PHILIPPINE ADMINSTRATIVE LAW

Describe the Administrative Code of 1987.

 Held:  The Code is a general law and “incorporates in a unified document the major structural, functional
and procedural principles of governance (Third Whereas Clause, Administrative Code of 1987) and
“embodies changes in administrative structures and procedures designed to serve the people.” (Fourth
Whereas Clause, Administrative Code of 1987)  The Code is divided into seven (7) books.  These books
contain provisions on the organization, powers and general administration of departments, bureaus and
offices under the executive branch, the organization and functions of the Constitutional Commissions and
other constitutional bodies, the rules on the national government budget, as well as guidelines for the
exercise by administrative agencies of quasi-legislative and quasi-judicial powers.  The Code covers both the
internal administration, i.e., internal organization, personnel and recruitment, supervision and discipline, and
the effects of the functions performed by administrative officials on private individuals or parties outside
government.  (Ople v. Torres, G.R. No. 127685, July 23, 1998 [Puno]) 
What is Administrative Power? 
Held:  Administrative power is concerned with the work of applying policies and enforcing orders as
determined by proper governmental organs.  It enables the President to fix a uniform standard of
administrative efficiency and check the official conduct of his agents.  To this end, he can issue
administrative orders, rules and regulations.  (Ople v. Torres, G.R. No. 127685, July 23, 1998 [Puno]) 
What is an Administrative Order? 
Held:  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.  (Ople v. Torres, G.R. No.
127685, July 23, 1998 [Puno]) 
What is the Government of the Republic of the Philippines? 
Ans.:  The Government of the Republic of the Philippines refers to the corporate governmental entity
through which the functions of the government are exercised throughout the Philippines, including, save as
the contrary appears from the context, the various arms through which political authority is made effective
in the Philippines, whether pertaining to the autonomous regions, the provincial, city, municipal or barangay
subdivisions or other forms of local government.  (Sec. 2[1], Introductory Provisions, Executive Order
No. 292) 
  What is an Agency of the Government? 
Ans.:  Agency of the Government refers to any of the various units of the Government, including a
department, bureau, office, instrumentality, or government-owned or controlled corporation, or a local
government or a distinct unit therein. (Sec. 2[4], Introductory Provisions, Executive Order No. 292) 
  What is a Department? 
Ans.:  Department refers to an executive department created by law.  For purposes of Book IV, this shall
include any instrumentality, as herein defined, having or assigned the rank of a department, regardless of
its name or designation.  (Sec. 2[7], Introductory Provisions, Executive Order No. 292) 
What is a Bureau? 
Ans.:  Bureau refers to any principal subdivision or unit of any department.  For purposes of Book IV,
this shall include any principal subdivision or unit of any instrumentality given or assigned the rank of a
bureau, regardless of actual name or designation, as in the case of department-wide regional offices.  (Sec.
2[8], Introductory Provisions, Executive Order No. 292) 
What is an Office?
Ans.:  Office  refers, within the framework of governmental organization, to any major functional unit of a
department or bureau including  regional offices.  It may also refer to any position held or occupied by
individual persons, whose functions are defined by law or regulation.  (Sec. 2[9], Introductory
Provisions, Executive Order No. 292) 
What is a Government Instrumentality?  What are included in the term Government
Instrumentality? 
Ans.:  A government 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, enjoying operational autonomy, usually through a charter. 
The term includes regulatory agencies, chartered institutions and government-owned or controlled
corporations.  (Sec. 2[10], Introductory Provisions, Executive Order No. 292) 
What is a Regulatory Agency? 
Ans.:  A regulatory agency refers to any agency expressly vested with jurisdiction to regulate, administer or
adjudicate matters affecting substantial rights and interest of private persons, the principal powers of which
are exercised by a collective body, such as a commission, board or council.  (Sec. 2[11], Introductory
Provisions, Executive Order No. 292) 
What is a Chartered Institution? 
Ans.:  A 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 state
universities and colleges and the monetary authority of the State.  (Section 2[12], Introductory
Provisions, Executive Order No. 292) 
What is a Government-Owned or Controlled Corporation? 
Ans.:  Government-owned or controlled corporation refers to any agency organized as a stock or non-stock
corporation, vested with functions relating to public needs whether governmental or proprietary in nature,
and owned by the Government directly or through its instrumentalities either wholly, or, where applicable as
in the case of stock corporations, to the extent of at least fifty-one (51) per cent of its capital stock; x x
x (Sec. 2[13], Introductory Provisions, Executive Order No. 292) 
When is a Government-Owned or Controlled Corporation deemed to be performing proprietary
function?  When is it deemed to be performing governmental function? 
Held:  Government-owned or controlled corporations may perform governmental or proprietary functions or
both, depending on the purpose for which they have been created.  If the purpose is to obtain special
corporate benefits or earn pecuniary profit, the function is proprietary.  If it is in the interest of health,
safety and for the advancement of public good and welfare, affecting the public in general, the function is
governmental.  Powers classified as “proprietary” are those intended for private advantage and
benefit.  (Blaquera v. Alcala, 295 SCRA 366, 425, Sept. 11, 1998, En Banc [Purisima])  
The Philippine National Red Cross (PNRC) is a government-owned and controlled corporation
with an original charter under R.A. No. 95, as amended.  Its charter, however, was amended to
vest in it the authority to secure loans, be exempted from payment of all duties, taxes, fees and
other charges, etc.  With the amendnt of its charter, has it been “impliedly converted to a private
corporation”? 
Held:  The test to determine whether a corporation is government owned or controlled, or private in nature
is simple.  Is it created by its own charter for the exercise of a public function, or by incorporation under the
general corporation law?  Those with special charters are government corporations subject to its provisions,
and its employees are under the jurisdiction of the Civil Service Commission.  The PNRC was not “impliedly
converted to a private corporation” simply because its charter was amended to vest in it the authority to
secure loans, be exempted from payment of all duties, taxes, fees and other charges,
etc.  (Camporedondo v. NLRC, G.R. No. 129049, Aug. 6, 1999, 1 st  Div. [Pardo]) 
   When may the Government not validly invoke the rule that prescription does not run against
the State?  Illustrative Case. 
Held:  While it is true that prescription does not run against the State, the same may not be invoked by the
government in this case since it is no longer interested in the subject matter.  While Camp Wallace may
have belonged to the government at the time Rafael Galvez’s title was ordered cancelled in Land
Registration Case No. N-361, the same no longer holds true today. 
Republic Act No. 7227, otherwise known as the Base Conversion and Development Act of 1992, created the
Bases Conversion and Development Authority.  X x x

With the transfer of Camp Wallace to the BCDA, the government no longer has a right or interest to protect. 
Consequently, the Republic is not a real party in interest and it may not institute the instant action.  Nor
may it raise the defense of imprescriptibility, the same being applicable only in cases where the government
is a party in interest.  x x x.  Being the owner of the areas covered by Camp Wallace, it is the Bases
Conversion and Development Authority, not the Government, which stands to be benefited if the land
covered by TCT No. T-5710 issued in the name of petitioner is cancelled. 

Nonetheless, it has been posited that the transfer of military reservations and their extensions to the BCDA
is basically for the purpose of accelerating the sound and balanced conversion of these military reservations
into alternative productive uses and to enhance the benefits to be derived from such property as a measure
of promoting the economic and social development, particularly of Central Luzon and, in general, the
country’s goal for enhancement (Section 2, Republic Act No. 7227).  It is contended that the transfer of
these military reservations to the Conversion Authority does not amount to an abdication on the part of the
Republic of its interests, but simply a recognition of the need to create a body corporate which will act as its
agent for the realization of its program.  It is consequently asserted that the Republic remains to be the real
party in interest and the Conversion Authority merely its agent. 

We, however, must not lose sight of the fact that the BCDA is an entity invested with a personality separate
and distinct from the government.  X x x 

It may not be amiss to state at this point that the functions of government have been classified into
governmental or constituent and proprietary or ministrant.  While public benefit and public welfare,
particularly, the promotion of the economic and social development of Central Luzon, may be attributable to
the operation of the BCDA, yet it is certain that the functions performed by the BCDA are basically
proprietary in nature.  The promotion of economic and social development of Central Luzon, in particular,
and the country’s goal for enhancement, in general, do not make the BCDA equivalent to the Government. 
Other corporations have been created by government to act as its agents for the realization of its programs,
the SSS, GSIS, NAWASA and the NIA, to count a few, and yet, the Court has ruled that these entities,
although performing functions aimed at promoting public interest and public welfare, are not government-
function corporations invested with governmental attributes.  It may thus be said that the BCDA is not a
mere agency of the Government but a corporate body performing proprietary functions.  

Having the capacity to sue or be sued, it should thus be the BCDA which may file an action to cancel
petitioner’s title, not the Republic, the former being the real party in interest.  One having no right or
interest to protect cannot invoke the jurisdiction of the court as a party plaintiff in an action.  A suit may be
dismissed if the plaintiff or the defendant is not a real party in interest.  x x x 

However, E.B. Marcha Transport Co., Inc. v. IAC  is cited as authority that the Republic is the proper party to
sue for the recovery of possession of property which at the time of the installation of the suit was no longer
held by the national government body but by the Philippine Ports Authrotiy.  In E.B. Marcha,  the Court
ruled: 
It can be said that in suing for the recovery of the rentals, the Republic of the Philippines, acted as principal
of the Philippine Ports Authority, directly exercising the commission it had earlier conferred on the latter as
its agent.  We may presume that, by doing so, the Republic of the Philippines did not intend to retain the
said rentals for its own use, considering that by its voluntary act it had transferred the land in question to
the Philippine Ports Authority effective July 11, 1974.  The Republic of the Philippines had simply sought to
assist, not supplant, the Philippine Ports Authority, whose title to the disputed property it continues to
recognize.  We may expect the that the said rentals, once collected by the Republic of the Philippines, shall
be turned over by it to the Philippine Ports Authority conformably to the purposes of P.D. No. 857. 
E.B. Marcha  is, however, not on all fours with the case at bar.  In the former, the Court considered the
Republic a proper party to sue since the claims of the Republic and the Philippine Ports Authority against the
petitioner therein were the same.  To dismiss the complaint in E.B. Marcha  would have brought needless
delay in the settlement of the matter since the PPA would have to refile the case on the same claim already
litigated upon.  Such is not the case here since to allow the government to sue herein enables it to raise the
issue of imprescriptibility, a claim which is not available to the BCDA.  The rule that prescription does not
run against the State does not apply to corporations or artificial bodies created by the State for special
purposes, it being said that when the title of the Republic has been divested, its grantees, although artificial
bodies of its own creation, are in the same category as ordinary persons.  By raising the claim of
imprescriptibility, a claim which cannot be raised by the BCDA, the Government not only assists the BCDA,
as it did in E.B. Marcha, it even supplants the latter, a course of action proscribed by said case. 
Moreover, to recognize the Government as a proper party to sue in this case would set a bad precedent as it
would allow the Republic to prosecute, on behalf of government-owned or controlled corporations, causes of
action which have already prescribed, on the pretext that the Government is the real party in interest
against whom prescription does not run, said corporations having been created merely as agents for the
realization of government programs.

It should also be noted that petitioner is unquestionably a buyer in good faith and for value, having acquired
the property in 1963, or 5 years after the issuance of the original certificate of title, as a third transferee.  If
only not to do violence and to give some measure of respect to the Torrens System, petitioner must be
afforded some measure of protection.  (Shipside Incorporated v. Court of Appeals, 352 SCRA 334,
Feb. 20, 2001, 3rd  Div. [Melo]) 
     Discuss the nature and functions of the National Telecommunications Commission (NTC), and
analyze its powers and authority as well as the laws, rules and regulations that govern its
existence and operations. 
                Held:  The NTC was created pursuant to Executive Order No. 546 x x x.  It assumed the
functions formerly assigned to the Board of Communications and the Communications Control Bureau, which
were both abolished under the said Executive Order.  Previously, the NTC’s function were merely those of
the defunct Public Service Commission (PSC), created under Commonwealth Act No. 146, as amended,
otherwise known as the Public Service Act, considering that the Board of Communications was the
successor-in-interest of the PSC.  Under Executive Order No. 125-A, issued in April 1987, the NTC became
an attached agency of the Department of Transportation and Communications. 
                In the regulatory communications industry, the NTC has the sole authority to issue Certificates of
Public Convenience and Necessity (CPCN) for the installation, operation, and maintenance of
communications facilities and services, radio communications systems, telephone and telegraph systems. 
Such power includes the authority to determine the areas of operations of applicants for telecommunications
services.  Specifically, Section 16 of the Public Service Act authorizes the then PSC, upon notice and
hearing, to issue Certificates of Public Convenience for the operation of public services within the Philippines
“whenever the Commission finds that the operation of the public service proposed and the authorization to
do business will promote the public interests in a proper and suitable manner.” (Commonwealth Act No.
146, Section 16[a])  The procedure governing the issuance of such authorizations is set forth in Section 29
of the said Act x x x. (Republic v. Express Telecommunication Co., Inc., 373 SCRA 316, Jan. 15,
2002, 1st Div. [Ynares-Santiago]) 
  Is the filing of the administrative rules and regulations with the UP Law Center the operative act
that gives the rules force and effect? 
                Held:  In granting Bayantel the provisional authority to operate a CMTS, the NTC applied Rule
15, Section 3 of its 1978 Rules of Practice and Procedure, which provides: 
Sec. 3.  Provisional Relief. – Upon the filing of an application, complaint or petition or at any stage
thereafter, the Board may grant on motion of the pleader or on its own initiative, the relief prayed for, based
on the pleading, together with the affidavits and supporting documents attached thereto, without prejudice
to a final decision after completion of the hearing which shall be called within thirty (30) days from grant of
authority asked for. 
                Respondent Extelcom, however, contends that the NTC should have applied the Revised Rules
which were filed with the Office of the National Administrative Register on February 3, 1993.  These Revised
Rules deleted the phrase “on its own initiative”; accordingly, a provisional authority may be issued only upon
filing of the proper motion before the Commission. 

                In answer to this argument, the NTC, through the Secretary of the Commission, issued a
certification to the effect that inasmuch as the 1993 Revised Rules have not been published in a newspaper
of general circulation, the NTC has been applying the 1978 Rules. 

                The absence of publication, coupled with the certification by the Commissioner of the NTC stating
that the NTC was still governed by the 1987 Rules, clearly indicate that the 1993 Revised Rules have not
taken effect at the time of the grant of the provisional authority to Bayantel.  The fact that the 1993 Revised
Rules were filed with the UP Law Center on February 3, 1993 is of no moment.  There is nothing in the
Administrative Code of 1987 which implies that the filing of the rules with the UP Law Center is the operative
act that gives the rules force and effect.  Book VII, Chapter 2, Section 3 thereof merely states: 

Filing. – (1) Every agency shall file with the University of the Philippines Law Center three (3) certified
copies of every rule adopted by it.  Rules in force on the date of effectivity of this Code which are not filed
within three (3) months from the date shall not thereafter be the basis of any sanction against any party or
persons. 
(2) The records officer of the agency, or his equivalent functionary, shall carry out the requirements of this
section under pain of disciplinary action. 

(3) A permanent register of all rules shall be kept by the issuing agency and shall be open to public
inspection. 
                The National Administrative Register is merely a bulletin of codified rules and it is furnished only
to the Office of the President, Congress, all appellate courts, the National Library, other public offices or
agencies as the Congress may select, and to other persons at a price sufficient to cover publication and
mailing or distribution costs (Administrative Code of 1987, Book VII, Chapter 2, Section 7).  In a similar
case, we held: 
This does not imply, however, that the subject Administrative Order is a valid exercise of such quasi-
legislative power.  The original Administrative Order issued on August 30, 1989, under which the
respondents filed their applications for importations, was not published in the Official Gazette or in a
newspaper of general circulation.  The questioned Administrative Order, legally, until it is published, is
invalid within the context of Article 2 of Civil Code, which reads: 

“Article 2.  Laws shall take effect after fifteen days following the completion of their publication in the Official
Gazette (or in a newspaper of general circulation in the Philippines), unless it is otherwise provided. X x x” 

The fact that the amendments to Administrative Order No. SOCPEC 89-08-01 were filed with, and published
by the UP Law Center in the National Administrative Register, does not cure the defect related to the
effectivity of the Administrative Order. 

This Court, in Tanada v. Tuvera stated, thus: 

“We hold therefore that all statutes, including those of local application and private laws, shall be published
as a condition for their effectivity, which shall begin fifteen days after publication unless a different
effectivity is fixed by the legislature. 

Covered by this rule are presidential decrees and executive orders promulgated by the President in the
exercise of legislative power or, at present, directly conferred by the Constitution.  Administrative Rules and
Regulations must also be published if their purpose is to enforce or implement existing law pursuant also to
a valid delegation. 

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

We agree that the publication must be in full or it is no publication at all since its purpose is to inform the
public of the contents of the laws.” 

The Administrative Order under consideration is one of those issuances which should be published for its
effectivity, since its purpose is to enforce and implement an existing law pursuant to a valid delegation, i.e.,
P.D. 1071, in relation to LOI 444 and EO 133. 
                Thus, publication in the Official Gazette or a newspaper of general circulation is a condition sine
qua non before statutes, rules or regulations can take effect.  This is explicit from Executive Order No. 200,
which repealed Article 2 of the Civil Code, and which states that: 
Laws shall take effect after fifteen days following the completion of their publication either in the Official
Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided (E.O. 200,
Section 1). 
                The Rules of Practice and Procedure of the NTC, which implements Section 29 of the Public
Service Act, fall squarely within the scope of these laws, as explicitly mentioned in the case of Tanada v.
Tuvera. 
Our pronouncement in Tanada v. Tuvera is clear and categorical.  Administrative rules and regulations must
be published if their purpose is to enforce or implement existing law pursuant to a valid delegation.  The
only exception are interpretative regulations, those merely internal in nature, or those so-called letters of
instructions issued by administrative superiors concerning the rules and guidelines to be followed by their
subordinates in the performance of their duties (PHILSA International Placement & Services Corp. v.
Secretary of Labor, G.R. No. 103144, April 4, 2001, 356 SCRA 174). 
                Hence, the 1993 Revised Rules should be published in the Official Gazette or in a newspaper of
general circulation before it can take effect.  Even the 1993 Revised Rules itself mandates that said Rules
shall take effect only after their publication in a newspaper of general circulation (Section 20 thereof).  In
the absence of such publication, therefore, it is the 1978 Rules that govern.  (Republic v. Express
Telecommunication Co., Inc., 373 SCRA 316, Jan. 15, 2002, 1st  Div. [Ynares-Santiago]) 
  May a person be held liable for violation of an administrative regulation which was not
published? 
                Held:  Petitioner insists, however, that it cannot be held liable for illegal exaction as POEA
Memorandum Circular No. II, Series of 1983, which enumerated the allowable fees which may be collected
from applicants, is void for lack of publication. 
There is merit in the argument. 

                In Tanada v. Tuvera, the Court held, as follows: 

“We hold therefore that all statutes, including those of local application and private laws, shall be published
as a condition for their effectivity, which shall begin fifteen days after publication unless a different
effectivity date is fixed by the legislature. 

Covered by this rule are presidential decrees and executive orders promulgated by the President in the
exercise of legislative powers whenever the same are validly delegated by the legislature or, at present,
directly conferred by the Constitution.  Administrative rules and regulations must also be published if their
purpose is to enforce or implement existing law pursuant to a valid delegation. 

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

                Applying this doctrine, we have previously declared as having no force and effect the following
administrative issuances: a) Rules and Regulations issued by the Joint Ministry of Health-Ministry of Labor
and Employment Accreditation Committee regarding the accreditation of hospitals, medical clinics and
laboratories; b) Letter of Instruction No. 416 ordering the suspension of payments due and payable by
distressed copper mining companies to the national government; c) Memorandum Circulars issued by the
POEA regulating the recruitment of domestic helpers to Hong Kong; d) Administrative Order No. SOCPEC 89-
08-01 issued by the Philippine International Trading Corporation regulating applications for importation from
the People’s Republic of China; and e) Corporate Compensation Circular No. 10 issued by the Department of
Budget and Management discontinuing the payment of other allowances and fringe benefits to government
officials and employees.  In all these cited cases, the administrative issuances questioned therein were
uniformly struck down as they were not published or filed with the National Administrative Register as
required by the Administrative Code of 1987. 
                POEA Memorandum Circular No. 2, Series of 1983 must likewise be declared ineffective as the
same was never published or filed with the National Administrative Register. 

                POEA Memorandum Circular No. 2, Series of 1983 provides for the applicable schedule of
placement and documentation fees for private employment agencies or authority holders.  Under the said
Order, the maximum amount which may be collected from prospective Filipino overseas workers is
P2,500.00.  The said circular was apparently issued in compliance with the provisions of Article 32 of the
Labor Code x x x. 

                It is thus clear that the administrative circular under consideration is one of those issuances
which should be published for its effectivity, since its purpose is to enforce and implement an existing law
pursuant to a valid delegation.  Considering that POEA Administrative Circular No. 2, Series of 1983 has not
as yet been published or filed with the National Administrative Register, the same is ineffective and may not
be enforced.  (Philsa International Placement and Services Corporation v. Secretary of Labor and
Employment, 356 SCRA 174, April 4, 2001, 3rd  Div., [Gonzaga-Reyes]) 
Does the publication requirement apply as well to administrative regulations addressed only to a
specific group and not to the general public? 
                Held:  The Office of the Solicitor General likewise argues that the questioned administrative
circular is not among those requiring publication contemplated by Tanada v. Tuvera as it is addressed only
to a specific group of persons and not to the general public. 
                Again, there is no merit in this argument. 

                The fact that the said circular is addressed only to a specified group, namely private employment
agencies or authority holders, does not take it away from the ambit of our ruling in Tanada v. Tuvera.  In
the case of Phil. Association of Service Exporters v. Torres, the administrative circulars questioned therein
were addressed to an even smaller group, namely Philippine and Hong Kong agencies engaged in the
recruitment of workers for Hong Kong, and still the Court ruled therein that, for lack of proper publication,
the said circulars may not be enforced or implemented. 
                Our pronouncement in Tanada v. Tuvera is clear and categorical.  Administrative rules and
regulations must be published if their purpose is to enforce or implement existing law pursuant to a valid
delegation.  The only exceptions are interpretative regulations, those merely internal in nature, or those so-
called letters of instructions issued by administrative superiors concerning the rules and guidelines to be
followed by their subordinates in the performance of their duties.  Administrative Circular No. 2, Series of
1983 has not been shown to fall under any of these exceptions. 
In this regard, the Solicitor General’s reliance on the case of Yaokasin v. Commissioner of Customs is
misplaced.  In the said case, the validity of certain Customs Memorandum Orders were upheld despite their
lack of publication as they were addressed to a particular class of persons, the customs collectors, who were
also the subordinates of the Commissioner of the Bureau of Customs.  As such, the said Memorandum
Orders clearly fall under one of the exceptions to the publication requirement, namely those dealing with
instructions from an administrative superior to a subordinate regarding the performance of their duties, a
circumstance which does not obtain in the case at bench. X x x 
To summarize, petitioner should be absolved from the three (3) counts of exaction as POEA Administrative
Circular No. 2, Series of 1983 could not be the basis of administrative sanctions against petitioner for lack of
publication.  (Philsa International Placement and Services Corporation v. Secretary of Labor and
Employment, 356 SCRA 174, April 4, 2001, 3rd  Div., [Gonzaga-Reyes]) 
May a successful bidder compel a government agency to formalize a contract with it
notwithstanding that its bid exceeds the amount appropriated by Congress for the project? 
Held:  Enshrined in the 1987 Philippine Constitution is the mandate that “no money shall be paid out of the
Treasury except in pursuance of an appropriation made by law.” (Sec. 29[1], Article VI of the 1987
Constitution)  Thus, in the execution of government contracts, the precise import of this constitutional
restriction is to require the various agencies to limit their expenditures within the appropriations made by
law for each fiscal year. 
It is quite evident from the tenor of the language of the law that the existence of appropriations and the
availability of funds are indispensable pre-requisites to or conditions sine qua non  for the execution of
government contracts.  The obvious intent is to impose such conditions as a priori  requisites to the validity
of the proposed contract.   Using this as our premise, we cannot accede to PHOTOKINA’s contention that
there is already a perfected contract.  While we held in Metropolitan Manila Development Authority v.
Jancom Environmental Corporation  that “the effect of an unqualified acceptance of the offer or proposal of
the bidder is to perfect a contract, upon notice of the award to the bidder,” however, such statement would
be inconsequential in a government where the acceptance referred to is yet to meet certain conditions.  To
hold otherwise is to allow a public officer to execute a binding contract that would obligate the government
in an amount in excess of the appropriations for the purpose for which the contract was attempted to be
made.   This is a dangerous precedent. 
                In the case at bar, there seems to be an oversight of the legal requirements as early as the
bidding stage.  The first step of a Bids and Awards Committee (BAC) is to determine whether the bids
comply with the requirements.  The BAC shall rate a bid “passed” only if it complies with all the
requirements and the submitted price does not exceed the approved budget for the contract.”(Implementing
Rules and Regulations [IRR] for Executive Order No. 262, supra.) 
                        Extant on the record is the fact that the VRIS Project was awarded to PHOTOKINA on account
of its bid in the amount of P6.588 Billion Pesos.  However, under Republic Act No. 8760 (General
Appropriations Act, FY 2000, p. 1018, supra.),the only fund appropriated for the project was P1 Billion Pesos
and under the Certification of Available Funds (CAF) only P1.2 Billion Pesos was available.  Clearly, the
amount appropriated is insufficient to cover the cost of the entire VRIS Project.  There is no way that the
COMELEC could enter into a contract with PHOTOKINA whose accepted bid was way beyond the amount
appropriated by law for the project.  This being the case, the BAC should have rejected the bid for being
excessive or should have withdrawn the Notice of Award on the ground that in the eyes of the law, the same
is null and void.
                Even the draft contract submitted by Commissioner Sadain that provides for a contract price in
the amount of P1.2 Billion Pesos is unacceptable.  x x x While the contract price under the draft contract is
only P1.2 Billion and, thus, within the certified available funds, the same covers only Phase I of the VRIS
Project, i.e., the issuance of identification cards for only 1,000,000 voters in specified areas.   In effect, the
implementation of the VRIS Project will be “segmented” or “chopped” into several phases.  Not only is such
arrangement disallowed by our budgetary laws and practices, it is also disadvantageous to the COMELEC
because of the uncertainty that will loom over its modernization project for an indefinite period of time. 
Should Congress fail to appropriate the amount necessary for the completion of the entire project, what
good will the accomplished Phase I serve?  As expected, the project failed “to sell” with the Department of
Budget and Management.  Thus, Secretary Benjamin Diokno, per his letter of December 1, 2000, declined
the COMELEC’s request for the issuance of the Notice of Cash Availability (NCA) and a multi-year obligatory
authority to assume payment of the total VRIS Project for lack of legal basis.  Corollarily, under Section 33
of R.A. No. 8760, no agency shall enter into a multi-year contract without a multi-year obligational
authority, thus: 
“SECTION 33.  Contracting Multi-Year Projects. -   In the implementation of multi-year projects, no agency
shall enter into a multi-year contract without a multi-year Obligational Authority issued by the Department
of Budget and Management for the purpose.  Notwithstanding the issuance of the multi-year Obligational
Authority, the obligation to be incurred in any given calendar year, shall in no case exceed the amount
programmed for implementation during said calendar year.” 
Petitioners are justified in refusing to formalize the contract with PHOTOKINA.  Prudence dictated them not
to enter into a contract not backed up by sufficient appropriation and available funds.  Definitely, to act
otherwise would be a futile exercise for the contract would inevitably suffer the vice of nullity.  x x x
                Verily, the contract, as expressly declared by law, is inexistent and void ab initio (Article 1409 of
the Civil Code of the Philippines).   This is to say that the proposed contract is without force and effect from
the very beginning or from its incipiency, as if it had never been entered into, and hence, cannot be
validated either by lapse of time or ratification. 
In fine, we rule that PHOTOKINA, though the winning bidder, cannot compel the COMELEC to formalize the
contract.  Since PHOTOKINA’s bid is beyond the amount appropriated by Congress for the VRIS Project, the
proposed contract is not binding upon the COMELEC and is considered void x x x.  (Commission on
Elections v. Judge Ma. Luisa Quijano-Padilla, G.R. No. 151992, Sept. 18, 2002, En Banc
[Sandoval-Gutierrez])               
  What is the remedy available to a party who contracts with the government contrary to the
requirements of the law and, therefore, void ab initio? 
Held:  Of course, we are not saying that the party who contracts with the government has no other
recourse in law.  The law itself affords him the remedy.  Section 48 of E.O. No. 292 explicitly provides that
any contract entered into contrary to the above-mentioned requirements shall be void, and “the officers
entering into the contract shall be liable to the Government or other contracting party for any consequent
damage to the same as if the transaction had been wholly between private parties.”   So when the
contracting officer transcends his lawful and legitimate powers by acting in excess of or beyond the limits of
his contracting authority, the Government is not bound under the contract.  It would be as if the contract in
such case were a private one, whereupon, he binds himself, and thus, assumes personal liability thereunder.
Otherwise stated, the proposed contract is unenforceable as to the Government. 
                While this is not the proceeding to determine where the culpability lies, however, the
constitutional mandate cited above constrains us to remind all public officers that public office is a public
trust and all public officers must at all times be accountable to the people.  The authority of public officers to
enter into government contracts is circumscribed with a heavy burden of responsibility.  In the exercise of
their contracting prerogative, they should be the first judges of the legality, propriety and wisdom of the
contract they entered into.  They must exercise a high degree of caution so that the Government may not
be the victim of ill-advised or improvident action.   (Commission on Elections v. Judge Ma. Luisa
Quijano-Padilla, G.R. No. 151992, Sept. 18, 2002, En Banc [Sandoval-Gutierrez]) 
Does the Commission on Human Rights have the power to adjudicate? 
                Held:  In its Order x x x denying petitioners’ motion to dismiss, the CHR theorizes that the
intention of the members of the Constitutional Commission is to make CHR a quasi-judicial body.  This view,
however, has not heretofore been shared by this Court.  In Carino v. Commission on Human Rights, the
Court x x x has observed that it is “only the first of the enumerated powers and functions that bears any
resemblance to adjudication of adjudgment,” but that resemblance can in no way be synonymous to the
adjudicatory power itself.  The Court explained: 
“x x x [T]he Commission on Human Rights x x x was not meant by the fundamental law to be another court
or quasi-judicial agency in this country, or duplicate much less take over the functions of the latter. 
“The most that may be conceded to the Commission in the way of adjudicative power is that it may
investigate, i.e., receive evidence and make findings of fact as regards claimed human rights violations
involving civil and political rights.  But fact finding is not adjudication, and cannot be likened to the judicial
function of a court of justice, or even a quasi-judicial agency or official.  The function of receiving evidence
and ascertaining therefrom the facts of a controversy is not a judicial function, properly speaking.  To be
considered such, the faculty of receiving evidence and making factual conclusions in a controversy must be
accompanied by the authority of applying the law to those factual conclusions to the end that the
controversy may be decided or determined authoritatively, finally and definitively, subject to such appeals or
modes of review as may be provided by law.  This function, to repeat, the Commission does not
have. (Simon, Jr. v. Commission on Human Rights, 229 SCRA 117, 125, Jan. 5, 1994, En Banc [Vitug, J.]) 
  Does the Commission on Human Rights have jurisdiction to issue TRO or writ of preliminary
injunction? 
                Held:  In Export Processing Zone Authority v. Commission on Human Rights, the Court x x x
explained: 
“The constitutional provision directing the CHR to ‘provide for preventive measures and legal aid services to
the underprivileged whose human rights have been violated or need protection’ may not be construed to
confer jurisdiction on the Commission to issue a restraining order or writ of injunction for, if that were the
intention, the Constitution would have expressly said so.  ‘Jurisdiction is conferred only by the Constitution
or by law.’  It is never derived by implication.” 

“Evidently, the ‘preventive measures and legal aid services’ mentioned in the Constitution refer to
extrajudicial and judicial remedies (including a writ of preliminary injunction) which the CHR may seek from
the proper courts on behalf of the victims of human rights violations.  Not being a court of justice, the CHR
itself has no jurisdiction to issue the writ, for a writ of preliminary injunction may only be issued ‘by the
judge of any court in which the action is pending [within his district], or by a Justice of the Court of Appeals,
or of the Supreme Court. x x x.  A writ of preliminary injunction is an ancillary remedy.  It is available only
in a pending principal action, for the preservation or protection of the rights and interest of a party thereto,
and for no other purpose.” 

The Commission does have legal standing to indorse, for appropriate action, its findings and
recommendations to any appropriate agency of government.   (Simon, Jr. v. Commission on Human
Rights, 229 SCRA 117, 134-135, Jan. 5, 1994, En Banc [Vitug, J.]) 
Does the petition for annulment of proclamation of a candidate merely involve the exercise by
the COMELEC of its administrative power to review, revise and reverse the actions of the board of
canvassers and, therefore, justifies non-observance of procedural due process, or does it involve
the exercise of the COMELEC’s quasi-judicial function?  
Held:  Taking cognizance of private respondent’s petitions for annulment of petitioner’s proclamation,
COMELEC was not merely performing an administrative function.  The administrative powers of the
COMELEC include the power to determine the number and location of polling places, appoint election officials
and inspectors, conduct registration of voters, deputize law enforcement agencies and governmental
instrumentalities to ensure free, orderly, honest, peaceful and credible elections, register political parties,
organizations or coalition, accredit citizen’s arms of the Commission, prosecute election offenses, and
recommend to the President the removal of or imposition of any other disciplinary action upon any officer or
employee it has deputized for violation or disregard of its directive, order or decision.  In addition, the
Commission also has direct control and supervision over all personnel involved in the conduct of election. 
However, the resolution of the adverse claims of private respondent and petitioner as regards the existence
of a manifest error in the questioned certificate of canvass requires the COMELEC to act as an arbiter.  It
behooves the Commission to hear both parties to determine the veracity of their allegations and to decide
whether the alleged error is a manifest error.  Hence, the resolution of this issue calls for the exercise by the
COMELEC of its quasi-judicial power.  It has been said that where a power rests in judgment or discretion,
so that it is of judicial nature or character, but does not involve the exercise of functions of a judge, or is
conferred upon an officer other than a judicial officer, it is deemed quasi-judicial.  The COMELEC therefore,
acting as quasi-judicial tribunal, cannot ignore the requirements of procedural due process in resolving the
petitions filed by private respondent. (Federico S. Sandoval v. COMELEC, G.R. No. 133842, Jan. 26,
2000 [Puno]) 
Discuss the contempt power of the Commission on Human Rights (CHR).  When may it be validly
exercised. 
                Held:  On its contempt powers, the CHR is constitutionally authorized to “adopt its operational
guidelines and rules of procedure, and cite for contempt for violations thereof in accordance with the Rules
of Court.”  Accordingly, the CHR acted within its authority in providing in its revised rules, its power “to cite
or hold any person in direct or indirect contempt, and to impose the appropriate penalties in accordance
with the procedure and sanctions provided for in the Rules of Court.” That power to cite for contempt,
however, should be understood to apply only to violations of its adopted operational guidelines and rules of
procedure essential to carry out its investigatorial powers.  To exemplify, the power to cite for contempt
could be exercised against persons who refuse to cooperate with the said body, or who unduly withhold
relevant information, or who decline to honor summons, and the like, in pursuing its investigative work.  The
“order to desist” (a semantic interplay for a restraining order) in the instance before us, however, is not
investigatorial in character but prescinds from an adjudicative power that it does not possess.  x x
x (Simon, Jr. v. Commission on Human Rights, 229 SCRA 117, 134, Jan. 5, 1994, En Banc [Vitug,
J.]) 
  Discuss the Doctrine of Primary Jurisdiction (or Prior Resort). 
Held:  Courts cannot and will not resolve a controversy involving a question which is within the jurisdiction
of an administrative tribunal, especially where the question demands the exercise of sound administrative
discretion requiring the special knowledge, experience and services of the administrative tribunal to
determine technical and intricate matters of fact. 
In recent years, it has been the jurisprudential trend to apply this doctrine to cases involving matters that
demand the special competence of administrative agencies even if the question involved is also judicial in
character.  It applies “where a claim is originally cognizable in the courts, and comes into play whenever
enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been
placed within the special competence of an administrative body; in such case, the judicial process is
suspended pending referral of such issues to the administrative body for its view.”   

In cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot arrogate unto itself
the authority to resolve a controversy, the jurisdiction over which is lodged with an administrative body of
special competence.  (Villaflor v. CA, 280 SCRA 297, Oct. 9, 1992, 3rd Div. [Panganiban])  
Discuss the Doctrine of Exhaustion of Administrative Remedies.  What are the exceptions
thereto? 
Held:  1. Before a party is allowed to seek the intervention of the court, it is a pre-condition that he should
have availed of all the means of administrative processes afforded him.  Hence, if a remedy within the
administrative machinery can still be resorted to by giving the administrative officer concerned every
opportunity to decide on a matter that comes within his jurisdiction then such remedy should be exhausted
first before the court’s judicial power can be sought.  The premature invocation of court’s jurisdiction is fatal
to one’s cause of action.  Accordingly, absent any finding of waiver or estoppel the case is susceptible of
dismissal for lack of cause of action.  This doctrine of exhaustion of administrative remedies was not without
its practical and legal reasons, for one thing, availment of administrative remedy entails lesser expenses and
provides for a speedier disposition of controversies.  It is no less true to state that the courts of justice for
reasons of comity and convenience will shy away from a dispute until the system of administrative redress
has been completed and complied with so as to give the administrative agency concerned every opportunity
to correct its error and to dispose of the case.
This doctrine is disregarded: 

when there is a violation of due process;

when the issue involved is purely a legal question;

when the administrative action is patently illegal amounting to lack or excess of jurisdiction;

when there is estoppel on the part of the administrative agency concerned;

when there is irreparable injury;

when the respondent is a department secretary whose acts as an alter ego of the President bears the
implied and assumed approval of the latter;
when to require exhaustion of administrative remedies would be unreasonable;
when it would amount to a nullification of a claim;

when the subject matter is a private land in land case proceeding;

when the rule does not provide a plain, speedy and adequate remedy, and

when there are circumstances indicating the urgency of judicial intervention.

(Paat v. CA, 266 SCRA 167 [1997]) 

2.  Non-exhaustion of administrative remedies is not jurisdictional.  It only renders the action
premature, i.e.,  claimed cause of action is not ripe for judicial determination and for that reason a party has
no cause of action to ventilate in court.  (Carale v. Abarintos, 269 SCRA 132, March 3, 1997, 3 rd Div.
[Davide])