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Maceda vs Energy Regulatory Board

G.R. Nos. 95203-05, December 18, 1990

On September 10, 1990, Caltex Philippines, Pilipinas Shell Petroleum Corporation and
Petron Corporation asked the Energy Regulatory Board (ERB) for permission to
increase the prices of petroleum. Caltex asked for P3.2697 per liter increase while
Shell and Petron asked for P2.0338 per liter and P2.00 per liter increase, respectively.
Furthermore, the oil companies asked for provisional authority to allow them to
temporarily increase posted prices pending further proceedings.
On September 21, 1990, the ERB granted a P1.42 per liter increase and the
provisional authority asked for.
Petitioner Sen. Ernesto Maceda filed for an injunctive relief to prevent the
implementation of the ERB Order of September 21, 1990, on the grounds that the ERB
abused its discretion when it issued an order without notice and hearing, in violation of
Section 3, paragraph (e), of EO No. 172. He also alleges that the increase constituted
a tax which was a power vested in the legislature and was abolished by RA. No. 6965.
Petitioner Atty. Lozano also questioned the lack of notice and hearing. On the other
hand, the Trade Union of the Philippines and Allied Services (TUPAS/FSM)-W.F.T.U.,
argues that the increase cannot be allowed since the respondent oil companies had
not exhausted their existing oil stock which they had bought at old prices and that they
cannot be allowed to charge new rates for stock purchased at such lower rates.
1. Whether or not the lack of hearing violated Section 3, paragraph (e), of EO No. 172.
2. Whether or not the ERB order constitutes an act of taxation.
3. Whether or not oil companies can charge new prices for oil purchased at old rates.
1. No. Under Section 8 of EO No. 172:
SECTION 8. Authority to Grant Provisional Relief. The Board may, upon the filing of
an application, petition or complaint or at any stage thereafter and without prior hearing,
on the basis or supporting papers duly verified or authenticated, grant provisional relief
on motion of a party in the case or on its own initiative, without prejudice to a final
decision after hearing, should the Board find that the pleadings, together with such
affidavits, documents and other evidence which may be submitted in support of the
motion, substantially support the provisional order: Provided, That the Board shall
immediately schedule and conduct a hearing thereon within thirty (30) days thereafter,
upon publication and notice to all affected parties.

Under EO No. 172, a hearing is indispensable. However, it does not preclude the
Board from ordering, ex parte, a provisional increase, subject to its final disposition of
whether or not: (1) to make it permanent; (2) to reduce or increase it further; or (3) to
deny the application. Section 3, paragraph (e) is akin to a temporary restraining order
or a writ of preliminary attachment issued by the courts, which are given ex parte, and
which are subject to the resolution of the main case.
Section 3, paragraph (e) and Section 8 do not negate each other, or otherwise, operate
exclusively of the other, in that the Board may resort to one but not to both at the same
Section 3(e) of EO No. 172, outlines the jurisdiction of the ERB and the grounds for
which it may decree a price adjustment, subject to the requirements of notice and
hearing. However, under Section 8, EO No. 172, it also has authority to increase
provisionally, without need of a hearing, subject to the final outcome of the proceeding,
while said proceeding is pending. In other words, the ERB is not prevented from
conducting a hearing on the grant of provisional authority but they cannot be
stigmatized if they do not do so.
2. No. Under PD No. 1956, the Oil Price Stabilization Fund (OPSF) was created to
minimize frequent price changes brought about by exchange rate adjustments and/or
changes in world market prices of crude oil and imported petroleum products.
Therefore, it is not an act of taxation.
Under Republic Act No. 6965, taxes were lowered on petroleum and petroleum
products by imposing specific taxes rather than ad valorem taxes thereon. However, it
is not an insurance against an oil hike, whenever warranted, nor is it a price control
mechanism on petroleum and petroleum products. The statute had possibly forestalled
a larger hike, but it operated no more.
3. Political Question. The Court cannot debate the wisdom of policy or the logic behind
it (unless it is otherwise arbitrary), not because the Court agrees with policy, but
because the Court is not the suitable forum for debate.
It is a question best judged by the political leadership which after all, determines policy,
and ultimately, by the electorate, that stands to be better for it or worse off, either in the
short or long run.

Malaga vs. Penachos Jr.

G.R. No.86695

The Iloilo State College of Fisheries (henceforth ISCOF) through its Pre-qualification,
Bids and Awards Committee (henceforth PBAC) caused the publication in the
November 25, 26, 28, 1988 issues of the Western Visayas Daily an Invitation to Bid for
the construction of the Micro Laboratory Building at ISCOF. The notice announced that
the last day for the submission of pre-qualification requirements (PRE C-1) ** was
December 2, 1988, and that the bids would be received and opened on December 12,
1988, 3 oclock in the afternoon.
Petitioners Maria Elena Malaga and Josieleen Najarro, respectively doing business
under the name of the B.E. Construction and Best Built Construction, submitted their
pre-qualification documents at two oclock in the afternoon of December 2, 1988.
Petitioner Jose Occea submitted his own PRE-C1 on December 5, 1988. All three of
them were not allowed to participate in the bidding because their documents were
considered late, having been submitted after the cut-off time of ten oclock in the
morning of December 2, 1988.
On December 12, 1988, the petitioners filed a complaint with the Regional Trial Court
of Iloilo against the chairman and members of PBAC in their official and personal
capacities. On the same date, Judge Lodrigio L. Lebaquin issued a restraining order
prohibiting PBAC from conducting the bidding and awarding the project.
On December 16, 1988, the defendants filed a motion to lift the restraining order on the
ground that the Court was prohibited from issued restraining orders, preliminary
injunctions and preliminary mandatory injunctions by P.D. 1818.
Issue: WON ISCOF is considered a government instrumentality, therefore, covered by
PD 1818.
Yes. The 1987 Administrative Code defines a government instrumentality as
follows:chanrob1es virtual 1aw library

Instrumentality refers to any agency of the National Government, not integrated within
the department framework, vested with special functions or jurisdiction by law,
endowed with some if not all corporate powers, administering special funds, and
enjoying operational autonomy, usually through a charter. This term includes
regulatory agencies, chartered institutions, and government-owned or controlled
corporations. (Sec. 2 (5) Introductory Provisions).
The same Code describes a chartered institution thus:chanrob1es virtual 1aw library
Chartered institution refers to any agency organized or operating under a special
charter, and vested by law with functions relating to specific constitutional policies or
objectives. This term includes the state universities and colleges, and the monetary
authority of the state. (Sec. 2 (12) Introductory Provisions). It is clear from the above
definitions that ISCOF is a chartered institution and is therefore covered by P.D. 1818.
Nevertheless, it does not automatically follow that ISCOF is covered by the prohibition
in the said decree.
In the case of Datiles and Co. v. Sucaldito, 9 this Court interpreted a similar prohibition
contained in P.D. 605, the law after which P.D. 1818 was patterned. It was there
declared that the prohibition pertained to the issuance of injunctions or restraining
orders by courts against administrative acts in controversies involving facts or the
exercise of discretion in technical cases. The Court observed that to allow the courts to
judge these matters would disturb the smooth functioning of the administrative
machinery. Justice Teodoro Padilla made it clear, however, that on issues definitely
outside of this dimension and involving questions of law, courts could not be prevented
by P.D. No. 605 from exercising their power to restrain or prohibit administrative acts.

FIDENCIO Y. BEJA, SR., petitioner,

Secretary of the Department of Transportation and Communications;
COMMODORE ROGELIO A. DAYAN, in his capacity as General Manager of the
A. VILLALUZ, in his capacity as Chairman of the Administrative Action Board,
DOTC, respondents.

Petitioner Fidencio Y. Beja, Sr. was employed by the PPA as Terminal Supervisor.
The PPA General Manager Dayan filed an administrative case against Beja and
Villaluz for grave dishonesty, grave misconduct, willful violation of reasonable office
rules and regulations and conduct prejudicial to the best interest of the service. The
case was considered closed for lack of merit. Thereafter, another charge was filed
against Beja by the PPA General Manager for the same offenses mentioned in the first
case. The charge consisted of six (6) different specifications of administrative offenses
including fraud against the PPA in the total amount of P218,000.00. Beja was also
placed under preventive suspension pursuant to Sec. 41 of P.D. No. 807.
The PPA general manager indorsed it to the AAB for appropriate action. A decision
was rendered by the AAB adjudging Beja exonerated from the charge against them
and dismissing him from service, among others.
Beja challenges the legality of the preventive suspension and the jurisdiction of the
DOTC Secretary and/or the AAB to initiate and hear administrative cases against PPA
personnel below the rank of Assistant General Manager
The imposition of preventive suspension on a government employee charged with an
administrative offense is subject to the following provision of the Civil Service Law, P.D.
No. 807:
Sec. 41. Preventive Suspension. The proper disciplining authority may
preventively suspend any subordinate officer or employee under his
authority pending an investigation, if the charge against such officer or
employee involves dishonesty, oppression or grave misconduct, or neglect

in the performance of duty, or if there are reasons to believe that the

respondent is guilty of charges which would warrant his removal from the
Imposed during the pendency of an administrative investigation, preventive suspension
is not a penalty in itself. It is merely a measure of precaution so that the employee who
is charged may be separated, for obvious reasons, from the scene of his alleged
misfeasance while the same is being investigated.
The PPA general manager is the disciplining authority who may, by himself and without
the approval of the PPA Board of Directors, subject a respondent in an administrative
case to preventive suspension. His disciplinary powers are sanctioned, not only by Sec.
8 of P.D. No. 857 aforequoted, but also by Sec. 37 of P.D. No. 807 granting heads of
agencies the "jurisdiction to investigate and decide matters involving disciplinary
actions against officers and employees" in the PPA.
With respect to the issue of whether or not the DOTC Secretary and/or the AAB may
initiate and hear administrative cases against PPA Personnel below the rank of
Assistant General Manager, the Court qualifiedly rules in favor of petitioner.
The PPA was created through P.D. No. 505 dated July 11, 1974. Under that Law, the
corporate powers of the PPA were vested in a governing Board of Directors known as
the Philippine Port Authority Council. Sec. 5(i) of the same decree gave the Council the
power "to appoint, discipline and remove, and determine the composition of the
technical staff of the Authority and other personnel."
P.D. No. 505 was substituted by P.D. No. 857, See. 4(a) thereof created the Philippine
Ports Authority which would be "attached" to the then Department of Public Works,
Transportation and Communication. When Executive Order No. 125 dated January 30,
1987 reorganizing the Ministry of Transportation and Communications was issued, the
PPA retained its "attached" status.
Attachment of an agency to a Department is one of the three administrative
relationships mentioned in Book IV, Chapter 7 of the Administrative Code of 1987, the
other two being supervision and control and administrative supervision.
An attached agency has a larger measure of independence from the Department to
which it is attached than one which is under departmental supervision and control or
administrative supervision. This is borne out by the "lateral relationship" between the
Department and the attached agency. The attachment is merely for "policy and
program coordination." With respect to administrative matters, the independence of an
attached agency from Departmental control and supervision is further reinforced by the
fact that even an agency under a Department's administrative supervision is free from
Departmental interference with respect to appointments and other personnel actions
"in accordance with the decentralization of personnel functions" under the

Administrative Code of 1987. 11 Moreover, the Administrative Code explicitly provides

that Chapter 8 of Book IV on supervision and control shall not apply to chartered
institutions attached to a Department. 12
Hence, the inescapable conclusion is that with respect to the management of
personnel, an attached agency is, to a certain extent, free from Departmental
interference and control.
The law impliedly grants said officials the power to investigate its personnel below the
rank of Assistant Manager who may be charged with an administrative offense. During
such investigation, the PPA General Manager, as earlier stated, may subject the
employee concerned to preventive suspension. The investigation should be conducted
in accordance with the procedure set out in Sec. 38 of P.D. No. 807. Only after
gathering sufficient facts may the PPA General Manager impose the proper penalty in
accordance with law. It is the latter action which requires the approval of the PPA
Board of Directors.
From an adverse decision of the PPA General Manager and the Board of Directors, the
employee concerned may elevate the matter to the Department Head or Secretary.
Otherwise, he may appeal directly to the Civil Service Commission. The permissive
recourse to the Department Secretary is sanctioned by the Civil Service Law
It is, therefore, clear that the transmittal of the complaint by the PPA General Manager
to the AAB was premature. The PPA General Manager should have first conducted an
investigation, made the proper recommendation for the imposable penalty and sought
its approval by the PPA Board of Directors. It was discretionary on the part of the
herein petitioner to elevate the case to the then DOTC Secretary Reyes. Only then
could the AAB take jurisdiction of the case.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED insofar as it upholds
the power of the PPA General Manager to subject petitioner to preventive suspension
and REVERSED insofar as it validates the jurisdiction of the DOTC and/or the AAB to
act on Administrative Case No. PPA-AAB-1-049-89 and rules that due process has
been accorded the petitioner.
The AAB decision in said case is hereby declared NULL and VOID and the case in
REMANDED to the PPA whose General Manager shall conduct with dispatch its

Aida D. Eugenio v. Civil Service Commission

G.R. No. 115863; March 31, 1995

Petitioner is the Deputy Director of the Philippine Nuclear Research Institute. She
applied for Career Executive Service (CES) Eligibility and a CESO rank on 2 August
1993. She was given a CES eligibility. On 15 September 1993, she was recommended
to be the President for a CESO rank by the Career Executive Service Board (CESB).
Then respondent Civil Service Commission (CSC) passed a Resolution which
abolished the CESB, relying on the provisions of Section 17, Title I, Subtitle A, Book V
of the Administrative Code of 1987 allegedly conferring on the Commission the power
and authority to effect changes in its organization as the need arises. Said resolution
Pursuant thereto, the Career Executive Service Board, shall now be known as the
Office for Career Executive Service of the Civil Service Commission. Accordingly, the
existing personnel, budget, properties and equipment of the Career Executive Service
Board shall now form part of the Office for Career Executive Service.

Finding herself bereft of further administrative relief as the Career Executive Service
Board which recommended her CESO Rank IV has been abolished, petitioner filed the
petition at bench to annul, among others, said resolution.

Issue: Whether or not CSC was given the authority to abolish the office of the CESB

Held: No. The CESB was created in PD No. 1 on September 1, 1974. It cannot be
disputed, therefore, that as the CESB was created by law, it can only be abolished by
the legislature.

In the petition at bench, the legislature has not enacted any law authorizing the
abolition of the CESB. On the contrary, in all the General Appropriations Acts from
1975 to 1993, the legislature has set aside funds for the operation of CESB.

Respondent Commission, however, invokes Section 17, Chapter 3, Subtitle A. Title I,

Book V of the Administrative Code of 1987 as the source of its power to abolish the
CESB. But as well pointed out by petitioner and the Solicitor General, Section 17 must
be read together with Section 16 of the said Code which enumerates the offices under
the respondent Commission. As read together, the conclusion is that respondent
Commissions power to reorganize is limited to offices under its control as enumerated
in Section 16.

As conceptualized by the Reorganization Committee the CESB shall be autonomous.

It is expected to view the problem of building up executive manpower in the
government with a broad and positive outlook. The essential autonomous character of
the CESB is not negated by its attachment to respondent Commission. By said
attachment, CESB was not made to fall within the control of respondent Commission.
Under the Administrative Code of 1987, the purpose of attaching one functionally interrelated government agency to another is to attain policy and program coordination.
This is clearly etched out in Section 38(3), Chapter 7, Book IV of the aforecited Code,
to wit:
(3) Attachment. (a) This refers to the lateral relationship between the department or
its equivalent and attached agency or corporation for purposes of policy and program
coordination. The coordination may be accomplished by having the department
represented in the governing board of the attached agency or corporation, either as
chairman or as a member, with or without voting rights, if this is permitted by the
charter; having the attached corporation or agency comply with a system of periodic
reporting which shall reflect the progress of programs and projects; and having the
department or its equivalent provide general policies through its representative in the
board, which shall serve as the framework for the internal policies of the attached
corporation or agency.

Section 17, Chapter 3, Subtitle A. Title I, Book V of the Administrative Code of 1987 as
the source of its power to abolish the CESB. Section 17 provides:
Sec. 17. Organizational Structure. Each office of the Commission shall be headed
by a Director with at least one Assistant Director, and may have such divisions as are
necessary independent constitutional body, the Commission may effect changes in the
organization as the need arises.

Sec. 16. Offices in the Commission. The Commission shall have the following
(1) The Office of the Executive
(2) The Merit System Protection Board composed of a Chairman and two (2) members
(3) The Office of Legal Affairs
(4) The Office of Planning and Management
(5) The Central Administrative Office.
(6) The Office of Central Personnel Records
(7) The Office of Position Classification and Compensation
(8) The Office of Recruitment, Examination and Placement
(9) The Office of Career Systems and Standards
(10) The Office of Human Resource Development
(11) The Office of Personnel Inspection and Audit
(12) The Office of Personnel Relations
(13) The Office of Corporate Affairs
(14) The Office of Retirement
(15) The Regional and Field Offices


GR. NO. 83578, MARCH 16, 1989
On March 12, 1985, State Prosecutor Jose B. Rosales, who is assigned with the
Presidential Anti-Dollar Salting Task Force hereinafter referred to as PADS Task Force
for purposes of convenience, issued search warrants Nos. 156, 157, 158, 159, 160 and
161 against the petitioners Karamfil Import-Export Co., Inc., P & B Enterprises Co., Inc.,
Philippine Veterans Corporation, Philippine Veterans Development Corporation,
Philippine Construction Development Corporation, Philippine Lauan Industries
Corporation, Inter-trade Development (Alvin Aquino), Amelili U. Malaquiok Enterprises
and Jaime P. Lucman Enterprises.
The application for the issuance of said search warrants was filed by Atty. Napoleon
Gatmaytan of the Bureau of Customs who is a deputized member of the PADS Task
Force. Attached to the said application is the affidavit of Josefin M. Castro who is an
operative and investigator of the PADS Task Force.
Shortly thereafter, the private respondent (the petitioner below) went to the RTC on a
petition to enjoin the implementation of the search warrants in question. On March 13,
1985, the trial court issued a temporary restraining order effective "for a period of five
(5) days notice" and set the case for hearing.
In disposing of the petition, the said court found the material issues to be:
1) Competency of this Court to act on petition filed by the petitioners;
2) Validity of the search warrants issued by respondent State Prosecutor;
3) Whether or not the petition has become moot and academic because all the search
warrants sought to be quashed had already been implemented and executed.
On April 16, 1985, the lower court issued the first of its challenged Orders, and held
that the Search Warrants are null and void.
The PADS Task Force went to the respondent Court of Appeals to contest, on
certiorari, the twin Order(s) of the lower court. In ruling initially for the Task Force, the
Appellate Court held: (1) Herein petitioner is a special quasi-judicial body with express
powers enumerated under PD 1936 to prosecute foreign exchange violations defined
and punished under P.D. No. 1883; (2) The petitioner, in exercising its quasi-judicial
powers, ranks with the Regional Trial Courts, and the latter in the case at bar had no
jurisdiction to declare the search warrants in question null and void; (3) Besides as
correctly pointed out by the Assistant Solicitor General the decision of the Presidential
Anti-Dollar Salting Task Force is appealable to the Office of the President.

On November 12, 1986, Karamfil Import-Export Co., Inc. sought a reconsideration. The
Court of Appeals, on Karamfil's motion, reversed itself and issued its Resolution, dated
September 1987, and subsequently, its Resolution, dated May 20, 1988, denying the
petitioner's motion for reconsideration.
(iv) Is the Presidential Anti-Dollar Salting Task Force a quasi-judicial body, and one
co-equal in rank and standing with the Regional Trial Court, and accordingly,
beyond the latter's jurisdiction; and
(v) May the said presidential body be said to be "such other responsible officer as may
be authorized by law" to issue search warrants under the 1973 Constitution

Petition is DISMISSED.
(vi) This Court finds the Appellate Court to be in error, since what the petitioner puts
to question is the Regional Trial Court's act of assuming jurisdiction over the private
respondent's petition below and its subsequent countermand of the Presidential
Anti-Dollar Salting Task Force's orders of search and seizure, for the reason that the
presidential body, as an entity (allegedly) coordinate and co-equal with the Regional
Trial Court, was (is) not vested with such a jurisdiction. An examination of the
Presidential Anti-Dollar Salting Task Force's petition shows indeed its recognition of
judicial review (of the acts of Government) as a basic privilege of the courts. Its
objection, precisely, is whether it is the Regional Trial Court, or the superior courts,
that may undertake such a review.
As a rule, where legislation provides for an appeal from decisions of certain
administrative bodies to the Court of Appeals, it means that such bodies are coequal with the Regional Trial Courts, in terms of rank and stature, and logically,
beyond the control of the latter.
A quasi-judicial body has been defined as "an organ of government other than a
court and other than a legislature, which affects the rights of private parties through
either adjudication or rule making. As may be seen, it is the basic function of these
bodies to adjudicate claims and/or to determine rights, and unless its decision are
seasonably appealed to the proper reviewing authorities, the same attain finality and
become executory. A perusal of the Presidential Anti-Dollar Salting Task Force's
organic act, Presidential Decree No. 1936, as amended by Presidential Decree No.
2002, convinces the Court that the Task Force was not meant to exercise quasijudicial functions, that is, to try and decide claims and execute its judgments. As the
President's arm called upon to combat the vice of "dollar salting" or the

blackmarketing and salting of foreign exchange, it is tasked alone by the Decree to

handle the prosecution of such activities, but nothing more. Sec. 1 of PD 1936 will
reveal a legislative intendment to confer it with quasi-judicial responsibilities relative
to offenses punished by Presidential Decree No. 1883. Its undertaking, as we said,
is simply, to determine whether or not probable cause exists to warrant the filing of
charges with the proper court, meaning to say, to conduct an inquiry preliminary to a
judicial recourse, and to recommend action "of appropriate authorities.
If the Presidential Anti-Dollar Salting Task Force is not, hence, a quasi-judicial body,
it cannot be said to be co-equal or coordinate with the Regional Trial Court. There is
nothing in its enabling statutes that would demonstrate its standing at par with the
said court. In that respect, we do not find error in the respondent Court of Appeal's
resolution sustaining the assumption of jurisdiction by the court a quo.
(vii) We agree that the PADS Task Force exercises, or was meant to exercise,
prosecutorial powers, and on that ground, it cannot be said to be a neutral and
detached "judge" to determine the existence of probable cause for purposes of
arrest or search. Unlike a magistrate, a prosecutor is naturally interested in the
success of his case. Although his office "is to see that justice is done and not
necessarily to secure the conviction of the person accused," he stands, invariably,
as the accused's adversary and his accuser. To permit him to issue search warrants
and indeed, warrants of arrest, is to make him both judge and jury in his own right,
when he is neither. That makes, to our mind and to that extent, Presidential Decree
No. 1936 as amended by Presidential Decree No. 2002, unconstitutional.
It is our ruling, thus, that when the 1973 Constitution spoke of "responsible officer" to
whom the authority to issue arrest and search warrants may be delegated by
legislation, it did not furnish the legislator with the license to give that authority to
whomsoever it pleased. It is to be noted that the Charter itself makes the
qualification that the officer himself must be "responsible". We are not saying, of
course, that the PADS Task Force (or any similar prosecutor) is or has been
irresponsible in discharging its duty. Rather, we take "responsibility", as used by the
Constitution, to mean not only skill and competence but more significantly, neutrality
and independence comparable to the impartiality presumed of a judicial officer. A
prosecutor can in no manner be said to be possessed of the latter qualities.

De La Llana v. Alba
GR No. L-57883
March 12, 1982
As well-settled as the rule that the abolition of an office does not amount to an illegal
removal of its incumbent is the principle that, in order to be valid, the abolition must be
made in good faith.
In 1981, BP 129, entitled An Act Reorganizing the Judiciary, Appropriating Funds
Therefor and for Other Purposes, was passed. The assailed legislation mandates that
Justices and judges of inferior courts from the Court of Appeals to municipal circuit
courts, except the occupants of the Sandiganbayan and the Court of Tax Appeals,
unless appointed to the inferior courts established by such Act, would be considered
separated from the judiciary. It is the termination of their incumbency that for
petitioners justifies a suit of this character, it being alleged that thereby the security of
tenure provision of the Constitution has been ignored and disregarded. To be more
specific, petitioners contend that the abolition of the existing inferior courts collides with
the security of tenure enjoyed by incumbent Justices and judges under Article X ,
Section 7 of the Constitution.
1. WON BP 129 is unconstitutional
2. WON Judge De La Llana can be validly removed by the legislature by such statute
(BP 129)
1. Batas Pambansa Blg. 129 is not unconstitutional. It is likewise undeniable that the
Batasang Pambansa retains its full authority to enact whatever legislation may be
necessary to carry out national policy as usually formulated in a caucus of the majority
party. It is understandable then why in Fortun v. Labang 73 it was stressed that with
the provision transferring to the Supreme Court administrative supervision over the
Judiciary, there is a greater need "to preserve unimpaired the independence of the
judiciary, especially so at present, where to all intents and purposes, there is a fusion
between the executive and the legislative branches.
To be specific, the Batasang Pambansa is expressly vested with the authority to
reorganize inferior courts and in the process to abolish existing ones.

2. Nothing is better settled in our law than that the abolition of an office within the
competence of a legitimate body if done in good faith suffers from no infirmity. The
ponencia of Justice J.B.L. Reyes in Cruz v. Primicias, Jr. 38 reiterated such a doctrine:
"We find this point urged by respondents, to be without merit. No removal or separation
of petitioners from the service is here involved, but the validity of the abolition of their
offices. This is a legal issue that is for the Courts to decide. It is well-known rule also
that valid abolition of offices is neither removal nor separation of the incumbents. ...
And, of course, if the abolition is void, the incumbent is deemed never to have ceased
to hold office. The preliminary question laid at rest, we pass to the merits of the case.
As well-settled as the rule that the abolition of an office does not amount to an illegal
removal of its incumbent is the principle that, in order to be valid, the abolition must be
made in good faith.
Removal is, of course, to be distinguished from termination by virtue of the abolition of
the office. There can be no tenure to a non-existent office. After the abolition, there is
in law no occupant. I n case of removal, there is an office with an occupant who would
thereby lose his position. It is in that sense that from the standpoint of strict law, the
question of any impairment of security of tenure does not arise

Medalla vs. Sayo (103 Phil. 587)

LIMITATIONS THEREON; CASE AT BAR. Under the Revised Charter of the City of
Caloocan (RA No. 5502), it is clear that the power of appointment by the City Mayor of
heads of offices entirely paid out of city funds is subject to Civil Service law, rules and
regulations (ibid., section 19). The Caloocan City General Hospital is one of the city
departments provided for in said law (ibid., section 17). The Hospital Administrator is
appointed by the City Mayor (ibid., section 66-B).
FACTS: Petitioner, Dr. Eustaquio M. Medalla, Jr, is the chief of clinics of the Caloocan
City general Hospital, Caloocan city. Private respondent Dr. Honorato G. Mackay was
the Resident Physician thereat. When the position of assistant, hospital administrator
of the Caloocan City general hospital became vacant upon the resignation of the
incumbent, former Caloocan city mayor Alejandro A. Fider designated and
subsequently appointed, as assistant hospital administrator private respondent Dr.
Mackay, a Resident Physician in said hospital. Petitioner, Dr. Medalla, Jr, Protested Dr.
Mackay designation and subsequent appointment alleging among others that, chief of
clinics, he (Medalla) was next-in-rank, the then acting city Mayor Virgililo P. Robles,
who succeeded former mayor, now Assemblyman Alejandro A. Fider, in his 4th
endorsement dated September 20,1978, sustained Mackay appointment state that as
of April 18, 1978 when Dr. Honorato G. Mackay was promoted to assistant hospital
administrator from his previous position of Resident Physician, he was next in rank to
the said higher position by reason of his having completed all academic requirements
for the certificate in Hospital administration contrary to the claim of Dr. Eustaquio
Medalla, Jr. in his letter of May 2, 1978.
ISSUE: Whether or not that appointment of Dr. Honorato G. Mackay as assistant
hospital Administrator is valid
HELD: When a presidential act is challenged before the court of justice, it is not to be
implied there from that the executive is being made subject and subordinate to courts
the legality of his acts are under judicial review, not because the executive is inferior to
the courts, but because the law is above the chief executive himself, and the court
seek only to interpret, apply or implement it a judicial review of the President decision
of a case of an employee decided by the civil service board of appeals should be
viewed in this light and the bringing of the case to the courts should be governed by
the same principles as govern the judicial review of all administrative act of all
administrative officer. The court may always examine into the exercise of power by a
ministerial officer to the extent of determining whether it is a legal power that could

have been granted to him and whether it has been exercised in a legal manner. And
under the civil service section 19 (3) of the civil service PD no. 807 the recruitment of
selection of employees for promotion is drawn from the next in rank.
The Supreme Court upheld the jurisdiction of the Court of First Instance to review by
Certioraridecisions and/or resolutions of the Civil Service Commission and of the
Presidential Executive Assistant; but rather than remanding the case for further
proceedings decided the case on the merits holding, that no grave abuse of discretion
was committed by the Civil Service Commission and the Presidential Executive
Assistant since (1) the appointing power of the City Mayor is subject to the next-in-rank
rule of the Civil Service law, rules and regulations; (2) the petitioner has followed the
prescribed administrative procedure for redress of his grievance; and (3) the assailed
Decision contains a judicious assessment of the qualifications of both the contenders
for the position.

Lianga Bay Logging v Enage

FACTS: The parties herein are both forest concessionaries whose licensed areas are
adjacent to each other. Since the concessions of petitioner and respondent are
adjacent to each other, they have a common boundary-the Agusan-Surigao Provincial
boundary-whereby the eastern boundary of respondent Ago's concession is petitioner
Lianga's western boundary. Because of reports of encroachment by both parties on
each other's concession areas, the Director of Forestry ordered a survey to establish
on the ground the common boundary of their respective concession areas. The
decision fixed the common boundary of the licensed areas of the Ago Timber
Corporation and Lianga Bay Logging Co., Inc. as that indicated in red pencil of the
sketch attached to the decision. In an appeal interposed by respondent Ago,
docketed in the Department of Agriculture and Natural Resources, then Acting
Secretary of Agriculture and Natural Resources Jose Y. Feliciano, in a decision
dated August 9, 1965ruled that the common boundary line of the licensed areas of the
Ago Timber Corporation and the Lianga Bay Logging Co., Inc., should be that indicated
by the green line on the same sketch which had been made an integral part of the
appealed decision. Petitioner elevated the case to the Office of the President and was
affirmed. On motion for reconsideration the Office of the President issued another
decision dated August 9, 1968 reversing and overturning the decision of the then
Acting Secretary of Agriculture and Natural Resources and affirming in toto and
reinstating thedecision, dated March 20, 1961, of the Director of Forestry. Thereafter,
Ago brought the action in the Court of First Instance of Agusan.
ISSUE: Whether or not CFI has the authority to hear the case
HELD: No. The Court holds that respondent judge, absent any showing of grave abuse
of discretion, has no competence nor authority to review anew the decision in
administrative proceedings of respondents public officials (director of forestry,
secretary of agricultureand natural resources and assistant executive secretaries of
the Office of the President) in determining the correct boundary line of the licensed
timber areas of the contending parties. The Court reaffirms the established principle
that findings of fact by an administrative board or agency or official, following a hearing,
are binding upon the courts and will not be disturbed except where the board, agency
and/or official(s) have gone beyond their statutory authority, exercised unconstitutional
powers or clearly acted arbitrarily and without regard to their duty or with grave abuse
of discretion.


[ G.R. No. L-75697; June 18, 1987 ]
In the year 1986, Presidential Decree No. 1987 entitled An Act Creating the
Videogram Regulatory Board was enacted with broad powers to regulate and
supervise the videogram industry.
The rationale behind the enactment of the DECREE, is set out in its preambular
clauses as follows:
1. WHEREAS, the proliferation and unregulated circulation of videograms
including, among others, videotapes, discs, cassettes or any technical
improvement or variation thereof, have greatly prejudiced the operations of
moviehouses and theaters, and have caused a sharp decline in theatrical
attendance by at least forty percent (40%) and a tremendous drop in the
collection of sales, contractor's specific, amusement and other taxes, thereby
resulting in substantial losses estimated at P450 Million annually in government
2. WHEREAS, videogram(s) establishments collectively earn around P600
Million per annum from rentals, sales and disposition of videograms, and such
earnings have not been subjected to tax, thereby depriving the Government of
approximately P180 Million in taxes each year;
3. WHEREAS, the unregulated activities of videogram establishments have also
affected the viability of the movie industry, particularly the more than 1,200 movie
houses and theaters throughout the country, and occasioned industry-wide
displacement and unemployment due to the shutdown of numerous moviehouses
and theaters;
4. "WHEREAS, in order to ensure national economic recovery, it is imperative for
the Government to create an environment conducive to growth and development
of all business industries, including the movie industry which has an accumulated
investment of about P3 Billion;
5. WHEREAS, proper taxation of the activities of videogram establishments will
not only alleviate the dire financial condition of the movie industry upon which

more than 75,000 families and 500,000 workers depend for their livelihood, but
also provide an additional source of revenue for the Government, and at the
same time rationalize the heretofore uncontrolled distribution of videograms;
6. WHEREAS, the rampant and unregulated showing of obscene videogram
features constitutes a clear and present danger to the moral and spiritual wellbeing of the youth, and impairs the mandate of the Constitution for the State to
support the rearing of the youth for civic efficiency and the development of moral
character and promote their physical, intellectual, and social well-being;
7. WHEREAS, civic-minded citizens and groups have called for remedial
measures to curb these blatant malpractices which have flaunted our censorship
and copyright laws;
8. WHEREAS, in the face of these grave emergencies corroding the moral
values of the people and betraying the national economic recovery program, bold
emergency measures must be adopted with dispatch; ... (Numbering of
paragraphs supplied).
In 1986, petitioner Valentin Tio assailed the said PD as he averred that it is
unconstitutional. Among others, Tio also raises the issue that there is an undue
delegation of legislative power to the Board, an administrative body, because the law
allowed the VRB to deputize, upon its discretion, other government agencies to
assist the VRB in enforcing the said Decree.

Whether or not there was an undue delegation of power and authority
No. The grant in Section 11 of the Decree of authority to the Board to solicit the direct
assistance of other agencies and units of the government and deputize, for a fixed and
limited period, the heads or personnel of such agencies and units to perform
enforcement functions for the Board is not a delegation of the power to legislate
but merely a conferment of authority or discretion as to its execution,
enforcement, and implementation.

The true distinction is between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and conferring authority or
discretion as to its execution to be exercised under and in pursuance of the law. The
first cannot be done; to the latter, no valid objection can be made.

Besides, in the very language of the decree, the authority of the BOARD to solicit such
assistance is for a fixed and limited period with the deputized agencies concerned
being subject to the direction and control of the BOARD. That the grant of such
authority might be the source of graft and corruption would not stigmatize the DECREE
as unconstitutional. Should the eventuality occur, the aggrieved parties will not be
without adequate remedy in law.

CASE #12
DOCTRINE: The CSC has the power to regulate the retirement of government
personnel pursuant to Sec. 11 of the Administrative Code and the Constitution.
Petitioners Dionisio Rabor, a Utility Worker in the Office of the Mayor, Davao City,
filed a petition assailing his compulsory retirement at the age of 65 with 13 years and 1
month of government service. He argued that based on the Courts previous ruling in
Cena vs CSC, he is entitled for an extension of his service to comply with the 15-year
service requirement for government pension.
In Cena vs CSC, the Court held that a government employee who has reached
the compulsory retirement age of sixty-five (65) years, but at the same time has not yet
completed fifteen (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 fifteen (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.
WON petitioner Rabor is entitled for extension of his government service in
accordance to the ruling in Cena vs CSC?
NO. The Court abandoned its ruling in Cena vs CSC. It held that Cena wrongly
invalidated Civil Service Commission Circular No. 27 series of 1990 which, amongst
others, 1) limited the request for the extension of service of compulsory retirees to
complete the fifteen (15) years service requirement for retirement 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,
and 2) prohibited the granting of extension to those employees who entered the
government service at 57 years of age. The Court in Cena explained that CSC Circular
No. 27 is againsth the plain letter of Sec. 11 of PD 1146.
In the case at bar, the Court held that the CSC validly promulgated CSC Circular
No. 27 series of 1990 not based on PD 1146 but on Section 11 of the Administrative

Code wherein the Commission was acting as "the central personnel agency of the
government empowered to promulgate policies, standards and guidelines for efficient,
responsive and effective personnel administration in the government." It was also
discharging its function of "administering the retirement program for government
officials and employees" and of "evaluat[ing] qualifications for retirement."
Moreover, the Court abandoned its ruling in Cena based on policy reasons in
order to avoid an absurd situation wherein a person sixty-four (64) years of age may be
appointed to the government service and one (1) year later may demand extension of
his service for the next fourteen (14) years; he would retire at age seventy-nine (79).
The net effect of such ruling is that the general statutory policy of compulsory
retirement at sixty-five (65) years is heavily eroded and effectively becomes

Philippine Airlines vs. Civil Aeronautics Board

Facts: On November 24, 1994, Grand Air Applied for a Certificate of Public
Convenience and Necessity (CPCN) with the Board, which application was docketed
as CAB Case No. EP-12711. According, the Chief Hearing Officer of the CAB issued a
Notice of Hearing setting the application for initial hearing on December 16,1994, and
directing Grand Air to serve a copy of the application and corresponding notice to all
scheduled Philippine Domestic operators. On December 14,1994, Grand Air filed its
Compliance, and requested for the issuance of a Temporary Operating Permit. PAL, a
holder of a legislative franchise to operate air transport services, filed an Opposition to
the application for a CPCN on December 16, 1994 on the following grounds:

a. The CAB has no jurisdiction to hear the petitioners application until the latter has
first obtained a franchise to operate from Congress.


At the initial hearing for the application, petitioner raised the issue of lack of
jurisdiction of the Board to hear the application because the Grand Air did not possess
a legislative franchise.

On December 20, 1994, the Chief Hearing Officer of CAB issued an Order
denying petitioners Opposition. Pertinent portions of the Order read:

PAL alleges that the CAB has no jurisdiction to hear the petitioners application
until the latter has first obtained a franchise to operate from Congress.

The CAB has jurisdiction to hear and resolve the application. In Avia Filipina vs.
CAB, it has been ruled that under Sec 10 (c) (I) of R.A. 776, the Board possesses this
specific power and duty.

In view thereof, the opposition of PAL on this ground is hereby denied.

Issue: Whether or not CAB has jurisdiction to hear the petitioners application to
engage in scheduled domestic air transportation services.

Held: "The franchise is a legislative grant, whether made directly by the legislature
itself, or by any one of its properly constituted instrumentalities. The grant, when made,
binds the public, and is, directly or indirectly, the act of the state."
The issue in this petition is whether or not Congress, in enacting Republic Act 776,
has delegated the authority to authorize the operation of domestic air transport
services to the respondent Board, such that Congressional mandate for the approval of
such authority is no longer necessary.
Congress has granted certain administrative agencies the power to grant licenses
for, or to authorize the operation of certain public utilities. With the growing complexity
of modern life, the multiplication of the subjects of governmental regulation, and the
increased difficulty of administering the laws, there is a constantly growing tendency
towards the delegation of greater powers by the legislature, and towards the approval
of the practice by the courts. It is generally recognized that a franchise may be derived
indirectly from the state through a duly designated agency, and to this extent, the
power to grant franchises has frequently been delegated, even to agencies other than
those of a legislative nature.In pursuance of this, it has been held that privileges
conferred by grant by local authorities as agents for the state constitute as much a
legislative franchise as though the grant had been made by an act of the Legislature.

The Court finds that the Civil Aeronautics Board has the authority to issue a
Certificate of Public Convenience and Necessity, or Temporary Operating Permit to a
domestic air transport operator, who, though not possessing a legislative franchise,
meets all the other requirements prescribed by the law. Such requirements were
enumerated in Section 21 of R.A. 776.
There is nothing in the law nor in the Constitution, which indicates that a legislative
franchise is an indispensable requirement for an entity to operate as a domestic air
transport operator. Although Section 11 of Article XII recognizes Congress' control over
any franchise, certificate or authority to operate a public utility, it does not mean

Congress has exclusive authority to issue the same. Franchises issued by Congress
are not required before each and every public utility may operate. In many instances,
Congress has seen it fit to delegate this function to government agencies, specialized
particularly in their respective areas of public service.
A reading of Section 10 of the same reveals the clear intent of Congress to
delegate the authority to regulate the issuance of a license to operate domestic air
transport services:
SECTION 10. Powers and Duties of the Board. (A) Except as otherwise provided
herein, the Board shall have the power to regulate the economic aspect of air
transportation, and shall have general supervision and regulation of, the jurisdiction
and control over air carriers, general sales agents, cargo sales agents, and air freight
forwarders as well as their property rights, equipment, facilities and franchise, insofar
as may be necessary for the purpose of carrying out the provision of this Act.
In support of the Board's authority as stated above, it is given the following specific
powers and duties:
(C) The Board shall have the following specific powers and duties:
(1) In accordance with the provisions of Chapter IV of this Act, to issue, deny, amend,
revise, alter, modify, cancel, suspend or revoke in whole or in part upon petition or
complaint or upon its own initiative any Temporary Operating Permit or Certificate of
Public Convenience and Necessity: Provided however, That in the case of foreign air
carriers, the permit shall be issued with the approval of the President of the Republic of
the Philippines.
Many and varied are the definitions of certificates of public convenience which
courts and legal writers have drafted. Some statutes use the terms "convenience and
necessity" while others use only the words "public convenience." The terms
"convenience and necessity", if used together in a statute, are usually held not to be
separable, but are construed together. Both words modify each other and must be
construed together. The word 'necessity' is so connected, not as an additional
requirement but to modify and qualify what might otherwise be taken as the strict
significance of the word necessity. Public convenience and necessity exists when the
proposed facility will meet a reasonable want of the public and supply a need which the
existing facilities do not adequately afford. It does not mean or require an actual
physical necessity or an indispensable thing.
"The terms 'convenience' and 'necessity' are to be construed together, although they
are not synonymous, and effect must be given both. The convenience of the public
must not be circumscribed by according to the word 'necessity' its strict meaning or an
essential requisites.

The use of the word "necessity", in conjunction with "public convenience" in a

certificate of authorization to a public service entity to operate, does not in any way
modify the nature of such certification, or the requirements for the issuance of the
same. It is the law which determines the requisites for the issuance of such certification,
and not the title indicating the certificate.
Congress, by giving the respondent Board the power to issue permits for the
operation of domestic transport services, has delegated to the said body the authority
to determine the capability and competence of a prospective domestic air transport
operator to engage in such venture. This is not an instance of transforming the
respondent Board into a mini-legislative body, with unbridled authority to choose who
should be given authority to operate domestic air transport services.
"To be valid, the delegation itself must be circumscribed by legislative restrictions, not
a "roving commission" that will give the delegate unlimited legislative authority. It must
not be a delegation "running riot" and "not canalized with banks that keep it from
overflowing." Otherwise, the delegation is in legal effect an abdication of legislative
authority, a total surrender by the legislature of its prerogatives in favor of the
Congress, in this instance, has set specific limitations on how such authority should
be exercised.
Firstly, Section 4 of R.A. No. 776, as amended, sets out the following guidelines or
"SECTION 4. Declaration of policies. In the exercise and performance of its powers
and duties under this Act, the Civil Aeronautics Board and the Civil Aeronautics
Administrator shall consider the following, among other things, as being in the public
interest, and in accordance with the public convenience and necessity:
(a) The development and utilization of the air potential of the Philippines;
(b) The encouragement and development of an air transportation system properly
adapted to the present and future of foreign and domestic commerce of the Philippines,
of the Postal Service and of the National Defense;
(c) The regulation of air transportation in such manner as to recognize and preserve
the inherent advantages of, assure the highest degree of safety in, and foster sound
economic condition in, such transportation, and to improve the relations between, and
coordinate transportation by, air carriers;
(d) The promotion of adequate, economical and efficient service by air carriers at
reasonable charges, without unjust discriminations, undue preferences or advantages,
or unfair or destructivecompetitive practices;

(e) Competition between air carriers to the extent necessary to assure the sound
development of an air transportation system properly adapted to the need of the
foreign and domestic commerce of the Philippines, of the Postal Service, and of the
National Defense;
(f) To promote safety of flight in air commerce in the Philippines; and,
(g) The encouragement and development of civil aeronautics.
More importantly, the said law has enumerated the requirements to determine the
competency of a prospective operator to engage in the public service of air
SECTION 12. Citizenship requirement. Except as otherwise provided in the
Constitution and existing treaty or treaties, a permit authorizing a person to engage in
domestic air commerce and/or air transportation shall be issued only to citizens of the
SECTION 21. Issuance of permit. The Board shall issue a permit authorizing the whole
or any part of the service covered by the application, if it finds: (1) that the applicant is
fit, willing and able to perform such service properly in conformity with the provisions of
this Act and the rules, regulations, and requirements issued thereunder; and (2) that
such service is required by the public convenience and necessity; otherwise the
application shall be denied.
Furthermore, the procedure for the processing of the application of a Certificate of
Public Convenience and Necessity had been established to ensure the weeding out of
those entities that are not deserving of public service.
In sum, respondent Board should now be allowed to continue hearing the
application of GrandAir for the issuance of a Certificate of Public Convenience and
Necessity, there being no legal obstacle to the exercise of its jurisdiction.

14. FACTS: In July 1919, the Philippine Legislature (during special session) passed
and approved Act No. 2868 entitled An Act Penalizing the Monopoly and Hoarding of
Rice, Palay and Corn. The said act, under extraordinary circumstances, authorizes the
Governor General (GG) to issue the necessary Rules and Regulations in regulating the
distribution of such products. Pursuant to this Act, in August 1919, the GG issued
Executive Order No. 53 which was published on August 20, 1919. The said EO fixed
the price at which rice should be sold. On the other hand, Ang Tang Ho, a rice dealer,
sold a ganta of rice to Pedro Trinidad at the price of eighty centavos. The said amount
was way higher than that prescribed by the EO. The sale was done on the 6th of
August 1919. On August 8, 1919, he was charged for violation of the said EO. He was
found guilty as charged and was sentenced to 5 months imprisonment plus a P500.00
fine. He appealed the sentence countering that there is an undue delegation of power
to the Governor General.

ISSUE: Whether or not there is undue delegation to the Governor General.

HELD: First of, Ang Tang Hos conviction must be reversed because he committed the
act prior to the publication of the EO. Hence, he cannot be ex post facto charged of the
crime. Further, one cannot be convicted of a violation of a law or of an order issued
pursuant to the law when both the law and the order fail to set up an ascertainable
standard of guilt.

Anent the issue of undue delegation, the said Act wholly fails to provide definitely and
clearly what the standard policy should contain, so that it could be put in use as a
uniform policy required to take the place of all others without the determination of the
insurance commissioner in respect to matters involving the exercise of a legislative
discretion that could not be delegated, and without which the act could not possibly be
put in use. The law must be complete in all its terms and provisions when it leaves the
legislative branch of the government and nothing must be left to the judgment of the
electors or other appointee or delegate of the legislature, so that, in form and
substance, it is a law in all its details in presenti, but which may be left to take effect in
future, if necessary, upon the ascertainment of any prescribed fact or event.


IV, ILOILO CITY, respondents.
Petitioner in this case transported six carabaos in a pump boat from Masbate to Iloilo
on January 13, 1984, when they were confiscated by the police station commander of
Barotac Nuevo, Iloilo for the violation of E.O. No. 626-A which prohibits the slaughter of
carabaos except under certain conditions. Petitioner sued for recovery, and the trial
Court of Iloilo issued a writ of replevin upon his filing of a supersedeas bond of twelve
thousand pesos (P 12, 000.00). After considering the merits of the case, the court
sustained the confiscation of the said carabaos and, since they could no longer be
produced, ordered the confiscation of the bond. The court also declined to rule on the
constitutionality of the E.O, as raised by the petitioner, for lack of authority and also for
its presumed validity.
Whether or not the said Executive Order is unconstitutional.
Yes, though police power was invoked by the government in this case for the reason
that the present condition demand that the carabaos and the buffaloes be conserved
for the benefit of the small farmers who rely on them for energy needs, it does not
however, comply with the second requisite for a valid exercise of the said power which
is, "that there be a lawful method." The reasonable connection between the means
employed and the purpose sought to be achieved by the questioned measure is
The challenged measure is an invalid exercise of Police power because the method
employed to conserve the carabaos is not reasonably necessary to the purpose of the
law and, worse, is unduly oppressive. To justify the State in the imposition of its
authority in behalf of the public, it must be:
1) The interest of the public generally, as distinguished from those of a particular class,
require such interference;
2) that the means employed are reasonably necessary for the accomplishment of the
purpose, and not unduly oppressive upon individuals.


15 SCRA 569
FACTS: During the period from September 4 to October 29, 1964 the President of the
Philippines, purporting to act pursuant to Section 68 of the Revised Administrative
Code, issued Executive Orders Nos. 93 to 121, 124 and 126 to 129; creating thirtythree (33) municipalities enumerated in the margin. Soon after the date last mentioned,
or on November 10, 1964 petitioner Emmanuel Pelaez, as Vice President of the
Philippines and as taxpayer, instituted the present special civil action, for a writ of
prohibition with preliminary injunction, against the Auditor General, to restrain him, as
well as his representatives and agents, from passing in audit any expenditure of public
funds in implementation of said executive orders and/or any disbursement by said
Petitioner alleges that said executive orders are null and void, upon the ground that
said Section 68 has been impliedly repealed by Republic Act No. 2370 and constitutes
an undue delegation of legislative power.
Said Section 68 of the Revised Administrative Code empowers the President of the
Philippines by executive order to define the boundary, or boundaries, of any province,
subprovince, municipality, [township] municipal district, or other political subdivision,
and increase or diminish the territory comprised therein, may divide any province into
one or more subprovinces, separate any political division other than a province, into
such portions as may be required, merge any of such subdivisions or portions with
another, name any new subdivision so created, and may change the seat of
government within any subdivision to such place therein as the public welfare may
ISSUE: Whether or not the provision in question constitute an undue delegation of
legislative power
RULING: Yes. The authority to create municipal corporations is essentially legislative
in nature. As the Supreme Court of Washington has put it "municipal corporations are
purely the creatures of statutes." It is obvious, however, that, whereas the power to fix
such common boundary, in order to avoid or settle conflicts of jurisdiction between
adjoining municipalities, may partake of an administrative nature involving, as it
does, the adoption of means and ways to carry into effect the law creating said
municipalities the authority to create municipal corporations is essentially legislative
in nature.
Although Congress may delegate to another branch of the Government the power to fill
in the details in the execution, enforcement or administration of a law, it is essential, to
forestall a violation of the principle of separation of powers, that said law: (a) be
complete in itself it must set forth therein the policy to be executed, carried out or
implemented by the delegate and (b) fix a standard the limits of which are
sufficiently determinate or determinable to which the delegate must conform in the
performance of his functions.

Indeed, without a statutory declaration of policy, the delegate would in effect, make or
formulate such policy, which is the essence of every law; and, without the
aforementioned standard, there would be no means to determine, with reasonable
certainty, whether the delegate has acted within or beyond the scope of his authority.
Hence, he could thereby delegate upon himself the power, not only to make the law,
but, also and this is worse to unmake it, by adopting measures inconsistent with
the end sought to be attained by the Act of Congress, thus nullifying the principle of
separation of powers and the system of checks and balances, and, consequently,
undermining the very foundation of our Republican system.
Section 68 of the Revised Administrative Code does not meet these well settled
requirements for a valid delegation of the power to fix the details in the enforcement of
a law. It does not enunciate any policy to be carried out or implemented by the
President. Neither does it give a standard sufficiently precise to avoid the evil effects
above referred to. In this connection, we do not overlook the fact that, under the last
clause of the first sentence of Section 68, the President:
... may change the seat of the government within any subdivision to such place therein
as the public welfare may require.
It is apparent, however, from the language of this clause, that the phrase "as the public
welfare may require" qualified, not the clauses preceding the one just quoted, but only
the place to which the seat of the government may be transferred. At any rate, the
conclusion would be the same, insofar as the case at bar is concerned, even if we
assumed that the phrase "as the public welfare may require," in said Section 68,
qualifies all other clauses thereof. In Section 68, as above indicated, the creation of
municipalities, is not an administrative function, but one which is essentially and
eminently legislative in character. The question of whether or not "public interest"
demands the exercise of such power is not one of fact. it is "purely a legislative
question ".
For this reason, courts of justice have annulled, as constituting undue delegation of
legislative powers, state laws granting the judicial department, the power to determine
whether certain territories should be annexed to a particular municipality or vesting in a
Commission the right to determine the plan and frame of government of proposed
villages and what functions shall be exercised by the same, although the powers and
functions of the village are specifically limited by statute or conferring upon courts the
authority to declare a given town or village incorporated, and designate its metes and
bounds, upon petition of a majority of the taxable inhabitants thereof, setting forth the
area desired to be included in such village or authorizing the territory of a town,
containing a given area and population, to be incorporated as a town, on certain steps
being taken by the inhabitants thereof and on certain determination by a court and
subsequent vote of the inhabitants in favor thereof, insofar as the court is allowed to
determine whether the lands embraced in the petition "ought justly" to be included in
the village, and whether the interest of the inhabitants will be promoted by such
incorporation, and to enlarge and diminish the boundaries of the proposed village "as
justice may require" or creating a Municipal Board of Control which shall determine

whether or not the laying out, construction or operation of a toll road is in the "public
interest" and whether the requirements of the law had been complied with, in which
case the board shall enter an order creating a municipal corporation and fixing the
name of the same.
To summarize and conclude upon this point: Sec. 3 of the Recovery Act is without
precedent. It supplies no standards for any trade, industry or activity. It does not
undertake to prescribe rules of conduct to be applied to particular states of fact
determined by appropriate administrative procedure. Instead of prescribing rules of
conduct, it authorizes the making of codes to prescribe them. For that legislative
undertaking, Sec. 3 sets up no standards, aside from the statement of the general aims
of rehabilitation, correction and expansion described in Sec. 1. In view of the scope of
that broad declaration, and of the nature of the few restrictions that are imposed, the
discretion of the President in approving or prescribing codes, and thus enacting laws
for the government of trade and industry throughout the country, is virtually unfettered.
We think that the code making authority thus conferred is an unconstitutional
delegation of legislative power.
If the term "unfair competition" is so broad as to vest in the President a discretion that
is "virtually unfettered." and, consequently, tantamount to a delegation of legislative
power, it is obvious that "public welfare," which has even a broader connotation, leads
to the same result. In fact, if the validity of the delegation of powers made in Section 68
were upheld, there would no longer be any legal impediment to a statutory grant of
authority to the President to do anything which, in his opinion, may be required by
public welfare or public interest. Such grant of authority would be a virtual abdication of
the powers of Congress in favor of the Executive, and would bring about a total
collapse of the democratic system established by our Constitution, which it is the
special duty and privilege of this Court to uphold.
RATIO: Accordingly, in delegating powers to administrative bodies, the legislature must
ordinarily prescribe a policy, standard, or rule for their guidance and must not vest
them with an arbitrary and uncontrolled discretion with regard thereto, and a statute
which is deficient in this respect is invalid.