People vs.

Vera- Delegation of Powers

G.R. No. L-45685, November 16, 1937

People of the Philippines & Hongkong and Shanghai Banking Corporation- Petitioners
Jose O. Vera, Judge of the Courts of First Instance of Manila and Mariano Cu Unjieng- Respondents

FACTS
Respondent Unjieng was convicted in a criminal case entitled “The People of the Philippine Islands vs. Mariano Cu
Unjieng, et al.", in which herein petitioner Hongkong and Shanghai Banking Corporation is the offended party and acted
as the private prosecutor. Respondent Unjieng filed an application for probation under the provisions of Act No. 4221
otherwise known as the “Probation Law” in the Court of First Instance in Manila where Respondent Vera is the Judge ad
interim. The Fiscal City of Manila filed an opposition to the granting of probation of respondent, stating that Act No.
4221 is violative of equal protection under Sec 1 (1), Article 3 of the Constitution because its applicability is not uniform
among the provinces in the Philippines, particularly, the Section 11 of the Act gives the power among the provinces to
determine whether to implement the said law in their province or not. Petitioner corporation filed a supplementary
opposition arguing that the Act is a undue delegation of legislative power. Herein petitioners filed a petition for
certiorari and prohibition questioning the constitutionality of Act No. 4221 and alleging that respondent judge has acted
without jurisdiction or in excess of his jurisdiction in granting the probation. On the other hand, the respondents
contend that: the act is constitutional, that the private may not intervene in probation proceedings, that the City Fiscal
and the Solicitor General are estopped form questioning the validity of the Act, that its validity cannot be questioned for
the first time before the Supreme court, and that the section in question of the act is inseparable from the entire Act.
ISSUES
1. Whether or not whether or not the constitutionality of Act No. 4221 has been properly raised in these proceedings
2. Whether or not the said Act is constitutional
RULING
1. Yes. Although the general rule is that only those who are parties to a suit may question the constitutionality of a
statute involved in a judicial decision, it has been held that since the decree pronounced by a court without jurisdiction
is void, where the jurisdiction of the court depends on the validity of the statute in question, the issue of the
constitutionality will be considered on its being brought to the attention of the court by persons interested in the effect
to be given the statute. In the case at bar, the trial court in granting the probation derived its jurisdiction in the assailed
Act therefore the petitioner have standing in the raising the issue. With regard to the Solicitor General acting as a
representing the People of the Philippines, if indeed the Act is violative of the constitution, then the People has
substantial interest on the issue. The well-settled rule is, the State can challenge its own laws.
In raising constitutionality questions, it must be raised at the earliest possible time. However, this rule has exception,
wherein courts has jurisdiction to determine the time when question of constitutionality of a statute may be presented.
It can be raised even for the first time, if its resolution is necessary for the decision of a case, which is the situation of the
present case.

2. No. The constitutionality of the act is questioned on three grounds, namely:

a) That said Act encroaches upon the pardoning power of the Executive
Pardon and probation are vested on different branches, the former to the executive and the latter to the
judiciary. The two are distinct acts, pardon removes the penalties, disabilities and restores civil rights of the accused, on
the other hand, probation, is a suspension of sentence temporarily or indefinitely but the conviction, liability and civil
disabilities remains and become operative after the suspension of when the judgement is rendered. Thus, the court
ruled that there is no encroachment in the pardoning power of the President since the two are very different acts.
b) That it constitutes an undue delegation of legislative power
The challenged section of Act No. 4221 in section 11 which reads as follows:
This Act shall apply only in those provinces in which the respective provincial boards have provided for the salary of a
probation officer at rates not lower than those now provided for provincial fiscals. Said probation officer shall be
appointed by the Secretary of Justice and shall be subject to the direction of the Probation Office.
The court rules that the section above constitute an improper and unlawful delegation of the legislative power
to the provincial board because of its insufficiency. It does not does not lay down any rule or definite standard by which
the administrative officer or board may be guided in the exercise of the discretionary powers delegated to it. It does
specify facts or conditions which therefore gives the provincial board unlimited absolute power in implementing the Act.
c) That it denies the equal protection of the laws
To implement the Act, the condition specified is the provision of the provincial boards for the salary of a
probation officer. Therefore, if a province do not comply with it, the Act will not be enforceable in that province which
means not all provinces will be able to enforce it. These different situations is clearly a manifestation of discrimination
and inequality.
Considering that the Act particularly Section 11 is an undue delegation of legislative authority that denies equal
protection of laws, the court ruled it unconstitutional. And since the said section is inseparable with the entire Act that
its elimination will render the law ineffective, the court further ruled Act No. 4221 as unconstitutional and void and the
writ of prohibition is granted.

8.  RABOR V. CSC (1995)

"It is well established in this jurisdiction that, while the making of laws is a non-delegable activity that corresponds
exclusively to Congress, nevertheless, the latter may constitutionally delegate authority and promulgate rules and
regulations to implement a given legislation and effectuate its policies, for the reason that the legislature often finds it
impracticable (if not impossible) to anticipate and provide for the multifarious and complex situations that may be met
in carrying the law into effect. 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 with it, but conform to the standards that the law
prescribes."[18] (Italics supplied)
The Civil Service Commission Memorandum Circular No. 27 being in the nature of an administrative regulation, must be
governed by the principle that 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 (People v. Maceren, G.R. No. L-32166, October 18, 1977, 79 SCRA 450; Teoxon v. Members of the Board of
Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel v. General Auditing Office, L-28952, December 29, 1971,
42 SCRA 660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350). x x x. The rule on limiting to one year the
extension of service of an employee who has reached the compulsory retirement age of sixty-five (65) years, but has less
than fifteen (15) years of service under  Civil  Service  Memorandum Circular No. 27, S. 1990, cannot likewise be accorded
validity because it has no relationship or connection with any provision of P.D. 1146 supposed to be carried into effect.
The rule was an addition to or extension of the law, not merely a mode of carrying it into
effect. The Civil Service Commission has no power to supply perceived omissions in P.D. 1146." [16] 

The Facts:
Sometime in May 1991,[1] Alma D. Pagatpatan, an official in the Office of the Mayor of Davao City, advised Dionisio M.
Rabor to apply for retirement, considering that he had already reached the age of sixty-eight (68) years and seven (7)
months, with thirteen (13) years and one (1) month of government service. Rabor responded to this advice by exhibiting
a "Certificate of Membership"[2] issued by the Government Service Insurance System ("GSIS") and dated 12 May 1988. At
the bottom of this "Certificate of Membership" is a typewritten statement of the following tenor: "Service extended to
comply 15 years service reqts." This statement is followed by a non-legible initial with the following date "2/28/91."

            In a letter dated 26 July 1991, Director Filemon B. Cawad of CSRO-XI advised Davao        City. Mayor Rodrigo R.
Duterte as follows:

            "Please be informed that the extension of services of Mr. Rabor is contrary to M.C.         No. 65 of         the Office
of the President, the relevant portion of which is hereunder             quoted:
            'Officials and employees who have reached the compulsory retirement age of 65            years shall       not be
retained in the service, except for extremely meritorious           reasons in which case the       retention shall not exceed
six (6) months.'
            IN VIEW WHEREFORE, please be advised that the services of Mr. Dominador [M.]            Rabor as             Utility
Worker in that office, is already non- extend[i]ble." [3]

            Accordingly, on 8 August 1991, Mayor Duterte furnished a copy of the 26 July 1991          letter of             Director
Cawad to Rabor and advised him "to stop reporting for work        effective August 16,    1991."[4]

Decision:
 
We find it very difficult to suppose that the limitation of permissible extensions of service after an employee has reached
sixty-five (65) years of age has no reasonable relationship or is not germane to the foregoing provisions of the
present Civil Service Law. 

"Worth pondering also are the points raised by the Civil Service Commission that extending the service of compulsory
retirees for longer than one (1) year would: (1) give apremium to late-comers in the government service and in effect
discriminate against those who enter the  service  at a younger age; (2) delay the promotion of the latter and of next-in-
rank employees; and (3) prejudice the chances for employment of qualified young  civil  service  applicants who have
already passed the various government examinations but must wait for jobs to be vacated by 'extendees' who have long
passed the mandatory retirement age but are enjoying extension of their government service to complete 15 years so
they may qualify for old-age pension."[24] (Italics supplied

Applying now the results of our reexamination of the instant case, we believe and so hold that Civil Service Resolution
No. 92-594 dated 28 April 1992 dismissing the appeal of petitioner Rabor and affirming the action of CSRO-XI Director
Cawad dated 26 July 1991, must be upheld and affirmed.

ACCORDINGLY, for all the foregoing, the Petition for Certiorari is hereby DISMISSED for lack of merit. No pronouncement
as to costs.

SO ORDERED.

ABAKADA Guro Party List v Purisima

G.R. No. 166715, August 14, 2008

FACTS:
This petition for prohibition seeks to prevent respondents from implementing and enforcing Republic Act (RA) 9335
(Attrition Act of 2005).

RA 9335 was enacted to optimize the revenue-generation capability and collection of the Bureau of Internal Revenue
(BIR) and the Bureau of Customs (BOC). The law intends to encourage BIR and BOC officials and employees to exceed
their revenue targets by providing a system of rewards and sanctions through the creation of a Rewards and Incentives
Fund (Fund) and a Revenue Performance Evaluation Board (Board). It covers all officials and employees of the BIR and
the BOC with at least six months of service, regardless of employment status

Petitioners, invoking their right as taxpayers filed this petition challenging the constitutionality of RA 9335, a tax reform
legislation. They contend that, by establishing a system of rewards and incentives, the law "transform[s] the officials and
employees of the BIR and the BOC into mercenaries and bounty hunters" as they will do their best only in consideration
of such rewards. Petitioners also assail the creation of a congressional oversight committee on the ground that it
violates the doctrine of separation of powers, for it permits legislative participation in the implementation and
enforcement of the law.

ISSUE:
WON the joint congressional committee is valid and constitutional

HELD:
No. It is unconstitutional.

In the case of Macalintal, in the discussion of J. Puno, the power of oversight embraces all activities undertaken by
Congress to enhance its understanding of and influence over the implementation of legislation it has enacted. Clearly,
oversight concerns post-enactment measures undertaken by Congress: (a) to monitor bureaucratic compliance with
program objectives, (b) to determine whether agencies are properly administered, (c) to eliminate executive waste and
dishonesty, (d) to prevent executive usurpation of legislative authority, and (d) to assess executive conformity with the
congressional perception of public interest. The power of oversight has been held to be intrinsic in the grant of
legislative power itself and integral to the checks and balances inherent in a democratic system of government

With this backdrop, it is clear that congressional oversight is not unconstitutional per se, meaning, it neither necessarily
constitutes an encroachment on the executive power to implement laws nor undermines the constitutional separation
of powers. Rather, it is integral to the checks and balances inherent in a democratic system of government. It may in fact
even enhance the separation of powers as it prevents the over-accumulation of power in the executive branch.

However, to forestall the danger of congressional encroachment "beyond the legislative sphere," the Constitution
imposes two basic and related constraints on Congress. It may not vest itself, any of its committees or its members with
either executive or judicial power. And, when it exercises its legislative power, it must follow the "single, finely wrought
and exhaustively considered, procedures" specified under the Constitution including the procedure for enactment of
laws and presentment.

Thus, any post-enactment congressional measure such as this should be limited to scrutiny and investigation. In
particular, congressional oversight must be confined to the following:
  (1) scrutiny based primarily on Congress' power of appropriation and the budget hearings conducted in
connection with it, its power to ask heads of departments to appear before and be heard by either of
its Houses on any matter pertaining to their departments and its power of confirmation and
   
  (2) investigation and monitoring of the implementation of laws pursuant to the power of Congress to
conduct inquiries in aid of legislation.

Any action or step beyond that will undermine the separation of powers guaranteed by the Constitution. Legislative
vetoes fall in this class.

Legislative veto is a statutory provision requiring the President or an administrative agency to present the proposed
implementing rules and regulations of a law to Congress which, by itself or through a committee formed by it, retains a
"right" or "power" to approve or disapprove such regulations before they take effect. As such, a legislative veto in the
form of a congressional oversight committee is in the form of an inward-turning delegation designed to attach a
congressional leash (other than through scrutiny and investigation) to an agency to which Congress has by law initially
delegated broad powers. It radically changes the design or structure of the Constitution's diagram of power as it entrusts
to Congress a direct role in enforcing, applying or implementing its own laws.

BPI V. CA; G.R. No. 127624   November 18, 2003

PARTIES:
BPI LEASING CORPORATION – petitioner, 
THE HONORABLE COURT OF APPEALS, COURT OF TAX APPEAL AND COMMISSIONER OF
INTERNAL REVENUE – respondents.

PONENTE: AZCUNA, J.:

FACTS:
For the calendar year 1986, BPI Leasing Corporation, Inc. (BLC) paid the Commissioner of Internal Revenue (CIR) a total
of P1,139,041.49 representing 4% "contractor’s percentage tax" then imposed by Section 205 of the National Internal
Revenue Code (NIRC), based on its gross rentals from equipment leasing for the said year amounting to P27,783,725.42.

On November 10, 1986, the CIR issued RR 19-86. Section 6.2 thereof provided that finance and leasing companies
registered under Republic Act 5980 shall be subject to gross receipt tax of 5%-3%-1% on actual income earned. This
means that companies registered under Republic Act 5980, such as BLC, are not liable for "contractor’s percentage tax"
under Section 205 but are, instead, subject to "gross receipts tax" under Section 260 (now Section 122) of the NIRC.
Since BLC had earlier paid the aforementioned "contractor’s percentage tax," it re-computed its tax liabilities under the
"gross receipts tax" and arrived at the amount of P361,924.44. BLC filed a claim for a refund with the CIR for the amount
of P777,117.05, representing the difference between the P1,139,041.49 it had paid as "contractor’s percentage tax" and
P361,924.44 it should have paid for "gross receipts tax."

The CTA dismissed the petition and denied BLC’s claim of refund and held that RR 19-86, may only be applied
prospectively such that it only covers all leases written on or after January 1, 1987. The CTA ruled that, since BLC’s rental
income was all received prior to 1986, it follows that this was derived from lease transactions prior to January 1, 1987,
and hence, not covered by the RR.

A motion for reconsideration of the CTA’s decision was filed, but was denied. BLC then appealed the case to the Court of
Appeals. BLC submits that the Court of Appeals and the CTA erred in not ruling that RR 19-86 may be applied
retroactively so as to allow BLC’s claim for a refund of P777,117.05.

Respondents, on the other hand, maintain that the provision on the date of effectivity of RR 19-86 is clear and
unequivocal, leaving no room for interpretation on its prospective application.

ISSUES:
WON RR 19-86 is legislative or interpretative in nature.
WON RR 19-86 is prospective or retroactive in nature.
WON BPI failed to meet the quantum of evidence required in refund cases.

RULE:
1ST ISSUE – BLC attempts to convince the Court that RR 19-86 is legislative rather than interpretative in character and
hence, should retroact to the date of effectivity of the law it seeks to interpret. A legislative rule is in the matter of
subordinate legislation, designed to implement a primary legislation by providing the details thereof. An interpretative
rule, on the other hand, is designed to provide guidelines to the law which the administrative agency is in charge of
enforcing. The Court finds the questioned RR to be legislative in nature. Section 1 of RR 19-86 plainly states that it was
promulgated pursuant to Section 277 of the NIRC (now Section 244), an express grant of authority to the Secretary of
Finance to promulgate all needful rules and regulations for the effective enforcement of the provisions of the NIRC.
Verily, it cannot be disputed that RR 19-86 was issued pursuant to the rule-making power of the Secretary of Finance,
thus making it legislative, and not interpretative as alleged by BLC.

BLC further posits that, it is invalid for want of due process as no prior notice, publication and public hearing attended
the issuance thereof. To support its view, BLC cited CIR v. Fortune Tobacco, et al., wherein the Court nullified a revenue
memorandum circular which reclassified certain cigarettes and subjected them to a higher tax rate, holding it invalid for
lack of notice, publication and public hearing. In this case, RR 19-86 would be beneficial to the taxpayers as they are
subjected to lesser taxes. Petitioner, in fact, is invoking RR 19-86 as the very basis of its claim for refund. If it were
invalid, then petitioner all the more has no right to a refund.
2ND ISSUE – The Court now resolves whether its application should be prospective or retroactive. Statutes, including
administrative rules and regulations, operate prospectively only, unless the legislative intent to the contrary is manifest
by express terms or by necessary implication. In the present case, there is no indication that the RR may operate
retroactively. Furthermore, there is an express provision stating that it "shall take effect on January 1, 1987," and that it
"shall be applicable to all leases written on or after the said date." Thus, BLC is not in a position to invoke the provisions
of RR 19-86 for lease rentals it received prior to January 1, 1987.
3RD ISSUE – Tax refunds are in the nature of tax exemptions. As such, these are to be strictly construed against the
person or entity claiming the exemption. The burden of proof is upon him who claims the exemption and he must be
able to justify his claim by the clearest grant under Constitutional or statutory law, and he cannot be permitted to rely
upon vague implications. Nothing that BLC has raised justifies a tax refund.

WHEREFORE, the petition for review is hereby DENIED, and the assailed decision and resolution of the Court of Appeals
are AFFIRMED. No pronouncement as to costs.

SO ORDERED.

PRINCIPLES INVOLVED: Legislative or Interpretive nature of Statute

Prospective or Retroactive effect of Ordinances

Dagan v. Phil. Racing Commission (Philracom)

G.R. No. 175220
February 12, 2009
Tinga

FACTS:
• Aug. 11, 2004- Philracom issued a directive directing the Manila Jockey Club, Inc. (MJCI) and Philippine Racing
Club, Inc. (PRCI) to immediately come up with their respective Clubs’ House Rule to address Equine Infectious Anemia
(EIA) problem and to rid their facilities of horses infected with EIA.
• Said directive was issued pursuant to Administrative Order No. 5 dated 28 March 1994 by the Department of
Agriculture declaring it unlawful for any person, firm or corporation to ship, drive, or transport horses from any locality
or place except when accompanied by a certificate issued by the authority of the Director of the Bureau of Animal
Industry (BAI).
• In compliance with the directive, MJCI and PRCI ordered the owners of racehorses stable in their establishments
to submit the horses to blood sampling and administration of the Coggins Test to determine whether they are afflicted
with the EIA virus. Subsequently, on 17 September 2004, Philracom issued copies of the guidelines for the monitoring
and eradication of EIA.(2nd directive)
• Petitioners refused to comply with the directives. Despite resistance from petitioners, the blood testing
proceeded. The horses, whose owners refused to comply were banned from the races, were removed from the actual
day of race, prohibited from renewing their licenses or evicted from their stables.
• Racehorse owners complained before the Office of the President (OP) which in turn issued a directive
instructing Philracom to investigate the matter.
• Petitioners filed for a TRO with the RTC- granted. RTC however dismissed their petition for injunction because: 1.
The issue is already moot since almost all racehorse owners complied with the directives; and 2. It is a valid exercise of
police power.
• Upon appeal, CA affirmed the RTC decision in toto.

• SC level:
Petitioner's arguments: 1. They maintain that the assailed guidelines do not comply with due process requirements; 2.
No investigation or at least a summary proceeding was conducted affording petitioners an opportunity to be heard. 3.
assailed guidelines are ultra vires in that the sanctions imposed for refusing to submit to medical examination are
summary eviction from the stables or arbitrary banning of participation in the races, notwithstanding the penalties
prescribed in the contract of lease.

• Philracom's arguments:Philracom also justified its right under the law to regulate horse raciing MJCI adds that
Philracom need not delegate its rule-making power to the former since MJCI’s right to formulate its internal rules is
subsumed under the franchise granted to it by Congress.

• That is why petitioners raise for the first time the issue that Philracom had unconstitutionally delegated its rule-
making power to PRCI and MJCI in issuing the directive for them to come up with club rules. They said that power
granted to PRCI and MJCI under their respective franchises is limited to: (1) the construction, operation and
maintenance of racetracks; (2) the establishment of branches for booking purposes; and (3) the conduct of horse races.

ISSUE: WON there is a valid delegation of legislative power to Philracom

RULING: YES
The validity of an administrative issuance, such as the assailed guidelines, hinges on compliance with the following
requisites:

1. Its promulgation must be authorized by the legislature;

2. It must be promulgated in accordance with the prescribed procedure;
3. It must be within the scope of the authority given by the legislature;
4. It must be reasonable.[

All the prescribed requisites are met as regards the questioned issuances. Philracom’s authority is drawn from P.D. No.
420. The delegation made in the presidential decree is valid. Philracom did not exceed its authority. And the issuances
are fair and reasonable.

FIRST REQUISITE:

The rule is that what has been delegated cannot be delegated, or as expressed in the Latin maxim: potestas delegate
non delegare potest. This rule is based upon the ethical principle that such delegated power constitutes not only a right
but a duty to be performed by the delegate by the instrumentality of his own judgment acting immediately upon the
matter of legislation and not through the intervening mind of another.[29] This rule however admits of recognized
exceptions[30] such as the grant of rule-making power to administrative agencies. They have been granted by Congress
with the authority to issue rules to regulate the implementation of a law entrusted to them. However, in every case of
permissible delegation, there must be a showing that the delegation itself is valid. It is valid only if the law (a) is
complete in itself, setting forth therein the policy to be executed, carried out, or implemented by the delegate; and (b)
fixes a standard—the limits of which are sufficiently determinate and determinable—to which the delegate must
conform in the performance of his functions.
P.D. No. 420 hurdles the tests of completeness and standards sufficiency.
Complete: Philracom was created for the purpose of carrying out the declared policy in Section 1 which is “to promote
and direct the accelerated development and continued growth of horse racing not only in pursuance of the sports
development program but also in order to insure the full exploitation of the sport as a source of revenue and
employment.” Philracom was granted exclusive jurisdiction and control over every aspect of the conduct of horse racing,
including the framing and scheduling of races, the construction and safety of race tracks, and the security of racing.

Sufficient Standards: Section 9 provides for Specific Powers: To register race horses, horse owners or associations or
federations thereof, and to regulate the construction of race tracks and to grant permit for the holding of races; To
issue, suspend or revoke permits and licenses;order the suspension of any racing event in case of violation of any law,
ordinance or rules and regulations;
g. To prohibit the use of improper devices, drugs, stimulants or other means to enhance or diminish the speed of
horse or materially harm their condition;
No delegation of rule-making power to MJCI and PRCI
The Philracom directive is merely instructive in character. Compliance with the Philracom’s directive is part of the
mandate of PRCI and MJCI under Sections 1[33] of R.A. No. 7953[34] and Sections 1[35] and 2[36] of 8407.[As correctly
proferred by MJCI, its duty is not derived from the delegated authority of Philracom but arises from the franchise
granted to them by Congress

SECOND REQUISITE:
While it is conceded that the guidelines were issued a month after Philracom’s directive, this circumstance does not
render the directive nor the guidelines void. Philracom has every right to issue directives to MJCI and PRCI with respect
to the conduct of horse racing, with or without implementing guidelines.

Lack of publication:As a rule, the issuance of rules and regulations in the exercise of an administrative agency of its
quasi-legislative power does not require notice and hearing.[40] InAbella, Jr. v. Civil Service Commission,[41] this Court
had the occasion to rule that prior notice and hearing are not essential to the validity of rules or regulations issued in the
exercise of quasi-legislative powers since there is no determination of past events or facts that have to be established or
ascertained.[

Third requisite:
The administrative body may not make rules and regulations which are inconsistent with the provisions of the
Constitution or a statute, particularly the statute it is administering or which created it, or which are in derogation of, or
defeat, the purpose of a statute.The assailed guidelines prescribe the procedure for monitoring and eradicating EIA.
These guidelines are in accord with Philracom’s mandate under the law to regulate the conduct of horse racing in the
country.

Fourth requisite:

The assailed guidelines do not appear to be unreasonable or discriminatory. In fact, all horses stabled at the MJCI and
PRCI’s premises underwent the same procedure. The guidelines implemented were undoubtedly reasonable as they
bear a reasonable relation to the purpose sought to be accomplished, i.e., the complete riddance of horses infected with
EIA.

Horse-owners were also informed beforehand. The lease contract executed between petitioner and MJC contains a
proviso reserving the right of the lessor, MJCI in this case, the right to determine whether a particular horse is a qualified
horse. In addition, Philracom’s rules and regulations on horse racing provide that horses must be free from any
contagious disease or illness in order to be eligible as race entries.

SMART VS. NTC; G.R. No. 151908            

PARTIES:
SMART & PILTEL – petitioners, 
GLOBE & ISLACOM – petitioners, 
NATIONAL TELECOMMUNICATIONS COMMISSION (NTC) – respondent.

PONENTE: YNARES-SANTIAGO, J.:

FACTS:
Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission (NTC)
issued Memorandum Circular No. 13-6-2000, promulgating rules and regulations on the billing of
telecommunications services. On August 30, 2000, the NTC issued a Memorandum to all cellular mobile
telephone service (CMTS) operators which contained measures to minimize if not totally eliminate the
incidence of stealing of cellular phone units. This was followed by another Memorandum dated October 6,
2000 addressed to all public telecommunications entities, which reads:
 This is to remind you that the validity of all prepaid cards sold on 07 October 2000 and beyond shall be
valid for at least two (2) years from date of first use pursuant to MC 13-6-2000.

In addition, all CMTS operators are reminded that all SIM packs used by subscribers of prepaid cards
sold on 07 October 2000 and beyond shall be valid for at least two (2) years from date of first use. Also,
the billing unit shall be on a six (6) seconds pulse effective 07 October 2000. For strict compliance.

On October 20, 2000, petitioners ISLACOM and PILTEL filed against the NTC, Commissioner Joseph A.
Santiago, Deputy Commissioner Aurelio M. Umali and Deputy Commissioner Nestor C. Dacanay, an action for
declaration of nullity of NTC Memorandum Circular No. 13-6-2000 (the Billing Circular) and the NTC
Memorandum dated October 6, 2000, with prayer for the issuance of a writ of preliminary injunction and
temporary restraining order at the Regional Trial Court of Quezon City, Branch 77.

Petitioners Islacom and Piltel alleged, that the NTC has no jurisdiction to regulate the sale of consumer goods
such as the prepaid call cards since such jurisdiction belongs to the Department of Trade and Industry under
the Consumer Act of the Philippines; that the Billing Circular is oppressive, confiscatory and violative of the
constitutional prohibition against deprivation of property without due process of law; that the Circular will result
in the impairment of the viability of the prepaid cellular service by unduly prolonging the validity and expiration
of the prepaid SIM and call cards; and that the requirements of identification of prepaid card buyers and call
balance announcement are unreasonable. Hence, they prayed that the Billing Circular be declared null and
void ab initio. Globe Telecom and Smart filed a joint Motion for Leave to Intervene which was granted by the
trial court. On October 27, 2000, the trial court issued a temporary restraining order enjoining the NTC from
implementing Memorandum Circular No. 13-6-2000 and the Memorandum dated October 6, 2000.

In the meantime, respondent NTC and its co-defendants filed a motion to dismiss the case on the ground of
petitioners' failure to exhaust administrative remedies. Subsequently, the trial court denied the defendant’s
motion to dismiss. Defendants filed a motion for reconsideration, which was denied in an Order dated February
1, 2001.

Respondent NTC thus filed a special civil action for certiorari and prohibition with the Court of Appeals, which
was granted and annulled the injunction issued by the lower court.

Petitioners' motions for reconsideration were denied in a Resolution dated January 10, 2002 for lack of merit.
Hence, the instant petition for review filed by Smart and Piltel.

ISSUES:
WON Respondent court erred in holding respondents failed to exhaust administrative remedy.
WON NTC has Jurisdiction over the case.
WON the Billing Circular issued by NTC is unconstitutional.

RULE:
1ST ISSSUE – 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.

The rules and regulations should be within the scope of the statutory authority granted by the
legislature to the administrative agency. It is required that the regulation be germane to the objects and
purposes of the law, and be not in contradiction to, but in conformity with, the standards prescribed by
law.17 They must conform to and be consistent with the provisions of the enabling statute in order for
such rule or regulation to be valid. The administrative body exercises its quasi-judicial power when it
performs in a judicial manner an act which is essentially of an executive or administrative nature, where
the power to act in such manner is incidental to or reasonably necessary for the performance of the
executive or administrative duty entrusted to it.
 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 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.
Even assuming that the principle of exhaustion of administrative remedies apply in this case, the
records reveal that petitioners sufficiently complied with this requirement. Petitioners were able to
register their protests to the proposed billing guidelines. They submitted their respective position papers
setting forth their objections and submitting proposed schemes for the billing circular. After the same
was issued, petitioners wrote successive letters dated July 3, 2000 and July 5, 2000, asking for the
suspension and reconsideration of the so-called Billing Circular. This was taken by petitioners as a
clear denial of the requests contained in their previous letters, thus prompting them to seek judicial
relief.

2ND ISSSUE – In like manner, the doctrine of primary jurisdiction applies only where the administrative
agency exercises its quasi-judicial or adjudicatory function. The objective of the doctrine of primary
jurisdiction is to guide a court in determining whether it should refrain from exercising its jurisdiction
until after an administrative agency has determined some question or some aspect of some question
arising in the proceeding before the court.

However, 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. The determination of whether a specific rule or set of rules issued
by an administrative agency contravenes the law or the constitution is within the jurisdiction of the
regular courts.

3RD ISSSUE – In the case at bar, the issuance by the NTC of Memorandum Circular No. 13-6-2000 and
its Memorandum dated October 6, 2000 was pursuant to its quasi-legislative or rule-making power. As
such, petitioners were justified in invoking the judicial power of the Regional Trial Court to assail the
constitutionality and validity of the said issuances. Hence, the Regional Trial Court has jurisdiction to
hear and decide the case. The Court of Appeals erred in setting aside the orders of the trial court and in
dismissing the case.

WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The decision of the
Court of Appeals are REVERSED and SET ASIDE.

Davide, Jr., C.J., Vitug, and Carpio, JJ., concur.

Azcuna, J., took no part

PRINCIPLE INVOLVED: Doctrine of Administrative Exhaustion.

CHAPTER VIII TERMINATION OF OFFICIAL RELATION

B. Reaching the age limit
CONTE vs. COA

FACTS: Petitioners were former employees of SSS who retired from government service. They availed of
compulsory retirement benefits under Republic Act No. 660. In addition, petitioners also claimed SSS financial
assistance benefits granted under SSS Resolution No. 56, series of 1971. The said Resolution 56 provides that
all the SSS employees who are simultaneously qualified for compulsory retirement at age 65 or for optional
retirement at a lower age be encouraged to avail for themselves the life annuity under R.A. 660. Long after the
promulgation of SSS Resolution No. 56, respondent COA issued a ruling, disallowing in audit all such claims
for financial assistance under SSS Resolution No. 56 because it results in the increase of benefits beyond what
is allowed under existing retirement laws. Despite the aforequoted ruling of respondent COA, the SSS
Administrator nevertheless wrote to the Executive Secretary., seeking presidential authority for SSS to continue
implementing its Resolution No. 56 which was denied by the office of the President in a letter-reply. On
January 12, 1993, herein petitioners filed with respondent COA their letter-appeal seeking reconsideration of
COAs ruling disallowing claims for financial assistance under Res. 56. COA rendered its COA Decision No.
94-126 denying petitioners request for reconsideration. Thus this petition for certiorari under Rule 65 of the
Rules of Court.
ISSUE: Are the benefits provided by Resolution No. 56 to be considered simply as financial assistance for
retiring employees, or does such scheme constitute a supplementary retirement plan prohibited by Republic Act
No. 4968?
HELD: The benefits of Resolution 56 is prohibited by Act 4968 because Said Sec. 28 (b) of Act 4968 bars the
creation of any insurance or retirement plan, other than the GSIS, for government officers and employees, in
order to prevent the undue and inequitous proliferation of such plans. An examination of the provisions of Res.
56 provides a number of clear indications that its financial assistance plan constitutes the prohibited
supplemental retirement/pension benefits plan. The wording of the resolution itself which states Resolved,
further, that SSS employees who availed themselves of the said life annuity (under RA 660), in appreciation and
recognition of their long and faithful service, be granted financial assistance x x x can only be interpreted to
mean that the benefit being granted is none other than a kind of amelioration to enable the retiring employee to
enjoy (or survive) his retirement years and a reward for his loyalty and service. The petitioners are innocent by
standers in this bureaucratic rule making drama and should not be penalized.

Wherefore, Resolution No. 56 is hereby declared ILLEGAL, VOID AND OF NO EFFECT. The SSS is hereby
urged to assist petitioners and facilitate their applications under RA 1616, and to advance to them, unless barred
by existing regulations, the corresponding amounts representing the difference between the two benefits
programs.

People vs. Santos

63 Phils 300
Facts:
Augusto Santos was charged of prohibited fishing under Section 28 of Administrative Order No. 2
relative to fish and game, issued by the Secretary of Agriculture and Commerce, by virtue of the
authority vested in him by section 4 of Act No. 4003, when he have his boats, manned and operated
by his fishermen without permission from the Secretary of Agriculture and Commerce within three
(3) kilometers from the shore line of the Island of Corregidor.

Issue:
W/N the secretary of Agriculture and Commerce has the quasi legislative power under Act No.
4003.

Ruling:
None. Inasmuch as the only authority granted to the Secretary of Agriculture and Commerce, by
section 4 of Act No. 4003, is to issue from time to time such instructions, orders, rules, and
regulations consistent with said Act. The Act contains no provisions similar to conditional clause of
section 28 of Administrative Order No. 2, the conditional clause in question supplies a defect of the
law, extending it. This is equivalent to legislating on the matter.
Therefore, Section 28 of Administrative Order No. 2. issued by the Secretary of Agriculture and
Commerce, is null and void and without effect, as constituting an excess of the regulatory power
conferred upon him by section 4 of Act No. 4003 and an exercise of a legislative power which has
not been and cannot be delegated to him.