
and upon conviction shall be punished by imprisonment for not more than six months, or
by a fine of not more than 100 USD. In implementing said Act, the Collector of Customs
issued Circular No. 397. Certain provisions of the Circular are the following:
Par 70: No heavily loaded casco, lighter, or other similar craft shall be permitted to move in the
Pasig River without being towed by steam or moved by other adequate power.
Par 83: For the violation of any of the foregoing regulations, the person offending shall be liable to
a fine of not less than P5 and not more than P500, in the discretion of the court.

The Court of First Instance of Manila convicted the defendant with a violation of the
Circular (hence fined with an amount of P5 to P500)1 for navigating the Pasig River using a lighter
which is manually powered by bamboo poles (sagwan). Counsel of Barrias questioned
the validity of Circular 397 because by authorizing the Collector to promulgate such rule,
it is deemed as constituting an illegal delegation of legislative power.

Issue: Whether or not the provision of the penalty in the Circular is valid.

Ruling: No. One of the settled maxims in constitutional law is, that the power conferred
upon the legislature to make laws cannot be delegated by that department to any other
body or authority. Here, there is no difficulty in sustaining the regulation of the Collector
indicated in Par 70 as within the powers confined by Act 1136. However, in Paragraph
83, the Collector did not only make suitable regulations, but also prescribed penalties not
exceeding a fine of P500. Such is beyond the ambit of Act 1136 which specifically
provided penalty for its violation. The fixing of penalties for criminal offenses is the
exercise of a legislative power which cannot be delegated to a subordinate authority. This
doctrine is based on the ethical principle that such a delegated power constitutes not only
a right but a duty to be performed by the delegate by the instrumentality of his own
judgment acting immediately upon the matter of legislation and not through the
intervening mind of another.

Fallo: So much of the judgment of the Court of First Instance as convicts the defendant
of a violation of Acts Nos. 355 and 1235 is hereby revoked, and he is hereby convicted
of a misdemeanor and punished by a fine of 25 dollars, with costs of both instances. So
ordered.

1
During the time when the case was decided, peso and dollar exchange rate was more or less equal.

1
Navaluna, Veraiconica D.
G. R. No. 4349 September 24, 1908
THE UNITED STATES, Plaintiff-Appellee,
vs.
ANICETO BARRIAS, Defendant-Appellant
TRACEY, J.:

Doctrine:
Delegation of legislative power - the fixing of penalties for criminal offenses is the
exercise of a legislative power which cannot be delegated to a subordinate authority.

Facts:
Act No. 1136 was passed in 1904 authorizing the Collector of Customs to license
craft engaged in the lighterage or other exclusively harbor business of the ports of
the Islands, and, with certain exceptions, all vessels engaged in lightering are
required to be so licensed.
Defendant Barrias is the captain of the lighter Maude. A complaint against him was
filed charging him of violation of paragraphs 70 and 83 of Circular No. 397 of the
Insular Collector of Customs because he was caught navigating the Pasig River
through manually powered bamboo poles without steam, sail or any other external
power.
According to Paragraph 70 of Circular No. 397, “no heavily loaded casco, lighter, or
other similar craft shall be permitted to move in the pasig river without being towed
by steam or moved by adequate power. Further, Paragraph 83 states that for the
violation of any forgoing regulations, the person offending shall be liable to a fine of
not less than P5 and not more than P500 in the discretion of the court.
Act No. 1136 on the other hand provides that a fine of not more than one hundred
dollars be imposed for violations of its provisions.
Barrias attacked the validity of Paragraph 70 of Circular No. 397 on the ground that it
is unauthorized and it constitutes illegal delegation of legislative power to the Insular
Collector of Customs because it would appear that the Collector was authorized to
promulgate such a law.

Issue:
Whether or not there was in invalid delegation of legislative power to the Collector of
Customs when he promulgated Circular No. 397 and imposed a different penalty?

1
Ruling:
Yes, there was an invalid delegation of legislative power. Such law promulgated
authorizing the Collector to impose penalties for violation of his rules is invalid
because such power vested upon him is exclusively lodged in the lawmaking body.

One of the settled maxims in constitutional law is, that the power conferred upon the
legislature to make laws can not be delegated by that department to any other body
or authority. Where the sovereign power of the State has located the authority, there
it must remain; and by the constitutional agency alone the laws must be made until
the constitution itself is changed. This doctrine is based on the ethical principle that
such a delegated power constitutes not only a right but a duty to be performed by the
delegate by the instrumentality of his own judgment acting immediately upon the
matter of legislation and not through the intervening mind of another.

Fallo:
So much of the judgment of the Court of First Instance as convicts the defendant of a
violation of Acts Nos. 355 and 1235 is hereby revoked, and he is hereby convicted of
a misdemeanor and punished by a fine of 25 dollars, with costs of both instances. So
ordered.

2
Pablo, Centene V.
G.R. No. 88291 May 31, 1991
ERNESTO M. MACEDA, petitioner,
vs.
HON. CATALINO MACARAIG, JR., in his capacity as Executive Secretary, Office of
the President; HON. VICENTE R. JAYME, in his capacity as Secretary of the
Department of Finance; HON. SALVADOR MISON, in his capacity as
Commissioner, Bureau of Customs; HON. JOSE U. ONG, in his capacity as
Commissioner of Internal Revenue; NATIONAL POWER CORPORATION; the
FISCAL INCENTIVES REVIEW BOARD; Caltex (Phils.) Inc.; Pilipinas Shell
Petroleum Corporation; Philippine National Oil Corporation; and Petrophil
Corporation, respondents.
GANCAYCO, J.:

Doctrine:
Delegation of Powers; An Administrative body can apply tax exemption under existing
law, but it cannot itself create such exemptions
Facts:
The main thrust of the petition is that under the latest amendment to the NPC charter by
PD No. 938, the exemption of NPC from indirect taxation was revoked and repealed.
While petitioner concedes that NPC enjoyed broad exemption privileges from both
direct and indirect taxes on the petroleum products it used, under Section 13 of RA No.
6395 and more so under PD No. 380, however, by the deletion of the phrases "directly
or indirectly" and "on all petroleum products used by the Corporation in the generation,
transmission, utilization and sale of electric power" he contends that the exemption from
indirect taxes was withdrawn by P.D. No. 938
November 3, 1986: Commonwealth Act No. 120 created the NPC as a public
corporation to undertake the development of hydraulic power and the production of
power from other sources.
June 4, 1949, RA No. 358 granted NPC tax and duty exemption privileges under—Sec.
2. To facilitate payment of its indebtedness, the National Power Corporation shall be
exempt from all taxes, duties, fees, imposts, charges and restrictions of the Republic of
the Philippines, its provinces, cities and municipalities.
September 10, 1971: RA No. 6395 revised the charter of the NPC wherein Congress
declared as a national policy the total electrification of the Philippines through the
development of power from all sources to meet the needs of industrial development and
rural electrification. Being a non-profit corporation, Section 13 of the law provided in
detail the exemption of the NPC from all taxes, duties, fees, imposts and other charges
by the government and its instrumentalities. (4) January 22, 1974: PD No. 380 amended
section 13, paragraphs (a) and (d) of Republic Act No. 6395 by specifying, among
others, the exemption of NPC from such taxes, duties, fees, imposts and other charges
imposed "directly or indirectly," on all petroleum products used by NPC in its operation.
Presidential Decree No. 938 dated May 27, 1976 further amended the aforesaid
provision by integrating the tax exemption in general terms under one paragraph

1
June 11, 1984: PD No. 1931 withdrew all tax exemption privileges granted in favor of
government-owned or controlled corporations including their subsidiaries. However, said
law empowered the President and/or the then Minister of Finance, upon
recommendation of the FIRB to restore, partially or totally, the exemption withdrawn, or
otherwise revise the scope and coverage of any applicable tax and duty.
Pursuant to said law, the FIRB issued Resolution No. 10-85 on February 1985 restoring
the tax and duty exemption privileges of NPC from June 11, 1984 to June 30, 1985. On
January 7, 1986, the FIRB issued Resolution No. 1-86 indefinitely restoring the NPC tax
and duty exemption privileges effective July 1, 1985.
However, Executive Order No. 93 (March 1987) once again withdrew all tax and duty
incentives granted to government and private entities which had been restored under
Presidential Decree Nos. 1931 and 1955 but it gave the authority to FIRB to restore,
revise the scope and prescribe the date of effectivity of such tax and/or duty
exemptions.
On June 24, 1987 the FIRB issued Resolution No. 17-87 restoring NPC's tax and duty
exemption privileges effective March 10, 1987.
On October 5, 1987, the President, through respondent Executive Secretary Macaraig,
Jr., confirmed and approved FIRB Resolution No. 17-87.
NPC's questioned claim for refunds of taxes and duties originally paid by respondents
Caltex, Petrophil and Shell for specific and ad valorem taxes to the BIR; and for
Customs duties and ad valorem taxes paid by PNOC, Shell and Caltex to the Bureau of
Customs on its crude oil importation, was GRANTED and, accordingly, unless
restrained by proper authorities, that department and/or its linetax bureaus may now
proceed with the processing of the claims of the National Power Corporation for duty
and tax free exemption and/or tax credits/ refunds, if there be any, in accordance with
the ruling of that Department dated May 20,1988, as confirmed by this Office on June
15, 1988
Hence, this petition for certiorari, prohibition and mandamus with prayer for a writ of
preliminary injunction and/or restraining order, against the respondents. (11) Petitioner
does not question the validity and enforceability of FIRB Resolution Nos. 10-85 and
1-86.
Petitioner, however, argues that under both FIRB resolutions, only the tax and duty
exemption privileges enjoyed by the NPC under its charter, C.A. No. 120, as amended,
are restored, that is, only its direct tax exemption privilege.

Issue:
Whether the authority to determine/declare tax exemption delegated to FIRB was valid

Ruling: YES
EO No. 93 delegated authority to FIRB, as follows: “Sec. 1. The provisions of any
general or special law to the contrary notwithstanding, all tax and duty incentives
granted " to government and private entities are hereby withdrawn, except: x x x f) those
approved by the President upon the recommendation of the Fiscal Incentives Review
Board.”

2
True it is that the then Secretary of Justice in Opinion No. 77 dated August 6, 1977 was
of the view that the powers conferred upon the FIRB by Sections 2(a), (b), (c), and (d) of
Executive Order No. 93 constitute undue delegation of legislative power and is therefore
unconstitutional. However, he was overruled by the respondent Executive Secretary in a
letter to the Secretary of Finance dated March 30, 1989. The Executive Secretary, by
authority of the President, has the power to modify, alter or reverse the construction of a
statute given by a department secretary
A reading of Section 3 of said law shows that it set the policy to be the greater national
interest. The standards of the delegated power are also clearly provided for.
The legislative authority could not or is not expected to state all the detailed situations
wherein the tax exemption privileges of persons or entities would be restored. The task
may be assigned to an administrative body like the FIRB
Moreover, all presumptions are indulged in favor of the constitutionality and validity of
the statute. Such presumption can be overturned if its invalidity is proved beyond
reasonable doubt. Otherwise, a liberal interpretation in favor of constitutionality of
legislation should be adopted.
E.O. No. 93 is complete in itself and constitutes a valid delegation of legislative power to
the FIRB and as above discussed, the tax exemption privilege that was restored to NPC
by FIRB Resolution No. 17-87 of June 1987 includes exemption from indirect taxes and
duties on petroleum products used in its operation.
FIRB Resolution No. 17-87 was approved by the respondent Executive Secretary, by
authority of the President, on October 15, 1987.
Indeed, the validity of Executive Order No. 93 as well as of FIRB Resolution No. 17-87
has been upheld in Albay case.
Even assuming arguendo that P.D. Nos. 776, 1931 and Executive Order No. 93 are not
valid and are unconstitutional, the result would be the same, as then the latest
applicable law would be P.D. No. 938 which amended the NPC charter by granting
exemption to NPC from all forms of taxes.

Fallo:
WHEREFORE, the petition is DISMISSED for lack of merit. No pronouncement as to
costs.
SO ORDERED.

3
Espiritu, Cendria Nicole D.

G.R. No. 88291 May 31, 1991

Ernesto M. Maceda, petitioner

vs.

Hon. Catalino Macaraig Jr., in his capacity as Executive Secretary of the Office
of the President, et. al., respondents

GANCAYCO, J.:

Doctrine:

The Executive Secretary, by authority of the President, has the power to modify, alter
or reverse the construction of a statute given by a department secretary.

For a valid delegation of power, the “standard” required need not be spelled out
specifically, it could be implied from the policy and purpose of the act considered as a
whole.

Facts:

On November 3, 1936, Commonwealth Act No. 120 created the National Power
Corporation (NPC) as a public corporation to undertake the development of hydraulic
power and the production of power from other sources. Subsequently, the NPC was
granted tax and duty exemption privileges.

On September 10, 1971, the corporate existence of NPC was extended pursuant to
the national policy of Republic Act No. 6935 to undertake the development of hydro
electric generation of power and the production of electricity from nuclear, geothermal
and other sources, as well as the transmission of electric power on a nationwide basis.
Again, the NPC was granted exemption from all taxes, duties, fees, imposts and other
charges by the government and its instrumentalities. Three years after, a Presidential
Decree was issued which amended the tax exemption clause of RA 6935 by
specifying, among others, the Exemption of NPC from such taxes, duties, fees,
imposts and other charges imposed "directly or indirectly," on all petroleum products
used by NPC in its operation. Another Presidential Decree was issued two years after,
further amending the aforesaid provision by integrating the tax exemption in general
terms under one paragraph.

On June 11, 1984, Presidential Decree No. 1931 withdrew all tax exemption privileges
granted in favor of government-owned or controlled corporations including their
subsidiaries. However, said law empowered the President and/or the then Minister of
Finance, upon recommendation of the Fiscal Incentives Review Board (FIRB), to
restore, partially or totally, the exemption withdrawn, or otherwise revise the scope
and coverage of any applicable tax and duty.
In 1986, the FIRB issued a resolution restoring the tax and duty exemption privileges
of NPC. However, Executive Order No. 93 was issued in 1987, withdrawing all tax and
duty incentives granted to government and private entities which had been restored
under the above-mentioned Presidential Decrees but it gave authority to FIRB to
restore, revise the scope and prescribe the date of effectivity of such tax and/or duty
exemptions.

On June 24, 1987, the FIRB issued Resolution No. 17-87 restoring NPC's tax and duty
exemption privileges and included in the exemption "those pertaining to its domestic
purchases of petroleum and petroleum products, and the restorations were made to
retroact effective March 10, 1987.

On August 6, 1987, the Hon. Sedfrey A. Ordoñez, Secretary of Justice, issued Opinion
No. 77, series of 1987, opining that "the power conferred upon Fiscal Incentives
Review Board by Section 2-(a), (b), (c) and (d) of Executive Order No. 93 constitute
undue delegation of legislative power and, therefore, [are] unconstitutional".

However, on October 5, 1987, respondent Executive Secretary Macaraig, Jr. in a

Memorandum to the Chairman of the FIRB, a certified true copy of which is hereto
attached and made a part hereof as petitioner's Annex "M," confirmed and approved
FIRB Res. No. 17-87 dated June 24, 1987, allegedly pursuant to Sections 1 (f) and 2
(e) of Executive Order No. 93.

Hence, petitioner in this case sought relief from the Court that respondent NPC did not
enjoy tax exemption privilege.

Issue:

W/N the FIRB could validly and legally issue Resolution no. 17-87 which restored
NPC’s tax exemption privilege.

Ruling:

Yes. True it is that the then Secretary of Justice in Opinion No. 77 dated August 6,
1977 was of the view that the powers conferred upon the FIRB by Sections 2(a), (b),
(c), and (d) of Executive Order No. 93 constitute undue delegation of legislative power
and is therefore unconstitutional. However, he was overruled by the respondent
Executive Secretary in a letter to the Secretary of Finance dated March 30, 1989. The
Executive Secretary, by authority of the President, has the power to modify, alter or
reverse the construction of a statute given by a department secretary.

A reading of Section 3 of said law shows that it set the policy to be the greater national
interest. The standards of the delegated power are also clearly provided for.

The required "standard" need not be expressed. In Edu vs. Ericta and in De la Llana
vs. Alba, this Court held: “The standard may be either express or implied. If the former,
the non-delegated objection is easily met. The standard though does not have to be
spelled out specifically. It could be implied from the policy and purpose of the act
considered as a whole."
In People vs. Rosenthal, the broad standard of "public interest" was deemed sufficient.
In Calalang vs. Williams, it was "public welfare" and in Cervantes vs. Auditor General,
it was the purpose of promotion of "simplicity, economy and efficiency." And, implied
from the purpose of the law as a whole, "national security" was considered sufficient
standard and so was “protection of fish-fry or fish eggs".

The observation of petitioner that the approval of the President was not even required
in said Executive Order of the tax exemption privilege approved by the FIRB, unlike in
previous similar issuances, is not well-taken. On the contrary, under Section 1(f) of
Executive Order No. 93, aforestated, such tax and duty exemptions extended by the
FIRB must be approved by the President. In this case, FIRB Resolution No. 17-87 was
approved by the respondent Executive Secretary, by authority of the President, on
October 15, 1987.

The legislative authority could not or is not expected to state all the detailed situations
wherein the tax exemption privileges of persons or entities would be restored. The
task may be assigned to an administrative body like the FIRB.

Fallo:

WHEREFORE, the petition is DISMISSED for lack of merit. No pronouncement as to

costs.
Timbang, Kent Jasper
G.R. No. 76633 Octobrt 18, 1988
EASTERN SHIPPING LINES, INC., petitioner,
vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), MINISTER OF
LABOR AND EMPLOYMENT, HEARING OFFICER ABDUL BASAR and KATHLEEN
D. SACO, respondents.
CRUZ, J.:

Doctrine:
There are two accepted tests to determine whether or not there is a valid delegation of
legislative power, viz, the completeness test and the sufficient standard test. Under the
first test, the law must be complete in all its terms and conditions when it leaves the
legislature such that when it reaches the delegate the only thing he will have to do is
enforce it. Under the sufficient standard test, there must be adequate guidelines or
stations in the law to map out the boundaries of the delegate's authority and prevent the
delegation from running riot.

Facts:
Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an
accident in Tokyo, Japan, March 15, 1985. His widow sued for damages under Executive
Order No. 797 and Memorandum Circular No. 2 of the POEA. The petitioner, as owner of
the vessel, argued that the complaint was cognizable not by the POEA but by the Social
Security System and should have been filed against the State Insurance Fund. The POEA
nevertheless assumed jurisdiction and after considering the position papers of the parties
ruled in favor of the complainant. The award consisted of P180,000.00 as death benefits
and P12,000.00 for burial expenses.
The petitioner Eastern Shipping Sales immediately came to the Supreme Court,
prompting the OSG to move for dismissal due to non-exhaustion of administrative
remedies. However, seeing as there was a question of law and not of fact, the case
prospered.
The petitioner assailed the validity of Circular Memorandum No. 2 as it is violative of the
principle of non-delegation of legislative power. It contends that no authority had been
given the POEA to promulgate the said regulation; and even with such authorization, the
regulation represents an exercise of legislative discretion which, under the principle, is
not subject to delegation.
Issue:
Whether there was a invalid delegation of legislative power in allowing POEA to
promulgate Memorandum Circular No. 2.

Ruling:
No. The authority to issue the said regulation is clearly provided in Section 4(a) of
Executive Order No. 797, reading as follows:

... The governing Board of the Administration (POEA), as hereunder provided shall
promulgate the necessary rules and regulations to govern the exercise of the adjudicatory
functions of the Administration (POEA).

Similar authorization had been granted the National Seamen Board, which, as earlier
observed, had itself prescribed a standard shipping contract substantially the same as
the format adopted by the POEA.

The second challenge is more serious as it is true that legislative discretion as to the
substantive contents of the law cannot be delegated. What can be delegated is the
discretion to determine how the law may be enforced, not what the law shall be. The
ascertainment of the latter subject is a prerogative of the legislature. This prerogative
cannot be abdicated or surrendered by the legislature to the delegate. Thus, in Ynot v.
Intermediate Apellate Court 12 which annulled Executive Order No. 626, this Court held:

We also mark, on top of all this, the questionable manner of the disposition of the
confiscated property as prescribed in the questioned executive order. It is there
authorized that the seized property shall be distributed to charitable institutions and other
similar institutions as the Chairman of the National Meat Inspection Commission may see
fit, in the case of carabaos.' (Italics supplied.) The phrase "may see fit" is an extremely
generous and dangerous condition, if condition it is. It is laden with perilous opportunities
for partiality and abuse, and even corruption. One searches in vain for the usual standard
and the reasonable guidelines, or better still, the limitations that the officers must observe
when they make their distribution. There is none. Their options are apparently boundless.
Who shall be the fortunate beneficiaries of their generosity and by what criteria shall they
be chosen? Only the officers named can supply the answer, they and they alone may
choose the grantee as they see fit, and in their own exclusive discretion. Definitely, there
is here a 'roving commission a wide and sweeping authority that is not canalized within
banks that keep it from overflowing,' in short a clearly profligate and therefore invalid
delegation of legislative powers.
The reasons given above for the delegation of legislative powers in general are
particularly applicable to administrative bodies. With the proliferation of specialized
activities and their attendant peculiar problems, the national legislature has found it more
and more necessary to entrust to administrative agencies the authority to issue rules to
carry out the general provisions of the statute. This is called the "power of subordinate
legislation."

With this power, administrative bodies may implement the broad policies laid down in a
statute by "filling in' the details which the Congress may not have the opportunity or
competence to provide. This is effected by their promulgation of what are known as
supplementary regulations, such as the implementing rules issued by the Department of
Labor on the new Labor Code. These regulations have the force and effect of law.
Memorandum Circular No. 2 is one such administrative regulation. The model contract
prescribed thereby has been applied in a significant number of the cases without
challenge by the employer. The power of the POEA (and before it the National Seamen
Board) in requiring the model contract is not unlimited as there is a sufficient standard
guiding the delegate in the exercise of the said authority. That standard is discoverable
in the executive order itself which, in creating the Philippine Overseas Employment
Administration, mandated it to protect the rights of overseas Filipino workers to "fair and
equitable employment practices."
One last challenge of the petitioner must be dealt with to close t case. Its argument that
it has been denied due process because the same POEA that issued Memorandum
Circular No. 2 has also sustained and applied it is an uninformed criticism of
administrative law itself. Administrative agencies are vested with two basic powers, the
quasi-legislative and the quasi-judicial. The first enables them to promulgate
implementing rules and regulations, and the second enables them to interpret and apply
such regulations. Examples abound: the Bureau of Internal Revenue adjudicates on its
own revenue regulations, the Central Bank on its own circulars, the Securities and
Exchange Commission on its own rules, as so too do the Philippine Patent Office and the
Videogram Regulatory Board and the Civil Aeronautics Administration and the
Department of Natural Resources and so on ad infinitum on their respective
administrative regulations. Such an arrangement has been accepted as a fact of life of
modern governments and cannot be considered violative of due process as long as the
cardinal rights laid down by Justice Laurel in the landmark case of Ang Tibay v. Court of
Industrial Relations are observed.
When the conflicting interests of labor and capital are weighed on the scales of social
justice, the heavier influence of the latter must be counter-balanced by the sympathy and
compassion the law must accord the underprivileged worker. This is only fair if he is to be
given the opportunity and the right to assert and defend his cause not as a subordinate
but as a peer of management, with which he can negotiate on even plane. Labor is not a
mere employee of capital but its active and equal partner.

Fallo:
WHEREFORE, the petition is DISMISSED, with costs against the petitioner. The
temporary restraining order dated December 10, 1986 is hereby LIFTED. It is so ordered.
Godoyo, John Michael

G.R. No. 111812 May 31, 1995

DIONISIO M. RABOR vs. CIVIL SERVICE COMMISSION

FELICIANO, J.:

Doctrine:

"It is well established in this jurisdiction that, while the making of laws is a non-
delegable activity that corresponds exclusively to Congress, nevertheless,
the latter may constitutionally delegate authority and promulgate rules and
regulations to implement a given legislation and effectuate its policies, for the
reason that the legislature often finds it impracticable (if not impossible) to
anticipate and provide for the multifarious and complex situations that may be
met in carrying the law into effect. All that is required is that the regulation should be
germane to the objects and purposes of the law; that the regulation be not in
contradiction with it, but conform to the standards that the law prescribes."

Facts:

Sometime in May 1991, Alma D. Pagatpatan, an official in the Office of the Mayor
of Davao City, advised Dionisio M. Rabor to apply for retirement, considering
that he had already reached the age of sixty-eight (68) years and se ve n ( 7)
mo n t h s, wi th t hir t ee n ( 13 ) yea rs an d on e ( 1) mo n t h o f government service.
Rabor re spon ded t o this advice by e xh ibiting a "Certificate of Membership"
issued by the Government Service Insurance System ("GSIS") and dated 12 May
1988. At the bottom of this "Certificate of Me mb e r sh i p " i s a t yp e wr i t t en
st a t e me n t o f t h e f oll o wi n g te n o r : "Service extended to comply 15 years
service reqts." This statement is followed by a non-legible initial with the following
date "2/28/91."

In a letter dated 26 July 1991, Director Filemon B. Cawad of CSRO- XI advised

Davao City. Mayor Rodrigo R. Duterte as follows:

"Please be informed that the extension of services of Mr. Rabor is contrary to M.C.
No. 65 of the Office of the President, the relevant portion of which is hereunder
quoted:

'Officials and employees who have reached the compulsory retirement age of
65 years shall not be retained in the service, except for extremely meritorious
reasons in which case the retention shall not exceed six (6) months.'

IN VIEW WHEREFORE, please be advised that the services of Mr.Dominador

Rabor as Utility Worker in that office, is already non- extendible."
Accordingly, on 8 August 1991, Mayor Duterte furnished a copy of the 26 July 1991
letter of Director Cawad to Rabor andadvised him "to stop reporting for work
effective August 16, 1991."

Petitioner Rabor then sent to the Regional Director, CSRO-XI, a letter dated 14 August
1991, asking for extension of his services in the City Government until he "shall have
completed the fifteen (15) years service [requirement] in the Government so that [he]
could also avail of the benefits of the retirement laws given to employees of the
Government." The extension he was asking for was about two (2) years. Asserting that
he was "still in good health and very able to perform the duties and functions of [his]
position as Utility Worker," Rabor sought "extension of [his] service as an exception to
Memorandum Circular No. 65 of the Office of the President." 5 This request was denied
by Director Cawad on 15 August 1991.

Petitioner Rabor next wrote to the Office of the President on 29 January 1992 seeking
reconsideration of the decision of Director Cawad, CSRO-XI. The Office of the
President referred Mr. Rabor's letter to the Chairman of the Civil Service Commission
on 5 March 1992.

In its Resolution No. 92-594, dated 28 April 1992, the Civil Service Commission
dismissed the appeal of Mr. Rabor and affirmed the action of Director Cawad embodied
in the latter's letter of 26 July 1991. This Resolution stated in part:

"In his appeal, Rabor requested that he be allowed to continue rendering services as
Utility Worker in order to complete the fifteen (15) year service requirement under P.D.
1146.

CSC Memorandum Circular No. 27, s. 1990 provides, in part:

'1. Any request for extension of service of compulsory retirees to complete the fifteen
years service requirement for retirement shall be allowed only to permanent appointees
in the career service who are regular members of the Government Service Insurance
System (GSIS) and shall be granted for a period of not exceeding one (1) year.'

Considering that as early as October 18, 1988, Rabor was already due for retirement,
his request for further extension of service cannot be given due course."

Issue:

Whether or not CSC Memorandum Circular No. 27 is a result of a valid delegation of

Quasi-legislative power.
Ruling:

Yes,
The Supreme court modified the previous doctrine established in Cena case. The court
declared that Civil Service Memorandum Circular No. 27, Series of 1990 valid.

It is well established in this jurisdiction that, while the making of laws is a non-
delegable activity that corresponds exclusively to Congress, nevertheless,
the latter may constitutionally delegate authority and promulgate rules and
regulations to implement a given legislation and effectuate its policies, for the
reason that the legislature often finds it impracticable (if not impossible) to
anticipate and provide for the multifarious and complex situations that may be
met in carrying the law into effect. All that is required is that the regulation should be
germane to the objects and purposes of the law; that the regulation be not in
contradiction with it, but conform to the standards that the law prescribes.

Fallo:

ACCORDINGLY, for all the foregoing, the Petition for Certiorari is

hereby DISMISSED for lack of merit. No pronouncement as to costs.
SO, ORDERED.
Valencia, Sheila Ruth, D.

G.R. No. 111812, May 31, 1995

DIONISIO M. RABOR, petitioner,

vs.
CIVIL SERVICE COMMISSION, respondent

FELICIANO, J.:

Doctrine:

It is well established in this jurisdiction that, while the making of laws is a non-delegable
activity that corresponds exclusively to Congress, nevertheless, the latter may
constitutionally delegate authority and promulgate rules and regulations to implement
a given legislation and effectuate its policies, for the reason that the legislature often
finds it impracticable (if not impossible) to anticipate and provide for the multifarious
and complex situations that may be met in carrying the law into effect. All that is
required is that the regulation should be germane to the objects and purposes of the
law; that the regulation be not in contradiction with it, but conform to standards that the
law prescribes.

Facts:

Rabor was advised by the Office of the Mayor of Davao City to apply for retirement,
considering that he had already reached the age of sixty-eight (68) years. Rabor
responded to this advice by exhibiting a "Certificate of Membership" issued by the
GSIS. At the bottom of this certificate is a typewritten statement: "Service extended to
comply 15 years service reqts" followed by a non-legible initial with date "2/28/91."

Section 11 (b) of P.D. No. 1146 provides that "unless the service is extended by
appropriate authorities, retirement shall be compulsory for an employee at sixty-five-
(65) years of age with at least fifteen (15) years of service; Provided, that if he has less
than fifteen (15) years of service, he shall he allowed to continue in the service to
completed the fifteen (15) years."

The Davao City Government sought the advise of CSC, who advised Davao City
Mayor Rodrigo Duterte that the extension of services of Mr. Rabor is contrary to M.C.
No. 65 of the Office of the President, limiting the extension of service to 6 months.
Accordingly, Mayor Duterte furnished a copy to Rabor and advised him "to stop
reporting for work effective August 16, 1991.

Petitioner Rabor wrote to the CSC and to the Office of the President (who referred the
matter to the Chairman of CSC) seeking for reconsideration. CSC dismissed the
appeal, citing CSC M.C. No. 27, Series of 1990 which provides that "Any request for
the extension of service of compulsory retirees to complete the fifteen (15) years
service requirement for retirement shall be allowed only to permanent appointees in
the career service who are regular members of the Government Service Insurance
System (GSIS), and shall be granted for a period not exceeding one (1) year."
At this point, Mr. Rabor decided to come to this Court. In this proceeding, Rabor
contends that his claim falls squarely within the ruling of the Court in Cena vs. CSC.

In Cena vs CSC, the Court held that a government employee who has reached the
compulsory retirement age of 65 years, but at the same time has not yet completed
15 years of government service required under Section 11 (b) of P.D. No. 1146 to
qualify for the Old-Age Pension Benefit, may be granted an extension of his
government service for such period of time as may be necessary to "fill up" or comply
with the 15-year service requirement. The Court also held that the authority to grant
the extension was a discretionary one vested in the head of the agency concerned.

The Court also held in Cena vs CSC that the rule on M.C. 27 limiting to one the year
the extension of service cannot be accorded validity because it has no relationship or
connection with any provision of P.D. 1146 supposed to be carried into effect. It was
an addition to or extension of the law, not merely a mode of carrying it into effect. The
Civil Service Commission has no power to supply perceived omissions in P.D. 1146.

Issue: Whether or not the promulgation of M.C. 27 was within the authority of CSC

Ruling:

Yes. The promulgation of M.C. 27 was within the authority of CSC.

Section 12 of the present Civil Service law set out in the 1987 Administrative Code
provides, among others, that the CSC shall have the powers and functions to:

(2) Prescribe, amend and enforce rules and regulations for carrying into effect
the provisions of the Civil Service Law and other pertinent laws;

(3) Promulgate policies, standards and guidelines for the Civil Service and
adopt plans and programs to promote economical, efficient and effective
personnel administration in the government;

xxx xxx xxx

(10) Formulate, administer and evaluate programs relative to the development

and retention of a qualified and competent work force in the public service;

xxx xxx xxx

(14) Take appropriate action on all appointments and other personnel matters
in the Civil Service including extension of service beyond retirement age;

xxx xxx xxx

(17) Administer the retirement program for government officials and

employees, and accredit government services and evaluate qualifications for
retirement;
 xxx xxx xxx

(19) Perform all functions properly belonging to a central personnel agency and
such other functions as may be provided by law.

It was on the bases of the above quoted provisions of the 1987 Administrative Code
that the Civil Service Commission promulgated its Memorandum Circular No. 27.

The Court modified the doctrine of Cena to the extent that CSC M.C. No. 27, Series
of 1990, more specifically paragraph (1) thereof, was declared valid and effective.
Section 11 (b) of P.D. No. 1146 must, accordingly, be read together with MC No. 27.

The Court reiterated that the discretionary authority of the head of the government
agency to allow or disallow extension of the service of an official or employee who has
reached 65 years of age without completing 15 years of government service must be
exercised conformably with the provisions of CSC M.C. No. 27, Series of 1990.

Fallo:

ACCORDINGLY, for all the foregoing, the Petition for Certiorari is hereby DISMISSED
for lack of merit. No pronouncement as to costs.
POWER OF PRESIDENT THROUGH EXECUTIVE ORDERS; EXERCISE OF
AUTHORITY BY THE PRESIDENT DOES NOT CONSTITUTE UNDUE DELEGATION
OF LEGISLATIVE POWERS.

SALVADOR A. ARANETA, ETC., ET AL., petitioners, vs.

THE HON. MAGNO S. GATMAITAN, ETC., ET AL., respondents.
G.R. Nos. L-8895 and L-9191, April 30, 1957
Felix, J.

Doctrine:
Under sections 75 and 83 of the Fisheries Law, the restriction and banning of trawl fishing
from all Philippine waters come within the powers of the Secretary of Agriculture and
Natural Resources, who, in compliance with his duties may even cause the criminal
prosecution of those who in violation of his instructions, regulations or orders are caught
fishing with trawls in Philippine waters. However, as the Secretary of Agriculture and
Natural Resources exercises its functions subject to the general supervision and control
of the President of the Philippines (Section 75, Revised Administrative Code), the
President can exercise the same power and authority through executive orders,
regulations, decrees and proclamations upon recommendation of the Secretary
concerned (Section 79-A, Revised Administrative Code). Hence, Executive Orders Nos.
22, 66 and 80, series of 1954, restricting and banning of trawl fishing from San Miguel
Bay (Camarines) are valid and issued by authority of law.

Facts:
San Miguel Bay, located between the provinces of Camarines Norte and Camarines Sur
is considered as the most important fishing area in the Pacific side of the Bicol region.
Trawl operators from Malabon, Navotas and other places migrated to this region for the
purpose of using this particular method of fishing in said bay. On account of the belief of
sustenance fishermen that the operation of this kind of gear caused the depletion of the
marine resources of that area, there arose a general clamor among the majority of the
inhabitants of coastal towns to prohibit the operation of trawls in San Miguel Bay. The
President issued on April 5, 1954, Executive Order No. 22 prohibiting the use of trawls in
San Miguel Bay, but said executive order was amended by Executive Order No. 66,
issued on September 23, 1954, apparently in answer to a resolution of the Provincial
Board of Camarines Sur recommending the allowance of trawl fishing during the typhoon
season only. On November 2, 1954, however, Executive Order No. 80 was issued
reviving Executive Order No. 22.

A group of Otter trawl operators took the matter to the court by filing a complaint for
injunction and/or declaratory relief with preliminary injunction with the Court of First
Instance of Manila praying that the executive order to declare the same null and void, and
for such other relief as may be just and equitable in the premises.
The Secretary of Agriculture and Natural Resources and the Director of Fisheries
answered the complaint alleging that the executive orders in question were issued
accordance with law.

Issue:
Whether the President of the Philippines has authority to issue Executive Orders Nos. 22,
66 and 80, banning the operation of trawls in San Miguel Bay, or, said in other words,
whether said Executive Orders Nos. 22, 66 and 80 were issued in accordance with law.

Ruling:
Yes. The Court ruled that with or without said Executive Orders, the restriction and
banning of trawl fishing from all Philippine waters come, under the law, within the powers
of the Secretary of Agriculture and Natural Resources, who in compliance with his duties
may even cause the criminal prosecution of those who in violation of his instructions,
regulations or orders are caught fishing with trawls in the Philippine waters.

Section 10(1), Article VII of the Constitution of the Philippines prescribes:

SEC. 10 (1). The President shall have control of all the executive departments,
bureaus or offices, exercises general supervision over all local governments as
may be provided by law, and take care that the laws be faithfully executed.

Section 63 of the Revised Administrative Code reads as follows:

SEC. 63. EXECUTIVE ORDERS AND EXECUTIVE PROCLAMATION. —
Administrative acts and commands of the President of the Philippines touching the
organization or mode of operation of the Government or rearranging or readjusting
any of the district, divisions, parts or ports of the Philippines, and all acts and
commands governing the general performance of duties by public employees or
disposing of issues of general concern shall be made in executive orders.

One of the executive departments is that of Agriculture and Natural Resources which by
law is placed under the direction and control of the Secretary, who exercises its functions
subject to the general supervision and control of the President of the Philippines.
Moreover, "executive orders, regulations, decrees and proclamations relative to matters
under the supervision or jurisdiction of a Department, the promulgation whereof is
expressly assigned by law to the President of the Philippines, shall as a general rule, be
issued upon proposition and recommendation of the respective Department", and there
can be no doubt that the promulgation of the questioned Executive Orders was upon the
proposition and recommendation of the Secretary of Agriculture and Natural Resources
and that is why said Secretary, who was and is called upon to enforce said executive
Orders, was made a party defendant in one of the cases at bar.

Fallo:

Wherefore, and on the strength of the foregoing considerations We render judgement, as

follows:
(a) Declaring that the issues involved in case G.R. No. L-8895 have become moot, as no
writ of preliminary injunction has been issued by this Court the respondent Judge of the
Court of First Instance of Manila Branch XIV, from enforcing his order of March 3, 1955;
and

(b) Reversing the decision appealed from in case G. R. No. L-9191; dissolving the writ of
injunction prayed for in the lower court by plaintiffs, if any has been actually issued by the
court a quo; and declaring Executive Orders Nos. 22, 66 and 80, series of 1954, valid for
having been issued by authority of the Constitution, the Revised Administrative Code and
the Fisheries Act.

Without pronouncement as to costs. It is so ordered.

G.R. No. 166715, August 14, 2008

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

S. ALCANTARA, ED VINCENT S. ALBANO, ROMEO R. ROBISO, RENE B.
GOROSPE and EDWIN R. SANDOVAL, petitioners,

vs.

HON. CESAR V. PURISIMA, in his capacity as Secretary of Finance, HON.

GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner of the Bureau of
Internal Revenue, and HON. ALBERTO D. LINA, in his Capacity as Commissioner
of Bureau of Customs, respondents.

CORONA, J.:

Doctrine:

Two tests determine the validity of delegation of legislative power: (1) the completeness
test and (2) the sufficient standard test.

Facts:

RA 9335 was enacted to optimize the revenue-generation capability and collection of the
BIR and BOC. It encourages BIR and BOC officials and employees to exceed their
revenue targets by providing a system of rewards and sanctions through the creation of
a Rewards and Incentives Fund (Fund) and a Revenue Performance Evaluation Board
(Board). It covers all officials and employees of the BIR and the BOC with at least six
months of service, regardless of employment status.

The Fund is sourced from the collection of the BIR and the BOC in excess of their revenue
targets for the year, as determined by the Development Budget and Coordinating
Committee (DBCC). Any incentive or reward is taken from the fund and allocated to the
BIR and the BOC in proportion to their contribution in the excess collection of the targeted
amount of tax revenue.

The DOF, DBM, NEDA, BIR, BOC and the CSC were tasked to promulgate and issue the
implementing rules and regulations of RA 9335, to be approved by a Joint Congressional
Oversight Committee created for such purpose.

Petitioners challenges the constitutionality of RA 9335. They contend that, (1) by

establishing a system of rewards and incentives, the law "transform[s] the officials and
employees of the BIR and the BOC into mercenaries and bounty hunters" as they will do
their best only in consideration of such rewards which invites corruption; (2) Violates the
constitutional guarantee of equal protection. There is no valid basis for classification or
distinction as to why such a system should not apply to officials and employees of all
other government agencies; (3) the law unduly delegates the power to fix revenue targets
to the President as it lacks a sufficient standard on that matter. Fixing of revenue targets
has been delegated to the President without sufficient standards that may be unrealistic
and unattainable target in order to dismiss BIR or BOC personnel; (4) creation of a
congressional oversight committee on the ground that it violates the doctrine of separation
of powers.

Office of the Solicitor General, question the petition for being premature as there is no
actual case or controversy yet. Petitioners have not asserted any right or claim that will
necessitate the exercise of this Court’s jurisdiction. They assert that the allegation that
the reward system will breed mercenaries is mere speculation and does not suffice to
invalidate the law. RA 9335 validly classifies the BIR and the BOC because the functions
they perform are distinct from those of the other government agencies and
instrumentalities. Moreover, the law provides a sufficient standard that will guide the
executive in the implementation of its provisions. Lastly, the creation of the congressional
oversight committee under the law enhances separation of powers. It ensures the
fulfillment of the legislative policy and serves as a check to any over-accumulation of
power on the part of the executive and the implementing agencies.

Issue:

Whether RA 9335 unduly delegates legislative power to the Executive Branch?

Ruling: No. It has passed the two test of valid delegation of powers.

Two tests determine the validity of delegation of legislative power: (1) the completeness
test and (2) the sufficient standard test. A law is complete when it sets forth therein the
policy to be executed, carried out or implemented by the delegate. It lays down a sufficient
standard when it provides adequate guidelines or limitations in the law to map out the
boundaries of the delegate’s authority and prevent the delegation from running riot. To be
sufficient, the standard must specify the limits of the delegate’s authority, announce the
legislative policy and identify the conditions under which it is to be implemented.

RA 9335 adequately states the policy and standards to guide the President in fixing
revenue targets and the implementing agencies in carrying out the provisions of the law.

Revenue targets are based on the original estimated revenue collection expected
respectively of the BIR and the BOC for a given fiscal year as approved by the DBCC and
stated in the BESF submitted by the President to Congress. Thus, the determination of
revenue targets does not rest solely on the President as it also undergoes the scrutiny of
the DBCC.
On the other hand, Section 7 specifies the limits of the Board’s authority and identifies the
conditions under which officials and employees whose revenue collection falls short of
the target by at least 7.5% may be removed from the service.

RA 9335 in no way violates the security of tenure of officials and employees of the BIR
and the BOC. The guarantee of security of tenure only means that an employee cannot
be dismissed from the service for causes other than those provided by law and only after
due process is accorded the employee. In the case of RA 9335, it lays down a reasonable
yardstick for removal (when the revenue collection falls short of the target by at least
7.5%) with due consideration of all relevant factors affecting the level of collection. This
standard is analogous to inefficiency and incompetence in the performance of official
duties, a ground for disciplinary action under civil service laws. The action for removal is
also subject to civil service laws, rules and regulations and compliance with substantive
and procedural due process.

At any rate, this Court has recognized the following as sufficient standards: "public
interest," "justice and equity," "public convenience and welfare" and "simplicity, economy
and welfare." In this case, the declared policy of optimization of the revenue-generation
capability and collection of the BIR and the BOC is infused with public interest.

Fallo:

WHEREFORE, the petition is hereby PARTIALLY GRANTED. Section 12 of RA 9335

creating a Joint Congressional Oversight Committee to approve the implementing rules
and regulations of the law is declared UNCONSTITUTIONAL and
therefore NULL and VOID. The constitutionality of the remaining provisions of RA 9335
is UPHELD. Pursuant to Section 13 of RA 9335, the rest of the provisions remain in force
and effect.
Quasi Legislative Powers – Test of Valid Delegation

G.R. No. 166715 August 14, 2008

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

ED VINCENT S. ALBANO, ROMEO R. ROBISO, RENE B. GOROSPE and EDWIN R. SANDOVAL,
petitioners,

vs.

HON. CESAR V. PURISIMA, in his capacity as Secretary of Finance, HON. GUILLERMO L. PARAYNO,
JR., in his capacity as Commissioner of the Bureau of Internal Revenue, and HON. ALBERTO D.
LINA, in his Capacity as Commissioner of Bureau of Customs, respondents.

CORONA, J.:

DOCTRINE:

Two tests determine the validity of delegation of legislative power: (1) the completeness test and (2)
the sufficient standard test. A law is complete when it sets forth therein the policy to be executed, carried
out or implemented by the delegate. It lays down a sufficient standard when it provides adequate
guidelines or limitations in the law to map out the boundaries of the delegate’s authority and prevent the
delegation from running riot. To be sufficient, the standard must specify the limits of the delegate’s authority,
announce the legislative policy and identify the conditions under which it is to be implemented.

FACTS:

RA 9335 was enacted to optimize the revenue-generation capability and collection of the Bureau of Internal
Revenue (BIR) and the Bureau of Customs (BOC). The law intends to encourage BIR and BOC officials
and employees to exceed their revenue targets by providing a system of rewards and sanctions through
the creation of a Rewards and Incentives Fund (Fund) and a Revenue Performance Evaluation Board
(Board). It covers all officials and employees of the BIR and the BOC with at least six months of service,
regardless of employment status. The Fund is sourced from the collection of the BIR and the BOC in excess
of their revenue targets for the year, as determined by the Development Budget and Coordinating
Committee (DBCC). Any incentive or reward is taken from the fund and allocated to the BIR and the BOC
in proportion to their contribution in the excess collection of the targeted amount of tax revenue. The DOF,
DBM, NEDA, BIR, BOC and the Civil Service Commission were tasked to promulgate and issue the
implementing rules and regulations of RA 9335, to be approved by a Joint Congressional Oversight
Committee created for such purpose. On May 22, 2006, the Joint Congressional Oversight Committee
approved the said IRR.

Petitioners’ Argument/s:
- Invoking their right as taxpayers, they challenge the constitutionality of RA 9335. They contend that,
by establishing a system of rewards and incentives, the law "transform[s] the officials and
employees of the BIR and the BOC into mercenaries and bounty hunters" as they will do their best
only in consideration of such rewards. Thus, the system of rewards and incentives invites corruption
and undermines the constitutionally mandated duty of these officials and employees to serve the
people with utmost responsibility, integrity, loyalty and efficiency.

- Also claim that limiting the scope of the system of rewards and incentives only to officials and
employees of the BIR and the BOC violates the constitutional guarantee of equal protection. There
is no valid basis for classification or distinction as to why such a system should not apply to officials
and employees of all other government agencies.
 - Assert that the law unduly delegates the power to fix revenue targets to the President as it
lacks a sufficient standard on that matter. While Section 7(b) and (c) of RA 9335 provides that
BIR and BOC officials may be dismissed from the service if their revenue collections fall short of
the target by at least 7.5%, the law does not, however, fix the revenue targets to be achieved.
Instead, the fixing of revenue targets has been delegated to the President without sufficient
standards. It will therefore be easy for the President to fix an unrealistic and unattainable target in
order to dismiss BIR or BOC personnel.

- Assail the creation of a congressional oversight committee on the ground that it violates
the doctrine of separation of powers. While the legislative function is deemed accomplished and
completed upon the enactment and approval of the law, the creation of the congressional oversight
committee permits legislative participation in the implementation and enforcement of the law.

MAIN ISSUE/s:

Is there undue delegation of power to the President?

RULING:

There is none.

Two tests determine the validity of delegation of legislative power: (1) the completeness test and (2)
the sufficient standard test. A law is complete when it sets forth therein the policy to be executed, carried
out or implemented by the delegate. It lays down a sufficient standard when it provides adequate
guidelines or limitations in the law to map out the boundaries of the delegate’s authority and prevent the
delegation from running riot. To be sufficient, the standard must specify the limits of the delegate’s authority,
announce the legislative policy and identify the conditions under which it is to be implemented.

Section 2 and Section 4 of RA 9335 adequately states the policy and standards to guide the
President in fixing revenue targets and the implementing agencies in carrying out the provisions of
the law. Revenue targets are based on the original estimated revenue collection expected respectively of
the BIR and the BOC for a given fiscal year as approved by the Development Budget and Coordinating
Committee (DBCC) and stated in the Budget of Expenditures and Sources of Financing (BESF) submitted
by the President to Congress. Thus, the determination of revenue targets does not rest solely on the
President as it also undergoes the scrutiny of the DBCC. On the other hand, Section 7 specifies the
limits of the Board’s authority and identifies the conditions under which officials and employees
whose revenue collection falls short of the target by at least 7.5% may be removed from the service.

At any rate, this Court has recognized the following as sufficient standards: "public interest," "justice and
equity," "public convenience and welfare" and "simplicity, economy and welfare." In this case, the declared
policy of optimization of the revenue-generation capability and collection of the BIR and the BOC is
infused with public interest.

Additional issue related to the topic – the constitutionality of the Joint Congressional Oversight
Committee:

Congress has two options when enacting legislation to define national policy within the broad horizons of
its legislative competence. It can itself formulate the details or it can assign to the executive branch the
responsibility for making necessary managerial decisions in conformity with those standards. In
the latter case, the law must be complete in all its essential terms and conditions when it leaves the hands
of the legislature. Thus, what is left for the executive branch or the concerned administrative agency
when it formulates rules and regulations implementing the law is to fill up details (supplementary
rule-making) or ascertain facts necessary to bring the law into actual operation (contingent rule-
making).

Administrative regulations enacted by administrative agencies to implement and interpret the law which
they are entrusted to enforce have the force of law and are entitled to respect. Such rules and regulations
partake of the nature of a statute and are just as binding as if they have been written in the statute itself.
As such, they have the force and effect of law and enjoy the presumption of constitutionality and legality
until they are set aside with finality in an appropriate case by a competent court. Congress, in the guise of
assuming the role of an overseer, may not pass upon their legality by subjecting them to its stamp of
approval without disturbing the calculated balance of powers established by the Constitution. In exercising
discretion to approve or disapprove the IRR based on a determination of whether or not they
conformed with the provisions of RA 9335, Congress arrogated judicial power unto itself, a power
exclusively vested in this Court by the Constitution.

Following this rationale, Section 12 of RA 9335 (the creation of the Joint Congressional Oversight
Committee) should be struck down as unconstitutional.

FALLO:

WHEREFORE, the petition is hereby PARTIALLY GRANTED. Section 12 of RA 9335 creating a Joint
Congressional Oversight Committee to approve the implementing rules and regulations of the law is
declared UNCONSTITUTIONAL and therefore NULL and VOID. The constitutionality of the remaining
provisions of RA 9335 is UPHELD. Pursuant to Section 13 of RA 9335, the rest of the provisions remain in
force and effect.
Calzita, Leren Hanna B.
G.R. No. 175220. February 12, 2009
WILLIAM C. DAGAN, CARLOS H. REYES, NARCISO MORALES, BONIFACIO
MANTILLA, CESAR AZURIN, WEITONG LIM, MA. TERESA TRINIDAD, MA.
CARMELITA FLORENTINO, petitioners,
vs.
PHILIPPINE RACING COMMISSION, MANILA JOCKEY CLUB, INC., and PHILIPPINE
RACING CLUB, INC., respondents.
TINGA, J.:
Doctrine:
The rule is that what has been delegated cannot be delegated or as expressed in the
Latin maxim: potestas delegate non delegare potest; Rule admits of recognized
exceptions such as the grant of rule-making power to administrative agencies.
Facts:
In 2004, a directive was issued by the Philippine Racing Commission (Philracom)
directing the Manila Jockey Club, Inc. (MJCI) and Philippine Racing Club, Inc. (PRCI) to
immediately come up with their respective Clubs’ House Rule to address Equine
Infectious Anemia (EIA) problem and to rid their facilities of horses infected with EIA. Said
directive was issued pursuant to Administrative Order No. 5 dated 28 March 1994 by the
Department of Agriculture declaring it unlawful for any person, firm or corporation to ship,
drive, or transport horses from any locality or place except when accompanied by a
certificate issued by the authority of the Director of the Bureau of Animal Industry (BAI).
To comply with the requirement, MJCI and PRC ordered the owners of race horses
stable in their establishments to submit the horses to blood sampling and administration
of the Coggins Test to determine whether they are afflicted with the EIA virus.
Subsequently, Philracom issued copies of the guidelines for the monitoring and
eradication of EIA.
The petitioners and racehorse owners which includes Dagan, refused to comply
with the directive. One of their arguments is that there had been no prior consultation with
horse owners before the issuance of the directive. Despite the protest, the blood testing
proceeded. The horses, whose owners refused to comply were banned from the races,
were removed from the actual day of race, prohibited from renewing their licenses or
evicted from their stables.
The petitioners lodged a complaint with the Office of the President (OP) which in
turn issued a directive instructing Philracom to investigate the matter. When Philcarom
failed to act upon the directive of the OP, petitioners filed a petition for injunction with
application for the issuance of a temporary restraining order (TRO) with the RTC of
Makati. Thereafter, the RTC issued a TRO. After the hearing, the RTC dismissed the case
for being moot and academic because it was found out that most racehorse owners,
except for Dagan, had already subjected their racehorses to EIA testing. Their act
constituted demonstrated compliance with the contested guidelines.
CA affirmed in toto the decision of the RTC, hence this instant petition for certiorari.
Petitioners essentially assail two issuances of Philracom; namely: the Philracom directive
and the subsequent guidelines addressed to MJCI and PRCI.

1
Issue:
Whether or not the assailed administrative issuances are valid?
Ruling: YES.
The validity of an administrative issuance, such as the assailed guidelines, hinges
on compliance with the following requisites: 1. Its promulgation must be authorized by the
legislature; 2. It must be promulgated in accordance with the prescribed procedure; 3. It
must be within the scope of the authority given by the legislature; 4. It must be reasonable.
All the prescribed requisites are met as regards the questioned issuances.
Philracom’s authority is drawn from P.D. No. 420. The delegation made in the presidential
decree is valid. Philracom did not exceed its authority. And the issuances are fair and
reasonable.
The rule is that what has been delegated cannot be delegated, or as expressed in
the Latin maxim: potestas delegate non delegare potest. This rule is based upon the
ethical principle that such delegated power constitutes not only a right but a duty to be
performed by the delegate by the instrumentality of his own judgment acting immediately
upon the matter of legislation and not through the intervening mind of another. This rule
however admits of recognized exceptions such as the grant of rule-making power to
administrative agencies. They have been granted by Congress with the authority to issue
rules to regulate the implementation of a law entrusted to them. Delegated rule-making
has become a practical necessity in modern governance due to the increasing complexity
and variety of public functions.
In every case of permissible delegation, there must be a showing that the
delegation itself is valid. It is valid only if the law (a) is complete in itself, setting forth
therein the policy to be executed, carried out, or implemented by the delegate; and (b)
fixes a standard—the limits of which are sufficiently determinate and determinable—to
which the delegate must conform in the performance of his functions. A sufficient standard
is one which defines legislative policy, marks its limits, maps out its boundaries and
specifies the public agency to apply it. It indicates the circumstances under which the
legislative command is to be effected.
As to the issue whether Philracom had unconstitutionally delegated its rule-making
power to PRCI and MJCI in issuing the directive for them to come up with club rules, the
Court ruled in the negative. There is no delegation of power to speak of between
Philracom, as the delegator and MJCI and PRCI as delegates. The Philracom directive is
merely instructive in character. Philracom had instructed PRCI and MJCI to “immediately
come up with Club’s House Rule to address the problem and rid their facilities of horses
infected with EIA.” PRCI and MJCI followed-up when they ordered the racehorse owners
to submit blood samples and subject their race horses to blood testing. Compliance with
the Philracom’s directive is part of the mandate of PRCI and MJCI under Section 1 of R.A.
No. 7953 and Sections 1 and 2 of 8407.
Further as a rule, the issuance of rules and regulations in the exercise of an
administrative agency of its quasi-legislative power does not require notice and hearing.
In Abella, Jr. v. Civil Service Commission, 442 SCRA 507 (2004), this Court had the
occasion to rule that prior notice and hearing are not essential to the validity of rules or
regulations issued in the exercise of quasi-legislative powers since there is no
determination of past events or facts that have to be established or ascertained.
Fallo:
WHEREFORE, the petition is DISMISSED. Costs against petitioner William Dagan