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G.R. No.

110120 March 16, 1994 health of the residents and the possibility of pollution of the water content of the
surrounding area.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,
vs. On November 15, 1991, the LLDA conducted an on-site investigation, monitoring and test
COURT OF APPEALS, HON. MANUEL JN. SERAPIO, Presiding Judge RTC, sampling of the leachate3that seeps from said dumpsite to the nearby creek which is a
Branch 127, Caloocan City, HON. MACARIO A. ASISTIO, JR., City Mayor of tributary of the Marilao River. The LLDA Legal and Technical personnel found that the
Caloocan and/or THE CITY GOVERNMENT OF CALOOCAN, respondents. City Government of Caloocan was maintaining an open dumpsite at the Camarin area
without first securing an Environmental Compliance Certificate (ECC) from the
Alberto N. Hidalgo and Ma. Teresa T. Oledan for petitioner. Environmental Management Bureau (EMB) of the Department of Environment and Natural
Resources, as required under Presidential Decree No. 1586, 4 and clearance from LLDA as
required under Republic Act No. 4850, 5 as amended by Presidential Decree No. 813 and
The City Legal Officer & Chief, Law Department for Mayor Macario A. Asistio, Jr. and the Executive Order No. 927, series of 1983.6
City Government of Caloocan.
After a public hearing conducted on December 4, 1991, the LLDA, acting on the complaint
of Task Force Camarin Dumpsite, found that the water collected from the leachate and the
receiving streams could considerably affect the quality, in turn, of the receiving waters
ROMERO, J.: since it indicates the presence of bacteria, other than coliform, which may have
contaminated the sample during collection or handling. 7 On December 5, 1991, the LLDA
The clash between the responsibility of the City Government of Caloocan to dispose off the issued a Cease and Desist Order 8 ordering the City Government of Caloocan, Metropolitan
350 tons of garbage it collects daily and the growing concern and sensitivity to a pollution- Manila Authority, their contractors, and other entities, to completely halt, stop and desist
free environment of the residents of Barangay Camarin, Tala Estate, Caloocan City where from dumping any form or kind of garbage and other waste matter at the Camarin
these tons of garbage are dumped everyday is the hub of this controversy elevated by the dumpsite.
protagonists to the Laguna Lake Development Authority (LLDA) for adjudication.
The dumping operation was forthwith stopped by the City Government of Caloocan.
The instant case stemmed from an earlier petition filed with this Court by Laguna Lake However, sometime in August 1992 the dumping operation was resumed after a meeting
Development Authority (LLDA for short) docketed as G.R. held in July 1992 among the City Government of Caloocan, the representatives of Task
No. 107542 against the City Government of Caloocan, et al. In the Resolution of November Force Camarin Dumpsite and LLDA at the Office of Environmental Management Bureau
10, 1992, this Court referred G.R. No. 107542 to the Court of Appeals for appropriate Director Rodrigo U. Fuentes failed to settle the problem.
disposition. Docketed therein as CA-G.R. SP
No. 29449, the Court of Appeals, in a decision 1 promulgated on January 29, 1993 ruled that After an investigation by its team of legal and technical personnel on August 14, 1992, the
the LLDA has no power and authority to issue a cease and desist order enjoining the LLDA issued another order reiterating the December 5, 1991, order and issued an Alias
dumping of garbage in Barangay Camarin, Tala Estate, Caloocan City. The LLDA now Cease and Desist Order enjoining the City Government of Caloocan from continuing its
seeks, in this petition, a review of the decision of the Court of Appeals. dumping operations at the Camarin area.

The facts, as disclosed in the records, are undisputed. On September 25, 1992, the LLDA, with the assistance of the Philippine National Police,
enforced its Alias Cease and Desist Order by prohibiting the entry of all garbage dump
On March 8, 1991, the Task Force Camarin Dumpsite of Our Lady of Lourdes Parish, trucks into the Tala Estate, Camarin area being utilized as a dumpsite.
Barangay Camarin, Caloocan City, filed a letter-complaint 2 with the Laguna Lake
Development Authority seeking to stop the operation of the 8.6-hectare open garbage Pending resolution of its motion for reconsideration earlier filed on September 17, 1992
dumpsite in Tala Estate, Barangay Camarin, Caloocan City due to its harmful effects on the with the LLDA, the City Government of Caloocan filed with the Regional Trial Court of

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Caloocan City an action for the declaration of nullity of the cease and desist order with further orders from it, ordering the respondents: (1) Judge Manuel Jn. Serapio, Presiding
prayer for the issuance of writ of injunction, docketed as Civil Case No. C-15598. In its Judge, Regional Trial Court, Branch 127, Caloocan City to cease and desist from exercising
complaint, the City Government of Caloocan sought to be declared as the sole authority jurisdiction over the case for declaration of nullity of the cease and desist order issued by
empowered to promote the health and safety and enhance the right of the people in the Laguna Lake Development Authority (LLDA); and (2) City Mayor of Caloocan and/or
Caloocan City to a balanced ecology within its territorial jurisdiction. 9 the City Government of Caloocan to cease and desist from dumping its garbage at the Tala
Estate, Barangay Camarin, Caloocan City.
On September 25, 1992, the Executive Judge of the Regional Trial Court of Caloocan City
issued a temporary restraining order enjoining the LLDA from enforcing its cease and Respondents City Government of Caloocan and Mayor Macario A. Asistio, Jr. filed on
desist order. Subsequently, the case was raffled to the Regional Trial Court, Branch 126 of November 12, 1992 a motion for reconsideration and/or to quash/recall the temporary
Caloocan which, at the time, was presided over by Judge Manuel Jn. Serapio of the restraining order and an urgent motion for reconsideration alleging that ". . . in view of the
Regional Trial Court, Branch 127, the pairing judge of the recently-retired presiding judge. calamitous situation that would arise if the respondent city government fails to collect 350
tons of garbage daily for lack of dumpsite (i)t is therefore, imperative that the issue be
The LLDA, for its part, filed on October 2, 1992 a motion to dismiss on the ground, among resolved with dispatch or with sufficient leeway to allow the respondents to find alternative
others, that under Republic Act No. 3931, as amended by Presidential Decree No. 984, solutions to this garbage problem."
otherwise known as the Pollution Control Law, the cease and desist order issued by it
which is the subject matter of the complaint is reviewable both upon the law and the facts On November 17, 1992, the Court issued a Resolution 13 directing the Court of Appeals to
of the case by the Court of Appeals and not by the Regional Trial Court. 10 immediately set the case for hearing for the purpose of determining whether or not the
temporary restraining order issued by the Court should be lifted and what conditions, if any,
On October 12, 1992 Judge Manuel Jn. Serapio issued an order consolidating Civil Case may be required if it is to be so lifted or whether the restraining order should be maintained
No. C-15598 with Civil Case No. C-15580, an earlier case filed by the Task Force Camarin or converted into a preliminary injunction.
Dumpsite entitled "Fr. John Moran, et al. vs. Hon. Macario Asistio." The LLDA, however,
maintained during the trial that the foregoing cases, being independent of each other, The Court of Appeals set the case for hearing on November 27, 1992, at 10:00 in the
should have been treated separately. morning at the Hearing Room, 3rd Floor, New Building, Court of Appeals. 14 After the oral
argument, a conference was set on December 8, 1992 at 10:00 o'clock in the morning
On October 16, 1992, Judge Manuel Jn. Serapio, after hearing the motion to dismiss, issued where the Mayor of Caloocan City, the General Manager of LLDA, the Secretary of DENR
in the consolidated cases an order11 denying LLDA's motion to dismiss and granting the or his duly authorized representative and the Secretary of DILG or his duly authorized
issuance of a writ of preliminary injunction enjoining the LLDA, its agent and all persons representative were required to appear.
acting for and on its behalf, from enforcing or implementing its cease and desist order
which prevents plaintiff City of Caloocan from dumping garbage at the Camarin dumpsite It was agreed at the conference that the LLDA had until December 15, 1992 to finish its
during the pendency of this case and/or until further orders of the court. study and review of respondent's technical plan with respect to the dumping of its garbage
and in the event of a rejection of respondent's technical plan or a failure of settlement, the
On November 5, 1992, the LLDA filed a petition for certiorari, prohibition and injunction parties will submit within 10 days from notice their respective memoranda on the merits of
with prayer for restraining order with the Supreme Court, docketed as G.R. No. 107542, the case, after which the petition shall be deemed submitted for
seeking to nullify the aforesaid order dated October 16, 1992 issued by the Regional Trial resolution.15Notwithstanding such efforts, the parties failed to settle the dispute.
Court, Branch 127 of Caloocan City denying its motion to dismiss.
On April 30, 1993, the Court of Appeals promulgated its decision holding that: (1) the
The Court, acting on the petition, issued a Resolution 12 on November 10, 1992 referring the Regional Trial Court has no jurisdiction on appeal to try, hear and decide the action for
case to the Court of Appeals for proper disposition and at the same time, without giving due annulment of LLDA's cease and desist order, including the issuance of a temporary
course to the petition, required the respondents to comment on the petition and file the restraining order and preliminary injunction in relation thereto, since appeal therefrom is
same with the Court of Appeals within ten (10) days from notice. In the meantime, the within the exclusive and appellate jurisdiction of the Court of Appeals under Section 9, par.
Court issued a temporary restraining order, effective immediately and continuing until (3), of Batas Pambansa Blg. 129; and (2) the Laguna Lake Development Authority has no

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power and authority to issue a cease and desist order under its enabling law, Republic Act The Court of Appeals sustained the position of the City of Caloocan on the theory that
No. 4850, as amended by P.D. No. 813 and Executive Order Section 7 of Presidential Decree No. 984, otherwise known as the Pollution Control law,
No. 927, series of 1983. authorizing the defunct National Pollution Control Commission to issue an ex-parte cease
and desist order was not incorporated in Presidential Decree No. 813 nor in Executive
The Court of Appeals thus dismissed Civil Case No. 15598 and the preliminary injunction Order No. 927, series of
issued in the said case was set aside; the cease and desist order of LLDA was likewise set 1983. The Court of Appeals ruled that under Section 4, par. (d), of Republic Act No. 4850,
aside and the temporary restraining order enjoining the City Mayor of Caloocan and/or the as amended, the LLDA is instead required "to institute the necessary legal proceeding
City Government of Caloocan to cease and desist from dumping its garbage at the Tala against any person who shall commence to implement or continue implementation of any
Estate, Barangay Camarin, Caloocan City was lifted, subject, however, to the condition that project, plan or program within the Laguna de Bay region without previous clearance from
any future dumping of garbage in said area, shall be in conformity with the procedure and the Authority."
protective works contained in the proposal attached to the records of this case and found on
pages 152-160 of the Rollo, which was thereby adopted by reference and made an integral The LLDA now assails, in this partition for review, the abovementioned ruling of the Court
part of the decision, until the corresponding restraining and/or injunctive relief is granted of Appeals, contending that, as an administrative agency which was granted regulatory and
by the proper Court upon LLDA's institution of the necessary legal proceedings. adjudicatory powers and functions by Republic Act No. 4850 and its amendatory laws,
Presidential Decree No. 813 and Executive Order No. 927, series of 1983, it is invested
Hence, the Laguna Lake Development Authority filed the instant petition for review with the power and authority to issue a cease and desist order pursuant to Section 4 par. (c),
on certiorari, now docketed as G.R. No. 110120, with prayer that the temporary restraining (d), (e), (f) and (g) of Executive Order No. 927 series of 1983 which provides, thus:
order lifted by the Court of Appeals be re-issued until after final determination by this
Court of the issue on the proper interpretation of the powers and authority of the LLDA Sec. 4. Additional Powers and Functions. The authority shall have the
under its enabling law. following powers and functions:

On July, 19, 1993, the Court issued a temporary restraining order 16 enjoining the City xxx xxx xxx
Mayor of Caloocan and/or the City Government of Caloocan to cease and desist from
dumping its garbage at the Tala Estate, Barangay Camarin, Caloocan City, effective as of (c) Issue orders or decisions to compel compliance with the provisions
this date and containing until otherwise ordered by the Court. of this Executive Order and its implementing rules and regulations only
after proper notice and hearing.
It is significant to note that while both parties in this case agree on the need to protect the
environment and to maintain the ecological balance of the surrounding areas of the (d) Make, alter or modify orders requiring the discontinuance of
Camarin open dumpsite, the question as to which agency can lawfully exercise jurisdiction pollution specifying the conditions and the time within which such
over the matter remains highly open to question. discontinuance must be accomplished.

The City Government of Caloocan claims that it is within its power, as a local government (e) Issue, renew, or deny permits, under such conditions as it may
unit, pursuant to the general welfare provision of the Local Government Code, 17 to determine to be reasonable, for the prevention and abatement of
determine the effects of the operation of the dumpsite on the ecological balance and to see pollution, for the discharge of sewage, industrial waste, or for the
that such balance is maintained. On the basis of said contention, it questioned, from the installation or operation of sewage works and industrial disposal
inception of the dispute before the Regional Trial Court of Caloocan City, the power and system or parts thereof.
authority of the LLDA to issue a cease and desist order enjoining the dumping of garbage
in the Barangay Camarin over which the City Government of Caloocan has territorial
jurisdiction. (f) After due notice and hearing, the Authority may also revoke,
suspend or modify any permit issued under this Order whenever the
same is necessary to prevent or abate pollution.

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(g) Deputize in writing or request assistance of appropriate government surrounding areas. In carrying out the aforementioned declared policy, the LLDA is
agencies or instrumentalities for the purpose of enforcing this mandated, among others, to pass upon and approve or disapprove all plans, programs, and
Executive Order and its implementing rules and regulations and the projects proposed by local government offices/agencies within the region, public
orders and decisions of the Authority. corporations, and private persons or enterprises where such plans, programs and/or projects
are related to those of the LLDA for the development of the region. 22
The LLDA claims that the appellate court deliberately suppressed and totally disregarded
the above provisions of Executive Order No. 927, series of 1983, which granted In the instant case, when the complainant Task Force Camarin Dumpsite of Our Lady of
administrative quasi-judicial functions to LLDA on pollution abatement cases. Lourdes Parish, Barangay Camarin, Caloocan City, filed its letter-complaint before the
LLDA, the latter's jurisdiction under its charter was validly invoked by complainant on the
In light of the relevant environmental protection laws cited which are applicable in this basis of its allegation that the open dumpsite project of the City Government of Caloocan in
case, and the corresponding overlapping jurisdiction of government agencies implementing Barangay Camarin was undertaken without a clearance from the LLDA, as required under
these laws, the resolution of the issue of whether or not the LLDA has the authority and Section 4, par. (d), of Republic Act. No. 4850, as amended by P.D. No. 813 and Executive
power to issue an order which, in its nature and effect was injunctive, necessarily requires a Order No. 927. While there is also an allegation that the said project was without an
determination of the threshold question: Does the Laguna Lake Development Authority, Environmental Compliance Certificate from the Environmental Management Bureau
under its Charter and its amendatory laws, have the authority to entertain the complaint (EMB) of the DENR, the primary jurisdiction of the LLDA over this case was recognized
against the dumping of garbage in the open dumpsite in Barangay Camarin authorized by by the Environmental Management Bureau of the DENR when the latter acted as
the City Government of Caloocan which is allegedly endangering the health, safety, and intermediary at the meeting among the representatives of the City Government of
welfare of the residents therein and the sanitation and quality of the water in the area Caloocan, Task Force Camarin Dumpsite and LLDA sometime in July 1992 to discuss the
brought about by exposure to pollution caused by such open garbage dumpsite? possibility of
re-opening the open dumpsite.
The matter of determining whether there is such pollution of the environment that requires
control, if not prohibition, of the operation of a business establishment is essentially Having thus resolved the threshold question, the inquiry then narrows down to the
addressed to the Environmental Management Bureau (EMB) of the DENR which, by virtue following issue: Does the LLDA have the power and authority to issue a "cease and desist"
of Section 16 of Executive Order No. 192, series of 1987, 18 has assumed the powers and order under Republic Act No. 4850 and its amendatory laws, on the basis of the facts
functions of the defunct National Pollution Control Commission created under Republic presented in this case, enjoining the dumping of garbage in Tala Estate, Barangay Camarin,
Act No. 3931. Under said Executive Order, a Pollution Adjudication Board (PAB) under Caloocan City.
the Office of the DENR Secretary now assumes the powers and functions of the National
Pollution Control Commission with respect to adjudication of pollution cases. 19 The irresistible answer is in the affirmative.

As a general rule, the adjudication of pollution cases generally pertains to the Pollution The cease and desist order issued by the LLDA requiring the City Government of Caloocan
Adjudication Board (PAB), except in cases where the special law provides for another to stop dumping its garbage in the Camarin open dumpsite found by the LLDA to have
forum. It must be recognized in this regard that the LLDA, as a specialized administrative been done in violation of Republic Act No. 4850, as amended, and other relevant
agency, is specifically mandated under Republic Act No. 4850 and its amendatory laws to environment laws,23 cannot be stamped as an unauthorized exercise by the LLDA of
carry out and make effective the declared national policy 20 of promoting and accelerating injunctive powers. By its express terms, Republic Act No. 4850, as amended by P.D. No.
the development and balanced growth of the Laguna Lake area and the surrounding 813 and Executive Order No. 927, series of 1983, authorizes the LLDA to " make, alter or
provinces of Rizal and Laguna and the cities of San Pablo, Manila, Pasay, Quezon and modify order requiring the discontinuance or pollution." 24 (Emphasis supplied) Section 4,
Caloocan21 with due regard and adequate provisions for environmental management and par. (d) explicitly authorizes the LLDA to make whatever order may be necessary in the
control, preservation of the quality of human life and ecological systems, and the exercise of its jurisdiction.
prevention of undue ecological disturbances, deterioration and pollution. Under such a
broad grant and power and authority, the LLDA, by virtue of its special charter, obviously To be sure, the LLDA was not expressly conferred the power "to issue and ex-parte cease
has the responsibility to protect the inhabitants of the Laguna Lake region from the and desist order" in a language, as suggested by the City Government of Caloocan, similar
deleterious effects of pollutants emanating from the discharge of wastes from the

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to the express grant to the defunct National Pollution Control Commission under Section 7 The immediate response to the demands of "the necessities of protecting vital public interests" gives
of P.D. No. 984 which, admittedly was not reproduced in P.D. No. 813 and E.O. No. 927, vitality to the statement on ecology embodied in the Declaration of Principles and State Policies or the
series of 1983. However, it would be a mistake to draw therefrom the conclusion that there 1987 Constitution. Article II, Section 16 which provides:
is a denial of the power to issue the order in question when the power "to make, alter or
modify orders requiring the discontinuance of pollution" is expressly and clearly bestowed The State shall protect and advance the right of the people to a balanced and
upon the LLDA by Executive Order No. 927, series of 1983. healthful ecology in accord with the rhythm and harmony of nature.

Assuming arguendo that the authority to issue a "cease and desist order" were not expressly As a constitutionally guaranteed right of every person, it carries the correlative duty of non-
impairment. This is but in consonance with the declared policy of the state "to protect and promote the
conferred by law, there is jurisprudence enough to the effect that the rule granting such
right to health of the people and instill health consciousness among them." 28 It is to be borne in mind
authority need not necessarily be express. 25 While it is a fundamental rule that an that the Philippines is party to the Universal Declaration of Human Rights and the Alma Conference
administrative agency has only such powers as are expressly granted to it by law, it is Declaration of 1978 which recognize health as a fundamental human right. 29
likewise a settled rule that an administrative agency has also such powers as are necessarily
implied in the exercise of its express powers. 26 In the exercise, therefore, of its express
The issuance, therefore, of the cease and desist order by the LLDA, as a practical matter of procedure
powers under its charter as a regulatory and quasi-judicial body with respect to pollution under the circumstances of the case, is a proper exercise of its power and authority under its charter
cases in the Laguna Lake region, the authority of the LLDA to issue a "cease and desist and its amendatory laws. Had the cease and desist order issued by the LLDA been complied with by
order" is, perforce, implied. Otherwise, it may well be reduced to a "toothless" paper the City Government of Caloocan as it did in the first instance, no further legal steps would have been
agency. necessary.

In this connection, it must be noted that in Pollution Adjudication Board v. Court of The charter of LLDA, Republic Act No. 4850, as amended, instead of conferring upon the LLDA the
Appeals, et al.,27 the Court ruled that the Pollution Adjudication Board (PAB) has the power means of directly enforcing such orders, has provided under its Section 4 (d) the power to institute
to issue an ex-parte cease and desist order when there isprima facie evidence of an "necessary legal proceeding against any person who shall commence to implement or continue
implementation of any project, plan or program within the Laguna de Bay region without previous
establishment exceeding the allowable standards set by the anti-pollution laws of the
clearance from the LLDA."
country. The ponente, Associate Justice Florentino P. Feliciano, declared:

Clearly, said provision was designed to invest the LLDA with sufficiently broad powers in the
Ex parte cease and desist orders are permitted by law and regulations in regulation of all projects initiated in the Laguna Lake region, whether by the government or the private
situations like that here presented precisely because stopping the sector, insofar as the implementation of these projects is concerned. It was meant to deal with cases
continuous discharge of pollutive and untreated effluents into the rivers which might possibly arise where decisions or orders issued pursuant to the exercise of such broad
and other inland waters of the Philippines cannot be made to wait until powers may not be obeyed, resulting in the thwarting of its laudabe objective. To meet such
protracted litigation over the ultimate correctness or propriety of such contingencies, then the writs of mandamus and injunction which are beyond the power of the LLDA to
orders has run its full course, including multiple and sequential appeals issue, may be sought from the proper courts.
such as those which Solar has taken, which of course may take several
years. The relevant pollution control statute and implementing Insofar as the implementation of relevant anti-pollution laws in the Laguna Lake region and its
regulations were enacted and promulgated in the exercise of that surrounding provinces, cities and towns are concerned, the Court will not dwell further on the related
pervasive, sovereign power to protect the safety, health, and general issues raised which are more appropriately addressed to an administrative agency with the special
welfare and comfort of the public, as well as the protection of plant and knowledge and expertise of the LLDA.
animal life, commonly designated as the police power. It is a
constitutional commonplace that the ordinary requirements of WHEREFORE, the petition is GRANTED. The temporary restraining order issued by the Court on
procedural due process yield to the necessities of protecting vital public July 19, 1993 enjoining the City Mayor of Caloocan and/or the City Government of Caloocan from
interests like those here involved, through the exercise of police dumping their garbage at the Tala Estate, Barangay Camarin, Caloocan City is hereby made
permanent.
power. . . .

SO ORDERED.

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In August, 1977, herein private respondent Rogelio R. Coria was hired by herein petitioner
Rizal Empire Insurance Group as a casual employee with a salary of P10.00 a day. On
January 1, 1978, he was made a regular employee, having been appointed as clerk-typist,
with a monthly salary of P300.00. Being a permanent employee, he was furnished a copy of
petitioner company’s "General Information, Office Behavior and Other Rules and
Regulations." In the same year, without change in his position-designation, he was
[G.R. No. 73140. May 29, 1987.] transferred to the Claims Department and his salary was increased to P450.00 a month. In
1980, he was transferred to the Underwriting Department and his salary was increased to
RIZAL EMPIRE INSURANCE GROUP and/or SERGIO CORPUS, Petitioners, v. P580.00 a month plus cost of living allowance, until he was transferred to the Fire
NATIONAL LABOR RELATIONS COMMISSION, TEODORICO L. RUIZ, as Department as filing clerk. In July, 1983, he was made an inspector of the Fire Division
Labor Arbiter and ROGELIO R. CORIA, Respondents. with a monthly salary of P685.00 plus allowances and other benefits.

Ambrosio Padilla, Mempin & Reyes Law Offices, for Petitioners. On October 15, 1983, private respondent Rogelio R. Coria was dismissed from work,
allegedly, on the grounds of tardiness and unexcused absences. Accordingly, he filed a
Guillermo H. Pulia for Private Respondent. complaint with the Ministry of Labor and Employment (MOLE), and in a Decision dated
March 14, 1985 (Record, pp. 80-87), Labor Arbiter Teodorico L. Ruiz reinstated him to his
position with back wages. Petitioner filed an appeal with the National Labor Relations
SYLLABUS Commission (NLRC) but, in a Resolution dated November 15, 1985 (Ibid., pp. 31-32), the
appeal was dismissed on the ground that the same had been filed out of time. Hence, the
instant petition (Ibid., pp. 2-22).
1. LABOR AND SOCIAL LEGISLATION; NATIONAL LABOR RELATIONS In compliance with the resolution of the Second Division of this Court dated April 30, 1986
COMMISSION; ITS ADMINISTRATIVE REGULATIONS AND POLICIES (Ibid., p. 94), private respondent filed his Comment on May 23, 1986 (Ibid., pp. 97-101)
INTERPRETING THE LABOR CODE; HAVE THE FORCE OF LAW AND ENTITLED and public respondent on July 2, 1986 (Ibid., pp. 120-124).
TO GREAT RESPECT. — The Revised Rules of the National Labor Relations Commission
are clear and explicit and leave no room for interpretation. It is an elementary rule in On June 6, 1986, petitioners filed their Reply to private respondent’s Comment (Ibid., pp.
administrative law that administrative regulations and policies enacted by administrative 102-105) and on July 25, 1986, their Reply to public respondent’s Comment (Ibid., pp.
bodies to interpret the law which they are entrusted to enforce, have the force of law, and 126-131).chanroblesvirtualawlibrary
are entitled to great respect (Espanol v. Philippine Veterans Administration, 137 SCRA 314
[1985]). In a Resolution dated August 18, 1986, the Second Division of this Court resolved to give
due course to the petition and to require the parties to submit their respective memoranda
(Ibid., p. 132).
DECISION
In compliance with the above mentioned Resolution, petitioners filed their memorandum
on November 10, 1986; while private respondent filed his Memorandum on October 17,
PARAS, J.: 1986 (Ibid., pp. 139-144), and public respondent on November 16, 1986 (Ibid., pp. 160-
166).

Before going however, into the merits of the case, an important point to consider is whether
This is a petition for review on certiorari of the March 14, 1985 Decision of Labor Arbiter
or not it is still within the jurisdiction of this Court to review.
Teodorico L. Ruiz which held that herein private respondent Rogelio R. Coria was illegally
dismissed; and of the Resolution of the National Labor Relations Commission which
Rule VIII of the Revised Rules of the National Labor Relations Commission on appeal,
dismissed petitioner’s appeal on the ground that the same was filed out of time.

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provides:chanrobles law library : red
SO ORDERED.
"SECTION 1. (a) Appeal. — Decision or orders of a Labor Arbiter shall be final and
executory unless appealed to the Commission by any or both of the parties within ten (10)
calendar days from receipt of notice thereof.

x x x"

"SECTION 6. No extension of period. No motion or request for extension of the period


within which to perfect an appeal shall be entertained."cralaw virtua1aw library

The record shows that the employer (petitioner herein) received a copy of the decision of
the Labor Arbiter on April 1, 1985. It filed a Motion for Extension of Time to File
Memorandum of Appeal on April 11, 1985 and filed the Memorandum of Appeal on April
22, 1985. Pursuant to the "no extension policy" of the National Labor Relations
Commission, aforesaid motion for extension of time was denied in its resolution dated
November 15, 1985 and the appeal was dismissed for having been filed out of time (Rollo,
pp. 31-32).

Petitioners claim, among other things, that respondent Commission committed a grave
abuse of discretion amounting to lack of jurisdiction in arbitrarily dismissing petitioners’
appeal on a technicality (Rollo, p. 9). It invokes the Rules of Court provision on liberal
construction of the Rules in the interest of substantial justice.

It will be noted however, that the foregoing provision refers to the Rules of Court. On the
other hand, the Revised Rules of the National Labor Relations Commission are clear and
explicit and leave no room for interpretation.

Moreover, it is an elementary rule in administrative law that administrative regulations and


policies enacted by administrative bodies to interpret the law which they are entrusted to
enforce, have the force of law, and are entitled to great respect (Espanol v. Philippine
Veterans Administration, 137 SCRA 314 [1985]).

Under the above-quoted provisions of the Revised NLRC Rules, the decision appealed
from in this case has become final and executory and can no longer be subject to appeal.

Even on the merits, the ruling of the Labor Arbiter appears to be correct; the consistent
promotions in rank and salary of the private respondent indicate he must have been a highly
efficient worker, who should be retained despite occasional lapses in punctuality and
attendance. Perfection cannot after all be demanded.

WHEREFORE, this petition is DISMISSED.

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sensored with a somewhat webbed copper wire on the tip or other end of a bamboo pole
with electric wire attachment which was attached to the dynamo direct and with the use of
these devices or equipments catches fish thru electric current, which destroy any aquatic
animals within its cuffed reach, to the detriment and prejudice of the populace" (Criminal
Case No. 5429).

Upon motion of the accused, the municipal court quashed the complaint. The prosecution
appealed. The Court of First Instance of Laguna affirmed the order of dismissal (Civil Case
No. SC-36). The case is now before this Court on appeal by the prosecution under Republic
Act No. 5440.

G.R. No. L-32166 October 18, 1977 The lower court held that electro fishing cannot be penalize because electric current is not
an obnoxious or poisonous substance as contemplated in section I I of the Fisheries Law
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant, and that it is not a substance at all but a form of energy conducted or transmitted by
vs. substances. The lower court further held that, since the law does not clearly prohibit electro
HON. MAXIMO A. MACEREN CFI, Sta. Cruz, Laguna, JOSE BUENAVENTURA, fishing, the executive and judicial departments cannot consider it unlawful.
GODOFREDO REYES, BENJAMIN REYES, NAZARIO AQUINO and CARLO
DEL ROSARIO, accused-appellees. As legal background, it should be stated that section 11 of the Fisheries Law prohibits "the
use of any obnoxious or poisonous substance" in fishing.
Office of the Solicitor General for appellant.
Section 76 of the same law punishes any person who uses an obnoxious or poisonous
Rustics F. de los Reyes, Jr. for appellees. substance in fishing with a fine of not more than five hundred pesos nor more than five
thousand, and by imprisonment for not less than six months nor more than five years.

It is noteworthy that the Fisheries Law does not expressly punish .electro fishing."
Notwithstanding the silence of the law, the Secretary of Agriculture and Natural Resources,
AQUINO, J.:têñ.£îhqw⣠upon the recommendation of the Commissioner of Fisheries, promulgated Fisheries
Administrative Order No. 84 (62 O.G. 1224), prohibiting electro fishing in all Philippine
This is a case involving the validity of a 1967 regulation, penalizing electro fishing in fresh waters. The order is quoted below: ñé+.£ªwph!1
water fisheries, promulgated by the Secretary of Agriculture and Natural Resources and the
Commissioner of Fisheries under the old Fisheries Law and the law creating the Fisheries SUBJECT: PROHIBITING ELECTRO FISHING IN ALL
Commission. WATERS ñé+.£ªwph!1

On March 7, 1969 Jose Buenaventura, Godofredo Reyes, Benjamin Reyes, Nazario Aquino OF THE PHILIPPINES.
and Carlito del Rosario were charged by a Constabulary investigator in the municipal court
of Sta. Cruz, Laguna with having violated Fisheries Administrative Order No. 84-1.
Pursuant to Section 4 of Act No. 4003, as amended, and Section 4 of R.A. No. 3512, the
following rules and regulations regarding the prohibition of electro fishing in all waters of
It was alleged in the complaint that the five accused in the morning of March 1, 1969 the Philippines are promulgated for the information and guidance of all concerned.ñé+.
resorted to electro fishing in the waters of Barrio San Pablo Norte, Sta. Cruz by "using their £ªwph!1
own motor banca, equipped with motor; with a generator colored green with attached
dynamo colored gray or somewhat white; and electrocuting device locally known as

8
SECTION 1. — Definition. — Words and terms used in this Order 11 84-1, amending section 2 of Administrative Order No. 84, by restricting the ban against
construed as follows: electro fishing to fresh water fisheries (63 O.G. 9963).

(a) Philippine waters or territorial waters of the Philippines' includes all Thus, the phrase "in any portion of the Philippine waters" found in section 2, was changed
waters of the Philippine Archipelago, as defined in the t between the by the amendatory order to read as follows: "in fresh water fisheries in the Philippines,
United States and Spain, dated respectively the tenth of December, such as rivers, lakes, swamps, dams, irrigation canals and other bodies of fresh water."
eighteen hundred ninety eight and the seventh of November, nineteen
hundred. For the purpose of this order, rivers, lakes and other bodies of The Court of First Instance and the prosecution (p. 11 of brief) assumed that electro fishing
fresh waters are included. is punishable under section 83 of the Fisheries Law (not under section 76 thereof), which
provides that any other violation of that law "or of any rules and regulations promulgated
(b) Electro Fishing. — Electro fishing is the catching of fish with the thereunder shall subject the offender to a fine of not more than two hundred pesos (P200),
use of electric current. The equipment used are of many electrical or in t for not more than six months, or both, in the discretion of the court."
devices which may be battery or generator-operated and from and
available source of electric current. That assumption is incorrect because 3 of the aforequoted Administrative Order No. 84
imposes a fm of not exceeding P500 on a person engaged in electro fishing, which amount
(c) 'Persons' includes firm, corporation, association, agent or employee. the 83. It seems that the Department of Fisheries prescribed their own penalty for swift
fishing which penalty is less than the severe penalty imposed in section 76 and which is not
(d) 'Fish' includes other aquatic products. Identified to the at penalty imposed in section 83.

SEC. 2. — Prohibition. — It shall be unlawful for any person to Had Administrative Order No. 84 adopted the fighter penalty prescribed in on 83, then the
engage in electro fishing or to catch fish by the use of electric current in crime of electro fishing would be within the exclusive original jurisdiction of the inferior
any portion of the Philippine waters except for research, educational court (Sec. 44 [f], Judiciary Law; People vs. Ragasi, L-28663, September 22,
and scientific purposes which must be covered by a permit issued by
the Secretary of Agriculture and Natural Resources which shall be We have discussed this pre point, not raised in the briefs, because it is obvious that the
carried at all times. crime of electro fishing which is punishable with a sum up to P500, falls within
the concurrent original jurisdiction of the inferior courts and the Court of First instance
SEC. 3. — Penalty. — Any violation of the provisions of this (People vs. Nazareno, L-40037, April 30, 1976, 70 SCRA 531 and the cases cited therein).
Administrative Order shall subject the offender to a fine of not
exceeding five hundred pesos (P500.00) or imprisonment of not And since the instant case was filed in the municipal court of Sta. Cruz, Laguna, a
extending six (6) months or both at the discretion of the Court. provincial capital, the order of d rendered by that municipal court was directly appealable
to the Court, not to the Court of First Instance of Laguna (Sec. 45 and last par. of section 87
SEC. 4. — Repealing Provisions. — All administrative orders or parts of the Judiciary Law; Esperat vs. Avila, L-25992, June 30, 1967, 20 SCRA 596).
thereof inconsistent with the provisions of this Administrative Order
are hereby revoked. It results that the Court of First Instance of Laguna had no appellate jurisdiction over the
case. Its order affirming the municipal court's order of dismissal is void for lack of motion.
SEC. 5. — Effectivity. — This Administrative Order shall take effect This appeal shall be treated as a direct appeal from the municipal court to this Court. (See
six (60) days after its publication in the Office Gazette. People vs. Del Rosario, 97 Phil. 67).

On June 28, 1967 the Secretary of Agriculture and Natural Resources, upon the In this appeal, the prosecution argues that Administrative Orders Nos. 84 and 84-1 were not
recommendation of the Fisheries Commission, issued Fisheries Administrative Order No. issued under section 11 of the Fisheries Law which, as indicated above, punishes fishing by

9
means of an obnoxious or poisonous substance. This contention is not well-taken because, Nowhere in that law is electro fishing specifically punished. Administrative Order No. 84,
as already stated, the Penal provision of Administrative Order No. 84 implies that electro in punishing electro fishing, does not contemplate that such an offense fails within the
fishing is penalized as a form of fishing by means of an obnoxious or poisonous substance category of "other violations" because, as already shown, the penalty for electro fishing is
under section 11. the penalty next lower to the penalty for fishing with the use of obnoxious or poisonous
substances, fixed in section 76, and is not the same as the penalty for "other violations" of
The prosecution cites as the legal sanctions for the prohibition against electro fishing in the law and regulations fixed in section 83 of the Fisheries Law.
fresh water fisheries (1) the rule-making power of the Department Secretary under section
4 of the Fisheries Law; (2) the function of the Commissioner of Fisheries to enforce the The lawmaking body cannot delegate to an executive official the power to declare what
provisions of the Fisheries Law and the regulations Promulgated thereunder and to execute acts should constitute an offense. It can authorize the issuance of regulations and the
the rules and regulations consistent with the purpose for the creation of the Fisheries imposition of the penalty provided for in the law itself. (People vs. Exconde 101 Phil. 11
Commission and for the development of fisheries (Sec. 4[c] and [h] Republic Act No. 3512; 25, citing 11 Am. Jur. 965 on p. 11 32).
(3) the declared national policy to encourage, Promote and conserve our fishing resources
(Sec. 1, Republic Act No. 3512), and (4) section 83 of the Fisheries Law which provides Originally, Administrative Order No. 84 punished electro fishing in all waters. Later, the
that "any other violation of" the Fisheries Law or of any rules and regulations promulgated ban against electro fishing was confined to fresh water fisheries. The amendment created
thereunder "shall subject the offender to a fine of not more than two hundred pesos, or the impression that electro fishing is not condemnable per se. It could be tolerated in
imprisonment for not more than six months, or both, in the discretion of the court." marine waters. That circumstances strengthens the view that the old law does not eschew
all forms of electro fishing.
As already pointed out above, the prosecution's reference to section 83 is out of place
because the penalty for electro fishing under Administrative order No. 84 is not the same as However, at present, there is no more doubt that electro fishing is punishable under the
the penalty fixed in section 83. Fisheries Law and that it cannot be penalized merely by executive revolution because
Presidential Decree No. 704, which is a revision and consolidation of all laws and decrees
We are of the opinion that the Secretary of Agriculture and Natural Resources and the affecting fishing and fisheries and which was promulgated on May 16, 1975 (71 O.G.
Commissioner of Fisheries exceeded their authority in issuing Fisheries Administrative 4269), expressly punishes electro fishing in fresh water and salt water areas.
Orders Nos. 84 and 84-1 and that those orders are not warranted under the Fisheries
Commission, Republic Act No. 3512. That decree provides: ñé+.£ªwph!1

The reason is that the Fisheries Law does not expressly prohibit electro fishing. As electro SEC. 33. — Illegal fishing, dealing in illegally caught fish or
fishing is not banned under that law, the Secretary of Agriculture and Natural Resources fishery/aquatic products. — It shall he unlawful for any person to
and the Commissioner of Fisheries are powerless to penalize it. In other words, catch, take or gather or cause to be caught, taken or gathered fish or
Administrative Orders Nos. 84 and 84-1, in penalizing electro fishing, are devoid of any fishery/aquatic products in Philippine waters with the use of explosives,
legal basis. obnoxious or poisonous substance, or by the use of electricity as
defined in paragraphs (1), (m) and (d), respectively, of Section 3
Had the lawmaking body intended to punish electro fishing, a penal provision to that effect hereof: ...
could have been easily embodied in the old Fisheries Law.
The decree Act No. 4003, as amended, Republic Acts Nos. 428, 3048, 3512 and 3586,
That law punishes (1) the use of obnoxious or poisonous substance, or explosive in fishing; Presidential Decrees Nos. 43, 534 and 553, and all , Acts, Executive Orders, rules and
(2) unlawful fishing in deepsea fisheries; (3) unlawful taking of marine molusca, (4) illegal regulations or parts thereof inconsistent with it (Sec. 49, P. D. No. 704).
taking of sponges; (5) failure of licensed fishermen to report the kind and quantity of fish
caught, and (6) other violations. The inclusion in that decree of provisions defining and penalizing electro fishing is a clear
recognition of the deficiency or silence on that point of the old Fisheries Law. It is an

10
admission that a mere executive regulation is not legally adequate to penalize electro the d of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel vs. General
fishing. Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao vs. Casteel, L-
21906, August 29, 1969, 29 SCRA 350).
Note that the definition of electro fishing, which is found in section 1 (c) of Fisheries
Administrative Order No. 84 and which is not provided for the old Fisheries Law, is now The rule-making power must be confined to details for regulating the mode or proceeding
found in section 3(d) of the decree. Note further that the decree penalty electro fishing by to carry into effect the law as it his been enacted. The power cannot be extended to
"imprisonment from two (2) to four (4) years", a punishment which is more severe than the amending or expanding the statutory requirements or to embrace matters not covered by the
penalty of a time of not excluding P500 or imprisonment of not more than six months or statute. Rules that subvert the statute cannot be sanctioned. (University of Santo Tomas vs.
both fixed in section 3 of Fisheries Administrative Order No. 84. Board of Tax A 93 Phil. 376, 382, citing 12 C.J. 845-46. As to invalid regulations, see of
Internal Revenue vs. Villaflor 69 Phil. 319, Wise & Co. vs. Meer, 78 Phil. 655, 676; Del
An examination of the rule-making power of executive officials and administrative March vs. Phil. Veterans Administrative, L-27299, June 27, 1973, 51 SCRA 340, 349).
agencies and, in particular, of the Secretary of Agriculture and Natural Resources (now
Secretary of Natural Resources) under the Fisheries Law sustains the view that he ex his There is no question that the Secretary of Agriculture and Natural Resources has rule-
authority in penalizing electro fishing by means of an administrative order. making powers. Section 4 of the Fisheries law provides that the Secretary "shall from time
to time issue instructions, orders, and regulations consistent" with that law, "as may be and
Administrative agent are clothed with rule-making powers because the lawmaking body proper to carry into effect the provisions thereof." That power is now vested in the
finds it impracticable, if not impossible, to anticipate and provide for the multifarious and Secretary of Natural Resources by on 7 of the Revised Fisheries law, Presidential
complex situations that may be encountered in enforcing the law. All that is required is that December No. 704.
the regulation should be germane to the defects and purposes of the law and that it should
conform to the standards that the law prescribes (People vs. Exconde 101 Phil. 1125; Section 4(h) of Republic Act No. 3512 empower the Co of Fisheries "to prepare and
Director of Forestry vs. Muñ;oz, L-24796, June 28, 1968, 23 SCRA 1183, 1198; Geukeko execute upon the approval of the Secretary of Agriculture and Natural Resources, forms
vs. Araneta, 102 Phil. 706, 712). instructions, rules and regulations consistent with the purpose" of that enactment "and for
the development of fisheries."
The lawmaking body cannot possibly provide for all the details in the enforcement of a
particular statute (U.S. vs. Tupasi Molina, 29 Phil. 119, 125, citing U.S. vs. Grimaud 220 Section 79(B) of the Revised Administrative Code provides that "the Department Head
U.S. 506; Interprovincial Autobus Co., Inc. vs. Coll. of Internal Revenue, 98 Phil. 290, 295- shall have the power to promulgate, whenever he may see fit do so, all rules, regulates,
6). orders, memorandums, and other instructions, not contrary to law, to regulate the proper
working and harmonious and efficient administration of each and all of the offices and
The grant of the rule-making power to administrative agencies is a relaxation of the dependencies of his Department, and for the strict enforcement and proper execution of the
principle of separation of powers and is an exception to the nondeleption of legislative, laws relative to matters under the jurisdiction of said Department; but none of said rules or
powers. Administrative regulations or "subordinate legislation calculated to promote the orders shall prescribe penalties for the violation thereof, except as expressly authorized by
public interest are necessary because of "the growing complexity of modem life, the law."
multiplication of the subjects of governmental regulations, and the increased difficulty of
administering the law" Calalang vs. Williams, 70 Phil. 726; People vs. Rosenthal and Administrative regulations issued by a Department Head in conformity with law have the
Osmeñ;a, 68 Phil. 328). force of law (Valerie vs. Secretary of culture and Natural Resources, 117 Phil. 729, 733;
Antique Sawmills, Inc. vs. Zayco, L- 20051, May 30, 1966, 17 SCRA 316). As he exercises
Administrative regulations adopted under legislative authority by a particular department the rule-making power by delegation of the lawmaking body, it is a requisite that he should
must be in harmony with the provisions of the law, and should be for the sole purpose of not transcend the bound demarcated by the statute for the exercise of that power; otherwise,
carrying into effect its general provisions. By such regulations, of course, the law itself he would be improperly exercising legislative power in his own right and not as a surrogate
cannot be extended. (U.S. vs. Tupasi Molina, supra). An administrative agency cannot of the lawmaking body.
amend an act of Congress (Santos vs. Estenzo, 109 Phil. 419, 422; Teoxon vs. Members of

11
Article 7 of the Civil Code embodies the basic principle that administrative or executive It has been held that "to declare what shall constitute a crime and how it shall be punished
acts, orders and regulations shall be valid only when they are not contrary to the laws or the is a power vested exclusively in the legislature, and it may not be delegated to any other
Constitution." body or agency" (1 Am. Jur. 2nd, sec. 127, p. 938; Texas Co. vs. Montgomery, 73 F. Supp.
527).
As noted by Justice Fernando, "except for constitutional officials who can trace their
competence to act to the fundamental law itself, a public office must be in the statute relied In the instant case the regulation penalizing electro fishing is not strictly in accordance with
upon a grant of power before he can exercise it." "department zeal may not be permitted to the Fisheries Law, under which the regulation was issued, because the law itself does not
outrun the authority conferred by statute." (Radio Communications of the Philippines, Inc. expressly punish electro fishing.
vs. Santiago, L-29236, August 21, 1974, 58 SCRA 493, 496-8).
The instant case is similar to People vs. Santos, 63 Phil. 300. The Santos case involves
"Rules and regulations when promulgated in pursuance of the procedure or authority section 28 of Fish and Game Administrative Order No. 2 issued by the Secretary of
conferred upon the administrative agency by law, partake of the nature of a statute, and Agriculture and Natural Resources pursuant to the aforementioned section 4 of the
compliance therewith may be enforced by a penal sanction provided in the law. This is so Fisheries Law.
because statutes are usually couched in general terms, after expressing the policy, purposes,
objectives, remedies and sanctions intended by the legislature. The details and the manner Section 28 contains the proviso that a fishing boat not licensed under the Fisheries Law and
of carrying out the law are oftentimes left to the administrative agency entrusted with its under the said administrative order may fish within three kilometers of the shoreline of
enforcement. In this sense, it has been said that rules and regulations are the product of a islands and reservations over which jurisdiction is exercised by naval and military
delegated power to create new or additional legal provisions that have the effect of law." reservations authorities of the United States only upon receiving written permission
The rule or regulation should be within the scope of the statutory authority granted by the therefor, which permission may be granted by the Secretary upon recommendation of the
legislature to the administrative agency. (Davis, Administrative Law, p. 194, 197, cited in military or naval authorities concerned. A violation of the proviso may be proceeded
Victories Milling Co., Inc. vs. Social Security Commission, 114 Phil. 555, 558). against under section 45 of the Federal Penal Code.

In case of discrepancy between the basic law and a rule or regulation issued to implement Augusto A. Santos was prosecuted under that provision in the Court of First Instance of
said law, the basic law prevails because said rule or regulation cannot go beyond the terms Cavite for having caused his two fishing boats to fish, loiter and anchor without permission
and provisions of the basic law (People vs. Lim, 108 Phil. 1091). from the Secretary within three kilometers from the shoreline of Corrigidor Island.

This Court in its decision in the Lim case, supra, promulgated on July 26, 1960, called the This Court held that the Fisheries Law does not prohibit boats not subject to license from
attention of technical men in the executive departments, who draft rules and regulations, to fishing within three kilometers of the shoreline of islands and reservations over which
the importance and necessity of closely following the legal provisions which they intend to jurisdiction is exercised by naval and military authorities of the United States, without
implement so as to avoid any possible misunderstanding or confusion. permission from the Secretary of Agriculture and Natural Resources upon recommendation
of the military and naval authorities concerned.
The rule is that the violation of a regulation prescribed by an executive officer of the
government in conformity with and based upon a statute authorizing such regulation As the said law does not penalize the act mentioned in section 28 of the administrative
constitutes an offense and renders the offender liable to punishment in accordance with the order, the promulgation of that provision by the Secretary "is equivalent to legislating on
provisions of the law (U.S. vs. Tupasi Molina, 29 Phil. 119, 124). the matter, a power which has not been and cannot be delegated to him, it being expressly
reserved" to the lawmaking body. "Such an act constitutes not only an excess of the
In other words, a violation or infringement of a rule or regulation validly issued can regulatory power conferred upon the Secretary but also an exercise of a legislative power
constitute a crime punishable as provided in the authorizing statute and by virtue of the which he does not have, and therefore" the said provision "is null and void and without
latter (People vs. Exconde 101 Phil. 1125, 1132). effect". Hence, the charge against Santos was dismiss.

12
A penal statute is strictly construed. While an administrative agency has the right to make SO ORDERED.
ranks and regulations to carry into effect a law already enacted, that power should not be
confused with the power to enact a criminal statute. An administrative agency can have
only the administrative or policing powers expressly or by necessary implication conferred
upon it. (Glustrom vs. State, 206 Ga. 734, 58 Second 2d 534; See 2 Am. Jr. 2nd 129-130).

Where the legislature has delegated to executive or administrative officers and boards
authority to promulgate rules to carry out an express legislative purpose, the rules of
administrative officers and boards, which have the effect of extending, or which conflict
with the authority granting statute, do not represent a valid precise of the rule-making
power but constitute an attempt by an administrative body to legislate (State vs. Miles,
Wash. 2nd 322, 105 Pac. 2nd 51).

In a prosecution for a violation of an administrative order, it must clearly appear that the
order is one which falls within the scope of the authority conferred upon the administrative
body, and the order will be scrutinized with special care. (State vs. Miles supra).

The Miles case involved a statute which authorized the State Game Commission "to adopt,
promulgate, amend and/or repeal, and enforce reasonable rules and regulations governing
and/or prohibiting the taking of the various classes of game.

Under that statute, the Game Commission promulgated a rule that "it shall be unlawful to
offer, pay or receive any reward, prize or compensation for the hunting, pursuing, taking,
killing or displaying of any game animal, game bird or game fish or any part thereof."

Beryl S. Miles, the owner of a sporting goods store, regularly offered a ten-down cash prize
to the person displaying the largest deer in his store during the open for hunting such game
animals. For that act, he was charged with a violation of the rule Promulgated by the State
Game Commission.

It was held that there was no statute penalizing the display of game. What the statute
penalized was the taking of game. If the lawmaking body desired to prohibit the display of
game, it could have readily said so. It was not lawful for the administrative board to extend
or modify the statute. Hence, the indictment against Miles was quashed. The Miles case is
similar to this case.

WHEREFORE, the lower court's decision of June 9, 1970 is set aside for lack of appellate
jurisdiction and the order of dismissal rendered by the municipal court of Sta. Cruz, Laguna
in Criminal Case No. 5429 is affirmed. Costs de oficio.

13
Herrera, Laurel, De los Reyes, Roxas & Teehankee for Boie-Takeda Chemicals, Inc. and
Phil Xerox Corp.

The Solicitor General for public respondents.

NARVASA, C.J.:

What items or items of employee remuneration should go into the computation of thirteenth
month pay is the basic issue presented in these consolidated petitions. Otherwise stated, the
question is whether or not the respondent labor officials in computing said benefit,
committed "grave abuse of discretion amounting to lack of jurisdiction," by giving effect to
Section 5 of the Revised Guidelines on the implementation of the Thirteenth Month Pay
(Presidential Decree No. 851) promulgated by then Secretary of Labor and Employment,
Hon. Franklin Drilon, and overruling petitioner's contention that said provision constituted
a usurpation of legislative power because not justified by or within the authority of the law
sought to be implemented besides being violative of the equal protection of the law clause
of the Constitution.

Resolution of the issue entails, first, a review of the pertinent provisions of the laws and
implementing regulations.

Sections 1 and 2 of Presidential Decree No. 851, the Thirteenth Month Pay Law, read as
G.R. No. 92174 December 10, 1993 follows:

BOIE-TAKEDA CHEMICALS, INC., petitioner, Sec 1. All employees are hereby required to pay all their employees
vs. receiving basic salary of not more than P1,000.00 a month, regardless
of the nature of the employment, a 13th month pay not later than
HON. DIONISIO DE LA SERNA, Acting Secretary of the Department of Labor and December 24 of every year.
Employment, respondent.
Sec. 2. Employers already paying their employees a 13th month pay or
G.R. No. L-102552 December 10, 1993 its equivalent are not covered by this Decree.

PHILIPPINE FUJI XEROX CORP., petitioner, The Rules and Regulations Implementing P.D. 851 promulgated by then Labor Minister
vs. Blas Ople on December 22, 1975 contained the following relevant provisions relative to the
concept of "thirteenth month pay" and the employers exempted from giving it, to wit:
CRESENCIANO B. TRAJANO, Undersecretary of the Department of Labor and
Employment, and PHILIPPINE FUJI XEROX EMPLOYEES UNION, respondents. Sec. 2. Definition of certain terms. — . . .

a) "Thirteenth month pay" shall mean one twelfth (1/12) of the basic
salary of an employee within a calendar year;

14
b) "Basic Salary" shall include all remunerations or earnings paid by an Sec. 4. Overtime pay, earnings and other remunerations which are not
employer to an employee for services rendered but may not include part of the basic salary shall not be included in the computation of the
cost of living allowances granted pursuant to Presidential Decree No. 13th month pay.
525 or Letter of Instructions No. 174, profit sharing payments, and all
allowances and monetary benefits which are not considered or On August 13, 1986, President Corazon C. Aquino promulgated Memorandum Order No.
integrated as part of the regular or basic salary of the employee at the 28, which contained a single provision modifying Presidential Decree No. 851 by removing
time of the promulgation of the Decree on December 16, 1975. the salary ceiling of P1,000.00 a month set by the latter, as follows:

Sec. 3. Employers covered. — . . . (The law applies) to all employers Section 1 of Presidential Decree No. 851 is hereby modified to the
except to: extent that all employers are hereby required to pay all their rank-and-
file employees a 13th month pay not later than December 24, of every
xxx xxx xxx year.

c) Employers already paying their employers a 13-month pay or more Slightly more than a year later, on November 16, 1987, Revised Guidelines on the
in calendar year or is equivalent at the time of this issuance; Implementation of the 13th Month Pay Law were promulgated by then Labor Secretary
Franklin Drilon which, among other things, defined with particularity what remunerative
xxx xxx xxx items were and were not embraced in the concept of 13th month pay, and specifically dealt
with employees who are paid a fixed or guaranteed wage plus commission. The relevant
provisions read:
e) Employers of those who are paid on purely commission, boundary,
or task basis, and those who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in the performance 4. Amount and payment of 13th Month Pay.
thereof, except where the workers are paid on piece-rate basis in which
case the employer shall be covered by this issuance insofar as such xxx xxx xxx
workers are concerned.
The basic salary of an employee for the purpose of computing the 13th
xxx xxx xxx month pay shall include all remunerations or earnings paid by the
employer for services rendered but does not include allowances and
The term "its equivalent" as used in paragraph (c) shall include monetary benefits which are not considered or integrated as part of the
Christmas bonus, mid-year bonus, profit-sharing payments and other regular or basic salary, such as the cash equivalent of unused vacation
cash bonuses amounting to not less than 1/12th of the basic salary but and sick leave credits, overtime, premium, night differential and
shall not include cash and stock dividends, cost of living allowances holiday pay, and cost-of-living allowances. However, these salary-
and all other allowances regularly enjoyed by the employee, as well as related benefits should be included as part of the basic salary in the
non-monetary benefits. Where an employer pays less than 1/12th of the computation of the 13th month pay if by individual or collective
employee's basic salary, the employer shall pay the difference. agreement, company practice or policy, the same are treated as part of
the basic salary of the employees.
Supplementary Rules and Regulations implementing P.D. 851 were subsequently issued by
Minister Ople which inter alia set out items of compensation not included in the xxx xxx xxx
computation of the 13th month pay, viz.:
5. 13th Month Pay for Certain Types of Employees.

15
(a) Employees Paid by Results. — Employees who are paid on piece pay for the years 1986, 1987, 1988, inclusive, pursuant to the . . .
work basis are by law entitled to the 13th month pay. revised guidelines within ten (10) days from receipt of this Order.

Employees who are paid a fixed or guaranteed wage plus commission A motion for reconsideration 4 was seasonably filed by Boie-Takeda under date of August
are also entitled to the mandated 13th month pay based on their total 3, 1989. Treated as an appeal, it was resolved on
earnings during the calendar year, i.e., on both their fixed or guaranteed January 17, 1990 by then Acting Labor Secretary Dionisio de la Serna, who affirmed the
wage and commission. July 24, 1989 Order with modification that the sales commissions earned by Boie-Takeda's
medical representatives before August 13, 1989, the effectivity date of Memorandum Order
This was the state of the law when the controversies at bar arose out of the following No. 28 and its Implementing Guidelines, shall be excluded in the computation of their 13th
antecedents: month pay. 5

(RE G.R. No. 92174) A routine inspection was conducted on May 2, 1989 in the premises Hence the petition docketed as G.R. No. 92174.
of petitioner Boie-Takeda Chemicals, Inc. by Labor
and Development Officer Reynaldo B. Ramos under Inspection Authority (RE G.R. No. 102552) A similar Routine Inspection was conducted in the premises of
No. 4-209-89. Finding that Boie-Takeda had not been including the commissions earned by Philippine Fuji Xerox Corp. on September 7, 1989 pursuant to Routine Inspection
its medical representatives in the computation of their 13th month pay, Ramos served a Authority No. NCR-LSED-RI-494-89. In his Notice of Inspection Results, 6 addressed to
Notice of Inspection Results 1 on Boie-Takeda through its president, Mr. Benito Araneta, the Manager, Mr. Nicolas O. Katigbak, Senior Labor and Employment Officer Nicanor M.
requiring Boie-Takeda within ten (10) calendar days from notice to effect restitution or Torres noted the following violation committed by Philippine Fuji Xerox Corp., to wit:
correction of "the underpayment of 13th month pay for the year(s) 1986, 1987 and 1988 of
Med Rep (Revised Guidelines on the Implementation of 13th month pay # 5) in the total Underpayment of 13th month pay of 62 employees, more or less —
amount of P558,810.89." pursuant to Revised Guidelines on the Implementation of the 13th
month pay law for the period covering 1986, 1987 and 1988.
Boie-Takeda wrote the Labor Department contesting the Notice of Inspection Results, and
expressing the view "that the commission paid to our medical representatives are not to be Philippine Fuji Xerox was requested to effect rectification and/or restitution of the noted
included in the computation of the 13th month pay . . . (since the) law and its implementing violation within five (5) working days from notice.
rules speak of REGULAR or BASIC salary and therefore exclude all other remunerations
which are not part of the REGULAR salary." It pointed out that, "if no sales is (sic) made
under the effort of a particular representative, there is no commission during the period No action having been taken thereon by Philippine Fuji Xerox,
when no sale was transacted, so that commissions are not and cannot be legally defined as Mr. Eduardo G. Gonzales, President of the Philxerox Employee Union, wrote then Labor
regular in nature. 2 Secretary Franklin Drilon requesting a follow-up of the inspection findings. Messrs.
Nicolas and Gonzales were summoned to appear before Labor Employment and
Development Officer Mario F. Santos, NCR Office, Department of Labor for a conciliation
Regional Director Luna C. Piezas directed Boie-Takeda to appear before his Office on June conference. When no amicable settlement was reached, the parties were required to file
9 and 16, 1989. On the appointed dates, however, and despite due notice, no one appeared their position papers.
for Boie-Takeda, and the matter had perforce to be resolved on the basis of the evidence at
hand. On July 24, 1989, Director Piezas issued an Order 3 directing Boie-Takeda:
Subsequently, Regional Director Luna C. Piezas issued an Order dated August 23,
1990, 7 disposing as follows:
. . . to pay . . . (its) medical representatives and its managers the total
amount of FIVE HUNDRED SIXTY FIVE THOUSAND SEVEN
HUNDRED FORTY SIX AND FORTY SEVEN CENTAVOS WHEREFORE, premises considered, Respondent PHILIPPINE FUJI
(P565,746.47) representing underpayment of thirteenth (13th) month XEROX is hereby ordered to restitute to its salesmen the portion of the
13th month pay which arose out of the non-implementation of the said

16
revised guidelines, ten (10) days from receipt hereof, otherwise, commissions; and worked no violation of the equal protection clause of the Constitution,
MR. NICANOR TORRES, the SR. LABOR EMPLOYMENT said Guidelines being based on reasonable classification. Respondents point to the case
OFFICER is hereby Ordered to proceed to the premises of the of Songco vs. National Labor Relations Commission, 183 SCRA 610, wherein the Court
Respondent for the purpose of computing the said deficiency (sic) declared that Article 97(f) of the Labor Code is explicit that commission is included in the
should respondent fail to heed his Order. definition of the term "wage".

Philippine Fuji Xerox appealed the aforequoted Order to the Office of the Secretary of We rule for the petitioners.
Labor. In an Order dated October 120, 1991, Undersecretary Cresenciano B. Trajano denied
the appeal for lack of merit. Hence, the petition in G.R. No. 102552, which was ordered Contrary to respondents' contention, Memorandum Order No. 28 did not repeal, supersede
consolidated with G.R. No. 92174 as involving the same issue. or abrogate P.D. 851. As may be gleaned from the language of the Memorandum Order No.
28, it merely "modified" Section 1 of the decree by removing the P1,000.00 salary ceiling.
In their almost identically-worded petitioner, petitioners, through common counsel, The concept of 13th Month Pay as envisioned, defined and implemented under P.D. 851
attribute grave abuse of discretion to respondent labor officials remained unaltered, and while entitlement to said benefit was no longer limited to
Hon. Dionisio dela Serna and Undersecretary Cresenciano B. Trajano in issuing the employees receiving a monthly basic salary of not more than P1,000.00, said benefit was,
questioned Orders of January 17, 1990 and October 10, 1991, respectively. They maintain and still is, to be computed on the basic salary of the employee-recipient as provided under
that under P.D. 851, the 13th month pay is based solely on basic salary. As defined by the P.D. 851. Thus, the interpretation given to the term "basic salary" as defined in P.D. 851
law itself and clarified by the implementing and Supplementary Rules as well as by the applies equally to "basic salary" under Memorandum Order No. 28.
Supreme Court in a long line of decisions, remunerations which do not form part of the
basic or regular salary of an employee, such as commissions, should not be considered in In the case of San Miguel Corp. vs. Inciong, 103 SCRA 139, this Court delineated the
the computation of the 13th month pay. This being the case, the Revised Guidelines on the coverage of the term "basic salary" as used in P.D. 851. We said at some length:
Implementation of the 13th Month Pay Law issued by then Secretary Drilon providing for
the inclusion of commissions in the 13th month pay, were issued in excess of the statutory
authority conferred by P.D. 851. According to petitioners, this conclusion becomes even Under Presidential Decree 851 and its implementing rules, the basic
more evident when considered in light of the opinion rendered by Labor Secretary Drilon salary of an employee is used as the basis in the determination of his
himself in "In Re: Labor Dispute at the Philippine Long Distance Telephone Company" 13th month pay. Any compensations or remunerations which are
which affirmed the contemporaneous interpretation by then Secretary Ople that deemed not part of the basic pay is excluded as basis in the
commissions are excluded from the basic salary. Petitioners further contend that assuming computation of the mandatory bonus.
that Secretary Drilon did not exceed the statutory authority conferred by P.D. 851, still the
Revised Guidelines are null and void as they violate the equal protection of the law clause. Under the Rules and Regulations implementing Presidential Decree
851, the following compensations are deemed not part of the basic
Respondents through the Office of the Solicitor General question the propriety of salary:
petitioners' attack on the constitutionality of the Revised Guidelines in a petition
for certiorari which, they contend, should be confined purely to the correction of errors a) Cost-of-living allowances granted pursuant to
and/or defects of jurisdiction, including matters of grave abuse of discretion amounting to Presidential Decree 525 and Letter of Instructions
lack or excess of jurisdiction and not extend to a collateral attack on the validity and/or No. 174;
constitutionality of a law or statute. They aver that the petitions do not advance any cogent
reason or state any valid ground to sustain the allegation of grave abuse of discretion, and b) Profit-sharing payments;
that at any rate, P.D. No. 851, otherwise known as the 13th Month Pay Law has already
been amended by Memorandum Order No. 28 issued by President Corazon C. Aquino on
August 13, 1986 so that commissions are now imputed into the computation of the 13th c) All allowances and monetary benefits which are
Month Pay. They add that the Revised Guidelines issued by then Labor Secretary Drilon not considered or integrated as part of the regular
merely clarified a gray area occasioned by the silence of the law as to the nature of

17
basic salary of the employee at the time of the salary and shall not be considered in the computation of the 13th-month
promulgation of the Decree on December 16, 1975. pay. If they were not excluded, it is hard to find any "earnings and other
remunerations" expressly excluded in the computation of the 13th
Under a later set of Supplementary Rules and Regulations month pay. Then the exclusionary provision would prove to be idle and
Implementing Presidential Decree 851 Presidential Decree 851 issued with no purpose.
by then Labor Secretary Blas Ople, overtime pay, earnings and other
remunerations are excluded as part of the basic salary and in the This conclusion finds strong support under the Labor Code of the
computation of the 13th month pay. Philippines. To cite a few provisions:

The exclusion of the cost-of-living allowances under Presidential Art. 87. Overtime Work. Work may be performed beyond eight (8)
Decree 525 and Letter of Instructions No. 174, and profit-sharing hours a day provided that the employee is paid for the overtime work,
payments indicate the intention to strip basic salary of other payments additional compensation equivalent to his regular wage plus at least
which are properly considered as "fringe" benefits. Likewise, the catch- twenty-five (25%) percent thereof.
all exclusionary phrase "all allowances and monetary benefits which
are not considered or integrated as part of the basic salary" shows also It is clear that overtime pay is an additional compensation other than
the intention to strip basic salary of any and all additions which may be and added to the regular wage or basic salary, for reason of which such
in the form of allowances or "fringe" benefits. is categorically excluded from the definition of basic salary under the
Supplementary Rules and Regulations Implementing Presidential
Moreover, the Supplementary Rules and Regulations Implementing Decree 851.
Presidential Decree 851 is even more emphatic in declaring that
earnings and other remunerations which are not part of the basic salary In Article 93 of the same Code, paragraph
shall not be included in the computation of the 13th-month pay.
c) work performed on any special holiday shall be paid an additional
While doubt may have been created by the prior Rules and Regulations compensation of at least thirty percent (30%) of the regular wage of the
Implementing Presidential Decree 851 which defines basic salary to employee.
include all remunerations or earnings paid by an employer to an
employee, this cloud is dissipated in the later and more controlling
Supplementary Rules and Regulations which categorically exclude It is likewise clear the premiums for special holiday which is at least
from the definitions of basic salary earnings and other remunerations 30% of the regular wage is an additional pay other than and added to
paid by an employer to an employee. A cursory perusal of the two sets the regular wage or basic salary. For similar reason, it shall not be
of Rules indicates that what has hitherto been the subject of a broad considered in the computation of the 13th month pay.
inclusion is now a subject of broad exclusion. The Supplementary
Rules and Regulations cure the seeming tendency of the former rules to Quite obvious from the foregoing is that the term "basic salary" is to be understood in its
include all remunerations and earnings within the definition of basic common, generally-accepted meaning, i.e., as a rate of pay for a standard work period
salary. exclusive of such additional payments as bonuses and overtime. 8 This is how the term was
also understood in the case of Pless v. Franks, 308 S.W. 2nd. 402, 403, 202 Tenn. 630,
The all embracing phrase "earnings and other remunerations" which are which held that in statutes providing that pension should not less than 50 percent of "basic
deemed not part of the basic salary includes within its meaning salary" at the time of retirement, the quoted words meant the salary that an employee (e.g.,
payments for sick, vacation, or maternity leaves, premium for works a policeman) was receiving at the time he retired without taking into consideration any
performed on rest days and special holidays, pays for regular holidays extra compensation to which he might be entitled for extra work. 9
and night differentials. As such they are deemed not part of the basic

18
In remunerative schemes consisting of a fixed or guaranteed wage plus commission, the HON. COURT OF APPEALS, HON. COURT OF TAX APPEALS and FORTUNE
fixed or guaranteed wage is patently the "basic salary" for this is what the employee TOBACCO CORPORATION, respondents.
receives for a standard work period. Commissions are given for extra efforts exerted in
consummating sales or other related transactions. They are, as such, additional pay, which VITUG, J.:p
this Court has made clear do not form part of the "basic salary."

Respondents would do well to distinguish this case from Songco vs. National Labor Relations
Commission, supra, upon which they rely so heavily. What was involved therein was the term "salary"
without the restrictive adjective "basic". Thus, in said case, we construed the term in its generic sense The Commissioner of Internal Revenue ("CIR") disputes the decision, dated 31 March
to refer to all types of "direct remunerations for services rendered," including commissions. In the 1995, of respondent Court of Appeals 1 affirming the 10th August 1994 decision and the
same case, we also took judicial notice of the fact "that some salesmen do not receive any basic salary 11th October 1994 resolution of the Court of Tax Appeals 2 ("CTA") in C.T.A. Case No.
but depend on commissions and allowances or commissions alone, although an employer-employee 5015, entitled "Fortune Tobacco Corporation vs. Liwayway Vinzons-Chato in her capacity
relationship exists," which statement is quite significant in that it speaks of a "basic salary" apart and
as Commissioner of Internal Revenue."
distinct from "commissions" and "allowances". Instead of supporting respondents' stand, it would
appear that Songco itself recognizes that commissions are not part of "basic salary."
The facts, by and large, are not in dispute.
In including commissions in the computation of the 13th month pay, the second paragraph of Section
5(a) of the Revised Guidelines on the Implementation of the 13th Month Pay Law unduly expanded Fortune Tobacco Corporation ("Fortune Tobacco") is engaged in the manufacture of
the concept of "basic salary" as defined in P.D. 851. It is a fundamental rule that implementing rules different brands of cigarettes.
cannot add to or detract from the provisions of the law it is designed to implement. Administrative
regulations adopted under legislative authority by a particular department must be in harmony with the
provisions of the law they are intended to carry into effect. They cannot widen its scope. An On various dates, the Philippine Patent Office issued to the corporation separate certificates
administrative agency cannot amend an act of Congress. 10 of trademark registration over "Champion," "Hope," and "More" cigarettes. In a letter,
dated 06 January 1987, of then Commissioner of Internal Revenue Bienvenido A. Tan, Jr.,
Having reached this conclusion, we deem it unnecessary to discuss the other issues raised in these to Deputy Minister Ramon Diaz of the Presidential Commission on Good Government,
petitions. "the initial position of the Commission was to classify 'Champion,' 'Hope,' and 'More' as
foreign brands since they were listed in the World Tobacco Directory as belonging to
WHEREFORE, the consolidated petitions are hereby GRANTED. The second paragraph of Section 5 foreign companies. However, Fortune Tobacco changed the names of 'Hope' to 'Hope
(a) of the Revised Guidelines on the Implementation of the 13th Month Pay Law issued on November Luxury' and 'More' to 'Premium More,' thereby removing the said brands from the foreign
126, 1987 by then Labor Secretary Franklin M. Drilon is declared null and void as being violative of brand category. Proof was also submitted to the Bureau (of Internal Revenue ['BIR']) that
the law said Guidelines were issued to implement, hence issued with grave abuse of discretion 'Champion' was an original Fortune Tobacco Corporation register and therefore a local
correctible by the writ of prohibition and certiorari. The assailed Orders of January 17, 1990 and brand." 3 Ad Valorem taxes were imposed on these brands, 4 at the following rates:
October 10, 1991 based thereon are SET ASIDE.

SO ORDERED.

BRAND AD VALOREM TAX RATE


CIR V CA 261 SCRA 262

E.O. 22 and E.O. 273 RA 6956


G.R. No. 119761 August 29, 1996

06-23-86 07-25-87 06-18-90


COMMISSIONER OF INTERNAL REVENUE, petitioner,

07-01-86 01-01-88 07-05-90


vs.

19
Hope Luxury M. 100's Sec. 142. Cigars and Cigarettes. —

Sec. 142, (c), (2) 40% 45% xxx xxx xxx

Hope Luxury M. King (c) Cigarettes packed by machine. — There shall be levied, assessed and collected
on cigarettes packed by machine a tax at the rates prescribed below based on the
Sec. 142, (c), (2) 40% 45% constructive manufacturer's wholesale price or the actual manufacturer's wholesale price,
whichever is higher:
More Premium M. 100's
(1) On locally manufactured cigarettes which are currently classified and taxed at
fifty-five percent (55%) or the exportation of which is not authorized by contract or
Sec. 142, (c), (2) 40% 45% otherwise, fifty-five (55%) provided that the minimum tax shall not be less than Five Pesos
(P5.00) per pack.
More Premium International
(2) On other locally manufactured cigarettes, forty-five percent (45%) provided that
Sec. 142, (c), (2) 40% 45% the minimum tax shall not be less than Three Pesos (P3.00) per pack.

Champion Int'l. M. 100's xxx xxx xxx

Sec. 142, (c), (2) 40% 45% When the registered manufacturer's wholesale price or the actual manufacturer's wholesale
price whichever is higher of existing brands of cigarettes, including the amounts intended
Champion M. 100's to cover the taxes, of cigarettes packed in twenties does not exceed Four Pesos and eighty
centavos (P4.80) per pack, the rate shall be twenty percent (20%). 7 (Emphasis supplied)

Sec. 142, (c), (2) 40% 45%


About a month after the enactment and two (2) days before the effectivity of RA 7654,
Revenue Memorandum Circular No. 37-93 ("RMC 37-93"), was issued by the BIR the full
Champion M. King text of which expressed:

Sec. 142, (c), last par. 15% 20% REPUBLIKA NG PILIPINAS

Champion Lights KAGAWARAN NG PANANALAPI

Sec. 142, (c), last par. 15% 20% 5 KAWANIHAN NG RENTAS INTERNAS

A bill, which later became Republic Act ("RA") No. 7654, 6 was enacted, on 10 June 1993, July 1, 1993
by the legislature and signed into law, on 14 June 1993, by the President of the Philippines.
The new law became effective on 03 July 1993. It amended Section 142(c)(1) of the
National Internal Revenue Code ("NIRC") to read; as follows: REVENUE MEMORANDUM CIRCULAR NO. 37-93

SUBJECT: Reclassification of Cigarettes Subject to Excise Tax

20
TO: All Internal Revenue Officers and Others Concerned. evidence as to whether a brand is foreign or not, resort to the World Tobacco Directory
should be made."
In view of the issues raised on whether "HOPE," "MORE" and "CHAMPION" cigarettes
which are locally manufactured are appropriately considered as locally manufactured In view of the foregoing, the aforesaid brands of cigarettes, viz: "HOPE," "MORE" and
cigarettes bearing a foreign brand, this Office is compelled to review the previous rulings "CHAMPION" being manufactured by Fortune Tobacco Corporation are hereby considered
on the matter. locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax
on cigarettes.
Section 142 (c)(1) National Internal Revenue Code, as amended by R.A. No. 6956,
provides: Any ruling inconsistent herewith is revoked or modified accordingly.

On locally manufactured cigarettes bearing a foreign brand, fifty-five percent (55%) (SGD) LIWAYWAY VINZONS-CHATO
Provided, That this rate shall apply regardless of whether or not the right to use or title to
the foreign brand was sold or transferred by its owner to the local manufacturer. Whenever Commissioner
it has to be determined whether or not a cigarette bears a foreign brand, the listing of brands
manufactured in foreign countries appearing in the current World Tobacco Directory shall
govern. On 02 July 1993, at about 17:50 hours, BIR Deputy Commissioner Victor A. Deoferio, Jr.,
sent via telefax a copy of RMC 37-93 to Fortune Tobacco but it was addressed to no one in
particular. On 15 July 1993, Fortune Tobacco received, by ordinary mail, a certified xerox
Under the foregoing, the test for imposition of the 55% ad valorem tax on cigarettes is that copy of RMC 37-93.
the locally manufactured cigarettes bear a foreign brand regardless of whether or not the
right to use or title to the foreign brand was sold or transferred by its owner to the local
manufacturer. The brand must be originally owned by a foreign manufacturer or producer. In a letter, dated 19 July 1993, addressed to the appellate division of the BIR, Fortune
If ownership of the cigarette brand is, however, not definitely determinable, ". . . the listing Tobacco requested for a review, reconsideration and recall of RMC 37-93. The request was
of brands manufactured in foreign countries appearing in the current World Tobacco denied on 29 July 1993. The following day, or on 30 July 1993, the CIR assessed Fortune
Directory shall govern. . . ." Tobacco for ad valorem tax deficiency amounting to P9,598,334.00.

"HOPE" is listed in the World Tobacco Directory as being manufactured by (a) Japan On 03 August 1993, Fortune Tobacco filed a petition for review with the CTA. 8
Tobacco, Japan and (b) Fortune Tobacco, Philippines. "MORE" is listed in the said
directory as being manufactured by: (a) Fills de Julia Reig, Andorra; (b) Rothmans, On 10 August 1994, the CTA upheld the position of Fortune Tobacco and adjudged:
Australia; (c) RJR-Macdonald Canada; (d) Rettig-Strenberg, Finland; (e) Karellas, Greece;
(f) R.J. Reynolds, Malaysia; (g) Rothmans, New Zealand; (h) Fortune Tobacco, WHEREFORE, Revenue Memorandum Circular No. 37-93 reclassifying the brands of
Philippines; (i) R.J. Reynolds, Puerto Rico; (j) R.J. Reynolds, Spain; (k) Tabacalera, Spain; cigarettes, viz: "HOPE," "MORE" and "CHAMPION" being manufactured by Fortune
(l) R.J. Reynolds, Switzerland; and (m) R.J. Reynolds, USA. "Champion" is registered in Tobacco Corporation as locally manufactured cigarettes bearing a foreign brand subject to
the said directory as being manufactured by (a) Commonwealth Bangladesh; (b) Sudan, the 55% ad valorem tax on cigarettes is found to be defective, invalid and unenforceable,
Brazil; (c) Japan Tobacco, Japan; (d) Fortune Tobacco, Philippines; (e) Haggar, Sudan; and such that when R.A. No. 7654 took effect on July 3, 1993, the brands in question were not
(f) Tabac Reunies, Switzerland. CURRENTLY CLASSIFIED AND TAXED at 55% pursuant to Section 1142(c)(1) of the
Tax Code, as amended by R.A. No. 7654 and were therefore still classified as other locally
Since there is no showing who among the above-listed manufacturers of the cigarettes manufactured cigarettes and taxed at 45% or 20% as the case may be.
bearing the said brands are the real owner/s thereof, then it follows that the same shall be
considered foreign brand for purposes of determining the ad valorem tax pursuant to Accordingly, the deficiency ad valorem tax assessment issued on petitioner Fortune
Section 142 of the National Internal Revenue Code. As held in BIR Ruling No. 410-88, Tobacco Corporation in the amount of P9,598,334.00, exclusive of surcharge and interest,
dated August 24, 1988, "in cases where it cannot be established or there is dearth of is hereby canceled for lack of legal basis.

21
Respondent Commissioner of Internal Revenue is hereby enjoined from collecting the VI. SINCE RMC 37-93 IS AN INTERPRETATIVE RULE, THE INQUIRY IS NOT
deficiency tax assessment made and issued on petitioner in relation to the implementation INTO ITS VALIDITY, EFFECTIVITY OR ENFORCEABILITY BUT INTO ITS
of RMC No. 37-93. CORRECTNESS OR PROPRIETY; RMC 37-93 IS CORRECT. 10

SO ORDERED. In fine, petitioner opines that RMC 37-93 is merely an interpretative ruling of the BIR
which can thus become effective without any prior need for notice and hearing, nor
In its resolution, dated 11 October 1994, the CTA dismissed for lack of merit the motion for publication, and that its issuance is not discriminatory since it would apply under similar
reconsideration. circumstances to all locally manufactured cigarettes.

The CIR forthwith filed a petition for review with the Court of Appeals, questioning the The Court must sustain both the appellate court and the tax court.
CTA's 10th August 1994 decision and 11th October 1994 resolution. On 31 March 1993,
the appellate court's Special Thirteenth Division affirmed in all respects the assailed Petitioner stresses on the wide and ample authority of the BIR in the issuance of rulings for
decision and resolution. the effective implementation of the provisions of the National Internal Revenue Code. Let
it be made clear that such authority of the Commissioner is not here doubted. Like any
In the instant petition, the Solicitor General argues: That — other government agency, however, the CIR may not disregard legal requirements or
applicable principles in the exercise of its quasi-legislative powers.
I. RMC 37-93 IS A RULING OR OPINION OF THE COMMISSIONER OF
INTERNAL REVENUE INTERPRETING THE PROVISIONS OF THE TAX CODE. Let us first distinguish between two kinds of administrative issuances — a legislative rule
and an interpretative rule.
II. BEING AN INTERPRETATIVE RULING OR OPINION, THE PUBLICATION
OF RMC 37-93, FILING OF COPIES THEREOF WITH THE UP LAW CENTER AND In Misamis Oriental Association of Coco Traders, Inc., vs. Department of Finance
PRIOR HEARING ARE NOT NECESSARY TO ITS VALIDITY, EFFECTIVITY AND Secretary, 11 the Court expressed:
ENFORCEABILITY.
. . . a legislative rule is in the nature of subordinate legislation, designed to implement a
III. PRIVATE RESPONDENT IS DEEMED TO HAVE BEEN NOTIFIED OR RMC primary legislation by providing the details thereof . In the same way that laws must have
37-93 ON JULY 2, 1993. the benefit of public hearing, it is generally required that before a legislative rule is adopted
there must be hearing. In this connection, the Administrative Code of 1987 provides:

Public Participation. — If not otherwise required by law, an agency shall, as far as


practicable, publish or circulate notices of proposed rules and afford interested parties the
IV. RMC 37-93 IS NOT DISCRIMINATORY SINCE IT APPLIES TO ALL opportunity to submit their views prior to the adoption of any rule.
LOCALLY MANUFACTURED CIGARETTES SIMILARLY SITUATED AS "HOPE,"
"MORE" AND "CHAMPION" CIGARETTES.
(2) In the fixing of rates, no rule or final order shall be valid unless the proposed
rates shall have been published in a newspaper of general circulation at least two (2) weeks
V. PETITIONER WAS NOT LEGALLY PROSCRIBED FROM RECLASSIFYING before the first hearing thereon.
"HOPE," "MORE" AND "CHAMPION" CIGARETTES BEFORE THE EFFECTIVITY
OF R.A. NO. 7654.
(3) In case of opposition, the rules on contested cases shall be observed.

In addition such rule must be published. On the other hand, interpretative rules are designed
to provide guidelines to the law which the administrative agency is in charge of enforcing.

22
It should be understandable that when an administrative rule is merely interpretative in of the Civil Code provision concerning effectivity of laws, whereby due notice is a basic
nature, its applicability needs nothing further than its bare issuance for it gives no real requirement (Sec. 1, Art. IV, Constitution; Art. 2, New Civil Code).
consequence more than what the law itself has already prescribed. When, upon the other
hand, the administrative rule goes beyond merely providing for the means that can facilitate In order that there shall be a just enforcement of rules and regulations, in conformity with
or render least cumbersome the implementation of the law but substantially adds to or the basic element of due process, the following procedures are hereby prescribed for the
increases the burden of those governed, it behooves the agency to accord at least to those drafting, issuance and implementation of the said Revenue Tax Issuances:
directly affected a chance to be heard, and thereafter to be duly informed, before that new
issuance is given the force and effect of law.
(1) This Circular shall apply only to (a) Revenue Regulations; (b) Revenue Audit
Memorandum Orders; and (c) Revenue Memorandum Circulars and Revenue
A reading of RMC 37-93, particularly considering the circumstances under which it has Memorandum Orders bearing on internal revenue tax rules and regulations.
been issued, convinces us that the circular cannot be viewed simply as a corrective measure
(revoking in the process the previous holdings of past Commissioners) or merely as
construing Section 142(c)(1) of the NIRC, as amended, but has, in fact and most (2) Except when the law otherwise expressly provides, the aforesaid internal revenue
importantly, been made in order to place "Hope Luxury," "Premium More" and tax issuances shall not begin to be operative until after due notice thereof may be fairly
"Champion" within the classification of locally manufactured cigarettes bearing foreign presumed.
brands and to thereby have them covered by RA 7654. Specifically, the new law would
have its amendatory provisions applied to locally manufactured cigarettes which at the time Due notice of the said issuances may be fairly presumed only after the following
of its effectivity were not so classified as bearing foreign brands. Prior to the issuance of procedures have been taken;
the questioned circular, "Hope Luxury," "Premium More," and "Champion" cigarettes were
in the category of locally manufactured cigarettes not bearing foreign brand subject to 45% xxx xxx xxx
ad valorem tax. Hence, without RMC 37-93, the enactment of RA 7654, would have had no
new tax rate consequence on private respondent's products. Evidently, in order to place
"Hope Luxury," "Premium More," and "Champion" cigarettes within the scope of the (5) Strict compliance with the foregoing procedures is enjoined. 13
amendatory law and subject them to an increased tax rate, the now disputed RMC 37-93
had to be issued. In so doing, the BIR not simply intrepreted the law; verily, it legislated Nothing on record could tell us that it was either impossible or impracticable for the BIR to
under its quasi-legislative authority. The due observance of the requirements of notice, of observe and comply with the above requirements before giving effect to its questioned
hearing, and of publication should not have been then ignored. circular.

Indeed, the BIR itself, in its RMC 10-86, has observed and provided: Not insignificantly, RMC 37-93 might have likewise infringed on uniformity of taxation.

Article VI, Section 28, paragraph 1, of the 1987 Constitution mandates taxation to be
uniform and equitable. Uniformity requires that all subjects or objects of taxation, similarly
RMC NO. 10-86 situated, are to be treated alike or put on equal footing both in privileges and liabilities. 14
Thus, all taxable articles or kinds of property of the same class must be taxed at the same
rate 15 and the tax must operate with the same force and effect in every place where the
Effectivity of Internal Revenue Rules and Regulations subject may be found.

It has been observed that one of the problem areas bearing on compliance with Internal Apparently, RMC 37-93 would only apply to "Hope Luxury," "Premium More" and
Revenue Tax rules and regulations is lack or insufficiency of due notice to the tax paying "Champion" cigarettes and, unless petitioner would be willing to concede to the submission
public. Unless there is due notice, due compliance therewith may not be reasonably of private respondent that the circular should, as in fact my esteemed colleague Mr. Justice
expected. And most importantly, their strict enforcement could possibly suffer from legal Bellosillo so expresses in his separate opinion, be considered adjudicatory in nature and
infirmity in the light of the constitutional provision on "due process of law" and the essence thus violative of due process following the Ang Tibay 16 doctrine, the measure suffers from

23
lack of uniformity of taxation. In its decision, the CTA has keenly noted that other (b) "WINNER" is listed as being manufactured by Alpha Tobacco, Bangladesh;
cigarettes bearing foreign brands have not been similarly included within the scope of the Nangyang, Hongkong; Joo Lan, Malaysia; Pakistan Tobacco Co., Pakistan; Premier
circular, such as — Tobacco, Pakistan and Haggar, Sudan (Exhibit "U-4"). 17

1. Locally manufactured by ALHAMBRA INDUSTRIES, INC. The court quoted at length from the transcript of the hearing conducted on 10 August 1993
by the Committee on Ways and Means of the House of Representatives; viz:
(a) "PALM TREE" is listed as manufactured by office of Monopoly, Korea (Exhibit
"R") THE CHAIRMAN. So you have specific information on Fortune Tobacco alone. You don't
have specific information on other tobacco manufacturers. Now, there are other brands
2. Locally manufactured by LA SUERTE CIGAR and CIGARETTE COMPANY which are similarly situated. They are locally manufactured bearing foreign brands. And
may I enumerate to you all these brands, which are also listed in the World Tobacco
Directory . . . Why were these brand not reclassified at 55 if your want to give a level
(a) "GOLDEN KEY" is listed being manufactured by United Tobacco, Pakistan playing filed to foreign manufacturers?
(Exhibit "S")
MS. CHATO. Mr. Chairman, in fact, we have already prepared a Revenue
(b) "CANNON" is listed as being manufactured by Alpha Tobacco, Bangladesh Memorandum Circular that was supposed to come after RMC No. 37-93 which have really
(Exhibit "T") named specifically the list of locally manufactured cigarettes bearing a foreign brand for
excise tax purposes and includes all these brands that you mentioned at 55 percent except
3. Locally manufactured by LA PERLA INDUSTRIES, INC. that at that time, when we had to come up with this, we were forced to study the brands of
Hope, More and Champion because we were given documents that would indicate the that
(a) "WHITE HORSE" is listed as being manufactured by Rothman's, Malaysia these brands were actually being claimed or patented in other countries because we went by
(Exhibit "U") Revenue Memorandum Circular 1488 and we wanted to give some rationality to how it
came about but we couldn't find the rationale there. And we really found based on our own
interpretation that the only test that is given by that existing law would be registration in the
(b) "RIGHT" is listed as being manufactured by SVENSKA, Tobaks, Sweden World Tobacco Directory. So we came out with this proposed revenue memorandum
(Exhibit "V-1") circular which we forwarded to the Secretary of Finance except that at that point in time,
we went by the Republic Act 7654 in Section 1 which amended Section 142, C-1, it said,
4. Locally manufactured by MIGHTY CORPORATION that on locally manufactured cigarettes which are currently classified and taxed at 55
percent. So we were saying that when this law took effect in July 3 and if we are going to
come up with this revenue circular thereafter, then I think our action would really be
subject to question but we feel that . . . Memorandum Circular Number 37-93 would really
cover even similarly situated brands. And in fact, it was really because of the study, the
(a) "WHITE HORSE" is listed as being manufactured by Rothman's, Malaysia short time that we were given to study the matter that we could not include all the rest of
(Exhibit "U-1") the other brands that would have been really classified as foreign brand if we went by the
law itself. I am sure that by the reading of the law, you would without that ruling by
5. Locally manufactured by STERLING TOBACCO CORPORATION Commissioner Tan they would really have been included in the definition or in the
classification of foregoing brands. These brands that you referred to or just read to us and in
fact just for your information, we really came out with a proposed revenue memorandum
(a) "UNION" is listed as being manufactured by Sumatra Tobacco, Indonesia and
circular for those brands. (Emphasis supplied)
Brown and Williamson, USA (Exhibit "U-3")

(Exhibit "FF-2-C," pp. V-5 TO V-6, VI-1 to VI-3).

24
xxx xxx xxx Tranquilino F. Meris Law Office for petitioner.

MS. CHATO. . . . But I do agree with you now that it cannot and in fact that is why I felt
that we . . . I wanted to come up with a more extensive coverage and precisely why I asked
that revenue memorandum circular that would cover all those similarly situated would be PADILLA, J.:
prepared but because of the lack of time and I came out with a study of RA 7654, it would
not have been possible to really come up with the reclassification or the proper
classification of all brands that are listed there. . . (emphasis supplied) (Exhibit "FF-2d," Petitioner was appointed Trade-Specialist II on 25 September 1989 in the Department of
page IX-1) Trade and Industry (DTI). His appointment was classified as "Reinstatement/Permanent".
Before said appointment, he was working at the Philippine Cotton Corporation, a
government-owned and controlled corporation under the Department of Agriculture.
xxx xxx xxx
On 8 December 1989, petitioner received his initial salary, covering the period from 25
HON. DIAZ. But did you not consider that there are similarly situated? September to 31 October 1989. Since he had no accumulated leave credits, DTI deducted
from his salary the amount corresponding to his absences during the covered period,
MS. CHATO. That is precisely why, Sir, after we have come up with this Revenue namely, 29 September 1989 and 20 October 1989, inclusive of Saturdays and
Memorandum Circular No. 37-93, the other brands came about the would have also Sundays. More specifically, the dates of said absences for which salary deductions were
clarified RMC 37-93 by I was saying really because of the fact that I was just recently made, are as follows:
appointed and the lack of time, the period that was allotted to us to come up with the right
actions on the matter, we were really caught by the July 3 deadline. But in fact, We have 1. 29 September 1989 — Friday
already prepared a revenue memorandum circular clarifying with the other . . . does not yet,
would have been a list of locally manufactured cigarettes bearing a foreign brand for excise
tax purposes which would include all the other brands that were mentioned by the 2. 30 September 1989 — Saturday
Honorable Chairman. (Emphasis supplied) (Exhibit "FF-2-d," par. IX-4). 18
3. 01 October 1989 — Sunday
All taken, the Court is convinced that the hastily promulgated RMC 37-93 has fallen short
of a valid and effective administrative issuance. 4. 20 October 1989 — Friday

WHEREFORE, the decision of the Court of Appeals, sustaining that of the Court of Tax 5. 21 October 1989 — Saturday
Appeals, is AFFIRMED. No costs.
6. 22 October 1989 — Sunday
SO ORDERED.
Petitioner sent a memorandum to Amando T. Alvis (Chief, General Administrative Service)
on 15 December 1989 inquiring as to the law on salary deductions, if the employee has no
leave credits.
G.R. No. 95832 August 10, 1992
Amando T. Alvis answered petitioner's query in a memorandum dated 30 January 1990
MAYNARD R. PERALTA, petitioner, citing Chapter 5.49 of the Handbook of Information on the Philippine Civil Service which
vs. states that "when an employee is on leave without pay on a day before or on a day
CIVIL SERVICE COMMISSION, respondent. immediately preceding a Saturday, Sunday or Holiday, such Saturday, Sunday, or Holiday
shall also be without pay (CSC, 2nd Ind., February 12, 1965)."

25
Petitioner then sent a latter dated 20 February 1990 addressed to Civil Service Commission who has no leave credits, could not be favorably credited with
(CSC) Chairman Patricia A. Sto. Tomas raising the following question: intervening days had the same been working days. Hence, the above
policy that for an employee on leave without pay to be entitled to salary
Is an employee who was on leave of absence without pay on a day on Saturdays, Sundays or holidays, the same must occur between the
before or on a day time immediately preceding a Saturday, Sunday or dates where the said employee actually renders service. To rule
Holiday, also considered on leave of absence without pay on such otherwise would allow an employee who is on leave of absent (sic)
Saturday, Sunday or Holiday?1 without pay for a long period of time to be entitled to payment of his
salary corresponding to Saturdays, Sundays or holidays. It also
discourages the employees who have exhausted their leave credits from
Petitioner in his said letter to the CSC Chairman argued that a reading of the General Leave absenting themselves on a Friday or Monday in order to have a
Law as contained in the Revised Administrative Code, as well as the old Civil Service Law prolonged weekend, resulting in the prejudice of the government and
(Republic Act No. 2260), the Civil Service Decree (Presidential Decree No. 807), and the the public in general. 3
Civil Service Rules and Regulation fails to disclose a specific provision which supports the
CSC rule at issue. That being the case, the petitioner contented that he cannot be deprived
of his pay or salary corresponding to the intervening Saturdays, Sundays or Holidays (in Petitioner filed a motion for reconsideration and in Resolution No. 90-797, the respondent
the factual situation posed), and that the withholding (or deduction) of the same is Commission denied said motion for lack of merit. The respondent Commission in
tantamount to a deprivation of property without due process of law. explaining its action held:

On 25 May 1990, respondent Commission promulgated Resolution No. 90-497, ruling that The Primer on the Civil Service dated February 21, 1978, embodies
the action of the DTI in deducting from the salary of petitioner, a part thereof the Civil Service Commission rulings to be observed whenever an
corresponding to six (6) days (September 29, 30, October 1, 20, 21, 22, 1989) is in employee of the government who has no more leave credits, is absent
order. 2 The CSC stated that: on a Friday and/or a Monday is enough basis for the deduction of his
salaries corresponding to the intervening Saturdays and Sundays. What
the Commission perceived to be without basis is the demand of Peralta
In a 2nd Indorsement dated February 12, 1965 of this Commission, for the payment of his salaries corresponding to Saturdays and Sundays
which embodies the policy on leave of absence without pay incurred on when he was in fact on leave of absence without pay on a
a Friday and Monday, reads: Friday prior to the said days. A reading of Republic Act No. 2260 (sic)
does not show that a government employee who is on leave of absence
Mrs. Rosalinda Gonzales is not entitled to payment without pay on a day before or immediately preceding Saturdays,
of salary corresponding to January 23 and 24, 1965, Sunday or legal holiday is entitled to payment of his salary for said
Saturday and Sunday, respectively, it appearing that days. Further, a reading of Senate Journal No. 67 dated May 4, 1960 of
she was present on Friday, January 22, 1965 but House Bill No. 41 (Republic Act No. 2625) reveals that while the law
was on leave without pay beginning January 25, the excludes Saturdays, Sundays and holidays in the computation of leave
succeeding Monday. It is the view of this Office credits, it does not, however, include a case where the leave of absence
that an employee who has no more leave credit in is without pay. Hence, applying the principle of inclusio unius est
his favor is not entitled to the payment of salary on exclusio alterius, the claim of Peralta has no merit. Moreover, to take a
Saturdays, Sundays or holidays unless such non- different posture would be in effect giving more premium to employees
working days occur within the period of service who are frequently on leave of absence without pay, instead of
actually rendered. (Emphasis supplied) discouraging them from incurring further absence without
pay. 4
The rationale for the above ruling which applies only to those
employees who are being paid on monthly basis, rests on the Petitioner's motion for reconsideration having been denied, petitioner filed the present
assumption that having been absent on either Monday or Friday, one petition.

26
What is primarily questioned by the petitioner is the validity of the respondent respondent Commission involving the case of a Mrs. Rosalinda Gonzales. The respondent
Commission's policy mandating salary deductions corresponding to the intervening Commission ruled that an employee who has no leave credits in his favor is not entitled to
Saturdays, Sundays or Holidays where an employee without leave credits was absent on the the payment of salary on Saturdays, Sundays or Holidays unless such non-working days
immediately preceding working day. occur within the period of service actually rendered. The same policy is reiterated in the
Handbook of Information on the Philippine Civil Service. 6 Chapter Five on leave of
During the pendency of this petition, the respondent Commission promulgated Resolution absence provides that:
No. 91-540 dated 23 April 1991 amending the questioned policy, considering that
employees paid on a monthly basis are not required to work on Saturdays, Sunday or 5.51. When intervening Saturday, Sunday or holiday considered as
Holidays. In said amendatory Resolution, the respondent Commission resolved "to adopt leave without pay — when an employee is on leave without pay on a
the policy that when an employee, regardless of whether he has leave credits or not, is day before or on a day immediately preceding a Saturday, Sunday or
absent without pay on day immediately preceding or succeeding Saturday, Sunday or holiday, such Saturday, Sunday or holiday shall also be without pay.
holiday, he shall not be considered absent on those days." Memorandum Circular No. 16 (CSC, 2nd Ind., Feb. 12, 1965).
Series of 1991 dated 26 April 1991, was also issued by CSC Chairman Sto. Tomas adopting
and promulgating the new policy and directing the Heads of Departments, Bureaus and It is likewise illustrated in the Primer on the Civil Service 7 in the section referring to
Agencies in the national and local governments, including government-owned or controlled Questions and Answers on Leave of Absences, which states the following:
corporations with original charters, to oversee the strict implementation of the circular.
27. How is leave of an employee who has no more leave credits
Because of these developments, it would seem at first blush that this petition has become computed if:
moot and academic since the very CSC policy being questioned has already been amended
and, in effect, Resolutions No. 90-497 and 90-797, subject of this petition for certiorari,
have already been set aside and superseded. But the issue of whether or not the policy that (1) he is absent on a Friday and the following Monday?
had been adopted and in force since 1965 is valid or not, remains unresolved . Thus, for
reasons of public interest and public policy, it is the duty of the Court to make a formal (2) if he is absent on Friday but reports to work the following Monday?
ruling on the validity or invalidity of such questioned policy.
(3) if he is absent on a Monday but present the preceding Friday?
The Civil Service Act of 1959 (R.A. No. 2260) conferred upon the Commissioner of Civil
Service the following powers and duties: - (1) He is considered on leave without pay for 4 days covering Friday to Monday;

Sec. 16 (e) with the approval by the President to prescribe, amend and - (2) He is considered on leave without pay for 3 days from Friday to Sunday;
enforce suitable rules and regulations for carrying into effect the
provisions of this Civil Service Law, and the rules prescribed pursuant
to the provisions of this law shall become effective thirty days after - (3) He is considered on leave without pay for 3 days from Saturday to Monday.
publication in the Official Gazette;
When an administrative or executive agency renders an opinion or issues a statement of
xxx xxx xxx policy, it merely interprets a pre-existing law; and the administrative interpretation of the
law is at best advisory, for it is the courts that finally determine what the law means. 8 It
has also been held that interpretative regulations need not be published. 9
(k) To perform other functions that properly belong to a central
personnel agency. 5
In promulgating as early as 12 February 1965 the questioned policy, the Civil Service
Commission interpreted the provisions of Republic Act No. 2625 (which took effect on 17
Pursuant to the foregoing provisions, the Commission promulgated the herein challenged June 1960) amending the Revised Administrative Code, and which stated as follows:
policy. Said policy was embodied in a 2nd Indorsement dated 12 February 1965 of the

27
Sec. 1. Sections two hundred eighty-four and two hundred eighty-five- against which their absences may be charged with pay, as its letters speak only of leaves of
A of the Administrative Code, as amended, are further amended to read absence with full pay. The respondent Commission ruled that a reading of R.A. 2625 does
as follows: not show that a government employee who is on leave of absence without pay on a day
before or immediately preceding a Saturday, Sunday or legal holiday is entitled to payment
Sec. 284. After at least six months' continues (sic) of his salary for said days.
faithful, and satisfactory service, the President or
proper head of department, or the chief of office in Administrative construction, if we may repeat, is not necessarily binding upon the courts.
the case of municipal employees may, in his Action of an administrative agency may be disturbed or set aside by the judicial department
discretion, grant to an employee or laborer, whether if there is an error of law, or abuse of power or lack of jurisdiction or grave abuse of
permanent or temporary, of the national discretion clearly conflicting with either the letter or the spirit of a legislative enactment. 10
government, the provincial government, the
government of a chartered city, of a municipality, We find this petition to be impressed with merit.
of a municipal district or of government-owned or
controlled corporations other than those mentioned
in Section two hundred sixty-eight, two hundred As held in Hidalgo vs. Hidalgo: 11
seventy-one and two hundred seventy-four hereof,
fifteen days vacation leave of absence with full pay, . . . . where the true intent of the law is clear that calls for the
exclusive of Saturdays, Sundays and holidays, for application of the cardinal rule of statutory construction that such intent
each calendar year of service. or spirit must prevail over the letter thereof, for whatever is within the
spirit of a statute is within the statute, since adherence to the letter
Sec. 285-A. In addition to the vacation leave would result in absurdity, injustice and contradictions and would defeat
provided in the two preceding sections each the plain and vital purpose of the statute.
employee or laborer, whether permanent or
temporary, of the national government, the The intention of the legislature in the enactment of R.A. 2625 may be gleaned from, among
provincial government, the government of a others, the sponsorship speech of Senator Arturo M. Tolentino during the second reading of
chartered city, of a municipality or municipal House Bill No. 41 (which became R.A. 2625). He said:
district in any regularly and specially organized
province, other than those mentioned in Section The law actually provides for sick leave and vacation leave of 15 days
two hundred sixty-eight, two hundred seventy-one each year of service to be with full pay. But under the present law, in
and two hundred seventy-four hereof, shall be computing these periods of leaves, Saturday, Sunday and holidays are
entitled to fifteen days of sick leave for each year included in the computation so that if an employee should become sick
of service with full pay, exclusive of Saturdays, and absent himself on a Friday and then he reports for work on a
Sundays and holidays: Provided, That such sick Tuesday, in the computation of the leave the Saturday and Sunday will
leave will be granted by the President, Head of be included, so that he will be considered as having had a leave of
Department or independent office concerned, or the Friday, Saturday, Sunday and Monday, or four days.
chief of office in case of municipal employees,
only on account of sickness on the part of the
employee or laborer concerned or of any member The purpose of the present bill is to exclude from the computation of
of his immediate family. the leave those days, Saturdays and Sundays, as well as holidays,
because actually the employee is entitled not to go to office during
those days. And it is unfair and unjust to him that those days should be
The Civil Service Commission in its here questioned Resolution No. 90-797 construed counted in the computation of leaves. 12
R.A. 2625 as referring only to government employees who have earned leave credits

28
With this in mind, the construction by the respondent Commission of R.A. 2625 is not in particular relations, individual and corporate; and particular conduct,
accordance with the legislative intent. R.A. 2625 specifically provides that government private and official.
employees are entitled to fifteen (15) days vacation leave of absence with full pay and
fifteen (15) days sick leave with full pay, exclusive of Saturdays, Sundays and Holidays in To allow all the affected government employees, similarly situated as petitioner herein, to
both cases. Thus, the law speaks of the granting of a right and the law does not provide for claim their deducted salaries resulting from the past enforcement of the herein invalidated
a distinction between those who have accumulated leave credits and those who have CSC policy, would cause quite a heavy financial burden on the national and local
exhausted their leave credits in order to enjoy such right. Ubi lex non distinguit nec nos governments considering the length of time that such policy has been effective. Also,
distinguere debemus. The fact remains that government employees, whether or not they administrative and practical considerations must be taken into account if this ruling will
have accumulated leave credits, are not required by law to work on Saturdays, Sundays and have a strict restrospective application. The Court, in this connection, calls upon the
Holidays and thus they can not be declared absent on such non-working days. They cannot respondent Commission and the Congress of the Philippines, if necessary, to handle this
be or are not considered absent on non-working days; they cannot and should not be problem with justice and equity to all affected government employees.
deprived of their salary corresponding to said non-working days just because they were
absent without pay on the day immediately prior to, or after said non-working days. A
different rule would constitute a deprivation of property without due process. It must be pointed out, however, that after CSC Memorandum Circular No. 16 Series of
1991 — amending the herein invalidated policy — was promulgated on 26 April 1991,
deductions from salaries made after said date in contravention of the new CSC policy must
Furthermore, before their amendment by R.A. 2625, Sections 284 and 285-A of the be restored to the government employees concerned.
Revised Administrative Code applied to all government employee without any distinction.
It follows that the effect of the amendment similarly applies to all employees enumerated in
Sections 284 and 285-A, whether or not they have accumulated leave credits. WHEREFORE, the petition is GRANTED, CSC Resolutions No. 90-497 and 90-797 are
declared NULL and VOID. The respondent Commission is directed to take the appropriate
action so that petitioner shall be paid the amounts previously but unlawfully deducted from
As the questioned CSC policy is here declared invalid, we are next confronted with the his monthly salary as above indicated. No costs.
question of what effect such invalidity will have. Will all government employees on a
monthly salary basis, deprived of their salaries corresponding to Saturdays, Sundays or
legal holidays (as herein petitioner was so deprived) since 12 February 1965, be entitled to SO ORDERED.
recover the amounts corresponding to such non-working days?

The general rule vis-a-vis legislation is that an unconstitutional act is not a law; it confers
no rights; it imposes no duties; it affords no protection; it creates no office; it is in legal
contemplation as inoperative as though it had never been passed. 13

But, as held in Chicot County Drainage District vs. Baxter State


Bank:14

. . . . It is quite clear, however, that such broad statements as to the


effect of a determination of unconstitutionality must be taken with
qualifications. The actual existence of a statute, prior to such
determination is an operative fact and may have consequences which
cannot always be ignored. The past cannot always be erased by a new
judicial declaration. The effect of the subsequent ruling as to invalidity
may have to be considered in various aspects — with respect to

29
PHILIPPINE AIRLINES, INC., petitioner, vs. CIVIL AERONAUTICS BOARD and
GRAND INTERNATIONAL AIRWAYS, INC., respondents.

DECISION
TORRES, JR., J.:

This Special Civil Action for Certiorari and Prohibition under Rule 65 of the Rules
of Court seeks to prohibit respondent Civil Aeronautics Board from exercising jurisdiction
over private respondent's Application for the issuance of a Certificate of Public
Convenience and Necessity, and to annul and set aside a temporary operating permit issued
by the Civil Aeronautics Board in favor of Grand International Airways (GrandAir, for
brevity) allowing the same to engage in scheduled domestic air transportation services,
particularly the Manila-Cebu, Manila-Davao, and converse routes.
The main reason submitted by petitioner Philippine Airlines, Inc. (PAL) to support its
petition is the fact that GrandAir does not possess a legislative franchise authorizing it to
engage in air transportation service within the Philippines or elsewhere. Such franchise is,
allegedly, a requisite for the issuance of a Certificate of Public Convenience or Necessity
by the respondent Board, as mandated under Section 11, Article XII of the Constitution.
Respondent GrandAir, on the other hand, posits that a legislative franchise is no
longer a requirement for the issuance of a Certificate of Public Convenience and Necessity
or a Temporary Operating Permit, following the Court's pronouncements in the case of
Albano vs. Reyes,[1] as restated by the Court of Appeals in Avia Filipinas International vs.
Civil Aeronautics Board[2] and Silangan Airways, Inc. vs. Grand International Airways,
Inc., and the Hon. Civil Aeronautics Board.[3]
On November 24, 1994, private respondent GrandAir applied for a Certificate of
Public Convenience and Necessity with the Board, which application was docketed as CAB
Case No. EP-12711.[4]Accordingly, the Chief Hearing Officer of the CAB issued a Notice
of Hearing setting the application for initial hearing on December 16, 1994, and directing
GrandAir to serve a copy of the application and corresponding notice to all scheduled
Philippine Domestic operators. On December 14, 1994, GrandAir filed its Compliance, and
requested for the issuance of a Temporary Operating Permit. Petitioner, itself the holder of
a legislative franchise to operate air transport services, filed an Opposition to the
application for a Certificate of Public Convenience and Necessity on December 16, 1995
on the following grounds:

"A. The CAB has no jurisdiction to hear the petitioner's application until the latter has first
[G.R. No. 119528. March 26, 1997] obtained a franchise to operate from Congress.

B. The petitioner's application is deficient in form and substance in that:

30
1. The application does not indicate a route structure including a computation of trunkline, "1. The applicant does not possess the required fitness and capability of operating the
secondary and rural available seat kilometers (ASK) which shall always be maintained at a services applied for under RA 776; and,
monthly level at least 5% and 20% of the ASK offered into and out of the proposed base of
operations for rural and secondary, respectively. 2. Applicant has failed to prove that there is clear and urgent public need for the services
applied for."[6]
2. It does not contain a project/feasibility study, projected profit and loss statements,
projected balance sheet, insurance coverage, list of personnel, list of spare parts inventory, On December 23, 1994, the Board promulgated Resolution No. 119(92) approving
tariff structure, documents supportive of financial capacity, route flight schedule, contracts the issuance of a Temporary Operating Permit in favor of Grand Air [7] for a period of three
on facilities (hangars, maintenance, lot) etc. months, i.e., from December 22, 1994 to March 22, 1994. Petitioner moved for the
reconsideration of the issuance of the Temporary Operating Permit on January 11, 1995,
C. Approval of petitioner's application would violate the equal protection clause of the but the same was denied in CAB Resolution No. 02 (95) on February 2, 1995. [8] In the said
constitution. Resolution, the Board justified its assumption of jurisdiction over GrandAir's application.

D. There is no urgent need and demand for the services applied for. "WHEREAS, the CAB is specifically authorized under Section 10-C (1) of Republic Act
No. 776 as follows:
E. To grant petitioner's application would only result in ruinous competition contrary to
Section 4(d) of R.A. 776."[5] '(c) The Board shall have the following specific powers and duties:

At the initial hearing for the application, petitioner raised the issue of lack of (1) In accordance with the provision of Chapter IV of this Act, to issue, deny, amend revise,
jurisdiction of the Board to hear the application because GrandAir did not possess a alter, modify, cancel, suspend or revoke, in whole or in part, upon petitioner-complaint, or
legislative franchise. 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
On December 20, 1994, the Chief Hearing Officer of CAB issued an Order denying permit shall be issued with the approval of the President of the Republic of the
petitioner's Opposition. Pertinent portions of the Order read: Philippines."

"PAL alleges that the CAB has no jurisdiction to hear the petitioner's application until the WHEREAS, such authority was affirmed in PAL vs. CAB, (23 SCRA 992), wherein the
latter has first obtained a franchise to operate from Congress. Supreme Court held that the CAB can even on its own initiative, grant a TOP even before
the presentation of evidence;
The Civil Aeronautics Board has jurisdiction to hear and resolve the application. In Avia
Filipina vs. CAB, CA G.R. No. 23365, it has been ruled that under Section 10 (c) (I) of WHEREAS, more recently, Avia Filipinas vs. CAB, (CA-GR No. 23365), promulgated on
R.A. 776, the Board possesses this specific power and duty. October 30, 1991, held that in accordance with its mandate, the CAB can issue not only a
TOP but also a Certificate of Public Convenience and Necessity (CPCN) to a qualified
In view thereof, the opposition of PAL on this ground is hereby denied. applicant therefor in the absence of a legislative franchise, citing therein as basis the
decision of Albano vs. Reyes (175 SCRA 264) which provides (inter alia) that:
SO ORDERED."
a) Franchises by Congress are not required before each and every public utility may operate
Meantime, on December 22, 1994, petitioner this time, opposed private respondent's when the law has granted certain administrative agencies the power to grant licenses for or
application for a temporary permit maintaining that: to authorize the operation of certain public utilities;

31
b) The Constitutional provision in Article XII, Section 11 that the issuance of a franchise, and Necessity and/or permit to engage in air commerce or air transportation to an
certificate or other form of authorization for the operation of a public utility does not individual or entity.
necessarily imply that only Congress has the power to grant such authorization since our
statute books are replete with laws granting specified agencies in the Executive Branch the You state that during the hearing on the application of Cebu Air for a congressional
power to issue such authorization for certain classes of public utilities. franchise, the House Committee on Corporations and Franchises contended that under the
present Constitution, the CAB may not issue the abovestated certificate or permit, unless
WHEREAS, Executive Order No. 219 which took effect on 22 January 1995, provides in the individual or entity concerned possesses a legislative franchise. You believe otherwise,
Section 2.1 that a minimum of two (2) operators in each route/link shall be encouraged and however, for the reason that under R.A. No. 776, as amended, the CAB is explicitly
that routes/links presently serviced by only one (1) operator shall be open for entry to empowered to issue operating permits or certificates of public convenience and necessity
additional operators. and that this statutory provision is not inconsistent with the current charter.

RESOLVED, (T)HEREFORE, that the Motion for Reconsideration filed by Philippine We concur with the view expressed by the House Committee on Corporations and
Airlines on January 05, 1995 on the Grant by this Board of a Temporary Operating Permit Franchises. In an opinion rendered in favor of your predecessor-in-office, this
(TOP) to Grand International Airways, Inc. alleging among others that the CAB has no Department observed that,-
such jurisdiction, is hereby DENIED, as it hereby denied, in view of the foregoing and
considering that the grounds relied upon by the movant are not indubitable." xxx it is useful to note the distinction between the franchise to
operate and a permit to commence operation. The former is
On March 21, 1995, upon motion by private respondent, the temporary permit was sovereign and legislative in nature; it can be conferred only by the
extended for a period of six (6) months or up to September 22, 1995. lawmaking authority(17 W and P, pp. 691-697). The latter is
administrative and regulatory in character (In re Application of
Hence this petition, filed on April 3, 1995. Fort Crook-Bellevue Boulevard Line, 283 NW 223); it is granted
Petitioners argue that the respondent Board acted beyond its powers and jurisdiction by an administrative agency, such as the Public Service
in taking cognizance of GrandAirs application for the issuance of a Certificate of Public Commission [now Board of Transportation], in the case of land
Convenience and Necessity, and in issuing a temporary operating permit in the meantime, transportation, and the Civil Aeronautics Board, in case of air
since GrandAir has not been granted and does not possess a legislative franchise to engage services. While a legislative franchise is a pre-requisite to a grant
in scheduled domestic air transportation. A legislative franchise is necessary before anyone of a certificate of public convenience and necessity to an airline
may engage in air transport services, and a franchise may only be granted by Congress. company, such franchise alone cannot constitute the authority to
This is the meaning given by the petitioner upon a reading of Section 11, Article XII,[9] and commence operations, inasmuch as there are still matters relevant
Section 1, Article VI,[10] of the Constitution. to such operations which are not determined in the franchise, like
rates, schedules and routes, and which matters are resolved in the
To support its theory, PAL submits Opinion No. 163, S. 1989 of the Department of process of issuance of permit by the administrative. (Secretary of
Justice, which reads: Justice opn No. 45, s. 1981)

Dr. Arturo C. Corona


Executive Director Indeed, authorities are agreed that a certificate of public convenience and necessity is an
authorization issued by the appropriate governmental agency for the operation of public
Civil Aeronautics Board
PPL Building, 1000 U.N. Avenue services for which a franchise is required by law (Almario, Transportation and Public
Service Law, 1977 Ed., p. 293; Agbayani, Commercial Law of the Phil., Vol. 4, 1979 Ed.,
Ermita, Manila
Sir: pp. 380-381).

Based on the foregoing, it is clear that a franchise is the legislative authorization to engage
This has reference to your request for opinion on the necessity of a legislative franchise
before the Civil Aeronautics Board (CAB) may issue a Certificate of Public Convenience in a business activity or enterprise of a public nature, whereas a certificate of public

32
convenience and necessity is a regulatory measure which constitutes the franchises "The franchise is a legislative grant, whether made directly by the legislature itself, or by
authority to commence operations. It is thus logical that the grant of the former should any one of its properly constituted instrumentalities. The grant, when made, binds the
precede the latter. public, and is, directly or indirectly, the act of the state." [13]

Please be guided accordingly. 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
(SGD.) SEDFREY A. ORDOEZ the respondent Board, such that Congressional mandate for the approval of such authority
is no longer necessary.
Secretary of Justice" 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
Respondent GrandAir, on the other hand, relies on its interpretation of the provisions modern life, the multiplication of the subjects of governmental regulation, and the
of Republic Act 776, which follows the pronouncements of the Court of Appeals in the increased difficulty of administering the laws, there is a constantly growing tendency
cases of Avia Filipinas vs. Civil Aeronautics Board, and Silangan Airways, Inc. vs. Grand towards the delegation of greater powers by the legislature, and towards the approval of the
International Airways (supra). practice by the courts.[14] 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
In both cases, the issue resolved was whether or not the Civil Aeronautics Board can grant franchises has frequently been delegated, even to agencies other than those of a
issue the Certificate of Public Convenience and Necessity or Temporary Operating Permit legislative nature.[15] In pursuance of this, it has been held that privileges conferred by grant
to a prospective domestic air transport operator who does not possess a legislative franchise by local authorities as agents for the state constitute as much a legislative franchise as
to operate as such. Relying on the Court's pronouncement in Albano vs. Reyes (supra), the though the grant had been made by an act of the Legislature. [16]
Court of Appeals upheld the authority of the Board to issue such authority, even in the
absence of a legislative franchise, which authority is derived from Section 10 of Republic The trend of modern legislation is to vest the Public Service Commissioner with the
Act 776, as amended by P.D. 1462.[11] power to regulate and control the operation of public services under reasonable rules and
regulations, and as a general rule, courts will not interfere with the exercise of that
The Civil Aeronautics Board has jurisdiction over GrandAir's Application for a discretion when it is just and reasonable and founded upon a legal right. [17]
Temporary Operating Permit. This rule has been established in the case of Philippine Air
Lines Inc., vs. Civil Aeronautics Board, promulgated on June 13, 1968. [12] The Board is It is this policy which was pursued by the Court in Albano vs. Reyes. Thus, a reading
expressly authorized by Republic Act 776 to issue a temporary operating permit or of the pertinent issuances governing the Philippine Ports Authority, [18] proves that the PPA
Certificate of Public Convenience and Necessity, and nothing contained in the said law is empowered to undertake by itself the operation and management of the Manila
negates the power to issue said permit before the completion of the applicant's evidence and International Container Terminal, or to authorize its operation and management by another
that of the oppositor thereto on the main petition. Indeed, the CAB's authority to grant a by contract or other means, at its option. The latter power having been delegated to the
temporary permit "upon its own initiative" strongly suggests the power to exercise said PPA, a franchise from Congress to authorize an entity other than the PPA to operate and
authority, even before the presentation of said evidence has begun. Assuming arguendo that manage the MICP becomes unnecessary.
a legislative franchise is prerequisite to the issuance of a permit, the absence of the same Given the foregoing postulates, we find that the Civil Aeronautics Board has the
does not affect the jurisdiction of the Board to hear the application, but tolls only upon the authority to issue a Certificate of Public Convenience and Necessity, or Temporary
ultimate issuance of the requested permit. Operating Permit to a domestic air transport operator, who, though not possessing a
The power to authorize and control the operation of a public utility is admittedly a legislative franchise, meets all the other requirements prescribed by the law. Such
prerogative of the legislature, since Congress is that branch of government vested with requirements were enumerated in Section 21 of R.A. 776.
plenary powers of legislation. 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

33
exclusive authority to issue the same. Franchises issued by Congress are not required Many and varied are the definitions of certificates of public convenience which
before each and every public utility may operate. [19] In many instances, Congress has seen it courts and legal writers have drafted. Some statutes use the terms "convenience and
fit to delegate this function to government agencies, specialized particularly in their necessity" while others use only the words "public convenience." The terms "convenience
respective areas of public service. 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
A reading of Section 10 of the same reveals the clear intent of Congress to delegate word 'necessity' is so connected, not as an additional requirement but to modify and qualify
the authority to regulate the issuance of a license to operate domestic air transport services: 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
SECTION 10. Powers and Duties of the Board. (A) Except as otherwise provided herein, the public and supply a need which the existing facilities do not adequately afford. It does
the Board shall have the power to regulate the economic aspect of air transportation, and not mean or require an actual physical necessity or an indispensable thing. [21]
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 "The terms 'convenience' and 'necessity' are to be construed together, although they are not
property rights, equipment, facilities and franchise, insofar as may be necessary for the synonymous, and effect must be given both. The convenience of the public must not be
purpose of carrying out the provision of this Act. circumscribed by according to the word 'necessity' its strict meaning or an essential
requisites."[22]
In support of the Board's authority as stated above, it is given the following specific
powers and duties: 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
(C) The Board shall have the following specific powers and duties: 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
(1) In accordance with the provisions of Chapter IV of this Act, to issue, deny, amend, indicating the certificate.
revise, alter, modify, cancel, suspend or revoke in whole or in part upon petition or Congress, by giving the respondent Board the power to issue permits for the
complaint or upon its own initiative any Temporary Operating Permit or Certificate of operation of domestic transport services, has delegated to the said body the authority to
Public Convenience and Necessity: Provided however, That in the case of foreign air determine the capability and competence of a prospective domestic air transport operator to
carriers, the permit shall be issued with the approval of the President of the Republic of the engage in such venture. This is not an instance of transforming the respondent Board into a
Philippines. mini-legislative body, with unbridled authority to choose who should be given authority to
operate domestic air transport services.
Petitioner argues that since R.A. 776 gives the Board the authority to issue
"Certificates of Public Convenience and Necessity", this, according to petitioner, means "To be valid, the delegation itself must be circumscribed by legislative restrictions, not a
that a legislative franchise is an absolute requirement. It cites a number of authorities "roving commission" that will give the delegate unlimited legislative authority. It must not
supporting the view that a Certificate of Public Convenience and Necessity is issued to a be a delegation "running riot" and "not canalized with banks that keep it from
public service for which a franchise is required by law, as distinguished from a "Certificate overflowing." Otherwise, the delegation is in legal effect an abdication of legislative
of Public Convenience" which is an authorization issued for the operation of public authority, a total surrender by the legislature of its prerogatives in favor of the delegate." [23]
services for which no franchise, either municipal or legislative, is required by law. [20]
This submission relies on the premise that the authority to issue a certificate of public Congress, in this instance, has set specific limitations on how such authority should
convenience and necessity is a regulatory measure separate and distinct from the authority be exercised.
to grant a franchise for the operation of the public utility subject of this particular case,
which is exclusively lodged by petitioner in Congress. Firstly, Section 4 of R.A. No. 776, as amended, sets out the following guidelines or
policies:
We do not agree with the petitioner.

34
"SECTION 4. Declaration of policies. In the exercise and performance of its powers and is required by the public convenience and necessity; otherwise the application shall be
duties under this Act, the Civil Aeronautics Board and the Civil Aeronautics Administrator denied.
shall consider the following, among other things, as being in the public interest, and in
accordance with the public convenience and necessity: 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
(a) The development and utilization of the air potential of the Philippines; entities that are not deserving of public service. [25]
In sum, respondent Board should now be allowed to continue hearing the application
(b) The encouragement and development of an air transportation system properly adapted of GrandAir for the issuance of a Certificate of Public Convenience and Necessity, there
to the present and future of foreign and domestic commerce of the Philippines, of the Postal being no legal obstacle to the exercise of its jurisdiction.
Service and of the National Defense;
ACCORDINGLY, in view of the foregoing considerations, the Court RESOLVED
(c) The regulation of air transportation in such manner as to recognize and preserve the to DISMISS the instant petition for lack of merit. The respondent Civil Aeronautics Board
inherent advantages of, assure the highest degree of safety in, and foster sound economic is hereby DIRECTED to CONTINUE hearing the application of respondent Grand
condition in, such transportation, and to improve the relations between, and coordinate International Airways, Inc. for the issuance of a Certificate of Public Convenience and
transportation by, air carriers; Necessity.
SO ORDERED.
(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 destructive competitive 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 transportation.

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 Philippines. [24]

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

35
G.R. No. 101279 August 6, 1992

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,


vs.
HON. RUBEN D. TORRES, as Secretary of the Department of Labor & Employment,
and JOSE N. SARMIENTO, as Administrator of the PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATION, respondents.

De Guzman, Meneses & Associates for petitioner.

GRIÑO-AQUINO, J.:

This petition for prohibition with temporary restraining order was filed by the Philippine
Association of Service Exporters (PASEI, for short), to prohibit and enjoin the Secretary of
the Department of Labor and Employment (DOLE) and the Administrator of the Philippine
Overseas Employment Administration (or POEA) from enforcing and implementing DOLE
Department Order No. 16, Series of 1991 and POEA Memorandum Circulars Nos. 30 and
37, Series of 1991, temporarily suspending the recruitment by private employment agencies
of Filipino domestic helpers for Hong Kong and vesting in the DOLE, through the facilities
of the POEA, the task of processing and deploying such workers.

PASEI is the largest national organization of private employment and recruitment agencies
duly licensed and authorized by the POEA, to engaged in the business of obtaining
overseas employment for Filipino landbased workers, including domestic helpers.

On June 1, 1991, as a result of published stories regarding the abuses suffered by Filipino
housemaids employed in Hong Kong, DOLE Secretary Ruben D. Torres issued Department
Order No. 16, Series of 1991, temporarily suspending the recruitment by private
employment agencies of "Filipino domestic helpers going to Hong Kong" (p. 30, Rollo).
The DOLE itself, through the POEA took over the business of deploying such Hong Kong-
bound workers.

In view of the need to establish mechanisms that will enhance the


protection for Filipino domestic helpers going to Hong Kong, the
recruitment of the same by private employment agencies is hereby
temporarily suspended effective 1 July 1991. As such, the DOLE

36
through the facilities of the Philippine Overseas Employment 2. Manpower Pooling
Administration shall take over the processing and deployment of
household workers bound for Hong Kong, subject to guidelines to be 3. Worker Training and Briefing
issued for said purpose.
4. Processing and Deployment
In support of this policy, all DOLE Regional Directors and the Bureau
of Local Employment's regional offices are likewise directed to
coordinate with the POEA in maintaining a manpower pool of 5. Welfare Programs
prospective domestic helpers to Hong Kong on a regional basis.
II. Documentary Requirements and Other Conditions for Accreditation
For compliance. (Emphasis ours; p. 30, Rollo.) of Hong Kong Recruitment Agencies or Principals

Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30, Recruitment agencies in Hong Kong intending to hire Filipino DHs for
Series of 1991, dated July 10, 1991, providing GUIDELINES on the Government their employers may negotiate with the HWPU in Manila directly or
processing and deployment of Filipino domestic helpers to Hong Kong and the through the Philippine Labor Attache's Office in Hong Kong.
accreditation of Hong Kong recruitment agencies intending to hire Filipino domestic
helpers. xxx xxx xxx

Subject: Guidelines on the Temporary Government Processing and X. Interim Arrangement


Deployment of Domestic Helpers to Hong Kong.
All contracts stamped in Hong Kong as of June 30 shall continue to be
Pursuant to Department Order No. 16, series of 1991 and in order to processed by POEA until 31 July 1991 under the name of the
operationalize the temporary government processing and deployment Philippine agencies concerned. Thereafter, all contracts shall be
of domestic helpers (DHs) to Hong Kong resulting from the temporary processed with the HWPU.
suspension of recruitment by private employment agencies for said
skill and host market, the following guidelines and mechanisms shall Recruitment agencies in Hong Kong shall submit to the Philippine
govern the implementation of said policy. Consulate General in Hong kong a list of their accepted applicants in
their pool within the last week of July. The last day of acceptance shall
I. Creation of a joint POEA-OWWA Household Workers Placement be July 31 which shall then be the basis of HWPU in accepting
Unit (HWPU) contracts for processing. After the exhaustion of their respective pools
the only source of applicants will be the POEA manpower pool.
An ad hoc, one stop Household Workers Placement Unit [or HWPU]
under the supervision of the POEA shall take charge of the various For strict compliance of all concerned. (pp. 31-35, Rollo.)
operations involved in the Hong Kong-DH industry segment:
On August 1, 1991, the POEA Administrator also issued Memorandum Circular No. 37,
The HWPU shall have the following functions in coordination with Series of 1991, on the processing of employment contracts of domestic workers for Hong
appropriate units and other entities concerned: Kong.

1. Negotiations with and Accreditation of Hong Kong Recruitment TO: All Philippine and Hong Kong Agencies engaged in the
Agencies recruitment of Domestic helpers for Hong Kong

37
Further to Memorandum Circular No. 30, series of 1991 pertaining to There is no merit in the first and second grounds of the petition.
the government processing and deployment of domestic helpers (DHs)
to Hong Kong, processing of employment contracts which have been Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate
attested by the Hong Kong Commissioner of Labor up to 30 June 1991 recruitment and placement activities.
shall be processed by the POEA Employment Contracts Processing
Branch up to 15 August 1991 only.
Art. 36. Regulatory Power. — The Secretary of Labor shall have the
power to restrict and regulate the recruitment and placement activities
Effective 16 August 1991, all Hong Kong recruitment agent/s hiring of all agencies within the coverage of this title [Regulation of
DHs from the Philippines shall recruit under the new scheme which Recruitment and Placement Activities] and is hereby authorized to
requires prior accreditation which the POEA. issue orders and promulgate rules and regulations to carry out the
objectives and implement the provisions of this title. (Emphasis ours.)
Recruitment agencies in Hong Kong may apply for accreditation at the
Office of the Labor Attache, Philippine Consulate General where a On the other hand, the scope of the regulatory authority of the POEA, which was created by
POEA team is posted until 31 August 1991. Thereafter, those who Executive Order No. 797 on May 1, 1982 to take over the functions of the Overseas
failed to have themselves accredited in Hong Kong may proceed to the Employment Development Board, the National Seamen Board, and the overseas
POEA-OWWA Household Workers Placement Unit in Manila for employment functions of the Bureau of Employment Services, is broad and far-ranging for:
accreditation before their recruitment and processing of DHs shall be
allowed.
1. Among the functions inherited by the POEA from the defunct Bureau
of Employment Services was the power and duty:
Recruitment agencies in Hong Kong who have some accepted
applicants in their pool after the cut-off period shall submit this list of
workers upon accreditation. Only those DHs in said list will be allowed "2. To establish and maintain a registration and/or
processing outside of the HWPU manpower pool. licensing system to regulate private sector
participation in the recruitment and placement of
workers, locally and overseas, . . ." (Art. 15, Labor
For strict compliance of all concerned. (Emphasis supplied, p. Code, Emphasis supplied). (p. 13, Rollo.)
36, Rollo.)
2. It assumed from the defunct Overseas Employment Development
On September 2, 1991, the petitioner, PASEI, filed this petition for prohibition to annul the Board the power and duty:
aforementioned DOLE and POEA circulars and to prohibit their implementation for the
following reasons:
3. To recruit and place workers for overseas
employment of Filipino contract workers on a
1. that the respondents acted with grave abuse of discretion and/or in government to government arrangement and in
excess of their rule-making authority in issuing said circulars; such other sectors as policy may dictate . . . (Art.
17, Labor Code.) (p. 13, Rollo.)
2. that the assailed DOLE and POEA circulars are contrary to the
Constitution, are unreasonable, unfair and oppressive; and 3. From the National Seamen Board, the POEA took over:

3. that the requirements of publication and filing with the Office of the 2. To regulate and supervise the activities of agents
National Administrative Register were not complied with. or representatives of shipping companies in the
hiring of seamen for overseas employment; and

38
secure the best possible terms of employment for Hongkong. [They are reasonable, valid and justified under the general
contract seamen workers and secure compliance welfare clause of the Constitution, since the recruitment and
therewith. (Art. 20, Labor Code.) deployment business, as it is conducted today, is affected with public
interest.
The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not
unconstitutional, unreasonable and oppressive. It has been necessitated by "the growing xxx xxx xxx
complexity of the modern society" (Solid Homes, Inc. vs. Payawal, 177 SCRA 72, 79).
More and more administrative bodies are necessary to help in the regulation of society's The alleged takeover [of the business of recruiting and placing Filipino
ramified activities. "Specialized in the particular field assigned to them, they can deal with domestic helpers in Hongkong] is merely a remedial measure, and
the problems thereof with more expertise and dispatch than can be expected from the expires after its purpose shall have been attained. This is evident from
legislature or the courts of justice" (Ibid.). the tenor of Administrative Order No. 16 that recruitment of Filipino
domestic helpers going to Hongkong by private employment agencies
It is noteworthy that the assailed circulars do not prohibit the petitioner from engaging in are hereby "temporarily suspended effective July 1, 1991."
the recruitment and deployment of Filipino landbased workers for overseas employment. A
careful reading of the challenged administrative issuances discloses that the same fall The alleged takeover is limited in scope, being confined to recruitment
within the "administrative and policing powers expressly or by necessary implication of domestic helpers going to Hongkong only.
conferred" upon the respondents (People vs. Maceren, 79 SCRA 450). The power to
"restrict and regulate conferred by Article 36 of the Labor Code involves a grant of police
power (City of Naga vs. Court of Appeals, 24 SCRA 898). To "restrict" means "to confine, xxx xxx xxx
limit or stop" (p. 62, Rollo) and whereas the power to "regulate" means "the power to
protect, foster, promote, preserve, and control with due regard for the interests, first and . . . the justification for the takeover of the processing and deploying of
foremost, of the public, then of the utility and of its patrons" (Philippine Communications domestic helpers for Hongkong resulting from the restriction of the
Satellite Corporation vs. Alcuaz, 180 SCRA 218). scope of petitioner's business is confined solely to the unscrupulous
practice of private employment agencies victimizing applicants for
The Solicitor General, in his Comment, aptly observed: employment as domestic helpers for Hongkong and not the whole
recruitment business in the Philippines. (pp. 62-65, Rollo.)
. . . Said Administrative Order [i.e., DOLE Administrative Order No.
16] merely restricted the scope or area of petitioner's business The questioned circulars are therefore a valid exercise of the police power as delegated to
operations by excluding therefrom recruitment and deployment of the executive branch of Government.
domestic helpers for Hong Kong till after the establishment of the
"mechanisms" that will enhance the protection of Filipino domestic Nevertheless, they are legally invalid, defective and unenforceable for lack of power
helpers going to Hong Kong. In fine, other than the recruitment and publication and filing in the Office of the National Administrative Register as required in
deployment of Filipino domestic helpers for Hongkong, petitioner may Article 2 of the Civil Code, Article 5 of the Labor Code and Sections 3(1) and 4, Chapter 2,
still deploy other class of Filipino workers either for Hongkong and Book VII of the Administrative Code of 1987 which provide:
other countries and all other classes of Filipino workers for other
countries. Art. 2. Laws shall take effect after fifteen (15) days following the
completion of their publication in the Official Gazatte, unless it is
Said administrative issuances, intended to curtail, if not to end, rampant otherwise provided. . . . (Civil Code.)
violations of the rule against excessive collections of placement and
documentation fees, travel fees and other charges committed by private Art. 5. Rules and Regulations. — The Department of Labor and other
employment agencies recruiting and deploying domestic helpers to government agencies charged with the administration and enforcement

39
of this Code or any of its parts shall promulgate the necessary SO ORDERED
implementing rules and regulations. Such rules and regulations shall
become effective fifteen (15) days after announcement of their adoption in G.R. No. 78385 August 31, 1987
newspapers of general circulation. (Emphasis supplied, Labor Code, as
amended.)
PHILIPPINE CONSUMERS FOUNDATION, INC., petitioner,
Sec. 3. Filing. — (1) Every agency shall file with the University of the vs.
Philippines Law Center, three (3) certified copies of every rule adopted by it. THE SECRETARY OF EDUCATION, CULTURE AND SPORTS, respondent.
Rules in force on the date of effectivity of this Code which are not filed within
three (3) months shall not thereafter be the basis of any sanction against any
party or persons. (Emphasis supplied, Chapter 2, Book VII of the Administrative
Code of 1987.)
GANCAYCO, J.:
Sec. 4. Effectivity. — In addition to other rule-making requirements provided by
law not inconsistent with this Book, each rule shall become effective fifteen (15) This is an original Petition for prohibition with a prayer for the issuance of a writ of
days from the date of filing as above provided unless a different date is fixed by preliminary injunction.
law, or specified in the rule in cases of imminent danger to public health, safety
and welfare, the existence of which must be expressed in a statement
accompanying the rule. The agency shall take appropriate measures to make The record of the case discloses that the herein petitioner Philippine Consumers
emergency rules known to persons who may be affected by them. (Emphasis Foundation, Inc. is a non-stock, non-profit corporate entity duly organized and existing
supplied, Chapter 2, Book VII of the Administrative Code of 1987). under the laws of the Philippines. The herein respondent Secretary of Education, Culture
and Sports is a ranking cabinet member who heads the Department of Education, Culture
Once, more we advert to our ruling in Tañada vs. Tuvera, 146 SCRA 446 that: and Sports of the Office of the President of the Philippines.

. . . Administrative rules and regulations must also be published if their purpose On February 21, 1987, the Task Force on Private Higher Education created by the
is to enforce or implement existing law pursuant also to a valid delegation. (p. Department of Education, Culture and Sports (hereinafter referred to as the DECS)
447.) submitted a report entitled "Report and Recommendations on a Policy for Tuition and
Other School Fees." The report favorably recommended to the DECS the following courses
Interpretative regulations and those merely internal in nature, that is, regulating of action with respect to the Government's policy on increases in school fees for the
only the personnel of the administrative agency and not the public, need not be schoolyear 1987 to 1988 —
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. (p. 448.) (1) Private schools may be allowed to increase its total school fees by
not more than 15 per cent to 20 per cent without the need for the prior
We agree that publication must be in full or it is no publication at all since its
approval of the DECS. Schools that wish to increase school fees
purpose is to inform the public of the content of the laws. (p. 448.) beyond the ceiling would be subject to the discretion of the DECS;

For lack of proper publication, the administrative circulars in question may not be enforced and (2) Any private school may increase its total school fees in excess of
implemented. the ceiling, provided that the total schools fees will not exceed
P1,000.00 for the schoolyear in the elementary and secondary levels,
WHEREFORE, the writ of prohibition is GRANTED. The implementation of DOLE Department and P50.00 per academic unit on a semestral basis for the collegiate
Order No. 16, Series of 1991, and POEA Memorandum Circulars Nos. 30 and 37, Series of 1991, by level. 1
the public respondents is hereby SUSPENDED pending compliance with the statutory requirements of
publication and filing under the aforementioned laws of the land.

40
The DECS took note of the report of the Task Force and on the basis of the same, the 232, otherwise known as The Education Act of 1982, vests the DECS with the power to
DECS, through the respondent Secretary of Education, Culture and Sports (hereinafter regulate the educational system in the country, to wit:
referred to as the respondent Secretary), issued an Order authorizing, inter alia, the 15% to
20% increase in school fees as recommended by the Task Force. The petitioner sought a SEC. 57. Educations and powers of the Ministry. The Ministry shall:
reconsideration of the said Order, apparently on the ground that the increases were too
high. 2 Thereafter, the DECS issued Department Order No. 37 dated April 10, 1987
modifying its previous Order and reducing the increases to a lower ceiling of 10% to 15%, xxx xxx xxx
accordingly. 3 Despite this reduction, the petitioner still opposed the increases. On April 23,
1987, the petitioner, through counsel, sent a telegram to the President of the Philippines (3) Promulgate rules and regulations necessary for the administration,
urging the suspension of the implementation of Department Order No. 37. 4 No response supervision and regulation of the educational system in accordance
appears to have been obtained from the Office of the President. with declared policy.

Thus, on May 20, 1987, the petitioner, allegedly on the basis of the public interest, went to xxx xxx xxx 9
this Court and filed the instant Petition for prohibition, seeking that judgment be rendered
declaring the questioned Department Order unconstitutional. The thrust of the Petition is Section 70 of the same Act grants the DECS the power to issue rules which are likewise
that the said Department Order was issued without any legal basis. The petitioner also necessary to discharge its functions and duties under the law, to wit:
maintains that the questioned Department Order was issued in violation of the due process
clause of the Constitution in asmuch as the petitioner was not given due notice and hearing
before the said Department Order was issued. SEC. 70. Rule-making Authority. — The Minister of Education and
Culture, charged with the administration and enforcement of this Act,
shall promulgate the necessary implementing rules and regulations.
In support of the first argument, the petitioner argues that while the DECS is authorized by
law to regulate school fees in educational institutions, the power to regulate does not
always include the power to increase school fees. 5 In the absence of a statute stating otherwise, this power includes the power to prescribe
school fees. No other government agency has been vested with the authority to fix school
fees and as such, the power should be considered lodged with the DECS if it is to properly
Regarding the second argument, the petitioner maintains that students and parents are and effectively discharge its functions and duties under the law.
interested parties that should be afforded an opportunity for a hearing before school fees are
increased. In sum, the petitioner stresses that the questioned Order constitutes a denial of
substantive and procedural due process of law. We find the remaining argument of the petitioner untenable. The petitioner invokes the due
process clause of the Constitution against the alleged arbitrariness of the assailed
Department Order. The petitioner maintains that the due process clause requires that prior
Complying with the instructions of this Court, 6 the respondent Secretary submitted a notice and hearing are indispensable for the Department Order to be validly issued.
Comment on the Petition. 7The respondent Secretary maintains, inter alia, that the increase
in tuition and other school fees is urgent and necessary, and that the assailed Department
Order is not arbitrary in character. In due time, the petitioner submitted a Reply to the We disagree.
Comment. 8 Thereafter, We considered the case submitted for resolution.
The function of prescribing rates by an administrative agency may be either a legislative or
After a careful examination of the entire record of the case, We find the instant Petition an adjudicative function. If it were a legislative function, the grant of prior notice and
devoid of merit. hearing to the affected parties is not a requirement of due process. As regards rates
prescribed by an administrative agency in the exercise of its quasi-judicial function, prior
notice and hearing are essential to the validity of such rates. When the rules and/or rates
We are not convinced by the argument that the power to regulate school fees "does not laid down by an administrative agency are meant to apply to all enterprises of a given kind
always include the power to increase" such fees. Section 57 (3) of Batas Pambansa Blg. throughout the country, they may partake of a legislative character. Where the rules and the

41
rates imposed apply exclusively to a particular party, based upon a finding of fact, then its
function is quasi-judicial in character. 9a

Is Department Order No. 37 issued by the DECS in the exercise of its legislative function?
We believe so. The assailed Department Order prescribes the maximum school fees that G.R. No. 148083 July 21, 2006
may be charged by all private schools in the country for schoolyear 1987 to 1988. This
being so, prior notice and hearing are not essential to the validity of its issuance.
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
This observation notwithstanding, there is a failure on the part of the petitioner to show BICOLANDIA DRUG CORPORATION (Formerly known as ELMAS DRUG
clear and convincing evidence of such arbitrariness. As the record of the case discloses, the CO.), respondent.
DECS is not without any justification for the issuance of the questioned Department Order.
It would be reasonable to assume that the report of the Task Force created by the DECS, on
which it based its decision to allow an increase in school fees, was made judiciously. DECISION
Moreover, upon the instance of the petitioner, as it so admits in its Petition, the DECS had
actually reduced the original rates of 15% to 20% down to 10% to 15%, accordingly. Under VELASCO, JR., J.:
the circumstances peculiar to this case, We cannot consider the assailed Department Order
arbitrary. In cases of conflict between the law and the rules and regulations implementing the law, the
law shall always prevail. Should Revenue Regulations deviate from the law they seek to
Under the Rules of Court, it is presumed that official duty has been regularly implement, they will be struck down.
performed. 10 In the absence of proof to the contrary, that presumption prevails. This being
so, the burden of proof is on the party assailing the regularity of official proceedings. In the The Facts
case at bar, the petitioner has not successfully disputed the presumption.

In 1992, Republic Act No. 7432, otherwise known as "An Act to Maximize the
We commend the petitioner for taking the cudgels for the public, especially the parents and Contribution of Senior Citizens to Nation Building, Grant Benefits and Special Privileges
the students of the country. Its zeal in advocating the protection of the consumers in its and For Other Purposes," granted senior citizens several privileges, one of which was
activities should be lauded rather than discouraged. But a more convincing case should be obtaining a 20 percent discount from all establishments relative to the use of transportation
made out by it if it is to seek relief from the courts some time in the future. Petitioner must services, hotels and similar lodging establishments, restaurants and recreation centers and
establish that respondent acted without or in excess of her jurisdiction; or with grave abuse purchase of medicines anywhere in the country. 1 The law also provided that the private
of discretion, and there is no appeal or any other plain, speedy, and adequate remedy in the establishments giving the discount to senior citizens may claim the cost as tax credit. 2 In
ordinary course of law before the extraordinary writ of prohibition may issue. 11 compliance with the law, the Bureau of Internal Revenue issued Revenue Regulations No.
2-94, which defined "tax credit" as follows:
This Court, however, does not go to the extent of saying that it gives its
judicial imprimatur to future increases in school fees. The increases must not be Tax Credit – refers to the amount representing the 20% discount granted to a
unreasonable and arbitrary so as to amount to an outrageous exercise of government qualified senior citizen by all establishments relative to their utilization of
authority and power. In such an eventuality, this Court will not hesitate to exercise the transportation services, hotels and similar lodging establishments, restaurants,
power of judicial review in its capacity as the ultimate guardian of the Constitution. halls, circuses, carnivals and other similar places of culture, leisure and
amusement, which discount shall be deducted by the said establishments from
WHEREFORE, in view of the foregoing, the instant Petition for prohibition is hereby their gross income for income tax purposes and from their gross sales for value-
DISMISSED for lack of merit. We make no pronouncement as to costs. added tax or other percentage tax purposes.3

SO ORDERED.

42
In 1995, respondent Bicolandia Drug Corporation, a corporation engaged in the business of On appeal, the Court of Appeals modified the decision of the Court of Tax Appeals as the
retailing pharmaceutical products under the business style of "Mercury Drug," granted the law provided for a tax credit, not a tax refund. The fallo of the Decision states:
20 percent sales discount to qualified senior citizens purchasing their medicines in
compliance with R.A. No. 7432.4 Respondent treated this discount as a deduction from its WHEREFORE, premises considered, the present appeal is hereby GRANTED
gross income in compliance with Revenue Regulations No. 2-94, which implemented R.A. and the Decision of the Court of Tax Appeals in C.T.A. Case No. 5599 is hereby
No. 7432.5 On April 15, 1996, respondent filed its 1995 Corporate Annual Income Tax MODIFIED in the sense that the award of tax refund is ANNULLED and SET
Return declaring a net loss position with nil income tax liability. 6 ASIDE. Instead, the petitioner is hereby ORDERED to issue a tax credit
certificate in favor of the respondent in the amount of P 236,321.52.
On December 27, 1996, respondent filed a claim for tax refund or credit in the amount of
PhP 259,659.00 with the Appellate Division of the Bureau of Internal Revenue—because No pronouncement as to costs.13
its net losses for the year 1995 prevented it from benefiting from the treatment of sales
discounts as a deduction from gross sales during the said taxable year. 7 It alleged that the
petitioner Commissioner of Internal Revenue erred in treating the 20 percent sales discount The Issue
given to senior citizens as a deduction from its gross income for income tax purposes or
other percentage tax purposes rather than as a tax credit. 8 Petitioner now argues that the Court of Appeals erred in holding that the 20 percent sales
discount granted to qualified senior citizens by the respondent pursuant to R.A. No. 7432
On April 6, 1998, respondent appealed to the Court of Tax Appeals in order to toll the may be claimed as a tax credit, instead of a deduction from gross income or gross sales. 14
running of two (2)-year prescriptive period to file a claim for refund pursuant to Section
230 of the Tax Code then.9 Respondent argued that since Section 4 of R.A. No. 7432 The Court's Ruling
provided that discounts granted to senior citizens may be claimed as tax credit, Section 2(i)
of Revenue Regulations No. 2-94, which referred to the tax credit as the amount The petition is not meritorious.
representing the 20 percent discount that "shall be deducted by the said establishments from
their gross income for income tax purposes and from their gross sales for value-added tax
or other percentage tax purposes," 10 is illegal, void and without effect for being inconsistent Redefining "Tax Credit" as "Tax Deduction"
with the statute it implements.
The problem stems from the issuance of Revenue Regulations No. 2-94, which was
Petitioner maintained that Revenue Regulations No. 2-94 is valid since the law tasked the supposed to implement R.A. No. 7432, and the radical departure it made when it defined
Department of Finance, among other government offices, with the issuance of the the "tax credit" that would be granted to establishments that give 20 percent discount to
necessary rules and regulations to carry out the objectives of the law. 11 senior citizens. Under Revenue Regulations No. 2-94, the tax credit is "the amount
representing the 20 percent discount granted to a qualified senior citizen by all
establishments relative to their utilization of transportation services, hotels and similar
Ruling of the Court of Tax Appeals lodging establishments, restaurants, drugstores, recreation centers, theaters, cinema houses,
concert halls, circuses, carnivals and other similar places of culture, leisure and amusement,
The Court of Tax Appeals declared that the provisions of R.A. No. 7432 would prevail over which discount shall be deducted by the said establishments from their gross income for
Section 2(i) of Revenue Regulations No. 2-94, whose definition of "tax credit" deviated income tax purposes and from their gross sales for value-added tax or other percentage tax
from the intendment of the law; and as a result, partially granted the respondent's claim for purposes."15 It equated "tax credit" with "tax deduction," contrary to the definition in
a refund. After examining the evidence on record, the Court of Tax Appeals reduced the Black's Law Dictionary, which defined tax credit as:
claimed 20 percent sales discount, thus reducing the refund to be given. It ruled that
"Respondent is hereby ORDERED to REFUND in favor of Petitioner the amount of An amount subtracted from an individual's or entity's tax liability to arrive at the
P236,321.52, representing overpaid income tax for the year 1995." 12 total tax liability. A tax credit reduces the taxpayer's liability x x x, compared to a
deduction which reduces taxable income upon which the tax liability is
Ruling of the Court of Appeals calculated. A credit differs from deduction to the extent that the former is

43
subtracted from the tax while the latter is subtracted from income before the tax that to do otherwise would result in Section 4(a) of R.A. No. 7432 impliedly repealing
is computed.16 Section 204 (c) of the National Internal Revenue Code.

The interpretation of an administrative government agency, which is tasked to implement These arguments must also fail.
the statute, is accorded great respect and ordinarily controls the construction of the
courts.17 Be that as it may, the definition laid down in the questioned Revenue Regulations Revenue Regulations No. 2-94 is still subordinate to R.A. No. 7432, and in cases of
can still be subjected to scrutiny. Courts will not hesitate to set aside an executive conflict, the implementing rule will not prevail over the law it seeks to implement. While
interpretation when it is clearly erroneous. There is no need for interpretation when there is seemingly conflicting laws must be harmonized as far as practicable, in this particular case,
no ambiguity in the rule, or when the language or words used are clear and plain or readily the conflict cannot be resolved in the manner the petitioner wishes. There is a great divide
understandable to an ordinary reader.18 The definition of the term "tax credit" is plain and separating the idea of "tax credit" and "tax deduction," as seen in the definition in Black's
clear, and the attempt of Revenue Regulations No. 2-94 to define it differently is the root of Law Dictionary.
the conflict.
The claimed absurdity of Section 4(a) of R.A. No. 7432 impliedly repealing Section 204(c)
Tax Credit is not Tax Refund of the National Internal Revenue Code could only come about if it is accepted that a tax
credit is akin to a tax refund wherein payment of taxes must be made in order for it to be
Petitioner argues that the tax credit is in the nature of a tax refund and should be treated as a claimed. But as shown in Section 112(a) of the National Internal Revenue Code, it is not
return for tax payments erroneously or excessively assessed against a taxpayer, in line with always necessary for payment to be made for a tax credit to be available.
Section 204(c) of Republic Act No. 8424, or the National Internal Revenue Code of 1997.
Petitioner claims that there should first be payment of the tax before the tax credit can be Looking into R.A. No. 7432
claimed. However, in the National Internal Revenue Code, we see at least one instance
where this is not the case. Any VAT-registered person, whose sales are zero-rated or
effectively zero-rated may, within two (2) years after the close of the taxable quarter when Finally, petitioner argues that should private establishments, which count respondent in
the sales were made, apply for the issuance of a tax credit certificate or refund of creditable their number, be allowed to claim tax credits for discounts given to senior citizens, they
input tax due or paid attributable to such sales, except transitional input tax, to the extent would be earning and not just be reimbursed for the discounts given.
that such input tax has not been applied against output tax. 19 It speaks of a tax credit for tax
due, so payment of the tax has not yet been made in that particular example. It cannot be denied that R.A. No. 7432 has a laudable goal. Moreover, it cannot be argued
that it was the intent of lawmakers for private establishments to be the primary
The Court of Appeals expressly recognized the differences between a "tax credit" and a beneficiaries of the law. However, while the purpose of the law to benefit senior citizens is
"tax refund," and stated that the same are not synonymous with each other, which is why it praiseworthy, the concerns of the affected private establishments were also considered by
modified the ruling of the Court of Tax Appeals. the lawmakers. As in other cases wherein private property is taken by the State for public
use, there must be just compensation. In this particular case, it took the form of the tax
credit granted to private establishments, purposely chosen by the lawmakers. In the similar
Revenue Regulations No. 2-94 vs. R.A. No. 7432 and case of Commissioner of Internal Revenue v. Central Luzon Drug
R.A. No. 7432 vs. the National Internal Revenue Code Corporation,20 scrutinizing the deliberations of the Bicameral Conference Committee
Meeting on Social Justice on February 5, 1992 which finalized R.A. No. 7432, the
Petitioner contends that since R.A. No. 7432 used the word "may," the availability of the discussions of the lawmakers clearly showed the intent that the cost of the 20 percent
tax credit to private establishments is only permissive and not absolute or mandatory. From discount may be claimed by the private establishments as a tax credit. An excerpt from the
that starting point, petitioner further argues that the definition of the term "tax credit" in deliberations is as follows:
Revenue Regulations No. 2-94 was validly issued under the authority granted by the law to
the Department of Finance to formulate the needed guidelines. It further explained that SEN. ANGARA. In the case of private hospitals they got the grant of 15%
Revenue Regulations No. 2-94 can be harmonized with R.A No. 7432, such that the discount, provided that, the private hospitals can claim the expense as a tax
definition of the term "tax credit" in Revenue Regulations No. 2-94 is controlling. It claims credit.

44
REP. AQUINO. Yah could be allowed as deductions in the preparation of provided greater incentive for the private establishments to comply with R.A. No. 7432, or
(inaudible) income. quicker relief from the cut into profits of these businesses.

SEN. ANGARA. I-tax credit na lang natin para walang cash-out? Revenue Regulations No. 2-94 Null and Void

REP. AQUINO. Oo, tax credit. Tama. Okay. Hospitals ba o lahat ng From the above discussion, it must be concluded that Revenue Regulations No. 2-94 is null
establishments na covered. and void for failing to conform to the law it sought to implement. In case of discrepancy
between the basic law and a rule or regulation issued to implement said law, the basic law
THE CHAIRMAN. Sa kuwan lang yon, as private hospitals lang. prevails because said rule or regulation cannot go beyond the terms and provisions of the
basic law.22
REP. AQUINO. Ano ba yung establishments na covered?
Revenue Regulations No. 2-94 being null and void, it must be ruled then that under R.A.
No. 7432, which was effective at the time, respondent is entitled to its claim of a tax credit,
SEN. ANGARA. Restaurant, lodging houses, recreation centers. and the ruling of the Court of Appeals must be affirmed.

REP. AQUINO. All establishments covered siguro? But even as this particular case is decided in this manner, it must be noted that the concerns
of the petitioner regarding tax credits granted to private establishments giving discounts to
SEN. ANGARA. From all establishments. Alisin na natin `yung kuwan kung senior citizens have been addressed. R.A. No. 7432 has been amended by Republic Act No.
ganon. Can we go back to Section 4 ha? 9257, the "Expanded Senior Citizens Act of 2003." In this, the term "tax credit" is no longer
used. The 20 percent discount granted by hotels and similar lodging establishments,
REP. AQUINO. Oho. restaurants and recreation centers, and in the purchase of medicines in all establishments
for the exclusive use and enjoyment of senior citizens is treated in the following manner:

SEN. ANGARA. Letter A. To capture that thought, we'll say the grant of 20%
discount from all establishments et cetera, et cetera, provided that said The establishment may claim the discounts granted under (a), (f), (g) and (h) as
establishments may claim the cost as a tax credit. Ganon ba `yon? tax deduction based on the net cost of the goods sold or services
rendered: Provided, That the cost of the discount shall be allowed as deduction
from gross income for the same taxable year that the discount is
REP. AQUINO. Yah. granted. Provided, further, that the total amount of the claimed tax deduction net
of value added tax if applicable, shall be included in their gross sales receipts for
SEN. ANGARA. Dahil kung government, they don't need to claim it. tax purposes and shall be subject to proper documentation and to the provisions
of the National Internal Revenue Code, as amended. 23
THE CHAIRMAN. Tax credit.
This time around, there is no conflict between the law and the implementing Revenue
21 Regulations. Under Revenue Regulations No. 4-2006, "(o)nly the actual amount of the
SEN. ANGARA. As a tax credit [rather] than a kuwan – deduction, Okay.
discount granted or a sales discount not exceeding 20% of the gross selling price can be
deducted from the gross income, net of value added tax, if applicable, for income tax
It is clear that the lawmakers intended the grant of a tax credit to complying private purposes, and from gross sales or gross receipts of the business enterprise concerned, for
establishments like the respondent. VAT or other percentage tax purposes."24 Under the new law, there is no tax credit to speak
of, only deductions.
If the private establishments appear to benefit more from the tax credit than originally
intended, it is not for petitioner to say that they shouldn't. The tax credit may actually have

45
Petitioner can find some vindication in the amendment made to R.A. No. 7432 by R.A. No.
9257, which may be more in consonance with the principles of taxation, but as it was R.A.
No. 7432 in force at the time this case arose, this law controls the result in this particular
case, for which reason the petition must fail.

This case should remind all heads of executive agencies which are given the power to
promulgate rules and regulations, that they assume the roles of lawmakers. It is well-settled HOLY SPIRIT HOMEOWNERS G.R. No. 163980
that a regulation should not conflict with the law it implements. Thus, those drafting the ASSOCIATION, INC. and NESTORIO
regulations should study well the laws their rules will implement, even to the extent of F. APOLINARIO, in his personal
reviewing the minutes of the deliberations of Congress about its intent when it drafted the capacity and as President of Holy
law. They may also consult the Secretary of Justice or the Solicitor General for their Spirit Homeowners Association, Inc., Present:
opinions on the drafted rules. Administrative rules, regulations and orders have the efficacy Petitioners,
and force of law so long as they do not contravene any statute or the Constitution. 25 It is PANGANIBAN, C.J.,
then the duty of the agencies to ensure that their rules do not deviate from or amend acts of - versus - PUNO,
Congress, for their regulations are always subordinate to law. QUISUMBING,
YNARES-SANTIAGO,
SECRETARY MICHAEL DEFENSOR, SANDOVAL-GUTIERREZ,
WHEREFORE, the Petition is hereby DENIED. The assailed Decision of the Court of in his capacity as Chairman of the CARPIO,
Appeals is AFFIRMED. There is no pronouncement as to costs. Housing and Urban Development AUSTRIA-MARTINEZ,
Coordinating Council (HUDCC), CORONA,
SO ORDERED. ATTY. EDGARDO PAMINTUAN, CARPIO MORALES,
in his capacity as General Manager of CALLEJO, SR.,
the National Housing Authority (NHA), AZCUNA,
MR. PERCIVAL CHAVEZ, in his TINGA,
capacity as Chairman of the Presidential CHICO-NAZARIO,
Commission for the Urban Poor (PCUP), GARCIA, and
MAYOR FELICIANO BELMONTE, in VELASCO, JR., JJ.
his capacity as Mayor of Quezon City,
SECRETARY ELISEA GOZUN, in her
capacity as Secretary of the Department
of Environment and Natural Resources
(DENR) and SECRETARY FLORENTE Promulgated:
SORIQUEZ, in his capacity as Secretary
of the Department of Public Works and
Highways (DPWH) as ex-officio members
of the NATIONAL GOVERNMENT August 3, 2006
CENTER ADMINISTRATION
COMMITTEE,
Respondents.

x ---------------------------------------------------------------------------------- x

46
(DENR), and Secretary Florante Soriquez of the Department of Public Works and

DECISION Highways (DPWH).

Prior to the passage of R.A. No. 9207, a number of presidential issuances authorized the
TINGA, J.:
creation and development of what is now known as the National Government Center

(NGC).
The instant petition for prohibition under Rule 65 of the 1997 Rules of Civil Procedure,

with prayer for the issuance of a temporary restraining order and/or writ of preliminary On March 5, 1972, former President Ferdinand Marcos issued Proclamation No.

injunction, seeks to prevent respondents from enforcing the implementing rules and 1826, reserving a parcel of land in Constitution Hills, Quezon City, covering a little over

regulations (IRR) of Republic Act No. 9207, otherwise known as the National Government 440 hectares as a national government site to be known as the NGC. [1]

Center (NGC) Housing and Land Utilization Act of 2003.

On August 11, 1987, then President Corazon Aquino issued Proclamation No.
Petitioner Holy Spirit Homeowners Association, Inc. (Association) is a homeowners
137, excluding 150 of the 440 hectares of the reserved site from the coverage of
association from the West Side of the NGC. It is represented by its president, Nestorio F.
Proclamation No. 1826 and authorizing instead the disposition of the excluded portion by
Apolinario, Jr., who is a co-petitioner in his own personal capacity and on behalf of the
direct sale to the bona fide residents therein.[2]
association.

In view of the rapid increase in population density in the portion excluded by


Named respondents are the ex-officio members of the National Government Center
Proclamation No. 137 from the coverage of Proclamation No. 1826, former President Fidel
Administration Committee (Committee). At the filing of the instant petition, the Committee
Ramos issued Proclamation No. 248 on September 7, 1993, authorizing the vertical
was composed of Secretary Michael Defensor, Chairman of the Housing and Urban
development of the excluded portion to maximize the number of families who can
Development Coordinating Council (HUDCC), Atty. Edgardo Pamintuan, General
effectively become beneficiaries of the governments socialized housing program. [3]
Manager of the National Housing Authority (NHA), Mr. Percival Chavez, Chairman of the

Presidential Commission for Urban Poor (PCUP), Mayor Feliciano Belmonte of Quezon On May 14, 2003, President Gloria Macapagal-Arroyo signed into law R.A. No.

City, Secretary Elisea Gozun of the Department of Environment and Natural Resources 9207. Among the salient provisions of the law are the following:

47
In accordance with Section 5 of R.A. No. 9207, [4] the Committee formulated the
SEC. 2. Declaration of Policy. It is hereby declared the
policy of the State to secure the land tenure of the urban poor. Toward Implementing Rules and Regulations (IRR) of R.A. No. 9207 on June 29, 2004. Petitioners
this end, lands located in the NGC, Quezon City shall be utilized for
housing, socioeconomic, civic, educational, religious and other subsequently filed the instant petition, raising the following issues:
purposes.
WHETHER OR NOT SECTION 3.1 (A.4), 3.1 (B.2), 3.2
SEC. 3. Disposition of Certain Portions of
(A.1) AND 3.2 (C.1) OF THE RULES AND REGULATIONS OF
the National Government Center Site to Bona Fide Residents.
REPUBLIC ACT NO. 9207, OTHERWISE KNOWN AS NATIONAL
Proclamation No. 1826, Series of 1979, is hereby amended by
GOVERNMENT CENTER (NGC) HOUSING AND LAND
excluding from the coverage thereof, 184 hectares on the west side and
UTILIZATION ACT OF 2003 SHOULD BE DECLARED NULL
238 hectares on the east side of Commonwealth Avenue, and declaring
AND VOID FOR BEING INCONSISTENT WITH THE LAW IT
the same open for disposition to bona fide residents therein: Provided,
SEEKS TO IMPLEMENT.
That the determination of the bona fide residents on the west side shall
be based on the census survey conducted in 1994 and the determination
WHETHER OR NOT SECTION 3.1 (A.4), 3.1 (B.2), 3.2
of the bona fide residents on the east side shall be based on the census
(A.1) AND 3.2 (C.1) OF THE RULES AND REGULATIONS OF
survey conducted in 1994 and occupancy verification survey conducted
REPUBLIC ACT NO. 9207, OTHERWISE KNOWN AS NATIONAL
in 2000: Provided, further, That all existing legal agreements, programs
GOVERNMENT CENTER (NGC) HOUSING AND LAND
and plans signed, drawn up or implemented and actions taken,
UTILIZATION ACT OF 2003 SHOULD BE DECLARED NULL
consistent with the provisions of this Act are hereby adopted.
AND VOID FOR BEING ARBITRARY, CAPRICIOUS AND
WHIMSICAL.[5]
SEC. 4. Disposition of Certain Portions of
the National Government Center Site for Local Government or First, the procedural matters.
Community Facilities, Socioeconomic, Charitable, Educational and
Religious Purposes. Certain portions of land within the aforesaid area
for local government or community facilities, socioeconomic, The Office of the Solicitor General (OSG) argues that petitioner Association
charitable, educational and religious institutions are hereby reserved for
disposition for such purposes: Provided, That only cannot question the implementation of Section 3.1 (b.2) and Section 3.2 (c.1) since it does
those institutions already operating and with existing facilities or
structures, or those occupying the land may avail of the disposition not claim any right over the NGC East Side. Section 3.1 (b.2) provides for the maximum
program established under the provisions this Act; Provided, further,
That in ascertaining the specific areas that may be disposed of in favor lot area that may be awarded to a resident-beneficiary of the NGC East Side, while Section
of these institutions, the existing site allocation shall be used as basis
therefore: Provided, finally. That in determining the reasonable lot 3.2 (c.1) imposes a lot price escalation penalty to a qualified beneficiary who fails to
allocation of such institutions without specific lot allocations, the land
area that may be allocated to them shall be based on the area actually execute a contract to sell within the prescribed period. [6] Also, the OSG contends that since
used by said institutions at the time of effectivity of this Act. (Emphasis
supplied.) petitioner association is not the duly recognized peoples organization in the NGC and since

48
petitioners not qualify as beneficiaries, they cannot question the manner of disposition of NGC East Side, the rest of the assailed provisions of the IRR, namely, Sections 3.1 (a.4),

lots in the NGC.[7] 3.2 (a.1) and 3.2 (c.1), govern the disposition of lots in the West Side itself or all the lots in

the NGC.
Legal standing or locus standi has been defined as a personal and substantial

interest in the case such that the party has sustained or will sustain direct injury as a result

of the governmental act that is being challenged. The gist of the question of standing is

whether a party alleges such personal stake in the outcome of the controversy as to assure

that concrete adverseness which sharpens the presentation of issues upon which the court

depends for illumination of difficult constitutional questions. [8]


We cannot, therefore, agree with the OSG on the issue of locus standi. The

Petitioner association has the legal standing to institute the instant petition, petition does not merit dismissal on that ground.

whether or not it is the duly recognized association of homeowners in the NGC. There is no
There are, however, other procedural impediments to the granting of the instant
dispute that the individual members of petitioner association are residents of the NGC. As
petition. The OSG claims that the instant petition for prohibition is an improper remedy
such they are covered and stand to be either benefited or injured by the enforcement of the
because the writ of prohibition does not lie against the exercise of a quasi-legislative
IRR, particularly as regards the selection process of beneficiaries and lot allocation to
function.[9] Since in issuing the questioned IRR of R.A. No. 9207, the Committee was not
qualified beneficiaries. Thus, petitioner association may assail those provisions in the IRR
exercising judicial, quasi-judicial or ministerial function, which is the scope of a petition
which it believes to be unfavorable to the rights of its members. Contrary to the OSGs
for prohibition under Section 2, Rule 65 of the 1997 Rules of Civil Procedure, the instant
allegation that the failure of petitioner association and its members to qualify as
prohibition should be dismissed outright, the OSG contends. For their part, respondent
beneficiaries effectively bars them from questioning the provisions of the IRR, such
Mayor of Quezon City[10] and respondent NHA[11] contend that petitioners violated the
circumstance precisely operates to confer on them the legal personality to assail the IRR.
doctrine of hierarchy of courts in filing the instant petition with this Court and not with the
Certainly, petitioner and its members have sustained direct injury arising from the
Court of Appeals, which has concurrent jurisdiction over a petition for prohibition.
enforcement of the IRR in that they have been disqualified and eliminated from the

selection process. While it is true that petitioners claim rights over the NGC West Side only

and thus cannot be affected by the implementation of Section 3.1 (b.2), which refers to the

49
The cited breaches are mortal. The petition deserves to be spurned as a course to assail its validity must follow the doctrine of hierarchy of courts. Although the

consequence. Supreme Court, Court of Appeals and the Regional Trial Courts have concurrent

jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas


Administrative agencies possess quasi-legislative or rule-making powers and
corpus and injunction, such concurrence does not give the petitioner unrestricted freedom
quasi-judicial or administrative adjudicatory powers. Quasi-legislative or rule-making
of choice of court forum.[15]
power is the power to make rules and regulations which results in delegated legislation that

is within the confines of the granting statute and the doctrine of non-delegability and True, this Court has the full discretionary power to take cognizance of the

separability of powers.[12] petition filed directly with it if compelling reasons, or the nature and importance of the

issues raised, so warrant.[16]A direct invocation of the Courts original jurisdiction to issue
In questioning the validity or constitutionality of a rule or regulation issued by an
these writs should be allowed only when there are special and important reasons therefor,
administrative agency, a party need not exhaust administrative remedies before going to
clearly and specifically set out in the petition. [17]
court. This principle, however, applies only where the act of the administrative agency

concerned was performed pursuant to its quasi-judicial function, and not when the assailed In Heirs of Bertuldo Hinog v. Melicor,[18] the Court said that it will not entertain

act pertained to its rule-making or quasi-legislative power. [13] direct resort to it unless the redress desired cannot be obtained in the appropriate courts,

and exceptional and compelling circumstances, such as cases of national interest and of
The assailed IRR was issued pursuant to the quasi-legislative power of the
serious implications, justify the availment of the extraordinary remedy of writ of certiorari,
Committee expressly authorized by R.A. No. 9207. The petition rests mainly on the theory
calling for the exercise of its primary jurisdiction. [19] A perusal, however, of the petition for
that the assailed IRR issued by the Committee is invalid on the ground that it is not
prohibition shows no compelling, special or important reasons to warrant the Courts taking
germane to the object and purpose of the statute it seeks to implement. Where what is
cognizance of the petition in the first instance. Petitioner also failed to state any reason that
assailed is the validity or constitutionality of a rule or regulation issued by the
precludes the lower courts from passing upon the validity of the questioned IRR. Moreover,
administrative agency in the performance of its quasi-legislative function, the regular courts
as provided in Section 5, Article VIII of the
have jurisdiction to pass upon the same.[14]

Since the regular courts have jurisdiction to pass upon the validity of the assailed

IRR issued by the Committee in the exercise of its quasi-legislative power, the judicial

50
Constitution,[20] the Courts power to evaluate the validity of an implementing rule without or in excess of their jurisdiction may appropriately be enjoined by the trial court

or regulation is generally appellate in nature. Thus, following the doctrine of hierarchy of through a writ of injunction or a temporary restraining order.

courts, the instant petition should have been initially filed with the Regional Trial Court.
In a number of petitions, [24] the Court adequately resolved them on other grounds

A petition for prohibition is also not the proper remedy to assail an IRR issued in without adjudicating on the constitutionality issue when there were no compelling reasons

the exercise of a quasi-legislative function. Prohibition is an extraordinary writ directed to pass upon the same. In like manner, the instant petition may be dismissed based on the

against any tribunal, corporation, board, officer or person, whether exercising judicial, foregoing procedural grounds. Yet, the Court will not shirk from its duty to rule on the

quasi-judicial or ministerial functions, ordering said entity or person to desist from further merits of this petition to facilitate the speedy resolution of this case. In proper cases,

proceedings when said proceedings are without or in excess of said entitys or persons procedural rules may be relaxed or suspended in the interest of substantial justice. And the

jurisdiction, or are accompanied with grave abuse of discretion, and there is no appeal or power of the Court to except a particular case from its rules whenever the purposes of

any other plain, speedy and adequate remedy in the ordinary course of law. [21] Prohibition justice require it cannot be questioned.[25]

lies against judicial or ministerial functions, but not against legislative or quasi-legislative
Now, we turn to the substantive aspects of the petition. The outcome, however, is
functions. Generally, the purpose of a writ of prohibition is to keep a lower court within the
just as dismal for petitioners.
limits of its jurisdiction in order to maintain the administration of justice in orderly

channels.[22] Prohibition is the proper remedy to afford relief against usurpation of Petitioners assail the following provisions of the IRR:

jurisdiction or power by an inferior court, or when, in the exercise of jurisdiction in

handling matters clearly within its cognizance the inferior court transgresses the bounds Section 3. Disposition of Certain portions of the NGC Site to the
bonafide residents
prescribed to it by the law, or where there is no adequate remedy available in the ordinary

course of law by which such relief can be obtained. [23] Where the principal relief sought is 3.1. Period for Qualification of Beneficiaries

to invalidate an IRR, petitioners remedy is an ordinary action for its nullification, an action xxxx

which properly falls under the jurisdiction of the Regional Trial Court. In any case, (a.4) Processing and evaluation of qualifications shall be based on the
Code of Policies and subject to the condition that a beneficiary is
petitioners allegation that respondents are performing or threatening to perform functions qualified to acquire only one (1) lot with a minimum of 36 sq. m. and
maximum of 54 sq. m. and subject further to the availability of lots.

xxxx

51
(b.2) Applications for qualification as beneficiary shall be beneficiaries shall be based on the area actually used or occupied by bona fide residents
processed and evaluated based on the Code of Policies including the
minimum and maximum lot allocation of 35 sq. m. and 60 sq. m. without limitation to area. The argument is utterly baseless.

xxxx

3.2. Execution of the Contract to Sell The beneficiaries of lot allocations in the NGC may be classified into two groups,

namely, the urban poor or the bona fide residents within the NGC site and certain
(a) Westside
government institutions including the local government. Section 3, R.A. No. 9207
(a.1) All qualified beneficiaries shall execute
Contract to Sell (CTS) within sixty (60) days from the mandates the allocation of additional property within the NGC for disposition to its bona
effectivity of the IRR in order to avail of the lot at P700.00
per sq. m. fide residents and the manner by which this area may be distributed to qualified

xxxx beneficiaries. Section 4, R.A. No. 9207, on the other hand, governs the lot disposition to

(c) for both eastside and westside government institutions. While it is true that Section 4 of R.A. No. 9207 has a proviso

(c.1) Qualified beneficiaries who failed to execute mandating that the lot allocation shall be based on the land area actually used or occupied
CTS on the deadline set in item a.1 above in case of westside
and in case of eastside six (6) months after approval of the at the time of the laws effectivity, this proviso applies only to institutional beneficiaries
subdivision plan shall be subjected to lot price escalation.
consisting of the local government, socioeconomic, charitable, educational and religious
The rate shall be based on the formula to be set by
institutions which do not have specific lot allocations, and not to the bona fide residents of
the National Housing Authority factoring therein the
affordability criteria. The new rate shall be approved by the NGC. There is no proviso which even hints that a bona fide resident of the NGC is likewise
NGC-Administration Committee (NGC-AC).
entitled to the lot area actually occupied by him.

Petitioners contend that the aforequoted provisions of the IRR are constitutionally Petitioners interpretation is also not supported by the policy of R.A. No. 9207 and
infirm as they are not germane to and/or are in conflict with the object and purpose of the the prior proclamations establishing the NGC. The governments policy to set aside public
law sought to be implemented. property aims to benefit not only the urban poor but also the local government and various

government institutions devoted to socioeconomic, charitable, educational and


First. According to petitioners, the limitation on the areas to be awarded to

qualified beneficiaries under Sec. 3.1 (a.4) and (b.2) of the IRR is not in harmony with the

provisions of R.A. No. 9207, which mandates that the lot allocation to qualified

52
religious purposes.[26] Thus, although Proclamation No. 137 authorized the sale of lots such penalty imposed by R.A. No. 9207. Thus, they conclude that the assailed provisions

to bona fide residents in the NGC, only a third of the entire area of the NGC was declared conflict with R.A. No. 9207 and should be nullified. The argument deserves scant

open for disposition subject to the condition that those portions being used or earmarked for consideration.

public or quasi-public purposes would be excluded from the housing program for NGC
Where a rule or regulation has a provision not expressly stated or contained in the
residents. The same policy of rational and optimal land use can be read in Proclamation
statute being implemented, that provision does not necessarily contradict the statute. A
No. 248 issued by then President Ramos. Although the proclamation recognized the rapid
legislative rule is in the nature of subordinate legislation, designed to implement a primary
increase in the population density in the NGC, it did not allocate additional property within
legislation by providing the details thereof. [27] All that is required is that the regulation
the NGC for urban poor housing but instead authorized the vertical development of the
should be germane to the objects and purposes of the law; that the regulation be not in
same 150 hectares identified previously by Proclamation No. 137 since the distribution of
contradiction to but in conformity with the standards prescribed by the law. [28]
individual lots would not adequately provide for the housing needs of all the bona

fide residents in the NGC. In Section 5 of R.A. No. 9207, the Committee is granted the power to

administer, formulate guidelines and policies, and implement the disposition of the areas
In addition, as provided in Section 4 of R.A. No. 9207, the institutional
covered by the law. Implicit in this authority and the statutes objective of urban poor
beneficiaries shall be allocated the areas actually occupied by them; hence, the portions
housing is the power of the Committee to formulate the manner by which the reserved
intended for the institutional beneficiaries is fixed and cannot be allocated for other non-
property may be allocated to the beneficiaries. Under this broad power, the Committee is
institutional beneficiaries. Thus, the areas not intended for institutional beneficiaries would
mandated to fill in the details such as the qualifications of beneficiaries, the selling price of
have to be equitably distributed among the bona fide residents of the NGC. In order to
the lots, the terms and conditions governing the sale and other key particulars necessary to
accommodate all qualified residents, a limitation on the area to be awarded to each
implement the objective of the law. These details are purposely omitted from the statute and
beneficiary must be fixed as a necessary consequence.
their determination is left to the discretion of the Committee because the latter possesses

Second. Petitioners note that while Sec. 3.2 (a.1) of the IRR fixes the selling rate special knowledge and technical expertise over these matters.

of a lot at P700.00 per sq. m., R.A. No. 9207 does not provide for the price. They add Sec.
The Committees authority to fix the selling price of the lots may be likened to the
3.2 (c.1) penalizes a beneficiary who fails to execute a contract to sell within six (6) months
rate-fixing power of administrative agencies. In case of a delegation of rate-fixing power,
from the approval of the subdivision plan by imposing a price escalation, while there is no

53
the only standard which the legislature is required to prescribe for the guidance of the there is observance of more than the minimum requirements of due process in the adoption

administrative authority is that the rate be reasonable and just. However, it has been held of the questioned IRR is not a ground to invalidate the same.

that even in the absence of an express requirement as to reasonableness, this standard may In sum, the petition lacks merit and suffers from procedural deficiencies.

be implied.[29] In this regard, petitioners do not even claim that the selling price of the lots is
WHEREFORE, the instant petition for prohibition is DISMISSED. Costs against
unreasonable.
petitioners.

The provision on the price escalation clause as a penalty imposed to a beneficiary

who fails to execute a contract to sell within the prescribed period is also within the SO ORDERED.

Committees authority to formulate guidelines and policies to implement R.A. No. 9207. G.R. No. L-75697

The Committee has the power to lay down the terms and conditions governing the

disposition of said lots, provided that these are reasonable and just. There is nothing VALENTIN TIO doing business under the name and style of OMI

objectionable about prescribing a period within which the parties must execute the contract ENTERPRISES, petitioner,

to sell. This condition can ordinarily be found in a contract to sell and is not contrary to vs.

law, morals, good customs, public order, or public policy. VIDEOGRAM REGULATORY BOARD, MINISTER OF FINANCE,

METRO MANILA COMMISSION, CITY MAYOR and CITY TREASURER OF


Third. Petitioners also suggest that the adoption of the assailed IRR suffers from a
MANILA, respondents.
procedural flaw. According to them the IRR was adopted and concurred in by several

representatives of peoples organizations contrary to the express mandate of R.A. No. 9207
Nelson Y. Ng for petitioner.
that only two representatives from duly recognized peoples organizations must compose the
The City Legal Officer for respondents City Mayor and City Treasurer.
NGCAC which promulgated the assailed IRR. It is worth noting that petitioner association

is not a duly recognized peoples organization.


MELENCIO-HERRERA, J.:

In subordinate legislation, as long as the passage of the rule or regulation had the

benefit of a hearing, the procedural due process requirement is deemed complied with. That

54
This petition was filed on September 1, 1986 by petitioner on his own behalf and proliferation of film piracy." The Intervenors were thereafter allowed to file their Comment

purportedly on behalf of other videogram operators adversely affected. It assails the in Intervention.

constitutionality of Presidential Decree No. 1987 entitled "An Act Creating the Videogram

Regulatory Board" with broad powers to regulate and supervise the videogram industry The rationale behind the enactment of the DECREE, is set out in its preambular

(hereinafter briefly referred to as the BOARD). The Decree was promulgated on October 5, clauses as follows:

1985 and took effect on April 10, 1986, fifteen (15) days after completion of its publication

in the Official Gazette. 1. WHEREAS, the proliferation and unregulated circulation of

videograms including, among others, videotapes, discs, cassettes or any technical

On November 5, 1985, a month after the promulgation of the abovementioned improvement or variation thereof, have greatly prejudiced the operations of moviehouses

decree, Presidential Decree No. 1994 amended the National Internal Revenue Code and theaters, and have caused a sharp decline in theatrical attendance by at least forty

providing, inter alia: 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

SEC. 134. Video Tapes. — There shall be collected on each processed video-tape Million annually in government revenues;

cassette, ready for playback, regardless of length, an annual tax of five pesos; Provided,

That locally manufactured or imported blank video tapes shall be subject to sales tax. 2. WHEREAS, videogram(s) establishments collectively earn around

P600 Million per annum from rentals, sales and disposition of videograms, and such

On October 23, 1986, the Greater Manila Theaters Association, Integrated Movie earnings have not been subjected to tax, thereby depriving the Government of

Producers, Importers and Distributors Association of the Philippines, and Philippine approximately P180 Million in taxes each year;

Motion Pictures Producers Association, hereinafter collectively referred to as the 3. WHEREAS, the unregulated activities of videogram establishments

Intervenors, were permitted by the Court to intervene in the case, over petitioner's have also affected the viability of the movie industry, particularly the more than 1,200

opposition, upon the allegations that intervention was necessary for the complete protection movie houses and theaters throughout the country, and occasioned industry-wide

of their rights and that their "survival and very existence is threatened by the unregulated displacement and unemployment due to the shutdown of numerous moviehouses and

theaters;

55
4. "WHEREAS, in order to ensure national economic recovery, it is Petitioner's attack on the constitutionality of the DECREE rests on the following

imperative for the Government to create an environment conducive to growth and grounds:

development of all business industries, including the movie industry which has an 1. Section 10 thereof, which imposes a tax of 30% on the gross receipts

accumulated investment of about P3 Billion; payable to the local government is a RIDER and the same is not germane to the subject

5. WHEREAS, proper taxation of the activities of videogram matter thereof;

establishments will not only alleviate the dire financial condition of the movie industry 2. The tax imposed is harsh, confiscatory, oppressive and/or in unlawful

upon which more than 75,000 families and 500,000 workers depend for their livelihood, restraint of trade in violation of the due process clause of the Constitution;

but also provide an additional source of revenue for the Government, and at the same time 3. There is no factual nor legal basis for the exercise by the President of

rationalize the heretofore uncontrolled distribution of videograms; the vast powers conferred upon him by Amendment No. 6;

4. There is undue delegation of power and authority;

6. WHEREAS, the rampant and unregulated showing of obscene 5. The Decree is an ex-post facto law; and

videogram features constitutes a clear and present danger to the moral and spiritual well- 6. There is over regulation of the video industry as if it were a nuisance,

being of the youth, and impairs the mandate of the Constitution for the State to support the which it is not.

rearing of the youth for civic efficiency and the development of moral character and We shall consider the foregoing objections in seriatim.

promote their physical, intellectual, and social well-being; 1. The Constitutional requirement that "every bill shall embrace only one

7. WHEREAS, civic-minded citizens and groups have called for remedial subject which shall be expressed in the title thereof" 1 is sufficiently complied with if the

measures to curb these blatant malpractices which have flaunted our censorship and title be comprehensive enough to include the general purpose which a statute seeks to

copyright laws; achieve. It is not necessary that the title express each and every end that the statute wishes

8. WHEREAS, in the face of these grave emergencies corroding the moral to accomplish. The requirement is satisfied if all the parts of the statute are related, and are

values of the people and betraying the national economic recovery program, bold germane to the subject matter expressed in the title, or as long as they are not inconsistent

emergency measures must be adopted with dispatch; ... (Numbering of paragraphs with or foreign to the general subject and title. 2 An act having a single general subject,

supplied). indicated in the title, may contain any number of provisions, no matter how diverse they

may be, so long as they are not inconsistent with or foreign to the general subject, and may

56
be considered in furtherance of such subject by providing for the method and means of industry in order to regulate and rationalize the heretofore uncontrolled distribution of

carrying out the general object." 3 The rule also is that the constitutional requirement as to videograms is evident from Preambles 2 and 5, supra. Those preambles explain the motives

the title of a bill should not be so narrowly construed as to cripple or impede the power of of the lawmaker in presenting the measure. The title of the DECREE, which is the creation

legislation. 4 It should be given practical rather than technical construction. 5 of the Videogram Regulatory Board, is comprehensive enough to include the purposes

expressed in its Preamble and reasonably covers all its provisions. It is unnecessary to

Tested by the foregoing criteria, petitioner's contention that the tax provision of express all those objectives in the title or that the latter be an index to the body of the

the DECREE is a rider is without merit. That section reads, inter alia: DECREE. 7

2. Petitioner also submits that the thirty percent (30%) tax imposed is

Section 10. Tax on Sale, Lease or Disposition of Videograms. — Notwithstanding harsh and oppressive, confiscatory, and in restraint of trade. However, it is beyond serious

any provision of law to the contrary, the province shall collect a tax of thirty percent (30%) question that a tax does not cease to be valid merely because it regulates, discourages, or

of the purchase price or rental rate, as the case may be, for every sale, lease or disposition even definitely deters the activities taxed. 8 The power to impose taxes is one so unlimited

of a videogram containing a reproduction of any motion picture or audiovisual program. in force and so searching in extent, that the courts scarcely venture to declare that it is

Fifty percent (50%) of the proceeds of the tax collected shall accrue to the province, and subject to any restrictions whatever, except such as rest in the discretion of the authority

the other fifty percent (50%) shall acrrue to the municipality where the tax is collected; which exercises it. 9 In imposing a tax, the legislature acts upon its constituents. This is, in

PROVIDED, That in Metropolitan Manila, the tax shall be shared equally by the general, a sufficient security against erroneous and oppressive taxation. 10

City/Municipality and the Metropolitan Manila Commission. The tax imposed by the DECREE is not only a regulatory but also a revenue

xxx xxx xxx measure prompted by the realization that earnings of videogram establishments of around

The foregoing provision is allied and germane to, and is reasonably necessary for P600 million per annum have not been subjected to tax, thereby depriving the Government

the accomplishment of, the general object of the DECREE, which is the regulation of the of an additional source of revenue. It is an end-user tax, imposed on retailers for every

video industry through the Videogram Regulatory Board as expressed in its title. The tax videogram they make available for public viewing. It is similar to the 30% amusement tax

provision is not inconsistent with, nor foreign to that general subject and title. As a tool for imposed or borne by the movie industry which the theater-owners pay to the government,

regulation 6 it is simply one of the regulatory and control mechanisms scattered throughout but which is passed on to the entire cost of the admission ticket, thus shifting the tax burden

the DECREE. The express purpose of the DECREE to include taxation of the video

57
on the buying or the viewing public. It is a tax that is imposed uniformly on all videogram In refutation, the Intervenors and the Solicitor General's Office aver that the 8th

operators. "whereas" clause sufficiently summarizes the justification in that grave emergencies

The levy of the 30% tax is for a public purpose. It was imposed primarily to corroding the moral values of the people and betraying the national economic recovery

answer the need for regulating the video industry, particularly because of the rampant film program necessitated bold emergency measures to be adopted with dispatch. Whatever the

piracy, the flagrant violation of intellectual property rights, and the proliferation of reasons "in the judgment" of the then President, considering that the issue of the validity of

pornographic video tapes. And while it was also an objective of the DECREE to protect the the exercise of legislative power under the said Amendment still pends resolution in several

movie industry, the tax remains a valid imposition. other cases, we reserve resolution of the question raised at the proper time.

The public purpose of a tax may legally exist even if the motive which impelled 4. Neither can it be successfully argued that the DECREE contains an

the legislature to impose the tax was to favor one industry over another. 11 undue delegation of legislative power. The grant in Section 11 of the DECREE of authority

It is inherent in the power to tax that a state be free to select the subjects of to the BOARD to "solicit the direct assistance of other agencies and units of the

taxation, and it has been repeatedly held that "inequities which result from a singling out of government and deputize, for a fixed and limited period, the heads or personnel of such

one particular class for taxation or exemption infringe no constitutional limitation". 12 agencies and units to perform enforcement functions for the Board" is not a delegation of

Taxation has been made the implement of the state's police power.13 the power to legislate but merely a conferment of authority or discretion as to its execution,

At bottom, the rate of tax is a matter better addressed to the taxing legislature. enforcement, and implementation. "The true distinction is between the delegation of power

3. Petitioner argues that there was no legal nor factual basis for the to make the law, which necessarily involves a discretion as to what it shall be, and

promulgation of the DECREE by the former President under Amendment No. 6 of the 1973 conferring authority or discretion as to its execution to be exercised under and in pursuance

Constitution providing that "whenever in the judgment of the President ... , there exists a of the law. The first cannot be done; to the latter, no valid objection can be made." 14

grave emergency or a threat or imminence thereof, or whenever the interim Batasang Besides, in the very language of the decree, the authority of the BOARD to solicit such

Pambansa or the regular National Assembly fails or is unable to act adequately on any assistance is for a "fixed and limited period" with the deputized agencies concerned being

matter for any reason that in his judgment requires immediate action, he may, in order to "subject to the direction and control of the BOARD." That the grant of such authority might

meet the exigency, issue the necessary decrees, orders, or letters of instructions, which shall be the source of graft and corruption would not stigmatize the DECREE as

form part of the law of the land." unconstitutional. Should the eventuality occur, the aggrieved parties will not be without

adequate remedy in law.

58
5. The DECREE is not violative of the ex post facto principle. An ex post Phil. 856 [1953] at 858-59, citing 1 COOLEY, A TREATISE ON THE

facto law is, among other categories, one which "alters the legal rules of evidence, and CONSTITUTIONAL LIMITATIONS, 639-641). And the "legislature may enact that when

authorizes conviction upon less or different testimony than the law required at the time of certain facts have been proved that they shall be prima facie evidence of the existence of

the commission of the offense." It is petitioner's position that Section 15 of the DECREE in the guilt of the accused and shift the burden of proof provided there be a rational

providing that: connection between the facts proved and the ultimate facts presumed so that the inference

All videogram establishments in the Philippines are hereby given a period of of the one from proof of the others is not unreasonable and arbitrary because of lack of

forty-five (45) days after the effectivity of this Decree within which to register with and connection between the two in common experience". 16

secure a permit from the BOARD to engage in the videogram business and to register with Applied to the challenged provision, there is no question that there is a rational

the BOARD all their inventories of videograms, including videotapes, discs, cassettes or connection between the fact proved, which is non-registration, and the ultimate fact

other technical improvements or variations thereof, before they could be sold, leased, or presumed which is violation of the DECREE, besides the fact that the prima facie

otherwise disposed of. Thereafter any videogram found in the possession of any person presumption of violation of the DECREE attaches only after a forty-five-day period

engaged in the videogram business without the required proof of registration by the counted from its effectivity and is, therefore, neither retrospective in character.

BOARD, shall be prima facie evidence of violation of the Decree, whether the possession 6. We do not share petitioner's fears that the video industry is being over-

of such videogram be for private showing and/or public exhibition. regulated and being eased out of existence as if it were a nuisance. Being a relatively new

raises immediately a prima facie evidence of violation of the DECREE when the industry, the need for its regulation was apparent. While the underlying objective of the

required proof of registration of any videogram cannot be presented and thus partakes of DECREE is to protect the moribund movie industry, there is no question that public welfare

the nature of an ex post facto law. is at bottom of its enactment, considering "the unfair competition posed by rampant film

The argument is untenable. As this Court held in the recent case of Vallarta vs. piracy; the erosion of the moral fiber of the viewing public brought about by the

Court of Appeals, et al. 15 availability of unclassified and unreviewed video tapes containing pornographic films and

... it is now well settled that "there is no constitutional objection to the passage of films with brutally violent sequences; and losses in government revenues due to the drop in

a law providing that the presumption of innocence may be overcome by a contrary theatrical attendance, not to mention the fact that the activities of video establishments are

presumption founded upon the experience of human conduct, and enacting what evidence virtually untaxed since mere payment of Mayor's permit and municipal license fees are

shall be sufficient to overcome such presumption of innocence" (People vs. Mingoa 92 required to engage in business. 17

59
The enactment of the Decree since April 10, 1986 has not brought about the No costs.

"demise" of the video industry. On the contrary, video establishments are seen to have

proliferated in many places notwithstanding the 30% tax imposed. SO ORDERED.

In the last analysis, what petitioner basically questions is the necessity, wisdom

and expediency of the DECREE. These considerations, however, are primarily and

exclusively a matter of legislative concern.

Only congressional power or competence, not the wisdom of the action taken,

may be the basis for declaring a statute invalid. This is as it ought to be. The principle of

separation of powers has in the main wisely allocated the respective authority of each

department and confined its jurisdiction to such a sphere. There would then be intrusion not

allowable under the Constitution if on a matter left to the discretion of a coordinate branch,

the judiciary would substitute its own. If there be adherence to the rule of law, as there

ought to be, the last offender should be courts of justice, to which rightly litigants submit

their controversy precisely to maintain unimpaired the supremacy of legal norms and

prescriptions. The attack on the validity of the challenged provision likewise insofar as

there may be objections, even if valid and cogent on its wisdom cannot be sustained. 18

In fine, petitioner has not overcome the presumption of validity which attaches to

a challenged statute. We find no clear violation of the Constitution which would justify us

in pronouncing Presidential Decree No. 1987 as unconstitutional and void.

WHEREFORE, the instant Petition is hereby dismissed.

60