Administrative Law - Full Text Cases - Quasi - Legislative Power PDF

C.
QUASI-LEGISLATIVE POWER ADMIN LAW – NACHURA

2J 2019-2020
NATURE AND KINDS
Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 190837 March 5, 2014
REPUBLIC OF THE PHILIPPINES, represented by the BUREAU OF FOOD AND DRUGS (now FOOD
AND DRUG ADMINISTRATION), Petitioner,
vs.
DRUGMAKER'S LABORATORIES, INC. and TERRAMEDIC, INC., Respondents.
DECISION
PERLAS-BERNABE, J.:
This is a direct recourse to the Court from the Regional Trial Court of Muntinlupa City, Branch 256 (RTC),
through a petition for review on certiorari,1 raising a pure question of law. In particular, petitioner Republic of
the Philippines, represented by the Bureau.of Food and Drugs (BFAD), now Food and Drug Administration
(FDA), assails the Order2 dated December 18, 2009 of the RTC in Civil Case No. 08-124 which: (a) declared
BF AD Circular Nos. 1 and 8, series of 1997 (Circular Nos. 1 and 8, s. 1997) null and void; (b) ordered the
issuance of writs of permanent injunction and prohibition against the FDA in implementing the aforesaid
circulars; and ( c) directed the FDA to issue Certificates of Product Registration (CPR) in favor of
respondents Drugmaker's Laboratories, Inc. and Terrarriedic, Inc. (respondents).
The Facts
The FDA3 was created pursuant to Republic Act No. (RA) 3720,4 otherwise known as the "Food, Drug, and
Cosmetic Act," primarily in order "to establish safety or efficacy standards and quality measures for foods,
drugs and devices, and cosmetic product[s]."5 On March 15, 1989, the Department of Health (DOH), thru
then-Secretary Alfredo R.A. Bengzon, issued Administrative Order No. (AO) 67, s. 1989, entitled "Revised
Rules and Regulations on Registration of Pharmaceutical Products." Among others, it required drug
manufacturers to register certain drug and medicine products with the FDA before they may release the
same to the market for sale. In this relation, a satisfactory bioavailability 6/bioequivalence7 (BA/BE) test is
needed for a manufacturer to secure a CPR for these products. However, the implementation of the BA/BE
testing requirement was put on hold because there was no local facility capable of conducting the same. The
issuance of Circular No. 1, s. 19978 resumed the FDA’s implementation of the BA/BE testing requirement
with the establishment of BA/BE testing facilities in the country. Thereafter, the FDA issued Circular No. 8, s.
19979 which provided additional implementation details concerning the BA/BE testing requirement on drug
products.10
Respondents manufacture and trade a "multisource pharmaceutical product"11 with the generic name of
rifampicin12 – branded as "Refam 200mg/5mL Suspension" (Refam) – for the treatment of adults and children
suffering from pulmonary and extra-pulmonary tuberculosis.13 On November 15, 1996, respondents applied
for and were issued a CPR for such drug, valid for five (5) years, or until November 15, 2001. 14 At the time of
the CPR’s issuance, Refam did not undergo BA/BE testing since there was still no facility capable of
conducting BA/BE testing. Sometime in 2001, respondents applied for and were granted numerous yearly
renewals of their CPR for Refam, which lasted until November 15, 2006, albeit with the condition that they
submit satisfactory BA/BE test results for said drug. 15
C. QUASI-LEGISLATIVE POWER ADMIN LAW – NACHURA
2J 2019-2020
Accordingly, respondents engaged the services of the University of the Philippines’ (Manila) Department of
Pharmacology and Toxicology, College of Medicine to conduct BA/BE testing on Refam, the results of which
were submitted to the FDA.16 In turn, the FDA sent a letter dated July 31, 2006 to respondents, stating that
Refam is "not bioequivalent with the reference drug."17 This notwithstanding, the FDA still revalidated
respondents’ CPR for Refam two (2) more times, effective until November 15, 2008, the second of which
came with a warning that no more further revalidations shall be granted until respondents submit satisfactory
BA/BE test results for Refam.18
Instead of submitting satisfactory BA/BE test results for Refam, respondents filed a petition for prohibition
and annulment of Circular Nos. 1 and 8, s. 1997 before the RTC, alleging that it is the DOH, and not the
FDA, which was granted the authority to issue and implement rules concerning RA 3720. As such, the
issuance of the aforesaid circulars and the manner of their promulgation contravened the law and the
Constitution.19 They further averred that that the non-renewal of the CPR due to failure to submit satisfactory
BA/BE test results would not only affect Refam, but their other products as well. 20
During the pendency of the case, RA 9711,21 otherwise known as the "Food and Drug Administration [FDA]
Act of 2009," was enacted into law.
The RTC Ruling
In an Order22 dated December 18, 2009, the RTC ruled in favor of respondents, and thereby declared
Circular Nos. 1 and 8, s. 1997 null and void, ordered the issuance of writs of permanent injunction and
prohibition against the FDA in implementing the aforesaid circulars, and directed the FDA to issue CPRs in
favor of respondents’ products.
The RTC held that there is nothing in RA 3720 which granted either the FDA the authority to issue and
implement the subject circulars, or the Secretary of Health the authority to delegate his powers to the FDA.
For these reasons, it concluded that the issuance of Circular Nos. 1 and 8, s.
1997 constituted an illegal exercise of legislative and administrative powers and, hence, must be struck
down.23
Accordingly, the RTC issued a Writ of Permanent Injunction24 dated January 19, 2010, enjoining the FDA
and all persons acting for and under it from enforcing Circular Nos. 1 and 8, s. 1997 and directing them to
approve the renewal and revalidation of respondents’ products without submitting satisfactory BA/BE test
results.
Aggrieved, the FDA sought direct recourse to the Court through the instant petition with an urgent prayer for
the immediate issuance of a temporary restraining order and/or a writ of preliminary injunction against the
implementation of the RTC’s Order dated December 18, 2009 and Writ of Permanent Injunction dated
January 19, 2010.25 The Court granted FDA’s application and issued a Temporary Restraining Order26 dated
February 24, 2010, effective immediately and continuing until further orders.
The Issue Before the Court
The primordial issue in this case is whether or not the FDA may validly issue and implement Circular Nos. 1
and 8, s. 1997. In resolving this issue, there is a need to determine whether or not the aforesaid circulars
partake of administrative rules and regulations and, as such, must comply with the requirements of the law
for its issuance.
2J 2019-2020
The FDA contends that it has the authority to issue Circular Nos. 1 and 8, s. 1997 as it is the agency
mandated by law to administer and enforce laws, including rules and regulations issued by the DOH, that
pertain to the registration of pharmaceutical products.27
For their part, respondents maintain that under RA 3720, the power to make rules to implement the law is
lodged with the Secretary of Health, not with the FDA.28 They also argue that the assailed circulars are void
for lack of prior hearing, consultation, and publication. 29
The Court’s Ruling
The petition is meritorious.
Administrative agencies may exercise quasi-legislative or rule-making powers only if there exists a law
which delegates these powers to them. Accordingly, the rules so promulgated must be within the confines of
the granting statute and must involve no discretion as to what the law shall be, but merely the authority to fix
the details in the execution or enforcement of the policy set out in the law itself, so as to conform with the
doctrine of separation of powers and, as an adjunct, the doctrine of non-delegability of legislative power.30
An administrative regulation may be classified as a legislative rule, an interpretative rule, or a contingent

rule. Legislative rules are in the nature of subordinate legislation and designed to implement a primary
legislation by providing the details thereof.31 They usually implement existing law, imposing general, extra-
statutory obligations pursuant to authority properly delegated by Congress 32 and effect a change in existing
law or policy which affects individual rights and obligations.33 Meanwhile, interpretative rules are intended to
interpret, clarify or explain existing statutory regulations under which the administrative body operates. Their
purpose or objective is merely to construe the statute being administered and purport to do no more than
interpret the statute. Simply, they try to say what the statute means and refer to no single person or party in
particular but concern all those belonging to the same class which may be covered by the said
rules.34 Finally, contingent rules are those issued by an administrative authority based on the existence of
certain facts or things upon which the enforcement of the law depends. 35
In general, an administrative regulation needs to comply with the requirements laid down by Executive Order
No. 292, s. 1987, otherwise known as the "Administrative Code of 1987," on prior notice, hearing, and
publication in order to be valid and binding, except when the same is merely an interpretative rule. This is
because "[w]hen an administrative rule is merely interpretative in nature, its applicability needs nothing
further than its bare issuance, for it gives no real consequence more than what the law itself has already
prescribed. When, on the other hand, the administrative rule goes beyond merely providing for the means
that can facilitate or render least cumbersome the implementation of the law but substantially increases the
burden of those governed, it behooves the agency to accord at least to those 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." 36
In the case at bar, it is undisputed that RA 3720, as amended by Executive Order No. 175, s.
198737 prohibits, inter alia, the manufacture and sale of pharmaceutical products without obtaining the proper
CPR from the FDA.38 In this regard, the FDA has been deputized by the same law to accept applications for
registration of pharmaceuticals and, after due course, grant or reject such applications.39 To this end, the
said law expressly authorized the Secretary of Health, upon the recommendation of the FDA Director, to
issue rules and regulations that pertain to the registration of pharmaceutical products. 40
In accordance with his rule-making power under RA 3720, the Secretary of Health issued AO 67, s. 1989 in
order to provide a comprehensive set of guidelines covering the registration of pharmaceutical products. AO
67, s. 1989, required, among others, that certain pharmaceutical products undergo BA/BE testing prior to the
issuance of CPR, contrary to respondents’ assertion that it was Circular Nos. 1 and 8, s. 1997 that required
such tests.41
2J 2019-2020
Despite the fact that the BA/BE testing requirement was already in place as early as the date of effectivity of
AO 67, s. 1989, its implementation was indefinitely shelved due to lack of facilities capable of conducting the
same. It was only sometime in 1997 when technological advances in the country paved the way for the
establishment of BA/BE testing facilities, thus allowing the rule’s enforcement. Owing to these
developments, the FDA (then, the BFAD) issued Circular No. 1, s. 1997, the full text of which reads:
In Annex 1 of A.O. 67 s. 1989 which is entitled Requirement for Registration provides that
"Bioavailability/Bioequivalence study for certain drugs as determined by BFAD" is required for [(i)] Tried and
Tested Drug, (ii) Established Drug, and (iii) Pharmaceutical Innovation of Tried and Tested or Established
Drug.
Drugs requiring strict precaution in prescribing and dispensing contained in the List-B (Prime) were the
drugs identified by BFAD in the process of registration that will be required "Bioavailability/Bioequivalence"
studies. However, due to the supervening factor that there had yet been no bioavailability testing unit in the
country when the A.O. 67 s. 1989 became effective, the Bureau did not strictly enforce the said requirement.
The supervening factor no longer exist [sic] as of date. As a matter of fact, one of the registered products
tested by the Bioavailability Testing Unit at the University of Sto. Tomas under the NDP Cooperation Project
of the Philippines and Australia failed to meet the standard of bioavailability. This finding brings forth the fact
that there may be registered products which do not or may no longer meet bioavailability standard.
Wherefore, all drugs manufacturers, traders, distributor-importers of products contained or identified in the
list b’ (prime) provided for by BFAD, a copy of which is made part of this circular, are advised that all
pending initial and renewal registration of the products aforementioned, as well as all applications for initial
and renewal registration of the same, shall henceforth be required to submit bioavailability test with
satisfactory results on the products sought to be registered or renewed conducted by any bioavailability
testing units here or abroad, duly recognized by the BFAD under the Dept. of Health. (Emphases and
1âwphi1
underscoring supplied)
The FDA then issued Circular No. 8, s. 1997 to supplement Circular No. 1, s. 1997 in that it reiterates the
importance of the BA/BE testing requirement originally provided for by AO 67, s. 1989. 1âwphi1
A careful scrutiny of the foregoing issuances would reveal that AO 67, s. 1989 is actually the rule that
originally introduced the BA/BE testing requirement as a component of applications for the issuance of
CPRs covering certain pharmaceutical products. As such, it is considered an administrative regulation – a
legislative rule to be exact – issued by the Secretary of Health in consonance with the express authority
granted to him by RA 3720 to implement the statutory mandate that all drugs and devices should first be
registered with the FDA prior to their manufacture and sale. Considering that neither party contested the
validity of its issuance, the Court deems that AO 67, s. 1989 complied with the requirements of prior hearing,
notice, and publication pursuant to the presumption of regularity accorded to the government in the exercise
of its official duties.42
On the other hand, Circular Nos. 1 and 8, s. 1997 cannot be considered as administrative regulations
because they do not: (a) implement a primary legislation by providing the details thereof; (b) interpret, clarify,
or explain existing statutory regulations under which the FDA operates; and/or (c) ascertain the existence of
certain facts or things upon which the enforcement of RA 3720 depends. In fact, the only purpose of these
circulars is for the FDA to administer and supervise the implementation of the provisions of AO 67, s. 1989,
including those covering the BA/BE testing requirement, consistent with and pursuant to RA
3720.43 Therefore, the FDA has sufficient authority to issue the said circulars and since they would not affect
the substantive rights of the parties that they seek to govern – as they are not, strictly speaking,
administrative regulations in the first place – no prior hearing, consultation, and publication are needed for
their validity.
2J 2019-2020
In sum, the Court holds that Circular Nos. 1 and 8, s. 1997 are valid issuances and binding to all concerned
parties, including the respondents in this case.
As a final note, while the proliferation of generic drugs and medicines is indeed a welcome development as it
effectively ensures access to affordable quality drugs and medicines for all through their lower prices, the
State, through the FDA, which is the government instrumentality tasked on this matter, must nevertheless be
vigilant in ensuring that the generic drugs and medicines released to the market are safe and effective for
use.
WHEREFORE, the petition is GRANTED. The Order dated December 18, 2009 and the Writ of Permanent
Injunction dated January 19, 2010 of the Regional Trial Court of Muntinlupa City, Branch 256 in Civil Case
No. 08-124 are hereby SET ASIDE. BFAD Circular Nos. 1 and 8, series of 1997 are declared VALID.
Accordingly, the Court's Temporary Restraining Order dated February 24, 2010 is hereby made
PERMANENT.
SO ORDERED.
2J 2019-2020
EN BANC
G.R. No. 163980 August 3, 2006
HOLY SPIRIT HOMEOWNERS ASSOCIATION, INC. and NESTORIO F. APOLINARIO, in his personal
capacity and as President of Holy Spirit Homeowners Association, Inc., Petitioners,
vs.
SECRETARY MICHAEL DEFENSOR, in his capacity as Chairman of the Housing and Urban
Development Coordinating Council (HUDCC), ATTY. EDGARDO PAMINTUAN, in his capacity as
General Manager of the National Housing Authority (NHA), MR. PERCIVAL CHAVEZ, in his capacity
as Chairman of the Presidential Commission for the Urban Poor (PCUP), MAYOR FELICIANO
BELMONTE, in 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 SORIQUEZ, in his capacity as Secretary of the Department of Public Works and
Highways (DPWH) as ex-officio members of the NATIONAL GOVERNMENT CENTER
ADMINISTRATION COMMITTEE, Respondents.
DECISION
TINGA, J.:
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 injunction, seeks to prevent respondents
from enforcing the implementing rules and regulations (IRR) of Republic Act No. 9207, otherwise known as
the "National Government Center (NGC) Housing and Land Utilization Act of 2003."
Petitioner Holy Spirit Homeowners Association, Inc. (Association) is a homeowners association from the
West Side of the NGC. It is represented by its president, Nestorio F. Apolinario, Jr., who is a co-petitioner in
his own personal capacity and on behalf of the association.
Named respondents are the ex-officio members of the National Government Center Administration
Committee (Committee). At the filing of the instant petition, the Committee was composed of Secretary
Michael Defensor, Chairman of the Housing and Urban Development Coordinating Council (HUDCC), Atty.
Edgardo Pamintuan, General Manager of the National Housing Authority (NHA), Mr. Percival Chavez,
Chairman of the Presidential Commission for Urban Poor (PCUP), Mayor Feliciano Belmonte of Quezon
City, Secretary Elisea Gozun of the Department of Environment and Natural Resources (DENR), and
Secretary Florante Soriquez of the Department of Public Works and Highways (DPWH).
Prior to the passage of R.A. No. 9207, a number of presidential issuances authorized the creation and
development of what is now known as the National Government Center (NGC).
2J 2019-2020
On March 5, 1972, former President Ferdinand Marcos issued Proclamation No. 1826, reserving a parcel of
land in Constitution Hills, Quezon City, covering a little over 440 hectares as a national government site to
be known as the NGC. 1
On August 11, 1987, then President Corazon Aquino issued Proclamation No. 137, excluding 150 of the 440
hectares of the reserved site from the coverage of Proclamation No. 1826 and authorizing instead the
disposition of the excluded portion by direct sale to the bona fide residents therein. 2
In view of the rapid increase in population density in the portion excluded by Proclamation No. 137 from the
coverage of Proclamation No. 1826, former President Fidel Ramos issued Proclamation No. 248 on
September 7, 1993, authorizing the vertical development of the excluded portion to maximize the number of
families who can effectively become beneficiaries of the government’s socialized housing program. 3
On May 14, 2003, President Gloria Macapagal-Arroyo signed into law R.A. No. 9207. Among the salient
provisions of the law are the following:
Sec. 2. Declaration of Policy. – It is hereby declared the policy of the State to secure the land tenure of the
urban poor. Toward this end, lands located in the NGC, Quezon City shall be utilized for housing,
socioeconomic, civic, educational, religious and other purposes.
Sec. 3. Disposition of Certain Portions of the National Government Center Site to Bona Fide Residents. –
Proclamation No. 1826, Series of 1979, is hereby amended by excluding from the coverage thereof, 184
hectares on the west side and 238 hectares on the east side of Commonwealth Avenue, and declaring the
same open for disposition to bona fide residents therein: Provided, 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 of the bona fide residents on the east side shall be based on the census survey conducted in
1994 and occupancy verification survey conducted in 2000: Provided, further, That all existing legal
agreements, programs and plans signed, drawn up or implemented and actions taken, consistent with the
provisions of this Act are hereby adopted.
Sec. 4. Disposition of Certain Portions of the National Government Center Site for Local Government or
Community Facilities, Socioeconomic, Charitable, Educational and Religious Purposes. – Certain portions of
land within the aforesaid area for local government or community facilities, socioeconomic, charitable,
educational and religious institutions are hereby reserved for disposition for such purposes: Provided, That
only those institutions already operating and with existing facilities or structures, or those occupying the
land may avail of the disposition program established under the provisions this Act; Provided, further, That in
ascertaining the specific areas that may be disposed of in favor of these institutions, the existing site
allocation shall be used as basis therefore: Provided, finally. That in determining the reasonable lot
allocation of such institutions without specific lot allocations, the land area that may be allocated to them
shall be based on the area actually used by said institutions at the time of effectivity of this Act. (Emphasis
supplied.)
In accordance with Section 5 of R.A. No. 9207, 4 the Committee formulated the Implementing Rules and
Regulations (IRR) of R.A. No. 9207 on June 29, 2004. Petitioners subsequently filed the instant petition,
raising the following issues:
WHETHER OR NOT SECTION 3.1 (A.4), 3.1 (B.2), 3.2 (A.1) AND 3.2 (C.1) OF THE RULES AND
REGULATIONS OF REPUBLIC ACT NO. 9207, OTHERWISE KNOWN AS "NATIONAL GOVERNMENT
CENTER (NGC) HOUSING AND LAND UTILIZATION ACT OF 2003" SHOULD BE DECLARED NULL AND
VOID FOR BEING INCONSISTENT WITH THE LAW IT SEEKS TO IMPLEMENT.
2J 2019-2020
WHETHER OR NOT SECTION 3.1 (A.4), 3.1 (B.2), 3.2 (A.1) AND 3.2 (C.1) OF THE RULES AND
REGULATIONS OF REPUBLIC ACT NO. 9207, OTHERWISE KNOWN AS "NATIONAL GOVERNMENT
CENTER (NGC) HOUSING AND LAND UTILIZATION ACT OF 2003" SHOULD BE DECLARED NULL AND
VOID FOR BEING ARBITRARY, CAPRICIOUS AND WHIMSICAL. 5
First, the procedural matters.
The Office of the Solicitor General (OSG) argues that petitioner Association cannot question the
implementation of Section 3.1 (b.2) and Section 3.2 (c.1) since it does not claim any right over the NGC East
Side. Section 3.1 (b.2) provides for the maximum lot area that may be awarded to a resident-beneficiary of
the NGC East Side, while Section 3.2 (c.1) imposes a lot price escalation penalty to a qualified beneficiary
who fails to execute a contract to sell within the prescribed period. 6 Also, the OSG contends that since
petitioner association is not the duly recognized people’s organization in the NGC and since petitioners not
qualify as beneficiaries, they cannot question the manner of disposition of lots in the NGC. 7
"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
Petitioner association has the legal standing to institute the instant petition, whether or not it is the duly
recognized association of homeowners in the NGC. There is no dispute that the individual members of
petitioner association are residents of the NGC. As such they are covered and stand to be either benefited
or injured by the enforcement of the IRR, particularly as regards the selection process of beneficiaries and
lot allocation to qualified beneficiaries. Thus, petitioner association may assail those provisions in the IRR
which it believes to be unfavorable to the rights of its members. Contrary to the OSG’s allegation that the
failure of petitioner association and its members to qualify as beneficiaries effectively bars them from
questioning the provisions of the IRR, such circumstance precisely operates to confer on them the legal
personality to assail the IRR. Certainly, petitioner and its members have sustained direct injury arising from
the 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 NGC East Side, the rest of the assailed provisions of
the IRR, namely, Sections 3.1 (a.4), 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.
We cannot, therefore, agree with the OSG on the issue of locus standi. The petition does not merit dismissal
on that ground.
There are, however, other procedural impediments to the granting of the instant petition. The OSG claims
that the instant petition for prohibition is an improper remedy because the writ of prohibition does not lie
against the exercise of a quasi-legislative function. 9 Since in issuing the questioned IRR of R.A. No. 9207,
the Committee was not exercising judicial, quasi-judicial or ministerial function, which is the scope of a
petition for prohibition under Section 2, Rule 65 of the 1997 Rules of Civil Procedure, the instant prohibition
should be dismissed outright, the OSG contends. For their part, respondent Mayor of Quezon City 10 and
respondent NHA 11 contend that petitioners violated the doctrine of hierarchy of courts in filing the instant
petition with this Court and not with the Court of Appeals, which has concurrent jurisdiction over a petition for
prohibition.
The cited breaches are mortal. The petition deserves to be spurned as a consequence.
2J 2019-2020
Administrative agencies possess quasi-legislative or rule-making powers and quasi-judicial or administrative

adjudicatory powers. Quasi-legislative or rule-making 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 separability of powers. 12
In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a

party need not exhaust administrative remedies before going to 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 act pertained to its rule-making or quasi-legislative power. 13
The assailed IRR was issued pursuant to the quasi-legislative power of the Committee expressly authorized
by R.A. No. 9207. The petition rests mainly on the theory that the assailed IRR issued by the Committee is
invalid on the ground that it is not germane to the object and purpose of the statute it seeks to implement.
Where what is assailed is the validity or constitutionality of a rule or regulation issued by the administrative
agency in the performance of its quasi-legislative function, the regular courts 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 course to assail its validity must follow
the doctrine of hierarchy of courts. Although the Supreme Court, Court of Appeals and the Regional Trial
Courts have concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas
corpus and injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court
forum. 15
True, this Court has the full discretionary power to take cognizance of the 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 Court’s original jurisdiction to issue these writs should be allowed only when there are special and
important reasons therefor, clearly and specifically set out in the petition. 17
In Heirs of Bertuldo Hinog v. Melicor, 18 the Court said that it will not entertain 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 serious implications, justify the availment of the
extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction. 19 A perusal,
however, of the petition for prohibition shows no compelling, special or important reasons to warrant the
Court’s taking cognizance of the petition in the first instance. Petitioner also failed to state any reason that
precludes the lower courts from passing upon the validity of the questioned IRR. Moreover, as provided in
Section 5, Article VIII of the
Constitution, 20 the Court’s power to evaluate the validity of an implementing rule or regulation is generally
appellate in nature. Thus, following the doctrine of hierarchy of courts, the instant petition should have been
initially filed with the Regional Trial Court.
A petition for prohibition is also not the proper remedy to assail an IRR issued in the exercise of a quasi-
legislative function. Prohibition is an extraordinary writ directed against any tribunal, corporation, board,
officer or person, whether exercising judicial, quasi-judicial or ministerial functions, ordering said entity or
person to desist from further proceedings when said proceedings are without or in excess of said entity’s or
person’s jurisdiction, or are accompanied with grave abuse of discretion, and there is no appeal or any other
plain, speedy and adequate remedy in the ordinary course of law. 21 Prohibition lies against judicial or
ministerial functions, but not against legislative or quasi-legislative functions. Generally, the purpose of a writ
of prohibition is to keep a lower court within the 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
jurisdiction or power by an inferior court, or when, in the exercise of jurisdiction in handling matters clearly
2J 2019-2020
within its cognizance the inferior court transgresses the bounds 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 to invalidate an IRR, petitioners’ remedy is an ordinary action for its nullification,
an action which properly falls under the jurisdiction of the Regional Trial Court. In any case, petitioners’
allegation that "respondents are performing or threatening to perform functions without or in excess of their
jurisdiction" may appropriately be enjoined by the trial court through a writ of injunction or a temporary
restraining order.
In a number of petitions, 24 the Court adequately resolved them on other grounds without adjudicating on the
constitutionality issue when there were no compelling reasons to pass upon the same. In like manner, the
instant petition may be dismissed based on the foregoing procedural grounds. Yet, the Court will not shirk
from its duty to rule on the merits of this petition to facilitate the speedy resolution of this case. In proper
cases, procedural rules may be relaxed or suspended in the interest of substantial justice. And the power of
the Court to except a particular case from its rules whenever the purposes of justice require it cannot be
questioned. 25
Now, we turn to the substantive aspects of the petition. The outcome, however, is just as dismal for
petitioners.
Petitioners assail the following provisions of the IRR:
Section 3. Disposition of Certain portions of the NGC Site to the bonafide residents
3.1. Period for Qualification of Beneficiaries
xxxx
(a.4) Processing and evaluation of qualifications shall be based on the Code of Policies and subject to the
condition that a beneficiary is 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
(b.2) Applications for qualification as beneficiary shall be processed and evaluated based on the Code of
Policies including the minimum and maximum lot allocation of 35 sq. m. and 60 sq. m.
xxxx
3.2. Execution of the Contract to Sell
(a) Westside
(a.1) All qualified beneficiaries shall execute Contract to Sell (CTS) within sixty (60) days from the effectivity
of the IRR in order to avail of the lot at P700.00 per sq. m.
xxxx
(c) for both eastside and westside

2J 2019-2020
(c.1) Qualified beneficiaries who failed to execute 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 subdivision plan shall be subjected to
lot price escalation.
The rate shall be based on the formula to be set by the National Housing Authority factoring therein the
affordability criteria. The new rate shall be approved by the NGC-Administration Committee (NGC-AC).
Petitioners contend that the aforequoted provisions of the IRR are constitutionally infirm as they are not
germane to and/or are in conflict with the object and purpose of the law sought to be implemented.
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 beneficiaries shall be based on the area actually used or occupied by bona
fide residents without limitation to area. The argument is utterly baseless.
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 government institutions including the local
government. Section 3, R.A. No. 9207 mandates the allocation of additional property within the NGC for
disposition to its bona fide residents and the manner by which this area may be distributed to qualified
beneficiaries. Section 4, R.A. No. 9207, on the other hand, governs the lot disposition to government
institutions. While it is true that Section 4 of R.A. No. 9207 has a proviso mandating that the lot allocation
shall be based on the land area actually used or occupied at the time of the law’s effectivity, this proviso
applies only to institutional beneficiaries consisting of the local government, socioeconomic, charitable,
educational and religious institutions which do not have specific lot allocations, and not to the bona
fide residents of NGC. There is no proviso which even hints that a bona fide resident of the NGC is likewise
entitled to the lot area actually occupied by him.
Petitioners’ interpretation is also not supported by the policy of R.A. No. 9207 and the prior proclamations
establishing the NGC. The government’s policy to set aside public property aims to benefit not only the
urban poor but also the local government and various government institutions devoted to socioeconomic,
charitable, educational and
religious purposes. 26 Thus, although Proclamation No. 137 authorized the sale of lots to bona fide residents
in the NGC, only a third of the entire area of the NGC was declared open for disposition subject to the
condition that those portions being used or earmarked for public or quasi-public purposes would be excluded
from the housing program for NGC residents. The same policy of rational and optimal land use can be read
in Proclamation No. 248 issued by then President Ramos. Although the proclamation recognized the rapid
increase in the population density in the NGC, it did not allocate additional property within the NGC for urban
poor housing but instead authorized the vertical development of the same 150 hectares identified previously
by Proclamation No. 137 since the distribution of individual lots would not adequately provide for the housing
needs of all the bona fide residents in the NGC.
In addition, as provided in Section 4 of R.A. No. 9207, the institutional beneficiaries shall be allocated the
areas actually occupied by them; hence, the portions intended for the institutional beneficiaries is fixed and
cannot be allocated for other non-institutional beneficiaries. Thus, the areas not intended for institutional
beneficiaries would have to be equitably distributed among the bona fide residents of the NGC. In order to
accommodate all qualified residents, a limitation on the area to be awarded to each beneficiary must be
fixed as a necessary consequence.
Second. Petitioners note that while Sec. 3.2 (a.1) of the IRR fixes the selling rate of a lot at P700.00 per sq.
m., R.A. No. 9207 does not provide for the price. They add Sec. 3.2 (c.1) penalizes a beneficiary who fails to
execute a contract to sell within six (6) months from the approval of the subdivision plan by imposing a price
2J 2019-2020
escalation, while there is no such penalty imposed by R.A. No. 9207. Thus, they conclude that the assailed
provisions conflict with R.A. No. 9207 and should be nullified. The argument deserves scant consideration.
Where a rule or regulation has a provision not expressly stated or contained in the statute being
implemented, that provision does not necessarily contradict the statute. A legislative rule is in the nature of
subordinate legislation, designed to implement a primary legislation by providing the details thereof. 27 All
that is required is that the regulation should be germane to the objects and purposes of the law; that the
regulation be not in contradiction to but in conformity with the standards prescribed by the law. 28
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 covered by the law. Implicit in this authority and the
statute’s objective of urban poor housing is the power of the Committee to formulate the manner by which
the reserved property may be allocated to the beneficiaries. Under this broad power, the Committee is
mandated to fill in the details such as the qualifications of beneficiaries, the selling price of the lots, the terms
and conditions governing the sale and other key particulars necessary to implement the objective of the law.
These details are purposely omitted from the statute and their determination is left to the discretion of the
Committee because the latter possesses special knowledge and technical expertise over these matters.
The Committee’s authority to fix the selling price of the lots may be likened to the rate-fixing power of
administrative agencies. In case of a delegation of rate-fixing power, the only standard which the legislature
is required to prescribe for the guidance of the administrative authority is that the rate be reasonable and
just. However, it has been held that even in the absence of an express requirement as to reasonableness,
this standard may be implied. 29 In this regard, petitioners do not even claim that the selling price of the lots
is unreasonable.
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 Committee’s authority to formulate guidelines
and policies to implement R.A. No. 9207. 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 objectionable about prescribing a period within which the parties must execute the contract to sell.
This condition can ordinarily be found in a contract to sell and is not contrary to law, morals, good customs,
public order, or public policy.
Third. Petitioners also suggest that the adoption of the assailed IRR suffers from a procedural flaw.
According to them the IRR was adopted and concurred in by several representatives of people’s
organizations contrary to the express mandate of R.A. No. 9207 that only two representatives from duly
recognized peoples’ organizations must compose the NGCAC which promulgated the assailed IRR. It is
worth noting that petitioner association is not a duly recognized people’s organization.
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 there is observance of more than the
minimum requirements of due process in the adoption of the questioned IRR is not a ground to invalidate the
same.
In sum, the petition lacks merit and suffers from procedural deficiencies.
WHEREFORE, the instant petition for prohibition is DISMISSED. Costs against petitioners.
SO ORDERED
2J 2019-2020

SUPREME COURT
Manila
EN BANC
G.R. No. 98472 August 19, 1993
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. (PASEI), PHILIPPINE ENTERTAINMENT

EXPORTERS AND PROMOTERS ASSOCIATION (PEEPA), and ASSOCIATION OF FILIPINO
OVERSEAS WORKERS, INC. (AFOWI), petitioners,
vs.
HON. RUBEN D. TORRES, SECRETARY OF LABOR AND EMPLOYMENT, respondent.
JOBLINK INTERNATIONAL, INC. (herein represented by FEBI L. ENRIQUEZ, Vice President for
Operations) and PROSPECS INTERNATIONAL CONSULTANCY (herein represented by QUINTIN C.
FENIZA, Proprietor-General Manager), intervenors, RP-JAPAN ENTERTAINMENT PROMOTERS,
ASSOCIATION, INC. (REPA), intervenor, AMADER INTERNATIONAL, INC., IDG TRADING & GENERAL
SERVICES, PHILCANGO INTERNATIONAL RECRUITMENT SERVICES, PAN ASIA MANPOWER
PLACEMENT, LYKA INTERNATIONAL MANPOWER SERVICES, INTERNATIONAL MANPOWER
SERVICES, MAINLINE RECRUITMENT INTERNATIONAL, INC., WORLD MATRIX UNLIMITED
SERVICES CONSULTANCY & TRADING CO., NUBA INTERNATIONAL MANPOWER SERVICES
CORPORATION, EL BARY MANPOWER SERVICES, SOCIAL SERVICES CONT., INT'L CO. LTD., CDD
ENTERPRISES and VELREY RECRUITMENT COMPANY, intervenors.
Gutierrez & Alo Law Office for petitioners.
Domingo F. Gonzales for Intervenor RP-Japan Entertainment Promoters Association.
Gil-Fernando C. Cruz for Intervenors JOBLINK International, Inc. et al.
Ceferino P. Padua for Intervenors Amader International, Inc. et al.
BELLOSILLO, J.:
May an Executive Order (EO) 1 repeal a Letter of Instruction (LOI)? 2
Ordinarily, since both LOI and EO are presidential issuances, one may repeal or otherwise alter, modify or
amend the other, depending on which comes later. The case before us appears compounded by the
circumstance that the LOI in question was issued by former President Ferdinand E. Marcos when he was
clothed with legislative power, while the EO revoking the LOI was issued by then President Corazon C.
Aquino at a time when she had already lost her law-making power after Congress convened on 27 July
1987.3 Although the EO issued by President Aquino is undoubtedly not a law but a mere administrative
issuance, the parties here debate whether the LOI issued by President Marcos was a law or simply an
administrative rule in view of his dual position then as chief executive and as legislative authority. Petitioners
contend that the LOI is a law, hence, the EO cannot countermand it, while public respondent claims that the
LOI is only an administrative issuance which may be superseded by an EO.
2J 2019-2020
In determining whether a presidential issuance under the 1973 Constitution may be considered a law, we
held in Garcia-Padilla v. Enrile4 that "[T]o form part of the law of the land, the decree, order or LOI must be
issued by the President in the exercise of his extraordinary power of legislation as contemplated in Section 6
of the 1976 Amendments to the Constitution, whenever in his judgment there exists a grave emergency or a
threat or imminence thereof, or whenever the interim Batasan Pambansa or the regular National Assembly
fails or is unable to act adequately on any matter for any reason that in his judgment requires immediate
action. . . . Verily, not all LOI issued by the President should be dignified into forming part of the law of the
land."
Article 25 of the Labor Code of the Philippines (P.D. 442, as amended) 5 encourages private sector
participation in recruitment and placement of workers under guidelines, rules and regulations to be issued by
the Secretary of Labor. On 20 January 1982, President Marcos issued LOI 1190 withholding the grant of
new licenses to operate agencies for overseas employment effective 1 January 1982 except as he may
otherwise direct.6 On 19 March 1991, President Aquino issued EO 450 lifting the ban on new applications for
licenses to operate recruitment agencies subject to guidelines and regulations the Secretary of Labor may
promulgate.7 On 8 April 1991, respondent Secretary of Labor and Employment promulgated Department
(DO) No. 9, Series of 1991, entitled "Guidelines Implementing Executive Order No. 450."
In this Petition for Prohibition with Preliminary Injunction/Restraining Order filed 14 May 1991 petitioners
Philippine Association of Service Exporters, Inc. (PASEI), Philippine Entertainment Exporters and Promoters
Association (PEEPA), and Association of Filipino Overseas Workers, Inc. (AFOWI) pray that EO 450 be
declared invalid for being contrary to LOI 1190.
On 16 May 1991, we issued a temporary restraining order directing respondent Secretary of Labor and
Employment to cease and desist from enforcing EO 450 and DO 9 until further orders. 8 Thereafter, three
motions for intervention were filed,9 which the Court eventually allowed. 10 Intervenors Joblink International,
Inc. (JOBLINK), Prospecs International Consultancy, Amader International, Inc. (AMADER), IDG Trading &
General Services, Philcango International Recruitment Services, Pan Asia Manpower Placement,
International, Manpower Services, Lyka International, Inc., World Matrix Unlimited Services Consultancy &
Trading Co., Nuba International Manpower Services Corporation, El Barry Manpower Services, Social
Services Cont. Int'l Co., Ltd., CDD Enterprises and Velrey Recruitment Company, all applicants for new
licenses, support the position of respondent that LOI 1190 was not a law.
On the other hand, intervenor RP-Japan Entertainment Promoters Association, Inc. (REPA), a non-stock,
non-profit domestic corporation composed of private employment agencies authorized to recruit and deploy
contract workers abroad, prays for the modification of the restraining order we issued on 16 May 1991. We
addressed this incident on 4 July 1991 when we explained that our temporary restraining order did not
comprehend renewal of existing licenses since EO 450 covered only new applications. 11 The other pending
issue relating to the lifting and modification of our Resolution of 16 May 1991, will accordingly be resolved in
this decision.
First, on the challenge of intervenors AMADER, et al., that petitioners lack locus standi, we need only
reiterate that the "proper-party" requirement is satisfied if it is alleged that petitioners and intervenors have
sustained or are in danger of sustaining immediate injury resulting from the acts or measures complained
of. 12 Petitioners PASEI and PEEPA allege that their member agencies, which enjoy protection against
competition by new licensees pursuant to LOI 1190, will suffer irreparable injury with the repeal of LOI 1190
by EO 450, considering further that there is no additional demand for Filipino workers abroad. Hence, any
gain made by the new agencies on the supposed exclusive preserve of existing agencies necessarily results
in the latter's loss.
But, as regards petitioner Association of Filipino Overseas Workers, Inc. (AFOWI), we are not persuaded
that the proliferation of recruitment agencies will necessarily result in exposure of workers to exploitation by
2J 2019-2020
unscrupulous recruiters, for the stiffer competition may even compel these agencies to seek better terms
and conditions for overseas workers. Hence, the petition being founded on mere speculation insofar as it
affects AFOWI, the same should be dismissed for want of a valid cause of action.
On the issue raised by intervenors that the petition can be decided without touching on the validity of EO
450, we cannot find any other way but to meet the question squarely since petitioners' relief depends on its
validity.
The central thesis of the petition is that LOI 1190 was issued pursuant to the law-making power of the
President under Sec. 6 of the 1976 Amendments to the 1973 Constitution in response to "a grave
emergency which cried for immediate and decisive action," hence, should be considered part of the law of
the land. Petitioners argue that because of its repealing or modifying effect on Art. 25 of the Labor Code, LOI
1190 could be valid only if treated as a law, and that a contrary interpretation that would render LOI 1190
invalid could not have been intended by the then incumbent President.
As we view it, LOI 1190 13 simply imposes a presidential review of the authority of the Minister of Labor and
Employment to grant licenses, hence, directed to him alone. Since this is undoubtedly an administrative
action, LOI 1190 should properly be treated as an administrative issuance. Unlike Presidential Decrees
which by usage have gained acceptance as laws promulgated by the President, Letters of Instruction are
presumed to be mere administrative issuances except when the conditions set out in Garcia-Padilla
v. Enrile exist. Consequently, to be considered part of the law of the land, petitioners must establish that
LOI, 1190 was issued in response to "a grave emergency or a threat or imminence thereof, or whenever the
interim Batasan Pambansa or the regular National Assembly fails or is unable to act adequately on any
matter." The conspicuous absence of any of these conditions fortifies the opinion that LOI 1190 cannot be
any more than a mere administrative issuance.
In arguing that LOI 1190 was issued to cope with "a grave emergency," petitioners point to the 3rd
"Whereas" clause which speaks of the concern of the state against cut-throat competition seriously affecting
the integrity and viability of the overseas recruitment industry, and the difficulty in the regulation and
supervision of agencies and the protection of the welfare of the workers. The petitioner's appraisal that the
3rd "Whereas" clause manifests a grave emergency situation is as good as anybody else's contrary view.
Moreover, even if we treat as emergency the "situation which has seriously affected the integrity and viability
of the overseas employment industry," there is no indication that in the judgment of the President it is grave.
Petitioners argue that since the repeal of Art. 25 of the Labor Code could not be done through an
administrative issuance, LOI 1190 must of necessity be a law. This reasoning is flawed.
There is nothing in the LOI which repeals or runs counter to Art. 25 of the Labor Code, as amended. Instead,
contrary to the perception of petitioners, LOI 1190 does not actually ban the grant of licenses nor bar the
entry of new licensees since anybody could still apply for license with the Minister of Labor and Employment,
although the grant thereof is subject to the prior authority of the President. In fact, the LOI did not modify the
rule-making power of the Minister of Labor and Employment under the Labor Code; it only added another
tier of review.
Neither can petitioners consider this additional review by the President as an amendment of Art. 25, for this
is within the scope of the exercise of his constitutionally sanctioned control over the executive departments
of government. 14 Implicit in that power of control is the President's "authority to go over, confirm, modify or
reverse the action taken by his department
secretaries." 15 Moreover, if we discern the intent of LOI 1190 from the manner it was enforced, the
unrebutted allegation of respondent — that 319 private employment agencies secured administrative
presidential approval from 1982 to 1989 16 — shows that then President Marcos merely intended to regulate,
2J 2019-2020
and not ban altogether, new applications for licenses. For this reason, Marcos could not have contemplated
repealing Art. 25 of the Labor Code.
Petitioners advance a rather outrageous interpretation of LOI 1190 when they claim that "[t]he then
President was in effect saying that 'Art. 25 of the Labor Code is hereby repealed as regards overseas
workers until I otherwise direct.'" 17 By their nature, and their purpose to maintain stability in the polity, laws
have a certain degree of permanence such that they are not intended to be repealed one hour after their
enactment, then re-enacted the following hour, and so on. If he law has to be applied on a case to case
basis, as in the case Art. 25 of the Labor Code, it does not have to undergo the tedious process of repeal
and re-enactment every time its application is warranted.
Petitioners would impress upon us the interpretation that LOI 1190 suspended the effectivity of Art. 25,
which could not be done because the chief executive is constitutionally bound to "ensure that the laws be
faithfully executed." 18 As we earlier stated, the LOI did not suspend the enforcement of Art. 25 of the Labor
Code; it merely added another level of administrative review.
The discussion on whether the word "I" in the phrase "except as I may otherwise direct" refers to the
President as chief executive or as a legislator is meaningless, for the correct interpretation would ultimately
depend on whether the LOI is a law or an administrative issuance.
Petitioners also contend that EO 450 cannot repeal LOI 1190 for Congress has not delegated that power to
the President. 19 We do not agree. There is no need for legislative delegation of power to the President to
revoke the LOI by way of an EO in view of our finding that LOI 1190 is a mere administrative
directive, 20 hence, may be repealed, altered or modified by EO 450, and DO 9 must consequently be
upheld.
Of the three(3) groups of intervenors, only AMADER et al., pray for attorney's fees claiming that they were
compelled to hire counsel to enforce and protect their rights. However, in view of the complexity of the legal
issue involved, the Court resolves not to grant attorney's fees.
WHEREFORE, the instant petition is DISMISSED. The Temporary Restraining Order we issued on 16 May
1991 is accordingly LIFTED and SET ASIDE. Executive Order No. 450 and Department Order No. 9 of the
Department of Labor and Employment are SUSTAINED. Accordingly, Letter of Instruction No. 1190 is
declared REPEALED and SUPERSEDED by Executive Order No. 450.
SO ORDERED.
2J 2019-2020

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 118712 October 6, 1995
LAND BANK OF THE PHILIPPINES, petitioner,

vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORP., respondents.
G.R. No. 118745 October 6, 1995
DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary of Agrarian Reform, petitioner,

vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORP., ET AL., respondents.
FRANCISCO, R., J.:
It has been declared that the duty of the court to protect the weak and the underprivileged should not be
carried out to such an extent as deny justice to the landowner whenever truth and justice happen to be on
his side.1 As eloquently stated by Justice Isagani Cruz:
. . . social justice — or any justice for that matter — is for the deserving, whether he be a
millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt,
we are called upon to tilt the balance in favor of the poor, to whom the Constitution fittingly
extends its sympathy and compassion. But never is it justified to prefer the poor simply
because they are poor, or to reject the rich simply because they are rich, for justice must
always be served, for poor and rich alike, according to the mandate of the law. 2
In this agrarian dispute, it is once more imperative that the aforestated principles be applied in its resolution.
Separate petitions for review were filed by petitioners Department of Agrarian Reform (DAR) (G.R. No.
118745) and Land Bank of the Philippines (G.R. No. 118712) following the adverse ruling by the Court of
Appeals in CA-G.R. SP No. 33465. However, upon motion filed by private respondents, the petitions were
ordered consolidated.3
Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994, which granted
private respondents' Petition for Certiorari and Mandamus and ruled as follows:
WHEREFORE, premises considered, the Petition for Certiorari and Mandamus is hereby
GRANTED:
2J 2019-2020
a) DAR Administrative Order No. 9, Series of 1990 is

declared null and void insofar as it provides for the opening of trust accounts
in lieu of deposits in cash or bonds;
b) Respondent Landbank is ordered to immediately deposit — not merely

"earmark", "reserve" or "deposit in trust" — with an accessible bank
designated by respondent DAR in the names of the following petitioners the
following amounts in cash and in government financial instruments — within
the parameters of Sec. 18 (1) of RA 6657:
P 1,455,207.31 Pedro L. Yap
P 135,482.12 Heirs of Emiliano Santiago
P 15,914,127.77 AMADCOR;
c) The DAR-designated bank is ordered to allow the petitioners to

withdraw the above-deposited amounts without prejudice to the final
determination of just compensation by the proper authorities; and
d) Respondent DAR is ordered to

1) immediately conduct summary administrative proceedings to determine
the just compensation for the lands of the petitioners giving the petitioners 15
days from notice within which to submit evidence and to 2) decide the
cases within 30 days after they are submitted for decision.4
Likewise, petitioners seek the reversal of the Resolution dated January 18, 1995, 5 denying their
motion for reconsideration.
Private respondents are landowners whose landholdings were acquired by the DAR and subjected to
transfer schemes to qualified beneficiaries under the Comprehensive Agrarian Reform Law (CARL, Republic
Act No. 6657).
Aggrieved by the alleged lapses of the DAR and the Landbank with respect to the valuation and
payment of compensation for their land pursuant to the provisions of RA 6657, private respondents
filed with this Court a Petition for Certiorari and Mandamus with prayer for preliminary mandatory
injunction. Private respondents questioned the validity of DAR Administrative Order No. 6, Series of
19926 and DAR Administrative Order No. 9, Series of 1990, 7 and sought to compel the DAR to
expedite the pending summary administrative proceedings to finally determine the just compensation
of their properties, and the Landbank to deposit in cash and bonds the amounts respectively
"earmarked", "reserved" and "deposited in trust accounts" for private respondents, and to allow them
to withdraw the same.
Through a Resolution of the Second Division dated February 9, 1994, this Court referred the petition to
respondent Court of Appeals for proper determination and disposition.
As found by respondent court , the following are undisputed:
Petitioner Pedro Yap alleges that "(o)n 4 September 1992 the transfer certificates of title
(TCTs) of petitioner Yap were totally cancelled by the Registrar of Deeds of Leyte and were
transferred in the names of farmer beneficiaries collectively, based on the request of the
2J 2019-2020
DAR together with a certification of the Landbank that the sum of P735,337.77 and
P719,869.54 have been earmarked for Landowner Pedro L. Yap for the parcels of lands
covered by TCT Nos. 6282 and 6283, respectively, and issued in lieu thereof TC-563 and
TC-562, respectively, in the names of listed beneficiaries (ANNEXES "C" & "D") without
notice to petitioner Yap and without complying with the requirement of Section 16 (e) of RA
6657 to deposit the compensation in cash and Landbank bonds in an accessible bank.
(Rollo, p. 6).
The above allegations are not disputed by any of the respondents.
Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F. Santiago are the
owners of a parcel of land located at Laur, NUEVA ECIJA with an area of 18.5615 hectares
covered by TCT No. NT-60359 of the registry of Deeds of Nueva Ecija, registered in the
name of the late Emiliano F. Santiago; that in November and December 1990, without notice
to the petitioners, the Landbank required and the beneficiaries executed Actual tillers Deed
of Undertaking (ANNEX "B") to pay rentals to the LandBank for the use of their farmlots
equivalent to at least 25% of the net harvest; that on 24 October 1991 the DAR Regional
Director issued an order directing the Landbank to pay the landowner directly or through the
establishment of a trust fund in the amount of P135,482.12, that on 24 February 1992, the
Landbank reserved in trust P135,482.12 in the name of Emiliano F. Santiago. (ANNEX
"E"; Rollo,
p. 7); that the beneficiaries stopped paying rentals to the landowners after they signed the
Actual Tiller's Deed of Undertaking committing themselves to pay rentals to the LandBank
(Rollo, p. 133).
The above allegations are not disputed by the respondents except that respondent Landbank
claims 1) that it was respondent DAR, not Landbank which required the execution of Actual
Tillers Deed of Undertaking (ATDU, for brevity); and 2) that respondent Landbank, although
armed with the ATDU, did not collect any amount as rental from the substituting beneficiaries
(Rollo, p. 99).
Petitioner Agricultural Management and Development Corporation (AMADCOR, for brevity)

alleges — with respect to its properties located in San Francisco, Quezon — that the
properties of AMADCOR in San Francisco, Quezon consist of a parcel of land covered by
TCT No. 34314 with an area of 209.9215 hectares and another parcel covered by TCT No.
10832 with an area of 163.6189 hectares; that a summary administrative proceeding to
determine compensation of the property covered by TCT No. 34314 was conducted by the
DARAB in Quezon City without notice to the landowner; that a decision was rendered on 24
November 1992 (ANNEX "F") fixing the compensation for the parcel of land covered by TCT
No. 34314 with an area of 209.9215 hectares at P2,768,326.34 and ordering the Landbank
to pay or establish a trust account for said amount in the name of AMADCOR; and that the
trust account in the amount of P2,768,326.34 fixed in the decision was established by adding
P1,986,489.73 to the first trust account established on 19 December 1991 (ANNEX "G").
With respect to petitioner AMADCOR's property in Tabaco, Albay, it is alleged that the
property of AMADCOR in Tabaco, Albay is covered by TCT No. T-2466 of the Register of
Deeds of Albay with an area of 1,629.4578 hectares'; that emancipation patents were issued
covering an area of 701.8999 hectares which were registered on 15 February 1988 but no
action was taken thereafter by the DAR to fix the compensation for said land; that on 21 April
1993, a trust account in the name of AMADCOR was established in the amount of
P12,247,217.83', three notices of acquisition having been previously rejected by AMADCOR.
(Rollo, pp. 8-9)
2J 2019-2020
The above allegations are not disputed by the respondents except that respondent Landbank
claims that petitioner failed to participate in the DARAB proceedings (land valuation case)
despite due notice to it (Rollo, p. 100).8
Private respondents argued that Administrative Order No. 9, Series of 1990 was issued without jurisdiction
and with grave abuse of discretion because it permits the opening of trust accounts by the Landbank, in lieu
of depositing in cash or bonds in an accessible bank designated by the DAR, the compensation for the land
before it is taken and the titles are cancelled as provided under Section 16(e) of RA 6657. 9 Private
respondents also assail the fact that the DAR and the Landbank merely "earmarked", "deposited in trust" or
"reserved" the compensation in their names as landowners despite the clear mandate that before taking
possession of the property, the compensation must be deposited in cash or in bonds. 10
Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its rule-making
power pursuant to Section 49 of RA 6657.11 Moreover, the DAR maintained that the issuance of the
"Certificate of Deposit" by the Landbank was a substantial compliance with Section 16(e) of RA 6657 and
the ruling in the case of Association of Small Landowners in the Philippines, Inc., et al. vs. Hon. Secretary of
Agrarian Reform, G.R. No. 78742, July 14, 1989 (175 SCRA 343). 12
For its part, petitioner Landbank declared that the issuance of the Certificates of Deposits was in
consonance with Circular Nos. 29, 29-A and 54 of the Land Registration Authority where the words
"reserved/deposited" were also used.13
On October 20, 1994, the respondent court rendered the assailed decision in favor of private
respondents.14 Petitioners filed a motion for reconsideration but respondent court denied the same. 15
Hence, the instant petitions.
On March 20, 1995, private respondents filed a motion to dismiss the petition in G.R. No. 118745 alleging
that the appeal has no merit and is merely intended to delay the finality of the appealed decision.16 The
Court, however, denied the motion and instead required the respondents to file their comments. 17
Petitioners submit that respondent court erred in (1) declaring as null and void DAR Administrative Order
No. 9, Series of 1990, insofar as it provides for the opening of trust accounts in lieu of deposit in cash or in
bonds, and (2) in holding that private respondents are entitled as a matter of right to the immediate and
provisional release of the amounts deposited in trust pending the final resolution of the cases it has filed for
just compensation.
Anent the first assignment of error, petitioners maintain that the word "deposit" as used in Section 16(e) of
RA 6657 referred merely to the act of depositing and in no way excluded the opening of a trust account as a
form of deposit. Thus, in opting for the opening of a trust account as the acceptable form of deposit through
Administrative Circular No. 9, petitioner DAR did not commit any grave abuse of discretion since it merely
exercised its power to promulgate rules and regulations in implementing the declared policies of RA 6657.
The contention is untenable. Section 16(e) of RA 6657 provides as follows:
Sec. 16. Procedure for Acquisition of Private Lands —
xxx xxx xxx
(e) Upon receipt by the landowner of the corresponding payment or, in case of rejection or
no response from the landowner, upon the deposit with an accessible bank designated by
2J 2019-2020
the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR
shall take immediate possession of the land and shall request the proper Register of Deeds
to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. . .
. (emphasis supplied)
It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds". Nowhere does it
appear nor can it be inferred that the deposit can be made in any other form. If it were the intention to
include a "trust account" among the valid modes of deposit, that should have been made express, or at
least, qualifying words ought to have appeared from which it can be fairly deduced that a "trust account" is
allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to warrant an expanded construction of
the term "deposit".
The conclusive effect of administrative construction is not absolute. Action of an administrative agency may
be disturbed or set aside by the judicial department if there is an error of law, a grave abuse of power or lack
of jurisdiction or grave abuse of discretion clearly conflicting with either the letter or the spirit of a legislative
enactment.18 In this regard, it must be stressed that the function of promulgating rules and regulations may
be legitimately exercised only for the purpose of carrying the provisions of the law into effect. The power of
administrative agencies is thus confined to implementing the law or putting it into effect. Corollary to this is
that administrative regulations cannot extend
the law and amend a legislative enactment,19 for settled is the rule that administrative regulations must be in
harmony with the provisions of the law. And in case there is a discrepancy between the basic law and an
implementing rule or regulation, it is the former that prevails.20
In the present suit, the DAR clearly overstepped the limits of its power to enact rules and regulations when it
issued Administrative Circular No. 9. There is no basis in allowing the opening of a trust account in behalf of
the landowner as compensation for his property because, as heretofore discussed, Section 16(e) of RA
6657 is very specific that the deposit must be made only in "cash" or in "LBP bonds". In the same vein,
petitioners cannot invoke LRA Circular Nos. 29, 29-A and 54 because these implementing regulations
cannot outweigh the clear provision of the law. Respondent court therefore did not commit any error in
striking down Administrative Circular No. 9 for being null and void.
Proceeding to the crucial issue of whether or not private respondents are entitled to withdraw the amounts
deposited in trust in their behalf pending the final resolution of the cases involving the final valuation of their
properties, petitioners assert the negative.
The contention is premised on the alleged distinction between the deposit of compensation under Section
16(e) of RA 6657 and payment of final compensation as provided under Section 18 21 of the same law.
According to petitioners, the right of the landowner to withdraw the amount deposited in his behalf pertains
only to the final valuation as agreed upon by the landowner, the DAR and the LBP or that adjudged by the
court. It has no reference to amount deposited in the trust account pursuant to Section 16(e) in case of
rejection by the landowner because the latter amount is only provisional and intended merely to secure
possession of the property pending final valuation. To further bolster the contention petitioners cite the
following pronouncements in the case of "Association of Small Landowners in the Phil. Inc. vs. Secretary of
Agrarian Reform".22
The last major challenge to CARP is that the landowner is divested of his property even
before actual payment to him in full of just compensation, in contravention of a well-accepted
principle of eminent domain.
xxx xxx xxx

2J 2019-2020
The CARP Law, for its part conditions the transfer of possession and ownership of the land
to the government on receipt by the landowner of the corresponding payment or the deposit
by the DAR of the compensation in cash or LBP bonds with an accessible bank. Until then,
title also remains with the landowner. No outright change of ownership is contemplated
either.
xxx xxx xxx
Hence the argument that the assailed measures violate due process by arbitrarily
transferring title before the land is fully paid for must also be rejected.
Notably, however, the aforecited case was used by respondent court in discarding petitioners' assertion as it
found that:
. . . despite the "revolutionary" character of the expropriation envisioned under RA 6657

which led the Supreme Court, in the case of Association of Small Landowners in the Phil.
Inc. vs. Secretary of Agrarian Reform (175 SCRA 343), to conclude that "payments of the
just compensation is not always required to be made fully in money" — even as the Supreme
Court admits in the same case "that the traditional medium for the payment of just
compensation is money and no other" — the Supreme Court in said case did not abandon
the "recognized rule . . . that title to the property expropriated shall pass from the owner to
the expropriator only upon full payment of the just compensation." 23 (Emphasis supplied)
We agree with the observations of respondent court. The ruling in the "Association" case merely recognized
the extraordinary nature of the expropriation to be undertaken under RA 6657 thereby allowing a deviation
from the traditional mode of payment of compensation and recognized payment other than in cash. It did
not, however, dispense with the settled rule that there must be full payment of just compensation before the
title to the expropriated property is transferred.
The attempt to make a distinction between the deposit of compensation under Section 16(e) of RA 6657 and
determination of just compensation under Section 18 is unacceptable. To withhold the right of the
landowners to appropriate the amounts already deposited in their behalf as compensation for their
properties simply because they rejected the DAR's valuation, and notwithstanding that they have already
been deprived of the possession and use of such properties, is an oppressive exercise of eminent domain.
The irresistible expropriation of private respondents' properties was painful enough for them. But petitioner
DAR rubbed it in all the more by withholding that which rightfully belongs to private respondents in exchange
for the taking, under an authority (the "Association" case) that is, however, misplaced. This is misery twice
bestowed on private respondents, which the Court must rectify.
Hence, we find it unnecessary to distinguish between provisional compensation under Section 16(e) and
final compensation under Section 18 for purposes of exercising the landowners' right to appropriate the
same. The immediate effect in both situations is the same, the landowner is deprived of the use and
possession of his property for which he should be fairly and immediately compensated. Fittingly, we reiterate
the cardinal rule that:
. . . within the context of the State's inherent power of eminent domain, just compensation
means not only the correct determination of the amount to be paid to the owner of the land
but also the payment of the land within a reasonable time from its taking. Without prompt
payment, compensation cannot be considered "just" for the property owner is made to suffer
the consequence of being immediately deprived of his land while being made to wait for a
decade or more before actually receiving the amount necessary to cope with his
loss. 24 (Emphasis supplied)
2J 2019-2020
The promulgation of the "Association" decision endeavored to remove all legal obstacles in the
implementation of the Comprehensive Agrarian Reform Program and clear the way for the true freedom of
the farmer.25 But despite this, cases involving its implementation continue to multiply and clog the courts'
dockets. Nevertheless, we are still optimistic that the goal of totally emancipating the farmers from their
bondage will be attained in due time. It must be stressed, however, that in the pursuit of this objective,
vigilance over the rights of the landowners is equally important because social justice cannot be invoked to
trample on the rights of property owners, who under our Constitution and laws are also entitled to
protection.26
WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for lack of merit and the
appealed decision is AFFIRMED in toto.
SO ORDERED.
2J 2019-2020

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 108358 January 20, 1995
COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
THE HON. COURT OF APPEALS, R.O.H. AUTO PRODUCTS PHILIPPINES, INC. and THE HON. COURT
OF TAX APPEALS, respondents.
VITUG, J.:
On 22 August 1986, during the period when the President of the Republic still wielded legislative powers,
Executive Order No. 41 was promulgated declaring a one-time tax amnesty on unpaid income taxes, later
amended to include estate and donor's taxes and taxes on business, for the taxable years 1981 to 1985.
Availing itself of the amnesty, respondent R.O.H. Auto Products Philippines, Inc., filed, in October 1986 and
November 1986, its Tax Amnesty Return No. 34-F-00146-41 and Supplemental Tax Amnesty Return No.
34-F-00146-64-B, respectively, and paid the corresponding amnesty taxes due.
Prior to this availment, petitioner Commissioner of Internal Revenue, in a communication received by private
respondent on 13 August 1986, assessed the latter deficiency income and business taxes for its fiscal years
ended 30 September 1981 and 30 September 1982 in an aggregate amount of P1,410,157.71. The taxpayer
wrote back to state that since it had been able to avail itself of the tax amnesty, the deficiency tax notice
should forthwith be cancelled and withdrawn. The request was denied by the Commissioner, in his letter of
22 November 1988, on the ground that Revenue Memorandum Order No. 4-87, dated 09 February 1987,
implementing Executive Order No. 41, had construed the amnesty coverage to include only assessments
issued by the Bureau of Internal Revenue after the promulgation of the executive order on 22 August 1986
and not to assessments theretofore made. The invoked provisions of the memorandum order read:
TO: All Internal Revenue Officers and Others Concerned:
1.0. To give effect and substance to the immunity provisions of the tax amnesty under
Executive Order No. 41, as expanded by Executive Order No. 64, the following instructions
are hereby issued:
xxx xxx xxx
1.02. A certification by the Tax Amnesty Implementation Officer of the fact of availment of the
said tax amnesty shall be a sufficient basis for:
xxx xxx xxx

2J 2019-2020
1.02.3. In appropriate cases, the cancellation/withdrawal of assessment notices and letters of

demand issued after August 21, 1986 for the collection of income, business, estate or
donor's taxes due during the same taxable years.1 (Emphasis supplied)
Private respondent appealed the Commissioner's denial to the Court of Tax Appeals. Ruling for the
taxpayer, the tax court said:
Respondent (herein petitioner Commissioner) failed to present any case or law which proves
that an assessment can withstand or negate the force and effects of a tax amnesty. This
burden of proof on the petitioner (herein respondent taxpayer) was created by the clear and
express terms of the executive order's intention — qualified availers of the amnesty may pay
an amnesty tax in lieu of said unpaid taxes which are forgiven (Section 2, Section 5,
Executive Order No. 41, as amended). More specifically, the plain provisions in the statute
granting tax amnesty for unpaid taxes for the period January 1, 1981 to December 31, 1985
shifted the burden of proof on respondent to show how the issuance of an assessment
before the date of the promulgation of the executive order could have a reasonable relation
with the objective periods of the amnesty, so as to make petitioner still answerable for a tax
liability which, through the statute, should have been erased with the proper availment of the
amnesty.
Additionally, the exceptions enumerated in Section 4 of Executive Order No. 41, as

amended, do not indicate any reference to an assessment or pending investigation aside
from one arising from information furnished by an informer. . . . Thus, we deem that the rule
in Revenue Memorandum Order No. 4-87 promulgating that only assessments issued after
August 21, 1986 shall be abated by the amnesty is beyond the contemplation of Executive
Order No. 41, as amended.2
On appeal by the Commissioner to the Court of Appeals, the decision of the tax court was affirmed. The
appellate court further observed:
In the instant case, examining carefully the words used in Executive Order No. 41, as
amended, we find nothing which justifies petitioner Commissioner's ground for denying
respondent taxpayer's claim to the benefits of the amnesty law. Section 4 of the subject law
enumerates, in no uncertain terms, taxpayers who may not avail of the amnesty granted,. . . .
Admittedly, respondent taxpayer does not fall under any of the . . . exceptions. The added
exception urged by petitioner Commissioner based on Revenue Memorandum Order No. 4-
87, further restricting the scope of the amnesty clearly amounts to an act of administrative
legislation quite contrary to the mandate of the law which the regulation ought to implement.
xxx xxx xxx
Lastly, by its very nature, a tax amnesty, being a general pardon or intentional overlooking by
the State of its authority to impose penalties on persons otherwise guilty of evasion or
violation of a revenue or tax law, partakes of an absolute forgiveness or waiver by the
Government of its right to collect what otherwise would be due it, and in this sense,
prejudicial thereto, particularly to give tax evaders, who wish to relent and are willing to
reform a chance to do so and thereby become a part of the new society with a clean slate.
(Republic vs. Intermediate Appellate Court. 196 SCRA 335, 340 [1991] citing Commissioner
of Internal Revenue vs. Botelho Shipping Corp., 20 SCRA 487) To follow [the restrictive
application of Revenue Memorandum Order No. 4-87 pressed by petitioner Commissioner
would be to work against the raison d'etre of E.O. 41, as amended, i.e., to raise government
2J 2019-2020
revenues by encouraging taxpayers to declare their untaxed income and pay the tax due
thereon. (E.O. 41, first paragraph)]3
In this petition for review, the Commissioner raises these related issues:
1. WHETHER OR NOT REVENUE MEMORANDUM ORDER NO. 4-87, PROMULGATED TO

IMPLEMENT E.O. NO. 41, IS VALID;
2. WHETHER OR NOT SAID DEFICIENCY ASSESSMENTS IN QUESTION WERE

EXTINGUISHED BY REASON OR PRIVATE RESPONDENT'S AVAILMENT OF EXECUTIVE
ORDER NO. 41 AS AMENDED BY EXECUTIVE ORDER NO. 64;
3. WHETHER OR NOT PRIVATE RESPONDENT HAS OVERCOME THE PRESUMPTION OF

VALIDITY OF ASSESSMENTS.4
The authority of the Minister of Finance (now the Secretary of Finance), in conjunction with the
Commissioner of Internal Revenue, to promulgate all needful rules and regulations for the effective
enforcement of internal revenue laws cannot be controverted. Neither can it be disputed that such rules and
regulations, as well as administrative opinions and rulings, ordinarily should deserve weight and respect by
the courts. Much more fundamental than either of the above, however, is that all such issuances must not
override, but must remain consistent and in harmony with, the law they seek to apply and implement.
Administrative rules and regulations are intended to carry out, neither to supplant nor to modify, the law.
The real and only issue is whether or not the position taken by the Commissioner coincides with the
meaning and intent of executive Order No. 41.
We agree with both the court of Appeals and court of Tax Appeals that Executive Order No. 41 is quite
explicit and requires hardly anything beyond a simple application of its provisions. It reads:
Sec. 1. Scope of Amnesty. — A one-time tax amnesty covering unpaid income taxes for the
years 1981 to 1985 is hereby declared.
Sec. 2. Conditions of the Amnesty. — A taxpayer who wishes to avail himself of the tax
amnesty shall, on or before October 31, 1986;
a) file a sworn statement declaring his net worth as of December 31, 1985;
b) file a certified true copy of his statement declaring his net worth as of
December 31, 1980 on record with the Bureau of Internal Revenue, or if no
such record exists, file a statement of said net worth therewith, subject to
verification by the Bureau of Internal Revenue;
c) file a return and pay a tax equivalent to ten per cent (10%) of the increase
in net worth from December 31, 1980 to December 31, 1985: Provided, That
in no case shall the tax be less than P5,000.00 for individuals and
P10,000.00 for judicial persons.
Sec. 3. Computation of Net Worth. — In computing the net worths referred to in Section 2
hereof, the following rules shall govern:
a) Non-cash assets shall be valued at acquisition cost.

2J 2019-2020
b) Foreign currencies shall be valued at the rates of exchange prevailing as

of the date of the net worth statement.
Sec. 4. Exceptions. — The following taxpayers may not avail themselves of the amnesty
herein granted:
a) Those falling under the provisions of Executive Order Nos. 1, 2 and 14;
b) Those with income tax cases already filed in Court as of the effectivity
hereof;
c) Those with criminal cases involving violations of the income tax already
filed in court as of the effectivity filed in court as of the effectivity hereof;
d) Those that have withholding tax liabilities under the National Internal
Revenue Code, as amended, insofar as the said liabilities are concerned;
e) Those with tax cases pending investigation by the Bureau of Internal

Revenue as of the effectivity hereof as a result of information furnished under
Section 316 of the National Internal Revenue Code, as amended;
f) Those with pending cases involving unexplained or unlawfully acquired

wealth before the Sandiganbayan;
g) Those liable under Title Seven, Chapter Three (Frauds, Illegal Exactions
and Transactions) and Chapter Four (Malversation of Public Funds and
Property) of the Revised Penal Code, as amended.
xxx xxx xxx
Sec. 9. The Minister of finance, upon the recommendation of the Commissioner of Internal
Revenue, shall promulgate the necessary rules and regulations to implement this Executive
Order.
xxx xxx xxx
Sec. 11. This Executive Order shall take effect immediately.
DONE in the City of Manila, this 22nd day of August in the year of Our Lord, nineteen
hundred and eighty-six.
The period of the amnesty was later extended to 05 December 1986 from 31 October 1986 by Executive
Order No. 54, dated 04 November 1986, and, its coverage expanded, under Executive Order No. 64, dated
17 November 1986, to include estate and honors taxes and taxes on business.
If, as the Commissioner argues, Executive Order No. 41 had not been intended to include 1981-1985 tax
liabilities already assessed (administratively) prior to 22 August 1986, the law could have simply so provided
in its exclusionary clauses. It did not. The conclusion is unavoidable, and it is that the executive order has
been designed to be in the nature of a general grant of tax amnesty subject only to the
cases specifically excepted by it.
2J 2019-2020
It might not be amiss to recall that the taxable periods covered by the amnesty include the years
immediately preceding the 1986 revolution during which time there had been persistent calls, all too vivid to
be easily forgotten, for civil disobedience, most particularly in the payment of taxes, to the martial law
regime. It should be understandable then that those who ultimately took over the reigns of government
following the successful revolution would promptly provide for abroad, and not a confined, tax amnesty.
Relative to the two other issued raised by the Commissioner, we need only quote from Executive Order No.
41 itself; thus:
Sec. 6. Immunities and Privileges. — Upon full compliance with the conditions of the tax
amnesty and the rules and regulations issued pursuant to this Executive order, the taxpayer
shall enjoy the following immunities and privileges:
a) The taxpayer shall be relieved of any income tax liability on any untaxed
income from January 1, 1981 to December 31, 1985, including increments
thereto and penalties on account of the non-payment of the said tax. Civil,
criminal or administrative liability arising from the non-payment of the said
tax, which are actionable under the National Internal Revenue Code, as
amended, are likewise deemed extinguished.
b) The taxpayer's tax amnesty declaration shall not be admissible in evidence

in all proceedings before judicial, quasi-judicial or administrative bodies, in
which he is a defendant or respondent, and the same shall not be examined,
inquired or looked into by any person, government official, bureau or office.
c) The books of account and other records of the taxpayer for the period from
January 1, 1981 to December 31, 1985 shall not be examined for income tax
purposes: Provided, That the Commissioner of Internal Revenue may
authorize in writing the examination of the said books of accounts and other
records to verify the validity or correctness of a claim for grant of any tax
refund, tax credit (other than refund on credit of withheld taxes on wages),
tax incentives, and/or exemptions under existing laws.
There is no pretension that the tax amnesty returns and due payments made by the taxpayer did not
conform with the conditions expressed in the amnesty order.
WHEREFORE, the decision of the court of Appeals, sustaining that of the court of Tax Appeals, is hereby
AFFIRMED in toto. No costs.
SO ORDERED.
2J 2019-2020

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 103533 December 15, 1998
MANILA JOCKEY CLUB, INC. AND PHILIPPINE RACING CLUB, INC., petitioners,
vs.
THE COURT OF APPEALS AND PHILIPPINE RACING COMMISSION, respondents.
QUISUMBING, J.:
This is a Petition for Review on Certiorari seeking the reversal of the decision1 of the Court of Appeals in
CA-G.R. SP No. 25251 dated September 17, 1991 and the resolution2 dated January 8, 1992, which
denied the motion for reconsideration. At issue here is the control and disposition of
"breakages" 3 in connection with the conduct of horse-racing.
The pertinent facts on record are as follows:
On June 18, 1948, Congress approved Republic Act No. 309, entitled "An Act to Regulate Horse-
Racing in the Philippines." This Act consolidated all existing laws and amended inconsistent
provisions relative to horse racing. It provided for the distribution of gross receipts from the sale of
betting tickets, but is silent on the allocation of so-called "breakages." Thus the practice, according
to the petitioners, was to use the "breakages" for the anti-bookies drive and other sales promotions
activities of the horse racing clubs.
On October 23, 1992, petitioners, Manila Jockey Club, Inc. (MJCI) and Philippine Racing Club, Inc.
(PRCI), were granted franchises to operate and maintain race tracks for horse racing in the City of
Manila and the Province of Rizal by virtue of Republic Act Nos. 6631 and 6632, respectively, and
allowed to hold horse races, with bets, on the following dates:
. . . Saturdays, Sundays and official holidays of the year, excluding Thursday and
Fridays of the Holy Week, June twelfth, commonly known as Independence Day,
Election Day and December thirtieth, commonly known as Rizal Day.
(Sec. 5 of R.A. 6631)
. . . Saturday, Sundays, and official holiday of the year, except on those official
holidays where the law expressly provides that no horse races are to be held. The
grantee may also conduct races on the eve of any public holiday to start not earlier
than five-thirty (5:30) o'clock in the afternoon but not to exceed five days a year.
(Sec. 7 of R.A. 6632)
Said laws carried provisions on the allocation of "breakages" to beneficiaries as follows:

2J 2019-2020
Franchise Laws
R.A. 66314 R.A. 66325
(for MJCI) (for PRCI)
Provincial or city hospitals 25%
Rehabilitation of drug addicts 25% 50%
For the benefit of Philippine
Amateur Athletes Federation 50% 25%
Charitable institutions 25%
On March 20, 1974, Presidential Decree No. 420 was issued creating the Philippine Racing
Commission (PHILRACOM), giving it exclusive jurisdiction and control over every aspect of the
conduct of horse racing, including the framing and scheduling of races. 6 By virtue of this power, the
PHILRACOM authorized the holding of races on Wednesdays starting on December 22, 1976. 7
In connection with the new schedule of races, petitioners made a joint query regarding the
ownership of breakages accumulated during Wednesday races. In response to the query,
PHILRACOM rendered its opinion in a letter dated September 20, 1978. It declared that the breakages
belonged to the racing clubs concerned, to wit:
We find no further need to dissect the provisions of P.D. 420 to come to a legal
conclusion. As can be clearly seen from the foregoing discussion and based on the
established precedents, there can be no doubt that the breakage of Wednesday races
shall belong to the racing club concerned. 8
Consequently, the petitioners allocated the proceeds of breakages for their own business
purpose:
Thereafter, PHILRACOM authorized the holding of races on Thursdays from November 15, 1984 to
December 31, 1984 and on Tuesdays since January 15, 1985 up to the present. These mid-week
races are in addition to those days specifically mentioned in R.A. 6631 and R.A. 6632. Likewise,
petition allocated the breakages from these races for their own uses.
On December 16, 1986 President Corazon Aquino amended certain provisions Sec. 4 of R.A. 8631
and Sec. 6 of R.A. 6632 through Executive Orders No. 88 and 89. Under these Executive Orders,
breakages were allocated to beneficiaries, as follows:
Franchise Laws
E.O. 899 E.O. 88 10
(for MJCI) (for PRCI)
Provincial or city hospitals 25%

2J 2019-2020
Rehabilitation of drug addicts 25% 50%
For the benefit of Philippine
Racing Commission 50% 25%
Charitable institutions 25%
On April 23, 1987, PHILRACOM itself addressed a query to the Office of the President asking which
agency is entitled to dispose of the proceeds of the "breakages" derived from the Tuesday and
Wednesday races.
In a letter dated May 21, 1987, the Office of the President, through then Deputy Executive Secretary
Catalino Macaraig, Jr., replied that "the disposition of the breakages rightfully belongs to
PHILRACOM, not only those derived from the Saturday, Sunday and holiday races, but also from the
Tuesday and Wednesday races in accordance with the distribution scheme prescribed in said
Executive Orders". 11
Controversy arose when herein respondent PHILRACOM, sent a series of demand letters to
petitioners MJCI and PRCI, requesting its share in the "breakages" of mid-week-races and proof of
remittances to other legal beneficiaries as provided under the franchise laws. On June 8, 1987,
PHILRACOM sent a letter of demand to petitioners MJCI and PRCI asking them to remit
PHILRACOM's share in the "breakages" derived from the Tuesday, Wednesday and Thursday races
in this wise:
xxx xxx xxx
Pursuant to Board Resolution dated December 21, 1986, and Executive Order Nos. 88
and 89 series of 1986, and the authority given by the Office of the President dated May
21, 1987, please remit to the Commission the following:
1) PHILRACOM's share in the breakages derived from Wednesday

racing for the period starting December 22, 1976 up to the December 31,
1986.
2) PHILRACOM's share in the breakages derived from Thursday racing

for the period starting November 15, 1984 up to December 31, 1984; and
3) PHILRACOM's share in the breakages derived from Tuesday racing

for the period starting January 15, 1985 up to December, 1986.
4) Kindly furnish the Commission with the breakdown of all breakages

derived from Tuesday, Thursdays and Wednesdays racing that you
have remitted to the legal beneficiaries. 12
On June 16, 1987, petitioners MJCI and PRCI sought reconsideration 13 of the May 21, 1987 opinion of
then Deputy Executive Secretary Macaraig, but the same was denied by the Office of the President in
its letter dated April 11, 1988. 14
2J 2019-2020
On April 25, 1988, PHILRACOM wrote another letter 15 to the petitioners MJCI and PRCI seeking the
remittance of its share in the breakages. Again, on June 13, 1990, PHILRACOM reiterated its
previous demand embodied in its letter of April 25, 1 988. 16
Petitioners ignored said demand. Instead, they filed a Petition for Declaratory Relief before the
Regional Trial Court, Branch 150 of Makati, on the ground that there is a conflict between the
previous opinion of PHILRACOM dated September 20, 1978 and the present position of PHILRACOM,
as declared and affirmed by the Office of the President in its letters dated May 21, 1987 and April 11,
1988. Petitioners averred that there was an "actual controversy" between the parties, which should
be resolved.
On March 11, 1991, the trial court rendered judgment, disposing as follows:
WHEREFORE, and in view of all the foregoing considerations, the Court hereby
declares and decides as follows:
a) Executive Orders Nos. 88 and 89 do not and cannot cover the

disposition and allocation of mid-week races, particularly those
authorized to be held during Tuesdays, Wednesdays and those which
are not authorized under Republic Acts 6631 and 6632; and
b) The ownership by the Manila Jockey Club, Inc. and the Philippine
Racing Club, Inc. of the breakages they derive from mid-week races
shall not be disturbed, with the reminder that the breakages should be
strictly and wholly utilized for the purpose for which ownership thereof
has been vested upon said racing entities.
SO ORDERED. 17
Dissatisfied, respondent PHILRACOM filed a Petition for Certiorari with prayer for the issuance of a
writ of preliminary injunction before this Court, raising the lone question of whether or not E.O. Nos.
88 and 89 cover breakages derived from the mid-week races. However, we referred the case to the
Court of Appeals, which eventually reversed the decision of the trial court, and ruled as follows:
xxx xxx xxx
The decision on the part of PHILRACOM to authorize additional racing days had the
effect of widening the scope of Section 5 of RA 6631 and Section 7 of RA 6632.
Consequently, private respondents derive their privilege to hold races on the
designated days not only their franchise acts but also from the order issued by the
PHILRACOM. No provision of law became inconsistent with the passage of the Order
granting additional racing days. Neither was there a special provision set to govern
those mid-week races. The reason is simple. There was no need for any new
provisions because there are enough general provisions to cover them. The
provisions on the disposition and allocation of breakages being general in character
apply to breakages derived on any racing day. 18
xxx xxx xxx

2J 2019-2020
WHEREFORE, based on the foregoing analysis and interpretation of the laws in

question, the judgment of the trial court is hereby SET ASIDE. Decision is hereby
rendered:
1. declaring Section 4 of RA 6631 as amended by E.O. 89 and Section 6 of RA 6632 as

amended by E.O. 88 to cover the disposition and allocation of breakages derived
on all races conducted by private respondents on any racing day, whether as
provided for under Section 4 of RA 6631 or Section 6 of RA 6632 or as ordered by
PHILRACOM in the exercise of its powers under P.D. 420;
2. ordering private respondent to remit to PHILRACOM its share under E.O. 88 and
E.O. 89 derived from races held on Tuesday, Wednesdays, Thursday as authorized by
PHILRACOM.
SO ORDERED. 19
Petitioners filed a motion for reconsideration, but it was denied for lack of merit, with respondent
Court of Appeals further declaring that:
xxx xxx xxx
In so far as the prospective application of Executive Orders Nos. 88 and 89 is

concerned. We have no disagreement with the respondents. Since PHILRACOM
became the beneficiary of the breakages only upon effectivity of Executive Order Nos.
88 and 89, it is therefore entitled to such breakages from December 16, 1986 when
said Executive Orders were issued. However, we do not concede that respondents are
entitled to breakages prior to December 16, 1986 because it is clear that the applicable
laws from 1976 to December 16, 1986 were R.A. 6631 and R.A. 6632, which specifically
apportion the breakages to specified beneficiaries among which was the PAAF, a
government agency. Since respondents admit that PHILRACOM (Petitioner) was
merely placed in lieu of PAAF as beneficiary/recipient of breakages, then whatever
breakages was due to PAAF as one of the beneficiaries under R.A. Nos. 6631 and 6632
accrued to or should belong to PHILRACOM as successor to the defunct PAAF.
Finding the Motion for Reconsideration without merit, and for reasons indicated, the
Motion is denied.
SO ORDERED. 20
Consequent to the aforequoted adverse decision, petitioners MJCI and PRCI filed this petition for
review under Rule 45.
The main issue brought by the parties for the Court's resolution is: Who are the rightful beneficiaries
of the breakages derived from mid-week races? This issue also carries an ancillary question:
assuming PHILRACOM is entitled to the mid-week breakages under the law, should the petitioners
remit the money from the time the mid-week races started, or only upon the promulgation of E.O.
Nos. 88 and 89?
Petitioners assert that franchise laws should be construed to apply the distribution scheme
specifically and exclusively to the racing days enumerated in Sec. 5 of R.A. 6631, and Sec. 7 of R.A.
6632. They claim that disposition of breakages under these laws should be limited to races
2J 2019-2020
conducted on "all Saturdays, Sundays, and official holidays of the year, except, on those official
holidays where the law expressly provides that no horse races are to be held", hence, there is no
doubt that the breakages of Wednesday races shall belong to the racing clubs concerned. 21 They
even advance the view that "where a statute by its terms is expressly limited to certain matters, it
may not by interpretation or construction be extended to other matters" 22
However, respondent PHILRACOM contends that R.A. Nos. 6631 and 6632 are laws intended
primarily to grant petitioners their respective franchises to construct, operate, and maintain a race
track for horse racing. 23 When PHILRACOM added mid-week races, the franchises given to the
petitioners remained the same. Logically, what applies to races authorized under Republic Act Nos.
6631 and 6632 should also apply to races additionally authorized by PHILRACOM, namely mid-week
races, because these are general provisions which apply general rues and procedures governing the
operation of the races. Consequently, if the authorized racing days are extended, these races must
therefore be governed by the same rules and provisions generally provided therein.
We find petitioners' position on the main issue lacking in merit and far from persuasive.
Franchise laws are privileges 24 conferred by the government on corporations to do that "which does
not belong to the citizens of the country generally by common right". 25 As a rule, a franchise springs
from contracts between the sovereign power and the private corporation for purposes of individual
advantage as well as public benefit. 26 Thus, a franchise partakes of a double nature and
character. 27 In so far as it affects or concerns the public, it is public juris and subject to
governmental control. 28 The legislature may prescribe the conditions and terms upon which it may
be held, and the duty of grantee to the public exercising it. 29
As grantees of a franchise, petitioners derive their existence from the same. Petitioners' operations
are governed by all existing rules relative to horse racing provided they are not inconsistent with
each other and could be reasonably harmonized. Therefore, the applicable laws are R.A. 309, as
amended, R.A. 6631 and 6632, as amended by E.O. 88 and 89, P.D. 420 and the orders issued
PHILRACOM. Consequently, every statute should be construed in such a way that will harmonize it
with existing laws. This principle is expressed in the legal maxim "interpretare et concordare leges
legibus est optimus interpretandi", that is, to interpret and to do it in such a way as to harmonize
laws with laws is the best method of interpretation. 30
A reasonable reading of the horse racing laws favors the determination that the entities enumerated
in the distribution scheme provided under R.A. Nos. 6631 and 6632, as amended by Executive
Orders 88 and 89, are the rightful beneficiaries of breakages from mid-week races. Petitioners
should therefore remit the proceeds of breakages to those benefactors designated by the aforesaid
laws.
The holding of horse races on Wednesdays is in addition to the existing schedule of races
authorized by law. Since this new schedule became part of R.A. 6631 and 6632 the set of procedures
in the franchise laws applicable to the conduct of horse racing business must likewise be applicable
to Wednesday or other mid-week races. A fortiori, the granting of the mid-week races does not
require another legislative act to reiterate the manner of allocating the proceeds of betting tickets.
Neither does the allocation of breakages under the same provision need to be isolated to construe
another distribution scheme. No law can be viewed in a condition of isolation or as the beginning of
a new legal system. 31 A supplemental law becomes an addition to the existing statutes, or a section
thereof; and its effect is not to change in any way the provisions of the latter but merely to extend
the operation thereof, or give additional power to enforce its provisions, as the case may be. In
enacting a particular statute, legislators are presumed to have full knowledge and to taken full
cognizance of the existing laws on the same subject or those relating thereto.
2J 2019-2020
Proceeding to the subsidiary issue, the period for the remittance of breakages to the beneficiaries
should have commenced from the time PHILRACOM authorized the holding of mid-week races
because R.A. Nos. 6631 and 6632 were ready in effect then. The petitioners contend that they cannot
be held retroactively liable to respondent PHILRACOM for breakages prior to the effectivity of E.O.
Nos. 88 and 89. They assert that the real intent behind E.O. Nos. 88 and 89 was to favor the
respondent PHILRACOM anew with the benefits which formerly had accrued in favor of Philippine
Amateur Athletic Federation (PAAF). They opine that since laws operate prospectively unless the
legislator intends to give them retroactive effect, the accrual of these breakages should start on
December 16, 1986, the date of effectivity of E.O. Nos. 88 and 89. 32 Now, even if one of the
benefactors of breakages, the PAAF, as provided by R.A. 6631 and 6632 had ceased operation, it is
still not proper for the petitioners to presume that they were entitled to PAAF's share. When the
petitioners mistakenly appropriated the breakages for themselves, they became the implied trustees
for those legally entitled to the proceeds. This is in consonance with Article 1456 of the Civil Code,
which provides that:
Art. 1456 — If property is acquired through mistake or fraud, the person obtaining it is,
by force of law, considered a trustee of an implied trust for the benefit of the person
from whom the property comes.
The petitioners should have properly set aside amount for the defunct PAAF, until an alternative
beneficiary was designated, which as subsequently provided for by Executive Order Nos. 88 and 89,
is PHILRACOM:
xxx xxx xxx
Secs. 2 — All the cash balances and accumulated amounts corresponding to the
share of the Philippine Amateur Athletic Federation/Ministry of Youth and Sports
Development, pursuant to Section 6 of Republic Act No. 6632, not remitted by the
Philippine Racing Club, Inc./Manila Jockey Club Inc., are hereby transferred to the
Philippine Racing Commission to be constituted into a TRUST FUND to be used
exclusively for the payment of additional prizes for races sponsored by the
Commission and for necessary outlays and other expenses relative to horse-breeding
activities of the National Stud Farm. . . . . . . [E.O. No. 88]
xxx xxx xxx
Sec. 2. Any provision of law to the contrary notwithstanding, all cash balances and
accumulated amounts corresponding to the share of the Philippine Amateur Athletic
Federation/Ministry of Youth and Sports Development, pursuant to Republic Act No.
6631, not remitted by the Manila Jockey Club, Inc., are hereby constituted into a
TRUST FUND to be used exclusively for the payment of additional prizes for races
sponsored by the Philippine Racing Commission and for the necessary capital outlays
and other expenses relative to horse-breeding activities of the National Stud Farm. . . .
. . . . [E.O. No. 89]
While herein petitioners might have relied on a prior opinion issued by an administrative body, the
well-entrenched principle is that the State could not be estopped by a mistake committed by its
officials or agents. 33 Well-settled also is the rule that the erroneous application of the law by public
officers does not prevent a subsequent correct application of the law. 34 Although there was an initial
interpretation of the law by PHILRACOM, a court of law could not be precluded from setting that
interpretation aside if later on it is shown to be inappropriate.
2J 2019-2020
Moreover, the detrimental consequences of depriving the city hospitals and other institutions of the
funds needed for rehabilitation of drug dependents and other patients are all too obvious. It goes
without saying that the allocation of breakages in favor of said institutions is a policy decision in
pursuance of social development goals worthy of judicial approbation.
Nor could we be oblivious to the reality that horse racing although authorized by law is still a form of
gambling. Gambling is essentially antagonistic to the aims of enhancing national productivity and
self-reliance. 35 For this reason, legislative franchises impose limitations on horse racing and betting.
Petitioner's contention that a gambling franchise is a public contract protected by the Constitutional
provision on non-impairment of contract could not be left unqualified. For as well said in Lim vs.
Pacquing: 36
. . . it should be remembered that a franchise is not in the strict sense a simple

contract but rather it is, more importantly, a mere privilege specially in matters which
are within the government's power to regulate and even prohibit through the exercise
of the police power. Thus, a gambling franchise is always subject to the exercise of
police power for the public welfare. 37
That is why we need to stress anew that a statute which authorizes a gambling activity or business
should be strictly construed, and every reasonable doubt be resolved so as to limit rather than
expand the powers and rights claimed by franchise holders under its authority. 38
WHEREFORE, there being no reversible error, the appealed decision and the resolution of the
respondent Court of Appeals in CA-G.R. SP No. 25251, are hereby AFFIRMED, and the instant
petition is hereby DENIED for lack of merit.
Costs against petitioners.
SO ORDERED.
2J 2019-2020

SUPREME COURT
Manila
EN BANC
G.R. No. L-34674 October 26, 1931
MAURICIO CRUZ, petitioner-appellant,

vs.
STANTON YOUNGBERG, Director of the Bureau of Animal Industry, respondent-appellee.
Jose Yulo for appellant.

Office of the Solicitor-General Reyes for appellee.
OSTRAND, J.:
This is a petition brought originally before the Court of First Instance of Manila for the issuance of a writ of
mandatory injunction against the respondent, Stanton Youngberg, as Director of the Bureau of Animal
Industry, requiring him to issue a permit for the landing of ten large cattle imported by the petitioner and for
the slaughter thereof. The petitioner attacked the constitutionality of Act No. 3155, which at present prohibits
the importation of cattle from foreign countries into the Philippine Islands.
Among other things in the allegation of the petition, it is asserted that "Act No. 3155 of the Philippine
Legislature was enacted for the sole purpose of preventing the introduction of cattle diseases into the
Philippine Islands from foreign countries, as shown by an explanatory note and text of Senate Bill No. 328
as introduced in the Philippine Legislature, ... ." The Act in question reads as follows:
SECTION 1. After March thirty-first, nineteen hundred and twenty-five existing contracts for the
importation of cattle into this country to the contrary notwithstanding, it shall be strictly prohibited to
import, bring or introduce into the Philippine Islands any cattle from foreign countries: Provided,
however, That at any time after said date, the Governor-General, with the concurrence of the
presiding officers of both Houses, may raise such prohibition entirely or in part if the conditions of the
country make this advisable or if decease among foreign cattle has ceased to be a menace to the
agriculture and live stock of the lands.
SEC. 2. All acts or parts of acts inconsistent with this Act are hereby repealed.
SEC. 3. This Act shall take effect on its approval.
Approved, March 8, 1924.
The respondent demurred to the petition on the ground that it did not state facts sufficient to constitute a
cause of action. The demurrer was based on two reasons, namely, (1) that if Act No. 3155 were declared
unconstitutional and void, the petitioner would not be entitled to the relief demanded because Act No. 3052
would automatically become effective and would prohibit the respondent from giving the permit prayed for;
and (2) that Act No. 3155 was constitutional and, therefore, valid.
2J 2019-2020
The court sustained the demurrer and the complaint was dismissed by reason of the failure of the petitioner
to file another complaint. From that order of dismissal, the petitioner appealed to this court.
The appellee contends that even if Act No. 3155 be declared unconstitutional by the fact alleged by the
petitioner in his complaint, still the petitioner can not be allowed to import cattle from Australia for the reason
that, while Act No. 3155 were declared unconstitutional, Act No. 3052 would automatically become effective.
Act No. 3052 reads as follows:
SECTION 1. Section seventeen hundred and sixty-two of Act Numbered Twenty-seven hundred and
eleven, known as the Administrative Code, is hereby amended to read as follows:
"SEC. 1762. Bringing of animals imported from foreign countries into the Philippine Islands.
— It shall be unlawful for any person or corporation to import, bring or introduce live cattle
into the Philippine Islands from any foreign country. The Director of Agriculture may, with the
approval of the head of the department first had, authorize the importation, bringing or
introduction of various classes of thoroughbred cattle from foreign countries for breeding the
same to the native cattle of these Islands, and such as may be necessary for the
improvement of the breed, not to exceed five hundred head per annum: Provided, however,
That the Director of Agriculture shall in all cases permit the importation, bringing or
introduction of draft cattle and bovine cattle for the manufacture of serum: Provided, further,
That all live cattle from foreign countries the importation, bringing or introduction of which into
the Islands is authorized by this Act, shall be submitted to regulations issued by the Director
of Agriculture, with the approval of the head of the department, prior to authorizing its
transfer to other provinces.
"At the time of the approval of this Act, the Governor-General shall issue regulations and
others to provide against a raising of the price of both fresh and refrigerated meat. The
Governor-General also may, by executive order, suspend, this prohibition for a fixed period
in case local conditions require it."
SEC. 2. This Act shall take effect six months after approval.
Approved, March 14, 1922.
The petitioner does not present any allegations in regard to Act No. 3052 to show its nullity or
unconstitutionality though it appears clearly that in the absence of Act No. 3155 the former act would make it
impossible for the Director of the Bureau of Animal Industry to grant the petitioner a permit for the
importation of the cattle without the approval of the head of the corresponding department.
An unconstitutional statute can have no effect to repeal former laws or parts of laws by implication,
since, being void, it is not inconsistent with such former laws. (I Lewis Sutherland, Statutory
Construction 2nd ed., p. 458, citing McAllister vs. Hamlin, 83 Cal., 361; 23 Pac., 357; Orange
Country vs. Harris, 97 Cal., 600; 32 Pac., 594; Carr vs. State, 127 Ind., 204; 11 L.R.A., 370, etc.)
This court has several times declared that it will not pass upon the constitutionality of statutes unless it is
necessary to do so (McGirr vs. Hamilton and Abreu, 30 Phil., 563, 568; Walter E. Olsen & Co. vs. Aldanese
and Trinidad, 43 Phil., 259) but in this case it is not necessary to pass upon the validity of the statute
attacked by the petitioner because even if it were declared unconstitutional, the petitioner would not be
entitled to relief inasmuch as Act No. 3052 is not in issue.
But aside from the provisions of Act No. 3052, we are of the opinion that Act No. 3155 is entirely valid. As
shown in paragraph 8 of the amended petition, the Legislature passed Act No. 3155 to protect the cattle
2J 2019-2020
industry of the country and to prevent the introduction of cattle diseases through importation of foreign cattle.
It is now generally recognized that the promotion of industries affecting the public welfare and the
development of the resources of the country are objects within the scope of the police power (12 C.J., 927; 6
R.C.L., 203-206 and decisions cited therein; Reid vs. Colorado, 187 U.S., 137, 147, 152; Yeazel vs.
Alexander, 58 Ill., 254). In this connection it is said in the case of Punzalan vs. Ferriols and Provincial Board
of Batangas (19 Phil., 214), that the provisions of the Act of Congress of July 1, 1902, did not have the effect
of denying to the Government of the Philippine Islands the right to the exercise of the sovereign police power
in the promotion of the general welfare and the public interest. The facts recited in paragraph 8 of the
amended petition shows that at the time the Act No. 3155 was promulgated there was reasonable necessity
therefor and it cannot be said that the Legislature exceeded its power in passing the Act. That being so, it is
not for this court to avoid or vacate the Act upon constitutional grounds nor will it assume to determine
whether the measures are wise or the best that might have been adopted. (6 R.C.L., 243 and decisions cited
therein.)
1awphil.net
In his third assignment of error the petitioner claims that "The lower court erred in not holding that the power
given by Act No. 3155 to the Governor-General to suspend or not, at his discretion, the prohibition provided
in the act constitutes an unlawful delegation of the legislative powers." We do not think that such is the case;
as Judge Ranney of the Ohio Supreme Court in Cincinnati, Wilmington and Zanesville Railroad Co. vs.
Commissioners of Clinton County (1 Ohio St., 77, 88) said in such case:
The true distinction, therefore, is between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to
its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the
latter no valid objection can be made.
Under his fourth assignment of error the appellant argues that Act No. 3155 amends section 3 of the Tariff
Law, but it will be noted that Act No. 3155 is not an absolute prohibition of the importation of cattle and it
does not add any provision to section 3 of the Tariff Law. As stated in the brief of the Attorney-General: "It is
a complete statute in itself. It does not make any reference to the Tariff Law. It does not permit the
importation of articles, whose importation is prohibited by the Tariff Law. It is not a tariff measure but a
quarantine measure, a statute adopted under the police power of the Philippine Government. It is at most a
`supplement' or an àddition' to the Tariff Law. (See MacLeary vs. Babcock, 82 N.E., 453, 455; 169 Ind., 228
for distinction between `supplemental' and àmendatory' and O'Pry vs. U.S., 249 U.S., 323; 63 Law. ed.,
626, for distinction between àddition' and àmendment.')"
The decision appealed from is affirmed with the costs against the appellant. So ordered.
2J 2019-2020
REQUISITES FOR VALIDITY

SUPREME COURT
Manila
EN BANC
G.R. No. L-18740 April 28, 1922
WALTER E. OLSEN & CO., INC., petitioner,

vs.
VICENTE ALDANESE, as Insular Collector of Customs of the Philippine Islands, and W. TRINIDAD,
as Collector of Internal Revenue, respondents.
Gibbs, McDonough & Johnson for petitioner.

Attorney-General Villa-Real for respondents.
Araneta & Zaragoza (amici curiae) for "Manila Tobacco Association."
STATEMENT
On March 29, 1922, respondents' demurrer to the petition was overruled; on April 3, an answer was duly
filed; and on April 21, the petitioner filed a motion for judgment on the pleadings.
The facts are fully stated in the former opinion. 1
Paragraph 4 of the petition contains certain subdivisions of section 6 of Act No. 2613 of the Philippine
Legislature, passed February 4, 1916, entitled "an act to improve the methods of production and the quality
of tobacco in the Philippine and to develop the export trade therein." They empower the Collector of Internal
Revenue to establish certain general and local rules respecting the classification, marking and parking of
tobacco for domestic sale or for exportation to the United States, and, among other things, provide:
No leaf tobacco or manufactured tobacco shall be exported from the Philippine Islands to the United
States until it shall have been inspected by the Collector of Internal Revenue or his duly authorized
representative and found to be standard for export ...
In order to facilitate the free entry of tobacco products from the Philippine Islands into the United
States, the Collector of Internal Revenue is authorized to act as stamp agent for the Untied States
Commissioner of Internal Revenue, and to certify to the Insular Collector of Customs that the
standard tobacco exported is the growth and product of the Philippine Islands. The Insular Collector
of Customs upon certificate from the Collector of Internal Revenue as aforesaid, shall issue such
certificate of origin as may be necessary to insure the speedy admission of the standard tobacco into
the United States free of customs duties.
Paragraph 5 of the petition alleges that under clause B of section 6 of the Act, the Collector of Internal
Revenue promulgated Administrative Order No. 35, known as "Tobacco Inspection Regulations," in which it
is said:
To be classed as standard, cigars must be manufactured under sanitary conditions from good,
clean, selected tobacco, properly cured and seasoned, of a crop which has been harvested at least
2J 2019-2020
six months, exclusively the product of the provinces of Cagayan, Isabela, or Nueva Vizcaya. The
cigars must be well made, with suitable spiral wrapper and with long filler, etc.
Paragraph 6 pleads the provisions of section 1 of article 1 of the Constitution of the United States, and
paragraph 7 pleads section 10 of the "Jones Law."
The answer admits paragraphs 4, 5, 6, and 7 of the petition.
Paragraph 6 of the answer says:
They admit the facts alleged in Paragraph XI of the petition in so far as they refer to the Insular
Collector of Customs, but they deny that the acts performed by the said officer are wrongful or
illegal; and they also deny the others facts alleged in the same paragraph except as they may
hereinafter be impliedly admitted, that is, that on or about February 6, 1922, the petitioner applied to
the Collector of Internal Revenue for a certificate of origin covering a consignment of 10,000
machine-made cigars to San Francisco, and as the petitioner himself stated on making such
application that the cigars sought to be exported must have been manufactured from short-filler
tobacco which was not the product of the provinces of Cagayan, Isabela, and Nueva Vizcaya, the
Collector of Internal Revenue did not deem it necessary to make an actual examination and
inspection of said cigars and stated to the petitioner that he did not see his ways clear to the granting
of petitioner's request, in view of the fact that the cigars which the petitioner's request, in view of the
fact that the cigars which the petitioner was seeking to export were not made with long-filler nor were
they made from tobacco exclusively the product of any of the three mentioned provinces, and the
said cigars were neither inspected nor examined by the Collector of Internal Revenue.
As a special defense, the respondents allege that under section 11 of Act No. 2613 and section 5 of the
Administrative Code of 1917, the Collector of Internal Revenue has discretionary power to decide whether
the manufactured tobacco that the petitioner seeks to export to the United States fulfills the requisites
prescribed by Administrative Order No. 35. That it is not within the jurisdiction of this court to order the
Collector of Internal Revenue to issue a certificate to the petitioner to the effect that the manufactured
tobacco that the petitioner seeks to export is a product of the Philippine Islands, but it is for the Collector of
Internal Revenue to exercise the power of issuing said certificate if after an inspection of said tobacco, he
should find that "it conforms to the conditions required by Administrative order No. 35 with the exclusion of
those conditions which, according to the said decision of the Supreme Courts, the Collector of Internal
Revenue is not authorized to required under Act No. 2613."
That the cigars which petitioner seeks to export to the United States have not as yet been examined
or inspected by the Collector of Internal Revenue.
Wherefore, the defendants pray that the petition be dismissed, with costs.
The question presented is whether under the facts admitted, the answer is a good defense to the petition.
JOHNS, J.:
The defendants are public officers of the Philippine Islands, and the acts of which the petitioner complains
are their official acts.
2J 2019-2020
In paragraph 11 of the petition, among other things, it is alleged:
That on the 6th day of February the said respondent Collector of Internal Revenue wrongfully and
unlawfully refused and neglected and still unlawfully refuses and neglects to issue such certificate of
origin on the ground that said cigars were not manufactured of long-filler tobacco produced
exlusively in the provisions of Cagayan, Isabela, or Nueva Vizcaya.
Paragraph 6 of the answer says:
"The petitioner applied to the Collector of Internal Revenue for a certificate of origin covering a consignment
of 10,000 machine-made cigars to San Francisco," and represented that the cigars were made from short-
filler tobacco which was not the product of Cagayan, Isabela, and Nueva Vizcaya. The Collector of Internal
Revenue did not deem it necessary to make an actual examination and inspection of said cigars, and stated
to the petitioner that he did not see his way clear to the granting of petitioner's request, in view of the fact
that the cigars which the petitioner was seeking to export were not made with long-filler nor were they made
from tobacco exclusively the product of any of the three provinces, and the said cigars were neither
inspected nor examined by the Collector of Internal Revenue.
In its final analysis, this is an admission by the defendants the cigars in question were rejected by the
Collector of Internal Revenue, for the specified reason that they were not long-filler cigars manufactured
from tobacco grown in one of the three provinces. That the Collector accepted and treated the statement to
the petitioner as true, and, relying thereon, refused to use the certificate of origin, for the sole reason that the
cigars in question were not long-filler cigars, and were not manufactured from tobacco grown in one of the
three provinces.
If, when the cigars were presented, the Collector of Internal Revenue had simply refused to issue the
certificate of origin and had not specified any grounds for such refusal he would then have a legal right to
plead and rely upon any and all grounds of refusal. But where, as in the instant case, it is alleged in the
petition, and, in legal effects, admitted in the answer, that the cigars were rejected because they were not
long-filler and were not manufactured from tobacco grown in one of the three provinces, then, under the
authorities and rule of construction, the defendants are confined and limited to the specified grounds of
refusal, and cannot be heard to say that the cigars were rejected upon any other or different grounds than
those specified in the refusal.
Again, it appears from the whole purport and tenor of the answer that, in their refusal, the defendant were
acting under, and relying upon, those portions of Administrative Order No. 35, known as "Tobacco
Inspection Regulations," which this court held to be null and void in its former opinion.
Although in this class of cases, as a general rule, a demand and refusal is prerequisite to the granting of a
writ, it is not necessary where it appears from the record that the demand, if made, would have been
refused.
Merrill on Mandamus, section 225, says:
The law never demands a vain thing, and when the conduct and action of the officer is equivalent to
a refusal to perform the duty desired, it is not necessary to go through the useless formality of
demanding its performance. Anything showing that the defendant does not intend to perform the
duty is sufficient to warrant the issue of a mandamus.
Cyc., vol. 26, p. 182, says:

2J 2019-2020
Where it appears that a demand would be unavailing it need not be made, as where the course and
conduct of officers is such as to show a settled purpose not to perform the imposed duty.
In the case of Chicago, K. & W. R. Co. vs. Harris (30 Pac., 456), on page 459, the court says:
The action of the officers before and since the commencement of this action clearly shows that a
formal demand would have been unavailing. The commencement of this proceeding was at least a
sufficient demand; and the defendants, instead of indicating a willingness to execute the bonds,
expressly denied the right of the plaintiff to the bonds, and denied the existence of any obligation or
duty to issue and deliver them. Having distinctly manifested their purpose not to perform this duty,
the question of a formal demand is no longer important. It appears that it would have been useless
and foolish, and the law rarely requires the doing of a useless act. (Citing a number of authorities.)
In United States vs. Auditors of Town of Brooklyn (8 Fe. Rep., 473), the court says:
But while it is generally true that a court will not issue a mandamus to compel the performance of an
act which it is merely anticipated the defendant will not perform, still if the defendant has shown by
his conduct that he does not intend to perform the act, and that fact is apparent to the court, it would
be a work of supererogation to require that a demand should be made for its performance.
The facts in this case are peculiar.
Under the provisions of Act No. 2613, the Collector of Internal Revenue of the Philippine Islands
promulgated Administrative Order No. 35, known as "Tobacco Inspections Regulations." Such rules and
regulations, having been promulgated by that officer, we have a right to assume that he was acting under
such rules and regulations when he refused to issue the certificate of origin.
It appears from the record that the cigars in question were not long-filler cigars, and that they were not
manufactured from tobacco grown in one of the three provinces.
By the express terms and provisions of such rules and regulations promulgated by the Collector of Internal
Revenue, it was his duty to refuse petitioner's request, and decline the certificate or origin, because the
cigars tendered were not of the specified kind, and we have a right to assume that he performed his official
duty as the understood it. After such refusal and upon such grounds, it would indeed, have been a vain and
useless thing for the Collector of Internal Revenue to his examined or inspected the cigars.
Having refused to issue the certificate of origin for the reason above assigned, it is very apparent that a
request thereafter made examine or inspect the cigars would also have been refused.
The motion for judgment on the pleadings is sustained, and the writ will issue, as prayed for in the petition,
without costs. So ordered.
2J 2019-2020
EN BANC
G.R. No. 157286 June 16, 2006
THE PUBLIC SCHOOLS DISTRICT SUPERVISORS ASSOCIATION (PSDSA), its officers, to wit: DR.
ANILLA A. CALAMBA, President; DR. CARMELITA L. PALABAY, Gen. Vice-President; MS. ESTELITA
R. REYES, Board Secretary; DR. THELMA A. GALANG, Asst. Board Secretary; MR. FERNANDO
LAVITA, Treasurer; MS. LITA DIONISIO, Asst. Treasurer; MS. ROSELILY PADRE, Auditor; MR.
ROMAN CALICDAN, Asst. Auditor; MR. TOMO-AY, MR. OSCAR PEÑAFLORIDA, Bus. Managers; DR.
ANTONETTE ANG, DR. MAGNITA LABRADOR, P.R.O.’S; MR. BONIFACIO MIGUEL (Region I), MR.
JOSE CALAGUI (Region II), DR. REYNALDO SAGUM (Region III), MR. RUBEN PANAHON (Region IV),
MR. OSCAR BARBA (Region V), MS. IRMA GANELA (Region VI), DR. ERLINDA NAPULI (Region VII),
DR. PONCIANO GABIETA (Region VIII), MR. FEDERICO FIDEL (Region IX), MR.EMILIANO V.
RODRIGUEZ (Region X), MS. EDWINA ALAG (Region XI), MR. DOMINADOR ATAM (Region XII), MS.
CONSUELO VELASCO (NCR), MR. VICTORINO AGMATA (CAR), MS. NATIVIDAD SALASAB (ARMM-
CARAGA), All PSDSA Vice-Presidents for their respective Regions: DR. LOLITA CABANAYAN, MR.
CICERO AKLANG, DR. RUSTICO OCAMPO, MR. ROMEO SANTOS, MR. EMMANUEL CAMA, MR.
ROMEO TUMAOB, MR. JOVENCIO MENDOZA, MR. ALEJANDRO BARING, JR., MS. BERNARDITA
APOSTOL, MS. LORETA MACALUDAS, DR. MYRNA LYN MARACON, MS. ELIZABETH SAN DIEGO,
SITH HINDRON DAMMANG, MS. IMMACULADA BRINGAS, and MS. GLORIA DERECHO, all members
of the PSDSA Board of Directors, in their own behalf as current District Supervisors and IN
REPRESENTATION OF ALL DISTRICT SUPERVISORS OF THE DEPARTMENT OF
EDUCATION, Petitioners,
vs.
HON. EDILBERTO C. DE JESUS, Department Secretary, THE DEPARTMENT OF EDUCATION, and
THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
DECISION
CALLEJO, SR., J.:
This is a Petition for Prohibition with prayer for temporary restraining order and/or preliminary injunction filed
by the Public Schools District Supervisor Association (PSDSA) seeking to declare as unconstitutional Rule
IV, Section 4.3; Rule V, Sections 5.1 and the second paragraph of Section 5.2; and Rule VI, Section 6.2,
paragraph 11 of Department of Education Order No. 1, Series of 2003. The petition likewise seeks to
compel, by way of a writ of mandamus, the Department of Education, Culture, and Sports (DECS) and the
Department of Budget and Management (DBM) to upgrade the salary grade level of the district supervisors
from Salary Grade (SG) 19 to SG 24.
The Antecedents
Ever since the Department of Education (DepEd) 1 was founded decades ago, its management had been so
centralized in the Manila office. Schools in the national, regional, and division levels merely followed and
2J 2019-2020
implemented the orders and memoranda issued by the Education Secretary. Due to the evolution of the
learning process and the onset of information technology, there was a need for a radical change in the
governance of the DepEd. Thus, a study on how to improve the management of the Department was
conducted, and one of the proposals was the abolition of the office of the district supervisor.
Then Senator Tessie Aquino-Oreta, the Chairman of the Committee on Education, authored Senate Bill No.
2191, the thrust of which was to change the existing management style and focus on the schools where the
teaching-learning process occurs. The bill was intended to highlight shared governance in the different
levels in the DECS hierarchy and establish authority, accountability, and responsibility for achieving higher
learning outcomes. While the governance of basic education would begin at the national level, the field
offices (regions, divisions, schools, and learning centers) would translate the policy into programs, projects,
and services to fit local needs.2 The national level was likewise to be tasked to define the roles and
responsibilities of, and provide resources to the field offices which would implement educational programs,
projects, and services in communities they serve.3 At the forefront would be the DepEd Secretary, vested
with the overall authority and supervision over the operations of the department on the national, regional,
division, and schools district level.4
Republic Act No. 9155, otherwise known as the "Governance of Basic Education Act 2001," became a law
on August 11, 2001, in accordance with Section 27(1), Article VI of the Constitution. Under the law, each
regional office shall have a director, an assistant director, and an office staff for program promotion and
support, planning, administrative and fiscal services. 5 The regional director was given the authority to hire,
place and evaluate all employees in the regional office except for the position of assistant director, 6 as well
as the authority, accountability, and responsibility to determine the organization component of the divisions
and districts, and approve the staffing pattern of all employees therein; 7 evaluate all division superintendents
and assistant division superintendents in the region; 8 and other functions as may be assigned by the proper
authorities.9
A division, on the other hand, is headed by a schools division superintendent with the following
responsibilities, among others: to supervise the operations of all public and private elementary, secondary,
and integrated schools, and learning centers;10 to hire, place and evaluate all division supervisors and
schools district supervisors as well as all employees in the divisions, both teaching and non-teaching
personnel, including school heads, except for the assistant division superintendent; 11 and perform other
functions as may be assigned by proper authorities. 12
The office of the schools district supervisor has been retained under the law. Each district is headed by a
school district supervisor and an office staff for program promotion. However, the responsibilities of the
schools district supervisor are limited to the following: (1) providing professional and instructional advice and
support to the school heads and teachers/facilitators of schools and learning centers in the district or cluster
thereof; (2) curricula supervision; and (3) performing such other functions as may be assigned by proper
authorities. The schools district supervisors have no administrative, management, control or supervisory
functions over the schools and learning centers within their respective districts. 13
On the school level, an Elementary School Principal (ESP) was designated as school head for all public
elementary schools; and a Secondary School Principal (SSP) for high schools or a cluster thereof. 14 The
ESP and the SSP serve as both instructional leaders and administrative managers with the following
authority, accountability and responsibility:
(7) Administering and managing all personnel, physical, and fiscal resources of the school;
(8) Recommending the staffing complement of the school based on its needs;
(9) Encouraging staff development;

2J 2019-2020
xxxx
(11) Accepting donations, gifts, bequests, and grants for the purpose of upgrading teachers’/learning
facilitators’ competencies, improving and expanding school facilities, and providing instructional
materials and equipment. Such donations or grants must be reported to the appropriate district
supervisors and division superintendents; and
(12) Performing such other functions as may be assigned by proper authorities. 15
Under Section 14 of the law, the DepEd Secretary is mandated to "promulgate the implementing rules and
regulations within ninety (90) days after the approval of the Act, provided that the principle of shared
governance shall be fully implemented within two (2) years" after such approval.
Before the DepEd could issue the appropriate implementing rules and regulations, petitioner sought the
legal assistance of the Integrated Bar of the Philippines (IBP) National Committee on Legal Aid to make
representations for the resolution of the following administrative issues:
1. Restoration of the functions, duties, responsibilities, benefits, prerogatives, and position level of
Public Schools District Supervisors.
2. Upgrading of Salary Grade level of Public Schools District Supervisors from Salary Grade Level
19 to Salary Grade Level 24 under DBM Circular No. 36, otherwise known as the Compensation and
Position Classification Rules and Regulation.16
In a Letter dated March 1, 2002 addressed to then DepEd Secretary Raul Roco, the IBP stated that, per its
review of the documents submitted by the PSDSA, it found the latter’s position valid and legal, to wit:
First: The basis for the abolition of the position of District Supervisors under the Attrition Law and DECS
Department Order No. 110, Series of 1991 is no longer valid and rendered moot and academic due to
issuance of DECS Department Order No. 22, Series of 1996 and the passage by Congress of the
Philippines of Republic Act No. 9155, otherwise known as the Basic Education Governance Act of 2000.
Under R.A. 9155, school districts are mandated to be maintained and responsibilities of Public School’s
Districts Supervisors have been clearly defined.
Second: There is a clear case of discrimination of grant of salaries and benefits to District Supervisors
compared to salaries and benefits received by the School Principals – which position is lower in the
hierarchy of positions as prepared by the Department of Education and the Department of Budget and
Management. School Principals and District Supervisors enjoy the same level of Salary Grade even if the
latter position is considered as a promotion and enjoys a higher level of position than that of the position of
School Principals.17
The PSDSA thus requested the DepEd Secretary to call an immediate consultation with the district
supervisors nationwide through a convention, and their valid inputs be considered in formulating the rules
and regulations to be urged by the DepEd. However, the Secretary failed to reply. Thus, the IBP reiterated
the concerns raised by the PSDSA in a Letter18 to the DepEd dated April 15, 2002.
On January 6, 2003, DepEd Secretary Edilberto C. De Jesus issued DECS Office Order No. 1, which
constitutes the Implementing Rules and Regulations (IRR) of R.A. No. 9155. Sections 4.1 to 4.3, Rule IV of
the IRR provide:
2J 2019-2020
SECTION 4.1. The Schools Division Superintendent. – A division shall consist of a province or city which
shall have a schools division superintendent. There shall be at least one assistant schools division
superintendent and office staff for programs promotion, planning, administrative, fiscal, legal, ancillary, and
other support services.
SECTION 4.2. Authority, Accountability, and Responsibility of the Schools Division Superintendent. –
Consistent with the national educational policies, plans, and standards, the schools division superintendents
shall have authority, accountability, and responsibility for the following:
1) Developing and implementing division education development plans;
2) Planning and managing the effective and efficient performance of all personnel, physical, and
fiscal resources of the division, including professional staff development;
3) Hiring, placing, and evaluating all division supervisors and schools district supervisors as well as
all employees in the division, both teaching and non-teaching personnel, including school heads,
except for the assistant division superintendents;
4) Monitoring the utilization of funds provided by the national government and the local government
units to the schools and learning centers;
5) Ensuring compliance of quality standards for basic education programs and for this purpose
strengthening the role of division supervisors as subject area specialists;
6) Promoting awareness of, and adherence by, all schools and learning centers to accreditation
standards prescribed by the Secretary of Education;
7) Supervising the operations of all public and private elementary, secondary, and integrated
schools, and learning centers; and
8) Performing such other functions as may be assigned by the Secretary and/or Regional Director.
SECTION 4.3. Appointing and Disciplinary Authority of the Schools Division Superintendent. – The schools
district superintendent shall appoint the division supervisors and school district supervisors as well as all
employees in the division, both teaching and non-teaching personnel, including school heads, except for the
assistant schools division superintendent, subject to the civil service laws, rules and regulations, and the
policies and guidelines to be issued by the Secretary of Education for the purpose.
The schools division superintendent shall have disciplinary authority only over the non-teaching personnel
under his jurisdiction.
Such exercise of disciplinary authority by the schools division superintendent over the non-teaching
personnel shall be subject to the civil service laws, rules and regulations, and procedures and guidelines to
be issued by the Secretary of Education relative to this matter.
The Regional Director shall continue exercising disciplinary authority over the teaching personnel insofar as
the latter are covered by specific and exclusive disciplinary provisions under the Magna Carta for Public
School Teachers (R.A. No. 4670).19
Sections 5.1 and 5.2, Rule V of the IRR, in turn, provide:

2J 2019-2020
SECTION 5.1. The Schools District Supervisor. – A school district shall have a school district supervisor and
office staff for program promotion.
The schools district supervisor shall primarily perform staff functions and shall not exercise administrative
supervision over school principals, unless specifically authorized by the proper authorities. The main focus
of his/her functions shall be instructional and curricula supervision aimed at raising academic standards at
the school level.
The schools district supervisor shall be specifically responsible for:
1) Providing professional and instructional advice and support to the school heads and
teachers/facilitators of schools and learning centers in the district or cluster thereof;
2) Curricula supervision; and
3) Performing such other functions as may be assigned by the Secretary, Regional Directors, and
Schools Division Superintendents where they belong.
The schools district supervisor being mentioned in this section shall refer to a public schools district
supervisor.
SECTION 5.2. The School District. – A school district already existing at the time of the passage of this Act
shall be maintained. However, an additional school district may be established by the regional director
based on criteria set by the Secretary and on the recommendation of the schools division superintendent.
For this purpose, the Secretary of Education shall set standards and formulate criteria as basis of the
Regional Directors of the establishment of an additional school district.20
On March 13, 2003, the PSDSA, the national organization of about 1,800 public school district supervisors
of the DepEd, in behalf of its officers and members, filed the instant petition for prohibition and mandamus,
alleging that:
I. THE ACT OF THE DEPARTMENT OF EDUCATION IN REMOVING PETITIONERS’ ADMINISTRATIVE

SUPERVISION OVER ELEMENTARY SCHOOLS AND ITS PRINCIPALS (SCHOOL HEADS) WITHIN
HIS/HER DISTRICT AND CONVERTING HIS/HER ADMINISTRATIVE FUNCTION TO THAT OF
PERFORMING STAFF FUNCTION FOR THE DIVISION OFFICE PER SECTION 5.1 RULE V OF THE
IMPLEMENTING RULES AND REGULATIONS OF REPUBLIC ACT 9155 (DEPED ORDER NO. 1, SERIES
OF 2003) IS A GROSS VIOLATION OF REPUBLIC ACT 9155 – THE GOVERNANCE OF BASIC
EDUCATION ACT OF 2001.
II. THE IMPLEMENTING RULES AND REGULATION OF REPUBLIC ACT 9155 AS PROMULGATED
UNDER DEPED ORDER NO. 1, SERIES OF 2003 EXPANDED THE LAW AND INCLUDED PROVISIONS
WHICH ARE DIAMETRICALLY OPPOSED TO THE LETTER AND SPIRIT OF THE SUBJECT LAW.
III. THE DOWNGRADING OF SALARY GRADE LEVEL OF THE PUBLIC SCHOOLS DISTRICT
SUPERVISOR OR THE NEGLECT OR REFUSAL OF THE DEPARTMENT OF EDUCATION AND THE
DEPARTMENT OF BUDGET AND MANAGEMENT TO UPGRADE THE SALARY GRADE LEVEL OF
PUBLIC SCHOOLS DISTRICT TO A RESPECTABLE LEVEL OF SALARY GRADE HIGHER THAN THAT
OF THE PRINCIPALS – DESPITE CLEAR INTENTION OF R.A. 9155 TO RETAIN THE POSITION OF
PSDS IN THE HIERARCHY OF ADMINISTRATIVE MANAGERS AND OFFICERS OF THE DEPARTMENT
OF EDUCATION – IS UNCONSTITUTIONAL AND ILLEGAL.21
2J 2019-2020
Petitioners maintain that the questioned provisions of the IRR are invalid because they "extended or
expanded and modified" the provisions of R.A. No. 9155. They argue that the said law should be read in
harmony with other "existing educational laws" which it did not specifically repeal, such as Batas Pambansa
Blg. 232, otherwise known as "The Education Act of 1982," as amended by R.A. No. 7798; R.A. No. 4670,
otherwise known as the "Magna Charta for Public School Teachers"; and R.A. No. 7784 captioned "An Act
to Strengthen Teacher Education in the Philippines by Establishing Centers of Excellence, Creating a
Teacher Education Council for the Purpose, Appropriating Funds Therefore, and for Other Purposes."
Petitioners assert that under Section 7(D) of R.A. No. 9155, the district offices of the DepEd are intended as
field offices where the district supervisors can assist the ESPs and teachers/learning facilitators within their
district as experienced educational managers. Thus, the district supervisors were not divested of the
inherent administrative functions to manage and oversee the schools within their respective districts,
including their subordinates. They emphasize that the law provides an "office staff for program promotion" in
the school districts, which would be of no use if the office has no administrative supervision over schools
within its respective districts.
Petitioners assert that under the IRR, the schools district supervisors primarily perform staff functions and
shall not exercise administrative supervision over school principals, unless specifically authorized by the
proper authorities. Thus, under the IRR, the exercise of administrative supervision over school principals
was made discretionary and subject to the whims and caprices of "the proper authorities." The logical
inference of this provision, petitioners aver, is that the administrative supervisory powers can be withdrawn
from a district supervisor without any reason at all, a provision which has no basis in the enabling law.
Petitioners further contend that the DepEd has no authority to incorporate its plan of downgrading the
position of district supervisor, that is, from being an administrator of a particular district office to a position
performing a staff function, to exercise administrative supervision over the school principals only when
specifically authorized by proper authorities. Petitioners insist that respondent Education Secretary was
focused on removing the level of management in the district office, such that the IRR empower school heads
(principals) to have administrative and instructional supervision of school or cluster of schools, while
supervision of all public and private elementary, secondary, and integrated schools and learning centers was
given to the division office.
Petitioners further insist that respondent Education Secretary failed to consider the fact that R.A. No. 9155
strengthened the district office as a mid-level administrative field office of the DepEd. The law even
mandates to allow the district supervisor to have an office staff for program promotion in the district office.
Apart from the current administrative functions inherent in the district office, DECS Service Manual 2000
vested additional specific functions to the district offices, to provide professional and instructional advice and
support to the school heads and teachers/facilitators of schools and learning centers in the district, as well
as curricula supervision.
Petitioners posit that R.A. No. 9155 did not, in anyway, allow or authorize the reorganization of the entire
DepEd; it never reduced the position, rank, classification, and salary grade level of district supervisors, nor
abolished the district offices which are responsible for the administration and management of elementary
schools within its jurisdiction. It did not remove from the district supervisors the function of administrative
supervision over schools within their respective areas. In fact, petitioners insist, what the law did was to give
the district supervisor additional responsibility of providing professional and instructional advice and support
to the school heads and teachers/facilitators of schools and learning centers in the district or cluster thereof.
Petitioners point out that under Section 4.3, paragraph (b), Rule IV of the IRR, the schools division
superintendent was given the power to appoint the division supervisors and schools district supervisor and
other employees subject to civil service laws, rules, and regulations, and the policies and guidelines to be
issued by the Secretary of Education for the purpose. On the other hand, the school division superintendent
2J 2019-2020
shall have disciplinary authority only over the non-teaching personnel under his jurisdiction. Such exercise of
disciplinary authority by the schools division superintendent over the non-teaching personnel shall be
subject to civil service laws, rules, and regulations, and procedures and guidelines to be issued by the
Secretary of Education relative to this matter. The regional director shall continue exercising disciplinary
authority over the teaching personnel in so far as the latter are covered by specific and exclusive disciplinary
provisions under the Magna Carta for Public School Teachers (R.A. 4670).
Petitioners posit that this grant of disciplining authority to the regional director for teaching personnel who
commit violations of laws, rules, and regulations is definitely not provided for in R.A. No. 9155. The division
superintendent was given the power not only to hire and appoint the division supervisors, district
supervisors, school heads, or principals as well as employees in the division, both teaching and non-
teaching positions. However, when it comes to disciplining officers and teaching personnel who commit
infractions or violations of law, rules, and regulations of the DepEd, the exercise of such disciplining
authority is lodged in the hands of the regional director. Petitioners point out that the power to hire teachers
is in the hands of the division superintendent; principles of administrative rules and procedure provide that
the authority to hire and appoint carries with it the authority to discipline and fire the hired and appointed
personnel particularly if the law is silent thereon. Since the division superintendent has the authority to hire
teaching personnel within its division, he/she should also take the responsibility of disciplining erring
teachers and employees. If the set-up of placing the power of hiring and power to discipline or fire an errant
personnel is separated or divided between two offices of the DepEd, the proliferation of "palakasan" or
"bata-bata" system will flourish, to the detriment of the public education system and public service.
Petitioners also point out that under Section 7(E)(11) of R.A. No. 9155, school heads are authorized to
accept gifts, donations, bequests, and grants for the purpose of upgrading teacher’s/learning facilitator’s
competencies, improving and expanding school facilities and providing instructional materials and
equipment, which, in turn, shall be reported to the appropriate district supervisors and division
superintendents. However, under Section 6.2(11), Rule VI of the IRR, on the authority, accountability, and
responsibility of school heads, district supervisors were deleted as one of the administrative officers to whom
such reporting is to be made. Petitioners conclude that to the extent that the division superintendents are not
mandated to report donations and grants to district supervisors, the IRR is void.
On their plea for mandamus, petitioners pray that the Court compel the DepEd and the DBM to upgrade
their present salary grade. They claim that the position of an ESP is already classified as SG 21, which is
higher by two grades than that of district supervisors, SG 19. Considering their higher position in the
department’s pecking order, vis-à-vis that of the ESPs, petitioners opine that to rectify the present grade-
level distortion, their salary grade should be upgraded to SG 24. 22
For its part, the Office of the Solicitor General (OSG) avers that a perusal of Section 7(D) of R.A. No. 9155
shows that the district supervisor has limited responsibilities, and that the power to exercise administrative
supervision over the ESPs is not covered by any of those responsibilities. The Education Secretary is the
disciplining authority in the DepEd, with the regional directors acting as the disciplining authority in their
respective regions.
As to petitioners’ gripe that the IRR deleted district supervisors from among those school heads who should
report when "[a]ccepting donations, gifts, bequests, and grants for the purpose of upgrading
teachers’/learning facilitators’ competencies, improving and expanding school facilities, and providing
instructional materials and equipment," the OSG avers that this reportorial function is "directory" and merely
for "convenience."
Anent petitioners’ grievance on their alleged stagnant salary grade level, the OSG points out that the same
is "already provided for under FY 2003 GAA, [thus], petitioners’ complaint against the non-increase of their
SG level is already moot and academic." The OSG also emphasizes that the upgrading of the ESP’s salary
2J 2019-2020
grade over the petitioners is not violative of petitioners’ right to equal protection of the law, since "district
supervisors and ESPs are not similarly situated."
In reply, petitioners contend that the upgrading of the salary grade level of district supervisors to SG 21 is an
admission by the DepEd and by the DBM of the validity of their demand to increase their salary grade to a
respectable SG 24.
The petition is partially granted.
It must be stressed that the power of administrative officials to promulgate rules in the implementation of a
statute is necessarily limited to what is provided for in the legislative enactment. 23 The implementing rules
and regulations of a law cannot extend the law or expand its coverage, as the power to amend or repeal a
statute is vested in the legislature.24 It bears stressing, however, that administrative bodies are allowed
under their power of subordinate legislation to implement the broad policies laid down in a statute by "filling
in" the details. All that is required is that the regulation be germane to the objectives and purposes of the
law; that the regulation does not contradict but conforms with the standards prescribed by law.25 Moreover,
as a matter of policy, this Court accords great respect to the decisions and/or actions of administrative
authorities not only because of the doctrine of separation of powers but also for their presumed
knowledgeability and expertise in the enforcement of laws and regulations entrusted to their
jurisdiction.26 The rationale for this rule relates not only to the emergence of the multifarious needs of a
modern or modernizing society and the establishment of diverse administrative agencies for addressing and
satisfying those needs; it also relates to the accumulation of experience and growth of specialized
capabilities by the administrative agency charged with implementing a particular statute. 27
We have reviewed the IRR and find that Section 4.3 of Rule IV, and Sections 5.1 and 5.2 of Rule V are valid.
The provisions merely reiterate and implement the related provisions of R.A. No. 9155. Under the law, a
division superintendent has the authority and responsibility to hire, place, and evaluate all division
supervisors and district supervisors as well as all employees in the division, both teaching and non-teaching
personnel, including school heads.28 A school head is a person responsible for the administrative and
instructional supervision of the schools or cluster of schools. 29 The division superintendent, on the other
hand, supervises the operation of all public and private elementary, secondary, and integrated schools and
learning centers.30
Administrative supervision means "overseeing or the power or authority of an officer to see that their
subordinate officers perform their duties. If the latter fails or neglects to fulfill them, the former may take such
action or steps as prescribed by law to make them perform their duties."31
A plain reading of the law will show that the schools district supervisors have no administrative supervision
over the school heads; their responsibility is limited to those enumerated in Section 7(D) of R.A. No. 9155, to
wit:
(1) Providing professional and instructional advice and support to the school heads and
teachers/facilitators of schools and learning centers in the district or cluster thereof;
(2) Curricula supervision; and
(3) Performing such other functions as may be assigned by proper authorities.
As gleaned from the Senate deliberations on Senate Bill No. 2191, the district supervisors were divested of
any administrative supervision over elementary and public high schools. The Senate resolved to vest the
same in the division superintendents, and the Lower House concurred. Senator Rene Cayetano proposed
that the traditional function of the school supervisors of exercising administrative supervision over the
2J 2019-2020
elementary and public high schools be maintained. However, Senator Tessie Aquino-Oreta, the Chairperson
of the Senate Committee on Education and the Sponsor of the Bill, objected to such proposal:
The President:
Why do we not say AND SHALL NOT BE INCLUDED?
Senator Cayetano:
Yes, better yet, Mr. President. I thank the Chair for that amendment.
The President:
All right. Can we approve that? The sponsor accepts the amendment, I assume.
Senator Aquino-Oreta:
Yes, Mr. President.
The President:
Is there any objection from the floor? (Silence) There being none, the amendment is approved.
Senator Cayetano:
Thank you, Mr. President.
In line 17, it ends with the conjunction "and." I would like to propose an amendment by inserting a new
paragraph (b). This is, of course, the duties and responsibilities of schools district supervisors. It is to
SUPERVISE SCHOOL PRINCIPALS IN THE DISTRICT, because right now, this is exactly their job.
Again, the reality is, there are efforts to minimize, if not remove, the principal function of school supervisors,
which is to supervise school principals in the district. I just want it to be there to ensure that their primary
functions remain as such.
Therefore, what appears as paragraph (b) in line 18 will now be subparagraph (c).
The President:
What does the sponsor say?
Mr. President, may I just explain. There are two school supervisors. One is for the academic function and
the other is for the administrative function. As such, if these two supervisors will dictate to the principals,
then our thrust in reducing the level of bureaucracy might not be met. Also, the thrust of this governance bill
really is to flesh out the importance of the school as the heart of education here. In that heart, we have the
teacher, the student, and the school head.
2J 2019-2020
What we are trying to do here is to bring to the forefront the school itself. In fact, right now, there is a move
in the DECS to do away with the school supervisor in charge of administrative and leave that function to the
principal. If the principal, the school head will be dictated upon by these two school supervisors, we might
not be able to achieve what we want to do here – putting to the forefront the school itself. Meaning, putting
to the forefront the school head, the teacher, and the student.
Senator Cayetano:
Mr. President, I would like to thank the sponsor for that enlightenment. That is precisely my point.
Not too long ago, I was a speaker before the school supervisors all over the land. One of the points that they
complained about was, in most cases, their job to supervise school principals is now being removed or have
been removed simply because – and I may be inaccurate here – the Japanese government – I know it is a
foreign government that funded a study of the organizational setup of the DECS – has recommended the
abolition of school supervisors.
This is the reason this representation would like to ensure that the traditional function of the school
supervisors, among which is to supervise school principals, remain as such. What is good for the Japanese
education is not necessarily good for the Philippines. This representation knows that this is precisely one of
the complaints of the school supervisors.
The lady sponsor admitted that, indeed, there is an effort to phase out the school supervisors. That is
precisely my point, Mr. President. I do not want the school supervisors to be phased out simply because a
foreign government which funded the study of our education has suggested it.
The President:
Mr. President, actually, it is not Japanese. It is an ADB proposal to the DECS. The DECS had a study made
on how to improve the management order of the DECS. That was one of the proposals. They gave three
proposals. One of them was to take out the school supervisors.
But precisely, Mr. President, we are not doing that, we are not taking them out. What we are saying is for the
school supervisor to focus on the curriculum because in the administration of the affairs of the school, we
are saying that the principal knows best how to administer or how to run the school better. And so, we are
saying here that school supervisors will be there contrary to the view of that ADB study. We will maintain
them, but the focus of the school supervisors will be on the curriculum of the schools.
Senator Cayetano:
Mr. President, again I thank the lady senator. But again let us look at who supervisors of schools are.
Supervisors of schools once upon a time were all school principals. They rose from the ranks, that is why
they are fully aware of the administrative as well as the instructional capability of the principals now who are
under them. To remove their right to supervise, – now it is the ADB, I am correct, the lady senator is correct
because as I said I was not sure – to remove this traditional function would really render the supervisors
practically without anything to do. That is why they are now being justified that henceforth there will be no
principals that will be promoted as school supervisors because when the school supervisors reach the age
of retirement and retire, no principals shall be promoted to that level. But these school supervisors now, Mr.
2J 2019-2020
President, were once upon a time in their professional lives principals, and they know best how the schools
should be run – administratively and instructionally. That is the reason for that, Mr. President.
The President:
Senator Cayetano:
So, may I ask the sponsor to accept this, Mr. President.
Mr. President, what was the amendment?
Senator Cayetano:
To insert a new paragraph, paragraph (b) in line 18, which states: SUPERVISE SCHOOL PRINCIPALS IN
THE DISTRICT.
The President:
May I suggest, THE SUPERVISION OF SCHOOL PRINCIPALS IN THE DISTRICT, because –
Senator Cayetano:
Yes, Mr. President.
The President:
– the antecedent for that is, "The schools district supervisor shall be responsible for."
Senator Cayetano:
That is right, Mr. President. Supervision, yes.
The President:
Mr. President, may I have one minute?
SUSPENSION OF SESSION
Senator Tatad:
Mr. President, I move that we suspend the session for one minute.
2J 2019-2020
The President:
Is there any objection? (Silence) There being none, the session is suspended for one minute.
It was 5:33 p.m.
RESUMPTION OF SESSION
At 5:43 p.m., the session was resumed.
The President:
The session is resumed.
SUSPENSION OF CONSIDERATION OF S. NO. 2191
Senator Tatad:
Mr. President, we are still trying to find a way out of these conflicting points of view on the role of the
supervisor. To allow the parties to have a little more time to work on this, I move that we suspend
consideration of Senate Bill No. 2191. (Underscoring supplied)32
When the session resumed, Senator Cayetano no longer pursued his proposed amendment, and moved
instead that the same be amended to read "Curricula Supervision." The Senate approved the proposal of
the Senator:
The President:
The session is resumed. Senator Cayetano is recognized.
CAYETANO AMENDMENT
Senator Cayetano:
Thank you, Mr. President.
With the permission of the lady senator, after consulting her and the Majority Leader, I would like to propose
an amendment by rewording the original amendment I was proposing last night. The reworded proposed
amendment would be like this: CURRICULA SUPERVISION.
The President:
That would be on what page?
Senator Cayetano:
That would be on page 10, line 17, as a new paragraph (b).
The President:
2J 2019-2020
And how will it read?
Senator Cayetano:
CURRICULA SUPERVISION.
The President:
Just that?
Senator Cayetano:
Just that, Mr. President.
Senator Tatad:
Put a semicolon (;).
Senator Cayetano:
And because of that, line 18 which is paragraph (b), should now be paragraph (c).
The President:
The amendment is accepted, Mr. President. (Underscoring supplied)33
Thus, under R.A. No. 9155, administrative supervision over school heads is not one of those responsibilities
conferred on district supervisors.
It is a settled rule of statutory construction that the express mention of one person, thing, act, or
consequence excludes all others. This rule is expressed in the familiar maxim expressio unius est exclusio
alterius. Where a statute, by its terms, is expressly limited to certain matters, it may not, by interpretation or
construction, be extended to others. The rule proceeds from the premise that the legislature would not have
made specified enumerations in a statute had the intention been not to restrict its meaning and to confine its
terms to those expressly mentioned.34
It is not surprising that Senator Aquino-Oreta maintained her position that district supervisors should not
have administrative control or even supervision over ESPs and SSPs. As early as 1990, the DECS had
adopted the policy that, effective January 1, 1991, the positions of district supervisors and division
supervisors would be gradually phased out by not filling-up these positions as they become vacant. 35 On
September 17, 1991, then DECS Secretary Isidro Cariño issued DECS Order No. 110, Series of 1991,
declaring that, to foster better considerations and articulation of progress in the elementary level, all
elementary school principals shall report directly to the school division superintendents. In his Order dated
June 22, 1994, then DECS Secretary Armand V. Fabella declared that DECS Order No. 110 shall remain in
effect, with the recommendation that, in order to facilitate the phase-out of district supervisor positions,
incumbent district supervisors were encouraged to transfer to vacant division supervisor positions, provided
2J 2019-2020
they meet the qualification standards for such positions. 36 For his part, in his DECS Order No. 22, Series of
1996, DECS Secretary Ricardo T. Gloria restored the district supervisor positions but only on a selective
basis and subject to the following guidelines:
a) Schools superintendents, with the concurrence/approval of their regional directors, may have the
option to restore the position in selected districts after a careful evaluation of need. For this purpose,
the number of schools and their geographical location and distance for effective monitoring, the
availability of regular transportation, urban-rural setting, etc., should be considered in the decision.
b) The role of the district supervisor as an instructional leader and resource for teachers, rather than
merely as an administrative supervisor, should be emphasized in their functions and duties.
c) In the event of restoration and appointment of the position in a particular district, the school
superintendent shall ensure that the system of field supervision previous to the issuance of DECS
Orders No. 110, s. 1991 and No. 41, s. 1994 shall, likewise, be restored. Correspondingly, the
designation of coordinating principals in affected districts shall be withdrawn.
d) Should a division office opt not to restore some or all district supervisor positions, the funds for
such positions may be used to create new positions or upgrade existing positions, subject to the
approval of the Department of Budget and Management.
e) Considering that a number of vacated district supervisor positions in some divisions may have
been converted to other positions and/or otherwise phased out since 1991, appointments of district
supervisors shall be issued by regional directors only upon verification from the Department of
Budget and Management that the said position may be filled.
It is enjoined that regional directors and schools superintendents shall exert special effort to ensure that the
implementation of this Order shall be harmonious and conducive to field supervision. 37
Under DECS Order No. 36, Series of 1998 issued by DECS Secretary Erlinda C. Pefianco, the positions of
district supervisors were restored to their original status as a supervisory level in the DECS administrative
hierarchy subject to the following guidelines:
1.1 The positions of Education and District Supervisors are hereby restored to their original status as a
supervisory level in the DECS administrative hierarchy, subject to the following guidelines:
1.1.1 The functions of a district supervisor as an instructional leader and resource person for
teachers should be emphasized.
In the event of restoration and appointment of public schools district supervisor, the designation of the
coordinating principal shall be withdrawn.
Appointment of district supervisors shall be issued by regional directors only upon verification from the
Department of Budget and Management that the positions still exist since a number of vacated district
supervisor positions in some divisions may have been converted to other positions and/or otherwise phased
out since 1991.38
However, as already stated, the Senate resolved to maintain the positions of district supervisors but limited
their responsibilities only to those enumerated in Section 7(D) of R.A. No. 9155 to conform to the basic
thrust and objectives of the law. Far from strengthening the office of the district supervisors as a mid-head
field office of the DepEd, the law limited the authority and responsibility attached to such position.
2J 2019-2020
While it is true that the district supervisor is given a support staff for program promotion, it cannot thereby be
implied that he/she likewise has administrative supervision over ESPs and SSPs. Such a construction has
no basis in law and in fact. Indeed, such a construction of the statute defeats the very purpose of the law.
It is a basic precept that the intent of the legislature is the controlling factor in the interpretation of the
statute. The particular words, clauses, and phrases should not be studied as detached and isolated
expression, but the whole and every part of the statute must be considered in fixing the meaning of any of its
parts and in order to produce a harmonious whole.39
Besides, Congress enumerated the duties and responsibilities of a district supervisor. Congress would not
have made specific enumerations in a statute if it had the intention not to restrict or limit its meaning and
confine its terms only to those expressly enumerated. Courts may not, in the guise of interpretation, enlarge
the scope of a statute and include situations not provided nor intended by Congress. 40
The submission of the OSG, that the schools district supervisors have the administrative supervision over
school heads, is more in accord with the law, to wit:
Section 7 of RA 9155, on School District Level, pertinently provides that "a school district shall have a school
district supervisor and an office staff for program promotion," and that the schools district supervisor shall be
responsible for: (1) "(p)roviding professional and instructional advice and support to the school heads and
teachers/facilitators of schools and learning centers in the district [or] cluster thereof;" (2) "(c)urricula
supervision;" and, (3) "(p)erforming such other functions as may be assigned by the proper authorities."
A perusal of Section 7 shows that the District Supervisor has limited responsibilities, and that the power to
exercise administrative supervision over the ESPs is not covered by responsibility nos. 1 and 2. Neither is
that power covered by the directive that the District Supervisor shall have an office staff for program
promotion. The only logical conclusion, therefore, that can be derived from the aforesaid enumeration of
responsibilities is that the District Supervisor may only exercise administrative supervision over ESPs when
such function is assigned by proper authorities. And, since the DepEd Secretary specifically declared
through the IRR of RA 9155, that the District Supervisor shall not exercise administrative supervision over
the ESPs, unless otherwise authorized, petitioners cannot complain against the said declaration. On this
score, it is settled that the intent of the statute is the law (Philippine National Bank v. Office of the President,
252 SCRA 5 [1996]). In the absence of legislative intent to the contrary, words and phrases used in a statute
should be given their plain, ordinary and common usage meaning (Mustang Lumber, Inc. v. Court of
Appeals, 257 SCRA 430 [1996]).
Needless to say, Section 7, on Division Level, further provides that the School Division Superintendent shall
have authority, accountability and responsibility for, among others, "(s)upervising the operation of all public
and private elementary, secondary and integrated schools, and learning centers." To claim, therefore, that
the District Supervisor has administrative supervision over the ESPs would also violate the above-quoted
provision.41
The Court likewise declares that the last paragraph of Section 4.3 of the IRR, stating that the regional
director shall continue exercising disciplinary authority over the teaching personnel insofar as the latter are
covered by specific and exclusive disciplinary provisions under R.A. No. 4670 ("Magna Carta for Public
School Teachers") does not contravene R.A. No. 9155. Indeed, the IRR merely reiterates the DECS Rules
of Procedure, DECS Order No. 33, issued on March 30, 1999 by the DepEd Secretary, and R.A. No. 4670
which was approved on June 18, 1966, and pursuant to Section 7, Chapter II, Book IV of the 1987
Administrative Code, which provides that the DepEd Secretary is empowered to
a. Promulgate rules and regulations necessary to carry out department objectives, policies,
functions, plans, programs, and projects; and
2J 2019-2020
b. Promulgate administrative issuances necessary for the efficient administration of the offices under
the Secretary and for execution of the laws relative thereto.
Additionally, the IRR was issued by the DepEd Secretary pursuant to Section 7(A)(1) of R.A. No. 9155,
which mandates that the Secretary formulate national educational policies and enhance the employment
status, professional competence, welfare, and working conditions of all the DepEd personnel.42
We agree that R.A. No. 9155 does not provide who has disciplinary authority over the teaching personnel of
the DepEd. However, under Section 3, Chapter III of DECS Order No. 33, Series of 1999, otherwise known
as the 1999 DECS Rules of Procedure, the disciplining authority in the DECS is the DepEd Secretary, with
the regional directors acting as such in their respective regions except those appointed by the President.43
The officers and employees referred to in the Rules of Procedure include teachers who, under R.A. No.
4670, shall mean:
x x x all persons engaged in classroom teaching, in any level of instruction, on full-time basis, including
guidance counselors, school librarians, industrial arts, or vocational instructors, and all other persons
performing supervisory and/or administrative functions in all schools, colleges and universities operated by
the Government or its political subdivisions; but shall not include school nurses, school physicians, school
dentists, and other school employees.
A division superintendent of schools is not a disciplining authority over teachers, whether under R.A. No.
4670 or under the DECS Rules of Procedure. In fact, under Section 2, Chapter VII of such Rules of
Procedure, a division superintendent is a chairperson of the investigating committee over formal complaints
filed against such teachers:
a) When the respondent is an elementary or secondary school teacher, head teacher, principal, district
supervisor/chair/coordinator or Education Supervisor I –
(1) The schools division superintendent or his or her duly authorized representative, as chairperson;
(2) The duly authorized representative of the school, district, or division teacher’s organization, as
member; and
(3) The division supervisor for elementary or secondary education where the respondent belongs, as
member.
The foregoing rule is based on Section 9 of R.A. No. 4670 which reads:
Sec. 9. Administrative Charges. Administrative charges against a teacher shall be heard initially by a
committee composed of the corresponding School Superintendent of the Division or a duly authorized
representative who should, at least, have the rank of a division supervisor, where the teacher belongs, as
chairman, a representative of the local or, in its absence, any existing provincial or national teacher’s
organization and a supervisor of the Division, the last two to be designated by the Director of Public Schools.
The committee shall submit its findings and recommendations to the Director of Public Schools within thirty
days from the termination of the hearings: Provided, however, That where the school superintendent is the
complainant or an interested party, all the members of the committee shall be appointed by the Secretary of
Education.
Anent the issue on reporting of acceptance of donations, Section 7(E)(11) of R.A. No. 9155 provides:
2J 2019-2020
(11) Accepting donations, gifts, bequests, and grants for the purpose of upgrading teachers’/learning
facilitators’ competencies, improving and expanding school facilities, and providing instructional materials
and equipment. Such donations or grants must be reported to the appropriate district supervisors and
division superintendents. (emphasis supplied)
However, Section 6.2(11), Rule VI of the IRR provides that:
(11) Accepting donations, gifts, bequests, and grants in accordance with existing laws and policy of the
Department for the purpose of upgrading teachers’/learning facilitators’ competencies, improving and
expanding school facilities, and providing instructional materials and equipment. Such donations or grants
must be reported to the division superintendents. (emphasis supplied)
We agree with petitioners’ contention that, under the law, donations and grants must be reported to the
appropriate district supervisors and not only to the division superintendents. The use in the law of the word
"must" is an expression of the mandatory nature of the reporting of donations and grants to district
supervisors. The reason for the provision is that such grants and donations which are intended to upgrade
teachings/learning facilitators’ competencies, improve and expand school facilities, and provide instructional
materials and equipment will assist the school district supervisors in the performance of their duties and
responsibilities under Section 7(D) of R.A. No. 9155, and submit appropriate recommendations to the proper
administrative officers.
On petitioner’s plaint of the failure of respondents to upgrade their salary grade level to at most SG 21, and
for the issuance of the writ of mandamus mandating respondents to increase their salary grade from SG 19
to 24, the same is premature.
There is no showing in the petition that, before filing their petition, petitioners sought an adjustment of level
of their salary grade from SG 19 to SG 21 before respondents or the Civil Service Commission. Section 17
of Presidential Decree No. 985, as amended by Section 14 of R.A. No. 6758, otherwise known as the Salary
Standardization Law, provides:
Sec. 17. Powers and Functions. – The Budget Commission (now Department of Budget and Management),
principally through the OCPC (now CPCB, Compensation and Position Classification Board) shall, in
addition to those provided under other Sections of this Decree, have the following powers and functions:
a. Administer the compensation and position classification system established herein and revise it as
necessary;
xxxx
f. Certify classification actions and changes in class or grade of positions whenever the facts warrant, such
certification to be binding on administrative, certifying, payroll, disbursing, accounting and auditing officers of
the national government and government-owned or controlled corporations and financial institutions.
Sections 10 and 11 of R.A. No. 9155 provide:
SEC. 10. The Secretary of Education and the Secretary of Budget and Management shall, within ninety (90)
days from the approval of this Act, jointly promulgate the guidelines on the allocation, distribution, and
utilization of resources provided by the national government for the field offices, taking into consideration the
uniqueness of the working conditions of the teaching service.
2J 2019-2020
The Secretary of the Department of Education shall ensure that resources appropriated for the field offices
are adequate and that resources for school personnel, school desks, and textbooks and other instructional
materials intended are allocated directly and released immediately by the Department of Budget and
Management to said offices.
SEC. 11. The Secretary of the Department of Education, subject to civil service laws and regulations, shall
issue appropriate personnel policy rules and regulations that will best meet the requirements of the teaching
profession taking into consideration the uniqueness of the working conditions of the teaching service.
And insofar as the salary system for teaching positions is concerned, Section 14 provides:
SEC. 14. The Salary System for Teaching Position. – The salary grade of a teacher shall be determined in
accordance with the following:
a. The Teachers’ Preparation Pay Schedule shall be prepared by the Commission in consultation
with the Department of Education and Culture. Under this system, the teacher's academic or
educational preparation, teaching experience in both private and public schools, and extra-curricular
activities for professional growth, shall be considered in pursuance of the principle of 'equal pay for
equal training and experience.'
xxxx
d. The Budget Commission, in coordination and consultation with the Department of Education and
Culture and the Civil Service Commission may, when future needs require, modify, change or
otherwise improve on the salary system herein established for the teaching and closely related
occupations, any change that may be made as provided herein shall become part of the
implementing rules of this Decree to be issued by the Budget Commission upon prior approval by
the President.
Moreover, the issue of whether or not respondents should be compelled to adjust upwards the salary grade
of petitioners to SG 21 has become moot and academic, because, on November 3, 2003, the DepEd and
the DBM issued Joint Circular No. 1, Series of 2003 containing the guidelines in the implementation of the
Salary Upgrading for District and Education Supervisors, to wit:
4.0 GUIDELINES
4.1 To maintain the previous salary grade relationships under RA No. 6758 among the PSDS and
ES I, on the one hand, and Elementary School Principal (ESP) IV and Secondary School Principal
(SSP) II, on the other hand, and to preserve the consistency in the salary grade relationships of said
positions, the following are hereby authorized:
4.1.1 Upgrading of the PSDS and ES I positions from SG-19 to SG-20 in July 2003 and to
SG-21 in July 2004;
4.1.2 Upgrading of the ES II positions by two (2) salary grades from SG-20 to SG-21 in July
2003 and to SG-22 in July 2004;
4.1.3 A one-step salary adjustment to incumbents of ES III positions starting July 2003 and
another one-step salary adjustment starting July 2004;
2J 2019-2020
4.1.4 A one-step salary adjustment to incumbents of CES positions starting July 2003 and
another one-step salary adjustment starting July 2004.
4.2 Attached herewith is Annex A containing the summary of the guidelines for the salary upgrading
of positions authorized herein.
5.0 SALARY RULES
5.1 For purposes of the salary upgrading herein authorized, the basic salary of the employee
concerned shall be adjusted as follows:
5.1.1 Effective July 1, 2003 – at the same salary step of his assigned salary grade as of June
30, 2003 (Illustrative Example A) adopting the Salary Schedule prescribed under National
Budget Circular (NBC) No. 474 (Annex B);
5.1.2 Effective July 1, 2004 – at the same salary step of his assigned salary grade as of June
30, 2004 (Illustrative Example A) adopting the Salary Schedule prescribed under National
Budget Circular (NBC) No. 474 (Annex B).
5.2 The transition allowance as defined in 3.2 being received by the PSDS and ES, if any, shall be
considered as advance entitlement of the salary increase herein authorized. (Illustrative Examples B
and C)
5.3 No step adjustment shall be granted to incumbents of positions whose salary already falls at or
exceeds the maximum step (eighth step) of the salary grade allocation of their positions. (Illustrative
Example D)
5.4 The herein salary increases shall be effected through the issuance of a Notice of Salary
Adjustment (NOSA) by the duly authorized official. (Annex C)
6.0 FUNDING SOURCE
The amounts necessary to implement the salary adjustments authorized herein shall be charged against the
Nationwide lump sum appropriation for the purpose amounting to fifty million pesos (P50,000,000) in the
DepEd’s budget in RA 9206, the CY 2003 General Appropriations Act. For CY 2004, the same shall be
charged against the lump sum appropriation for the purpose that may be included in the 2004 budget.
7.0 POST-AUDIT
Any salary adjustment paid under this Circular shall be subject to post-audit by the DBM – ROs concerned.
Any payments thereof which are not in accordance herewith shall be adjusted accordingly.
8.0 CONTRIBUTIONS
The salary adjustments authorized herein are subject to the mandatory requirements for life and retirement
premiums, and health insurance premiums.
9.0 SAVING CLAUSE
Conflicts arising from the implementation of the provisions of this Circular shall be resolved by the
Department of Education, upon prior consultation with the Department of Budget and Management.
2J 2019-2020
10.0 EFFECTIVITY
This Circular Letter shall take effect on July 1, 2003.
IN VIEW OF ALL THE FOREGOING, the petition for prohibition is PARTIALLY GRANTED. Joint Circular
No. 1, Series of 2003 is declared valid, except Section 6.2(11), Rule VI thereof which provides that
"donations or grants shall be reported only to the division superintendents." Such donations or grants must
also be reported to the appropriate school district supervisors, as mandated by Republic Act No. 9155.
Petitioners’ prayer for the issuance of a writ of mandamus is DENIED for lack of merit. No costs.
SO ORDERED.
2J 2019-2020
FIRST DIVISION
G.R. No. 131082 June 19, 2000
ROMULO, MABANTA, BUENAVENTURA, SAYOC & DE LOS ANGELES, petitioner,

vs.
HOME DEVELOPMENT MUTUAL FUND, respondent.
DAVIDE, JR., C.J.:
Once again, this Court is confronted with the issue of the validity of the Amendments to the Rules and
Regulations Implementing Republic Act No. 7742, which require the existence of a plan providing for both
provident/retirement and housing benefits for exemption from the Pag-IBIG Fund coverage under
Presidential Decree No. 1752, as amended.
Pursuant to Section 19 1 of P.D. No. 1752, as amended by R.A. No. 7742, petitioner Romulo, Mabanta,
Buenaventura, Sayoc and De Los Angeles (hereafter PETITIONER), a law firm, was exempted for the
period 1 January to 31 December 1995 from the Pag-IBIG Fund coverage by respondent Home
Development Mutual Fund (hereafter HDMF) because of a superior retirement plan. 2
On 1 September 1995, the HDMF Board of Trustees, pursuant to Section 5 of Republic Act No. 7742, issued
Board Resolution No. 1011, Series of 1995, amending and modifying the Rules and Regulations
Implementing R.A. No. 7742. As amended, Section 1 of Rule VII provides that for a company to be entitled
to a waiver or suspension of Fund coverage, 3 it must have a plan providing for both provident/retirement and
housing benefits superior to those provided under the Pag-IBIG Fund.
On 16 November 1995, PETITIONER filed with the respondent an application for Waiver or Suspension of
Fund Coverage because of its superior retirement plan. 4 In support of said application, PETITIONER
submitted to the HDMF a letter explaining that the 1995 Amendments to the Rules are invalid. 5
In a letter dated 18 March 1996, the President and Chief Executive Officer of HDMF disapproved
PETITIONER's application on the ground that the requirement that there should be both a provident
retirement fund and a housing plan is clear in the use of the phrase "and/or," and that the Rules
Implementing R.A. No. 7742 did not amend nor repeal Section 19 of P.D. No. 1752 but merely implement
the law. 6
PETITIONER's appeal 7 with the HDMF Board of Trustees was denied for having been rendered moot and
academic by Board Resolution No. 1208, Series of 1996, removing the availment of waiver of the mandatory
coverage of the Pag-IBIG Fund, except for distressed employers. 8
On 31 March 1997, PETITIONER filed a petition for review 9 before the Court of Appeals. On motion by
HDMF, the Court of Appeals dismissed 10 the petition on the ground that the coverage of employers and
employees under the Home Development Mutual Fund is mandatory in character as clearly worded in
2J 2019-2020
Section 4 of P.D. No. 1752, as amended by R.A. No. 7742. There is no allegation that petitioner is a
distressed employer to warrant its exemption from the Fund coverage. As to the amendments to the Rules
and Regulations Implementing R.A. No. 7742, the same are valid. Under P.D. No. 1752 and R.A. No. 7742
the Board of Trustees of the HDMF is authorized to promulgate rules and regulations, as well as
amendments thereto, concerning the extension, waiver or suspension of coverage under the Pag-IBIG
Fund. And the publication requirement was amply met, since the questioned amendments were published in
the 21 October 1995 issue of the Philippine Star, which is a newspaper of general circulation.
PETITIONER's motion for reconsideration 11 was denied. 12 Hence, on 6 November 1997, PETITIONER filed a
petition before this Court assailing the 1995 and the 1996 Amendments to the Rules and Regulations
Implementing Republic Act No. 7742 for being contrary to law. In support thereof, PETITIONER contends
that the subject 1995 Amendments issued by HDMF are inconsistent with the enabling law, P.D. No. 1752,
as amended by R.A. No. 7742, which merely requires as a pre-condition for exemption from coverage the
existence of either a superior provident/retirement plan or a superior housing plan, and not the concurrence
of both plans. Hence, considering that PETITIONER has a provident plan superior to that offered by the
HDMF, it is entitled to exemption from the coverage in accordance with Section 19 of P.D. No. 1752. The
1996 Amendment are also void insofar as they abolished the exemption granted by Section 19 of P.D. 1752,
as amended. The repeal of such exemption involves the exercise of legislative power, which cannot be
delegated to HMDF.
PETITIONER also cites Section 9 (1), Chapter 2, Book VII of the Administrative Code of 1987, which
provides:
Sec. 9. Public Participation — (1) 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
opportunity to submit their views prior to the adoption of any rule.
Since the Amendments to the Rules and Regulations Implementing Republic Act No. 7742 involve an
imposition of an additional burden, a public hearing should have first been conducted to give chance to the
employers, like PETITIONER, to be heard before the HDMF adopted the said Amendments. Absent such
public hearing, the amendments should be voided.
Finally, PETITIONER contends that HDMF did not comply with Section 3, Chapter 2, Book VII of the
Administrative Code of 1987, which provides that "[e]very agency shall file with the University of the
Philippines Law Center three (3) certified copies of every rule adopted by it."
On the other hand, the HDMF contends that in promulgating the amendments to the rules and regulations
which require the existence of a plan providing for both provident and housing benefits for exemption from
the Fund Coverage, the respondent Board was merely exercising its rule-making power under Section 13 of
P.D. No. 1752. It had the option to use "and" only instead of "or" in the rules on waiver in order to effectively
implement the Pag-IBIG Fund Law. By choosing "and," the Board has clarified the confusion brought about
by the use of "and/or" in Section 19 of P.D. No. 1752, as amended.
As to the public hearing, HDMF maintains that as can be clearly deduced from Section 9(1), Chapter 2,
Book VII of the Revised Administrative Code of 1987, public hearing is required only when the law so
provides, and if not, only if the same is practicable. It follows that public hearing is only optional or
discretionary on the part of the agency concerned, except when the same is required by law. P.D. No. 1752
does not require that pubic hearing be first conducted before the rules and regulations implementing it would
become valid and effective. What it requires is the publication of said rules and regulations at least once in a
newspaper of general circulation. Having published said 1995 and 1996 Amendments through the Philippine
Star on 21 October 1995 1 and 15 November 1996, 14 respectively, HDMF has complied with the publication
requirement.
2J 2019-2020
Finally, HDMF claims that as early as 18 October 1996, it had already filed certified true copies of the
Amendments to the Rules and Regulations with the University of the Philippines Law Center. This fact is
evidenced by certified true copies of the Certification from the Office of the National Administrative Register
of the U.P. Law Center. 15
We find for the PETITIONER.
The issue of the validity of the 1995 Amendments to the Rules and Regulations Implementing R.A. No.
7742, specifically Section I, Rule VII on Waiver and Suspension, has been squarely resolved in the relatively
recent case of China Banking Corp. v. The Members of the Board of Trustees of the HDMF. 16 We held in
that case that Section 1 of Rule VII of the Amendments to the Rules and Regulations Implementing R.A. No.
7742, and HDMF Circular No. 124-B prescribing the Revised Guidelines and Procedure for Filing Application
for Waiver or Suspension of Fund Coverage under P.D. No. 1752, as amended by R.A. No. 7742, are null
and void insofar as they require that an employer should have both a provident/retirement plan and a
housing plan superior to the benefits offered by the Fund in order to qualify for waiver or suspension of the
Fund coverage. In arriving at said conclusion, we ruled:
The controversy lies in the legal signification of the words "and/or."
In the instant case, the legal meaning of the words "and/or" should be taken in its ordinary
signification, i.e., "either and or; e.g. butter and/or eggs means butter and eggs or butter or eggs.
The term "and/or" means that the effect shall be given to both the conjunctive "and" and the
disjunctive "or"; or that one word or the other may be taken accordingly as one or the other
will best effectuate the purpose intended by the legislature as gathered from the whole
statute. The term is used to avoid a construction which by the use of the disjunctive "or"
alone will exclude the combination of several of the alternatives or by the use of the
conjunctive "and" will exclude the efficacy of any one of the alternatives standing alone. 1avvphi1
It is accordingly ordinarily held that the intention of the legislature in using the term "and/or" is that
the word "and" and the word "or" are to be used interchangeably.
It . . . seems to us clear from the language of the enabling law that Section 19 of P.D. No. 1752
intended that an employer with a provident plan or an employee housing plan superior to that of the
fund may obtain exemption from coverage. If the law had intended that the employee [sic] should
have both a superior provident plan and a housing plan in order to qualify for exemption, it would
have used the words "and" instead of "and/or." Notably, paragraph (a) of Section 19 requires for
annual certification of waiver or suspension, that the features of the plan or plans are superior to the
fund or continue to be so. The law obviously contemplates that the existence of either plan is
considered as sufficient basis for the grant of an exemption; needless to state, the concurrence of
both plans is more than sufficient. To require the existence of both plans would radically impose a
more stringent condition for waiver which was not clearly envisioned by the basic law. By removing
the disjunctive word "or" in the implementing rules the respondent Board has exceeded its authority.
It is without doubt that the HDMF Board has rule-making power as provided in Section 51 17 of R.A. No. 7742
and Section 13 18 of P.D. No. 1752. However, it is well-settled that rules and regulations, which are the
product of a delegated power to create new and additional legal provisions that have the effect of law,
should be within the scope of the statutory authority granted by the legislature to the administrative
agency. 19 It is required that the regulation be germane to the objects and purposes of the law, and be not in
contradiction to, but in conformity with, the standards prescribed by law. 20
2J 2019-2020
In the present case, when the Board of Trustees of the HDMF required in Section 1, Rule VII of the 1995
Amendments to the Rules and Regulations Implementing R.A. No. 7742 that employers should have both
provident/retirement and housing benefits for all its employees in order to qualify for exemption from the
Fund, it effectively amended Section 19 of P.D. No. 1752. And when the Board subsequently abolished that
exemption through the 1996 Amendments, it repealed Section 19 of P.D. No. 1752. Such amendment and
subsequent repeal of Section 19 are both invalid, as they are not within the delegated power of the Board.
The HDMF cannot, in the exercise of its rule-making power, issue a regulation not consistent with the law it
seeks to apply. Indeed, administrative issuances must not override, supplant or modify the law, but must
remain consistent with the law they intend to carry out. 21 Only Congress can repeal or amend the law.
While it may be conceded that the requirement of having both plans to qualify for an exemption, as well as
the abolition of the exemption, would enhance the interest of the working group and further strengthen the
Home Development Mutual Fund in its pursuit of promoting public welfare through ample social services as
mandated by the Constitution, we are of the opinion that the basic law should prevail. A department zeal
may not be permitted to outrun the authority conferred by the statute. 22
Considering the foregoing conclusions, it is unnecessary to dwell on the other issues raised.
WHEREFORE, the petition is GRANTED. The assailed decision of 31 July 1997 of the Court of Appeals in
CA-G.R. No. SP-43668 and its Resolution of 15 October 1997 are hereby REVERSED and SET ASIDE. The
disapproval by the Home Development Mutual Fund of the application of the petitioner for waiver or
suspension of Fund coverage is SET ASIDE, and the Home Development Mutual Fund is hereby directed to
refund to petitioner all sums of money it collected from the latter.
SO ORDERED.
2J 2019-2020

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 77372 April 29, 1988
LUPO L. LUPANGCO, RAYMOND S. MANGKAL, NORMAN A. MESINA, ALEXANDER R. REGUYAL,

JOCELYN P. CATAPANG, ENRICO V. REGALADO, JEROME O. ARCEGA, ERNESTOC. BLAS, JR.,
ELPEDIO M. ALMAZAN, KARL CAESAR R. RIMANDO, petitioner,
vs.
COURT OF APPEALS and PROFESSIONAL REGULATION COMMISSION, respondent.
Balgos & Perez Law Offices for petitioners.
The Solicitor General for respondents.
GANCAYCO, J.:
Is the Regional Trial Court of the same category as the Professional Regulation Commission so that it cannot pass upon the validity of the
administrative acts of the latter? Can this Commission lawfully prohibit the examiness from attending review classes, receiving handout materials, tips,
or the like three (3) days before the date of the examination? Theses are the issues presented to the court by this petition for certiorari to review the
decision of the Court of Appeals promulagated on January 13, 1987, in CA-G.R. SP No. 10598, * declaring null and void the other dated Ocober 21,
1986 issued by the Regional Trial Court of Manila, Branch 32 in Civil Case No. 86-37950 entitled " Lupo L. Lupangco, et al. vs. Professional Regulation
Commission."
The records shows the following undisputed facts:
On or about October 6, 1986, herein respondent Professional Regulation Commission (PRC) issued
Resolution No. 105 as parts of its "Additional Instructions to Examiness," to all those applying for admission
to take the licensure examinations in accountancy. The resolution embodied the following pertinent
provisions:
No examinee shall attend any review class, briefing, conference or the like conducted by, or
shall receive any hand-out, review material, or any tip from any school, college or university,
or any review center or the like or any reviewer, lecturer, instructor official or employee of
any of the aforementioned or similars institutions during the three days immediately
proceeding every examination day including examination day.
Any examinee violating this instruction shall be subject to the sanctions prescribed by Sec. 8,
Art. III of the Rules and Regulations of the Commission. 1
On October 16, 1986, herein petitioners, all reviewees preparing to take the licensure examinations in
accountancy schedule on October 25 and November 2 of the same year, filed on their own behalf of all
others similarly situated like them, with the Regional Trial Court of Manila, Branch XXXII, a complaint for
injuction with a prayer with the issuance of a writ of a preliminary injunction against respondent PRC to
restrain the latter from enforcing the above-mentioned resolution and to declare the same unconstitution.
Respondent PRC filed a motion to dismiss on October 21, 1987 on the ground that the lower court had no
jurisdiction to review and to enjoin the enforcement of its resolution. In an Order of October 21, 1987, the
2J 2019-2020
lower court declared that it had jurisdiction to try the case and enjoined the respondent commission from
enforcing and giving effect to Resolution No. 105 which it found to be unconstitutional.
Not satisfied therewith, respondent PRC, on November 10, 1986, filed with the Court of Appeals a petition
for the nullification of the above Order of the lower court. Said petiton was granted in the Decision of the
Court of Appeals promulagated on January 13, 1987, to wit:
WHEREFORE, finding the petition meritorious the same is hereby GRANTED and the other
dated October 21, 1986 issued by respondent court is declared null and void. The
respondent court is further directed to dismiss with prejudice Civil Case No. 86-37950 for
want of jurisdiction over the subject matter thereof. No cost in this instance.
SO ORDERED. 2
Hence, this petition.
The Court of Appeals, in deciding that the Regional Trial Court of Manila had no jurisdiction to entertain the
case and to enjoin the enforcement of the Resolution No. 105, stated as its basis its conclusion that the
Professional Regulation Commission and the Regional Trial Court are co-equal bodies. Thus it held —
That the petitioner Professional Regulatory Commission is at least a co-equal body with the
Regional Trial Court is beyond question, and co-equal bodies have no power to control each
other or interfere with each other's acts. 3
To strenghten its position, the Court of Appeals relied heavily on National Electrification Administration vs.
Mendoza, 4 which cites Pineda vs. Lantin 5 and Philippine Pacific Fishing, Inc. vs. Luna, 6 where this Court
held that a Court of First Instance cannot interfere with the orders of the Securities and Exchange
Commission, the two being co-equal bodies.
After a close scrutiny of the facts and the record of this case,
We rule in favor of the petitioner.
The cases cited by respondent court are not in point. It is glaringly apparent that the reason why this Court
ruled that the Court of First Instance could not interfere with the orders of the Securities and Exchange
Commission was that this was so provided for by the law. In Pineda vs. Lantin, We explained that whenever
a party is aggrieved by or disagree with an order or ruling of the Securities and Exchange Commission, he
cannot seek relief from courts of general jurisdiction since under the Rules of Court and Commonwealth Act
No. 83, as amended by Republic Act No. 635, creating and setting forth the powers and functions of the old
Securities and Exchange Commission, his remedy is to go the Supreme Court on a petition for review.
Likewise, in Philippine Pacific Fishing Co., Inc. vs. Luna, it was stressed that if an order of the Securities and
Exchange Commission is erroneous, the appropriate remedy take is first, within the Commission itself, then,
to the Supreme Court as mandated in Presidential Decree No. 902-A, the law creating the new Securities
and Exchange Commission. Nowhere in the said cases was it held that a Court of First Instance has no
jurisdiction over all other government agencies. On the contrary, the ruling was specifically limited to the
Securities and Exchange Commission.
The respondent court erred when it place the Securities and Exchange Commission and the Professional
Regulation Commsision in the same category. As alraedy mentioned, with respect to the Securities and
Exchange Commission, the laws cited explicitly provide with the procedure that need be taken when one is
aggrieved by its order or ruling. Upon the other hand, there is no law providing for the next course of action
2J 2019-2020
for a party who wants to question a ruling or order of the Professional Regulation Commission. Unlike
Commonwealth Act No. 83 and Presidential Decree No. 902-A, there is no provision in Presidential Decree
No. 223, creating the Professional Regulation Commission, that orders or resolutions of the Commission are
appealable either to the Court of Appeals or to theSupreme Court. Consequently, Civil Case No. 86-37950,
which was filed in order to enjoin the enforcement of a resolution of the respondent Professional Regulation
Commission alleged to be unconstitutional, should fall within the general jurisdiction of the Court of First
Instance, now the Regional Trial Court. 7
What is clear from Presidential Decree No. 223 is that the Professional Regulation Commission is attached
to the Office of the President for general direction and coordination. 8 Well settled in our jurisprudence is the
view that even acts of the Office of the President may be reviewed by the Court of First Instance (now the
Regional Trial Court). In Medalla vs. Sayo, 9 this rule was thoroughly propounded on, to wit:
In so far as jurisdiction of the Court below to review by certiorari decisions and/or resolutions
of the Civil Service Commission and of the residential Executive Asssistant is concerned,
there should be no question but that the power of judicial review should be upheld. The
following rulings buttress this conclusion:
The objection to a judicial review of a Presidential act arises from a failure to

recognize the most important principle in our system of government, i.e., the
separation of powers into three co-equal departments, the executives, the
legislative and the judicial, each supreme within its own assigned powers and
duties. When a presidential act is challenged before the courts of justice, it is
not to be implied therefrom that the Executive is being made subject and
subordinate to the courts. The legality of his acts are under judicial review,
not because the Executive is inferior to the courts, but because the law is
above the Chief Executive himself, and the courts seek only to interpret,
apply or implement it (the law). A judicial review of the President's decision
on a case of an employee decided by the Civil Service Board of Appeals
should be viewed in this light and the bringing of the case to the Courts
should be governed by the same principles as govern the jucucial review of
all administrative acts of all administrative officers. 10
Republic vs. Presiding Judge, CFI of Lanao del Norte, Br. II, 11 is another case in point. Here, "the Executive
Office"' of the Department of Education and Culture issued Memorandum Order No. 93 under the authority
of then Secretary of Education Juan Manuel. As in this case, a complaint for injunction was filed with the
Court of First Instance of Lanao del Norte because, allegedly, the enforcement of the circular would impair
some contracts already entered into by public school teachers. It was the contention of petitioner therein that
"the Court of First Instance is not empowered to amend, reverse and modify what is otherwise the clear and
explicit provision of the memorandum circular issued by the Executive Office which has the force and effect
of law." In resolving the issue, We held:
... We definitely state that respondent Court lawfully acquired jurisdiction in Civil Case No. II-
240 (8) because the plaintiff therein asked the lower court for relief, in the form of injunction,
in defense of a legal right (freedom to enter into contracts) . . . . .
Hence there is a clear infringement of private respondent's constitutional right to enter into
agreements not contrary to law, which might run the risk of being violated by the threatened
implementation of Executive Office Memorandum Circular No. 93, dated February 5, 1968,
which prohibits, with certain exceptions, cashiers and disbursing officers from honoring
special powers of attorney executed by the payee employees. The respondent Court is not
only right but duty bound to take cognizance of cases of this nature wherein a constitutional
2J 2019-2020
and statutory right is allegedly infringed by the administrative action of a government office.
Courts of first Instance have original jurisdiction over all civil actions in which the subject of
the litigation is not capable of pecuniary estimation (Sec. 44, Republic Act 296, as
amended). 12 (Emphasis supplied.)
In San Miguel Corporation vs. Avelino, 13 We ruled that a judge of the Court of First Instance has the
authority to decide on the validity of a city tax ordinance even after its validity had been contested before the
Secretary of Justice and an opinion thereon had been rendered.
In view of the foregoing, We find no cogent reason why Resolution No. 105, issued by the respondent
Professional Regulation Commission, should be exempted from the general jurisdiction of the Regional Trial
Court.
Respondent PRC, on the other hand, contends that under Section 9, paragraph 3 of B.P. Blg. 129, it is the
Court of Appeals which has jurisdiction over the case. The said law provides:
SEC. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:
xxx xxx xxx
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or
awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions, except those falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary
Act of 1948.
The contention is devoid of merit.
In order to invoke the exclusive appellate jurisdiction of the Court of Appeals as provided for in Section 9,
paragraph 3 of B.P. Blg. 129, there has to be a final order or ruling which resulted from proceedings wherein
the administrative body involved exercised its quasi-judicial functions. In Black's Law Dictionary, quasi-
judicial is defined as a term applied to the action, discretion, etc., of public administrative officers or bodies
required to investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from
them, as a basis for their official action, and to exercise discretion of a judicial nature. To expound
thereon, quasi-judicial adjudication would mean a determination of rights, privileges and duties resulting in a
decision or order which applies to a specific situation . 14 This does not cover rules and regulations of general
applicability issued by the administrative body to implement its purely administrative policies and functions
like Resolution No. 105 which was adopted by the respondent PRC as a measure to preserve the integrity of
licensure examinations.
The above rule was adhered to in Filipinas Engineering and Machine Shop vs. Ferrer. 15 In this case, the
issue presented was whether or not the Court of First Instance had jurisdiction over a case involving an
order of the Commission on Elections awarding a contract to a private party which originated from an
invitation to bid. The said issue came about because under the laws then in force, final awards, judgments,
decisions or orders of the Commission on Elections fall within the exclusive jurisdiction of the Supreme
Court by way of certiorari. Hence, it has been consistently held that "it is the Supreme Court, not the Court of
First Instance, which has exclusive jurisdiction to review on certiorari final decisions, orders, or rulings of the
Commission on Elections relative to the conduct of elections and the enforcement of election laws." 16
As to whether or not the Court of First Instance had jurisdiction in saidcase, We said:
2J 2019-2020
We are however, far from convinced that an order of the COMELEC awarding a contract to a
private party, as a result of its choice among various proposals submitted in response to its
invitation to bid comes within the purview of a "final order" which is exclusively and directly
appealable to this court on certiorari. What is contemplated by the term "final orders, rulings
and decisions, of the COMELEC reviewable by certiorari by the Supreme Court as provided
by law are those rendered in actions or proceedings before the COMELEC and taken
cognizance of by the said body in the exercise of its adjudicatory or quasi-judicial powers.
(Emphasis supplied.)
xxx xxx xxx
We agree with petitioner's contention that the order of the Commission granting the award to
a bidder is not an order rendered in a legal controversy before it wherein the parties filed
their respective pleadings and presented evidence after which the questioned order was
issued; and that this order of the commission was issued pursuant to its authority to enter
into contracts in relation to election purposes. In short, the COMELEC resolution awarding
the contract in favor of Acme was not issued pursuant to its quasi-judicial functions but
merely as an incident of its inherent administrative functions over the conduct of elections,
and hence, the said resolution may not be deemed as a "final order reviewable by certiorari
by the Supreme Court. Being non-judicial in character, no contempt order may be imposed
by the COMELEC from said order, and no direct and exclusive appeal by certiorari to this
Tribunal lie from such order. Any question arising from said order may be well taken in an
ordinary civil action before the trial courts. (Emphasis supplied.) 17
One other case that should be mentioned in this regard is Salud vs. Central Bank of the Philippines. 18 Here,
petitioner Central Bank, like respondent in this case, argued that under Section 9, paragraph 3 of B.P. Blg.
129, orders of the Monetary Board are appealable only to the Intermediate Appellate Court. Thus:
The Central Bank and its Liquidator also postulate, for the very first time, that the Monetary
Board is among the "quasi-judicial ... boards" whose judgments are within the exclusive
appellate jurisdiction of the IAC; hence, it is only said Court, "to the exclusion of the Regional
Trial Courts," that may review the Monetary Board's resolutions. 19
Anent the posture of the Central Bank, We made the following pronouncement:
The contention is utterly devoid of merit. The IAC has no appellate jurisdiction over resolution
or orders of the Monetary Board. No law prescribes any mode of appeal from the Monetary
Board to the IAC. 20
In view of the foregoing, We hold that the Regional Trial Court has jurisdiction to entertain Civil Case No. 86-
37950 and enjoin the respondent PRC from enforcing its resolution.
Although We have finally settled the issue of jurisdiction, We find it imperative to decide once and for all the
validity of Resolution No. 105 so as to provide the much awaited relief to those who are and will be affected
by it.
Of course, We realize that the questioned resolution was adopted for a commendable purpose which is "to
preserve the integrity and purity of the licensure examinations." However, its good aim cannot be a cloak to
conceal its constitutional infirmities. On its face, it can be readily seen that it is unreasonable in that an
examinee cannot even attend any review class, briefing, conference or the like, or receive any hand-out,
review material, or any tip from any school, collge or university, or any review center or the like or any
reviewer, lecturer, instructor, official or employee of any of the aforementioned or similar institutions . ... 21
2J 2019-2020
The unreasonableness is more obvious in that one who is caught committing the prohibited acts even
without any ill motives will be barred from taking future examinations conducted by the respondent PRC.
Furthermore, it is inconceivable how the Commission can manage to have a watchful eye on each and every
examinee during the three days before the examination period.
It is an aixiom in administrative law that administrative authorities should not act arbitrarily and capriciously
in the issuance of rules and regulations. To be valid, such rules and regulations must be reasonable and
fairly adapted to the end in view. If shown to bear no reasonable relation to the purposes for which they are
authorized to be issued, then they must be held to be invalid. 22
Resolution No. 105 is not only unreasonable and arbitrary, it also infringes on the examinees' right to liberty
guaranteed by the Constitution. Respondent PRC has no authority to dictate on the reviewees as to how
they should prepare themselves for the licensure examinations. They cannot be restrained from taking all
the lawful steps needed to assure the fulfillment of their ambition to become public accountants. They have
every right to make use of their faculties in attaining success in their endeavors. They should be allowed to
enjoy their freedom to acquire useful knowledge that will promote their personal growth. As defined in a
decision of the United States Supreme Court:
The term "liberty" means more than mere freedom from physical restraint or the bounds of a
prison. It means freedom to go where one may choose and to act in such a manner not
inconsistent with the equal rights of others, as his judgment may dictate for the promotion of
his happiness, to pursue such callings and vocations as may be most suitable to develop his
capacities, and giv to them their highest enjoyment. 23
Another evident objection to Resolution No. 105 is that it violates the academic freedom of the schools
concerned. Respondent PRC cannot interfere with the conduct of review that review schools and centers
believe would best enable their enrolees to meet the standards required before becoming a full fledged
public accountant. Unless the means or methods of instruction are clearly found to be inefficient, impractical,
or riddled with corruption, review schools and centers may not be stopped from helping out their students. At
this juncture, We call attention to Our pronouncement in Garcia vs. The Faculty Admission Committee,
Loyola School of Theology, 24 regarding academic freedom to wit:
... It would follow then that the school or college itself is possessed of such a right. It decides
for itself its aims and objectives and how best to attain them. It is free from outside coercion
or interference save possibly when the overriding public welfare calls for some restraint. It
has a wide sphere of autonomy certainly extending to the choice of students. This
constitutional provision is not to be construed in a niggardly manner or in a grudging fashion.
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages in the
licensure examinations will be eradicated or at least minimized. Making the examinees suffer by depriving
them of legitimate means of review or preparation on those last three precious days-when they should be
refreshing themselves with all that they have learned in the review classes and preparing their mental and
psychological make-up for the examination day itself-would be like uprooting the tree to get ride of a rotten
branch. What is needed to be done by the respondent is to find out the source of such leakages and stop it
right there. If corrupt officials or personnel should be terminated from their loss, then so be it. Fixers or
swindlers should be flushed out. Strict guidelines to be observed by examiners should be set up and if
violations are committed, then licenses should be suspended or revoked. These are all within the powers of
the respondent commission as provided for in Presidential Decree No. 223. But by all means the right and
freedom of the examinees to avail of all legitimate means to prepare for the examinations should not be
curtailed.
2J 2019-2020
In the light of the above, We hereby REVERSE and SET ASIDE, the decision of the Court of Appeals in CA-
G.R. SP No. 10591 and another judgment is hereby rendered declaring Resolution No. 105 null and void
and of no force and effect for being unconstitutional. This decision is immediately executory. No costs.
SO ORDERED.
2J 2019-2020

SUPREME COURT
Manila
EN BANC
G.R. No. 109023 August 12, 1998
RODOLFO S. DE JESUS, EDELWINA DE PARUNGAO, VENUS M. POZON AND other similarly

situated personnel of the LOCAL WATER UTILITIES ADMINISTRATION (LWUA), petitioners,
vs.
COMMISSION ON AUDIT AND LEONARDO L. JAMORALIN in his capacity as COA-LWUA Corporate
Auditor, respondents.
PURISIMA, J.:
The pivotal issue raised in this petition is whether or not the petitioners are entitled to the payment of
honoraria which they were receiving prior to the effectivity of Rep. Act 6758.
Petitioners are employees of the Local Water Utilities Administration (LWUA). Prior to July 1, 1989, they
were receiving honoraria as designated members of the LWUA Board Secretariat and the Pre-Qualification,
Bids and Awards Committee.
On July 1, 1989, Republic Act No. 6758 (Rep. Act 6758), entitled "An Act Prescribing A Revised
Compensation and Position Classification System in the Government and For Other Purposes", took effect.
Section 12 of said law provides for the consolidation of allowances and additional compensation into
standardized salary rates. Certain additional compensations, however, were exempted from consolidation.
Sec. 12. Rep. Act 6758, reads —
Sec. 12. — Consolidation of Allowances and Compensation. — Allowances, except for

representation and transportation allowances; clothing and laundry allowances; subsistense
allowance of marine officers and crew on board government vessels and hospital personnel;
hazard pay: allowances of foreign services personnel stationed abroad; and such other
additional compensation not otherwise specified herein as may be determined by the DBM,
shall be deemed included in the standardized salary rules herein prescribed. Such other
additional compensation, whether in cash or in kind, being received by incumbents as of July
1, 1989 no integrated into the standardized salary rates shall continue to be
authorized.1 (Emphasis supplied)
To implement Rep. Act 6758, the Department of Budget and Management (DBM) issued Corporate
Compensation Circular No. 10 (DBM-CCC No. 10), discontinuing without qualification effective November 1,
1989, all allowances and fringe benefits granted on top of basic salary.
Paragraph 5.6 of DBM-CCC No. 10 provides:

2J 2019-2020
Payment of other allowances fringe benefits and all other forms of compensation granted on
top of basic salary, whether in cash or in kind, . . . shall be discontinued effective November
1, 1989. Payment made for such allowances fringe benefits after said date shall be
considered as illegal disbursement of public funds.2
Pursuant to the aforesaid Law and Circular, respondent Leonardo Jamoralin, as corporate auditor,
disallowed on post audit, the payment of honoraria to the herein petitioners.
Aggrieved, petitioners appealed to the COA, questioning the validity and enforceability of DBM-CCC No. 10.
More specifically, petitioners contend that DBM-CCC No. 10 is inconsistent with the provisions of Rep. Act
6758 (the law it is supposed to implement) and, therefore, void. And it is without force and effect because it
was not published in the Official Gazette; petitioners stressed.
In its decision dated January 29, 1993, the COA upheld the validity and effectivity of DBM-CCC No. 10 and
sanctioned the disallowance of petitioners' honoraria.3
Undaunted, petitioners found their way to this court via the present petition, posing the questions:
(1) Whether or not par. 5.6 of DBM-CCC No. 10 can supplant or negate the express
provisions of Sec. 12 of Rep. Act 6758 which it seeks to implement; and
(2) Whether or not DBM-CCC No. 10 is legally effective despite its lack of publication in the
Official Gazette.
Petitioners are of the view that par. 5.6 of DBM-CCC No. 10 prohibiting fringe benefits and allowances
effective November 1, 1989, is violative of Sec. 12 of Rep. Act 6758 which authorizes payment of additional
compensation not integrated into the standardized salary which incumbents were enjoying prior to July 1,
1989.
To buttress petitioners' stance, the Solicitor General presented a Manifestation and Motion in Lieu of
Comment, opining that Sec. 5.6 of DBM-CCC No. 10 is a nullity for being inconsistent with and repugnant to
the very law it is intended to implement. The Solicitor General theorized, that:
. . . following the settled principle that implementing rules must necessarily adhere to and not
depart from the provisions of the statute it seeks to implement, it is crystal clear that Section
5.6 of DBM-CCC No. 10 is a patient nullity. An implementing rule can only be declared valid
if it is in harmony with the provision of the legislative act and for the sole purpose of carrying
into effect its general provisions. When an implementing rule is inconsistent or repugnant to
the provision of the statute it seeks to interpret, the mandate of the statute must prevail and
must be followed. 4
Respondent COA, on the other hand, pointed out that to allow honoraria without statutory, presidential or
DBM authority, as in this case, would run counter to Sec. 8, Article IX-B of the Constitution which proscribes
payment of "additional or double compensation, unless specifically authorized by law." Therefore, the grant
of honoraria or like allowances requires a specific legal or statutory authority. And DBM-CCC No. 10 need
not be published for it is merely an interpretative regulation of a law already published 5; COA concluded.
In his Motion for Leave to intervene, the DBM Secretary asserted that the honoraria in question are
considered included in the basic salary, for the reason that they are not listed as exceptions under Sec. 12
of Rep. Act 6758.
2J 2019-2020
Before resolving the other issue — whether or not Paragraph 5.6 of DBM-CCC No. 10 can supplant or
negate the pertinent provisions of Rep. Act 6758 which it seeks to implement, we have to tackle first the
other question whether or not DBM-CCC No. 10 has legal force and effect notwithstanding the absence of
publication thereof in the Official Gazette. This should take precedence because should we rule that
publication in the Official Gazette or in a newspaper of general circulation in the Philippines 6 is sine qua
non to the effectiveness or enforceability of DBM-CCC No. 10, resolution of the first issue posited by
petitioner would not be necessary.
The applicable provision of law requiring publication in the Official Gazette is found in Article 2 of the New
Civil Code of the Philippines, which reads:
Art. 2. Laws shall take effect after fifteen days following the completion of their publications in
the Official Gazette, unless it is otherwise provided. This code shall take effect one year after
such publication.
In Tanada v. Tuvera, 146 SCRA 453, 454, this Court succinctly construed the aforecited provision of law in
point, thus:
We hold therefore that all statutes, including those of local application and privates laws,
shall be published as a condition for their effectivity, which shall begin after fifteen days after
publication unless a different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the
President in the exercise of legislative powers whenever the same are validly delegated by
the legislature or, at present, directly conferred by the Constitution. Administrative rules and
regulations must also be published if their purpose is to enforced or implement existing law
pursuant to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the
personnel of the administrative agency and not the public, need not be published. Neither is
publication required of the so-called letters of instructions issued by administrative superiors
concerning the rules or guidelines to be followed by their subordinates in the performance of
their duties.
Accordingly, even the charter of a city must be published notwithstanding that it applies to
only one portion of the national territory and directly affects only the inhabitants of that place.
All presidential decrees must be published, including, even, say those naming a public place
after a favored individual or exempting him from a certain prohibitions or requirements. The
circulars issued by the Monetary Board must be published if they are meant not merely
interpret but to "fill in details" of the Central Bank Act which that body supposed to enforce.
(Emphasis ours)
The same ruling was reiterated in the case of Philippine Association of Service Exporters, Inc. vs.
Torres, 212 SCRA 299 [1992].
On the need for publication of subject DBM-CCC No. 10, we rule in the affirmative. Following the doctrine
enunciated in Tanada, publication in the Official Gazette or in a newspaper of general circulation in the
Philippines is required since DBM-CCC No. 10 is in the nature of an administrative circular the purpose of
which is to enforce or implement an existing law. Stated differently, to be effective and enforceable, DBM-
CCC No. 10 must go through the requisite publication in the Official Gazette or in a newspaper of general
circulation in the Philippines.
2J 2019-2020
In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10, which completely disallows
payment of allowances and other additional compensation to government officials and employees, starting
November 1, 1989, is not a mere interpretative or internal regulation. It is something more than that. And
why not, when it tends to deprive government workers of their allowances and additional compensation
sorely needed to keep body and soul together. At the very least, before the said circular under attack may
be permitted to substantially reduce their income, the government officials and employees concerned should
be apprised and alerted by the publication of subject circular in the Official Gazette or in a newspaper of
general circulation in the Philippines — to the end that they be given amplest opportunity to voice out
whatever opposition they may have, and to ventilate their stance on the matter. This approach is more in
keeping with democratic precepts and rudiments of fairness and transparency.
In light of the foregoing disquisition on the ineffectiveness of DBM-CCC No. 10 due to its non-publication in
the Official Gazette or in a newspaper of general circulation in the country, as required by law, resolution of
the other issue at bar is unnecessary.
WHEREFORE, the Petition is hereby GRANTED, the assailed Decision of respondent Commission on Audit
is SET ASIDE, and respondents are ordered to pass on audit the honoraria of petitioners. No
pronouncement as to costs.
SO ORDERED.
2J 2019-2020

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-32166 October 18, 1977
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,

vs.
HON. MAXIMO A. MACEREN CFI, Sta. Cruz, Laguna, JOSE BUENAVENTURA, GODOFREDO REYES,
BENJAMIN REYES, NAZARIO AQUINO and CARLO DEL ROSARIO, accused-appellees.
Office of the Solicitor General for appellant.
Rustics F. de los Reyes, Jr. for appellees.
AQUINO, J.: têñ.£îhqwâ£
This is a case involving the validity of a 1967 regulation, penalizing electro fishing in fresh 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 Commission.
On March 7, 1969 Jose Buenaventura, Godofredo Reyes, Benjamin Reyes, Nazario Aquino 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.
It was alleged in the complaint that the five accused in the morning of March 1, 1969 resorted to electro
fishing in the waters of Barrio San Pablo Norte, Sta. Cruz by "using their 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 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.
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 and that it is not a substance at all
but a form of energy conducted or transmitted by substances. The lower court further held that, since the law
does not clearly prohibit electro fishing, the executive and judicial departments cannot consider it unlawful.
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.
2J 2019-2020
Section 76 of the same law punishes any person who uses an obnoxious or poisonous 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, upon the recommendation of the
Commissioner of Fisheries, promulgated Fisheries Administrative Order No. 84 (62 O.G. 1224), prohibiting
electro fishing in all Philippine waters. The order is quoted below: ñé+.£ªwph!1
SUBJECT: PROHIBITING ELECTRO FISHING IN ALL WATERS ñé+.£ªwph!1
OF THE PHILIPPINES.
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 the Philippines are promulgated for the
information and guidance of all concerned. ñé+.£ªwph!1
SECTION 1. — Definition. — Words and terms used in this Order 11 construed as follows:
(a) Philippine waters or territorial waters of the Philippines' includes all waters of the
Philippine Archipelago, as defined in the t between the United States and Spain, dated
respectively the tenth of December, eighteen hundred ninety eight and the seventh of
November, nineteen hundred. For the purpose of this order, rivers, lakes and other bodies of
fresh waters are included.
(b) Electro Fishing. — Electro fishing is the catching of fish with the use of electric current.
The equipment used are of many electrical devices which may be battery or generator-
operated and from and available source of electric current.
(c) 'Persons' includes firm, corporation, association, agent or employee.
(d) 'Fish' includes other aquatic products.
SEC. 2. — Prohibition. — It shall be unlawful for any person to engage in electro fishing or to
catch fish by the use of electric current in any portion of the Philippine waters except for
research, educational and scientific purposes which must be covered by a permit issued by
the Secretary of Agriculture and Natural Resources which shall be carried at all times.
SEC. 3. — Penalty. — Any violation of the provisions of this Administrative Order shall
subject the offender to a fine of not exceeding five hundred pesos (P500.00) or imprisonment
of not extending six (6) months or both at the discretion of the Court.
SEC. 4. — Repealing Provisions. — All administrative orders or parts thereof inconsistent

with the provisions of this Administrative Order are hereby revoked.
SEC. 5. — Effectivity. — This Administrative Order shall take effect six (60) days after its
publication in the Office Gazette.
On June 28, 1967 the Secretary of Agriculture and Natural Resources, upon the recommendation of the
Fisheries Commission, issued Fisheries Administrative Order No. 84-1, amending section 2 of
2J 2019-2020
Administrative Order No. 84, by restricting the ban against electro fishing to fresh water fisheries (63 O.G.
9963).
Thus, the phrase "in any portion of the Philippine waters" found in section 2, was changed by the
amendatory order to read as follows: "in fresh water fisheries in the Philippines, such as rivers, lakes,
swamps, dams, irrigation canals and other bodies of fresh water."
The Court of First Instance and the prosecution (p. 11 of brief) assumed that electro fishing 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 thereunder shall subject the offender to a fine of not
more than two hundred pesos (P200), or in t for not more than six months, or both, in the discretion of the
court."
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 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 Identified to the at penalty imposed in section 83.
Had Administrative Order No. 84 adopted the fighter penalty prescribed in on 83, then the crime of electro
fishing would be within the exclusive original jurisdiction of the inferior court (Sec. 44 [f], Judiciary Law;
People vs. Ragasi, L-28663, September 22,
We have discussed this pre point, not raised in the briefs, because it is obvious that the 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 (People vs. Nazareno, L-40037, April 30, 1976, 70 SCRA 531
and the cases cited therein).
And since the instant case was filed in the municipal court of Sta. Cruz, Laguna, a 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 of the Judiciary Law; Esperat vs. Avila, L-25992,
June 30, 1967, 20 SCRA 596).
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. This appeal shall be treated as a
direct appeal from the municipal court to this Court. (See People vs. Del Rosario, 97 Phil. 67).
In this appeal, the prosecution argues that Administrative Orders Nos. 84 and 84-1 were not issued under
section 11 of the Fisheries Law which, as indicated above, punishes fishing by means of an obnoxious or
poisonous substance. This contention is not well-taken because, as already stated, the Penal provision of
Administrative Order No. 84 implies that electro fishing is penalized as a form of fishing by means of an
obnoxious or poisonous substance under section 11.
The prosecution cites as the legal sanctions for the prohibition against electro fishing in 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 provisions of the Fisheries Law and the regulations
Promulgated thereunder and to execute the rules and regulations consistent with the purpose for the
creation of the Fisheries Commission and for the development of fisheries (Sec. 4[c] and [h] Republic Act
No. 3512; (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 that "any other violation
of" the Fisheries Law or of any rules and regulations promulgated thereunder "shall subject the offender to a
fine of not more than two hundred pesos, or imprisonment for not more than six months, or both, in the
discretion of the court."
2J 2019-2020
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 the penalty fixed in section 83.
We are of the opinion that the Secretary of Agriculture and Natural Resources and the Commissioner of
Fisheries exceeded their authority in issuing Fisheries Administrative Orders Nos. 84 and 84-1 and that
those orders are not warranted under the Fisheries Commission, Republic Act No. 3512.
The reason is that the Fisheries Law does not expressly prohibit electro fishing. As electro fishing is not
banned under that law, the Secretary of Agriculture and Natural Resources and the Commissioner of
Fisheries are powerless to penalize it. In other words, Administrative Orders Nos. 84 and 84-1, in penalizing
electro fishing, are devoid of any legal basis.
Had the lawmaking body intended to punish electro fishing, a penal provision to that effect could have been
easily embodied in the old Fisheries Law.
That law punishes (1) the use of obnoxious or poisonous substance, or explosive in fishing; (2) unlawful
fishing in deepsea fisheries; (3) unlawful taking of marine molusca, (4) illegal taking of sponges; (5) failure of
licensed fishermen to report the kind and quantity of fish caught, and (6) other violations.
Nowhere in that law is electro fishing specifically punished. Administrative Order No. 84, in punishing electro
fishing, does not contemplate that such an offense fails within the category of "other violations" because, as
already shown, the penalty for electro fishing is 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 law and regulations fixed in section 83 of the Fisheries Law.
The lawmaking body cannot delegate to an executive official the power to declare what acts should
constitute an offense. It can authorize the issuance of regulations and the imposition of the penalty provided
for in the law itself. (People vs. Exconde 101 Phil. 11 25, citing 11 Am. Jur. 965 on p. 11 32).
Originally, Administrative Order No. 84 punished electro fishing in all waters. Later, the ban against electro
fishing was confined to fresh water fisheries. The amendment created the impression that electro fishing is
not condemnable per se. It could be tolerated in marine waters. That circumstances strengthens the view
that the old law does not eschew all forms of electro fishing.
However, at present, there is no more doubt that electro fishing is punishable under the 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 affecting fishing and fisheries and which was promulgated
on May 16, 1975 (71 O.G. 4269), expressly punishes electro fishing in fresh water and salt water areas.
That decree provides: ñé+.£ªwph!1
SEC. 33. — Illegal fishing, dealing in illegally caught fish or fishery/aquatic products. — It
shall he unlawful for any person to catch, take or gather or cause to be caught, taken or
gathered fish or fishery/aquatic products in Philippine waters with the use of explosives,
obnoxious or poisonous substance, or by the use of electricity as defined in paragraphs (1),
(m) and (d), respectively, of Section 3 hereof: ...
The decree Act No. 4003, as amended, Republic Acts Nos. 428, 3048, 3512 and 3586, Presidential Decrees
Nos. 43, 534 and 553, and all , Acts, Executive Orders, rules and regulations or parts thereof inconsistent
with it (Sec. 49, P. D. No. 704).
2J 2019-2020
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 admission that a mere executive
regulation is not legally adequate to penalize electro fishing.
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 found in section 3(d) of the decree. Note
further that the decree penalty electro fishing by "imprisonment from two (2) to four (4) years", a punishment
which is more severe than the penalty of a time of not excluding P500 or imprisonment of not more than six
months or both fixed in section 3 of Fisheries Administrative Order No. 84.
An examination of the rule-making power of executive officials and administrative 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 authority in penalizing electro fishing by means of
an administrative order.
Administrative agent are clothed with rule-making powers because the lawmaking body finds it
impracticable, if not impossible, to anticipate and provide for the multifarious and complex situations that
may be encountered in enforcing the law. All that is required is that 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; Director of Forestry vs. Muñ;oz, L-24796, June 28, 1968, 23 SCRA 1183, 1198;
Geukeko vs. Araneta, 102 Phil. 706, 712).
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 U.S. 506; Interprovincial Autobus
Co., Inc. vs. Coll. of Internal Revenue, 98 Phil. 290, 295-6).
The grant of the rule-making power to administrative agencies is a relaxation of the principle of separation of
powers and is an exception to the nondeleption of legislative, powers. Administrative regulations or
"subordinate legislation calculated to promote the public interest are necessary because of "the growing
complexity of modem life, the 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 Osmeñ;a,
68 Phil. 328).
Administrative regulations adopted under legislative authority by a particular department must be in harmony
with the provisions of the law, and should be for the sole purpose of carrying into effect its general
provisions. By such regulations, of course, the law itself cannot be extended. (U.S. vs. Tupasi Molina,
supra). An administrative agency cannot amend an act of Congress (Santos vs. Estenzo, 109 Phil. 419, 422;
Teoxon vs. Members of the d of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel vs. General
Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao vs. Casteel, L-21906, August 29,
1969, 29 SCRA 350).
The rule-making power must be confined to details for regulating the mode or proceeding to carry into effect
the law as it his been enacted. The power cannot be extended to amending or expanding the statutory
requirements or to embrace matters not covered by the statute. Rules that subvert the statute cannot be
sanctioned. (University of Santo Tomas vs. 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 March vs. Phil. Veterans Administrative, L-27299, June 27, 1973, 51 SCRA 340, 349).
There is no question that the Secretary of Agriculture and Natural Resources has rule-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 proper to carry into effect the provisions thereof."
2J 2019-2020
That power is now vested in the Secretary of Natural Resources by on 7 of the Revised Fisheries law,
Presidential December No. 704.
Section 4(h) of Republic Act No. 3512 empower the Co of Fisheries "to prepare and execute upon the
approval of the Secretary of Agriculture and Natural Resources, forms instructions, rules and regulations
consistent with the purpose" of that enactment "and for the development of fisheries."
Section 79(B) of the Revised Administrative Code provides that "the Department Head shall have the power
to promulgate, whenever he may see fit do so, all rules, regulates, 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 dependencies of his Department, and for the strict enforcement and proper
execution of the laws relative to matters under the jurisdiction of said Department; but none of said rules or
orders shall prescribe penalties for the violation thereof, except as expressly authorized by law."
Administrative regulations issued by a Department Head in conformity with law have the 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 the rule-making power by delegation of the
lawmaking body, it is a requisite that he should not transcend the bound demarcated by the statute for the
exercise of that power; otherwise, he would be improperly exercising legislative power in his own right and
not as a surrogate of the lawmaking body.
Article 7 of the Civil Code embodies the basic principle that administrative or executive acts, orders and
regulations shall be valid only when they are not contrary to the laws or the Constitution."
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 upon a grant of power before he can
exercise it." "department zeal may not be permitted to outrun the authority conferred by statute." (Radio
Communications of the Philippines, Inc. vs. Santiago, L-29236, August 21, 1974, 58 SCRA 493, 496-8).
"Rules and regulations when promulgated in pursuance of the procedure or authority conferred upon the
administrative agency by law, partake of the nature of a statute, and compliance therewith may be enforced
by a penal sanction provided in the law. This is so 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 of carrying out the law are oftentimes left to the administrative agency entrusted with
its enforcement. In this sense, it has been said that rules and regulations are the product of a delegated
power to create new or additional legal provisions that have the effect of law." The rule or regulation should
be within the scope of the statutory authority granted by the legislature to the administrative agency. (Davis,
Administrative Law, p. 194, 197, cited in Victories Milling Co., Inc. vs. Social Security Commission, 114 Phil.
555, 558).
In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the
basic law prevails because said rule or regulation cannot go beyond the terms and provisions of the basic
law (People vs. Lim, 108 Phil. 1091).
This Court in its decision in the Lim case, supra, promulgated on July 26, 1960, called the attention of
technical men in the executive departments, who draft rules and regulations, to the importance and
necessity of closely following the legal provisions which they intend to implement so as to avoid any possible
misunderstanding or confusion.
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 constitutes an offense and renders the
2J 2019-2020
offender liable to punishment in accordance with the provisions of the law (U.S. vs. Tupasi Molina, 29 Phil.
119, 124).
In other words, a violation or infringement of a rule or regulation validly issued can constitute a crime
punishable as provided in the authorizing statute and by virtue of the latter (People vs. Exconde 101 Phil.
1125, 1132).
It has been held that "to declare what shall constitute a crime and how it shall be punished is a power vested
exclusively in the legislature, and it may not be delegated to any other body or agency" (1 Am. Jur. 2nd, sec.
127, p. 938; Texas Co. vs. Montgomery, 73 F. Supp. 527).
In the instant case the regulation penalizing electro fishing is not strictly in accordance with the Fisheries
Law, under which the regulation was issued, because the law itself does not expressly punish electro
fishing.
The instant case is similar to People vs. Santos, 63 Phil. 300. The Santos case involves section 28 of Fish
and Game Administrative Order No. 2 issued by the Secretary of Agriculture and Natural Resources
pursuant to the aforementioned section 4 of the Fisheries Law.
Section 28 contains the proviso that a fishing boat not licensed under the Fisheries Law and under the said
administrative order may fish within three kilometers of the shoreline of islands and reservations over which
jurisdiction is exercised by naval and military reservations authorities of the United States only upon
receiving written permission therefor, which permission may be granted by the Secretary upon
recommendation of the military or naval authorities concerned. A violation of the proviso may be proceeded
against under section 45 of the Federal Penal Code.
Augusto A. Santos was prosecuted under that provision in the Court of First Instance of Cavite for having
caused his two fishing boats to fish, loiter and anchor without permission from the Secretary within three
kilometers from the shoreline of Corrigidor Island.
This Court held that the Fisheries Law does not prohibit boats not subject to license from fishing within three
kilometers of the shoreline of islands and reservations over which jurisdiction is exercised by naval and
military authorities of the United States, without permission from the Secretary of Agriculture and Natural
Resources upon recommendation of the military and naval authorities concerned.
As the said law does not penalize the act mentioned in section 28 of the administrative order, the
promulgation of that provision by the Secretary "is equivalent to legislating on 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 regulatory power conferred upon the Secretary but also an exercise of
a legislative power which he does not have, and therefore" the said provision "is null and void and without
effect". Hence, the charge against Santos was dismiss.
A penal statute is strictly construed. While an administrative agency has the right to make 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
2J 2019-2020
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.
SO ORDERED.
2J 2019-2020

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 119761 August 29, 1996
COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
HON. COURT OF APPEALS, HON. COURT OF TAX APPEALS and FORTUNE TOBACCO
CORPORATION, respondents.
VITUG, J.:p
The Commissioner of Internal Revenue ("CIR") disputes the decision, dated 31 March 1995, of respondent Court of Appeals 1 affirming the 10th August
1994 decision and the 11th October 1994 resolution of the Court of Tax Appeals 2 ("CTA") in C.T.A. Case No. 5015, entitled "Fortune Tobacco
Corporation vs. Liwayway Vinzons-Chato in her capacity as Commissioner of Internal Revenue."
The facts, by and large, are not in dispute.
Fortune Tobacco Corporation ("Fortune Tobacco") is engaged in the manufacture of different brands of
cigarettes.
On various dates, the Philippine Patent Office issued to the corporation separate certificates 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., to Deputy Minister Ramon Diaz of the
Presidential Commission on Good Government, "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 foreign companies. However, Fortune Tobacco changed the names of 'Hope' to
'Hope Luxury' and 'More' to 'Premium More,' thereby removing the said brands from the foreign brand
category. Proof was also submitted to the Bureau (of Internal Revenue ['BIR']) that 'Champion' was an
original Fortune Tobacco Corporation register and therefore a local brand." 3 Ad Valorem taxes were
imposed on these brands, 4 at the following rates:
BRAND AD VALOREM TAX RATE

E.O. 22 and E.O. 273 RA 6956
06-23-86 07-25-87 06-18-90
07-01-86 01-01-88 07-05-90
Hope Luxury M. 100's

Sec. 142, (c), (2) 40% 45%
Hope Luxury M. King
Sec. 142, (c), (2) 40% 45%
More Premium M. 100's
Sec. 142, (c), (2) 40% 45%
More Premium International
Sec. 142, (c), (2) 40% 45%
2J 2019-2020
Champion Int'l. M. 100's

Sec. 142, (c), (2) 40% 45%
Champion M. 100's
Sec. 142, (c), (2) 40% 45%
Champion M. King
Sec. 142, (c), last par. 15% 20%
Champion Lights
Sec. 142, (c), last par. 15% 20% 5
A bill, which later became Republic Act ("RA") No. 7654, 6 was enacted, on 10 June 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:
Sec. 142. Cigars and Cigarettes. —
xxx xxx xxx
(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 constructive
manufacturer's wholesale price or the actual manufacturer's wholesale price, whichever is
higher:
(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 otherwise, fifty-five
(55%) provided that the minimum tax shall not be less than Five Pesos (P5.00) per pack.
(2) On other locally manufactured cigarettes, forty-five percent (45%) provided that the
minimum tax shall not be less than Three Pesos (P3.00) per pack.
xxx xxx xxx
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 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)
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 text of which
expressed:
REPUBLIKA NG PILIPINAS
KAGAWARAN NG PANANALAPI
KAWANIHAN NG RENTAS INTERNAS
July 1, 1993
REVENUE MEMORANDUM CIRCULAR NO. 37-93
SUBJECT: Reclassification of Cigarettes Subject to Excise Tax

2J 2019-2020
TO: All Internal Revenue Officers and Others Concerned.
In view of the issues raised on whether "HOPE," "MORE" and "CHAMPION" cigarettes which
are locally manufactured are appropriately considered as locally manufactured cigarettes
bearing a foreign brand, this Office is compelled to review the previous rulings on the matter.
Section 142 (c)(1) National Internal Revenue Code, as amended by R.A. No. 6956, provides:
On locally manufactured cigarettes bearing a foreign brand, fifty-five percent

(55%) 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 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.
Under the foregoing, the test for imposition of the 55% ad valorem tax on cigarettes is that
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. If
ownership of the cigarette brand is, however, not definitely determinable, ". . . the listing of
brands manufactured in foreign countries appearing in the current World Tobacco Directory
shall govern. . . ."
"HOPE" is listed in the World Tobacco Directory as being manufactured by (a) Japan
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, Australia; (c) RJR-
Macdonald Canada; (d) Rettig-Strenberg, Finland; (e) Karellas, Greece; (f) R.J. Reynolds,
Malaysia; (g) Rothmans, New Zealand; (h) Fortune Tobacco, Philippines; (i) R.J. Reynolds,
Puerto Rico; (j) R.J. Reynolds, Spain; (k) Tabacalera, Spain; (l) R.J. Reynolds, Switzerland;
and (m) R.J. Reynolds, USA. "Champion" is registered in the said directory as being
manufactured by (a) Commonwealth Bangladesh; (b) Sudan, Brazil; (c) Japan Tobacco,
Japan; (d) Fortune Tobacco, Philippines; (e) Haggar, Sudan; and (f) Tabac Reunies,
Switzerland.
Since there is no showing who among the above-listed manufacturers of the cigarettes
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 Section
142 of the National Internal Revenue Code. As held in BIR Ruling No. 410-88, dated August
24, 1988, "in cases where it cannot be established or there is dearth of evidence as to
whether a brand is foreign or not, resort to the World Tobacco Directory should be made."
In view of the foregoing, the aforesaid brands of cigarettes, viz: "HOPE," "MORE" and
"CHAMPION" being manufactured by Fortune Tobacco Corporation are hereby considered
locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax on
cigarettes.
Any ruling inconsistent herewith is revoked or modified accordingly.
(SGD) LIWAYWAY
VINZONS-CHATO
Commissioner
2J 2019-2020
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 copy of RMC 37-93.
In a letter, dated 19 July 1993, addressed to the appellate division of the BIR, Fortune Tobacco
requested for a review, reconsideration and recall of RMC 37-93. The request was denied on 29 July
1993. The following day, or on 30 July 1993, the CIR assessed Fortune Tobacco for ad valorem tax
deficiency amounting to P9,598,334.00.
On 03 August 1993, Fortune Tobacco filed a petition for review with the CTA. 8
On 10 August 1994, the CTA upheld the position of Fortune Tobacco and adjudged:
WHEREFORE, Revenue Memorandum Circular No. 37-93 reclassifying the brands of

cigarettes, viz: "HOPE," "MORE" and "CHAMPION" being manufactured by Fortune Tobacco
Corporation as locally manufactured cigarettes bearing a foreign brand subject to the 55% ad
valorem tax on cigarettes is found to be defective, invalid and unenforceable, such that when
R.A. No. 7654 took effect on July 3, 1993, the brands in question were not 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 manufactured
cigarettes and taxed at 45% or 20% as the case may be.
Accordingly, the deficiency ad valorem tax assessment issued on petitioner Fortune Tobacco
Corporation in the amount of P9,598,334.00, exclusive of surcharge and interest, is hereby
canceled for lack of legal basis.
Respondent Commissioner of Internal Revenue is hereby enjoined from collecting the

deficiency tax assessment made and issued on petitioner in relation to the implementation of
RMC No. 37-93.
SO ORDERED. 9
In its resolution, dated 11 October 1994, the CTA dismissed for lack of merit the motion for
reconsideration.
The CIR forthwith filed a petition for review with the Court of Appeals, questioning the 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 decision and resolution.
In the instant petition, the Solicitor General argues: That —
I. RMC 37-93 IS A RULING OR OPINION OF THE COMMISSIONER OF

INTERNAL REVENUE INTERPRETING THE PROVISIONS OF THE TAX
CODE.
II. BEING AN INTERPRETATIVE RULING OR OPINION, THE

PUBLICATION OF RMC 37-93, FILING OF COPIES THEREOF WITH THE
UP LAW CENTER AND PRIOR HEARING ARE NOT NECESSARY TO ITS
VALIDITY, EFFECTIVITY AND ENFORCEABILITY.
2J 2019-2020
III. PRIVATE RESPONDENT IS DEEMED TO HAVE BEEN NOTIFIED OR

RMC 37-93 ON JULY 2, 1993.
IV. RMC 37-93 IS NOT DISCRIMINATORY SINCE IT APPLIES TO ALL

LOCALLY MANUFACTURED CIGARETTES SIMILARLY SITUATED AS
"HOPE," "MORE" AND "CHAMPION" CIGARETTES.
V. PETITIONER WAS NOT LEGALLY PROSCRIBED FROM

RECLASSIFYING "HOPE," "MORE" AND "CHAMPION" CIGARETTES
BEFORE THE EFFECTIVITY OF R.A. NO. 7654.
VI. SINCE RMC 37-93 IS AN INTERPRETATIVE RULE, THE INQUIRY IS

NOT INTO ITS VALIDITY, EFFECTIVITY OR ENFORCEABILITY BUT INTO
ITS CORRECTNESS OR PROPRIETY; RMC 37-93 IS CORRECT. 10
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 publication, and that its issuance
is not discriminatory since it would apply under similar circumstances to all locally manufactured
cigarettes.
The Court must sustain both the appellate court and the tax court.
Petitioner stresses on the wide and ample authority of the BIR in the issuance of rulings for 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 other government
agency, however, the CIR may not disregard legal requirements or applicable principles in the
exercise of its quasi-legislative powers.
Let us first distinguish between two kinds of administrative issuances — a legislative rule and
an interpretative rule.
In Misamis Oriental Association of Coco Traders, Inc., vs. Department of Finance Secretary, 11 the
Court expressed:
. . . a legislative rule is in the nature of subordinate legislation, designed to implement a

primary legislation by providing the details thereof . In the same way that laws must have 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

(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 before the
first hearing thereon.
(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. 12
2J 2019-2020
It should be understandable that when an administrative rule is merely interpretative in nature, its
applicability needs nothing further than its bare issuance for it gives no real 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 or render least cumbersome the
implementation of the law but substantially adds to or increases the burden of those governed, it
behooves the agency to accord at least to those 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.
A reading of RMC 37-93, particularly considering the circumstances under which it has 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 importantly, been made in order to place "Hope
Luxury," "Premium More" and "Champion" within the classification of locally manufactured cigarettes
bearing foreign 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 of
its effectivity were not so classified as bearing foreign brands. Prior to the issuance of 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% 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 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 under its quasi-legislative authority. The due observance of the requirements of
notice, of hearing, and of publication should not have been then ignored.
Indeed, the BIR itself, in its RMC 10-86, has observed and provided:
RMC NO. 10-86

Effectivity of Internal Revenue Rules and Regulations
It has been observed that one of the problem areas bearing on compliance with Internal
Revenue Tax rules and regulations is lack or insufficiency of due notice to the tax paying
public. Unless there is due notice, due compliance therewith may not be reasonably
expected. And most importantly, their strict enforcement could possibly suffer from legal
infirmity in the light of the constitutional provision on "due process of law" and the essence of
the Civil Code provision concerning effectivity of laws, whereby due notice is a basic
requirement (Sec. 1, Art. IV, Constitution; Art. 2, New Civil Code).
In order that there shall be a just enforcement of rules and regulations, in conformity with the
basic element of due process, the following procedures are hereby prescribed for the
drafting, issuance and implementation of the said Revenue Tax Issuances:
(1) This Circular shall apply only to (a) Revenue Regulations; (b) Revenue
Audit Memorandum Orders; and (c) Revenue Memorandum Circulars and
Revenue Memorandum Orders bearing on internal revenue tax rules and
regulations.
(2) Except when the law otherwise expressly provides, the aforesaid internal
revenue tax issuances shall not begin to be operative until after due notice
thereof may be fairly presumed.
2J 2019-2020
Due notice of the said issuances may be fairly presumed only after the
following procedures have been taken;
xxx xxx xxx
(5) Strict compliance with the foregoing procedures is

enjoined. 13
Nothing on record could tell us that it was either impossible or impracticable for the BIR to observe
and comply with the above requirements before giving effect to its questioned circular.
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 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 subject may be found.
Apparently, RMC 37-93 would only apply to "Hope Luxury," "Premium More" and "Champion"
cigarettes and, unless petitioner would be willing to concede to the submission of private respondent
that the circular should, as in fact my esteemed colleague Mr. Justice Bellosillo so expresses in his
separate opinion, be considered adjudicatory in nature and thus violative of due process following
the Ang Tibay 16 doctrine, the measure suffers from lack of uniformity of taxation. In its decision, the
CTA has keenly noted that other cigarettes bearing foreign brands have not been similarly included
within the scope of the circular, such as —
1. Locally manufactured by ALHAMBRA INDUSTRIES, INC.
(a) "PALM TREE" is listed as manufactured by office of Monopoly, Korea

(Exhibit "R")
2. Locally manufactured by LA SUERTE CIGAR and CIGARETTE COMPANY
(a) "GOLDEN KEY" is listed being manufactured by United Tobacco,

Pakistan (Exhibit "S")
(b) "CANNON" is listed as being manufactured by Alpha Tobacco,

Bangladesh (Exhibit "T")
3. Locally manufactured by LA PERLA INDUSTRIES, INC.
(a) "WHITE HORSE" is listed as being manufactured by Rothman's, Malaysia

(Exhibit "U")
(b) "RIGHT" is listed as being manufactured by SVENSKA, Tobaks, Sweden

(Exhibit "V-1")
4. Locally manufactured by MIGHTY CORPORATION

2J 2019-2020
(a) "WHITE HORSE" is listed as being manufactured by Rothman's, Malaysia

(Exhibit "U-1")
5. Locally manufactured by STERLING TOBACCO CORPORATION
(a) "UNION" is listed as being manufactured by Sumatra Tobacco, Indonesia

and Brown and Williamson, USA (Exhibit "U-3")
(b) "WINNER" is listed as being manufactured by Alpha Tobacco,

Bangladesh; Nangyang, Hongkong; Joo Lan, Malaysia; Pakistan Tobacco
Co., Pakistan; Premier Tobacco, Pakistan and Haggar, Sudan (Exhibit "U-
4"). 17
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:
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
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 playing filed to
foreign manufacturers?
MS. CHATO. Mr. Chairman, in fact, we have already prepared a Revenue Memorandum
Circular that was supposed to come after RMC No. 37-93 which have really 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 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 these brands
were actually being claimed or patented in other countries because we went by 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 World Tobacco
Directory. So we came out with this proposed revenue memorandum 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, 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 short time that we were given to
study the matter that we could not include all the rest of 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 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 circular for those brands. (Emphasis supplied)
(Exhibit "FF-2-C," pp. V-5 TO V-6, VI-1 to VI-3).
xxx xxx xxx

2J 2019-2020
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
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," page IX-1)
xxx xxx xxx
HON. DIAZ. But did you not consider that there are similarly situated?
MS. CHATO. That is precisely why, Sir, after we have come up with this Revenue
Memorandum Circular No. 37-93, the other brands came about the would have also clarified
RMC 37-93 by I was saying really because of the fact that I was just recently 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 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 Honorable Chairman.
(Emphasis supplied) (Exhibit "FF-2-d," par. IX-4). 18
All taken, the Court is convinced that the hastily promulgated RMC 37-93 has fallen short of a valid and
effective administrative issuance.
WHEREFORE, the decision of the Court of Appeals, sustaining that of the Court of Tax Appeals, is
AFFIRMED. No costs.
SO ORDERED.
Kapunan, J., concurs.

2J 2019-2020

SUPREME COURT
Manila
EN BANC
G.R. No. 78385 August 31, 1987
PHILIPPINE CONSUMERS FOUNDATION, INC., petitioner,

vs.
THE SECRETARY OF EDUCATION, CULTURE AND SPORTS, respondent.
GANCAYCO, J.:
This is an original Petition for prohibition with a prayer for the issuance of a writ of preliminary injunction.
The record of the case discloses that the herein petitioner Philippine Consumers Foundation, Inc. is a non-
stock, non-profit corporate entity duly organized and existing 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 and Sports of the Office of the President of the Philippines.
On February 21, 1987, the Task Force on Private Higher Education created by the Department of Education,
Culture and Sports (hereinafter referred to as the DECS) 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 of action with respect to the Government's policy on increases in school
fees for the schoolyear 1987 to 1988 —
(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 approval of the DECS. Schools that wish to
increase school fees beyond the ceiling would be subject to the discretion of the DECS;
(2) Any private school may increase its total school fees in excess of the ceiling, provided
that the total schools fees will not exceed P1,000.00 for the schoolyear in the elementary and
secondary levels, and P50.00 per academic unit on a semestral basis for the collegiate
level. 1
The DECS took note of the report of the Task Force and on the basis of the same, the DECS, through the respondent Secretary of Education, Culture
and Sports (hereinafter 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 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%, 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 urging the suspension of the implementation of Department Order No. 37. 4 No response appears to
have been obtained from the Office of the President.
Thus, on May 20, 1987, the petitioner, allegedly on the basis of the public interest, went to 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 that the said Department Order was issued
without any legal basis. The petitioner also 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.
2J 2019-2020
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
Regarding the second argument, the petitioner maintains that students and parents are 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.
Complying with the instructions of this Court, 6 the respondent Secretary submitted a Comment on the
Petition. 7 The 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 Comment. 8 Thereafter, We considered the case submitted for resolution.
After a careful examination of the entire record of the case, We find the instant Petition devoid of merit.
We are not convinced by the argument that the power to regulate school fees "does not always include the
power to increase" such fees. Section 57 (3) of Batas Pambansa Blg. 232, otherwise known as The
Education Act of 1982, vests the DECS with the power to regulate the educational system in the country, to
wit:
SEC. 57. Educations and powers of the Ministry. The Ministry shall:
xxx xxx xxx
(3) Promulgate rules and regulations necessary for the administration, supervision and
regulation of the educational system in accordance with declared policy.
xxx xxx xxx 9
Section 70 of the same Act grants the DECS the power to issue rules which are likewise necessary to
discharge its functions and duties under the law, to wit:
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 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 and effectively discharge its functions and
duties under the 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 notice and hearing are indispensable for the
Department Order to be validly issued.
We disagree.
The function of prescribing rates by an administrative agency may be either a legislative or an adjudicative
function. If it were a legislative function, the grant of prior notice and hearing to the affected parties is not a
requirement of due process. As regards rates prescribed by an administrative agency in the exercise of
2J 2019-2020
its quasi-judicial function, prior notice and hearing are essential to the validity of such rates. When the rules
and/or rates laid down by an administrative agency are meant to apply to all enterprises of a given kind
throughout the country, they may partake of a legislative character. Where the rules and the 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 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.
This observation notwithstanding, there is a failure on the part of the petitioner to show clear and convincing
evidence of such arbitrariness. As the record of the case discloses, the 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. 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 the
circumstances peculiar to this case, We cannot consider the assailed Department Order arbitrary.
Under the Rules of Court, it is presumed that official duty has been regularly 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 case at
bar, the petitioner has not successfully disputed the presumption.
We commend the petitioner for taking the cudgels for the public, especially the parents and the students of
the country. Its zeal in advocating the protection of the consumers in its activities should be lauded rather
than discouraged. But a more convincing case should be made out by it if it is to seek relief from the courts
some time in the future. Petitioner must establish that respondent acted without or in excess of her
jurisdiction; or with grave abuse of discretion, and there is no appeal or any other plain, speedy, and
adequate remedy in the ordinary course of law before the extraordinary writ of prohibition may issue. 11
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
unreasonable and arbitrary so as to amount to an outrageous exercise of government authority and power. In such an eventuality, this Court will not
hesitate to exercise the power of judicial review in its capacity as the ultimate guardian of the Constitution.
WHEREFORE, in view of the foregoing, the instant Petition for prohibition is hereby DISMISSED for lack of
merit. We make no pronouncement as to costs.
SO ORDERED.
2J 2019-2020

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 108524 November 10, 1994
MISAMIS ORIENTAL ASSOCIATION OF COCO TRADERS, INC., petitioner,

vs.
DEPARTMENT OF FINANCE SECRETARY, COMMISSIONER OF THE BUREAU OF INTERNAL
REVENUE (BIR), AND REVENUE DISTRICT OFFICER, BIR MISAMIS ORIENTAL, respondents.
Damasing Law Office for petitioner.
MENDOZA, J.:
This is a petition for prohibition and injunction seeking to nullify Revenue Memorandum Circular No. 47-91
and enjoin the collection by respondent revenue officials of the Value Added Tax (VAT) on the sale of copra
by members of petitioner organization. 1
Petitioner Misamis Oriental Association of Coco Traders, Inc. is a domestic corporation whose members,
individually or collectively, are engaged in the buying and selling of copra in Misamis Oriental. The petitioner
alleges that prior to the issuance of Revenue Memorandum Circular 47-91 on June 11, 1991, which
implemented VAT Ruling 190-90, copra was classified as agricultural food product under $ 103(b) of the
National Internal Revenue Code and, therefore, exempt from VAT at all stages of production or distribution.
Respondents represent departments of the executive branch of government charged with the generation of
funds and the assessment, levy and collection of taxes and other imposts.
The pertinent provision of the NIRC states:
Sec. 103. Exempt Transactions. — The following shall be exempt from the value-added tax:
(a) Sale of nonfood agricultural, marine and forest products in their original state by the
primary producer or the owner of the land where the same are produced;
(b) Sale or importation in their original state of agricultural and marine food products,
livestock and poultry of a kind generally used as, or yielding or producing foods for human
consumption, and breeding stock and genetic material therefor;
Under §103(a), as above quoted, the sale of agricultural non-food products in their original state is exempt
from VAT only if the sale is made by the primary producer or owner of the land from which the same are
produced. The sale made by any other person or entity, like a trader or dealer, is not exempt from the tax.
On the other hand, under §103(b) the sale of agricultural food products in their original state is exempt from
VAT at all stages of production or distribution regardless of who the seller is.
2J 2019-2020
The question is whether copra is an agricultural food or non-food product for purposes of this provision of
the NIRC. On June 11, 1991, respondent Commissioner of Internal Revenue issued the circular in question,
classifying copra as an agricultural non-food product and declaring it "exempt from VAT only if the sale is
made by the primary producer pursuant to Section 103(a) of the Tax Code, as amended." 2
The reclassification had the effect of denying to the petitioner the exemption it previously enjoyed when
copra was classified as an agricultural food product under §103(b) of the NIRC. Petitioner challenges RMC
No. 47-91 on various grounds, which will be presently discussed although not in the order raised in the
petition for prohibition.
First. Petitioner contends that the Bureau of Food and Drug of the Department of Health and not the BIR is
the competent government agency to determine the proper classification of food products. Petitioner cites
the opinion of Dr. Quintin Kintanar of the Bureau of Food and Drug to the effect that copra should be
considered "food" because it is produced from coconut which is food and 80% of coconut products are
edible.
On the other hand, the respondents argue that the opinion of the BIR, as the government agency charged
with the implementation and interpretation of the tax laws, is entitled to great respect.
We agree with respondents. In interpreting §103(a) and (b) of the NIRC, the Commissioner of Internal
Revenue gave it a strict construction consistent with the rule that tax exemptions must be strictly construed
against the taxpayer and liberally in favor of the state. Indeed, even Dr. Kintanar said that his classification
of copra as food was based on "the broader definition of food which includes agricultural commodities and
other components used in the manufacture/processing of food." The full text of his letter reads:
10 April 1991
Mr. VICTOR A. DEOFERIO, JR.

Chairman VAT Review Committee
Bureau of Internal Revenue
Diliman, Quezon City
Dear Mr. Deoferio:
This is to clarify a previous communication made by this Office about copra in a letter dated
05 December 1990 stating that copra is not classified as food. The statement was made in
the context of BFAD's regulatory responsibilities which focus mainly on foods that are
processed and packaged, and thereby copra is not covered.
However, in the broader definition of food which include agricultural commodities and other
components used in the manufacture/ processing of food, it is our opinion that copra should
be classified as an agricultural food product since copra is produced from coconut meat
which is food and based on available information, more than 80% of products derived from
copra are edible products.
Very truly
yours,
QUINTIN L.
KINTANAR,
M.D., Ph.D.
2J 2019-2020
Director
Assistant
Secretary of
Health for
Standards and
Regulations
Moreover, as the government agency charged with the enforcement of the law, the opinion of the
Commissioner of Internal Revenue, in the absence of any showing that it is plainly wrong, is entitled to great
weight. Indeed, the ruling was made by the Commissioner of Internal Revenue in the exercise of his power
under § 245 of the NIRC to "make rulings or opinions in connection with the implementation of the provisions
of internal revenue laws, including rulings on the classification of articles for sales tax and similar purposes."
Second. Petitioner complains that it was denied due process because it was not heard before the ruling was
made. There is a distinction in administrative law between legislative rules and interpretative rules. 3 There
would be force in petitioner's argument if the circular in question were in the nature of a legislative rule. But it
is not. It is a mere interpretative rule.
The reason for this distinction is that a legislative rule is in the nature of subordinate legislation, designed to
implement a primary legislation by providing the details thereof. In the same way that laws must have 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

(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 before the
first hearing thereon.
(3) In case of opposition, the rules on contested cases shall be observed. 4
In addition such rule must be published.5 On the other hand, interpretative rules are designed to provide
guidelines to the law which the administrative agency is in charge of enforcing.
Accordingly, in considering a legislative rule a court is free to make three inquiries: (i) whether the rule is
within the delegated authority of the administrative agency; (ii) whether it is reasonable; and (iii) whether it
was issued pursuant to proper procedure. But the court is not free to substitute its judgment as to the
desirability or wisdom of the rule for the legislative body, by its delegation of administrative judgment, has
committed those questions to administrative judgments and not to judicial judgments. In the case of an
interpretative rule, the inquiry is not into the validity but into the correctness or propriety of the rule. As a
matter of power a court, when confronted with an interpretative rule, is free to (i) give the force of law to the
rule; (ii) go to the opposite extreme and substitute its judgment; or (iii) give some intermediate degree of
authoritative weight to the interpretative rule. 6
In the case at bar, we find no reason for holding that respondent Commissioner erred in not considering
copra as an "agricultural food product" within the meaning of § 103(b) of the NIRC. As the Solicitor General
contends, "copra per se is not food, that is, it is not intended for human consumption. Simply stated, nobody
eats copra for food." That previous Commissioners considered it so, is not reason for holding that the
present interpretation is wrong. The Commissioner of Internal Revenue is not bound by the ruling of his
predecessors. 7 To the contrary, the overruling of decisions is inherent in the interpretation of laws.
2J 2019-2020
Third. Petitioner likewise claims that RMC No. 47-91 is discriminatory and violative of the equal protection
clause of the Constitution because while coconut farmers and copra producers are exempt, traders and
dealers are not, although both sell copra in its original state. Petitioners add that oil millers do not enjoy tax
credit out of the VAT payment of traders and dealers.
The argument has no merit. There is a material or substantial difference between coconut farmers and copra
producers, on the one hand, and copra traders and dealers, on the other. The former produce and
sell copra, the latter merely sell copra. The Constitution does not forbid the differential treatment of persons
so long as there is a reasonable basis for classifying them differently. 8
It is not true that oil millers are exempt from VAT. Pursuant to § 102 of the NIRC, they are subject to 10%
VAT on the sale of services. Under § 104 of the Tax Code, they are allowed to credit the input tax on the
sale of copra by traders and dealers, but there is no tax credit if the sale is made directly by the copra
producer as the sale is VAT exempt. In the same manner, copra traders and dealers are allowed to credit
the input tax on the sale of copra by other traders and dealers, but there is no tax credit if the sale is made
by the producer.
Fourth. It is finally argued that RMC No. 47-91 is counterproductive because traders and dealers would be
forced to buy copra from coconut farmers who are exempt from the VAT and that to the extent that prices
are reduced the government would lose revenues as the 10% tax base is correspondingly diminished.
This is not so. The sale of agricultural non-food products is exempt from VAT only when made by the
primary producer or owner of the land from which the same is produced, but in the case of agricultural food
products their sale in their original state is exempt at all stages of production or distribution. At any rate, the
argument that the classification of copra as agricultural non-food product is counterproductive is a question
of wisdom or policy which should be addressed to respondent officials and to Congress.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.

Administrative Law - Full Text Cases - Quasi - Legislative Power PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Administrative Law - Full Text Cases - Quasi - Legislative Power PDF

Uploaded by

Copyright:

Available Formats

C.

QUASI-LEGISLATIVE POWER ADMIN LAW – NACHURA

NATURE AND KINDS

Republic of the Philippines

G.R. No. 190837 March 5, 2014

The RTC Ruling

The Issue Before the Court

The Court’s Ruling

The petition is meritorious.

An administrative regulation may be classified as a legislative rule, an interpretative rule, or a contingent

G.R. No. 163980 August 3, 2006

First, the procedural matters.

Administrative agencies possess quasi-legislative or rule-making powers and quasi-judicial or administrative

In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a

Petitioners assail the following provisions of the IRR:

3.1. Period for Qualification of Beneficiaries

3.2. Execution of the Contract to Sell

(c) for both eastside and westside

Republic of the Philippines

G.R. No. 98472 August 19, 1993

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. (PASEI), PHILIPPINE ENTERTAINMENT

Gutierrez & Alo Law Office for petitioners.

Domingo F. Gonzales for Intervenor RP-Japan Entertainment Promoters Association.

Gil-Fernando C. Cruz for Intervenors JOBLINK International, Inc. et al.

Ceferino P. Padua for Intervenors Amader International, Inc. et al.

May an Executive Order (EO) 1 repeal a Letter of Instruction (LOI)? 2

Republic of the Philippines

G.R. No. 118712 October 6, 1995

LAND BANK OF THE PHILIPPINES, petitioner,

G.R. No. 118745 October 6, 1995

DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary of Agrarian Reform, petitioner,

FRANCISCO, R., J.:

a) DAR Administrative Order No. 9, Series of 1990 is

b) Respondent Landbank is ordered to immediately deposit — not merely

P 1,455,207.31 Pedro L. Yap

P 135,482.12 Heirs of Emiliano Santiago

c) The DAR-designated bank is ordered to allow the petitioners to

d) Respondent DAR is ordered to

As found by respondent court , the following are undisputed:

The above allegations are not disputed by any of the respondents.

Petitioner Agricultural Management and Development Corporation (AMADCOR, for brevity)

Hence, the instant petitions.

The contention is untenable. Section 16(e) of RA 6657 provides as follows:

Sec. 16. Procedure for Acquisition of Private Lands —

xxx xxx xxx

xxx xxx xxx

xxx xxx xxx

. . . despite the "revolutionary" character of the expropriation envisioned under RA 6657

Republic of the Philippines

G.R. No. 108358 January 20, 1995

COMMISSIONER OF INTERNAL REVENUE, petitioner,

TO: All Internal Revenue Officers and Others Concerned:

xxx xxx xxx

xxx xxx xxx

1.02.3. In appropriate cases, the cancellation/withdrawal of assessment notices and letters of

Additionally, the exceptions enumerated in Section 4 of Executive Order No. 41, as

xxx xxx xxx

1. WHETHER OR NOT REVENUE MEMORANDUM ORDER NO. 4-87, PROMULGATED TO

2. WHETHER OR NOT SAID DEFICIENCY ASSESSMENTS IN QUESTION WERE

3. WHETHER OR NOT PRIVATE RESPONDENT HAS OVERCOME THE PRESUMPTION OF

a) Non-cash assets shall be valued at acquisition cost.

b) Foreign currencies shall be valued at the rates of exchange prevailing as

e) Those with tax cases pending investigation by the Bureau of Internal