Bea Maria Giselle B.

Flauta
LLB 1C
WMSU

EASTERN SHIPPING LINES, INC., vs. PHILIPPINE OVERSEAS EMPLOYMENT

ADMINISTRATION (POEA)
166 SCRA 533, G.R. No. 76633, October 18, 1988

Petitioner: Eastern Shipping Lines, Inc.

Respondents:

1. Philippine Overseas Employment Administration (POEA)

2. Minister of Labor and Employment
3. Abdul Basar (Hearing Officer)
4. Kathleen D. Saco

Ponente: Cruz, J.

Facts:

Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident
in Tokyo, Japan on March 15, 1985.

His widow sued for damages under Executive Order No. 797 and Memorandum Circular No. 2
of the POEA.

The petitioner, as owner of the vessel, argued that the complaint was cognizable not by the
POEA but by the Social Security System and should have been filed against the State Fund
Insurance.

The POEA nevertheless assumed jurisdiction and after considering the position papers of the
parties ruled in favour of the complainant.

The petition is DISMISSED, with costs against the petitioner. The temporary restraining order
dated December 10, 1986 is hereby LIFTED. It is so ordered.

Issue:

1. Whether or not the POEA had jurisdiction over the case as the husband was not an overseas
worker.

2. Whether or not the validity of Memorandum Circular No. 2 itself as violative of the principle
of non-delegation of legislative power.
Held:

1. Yes. The Philippine Overseas Employment Administration was created under Executive Order
No. 797, promulgated on May 1, 1982, to promote and monitor the overseas employment of
Filipinos and to protect their rights. It replaced the National Seamen Board created earlier under
Article 20 of the Labor Code in 1974. Under Section 4(a) of the said executive order, the POEA
is vested with "original and exclusive jurisdiction over all cases, including money claims,
involving employee-employer relations arising out of or by virtue of any law or contract
involving Filipino contract workers, including seamen." These cases, according to the 1985
Rules and Regulations on Overseas Employment issued by the POEA, include, “claims for death,
disability and other benefits” arising out of such employment.

The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was made by
the POEA pursuant to its Memorandum Circular No. 2, which became effective on February 1,
1984. This circular prescribed a standard contract to be adopted by both foreign and domestic
shipping companies in the hiring of Filipino seamen for overseas employment.

2. No. Memorandum Circular No. 2 is an administrative regulation. The model contract

prescribed thereby has been applied in a significant number of the cases without challenge by the
employer. The power of the POEA (and before it the National Seamen Board) in requiring the
model contract is not unlimited as there is a sufficient standard guiding the delegate in the
exercise of the said authority. That standard is discoverable in the executive order itself which, in
creating the Philippine Overseas Employment Administration, mandated it to protect the rights
of overseas Filipino workers to "fair and equitable employment practices."

GENERAL RULE: Non-delegation of powers; exception

It is true that legislative discretion as to the substantive contents of the law cannot be delegated.
What can be delegated is the discretion to determine how the law may be enforced, not what the
law shall be. The ascertainment of the latter subject is a prerogative of the legislature. This
prerogative cannot be abdicated or surrendered by the legislature to the delegate.

Two Tests of Valid Delegation of Legislative Power

There are two accepted tests to determine whether or not there is a valid delegation of legislative
power, viz, the completeness test and the sufficient standard test. Under the first test, the law
must be complete in all its terms and conditions when it leaves the legislature such that when it
reaches the delegate the only thing he will have to do is to enforce it. Under the sufficient
standard test, there must be adequate guidelines or stations in the law to map out the boundaries
of the delegate’s authority and prevent the delegation from running riot.

Both tests are intended to prevent a total transference of legislative authority to the delegate, who
is not allowed to step into the shoes of the legislature and exercise a power essentially legislative.

The delegation of legislative power has become the rule and its non-delegation the exception.
Rationale for Delegation of Legislative Power

The reason is the increasing complexity of the task of government and the growing inability of
the legislature to cope directly with the myriad problems demanding its attention. The growth of
society has ramified its activities and created peculiar and sophisticated problems that the
legislature cannot be expected to reasonably comprehend. Specialization even in legislation has
become necessary. Too many of the problems attendant upon present-day undertakings, the
legislature may not have the competence to provide the required direct and efficacious, not to
say, specific solutions. These solutions may, however, be expected from its delegates, who are
supposed to be experts in the particular fields.

Power of Subordinate Legislation

The reasons given above for the delegation of legislative powers in general are particularly
applicable to administrative bodies. With the proliferation of specialized activities and their
attendant peculiar problems, the national legislature has found it more and more necessary to
entrust to administrative agencies the authority to issue rules to carry out the general provisions
of the statute. This is called the “power of subordinate legislation.”

With this power, administrative bodies may implement the broad policies laid down in statute by
“filling in” the details which the Congress may not have the opportunity or competence to
provide. Memorandum Circular No. 2 is one such administrative regulation.

Administrative agencies are vested with two basic powers, the quasi-legislative and quasi-
judicial. The first enables them to promulgate implementing rules and regulations, and the
second enables them to interpret and apply such regulations.