RODOLFO S. DE JESUS, ET AL. vs.

COMMISSION ON AUDIT

Facts: The Board of Directors (BOD) of the Catbalogan Water District granted to themselves RATA, rice allowance,
productivity incentive, anniversary, and year-end bonus and cash gifts, as authorized by Resolution No. 313 of the
Local Water Utilities Administration (LWUA). The COA disallowed and ordered the refund of these allowances as
they are not allowed by P.D. No. 198, the Provincial Water Utilities Act of 1973.

Issue: Whether COA is vested with authority to disallow release of allowance not authorized by law even if authorized
by the LWUA.

Held: Art. IX, Sec. 2 D of the Constitution mandates the COA to audit all the government agencies, including
government-owned and controlled corporations (GOCC) with original charters. The COA is vested with authority to
disallow illegal or irregular disbursements of government funds. A Water District is a GOCC with a special charter
since it is created pursuant to special law, PD 198. The COA can disallow allowances not authorized by law, even if
authorized by the LWUA.
Considering that the disallowed allowances were received in good faith, without knowledge that payment had no
legal basis, the allowances need not to be refunded.

QUASI-LEGISLATIVE & QUASI-JUDICIAL POWERS; RULE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES;

DOCTRINE OF PRIMARY JURISDICTION;WHEN APPLICABLE

SMART COMMUNICATIONS, INC. ET AL. V. NATIONAL TELECOMMUNICATIONS COMMISSION (NTC)

G.R. 151908, August 12, 2003

Facts: The NTC issued Billing Circular 13-6-2000 which promulgated rules and regulations on the billing of
telecommunications services. Petitioners filed with the RTC a petition to declare the circular as unconstitutional. A
motion to dismiss was filed by the NTC on the ground of petitioner’s to exhaust administrative remedies. The RTC
denied the motion to dismiss but on certiorari, the CA reversed RTC.

Held: 1. Administrative bodies had (a) quasi-legislative or rule-making powers and (b) 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. To be valid, such rules and regulations must conform to, and be consistent with, the
provisions of enabling statute.
Quasi-judicial or administrative adjudicatory power is the power to hear and determine questions of fact to which the
legislative policy is to apply and to decide in accordance with the standards laid down by law itself in enforcing and
administering the same law. In carrying out their quasi-judicial functions, the administrative officers or bodies are
required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions
from them for their official action and exercise of discretion in a judicial.
2. The determination of whether a specific rule or set of rules issued by an administrative body contravenes the law
or the constitution is within the judicial power as defined by the Constitution which is “ the duty of the Courts of justice
to settle actual controversies involving rights which are legally demandable and enforceable, and to determine
whether or not there haw been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the Government.” The NTC circular was issued pursuant to its quasi-legislative or
rule-making power. Hence, the action must be filed directly with the regular courts without requiring exhaustion of
administrative remedies.
3. Where the act of administrative agency was performed pursuant to its quasi-judicial function, exhaustion of
administrative remedy is required, before going to court.
4. The doctrine of primary jurisdiction applies only where the administrative agency exercises its quasi-judicial or
adjudicatory function. Thus, in cases involving specialized disputes, the same must be referred to an administrative
agency of special competence pursuant to the doctrine of primary jurisdiction. This doctrine of primary jurisdiction
applies where the claim requires the resolution of issues which, under a regulatory scheme, has been placed within
the special competence of an administrative body. In such case, the judicial process is suspended pending referral of
such issues to the administrative body for its view.