PBCOM vs. COMMISSIONER OF INTERNAL REVENUE
TORRES
FACTS:
PBCom, is organized under Philippine laws, filed its income tax returns and
paid the BIR however, PBCom suffered losses so it declared a net loss thus no
income tax liability. For the succeeding year, they likewise reported a net loss again
and declared no tax payable for the year.
But during these two years, PBCom earned rental income from leased properties.
The leases withheld and remitted to the BIR withholding creditable taxes. PBC filed
a claim for refund.
Court of Tax Appeals denied the request of PBCom for a tax refund or credit
on the ground that it was filed beyond the two-year reglamentary period provided for
by law. PBCom argues that the government is barred from asserting a position
contrary to its declared circular if it would result to injustice to taxpayers..
ISSUE:
Whether or not Revenue Regulations No. 7-85 which alters the
reglementary period from two (2) years to ten (10) years is valid.
RULING:
NO. Invalid ang RR No. 7-85. The changing of the prescriptive period from
10 to 2 years by the Acting Commissioner of Internal Revenue created a clear
inconsistency with the provision of Nat’l Internal Revenue Code.
In so doing, the BIR did not simply interpret the law; rather it legislated
guidelines contrary to the statute passed by Congress.
Revenue memorandum-circulars are considered administrative rulings which are
issued from time to time by the Commissioner of Internal Revenue. Nevertheless, if
such interpretation is not conclusive, it will be ignored if judicially found to be
erroneous.
Thus, courts will invalidate administrative issuances that override the law
they seek to apply and implement. Such cannot be given weight.
Administrative issuances are merely interpretations and not expansions of
the provisions of law, thus, in case of inconsistency, the law prevails over them.
Administrative agencies have no legislative power.
BLAS F. OPLE vs.
FACTS:
Senator Blas F. Ople prays to invalidate Administrative Order No. 308
entitled "Adoption of a National Computerized Identification Reference
System" issued by Pres. Ramos on two important constitutional grounds: one, it is
a usurpation of the power of Congress to legislate, and two, it impermissibly intrudes
the right to privacy.
A.O. No. 308 was published in four newspapers of general circulation.
ISSUES:
Is the issuance of AO 308 by the president an unconstitutional usurpation
of the legislative powers of the congress.
RULING:
A.O. 308 is declared void and unconstitutional.
A.O. No. 308 involves a subject that is not appropriate to be covered by an
administrative order.
An administrative order is an ordinance issued by the President which
relates to specific aspects in the administrative operation of government. It must be
in harmony with the law and should be for the sole purpose of implementing the law
and carrying out the legislative policy.
Such System requires a delicate adjustment of various state policies — the
primacy of national security as said administrative order redefines the parameters
of some basic rights of our citizenry as well as the line that separates the
administrative power of the President to make rules and the legislative power of
Congress.
Under A.O. No. 308, a citizen cannot transact business with government agencies
delivering basic services to the people without the contemplated identification card.
No citizen will refuse to get this identification card for no one can avoid dealing with
government. It is thus clear as daylight that without the ID, a citizen will have difficulty
exercising his rights and enjoying his privileges. Given this reality, the contention
that A.O. No. 308 gives no right and imposes no duty cannot stand.
Regulations are not supposed to be a substitute for the general policy-making that
Congress enacts in the form of a public law. Although administrative regulations are
entitled to respect, the authority to prescribe rules and regulations is not an
independent source of power to make laws."
HON. RTC JUDGES DADOLE vs. COMMISSION ON AUDIT
FACTS:
In 1986, the RTC and MTC judges of Mandaue City started receiving
monthly allowances of P1,260 each through the yearly appropriation ordinance
enacted by the Sangguniang Panlungsod of the said city. Later, Mandaue City
increased the amount to P1,500 for each judge.
DBM issued the Local Budget Circular No. 55. It resulted for the
disallowances of the Judges of the excess of the amount authorized by said circular.
The additional monthly allowances of the judges shall be reduced to P1000 each.
They were also asked to reimburse the amount they received in excess of P1000
from the last six months.
ISSUE:
Whether or not Local Budget Circular No. 55 is void for going beyond the
supervisory powers of the President.
RULING:
Yes. Void. The DBM over-stepped its power of supervision over local
government units by imposing a prohibition that did not correspond with the law it
sought to implement. In other words, the prohibitory nature of the circular had no
legal basis. RA 7160, the law that supposedly serves as the legal basis of LBC
55, allows the grant of additional allowances to judges when the finances of
the city government allow. The said provision does not authorize setting a
definite maximum limit to the additional allowances granted to judges.
LGU are subject to the President's supervision only, not control, so long as
their acts are exercised within the sphere of their legitimate powers. The President
can only interfere in the affairs and activities of LGU if he or she finds that the latter
has acted contrary to law. Hence, any directive therefore by the President or any of
his or her alter egos seeking to alter the issues on local affairs of LGU is a patent
nullity because it violates the principle of local autonomy and separation of
powers of the executive and legislative departments in governing municipal
corporations.
In administrative law, supervision means overseeing or the power or
authority of an officer to see that subordinate officers perform their duties. If the latter
fail or neglect to fulfill them, the former may take such action or step as prescribed
by law to make them perform their duties.
Control, on the other hand, means the power of an officer to alter or
modify or nullify or set aside what a subordinate officer ha[s] done in the
performance of his duties and to substitute the judgment of the former for that of the
latter."
LUPANGCO et al vs. CA and PRC
FACTS:
PRC issued Reso No. 105 as parts of its "Additional Instructions to
Examinees," applying for admission to take the licensure examinations in
accountancy. The resolution prohibits the examinees to attend any review class or
receive any hand-out, review material, or any tip from any school during the 3 days
immediately preceding every examination day including examination day. Any
examinee violating this instruction shall be subject to the sanctions.
Reviewees filed with the RTC complaint against PRC to restrain the latter
from enforcing the said resolution and to declare the same unconstitutional. RTC
declared that it had jurisdiction to try the case and enjoined the respondent
commission from enforcing and giving effect to Resolution No. 105 which it found to
be unconstitutional. PRC filed with the CA a petition for the nullification of the Order
of the lower court, and such petition was granted.
ISSUE: Is the issuance of Resolution No. 105 a valid exercise of the quasi-
legislative power of the respondent PRC?
HELD: No, the issuance of Resolution No. 105 is not a valid exercise of the
quasi-legislative power of the respondent Professional Regulation Commission. It ia
unreasonable and arbitrary. It is unreasonable that an examinee cannot even attend
any review class, or receive any hand-out during the three days immediately
preceding examination day. The unreasonableness is more obvious in that one who
is caught will be barred from taking future examinations conducted by the PRC.
It is an axiom in administrative law that administrative authorities should not
act arbitrarily and capriciously in the issuance of rules and regulations. To be
valid, such rules and regulations must be reasonable and fairly adapted to the
end in view. If shown to bear no reasonable relation to the purposes for which
they are authorized to be issued, then they must be held to be invalid.
It also infringes on the examinees' right to liberty guaranteed by the
Constitution. Respondent PRC has no authority to dictate on the reviewees as to
how they should prepare themselves for the licensure examinations. It also violates
the academic freedom of the schools concerned.
Another issue: Does the RTC have jurisdiction to entertain the case and to enjoin
the enforcement of the Resolution No. 105? YES. The Professional
Regulation Commission is attached to the Office of the President for general
direction and coordination. Even acts of the Office of the President may be reviewed
by the Regional Trial Court. When a presidential act is challenged before the courts
of justice, it is not to be implied therefrom that the Executive is being made subject
and subordinate to the 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 courts seek only to interpret, apply or implement it
(the law).
 BRITISH AMERICAN TOBACCO vs. CAMACHO as Secretary of DoF and PARAYNO as
Commissioner of BIR
FACTS: BIR issued Revenue Reg, classifying the existing brands of cigarettes as those duly
registered and new brands, or those registered after January 1, 1997, shall be assessed at
their suggested retail price until such time that the appropriate survey to determine their
current net retail price is conducted. It is a one-time classification only.
British American Tobacco introduced into the market Lucky Strike cigarettes.
However, BIR amended Revenue Regulations by providing a periodic review every two
years or earlier of the current net retail price of new brands.
Series of Revenue Memos/Regulations were issued prescribing the guidelines in
establishing current net retail prices of new brands of cigarettes and alcohol products and
implement the revised tax classification of certain new brands.
British American Tobacco filed in RTC a petition for the issuance of a TRO of the
implementation of Section 145 of the NIRC, Revenue Regulations on the ground that they
discriminate against new brands of cigarettes, in violation of the equal protection and
uniformity provisions of the Constitution.
RTC rendered a decision upholding the constitutionality of the amendments NIRC,
Revenue Regulations. The petitioner brought the instant petition for review directly with the
Supreme Court.
The main contention of petitioner is that Revenue Regulations are invalid
insofar as they empower the BIR to reclassify or update the classification of new
brands of cigarettes based on their current net retail prices every two years or earlier.
ISSUE: Are the assailed Revenue Regulations issued by BIR valid?
HELD: No, Revenue Regulations No. 1-97, as amended by Revenue Regulations
No. 9-2003, Revenue Regulations No. 22-2003 and Revenue Memorandum Order No. 6-
2003 are invalid insofar as they grant the Bureau of Internal Revenue the power to
reclassify or update the classification of new brands every two years or earlier.
It is clear that the Revenue Regulations unjustifiably weaken the operation of the
National Internal Revenue Code because they authorize the Commissioner of Internal
Revenue to update the tax classification of new brands every two years or earlier when
nowhere in Section 145 is such authority granted to the Bureau. Unless expressly granted
to the BIR, the power to reclassify cigarette brands remains a prerogative of the
legislature which cannot be usurped by the former.
In enacting RA 8240, Congress categorically rejected the Department of Finance
proposal and Senate Version which would have empowered the DOF and BIR to periodically
adjust the excise tax rate and tax brackets, and to periodically resurvey and reclassify
cigarette brands. It would thus, be absurd to conclude that Congress intended to allow the
periodic reclassification of new brands by the BIR after their classification is determined based
on their current net retail price while limiting the freezing of the classification to those brands
embodied in the Annex "D" of the National Internal Revenue Code.
Doctrine:
· Unless expressly granted to the Bureau of Internal Revenue, the power to reclassify cigarette
brands remains a prerogative of the legislature which cannot be usurped by the former.
ROMULO, MABANTA, BUENAVENTURA, SAYOC & DE LOS ANGELES,
petitioner, vs. HOME DEVELOPMENT MUTUAL FUND
Doctrine:
· HDMF Board has rule-making power as provided in Section 5 of R.A. No. 7742 and
Section 13 of P.D. No. 1752. However, it is well-settled that rules and regulations,
which are the product of a delegated power to create new and additional legal
provisions that have the effect of law, should be within the scope of the statutory
authority granted by the legislature to the administrative agency. It is required that
the regulation be germane to the objects and purposes of the law, and be not in
contradiction to, but in conformity with, the standards prescribed by law.
FACTS: Petitioner Romulo, Mabanta, Buenaventura, Sayoc and De Los
Angeles, a law firm, was exempted for the period 1 January to 31 December 1995
from the Pag-IBIG Fund coverage by respondent Home Development Mutual Fund
(HDMF) because of a superior retirement plan. This is pursuant to Section 19 of
P.D. No. 1752, as amended by R.A. No. 7742.
On 1 September 1995, the HDMF Board of Trustees issued Board
Resolution No. 1011, Series of 1995, amending and modifying the Rules and
Regulations Implementing R.A. No. 7742. As amended, Section 1 of Rule VII
provides that for a company to be entitled to a waiver or suspension of Fund
coverage, it must have a plan providing for both provident/ retirement and housing
benefits superior to those provided under the Pag-IBIG Fund.
Petitioner filed with the respondent an application for Waiver or Suspension
of Fund Coverage because of its superior retirement plan. Petitioner submitted to
the HDMF a letter explaining that the said Amendments to the Rules are invalid. On
March 18,1996, the President and Chief Executive Officer of HDMF disapproved the
application of petitioner on the ground that the requirement that there should be both
a provident retirement fund and a housing plan is clear in the use of the phrase
"and/or," and that the Rules Implementing R.A. No. 7742 did not amend nor repeal
Section 19 of P.D. No. 1752 but merely implement the law. The appeal of petitioner
with the HDMF Board of Trustees was denied. Petitioner filed a petition for review
before the Court of Appeals but the latter dismissed the petition.
Petitioner contends that the subject 1995 Amendments issued by HDMF are
inconsistent with the enabling law, P.D. No. 1752, as amended by R.A. No. 7742,
which merely requires as a precondition for exemption from coverage the existence
of either a superior provident/ retirement plan or a superior housing plan, and not
the concurrence of both plans. Hence, considering that Petitioner has a provident
plan superior to that offered by the HDMF, it is entitled to exemption from the
coverage in accordance with Section 19 of P.D. No. 1752. The 1996 Amendment
are also void insofar as they abolished the exemption granted by Section 19 of P.D.
1752, as amended. The repeal of such exemption involves the exercise of legislative
power, which cannot be delegated to HMDF.

ISSUE: Was there a valid exercise of quasi-legislative power by the
respondent HDMF?
HELD: No, respondent HDMF acted arbitrarily in issuing the assailed
Amendments.
It is without doubt that the HDMF Board has rule-making power as
provided in Section 5 of R.A. No. 7742 and Section 13 of P.D. No. 1752.
However, it is well-settled that rules and regulations, which are the product of
a delegated power to create new and additional legal provisions that have the
effect of law, should be within the scope of the statutory authority granted by
the legislature to the administrative agency. It is required that the regulation
be germane to the objects and purposes of the law, and be not in contradiction
to, but in conformity with, the standards prescribed by law.
In the present case, when the Board of Trustees of the HDMF required in
Section 1, Rule VII of the 1995 Amendments to the Rules and Regulations
Implementing R.A. No. 7742 that employers should have both provident/retirement
and housing benefits for all its employees in order to qualify for exemption from the
Fund, it effectively amended Section 19 of P.D. No. 1752. And when the Board
subsequently abolished that exemption through the 1996 Amendments, it repealed
Section 19 of P.D. No. 1752. Such amendment and subsequent repeal of
Section 19 are both invalid, as they are not within the delegated power of the
Board. The HDMF cannot, in the exercise of its rule-making power, issue a
regulation not consistent with the law it seeks to apply. Indeed, administrative
issuances must not override, supplant or modify the law, but must remain consistent
with the law they intend to carry out. Only Congress can repeal or amend the law.
While it may be conceded that the requirement of having both plans to
qualify for an exemption, as well as the abolition of the exemption, would enhance
the interest of the working group and further strengthen the Home Development
Mutual Fund in its pursuit of promoting public welfare through ample social services
as mandated by the Constitution, the basic law must still prevail. A department zeal
may not be permitted to outrun the authority conferred by the statute.
Another issue: The issue of the validity of the 1995 Amendments to the Rules and
Regulations Implementing R.A. No. 7742, specifically Section I, Rule VII on Waiver
and Suspension.
HELD:In the case of China Banking Corp. v. The Members of the Board of Trustees
of the HDMF, the Supreme Court held that Section 1 of Rule VII of the Amendments
to the Rules and Regulations Implementing R.A. No. 7742, and HDMF Circular No.
124~B prescribing the Revised Guidelines and Procedure for Filing Application for
Waiver or Suspension of Fund Coverage under P.D. No. 1752, as amended by R.A.
No. 7742, are null and void insofar as they require that an employer should have
both a provident/ retirement plan and a housing plan superior to the benefits offered
by the Fund in order to qualify for waiver or suspension of the Fund coverage.
The controversy lies in the legal signification of the words "and/or."
In the instant case, the legal meaning of the words "and/or" should be taken in its
ordinary signification.
"The term and/or means that the effect shall be given to both the conjunctive "and"
and the disjunctive "or"; or that one word or the other may be taken accordingly as
one or the other will best effectuate the purpose intended by the legislature as
gathered from the whole statute. The term is used to avoid a construction which by
the use of the disjunctive "or" alone will exclude the combination of several of the
alternatives or by the use of the conjunctive "and" will exclude the efficacy of any
one of the alternatives standing alone."
It is accordingly ordinarily held that the intention of the legislature in using the term
"and/or" is that the word "and" and the word "or" are to be used interchangeably.
It ... seems to us clear from the language of the enabling law that Section 19 of P.D.
No. 1752 intended that an employer with a provident plan or an employee housing
plan superior to that of the fund may obtain exemption from coverage. If the law had
intended that the employee [sic] should have both a superior provident plan and a
housing plan in order to qualify for exemption, it would have used the words "and"
instead of "and/or." Notably, paragraph (a) of Section 19 requires for annual
certification of waiver or suspension, that the features of the plan or plans are
superior to the fund or continue to be so. The law obviously contemplates that the
existence of either plan is considered as sufficient basis for the grant of an
exemption; needless to state, the concurrence of both plans is more than sufficient.
To require the existence of both plans would radically impose a more stringent
condition for waiver which was not clearly envisioned by the basic law. By removing
the disjunctive word "or" in the implementing rules the respondent Board has
exceeded its authority.