Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 124360 November 5, 1997

FRANCISCO S. TATAD, petitioner,
vs.
THE SECRETARY OF THE DEPARTMENT OF ENERGY AND THE SECRETARY OF THE
DEPARTMENT OF FINANCE, respondents.

G.R. No. 127867 November 5, 1997

EDCEL C. LAGMAN, JOKER P. ARROYO, ENRIQUE GARCIA, WIGBERTO TANADA, FLAG

HUMAN RIGHTS FOUNDATION, INC., FREEDOM FROM DEBT COALITION (FDC),
SANLAKAS, petitioners,
vs.
HON. RUBEN TORRES in his capacity as the Executive Secretary, HON. FRANCISCO VIRAY,
in his capacity as the Secretary of Energy, CALTEX Philippines, Inc., PETRON Corporation
and PILIPINAS SHELL Corporation, respondents.

PUNO, J.:

The petitions at bar challenge the constitutionality of Republic Act No. 8180 entitled "An Act
Deregulating the Downstream Oil Industry and For Other Purposes".  R.A. No. 8180 ends twenty six
1

(26) years of government regulation of the downstream oil industry. Few cases carry a surpassing
importance on the life of every Filipino as these petitions for the upswing and downswing of our
economy materially depend on the oscillation of oil.

First, the facts without the fat. Prior to 1971, there was no government agency regulating the oil
industry other than those dealing with ordinary commodities. Oil companies were free to enter and
exit the market without any government interference. There were four (4) refining companies (Shell,
Caltex, Bataan Refining Company and Filoil Refining) and six (6) petroleum marketing companies
(Esso, Filoil, Caltex, Getty, Mobil and Shell), then operating in the country.
2

In 1971, the country was driven to its knees by a crippling oil crisis. The government, realizing that
petroleum and its products are vital to national security and that their continued supply at reasonable
prices is essential to the general welfare, enacted the Oil Industry Commission Act.  It created
3

the Oil Industry Commission (OIC) to regulate the business of importing, exporting, re-exporting,

shipping, transporting, processing, refining, storing, distributing, marketing and selling crude oil,
gasoline, kerosene, gas and other refined petroleum products. The OIC was vested with the power
to fix the market prices of petroleum products, to regulate the capacities of refineries, to license new
refineries and to regulate the operations and trade practices of the industry. 4
In addition to the creation of the OIC, the government saw the imperious need for a more active role
of Filipinos in the oil industry. Until the early seventies, the downstream oil industry was controlled by
multinational companies. All the oil refineries and marketing companies were owned
by foreigners whose economic interests did not always coincide with the interest of the Filipino.
Crude oil was transported to the country by foreign-controlled tankers. Crude processing was done
locally by foreign-owned refineries and petroleum products were marketed through foreign-owned
retail outlets. On November 9, 1973, President Ferdinand E. Marcos boldly created the Philippine
National Oil Corporation (PNOC) to break the control by foreigners of our oil industry.  PNOC5

engaged in the business of refining, marketing, shipping, transporting, and storing petroleum. It
acquired ownership of ESSO Philippines and Filoil to serve as its marketing arm. It bought the
controlling shares of Bataan Refining Corporation, the largest refinery in the country.  PNOC later put
6

up its own marketing subsidiary — Petrophil. PNOC operated under the business name PETRON
Corporation. For the first time, there was a Filipino presence in the Philippine oil market.

In 1984, President Marcos through Section 8 of Presidential Decree No. 1956, created the Oil Price
Stabilization Fund (OPSF) to cushion the effects of frequent changes in the price of oil caused by
exchange rate adjustments or increase in the world market prices of crude oil and imported
petroleum products. The fund is used (1) to reimburse the oil companies for cost increases in crude
oil and imported petroleum products resulting from exchange rate adjustment and/or increase in
world market prices of crude oil, and (2) to reimburse oil companies for cost underrecovery incurred
as a result of the reduction of domestic prices of petroleum products. Under the law, the OPSF may
be sourced from:

1. any increase in the tax collection from ad valorem tax or customs duty imposed on
petroleum products subject to tax under P.D. No. 1956 arising from exchange rate
adjustment,

2. any increase in the tax collection as a result of the lifting of tax exemptions of
government corporations, as may be determined by the Minister of Finance in
consultation with the Board of Energy,

3. any additional amount to be imposed on petroleum products to augment the

resources of the fund through an appropriate order that may be issued by the Board
of Energy requiring payment of persons or companies engaged in the business of
importing, manufacturing and/or marketing petroleum products, or

4. any resulting peso costs differentials in case the actual peso costs paid by oil
companies in the importation of crude oil and petroleum products is less than the
peso costs computed using the reference foreign exchange rate as fixed by the
Board of Energy. 7

By 1985, only three (3) oil companies were operating in the country — Caltex, Shell and the
government-owned PNOC.

In May, 1987, President Corazon C. Aquino signed Executive Order No. 172 creating the Energy
Regulatory Board to regulate the business of importing, exporting, re-exporting, shipping,
transporting, processing, refining, marketing and distributing energy resources "when warranted and
only when public necessity requires." The Board had the following powers and functions:

1. Fix and regulate the prices of petroleum products;

 2. Fix and regulate the rate schedule or prices of piped gas to
be charged by duly franchised gas companies which
distribute gas by means of underground pipe system;

3. Fix and regulate the rates of pipeline concessionaries

under the provisions of R.A. No. 387, as amended . . . ;

4. Regulate the capacities of new refineries or additional

capacities of existing refineries and license refineries that
may be organized after the issuance of (E.O. No. 172) under
such terms and conditions as are consistent with the national
interest; and

5. Whenever the Board has determined that there is a

shortage of any petroleum product, or when public interest so
requires, it may take such steps as it may consider
necessary, including the temporary adjustment of the levels of
prices of petroleum products and the payment to the Oil Price
Stabilization Fund . . . by persons or entities engaged in the
petroleum industry of such amounts as may be determined by
the Board, which may enable the importer to recover its cost
of importation. 8

On December 9, 1992, Congress enacted R.A. No. 7638 which created the Department of Energy to
prepare, integrate, coordinate, supervise and control all plans, programs, projects, and activities of
the government in relation to energy exploration, development, utilization, distribution and
conservation.  The thrust of the Philippine energy program under the law was toward privatization of
9

government agencies related to energy, deregulation of the power and energy industry and
reduction of dependency on oil-fired plants.  The law also aimed to encourage free and active
10

participation and investment by the private sector in all energy activities. Section 5(e) of the law
states that "at the end of four (4) years from the effectivity of this Act, the Department shall, upon
approval of the President, institute the programs and timetable of deregulation of appropriate energy
projects and activities of the energy industry."

Pursuant to the policies enunciated in R.A. No. 7638, the government approved the privatization of
Petron Corporation in 1993. On December 16, 1993, PNOC sold 40% of its equity in Petron
Corporation to the Aramco Overseas Company.

In March 1996, Congress took the audacious step of deregulating the downstream oil industry. It
enacted R.A. No. 8180, entitled the "Downstream Oil Industry Deregulation Act of 1996." Under the
deregulated environment, "any person or entity may import or purchase any quantity of crude oil and
petroleum products from a foreign or domestic source, lease or own and operate refineries and other
downstream oil facilities and market such crude oil or use the same for his own requirement," subject
only to monitoring by the Department of
Energy. 11

The deregulation process has two phases: the transition phase and the full deregulation phase.
During the transition phase, controls of the non-pricing aspects of the oil industry were to be lifted.
The following were to be accomplished: (1) liberalization of oil importation, exportation,
manufacturing, marketing and distribution, (2) implementation of an automatic pricing mechanism,
(3) implementation of an automatic formula to set margins of dealers and rates of haulers, water
transport operators and pipeline concessionaires, and (4) restructuring of oil taxes. Upon full
deregulation, controls on the price of oil and the foreign exchange cover were to be lifted and the
OPSF was to be abolished.

The first phase of deregulation commenced on August 12, 1996.

On February 8, 1997, the President implemented the full deregulation of the Downstream Oil
Industry through E.O. No. 372.

The petitions at bar assail the constitutionality of various provisions of R.A No. 8180 and E.O. No.
372.

In G.R. No. 124360, petitioner Francisco S. Tatad seeks the annulment of section 5(b) of R.A. No.
8180. Section 5(b) provides:

b) Any law to the contrary notwithstanding and starting with the effectivity of this Act, tariff
duty shall be imposed and collected on imported crude oil at the rate of three percent (3%)
and imported refined petroleum products at the rate of seven percent (7%), except fuel oil
and LPG, the rate for which shall be the same as that for imported crude oil: Provided, That
beginning on January 1, 2004 the tariff rate on imported crude oil and refined petroleum
products shall be the same: Provided, further, That this provision may be amended only by
an Act of Congress.

The petition is anchored on three arguments:

First, that the imposition of different tariff rates on imported crude oil and imported refined petroleum
products violates the equal protection clause. Petitioner contends that the 3%-7% tariff differential
unduly favors the three existing oil refineries and discriminates against prospective investors in the
downstream oil industry who do not have their own refineries and will have to source refined
petroleum products from abroad.

Second, that the imposition of different tariff rates does not deregulate the downstream oil industry
but instead controls the oil industry, contrary to the avowed policy of the law. Petitioner avers that
the tariff differential between imported crude oil and imported refined petroleum products bars the
entry of other players in the oil industry because it effectively protects the interest of oil companies
with existing refineries. Thus, it runs counter to the objective of the law "to foster a truly competitive
market."

Third, that the inclusion of the tariff provision in section 5(b) of R.A. No. 8180 violates Section 26(1)
Article VI of the Constitution requiring every law to have only one subject which shall be expressed
in its title. Petitioner contends that the imposition of tariff rates in section 5(b) of R.A. No. 8180 is
foreign to the subject of the law which is the deregulation of the downstream oil industry.

In G.R. No. 127867, petitioners Edcel C. Lagman, Joker P. Arroyo, Enrique Garcia, Wigberto

Tanada, Flag Human Rights Foundation, Inc., Freedom from Debt Coalition (FDC) and Sanlakas
contest the constitutionality of section 15 of R.A. No. 8180 and E.O. No. 392. Section 15 provides:

Sec. 15. Implementation of Full Deregulation. — Pursuant to Section 5(e) of Republic Act
No. 7638, the DOE shall, upon approval of the President, implement the full deregulation of
the downstream oil industry not later than March 1997. As far as practicable, the DOE shall
time the full deregulation when the prices of crude oil and petroleum products in the world
market are declining and when the exchange rate of the peso in relation to the US dollar is
 stable. Upon the implementation of the full deregulation as provided herein, the transition
phase is deemed terminated and the following laws are deemed repealed:

x x x           x x x          x x x

E.O. No. 372 states in full, viz.:

WHEREAS, Republic Act No. 7638, otherwise known as the "Department of Energy Act of
1992," provides that, at the end of four years from its effectivity last December 1992, "the
Department (of Energy) shall, upon approval of the President, institute the programs and
time table of deregulation of appropriate energy projects and activities of the energy sector;"

WHEREAS, Section 15 of Republic Act No. 8180, otherwise known as the "Downstream Oil
Industry Deregulation Act of 1996," provides that "the DOE shall, upon approval of the
President, implement full deregulation of the downstream oil industry not later than March,
1997. As far as practicable, the DOE shall time the full deregulation when the prices of crude
oil and petroleum products in the world market are declining and when the exchange rate of
the peso in relation to the US dollar is stable;"

WHEREAS, pursuant to the recommendation of the Department of Energy, there is an

imperative need to implement the full deregulation of the downstream oil industry because of
the following recent developments: (i) depletion of the buffer fund on or about 7 February
1997 pursuant to the Energy Regulatory Board's Order dated 16 January 1997; (ii) the prices
of crude oil had been stable at $21-$23 per barrel since October 1996 while prices of
petroleum products in the world market had been stable since mid-December of last year.
Moreover, crude oil prices are beginning to soften for the last few days while prices of some
petroleum products had already declined; and (iii) the exchange rate of the peso in relation
to the US dollar has been stable for the past twelve (12) months, averaging at around
P26.20 to one US dollar;

WHEREAS, Executive Order No. 377 dated 31 October 1996 provides for an institutional
framework for the administration of the deregulated industry by defining the functions and
responsibilities of various government agencies;

WHEREAS, pursuant to Republic Act No. 8180, the deregulation of the industry will foster a
truly competitive market which can better achieve the social policy objectives of fair prices
and adequate, continuous supply of environmentally-clean and high quality petroleum
products;

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by

the powers vested in me by law, do hereby declare the full deregulation of the downstream
oil industry.

In assailing section 15 of R.A. No. 8180 and E.O. No. 392, petitioners offer the following
submissions:

First, section 15 of R.A. No. 8180 constitutes an undue delegation of legislative power to the
President and the Secretary of Energy because it does not provide a determinate or determinable
standard to guide the Executive Branch in determining when to implement the full deregulation of the
downstream oil industry. Petitioners contend that the law does not define when it is practicable for
the Secretary of Energy to recommend to the President the full deregulation of the downstream oil
industry or when the President may consider it practicable to declare full deregulation. Also, the law
does not provide any specific standard to determine when the prices of crude oil in the world market
are considered to be declining nor when the exchange rate of the peso to the US dollar is
considered stable.

Second, petitioners aver that E.O. No. 392 implementing the full deregulation of the downstream oil
industry is arbitrary and unreasonable because it was enacted due to the alleged depletion of the
OPSF fund — a condition not found in R.A. No. 8180.

Third, section 15 of R.A. No. 8180 and E.O. No. 392 allow the formation of a de facto cartel among
the three existing oil companies — Petron, Caltex and Shell — in violation of the constitutional
prohibition against monopolies, combinations in restraint of trade and unfair competition.

Respondents, on the other hand, fervently defend the constitutionality of R.A. No. 8180 and E.O. No.
392. In addition, respondents contend that the issues raised by the petitions are not justiciable as
they pertain to the wisdom of the law. Respondents further aver that petitioners have no locus
standi as they did not sustain nor will they sustain direct injury as a result of the implementation of
R.A. No. 8180.

The petitions were heard by the Court on September 30, 1997. On October 7, 1997, the Court
ordered the private respondents oil companies "to maintain the status quo and to cease and desist
from increasing the prices of gasoline and other petroleum fuel products for a period of thirty (30)
days . . . subject to further orders as conditions may warrant."

We shall now resolve the petitions on the merit. The petitions raise procedural and substantive
issues bearing on the constitutionality of R.A. No. 8180 and E.O. No. 392. The procedural
issues are: (1) whether or not the petitions raise a justiciable controversy, and (2) whether or not the
petitioners have the standing to assail the validity of the subject law and executive order.
The substantive issues are: (1) whether or not section 5 (b) violates the one title — one subject
requirement of the Constitution; (2) whether or not the same section violates the equal protection
clause of the Constitution; (3) whether or not section 15 violates the constitutional prohibition on
undue delegation of power; (4) whether or not E.O. No. 392 is arbitrary and unreasonable; and (5)
whether or not R.A. No. 8180 violates the constitutional prohibition against monopolies,
combinations in restraint of trade and unfair competition.

We shall first tackle the procedural issues. Respondents claim that the avalanche of arguments of
the petitioners assail the wisdom of R.A. No. 8180. They aver that deregulation of the downstream
oil industry is a policy decision made by Congress and it cannot be reviewed, much less be reversed
by this Court. In constitutional parlance, respondents contend that the petitions failed to raise a
justiciable controversy.

Respondents' joint stance is unnoteworthy. Judicial power includes not only the duty of the courts to
settle actual controversies involving rights which are legally demandable and enforceable, but also
the duty to determine whether or not there has been grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the government.  The courts, as
12

guardians of the Constitution, have the inherent authority to determine whether a statute enacted by
the legislature transcends the limit imposed by the fundamental law. Where a statute violates the
Constitution, it is not only the right but the duty of the judiciary to declare such act as unconstitutional
and void.  We held in the recent case of Tanada v. Angara:
13 14

xxx xxx xxx

 In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the
legislative branch is seriously alleged to have infringed the Constitution, it becomes not only
the right but in fact the duty of the judiciary to settle the dispute. The question thus posed is
judicial rather than political. The duty to adjudicate remains to assure that the supremacy of
the Constitution is upheld. Once a controversy as to the application or interpretation of a
constitutional provision is raised before this Court, it becomes a legal issue which the Court
is bound by constitutional mandate to decide.

Even a sideglance at the petitions will reveal that petitioners have raised constitutional issues which
deserve the resolution of this Court in view of their seriousness and their value as precedents. Our
statement of facts and definition of issues clearly show that petitioners are assailing R.A. No. 8180
because its provisions infringe the Constitution and not because the law lacks wisdom. The principle
of separation of power mandates that challenges on the constitutionality of a law should be resolved
in our courts of justice while doubts on the wisdom of a law should be debated in the halls of
Congress. Every now and then, a law may be denounced in court both as bereft of wisdom and
constitutionally infirmed. Such denunciation will not deny this Court of its jurisdiction to resolve the
constitutionality of the said law while prudentially refusing to pass on its wisdom.

The effort of respondents to question the locus standi of petitioners must also fall on barren ground.
In language too lucid to be misunderstood, this Court has brightlined its liberal stance on a
petitioner's locus standi where the petitioner is able to craft an issue of transcendental significance to
the people.  In Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan,  we
15 16

stressed:

xxx xxx xxx

Objections to taxpayers' suit for lack of sufficient personality, standing or interest are,
however, in the main procedural matters. Considering the importance to the public of the
cases at bar, and in keeping with the Court's duty, under the 1987 Constitution, to determine
whether or not the other branches of government have kept themselves within the limits of
the Constitution and the laws and that they have not abused the discretion given to them, the
Court has brushed aside technicalities of procedure and has taken cognizance of these
petitions.

There is not a dot of disagreement between the petitioners and the respondents on the far reaching
importance of the validity of RA No. 8180 deregulating our downstream oil industry. Thus, there is no
good sense in being hypertechnical on the standing of petitioners for they pose issues which are
significant to our people and which deserve our forthright resolution.

We shall now track down the substantive issues. In G.R. No. 124360 where petitioner is Senator
Tatad, it is contended that section 5(b) of R.A. No. 8180 on tariff differential violates the provision  of
17

the Constitution requiring every law to have only one subject which should be expressed in its title.
We do not concur with this contention. As a policy, this Court has adopted a liberal construction of
the one title — one subject rule. We have consistently ruled  that the title need not mirror, fully index
18

or catalogue all contents and minute details of a law. A law having a single general subject indicated
in the title may contain any number of provisions, no matter how diverse they may be, so long as
they are not inconsistent with or foreign to the general subject, and may be considered in
furtherance of such subject by providing for the method and means of carrying out the general
subject.  We hold that section 5(b) providing for tariff differential is germane to the subject of R.A.
19

No. 8180 which is the deregulation of the downstream oil industry. The section is supposed to sway
prospective investors to put up refineries in our country and make them rely less on imported
petroleum.  We shall, however, return to the validity of this provision when we examine its blocking
20

effect on new entrants to the oil market.

We shall now slide to the substantive issues in G.R. No. 127867. Petitioners assail section 15 of
R.A. No. 8180 which fixes the time frame for the full deregulation of the downstream oil industry. We
restate its pertinent portion for emphasis, viz.:

Sec. 15. Implementation of Full Deregulation — Pursuant to section 5(e) of Republic Act No.
7638, the DOE shall, upon approval of the President, implement the full deregulation of the
downstream oil industry not later than March 1997. As far as practicable, the DOE shall time
the full deregulation when the prices of crude oil and petroleum products in the world market
are declining and when the exchange rate of the peso in relation to the US dollar
is stable . . .

Petitioners urge that the phrases "as far as practicable," "decline of crude oil prices in the world
market" and "stability of the peso exchange rate to the US dollar" are ambivalent, unclear and
inconcrete in meaning. They submit that they do not provide the "determinate or determinable
standards" which can guide the President in his decision to fully deregulate the downstream oil
industry. In addition, they contend that E.O. No. 392 which advanced the date of full deregulation is
void for it illegally considered the depletion of the OPSF fund as a factor.

The power of Congress to delegate the execution of laws has long been settled by this Court. As
early as 1916 in Compania General de Tabacos de Filipinas vs. The Board of Public Utility
Commissioners,  this Court thru, Mr. Justice Moreland, held that "the true distinction is between the
21

delegation of power to make the law, which necessarily involves a discretion as to what it shall be,
and conferring 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." Over the years, as
the legal engineering of men's relationship became more difficult, Congress has to rely more on the
practice of delegating the execution of laws to the executive and other administrative agencies. Two
tests have been developed to determine whether the delegation of the power to execute laws does
not involve the abdication of the power to make law itself. We delineated the metes and bounds of
these tests in Eastern Shipping Lines, Inc. VS. POEA,  thus:
22

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 legislative
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 limitations 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 validity of delegating legislative power is now a quiet area in our constitutional landscape. As
sagely observed, delegation of legislative power has become an inevitability in light of the increasing
complexity of the task of government. Thus, courts bend as far back as possible to sustain the
constitutionality of laws which are assailed as unduly delegating legislative powers.
Citing Hirabayashi v. United States  as authority, Mr. Justice Isagani A. Cruz states "that even if the
23

law does not expressly pinpoint the standard, the courts will bend over backward to locate the same
elsewhere in order to spare the statute, if it can, from constitutional infirmity."
24
Given the groove of the Court's rulings, the attempt of petitioners to strike down section 15 on the
ground of undue delegation of legislative power cannot prosper. Section 15 can hurdle both the
completeness test and the sufficient standard test. It will be noted that Congress expressly provided
in R.A. No. 8180 that full deregulation will start at the end of March 1997, regardless of the
occurrence of any event. Full deregulation at the end of March 1997 is mandatory and the Executive
has no discretion to postpone it for any purported reason. Thus, the law is complete on the question
of the final date of full deregulation. The discretion given to the President is to advance the date of
full deregulation before the end of March 1997. Section 15 lays down the standard to guide the
judgment of the President — he is to time it as far as practicable when the prices of crude oil and
petroleum products in the world market are declining and when the exchange rate of the peso in
relation to the US dollar is stable.

Petitioners contend that the words "as far as practicable," "declining" and "stable" should have been
defined in R.A. No. 8180 as they do not set determinate or determinable standards. The stubborn
submission deserves scant consideration. The dictionary meanings of these words are well settled
and cannot confuse men of reasonable intelligence. Webster defines "practicable" as meaning
possible to practice or perform, "decline" as meaning to take a downward direction, and "stable" as
meaning firmly established.  The fear of petitioners that these words will result in the exercise of
25

executive discretion that will run riot is thus groundless. To be sure, the Court has sustained the
validity of similar, if not more general standards in other cases.
26

It ought to follow that the argument that E.O. No. 392 is null and void as it was based on
indeterminate standards set by R.A. 8180 must likewise fail. If that were all to the attack against the
validity of E.O. No. 392, the issue need not further detain our discourse. But petitioners further posit
the thesis that the Executive misapplied R.A. No. 8180 when it considered the depletion of the OPSF
fund as a factor in fully deregulating the downstream oil industry in February 1997. A perusal of
section 15 of R.A. No. 8180 will readily reveal that it only enumerated two factors to be considered
by the Department of Energy and the Office of the President, viz.: (1) the time when the prices of
crude oil and petroleum products in the world market are declining, and (2) the time when the
exchange rate of the peso in relation to the US dollar is stable. Section 15 did not mention the
depletion of the OPSF fund as a factor to be given weight by the Executive before ordering full
deregulation. On the contrary, the debates in Congress will show that some of our legislators wanted
to impose as a pre-condition to deregulation a showing that the OPSF fund must not be in
deficit.  We therefore hold that the Executive department failed to follow faithfully the standards set
27

by R.A. No. 8180 when it considered the extraneous factor of depletion of the OPSF fund. The
misappreciation of this extra factor cannot be justified on the ground that the Executive department
considered anyway the stability of the prices of crude oil in the world market and the stability of the
exchange rate of the peso to the dollar. By considering another factor to hasten full deregulation, the
Executive department rewrote the standards set forth in R.A. 8180. The Executive is bereft of any
right to alter either by subtraction or addition the standards set in R.A. No. 8180 for it has no power
to make laws. To cede to the Executive the power to make law is to invite tyranny, indeed, to
transgress the principle of separation of powers. The exercise of delegated power is given a strict
scrutiny by courts for the delegate is a mere agent whose action cannot infringe the terms of agency.
In the cases at bar, the Executive co-mingled the factor of depletion of the OPSF fund with the
factors of decline of the price of crude oil in the world market and the stability of the peso to the US
dollar. On the basis of the text of E.O. No. 392, it is impossible to determine the weight given by the
Executive department to the depletion of the OPSF fund. It could well be the principal consideration
for the early deregulation. It could have been accorded an equal significance. Or its importance
could be nil. In light of this uncertainty, we rule that the early deregulation under E.O. No. 392
constitutes a misapplication of R.A. No. 8180.

We now come to grips with the contention that some provisions of R.A. No. 8180 violate section 19
of Article XII of the 1987 Constitution. These provisions are:
 (1) Section 5 (b) which states — "Any law to the contrary notwithstanding and starting with
the effectivity of this Act, tariff duty shall be imposed and collected on imported crude oil at
the rate of three percent (3%) and imported refined petroleum products at the rate of seven
percent (7%) except fuel oil and LPG, the rate for which shall be the same as that for
imported crude oil. Provided, that beginning on January 1, 2004 the tariff rate on imported
crude oil and refined petroleum products shall be the same. Provided, further, that this
provision may be amended only by an Act of Congress."

(2) Section 6 which states — "To ensure the security and continuity of petroleum crude and
products supply, the DOE shall require the refiners and importers to maintain a minimum
inventory equivalent to ten percent (10%) of their respective annual sales volume or forty
(40) days of supply, whichever is lower," and

(3) Section 9 (b) which states — "To ensure fair competition and prevent cartels and
monopolies in the downstream oil industry, the following acts shall be prohibited:

x x x           x x x          x x x

(b) Predatory pricing which means selling or offering to sell any product at a
price unreasonably below the industry average cost so as to attract
customers to the detriment of competitors.

On the other hand, section 19 of Article XII of the Constitution allegedly violated by the aforestated
provisions of R.A. No. 8180 mandates: "The State shall regulate or prohibit monopolies when the
public interest so requires. No combinations in restraint of trade or unfair competition shall be
allowed."

A monopoly is a privilege or peculiar advantage vested in one or more persons or companies,

consisting in the exclusive right or power to carry on a particular business or trade, manufacture a
particular article, or control the sale or the whole supply of a particular commodity. It is a form of
market structure in which one or only a few firms dominate the total sales of a product or
service.  On the other hand, a combination in restraint of trade is an agreement or understanding
28

between two or more persons, in the form of a contract, trust, pool, holding company, or other form
of association, for the purpose of unduly restricting competition, monopolizing trade and commerce
in a certain commodity, controlling its, production, distribution and price, or otherwise interfering with
freedom of trade without statutory authority.  Combination in restraint of trade refers to the means
29

while monopoly refers to the end. 30

Article 186 of the Revised Penal Code and Article 28 of the New Civil Code breathe life to this
constitutional policy. Article 186 of the Revised Penal Code penalizes monopolization and creation of
combinations in restraint of
trade,   while Article 28 of the New Civil Code makes any person who shall engage in unfair
31

competition liable for damages. 32

Respondents aver that sections 5(b), 6 and 9(b) implement the policies and objectives of R.A. No.
8180. They explain that the 4% tariff differential is designed to encourage new entrants to invest in
refineries. They stress that the inventory requirement is meant to guaranty continuous domestic
supply of petroleum and to discourage fly-by-night operators. They also submit that the prohibition
against predatory pricing is intended to protect prospective entrants. Respondents manifested to the
Court that new players have entered the Philippines after deregulation and have now captured 3%
— 5% of the oil market.
The validity of the assailed provisions of R.A. No. 8180 has to be decided in light of the letter and
spirit of our Constitution, especially section 19, Article XII. Beyond doubt, the Constitution committed
us to the free enterprise system but it is a system impressed with its own distinctness. Thus, while
the Constitution embraced free enterprise as an economic creed, it did not prohibit per se the
operation of monopolies which can, however, be regulated in the public interest.  Thus too, our free
33

enterprise system is not based on a market of pure and unadulterated competition where the State
pursues a strict hands-off policy and follows the let-the-devil devour the hindmost rule. Combinations
in restraint of trade and unfair competitions are absolutely proscribed and the proscription is directed
both against the State as well as the private sector.  This distinct free enterprise system is dictated
34

by the need to achieve the goals of our national economy as defined by section 1, Article XII of the
Constitution which are: more equitable distribution of opportunities, income and wealth; a sustained
increase in the amount of goods and services produced by the nation for the benefit of the people;
and an expanding productivity as the key to raising the quality of life for all, especially the
underprivileged. It also calls for the State to protect Filipino enterprises against unfair competition
and trade practices.

Section 19, Article XII of our Constitution is anti-trust in history and in spirit. It espouses competition.
The desirability of competition is the reason for the prohibition against restraint of trade, the reason
for the interdiction of unfair competition, and the reason for regulation of unmitigated monopolies.
Competition is thus the underlying principle of section 19, Article XII of our Constitution which cannot
be violated by R.A. No. 8180. We subscribe to the observation of Prof. Gellhorn that the objective of
anti-trust law is "to assure a competitive economy, based upon the belief that through competition
producers will strive to satisfy consumer wants at the lowest price with the sacrifice of the fewest
resources. Competition among producers allows consumers to bid for goods and services, and thus
matches their desires with society's opportunity costs."  He adds with appropriateness that there is a
35

reliance upon "the operation of the 'market' system (free enterprise) to decide what shall be
produced, how resources shall be allocated in the production process, and to whom the various
products will be distributed. The market system relies on the consumer to decide what and how
much shall be produced, and on competition, among producers to determine who will manufacture
it."

Again, we underline in scarlet that the fundamental principle espoused by section 19, Article XII of
the Constitution is competition for it alone can release the creative forces of the market. But the
competition that can unleash these creative forces is competition that is fighting yet is fair. Ideally,
this kind of competition requires the presence of not one, not just a few but several players. A market
controlled by one player (monopoly) or dominated by a handful of players (oligopoly) is hardly the
market where honest-to-goodness competition will prevail. Monopolistic or oligopolistic markets
deserve our careful scrutiny and laws which barricade the entry points of new players in the market
should be viewed with suspicion.

Prescinding from these baseline propositions, we shall proceed to examine whether the provisions of
R.A. No. 8180 on tariff differential, inventory reserves, and predatory prices imposed substantial
barriers to the entry and exit of new players in our downstream oil industry. If they do, they have to
be struck down for they will necessarily inhibit the formation of a truly competitive market.
Contrariwise, if they are insignificant impediments, they need not be stricken down.

In the cases at bar, it cannot be denied that our downstream oil industry is operated and controlled
by an oligopoly, a foreign oligopoly at that. Petron, Shell and Caltex stand as the only major league
players in the oil market. All other players belong to the lilliputian league. As the dominant players,
Petron, Shell and Caltex boast of existing refineries of various capacities. The tariff differential of 4%
therefore works to their immense benefit. Yet, this is only one edge of the tariff differential. The other
edge cuts and cuts deep in the heart of their competitors. It erects a high barrier to the entry of new
players. New players that intend to equalize the market power of Petron, Shell and Caltex by
building refineries of their own will have to spend billions of pesos. Those who will not build refineries
but compete with them will suffer the huge disadvantage of increasing their product cost by 4%.
They will be competing on an uneven field. The argument that the 4% tariff differential is desirable
because it will induce prospective players to invest in refineries puts the cart before the horse. The
first need is to attract new players and they cannot be attracted by burdening them with heavy
disincentives. Without new players belonging to the league of Petron, Shell and Caltex, competition
in our downstream oil industry is an idle dream.

The provision on inventory widens the balance of advantage of Petron, Shell and Caltex against
prospective new players. Petron, Shell and Caltex can easily comply with the inventory requirement
of R.A. No. 8180 in view of their existing storage facilities. Prospective competitors again will find
compliance with this requirement difficult as it will entail a prohibitive cost. The construction cost of
storage facilities and the cost of inventory can thus scare prospective players. Their net effect is to
further occlude the entry points of new players, dampen competition and enhance the control of the
market by the three (3) existing oil companies.

Finally, we come to the provision on predatory pricing which is defined as ". . . selling or offering to
sell any product at a price unreasonably below the industry average cost so as to attract customers
to the detriment of competitors." Respondents contend that this provision works against Petron,
Shell and Caltex and protects new entrants. The ban on predatory pricing cannot be analyzed in
isolation. Its validity is interlocked with the barriers imposed by R.A. No. 8180 on the entry of new
players. The inquiry should be to determine whether predatory pricing on the part of the dominant oil
companies is encouraged by the provisions in the law blocking the entry of new players. Text-writer
Hovenkamp,  gives the authoritative answer and we quote:
36

xxx xxx xxx

The rationale for predatory pricing is the sustaining of losses today that will give a firm
monopoly profits in the future. The monopoly profits will never materialize, however, if the
market is flooded with new entrants as soon as the successful predator attempts to raise its
price. Predatory pricing will be profitable only if the market contains significant barriers to
new entry.

As aforediscsussed, the 4% tariff differential and the inventory requirement are significant barriers
which discourage new players to enter the market. Considering these significant barriers established
by R.A. No. 8180 and the lack of players with the comparable clout of PETRON, SHELL and
CALTEX, the temptation for a dominant player to engage in predatory pricing and succeed is a
chilling reality. Petitioners' charge that this provision on predatory pricing is anti-competitive is not
without reason.

Respondents belittle these barriers with the allegation that new players have entered the market
since deregulation. A scrutiny of the list of the alleged new players will, however, reveal that not one
belongs to the class and category of PETRON, SHELL and CALTEX. Indeed, there is no showing
that any of these new players intends to install any refinery and effectively compete with these
dominant oil companies. In any event, it cannot be gainsaid that the new players could have been
more in number and more impressive in might if the illegal entry barriers in R.A. No. 8180 were not
erected.

We come to the final point. We now resolve the total effect of the untimely deregulation, the
imposition of 4% tariff differential on imported crude oil and refined petroleum products, the
requirement of inventory and the prohibition on predatory pricing on the constitutionality of R.A. No.
8180. The question is whether these offending provisions can be individually struck down without
invalidating the entire R.A. No. 8180. The ruling case law is well stated by author Agpalo,  viz.:
37

xxx xxx xxx

The general rule is that where part of a statute is void as repugnant to the Constitution, while
another part is valid, the valid portion, if separable from the invalid, may stand and be
enforced. The presence of a separability clause in a statute creates the presumption that the
legislature intended separability, rather than complete nullity of the statute. To justify this
result, the valid portion must be so far independent of the invalid portion that it is fair to
presume that the legislature would have enacted it by itself if it had supposed that it could
not constitutionally enact the other. Enough must remain to make a complete, intelligible and
valid statute, which carries out the legislative intent. . . .

The exception to the general rule is that when the parts of a statute are so mutually
dependent and connected, as conditions, considerations, inducements, or compensations for
each other, as to warrant a belief that the legislature intended them as a whole, the nullity of
one part will vitiate the rest. In making the parts of the statute dependent, conditional, or
connected with one another, the legislature intended the statute to be carried out as a whole
and would not have enacted it if one part is void, in which case if some parts are
unconstitutional, all the other provisions thus dependent, conditional, or connected must fall
with them.

R.A. No. 8180 contains a separability clause. Section 23 provides that "if for any reason, any section
or provision of this Act is declared unconstitutional or invalid, such parts not affected thereby shall
remain in full force and effect." This separability clause notwithstanding, we hold that the offending
provisions of R.A. No. 8180 so permeate its essence that the entire law has to be struck down. The
provisions on tariff differential, inventory and predatory pricing are among the principal props of R.A.
No. 8180. Congress could not have deregulated the downstream oil industry without these
provisions. Unfortunately, contrary to their intent, these provisions on tariff differential, inventory and
predatory pricing inhibit fair competition, encourage monopolistic power and interfere with the free
interaction of market forces. R.A. No. 8180 needs provisions to vouchsafe free and fair competition.
The need for these vouchsafing provisions cannot be overstated. Before deregulation, PETRON,
SHELL and CALTEX had no real competitors but did not have a free run of the market because
government controls both the pricing and non-pricing aspects of the oil industry. After deregulation,
PETRON, SHELL and CALTEX remain unthreatened by real competition yet are no longer subject to
control by government with respect to their pricing and non-pricing decisions. The aftermath of R.A.
No. 8180 is a deregulated market where competition can be corrupted and where market forces can
be manipulated by oligopolies.

The fall out effects of the defects of R.A. No. 8180 on our people have not escaped Congress. A lot
of our leading legislators have come out openly with bills seeking the repeal of these odious and
offensive provisions in R.A. No. 8180. In the Senate, Senator Freddie Webb has filed S.B. No. 2133
which is the result of the hearings conducted by the Senate Committee on Energy. The hearings
revealed that (1) there was a need to level the playing field for the new entrants in the downstream
oil industry, and (2) there was no law punishing a person for selling petroleum products at
unreasonable prices. Senator Alberto G. Romulo also filed S.B. No. 2209 abolishing the tariff
differential beginning January 1, 1998. He declared that the amendment ". . . would mean that
instead of just three (3) big oil companies there will be other major oil companies to provide more
competitive prices for the market and the consuming public." Senator Heherson T . Alvarez, one of
the principal proponents of R.A. No. 8180, also filed S.B. No. 2290 increasing the penalty for
violation of its section 9. It is his opinion as expressed in the explanatory note of the bill that the
present oil companies are engaged in cartelization despite R.A. No. 8180, viz,:

xxx xxx xxx

Since the downstream oil industry was fully deregulated in February 1997, there have been
eight (8) fuel price adjustments made by the three oil majors, namely: Caltex Philippines,
Inc.; Petron Corporation; and Pilipinas Shell Petroleum Corporation. Very noticeable in the
price adjustments made, however, is the uniformity in the pump prices of practically all
petroleum products of the three oil companies. This, despite the fact, that their selling rates
should be determined by a combination of any of the following factors: the prevailing peso-
dollar exchange rate at the time payment is made for crude purchases, sources of crude,
and inventory levels of both crude and refined petroleum products. The abovestated factors
should have resulted in different, rather than identical prices.

The fact that the three (3) oil companies' petroleum products are uniformly priced suggests
collusion, amounting to cartelization, among Caltex Philippines, Inc., Petron Corporation and
Pilipinas Shell Petroleum Corporation to fix the prices of petroleum products in violation of
paragraph (a), Section 9 of R.A. No. 8180.

To deter this pernicious practice and to assure that present and prospective players in the
downstream oil industry conduct their business with conscience and propriety, cartel-like
activities ought to be severely penalized.

Senator Francisco S. Tatad also filed S.B. No. 2307 providing for a uniform tariff rate on imported
crude oil and refined petroleum products. In the explanatory note of the bill, he declared in no
uncertain terms that ". . . the present set-up has raised serious public concern over the way the three
oil companies have uniformly adjusted the prices of oil in the country, an indication of a possible
existence of a cartel or a cartel-like situation within the downstream oil industry. This situation is
mostly attributed to the foregoing provision on tariff differential, which has effectively discouraged
the entry of new players in the downstream oil industry."

In the House of Representatives, the moves to rehabilitate R.A. No. 8180 are equally
feverish. Representative Leopoldo E. San Buenaventura has filed H.B. No. 9826 removing the tariff
differential for imported crude oil and imported refined petroleum products. In the explanatory note of
the bill, Rep. Buenaventura explained:

xxx xxx xxx

As we now experience, this difference in tariff rates between imported crude oil and imported
refined petroleum products, unwittingly provided a built-in-advantage for the three existing oil
refineries in the country and eliminating competition which is a must in a free enterprise
economy. Moreover, it created a disincentive for other players to engage even initially in the
importation and distribution of refined petroleum products and ultimately in the putting up of
refineries. This tariff differential virtually created a monopoly of the downstream oil industry
by the existing three oil companies as shown by their uniform and capricious pricing of their
products since this law took effect, to the great disadvantage of the consuming public.

Thus, instead of achieving the desired effects of deregulation, that of free enterprise and a
level playing field in the downstream oil industry, R.A. 8180 has created an environment
conducive to cartelization, unfavorable, increased, unrealistic prices of petroleum products in
the country by the three existing refineries.
Representative Marcial C. Punzalan, Jr., filed H.B. No. 9981 to prevent collusion among the present
oil companies by strengthening the oversight function of the government, particularly its ability to
subject to a review any adjustment in the prices of gasoline and other petroleum products. In the
explanatory note of the bill, Rep. Punzalan, Jr., said:

xxx xxx xxx

To avoid this, the proposed bill seeks to strengthen the oversight function of government,
particularly its ability to review the prices set for gasoline and other petroleum products. It
grants the Energy Regulatory Board (ERB) the authority to review prices of oil and other
petroleum products, as may be petitioned by a person, group or any entity, and to
subsequently compel any entity in the industry to submit any and all documents relevant to
the imposition of new prices. In cases where the Board determines that there exist collusion,
economic conspiracy, unfair trade practice, profiteering and/or overpricing, it may take any
step necessary to protect the public, including the readjustment of the prices of petroleum
products. Further, the Board may also impose the fine and penalty of imprisonment, as
prescribed in Section 9 of R.A. 8180, on any person or entity from the oil industry who is
found guilty of such prohibited acts.

By doing all of the above, the measure will effectively provide Filipino consumers with a
venue where their grievances can be heard and immediately acted upon by government.

Thus, this bill stands to benefit the Filipino consumer by making the price-setting process
more transparent and making it easier to prosecute those who perpetrate such prohibited
acts as collusion, overpricing, economic conspiracy and unfair trade.

Representative Sergio A.F . Apostol filed H.B. No. 10039 to remedy an omission in R.A. No. 8180
where there is no agency in government that determines what is "reasonable" increase in the prices
of oil products. Representative Dente O. Tinga, one of the principal sponsors of R.A. No. 8180, filed
H.B. No. 10057 to strengthen its anti-trust provisions. He elucidated in its explanatory note:

xxx xxx xxx

The definition of predatory pricing, however, needs to be tightened up particularly with

respect to the definitive benchmark price and the specific anti-competitive intent. The
definition in the bill at hand which was taken from the Areeda-Turner test in the United States
on predatory pricing resolves the questions. The definition reads, "Predatory pricing means
selling or offering to sell any oil product at a price below the average variable cost for the
purpose of destroying competition, eliminating a competitor or discouraging a competitor
from entering the market."

The appropriate actions which may be resorted to under the Rules of Court in conjunction
with the oil deregulation law are adequate. But to stress their availability and dynamism, it is
a good move to incorporate all the remedies in the law itself. Thus, the present bill formalizes
the concept of government intervention and private suits to address the problem of antitrust
violations. Specifically, the government may file an action to prevent or restrain any act of
cartelization or predatory pricing, and if it has suffered any loss or damage by reason of the
antitrust violation it may recover damages. Likewise, a private person or entity may sue to
prevent or restrain any such violation which will result in damage to his business or property,
and if he has already suffered damage he shall recover treble damages. A class suit may
also be allowed.
 To make the DOE Secretary more effective in the enforcement of the law, he shall be given
additional powers to gather information and to require reports.

Representative Erasmo B. Damasing filed H.B. No. 7885 and has a more unforgiving view of R.A.
No. 8180. He wants it completely repealed. He explained:

xxx xxx xxx

Contrary to the projections at the time the bill on the Downstream Oil Industry Deregulation
was discussed and debated upon in the plenary session prior to its approval into law, there
aren't any new players or investors in the oil industry. Thus, resulting in practically a cartel or
monopoly in the oil industry by the three (3) big oil companies, Caltex, Shell and Petron. So
much so, that with the deregulation now being partially implemented, the said oil companies
have succeeded in increasing the prices of most of their petroleum products with little or no
interference at all from the government. In the month of August, there was an increase of
Fifty centavos (50¢) per liter by subsidizing the same with the OPSF, this is only temporary
as in March 1997, or a few months from now, there will be full deregulation (Phase II)
whereby the increase in the prices of petroleum products will be fully absorbed by the
consumers since OPSF will already be abolished by then. Certainly, this would make the
lives of our people, especially the unemployed ones, doubly difficult and unbearable.

The much ballyhooed coming in of new players in the oil industry is quite remote considering
that these prospective investors cannot fight the existing and well established oil companies
in the country today, namely, Caltex, Shell and Petron. Even if these new players will come
in, they will still have no chance to compete with the said three (3) existing big oil companies
considering that there is an imposition of oil tariff differential of 4% between importation of
crude oil by the said oil refineries paying only 3% tariff rate for the said importation and 7%
tariff rate to be paid by businessmen who have no oil refineries in the Philippines but will
import finished petroleum/oil products which is being taxed with 7% tariff rates.

So, if only to help the many who are poor from further suffering as a result of unmitigated
increase in oil products due to deregulation, it is a must that the Downstream Oil Industry
Deregulation Act of 1996, or R.A. 8180 be repealed completely.

Various resolutions have also been filed in the Senate calling for an immediate and comprehensive
review of R.A. No. 8180 to prevent the downpour of its ill effects on the people. Thus, S. Res. No.
574 was filed by Senator Gloria M. Macapagal entitled Resolution "Directing the Committee on
Energy to Inquire Into The Proper Implementation of the Deregulation of the Downstream Oil
Industry and Oil Tax Restructuring As Mandated Under R.A. Nos. 8180 and 8184, In Order to Make
The Necessary Corrections In the Apparent Misinterpretation Of The Intent And Provision Of The
Laws And Curb The Rising Tide Of Disenchantment Among The Filipino Consumers And Bring
About The Real Intentions And Benefits Of The Said Law." Senator Blas P. Ople filed S. Res. No.
664 entitled resolution "Directing the Committee on Energy To Conduct An Inquiry In Aid Of
Legislation To Review The Government's Oil Deregulation Policy In Light Of The Successive
Increases In Transportation, Electricity And Power Rates, As well As Of Food And Other Prime
Commodities And Recommend Appropriate Amendments To Protect The Consuming Public."
Senator Ople observed:

xxx xxx xxx

WHEREAS, since the passage of R.A. No. 8180, the Energy Regulatory Board (ERB) has
imposed successive increases in oil prices which has triggered increases in electricity and
 power rates, transportation fares, as well as in prices of food and other prime commodities to
the detriment of our people, particularly the poor;

WHEREAS, the new players that were expected to compete with the oil cartel-Shell, Caltex
and Petron-have not come in;

WHEREAS, it is imperative that a review of the oil deregulation policy be made to consider
appropriate amendments to the existing law such as an extension of the transition phase
before full deregulation in order to give the competitive market enough time to develop;

WHEREAS, the review can include the advisability of providing some incentives in order to
attract the entry of new oil companies to effect a dynamic competitive market;

WHEREAS, it may also be necessary to defer the setting up of the institutional framework for
full deregulation of the oil industry as mandated under Executive Order No. 377 issued by
President Ramos last October 31, 1996 . . .

Senator Alberto G. Romulo filed S. Res. No. 769 entitled resolution "Directing the Committees on
Energy and Public Services In Aid Of Legislation To Assess The Immediate Medium And Long Term
Impact of Oil Deregulation On Oil Prices And The Economy." Among the reasons for the resolution is
the finding that "the requirement of a 40-day stock inventory effectively limits the entry of other oil
firms in the market with the consequence that instead of going down oil prices will rise."

Parallel resolutions have been filed in the House of Representatives. Representative Dante

O. Tinga filed H. Res. No. 1311 "Directing The Committee on Energy To Conduct An Inquiry, In Aid
of Legislation, Into The Pricing Policies And Decisions Of The Oil Companies Since The
Implementation of Full Deregulation Under the Oil Deregulation Act (R.A. No. 8180) For the Purpose
of Determining In the Context Of The Oversight Functions Of Congress Whether The Conduct Of
The Oil Companies, Whether Singly Or Collectively, Constitutes Cartelization Which Is A Prohibited
Act Under R.A. No. 8180, And What Measures Should Be Taken To Help Ensure The Successful
Implementation Of The Law In Accordance With Its Letter And Spirit, Including Recommending
Criminal Prosecution Of the Officers Concerned Of the Oil Companies If Warranted By The
Evidence, And For Other Purposes." Representatives Marcial C. Punzalan, Jr. Dante O. Tinga and
Antonio E. Bengzon III filed H.R. No. 894 directing the House Committee on Energy to inquire into
the proper implementation of the deregulation of the downstream oil industry. House Resolution No.
1013 was also filed by Representatives Edcel C. Lagman, Enrique T . Garcia, Jr. and Joker
P. Arroyo urging the President to immediately suspend the implementation of E.O. No. 392.

In recent memory there is no law enacted by the legislature afflicted with so much constitutional
deformities as R.A. No. 8180. Yet, R.A. No. 8180 deals with oil, a commodity whose supply and
price affect the ebb and flow of the lifeblood of the nation. Its shortage of supply or a slight, upward
spiral in its price shakes our economic foundation. Studies show that the areas most impacted by the
movement of oil are food manufacture, land transport, trade, electricity and water.  At a time when
38

our economy is in a dangerous downspin, the perpetuation of R.A. No. 8180 threatens to multiply

the number of our people with bent backs and begging bowls. R.A. No. 8180 with its anti-
competition provisions cannot be allowed by this Court to stand even while Congress is working to
remedy its defects.

The Court, however, takes note of the plea of PETRON, SHELL and CALTEX to lift our restraining
order to enable them to adjust upward the price of petroleum and petroleum products in view of the
plummeting value of the peso. Their plea, however, will now have to be addressed to the Energy
Regulatory Board as the effect of the declaration of unconstitutionality of R.A. No. 8180 is to revive
the former laws it repealed.  The length of our return to the regime of regulation depends on
39

Congress which can fasttrack the writing of a new law on oil deregulation in accord with the
Constitution.

With this Decision, some circles will chide the Court for interfering with an economic decision of
Congress. Such criticism is charmless for the Court is annulling R.A. No. 8180 not because it
disagrees with deregulation as an economic policy but because as cobbled by Congress in its
present form, the law violates the Constitution. The right call therefor should be for Congress to write
a new oil deregulation law that conforms with the Constitution and not for this Court to shirk its duty
of striking down a law that offends the Constitution. Striking down R.A. No. 8180 may cost losses in
quantifiable terms to the oil oligopolists. But the loss in tolerating the tampering of our Constitution is
not quantifiable in pesos and centavos. More worthy of protection than the supra-normal profits of
private corporations is the sanctity of the fundamental principles of the Constitution. Indeed when
confronted by a law violating the Constitution, the Court has no option but to strike it down dead.
Lest it is missed, the Constitution is a covenant that grants and guarantees both the political
and economic rights of the people. The Constitution mandates this Court to be the guardian not only
of the people's political rights but their economic rights as well. The protection of the economic rights
of the poor and the powerless is of greater importance to them for they are concerned more with the
exoterics of living and less with the esoterics of liberty. Hence, for as long as the Constitution reigns
supreme so long will this Court be vigilant in upholding the economic rights of our people especially
from the onslaught of the powerful. Our defense of the people's economic rights may appear
heartless because it cannot be half-hearted.

IN VIEW WHEREOF, the petitions are granted. R.A. No. 8180 is declared unconstitutional and E.O.
No. 372 void.

SO ORDERED.
 EN BANC

February 23, 2016

G.R. No. 188720

QUEZON CITY PTCA FEDERATION, INC., Petitioner,

vs.
DEPARTMENT OF EDUCATION, represented by SECRETARY JESLI A. LAPUS, Respondent.

DECISION

LEONEN, J.:

This resolves a Petition for Certiorari and Prohibition  praying that respondent Department of
1

Education’s Department Order No. 54, Series of 2009 (Department Order) be nullified for being
unconstitutional and contrary to law, and that a writ of prohibition permanently enjoining the
Department of Education and all persons acting on its behalf from enforcing the assailed Department
Order be issued. 2

The Petition also prays that, in the interim, a temporary restraining order and/or writ of preliminary
injunction be issued, restraining the enforcement of the Department Order.

On June 1, 2009, the Department of Education, through Former Secretary Jesli A. Lapus, issued
Department Order No. 54, Series of 2009  entitled Revised Guidelines Governing Parents-Teachers
3

Associations (PTAs) at the School Level.

The Department of Education explained the reasons for the issuance of the Department Order as
follows:

The Department Order sought to address the limitations of the guidelines set forth in D.O.
No. 23, s. 2003 and was issued in response to increasing reports of malpractices by officers
or members of PTAs, such as, but not limited to (1) officers absconding with contributions
and membership fees; (2) non-disclosure of the status of funds and non-submission of
financial statements; and (3) misuse of funds.  (Citations omitted)
4
The Department Order is divided into 11 articles: (I) General Policy;  (II) Organization of PTAs at the
5

School Level;  (III) General Assembly;  (IV) Board of Directors and Officers;  (V) Recognition and
6 7 8

Monitoring of PTAs;  (VI) Privileges of Recognized PTAs;  (VII) Activities;  (VIII) Financial
9 10 11

Matters;  (IX) Prohibited Activities and Sanctions;  (X) Transitory Provision;  and (XI) Repealing
12 13 14

Clause.15

More specifically, the Department Order provides for:

(1) The approval of the school head as a prerequisite for PTAs to be organized:

II. Organization of PTAs at the School Level

....

2. Within fifteen (15) days from the start of the school year the Homeroom Adviser
and the Parents/Guardians shall organize the Homeroom PTA with the approval of
the School Head. 16

(2) The terms of office and manner of election of a PTA’s board of directors:

II. Organization of PTAs at the School Level

....

3. The elected presidents of the Homeroom PTAs and their respective

Homeroom Advisers shall elect the Board of Directors within thirty (30) days
from the start of the school year. The Board of Directors shall immediately
elect from among themselves the executive officers of the PTA on the same
day of their election to the Board.
17

....

IV. Board of Directors and Officers

1. The administration of the affairs and management of activities of the PTA

is vested [in] the Board of Directors and its officers in accordance with these
guidelines or their respective Constitution and By-Laws, if any, which shall
adhere to the following:

....

e. The term of office of the Board of Directors and its Officers shall be
one (1) year from the date of election. In no case shall a PTA Board
Director serve for more than two (2) consecutive terms; 18

(3) The cessation of recognition of existing parents-teachers community associations

(PTCAs) and of their federations effective school year 2009–2010. The Department Order
gave them until June 30, 2009 to dissolve, wind up their activities, submit financial reports,
and turn over all documents to school heads and schools division superintendents:

X. Transitory Provision
Existing and duly recognized PTCAs and its [sic] Federations shall no longer be given recognition
effective School Year 2009-2010. They shall cease operation at the end of School Year 2008-2009
and given until June 30, 2009 to dissolve, wind up their activities, submit their financial reports and
turn-over all documents to the School Heads and Schools Division Superintendents, respectively. 19

Petitioner Quezon City PTCA Federation filed the present Petition in the belief that the above-quoted
provisions undermine the independence of PTAs and PTCAs, effectively amend the constitutions
and by-laws of existing PTAs and PTCAs, and violate its constitutional rights to organize and to due
process, as well as other existing laws. 20

On November 17, 2009, the Department of Education filed its Comment,  and on February 9, 2010,
21

Quezon City PTCA Federation filed its Reply. 22

In the Resolution  dated January 8, 2013, this court gave due course to the Petition and required the
23

parties to submit their memoranda. Quezon City PTCA Federation complied on March 22,
2013,  and the Department of Education on May 15, 2013.
24 25

For resolution is the central issue of whether the Department of Education acted with grave abuse of
discretion amounting to lack or excess of jurisdiction in issuing Department Order No. 54, Series of
2009. Subsumed under this issue are:

First, whether the issuance of the Department Order was a valid exercise of the Department of
Education’s rule-making powers:

(a) Whether the Department Order contravenes any of the laws providing for the creation
and organization of parent-teacher associations;

(b) Whether Department Order is invalid and ineffective as no public consultations were
(supposedly) held before its adoption, and/or as it was not published by the Department of
Education; and

Second, whether the assailed provisions of the Department Order (i.e., Article II (2) and (3), Article
IV (1)(e), and Article X) undermine the organizational independence of parent-teacher associations.

Apart from these, the Department of Education assails the filing of this Petition as being violative of
the principle of hierarchy of courts.

We sustain the position of the Department of Education. The present Petition was filed in violation of
the principle of hierarchy of courts. Department Order No. 54, Series of 2009 was validly issued by
the Secretary of Education pursuant to his statutorily vested rule-making power and pursuant to the
purposes for which the organization of parent-teacher associations is mandated by statute. Likewise,
there was no fatal procedural lapse in the adoption of Department Order No. 54, Series of 2009.

The Department of Education correctly points out that the present Petition was filed in violation of the
principle of hierarchy of courts. On this score alone, the Petition should be dismissed.

It is true that petitions for certiorari and prohibition under Rule 65 of the 1997 Rules of Civil
Procedure fall under the original jurisdiction of this court. However, this is also true of regional trial
courts and the Court of Appeals.
"[T]his Court will not entertain a direct invocation of its jurisdiction unless the redress desired cannot
be obtained in the appropriate lower courts, and exceptional and compelling circumstances justify
the resort to the extraordinary remedy of a writ of certiorari."  Indeed, "concurrence [of jurisdiction]
26

does not allow unrestricted freedom of choice of the court forum. A direct invocation of the Supreme
Court’s original jurisdiction to issue this writ should be allowed only when there are special and
important reasons, clearly and specifically set out in the petition." 27

In Vergara v. Suelto: 28

The Supreme Court is a court of last resort, and must so remain if it is to satisfactorily perform the
functions assigned to it by the fundamental charter and immemorial tradition. It cannot and should
not be burdened with the task of dealing with causes in the first instance. Its original jurisdiction to
issue the so-called extraordinary writs should be exercised only where absolutely necessary or
where serious and important reasons exist therefor. Hence, that jurisdiction should generally be
exercised relative to actions or proceedings before the Court of Appeals, or before constitutional or
other tribunals, bodies or agencies whose acts for some reason or another are not controllable by
the Court of Appeals. Where the issuance of an extraordinary writ is also within the competence of
the Court of Appeals or a Regional Trial Court, it is in either of these courts that the specific action
for the writ’s procurement must be presented. This is and should continue to be the policy in this
regard, a policy that courts and lawyers must strictly observe. 29

Petitioner argues that the present Petition justifies direct recourse to this court "considering the
pervasive effect of the assailed Department Order to all the different PTCAs or PTAs across the
country and in order to avoid multiple suits that would only serve to further clog the court’s dockets." 30

This reason fails to impress.

That the effects of the Department Order extend throughout the country is a concern that can be
addressed by recourse to the Court of Appeals. Its territorial jurisdiction, much like this court’s, also
extends throughout the country. Moreover, the Court of Appeals is well-equipped to render reliable,
reasonable, and well-grounded judgments in cases averring grave abuse of discretion amounting to
lack or excess of jurisdiction. Recourse to the Court of Appeals is not a futile exercise that results to
nothing more than the clogging of court dockets.

II

Citing Article III, Section 8,  Article II, Section 23,  and Article XIII, Sections 15  and 16  of the 1987
31 32 33 34

Constitution, petitioner asserts that PTCAs are "independent voluntary organization[s]"  "enjoying
35

constitutional protection."36

It adds that, pursuant to Section 8(1)  of Batas Pambansa Blg. 232, otherwise known as the
37

Education Act of 1982, and Article 77  of Presidential Decree No. 603, otherwise known as the Child
38

and Youth Welfare Code, the PTCA "promotes and protects the welfare of . . . students all over the
country and . . . serve[s] as a forum for parents and the community to have an active role in the
efficient implementation of the . . . programs of the school [sic]." 39

Petitioner assails the Department Order as an inordinate exercise of the Department of Education’s
rule-making power. It claims that the Department Order contradicts the provisions of the Education
Act of 1982 and of the Child and Youth Welfare Code, the statutes that provide for the creation of
PTAs. It also alleges that the Department Order was issued without prior consultation and
publication, contrary to the requirements for regulations issued by administrative agencies.
Noting that the Department Order lends recognition only to PTAs and not to PTCAs, petitioner
assails the Department Order as being contrary to the purposes of Republic Act No.
9155,  otherwise known as the Governance of Basic Education Act of 2001, and of Republic Act No.
40

8980,  otherwise known as the Early Childhood Care and Development Act.
41

Petitioner further claims that Article II (2) of the Department Order, which provides for the
organization of the Homeroom PTA with the approval of the School Head, infringes upon the
independence of PTCAs and PTAs. It asserts that this provision gives "unbridled discretion [to the
school head] to disapprove the organization of a PTA."  Petitioner likewise assails the Department
42

Order’s provisions on the terms of office of PTA officers as being violative of the right to due
process. 43

III

The three powers of government—executive, legislative, and judicial—have been generally viewed
as non-delegable. However, in recognition of the exigencies that contemporary governance must
address, our legal system has recognized the validity of "subordinate legislation," or the rule-making
power of agencies tasked with the administration of government. In Eastern Shipping Lines v.
Philippine Overseas Employment Administration: 44

The principle of non-delegation of powers is applicable to all the three major powers of the
Government but is especially important in the case of the legislative power because of the many
instances when its delegation is permitted. The occasions are rare when executive or judicial powers
have to be delegated by the authorities to which they legally pertain. In the case of the legislative
power, however, such occasions have become more and more frequent, if not necessary. This has
led to the observation that the delegation of legislative power has become the rule and its non-
delegation the exception.

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 reasonably to comprehend. Specialization even in legislation has become necessary.
To 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 assigned to them.

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 a statute by
"filling in" the details which the Congress may not have the opportunity or competence to provide.
This is effected by their promulgation of what are known as supplementary regulations, such as the
implementing rules issued by the Department of Labor on the new Labor Code. These regulations
have the force and effect of law.45

Administrative agencies, however, are not given unfettered power to promulgate rules. As noted
in Gerochi v. Department of Energy,  two requisites must be satisfied in order that rules issued by
46
administrative agencies may be considered valid: the completeness test and the sufficient standard
test:

In the face of the increasing complexity of modern life, delegation of legislative power to various
specialized administrative agencies is allowed as an exception to this principle. Given the volume
and variety of interactions in today’s society, it is doubtful if the legislature can promulgate laws that
will deal adequately with and respond promptly to the minutiae of everyday life. Hence, the need to
delegate to administrative bodies – the principal agencies tasked to execute laws in their specialized
fields – the authority to promulgate rules and regulations to implement a given statute and effectuate
its policies. All that is required for the valid exercise of this power of subordinate legislation is that
the regulation be germane to the objects and purposes of the law and that the regulation be not in
contradiction to, but in conformity with, the standards prescribed by the law. These requirements are
denominated as the completeness test and the sufficient standard test.  (Emphasis supplied)
47

Further, in ABAKADA GURO Party List v. Purisima: 48

Two tests determine the validity of delegation of legislative power: (1) the completeness test and (2)
the sufficient standard test. A law is complete when it sets forth therein the policy to be executed,
carried out or implemented by the delegate. It lays down a sufficient standard when it provides
adequate guidelines or limitations in the law to map out the boundaries of the delegate’s authority
and prevent the delegation from running riot. To be sufficient, the standard must specify the limits of
the delegate’s authority, announce the legislative policy and identify the conditions under which it is
to be implemented.  (Citations omitted)
49

In addition to the substantive requisites of the completeness test and the sufficient standard test, the
Administrative Code of 1987 (Administrative Code) requires the filing of rules adopted by
administrative agencies with the University of the Philippines Law Center. Generally, rules filed with
the University of the Philippines Law Center become effective 15 days after filing. Chapter 2 of Book
VII of the Administrative Code provides:

CHAPTER 2
Rules and Regulations

SECTION 3. Filing.—(1) Every agency shall file with the University of the Philippines Law Center
three (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this
Code which are not filed within three (3) months from that date shall not thereafter be the basis of
any sanction against any party or persons.

(2) The records officer of the agency, or his equivalent functionary, shall carry out the
requirements of this section under pain of disciplinary action.

(3) A permanent register of all rules shall be kept by the issuing agency and shall be
open to public inspection.

SECTION 4. Effectivity.—In addition to other rule-making requirements provided by law not

inconsistent with this Book, each rule shall become effective fifteen (15) days from the date of filing
as above provided unless a different date is fixed by law, or specified in the rule in cases of imminent
danger to public health, safety and welfare, the existence of which must be expressed in a statement
accompanying the rule. The agency shall take appropriate measures to make emergency rules
known to persons who may be affected by them.
SECTION 5. Publication and Recording.—The University of the Philippines Law Center shall:

(1) Publish a quarterly bulletin setting forth the text of rules filed with it during the
preceding quarter; and

(2) Keep an up-to-date codification of all rules thus published and remaining in effect,
together with a complete index and appropriate tables.

SECTION 6. Omission of Some Rules.—(1) The University of the Philippines Law Center may omit
from the bulletin or the codification any rule if its publication would be unduly cumbersome,
expensive or otherwise inexpedient, but copies of that rule shall be made available on application to
the agency which adopted it, and the bulletin shall contain a notice stating the general subject matter
of the omitted rule and new copies thereof may be obtained.

(2) Every rule establishing an offense or defining an act which, pursuant to law is
punishable as a crime or subject to a penalty shall in all cases be published in full
text.

SECTION 7. Distribution of Bulletin and Codified Rules.—The University of the Philippines Law
Center shall furnish one (1) free copy each of every issue of the bulletin and of the codified rules or
supplements to the Office of the President, Congress, all appellate courts and the National Library.
The bulletin and the codified rules shall be made available free of charge to such public officers or
agencies as the Congress may select, and to other persons at a price sufficient to cover publication
and mailing or distribution costs.

SECTION 8. Judicial Notice.—The court shall take judicial notice of the certified copy of each rule
duly filed or as published in the bulletin or the codified rules.

SECTION 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.

(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.

IV

The Education Act of 1982 vested in the then Ministry of Education, Culture and Sports  "[t]he 50

administration of the education system and . . . the supervision and regulation of educational
institutions."  Section 70 of the Education Act of 1982 vested rule-making authority in the Minister of
51

Education who, under Section 55  of the same statute, was the head of the Ministry:
52

Section 70. Rule-making Authority. – The Minister of Education, Culture and Sports charged with the
administration and enforcement of this Act, shall promulgate the necessary implementing rules and
regulations.
Apart from the Education Act of 1982, Book IV, Chapter 2 of the Administrative Code provides for
the rule-making power of the secretaries heading the departments that comprise the executive
branch of government:

SECTION 7. Powers and Functions of the Secretary.—The Secretary shall:

....

(4) Promulgate administrative issuances necessary for the efficient administration of the offices
under the Secretary and for proper execution of the laws relative thereto. These issuances shall not
prescribe penalties for their violation, except when expressly authorized by law;

It was pursuant to this rule-making authority that Former Secretary of Education Jesli A. Lapus
promulgated Department Order No. 54, Series of 2009. As its title denotes, the Department Order
provided revised guidelines governing PTAs at the school-level.

The Department Order does not exist in a vacuum. As underscored by the Department of Education,
the Department Order was issued "in response to increasing reports of malpractices by officers or
members of PTAs."  Among these "malpractices" are those noted in a resolution adopted by the
53

"Regional Education Supervisors in-charge of THE [sic] Student Government Program (SGP),
selected Teachers-Advisers and the Officers of the National Federation of Supreme Student
Governments (NFSSG)"  during a conference held from February 4 to 8, 2008. This same resolution
54

formally sought to "review and [revise] the Guidelines Governing PTAs/PTCAs at the School Level
as contained in DepED Order No. 23, s. 2003."  The malpractices noted were:
55

PTA/PICA officers absconding with the [sic] contributions and membership fees;

Non-remittance or turn-over of collected funds in the name of organizations such as SSG funds,
STEP funds, School Publication fee and the like;

Misuse of funds by re-channeling the amounts collected to other activities and projects not within the
intended purpose;

Non-deposit of funds in reputable banks;

Non-disclosure of the status of the funds collected and non-submission of financial statements;

Fraudulent disbursements of funds due to the absence of resolutions, vouchers and official receipts;
and,

Un-liquidated cash advances of PICA officers[.] 56

Thus, the Department Order rationalized the mechanism for the organizing and granting of official
recognition to PTAs. Its first to seventh articles read:

I. General Policy

1. Every elementary and secondary school shall organize a Parents-Teachers

Association (PTA) for the purpose of providing a forum for the discussion of issues
 and their solutions related to the total school program and to ensure the full
cooperation of parents in the efficient implementation of such program.

Every PTA shall provide mechanisms to ensure proper coordination with the
members of the community, provide an avenue for discussing relevant concerns and
provide assistance and support to the school for the promotion of their common
interest. Standing committees may be created within the PTA organization to
coordinate with community members. Regular fora may be conducted with local
government units, civic organizations and other stakeholders to foster unity and
cooperation.

2. As an organization operating in the school, the PTA shall adhere to all existing
policies and implementing guidelines issued or hereinafter may be issued by the
Department of Education.

The PTA shall serve as support group and as a significant partner of the school
whose relationship shall be defined by cooperative and open dialogue to promote the
welfare of the students.

II. Organization of PTAs at the School Level

1. Membership in a PTA is limited to parents, or in their absence the guardian, of

duly enrolled students, and teachers in a given school.

For this purpose, a guardian is hereby defined as any of the following: a) an

individual authorized by the biological parents to whom the care and custody of the
student has been entrusted; b) a relative of the student within the fourth degree of
consanguinity or affinity provided that said relative has the care and custody over the
child; c) an individual appointed by a competent court as the legal guardian of the
student; or d) in case of an orphan, the individual/institution who has the care and
custody of the student.

A teacher-member refers to homeroom advisers, subject teachers, and non-teaching

personnel.

2. Within fifteen (15) days from the start of the school year the Homeroom Adviser
and the Parents/Guardians shall organize the Homeroom PTA with the approval of
the School Head.

3. The elected presidents of the Homeroom PTAs and their respective Homeroom
Advisers shall elect the Board of Directors within thirty (30) days from the start of the
school year. The Board of Directors shall immediately elect from among themselves
the executive officers of the PTA on the same day of their election to the Board.

4. The official name of the PTA shall bear the name of the school (example: Parents-
Teachers Association of Rizal High School or Rizal High School Parents-Teachers
Association).

5. For representation in the Local School Board and other purposes, the schools’
PTAs within a municipality or city or province shall federate and select from among
 the elected Presidents their respective officers. The president-elect shall sit as
representative of the Federation to the said Local School Board.

III. General Assembly

1. The General Assembly shall be composed of all parents of enrolled students of the
school, Board of Directors and Officers of the PTA, School Head, Homeroom
Advisers, Subject Teachers, and Non-Teaching Personnel.

2. The General Assembly shall be convened by the PTA Board of Directors

immediately after the PTA has been organized. The General Assembly shall be
convened as may be necessary but in no case less than twice a year. The Board
shall coordinate with the School Head as to time, venue and other details of the
General Assembly.

3. The General Assembly shall be a venue for presentation and discussion of the
PTA’s programs, projects, financial statements, reports and other matters.

4. The General Assembly may invite or consult with other members of the community
such as local government officials and civic organizations to solicit their support or
active participation in school activities.

IV. Board of Directors and Officers

1. The administration of the affairs and management of activities of the PTA is vested
[in] the Board of Directors and its officers in accordance with these guidelines or their
respective Constitution and By-Laws, if any, which shall adhere to the following:

a. The Board of Directors shall be composed of fifteen (15) members who

shall elect from among themselves the association’s executive officers;
namely: President, Vice-President, Secretary, Treasurer, Auditor, or other
equivalent positions, who shall oversee the day-to-day activities of the
associations;

b. Parent-members shall comprise two-thirds (2/3) and teacher-members

one-third (1/3) of the Board of Directors;

c. A teacher-member cannot hold any position in the PTA except as a

member of the Board of Directors or as Secretary;

d. The School Head shall not serve as a member of the Board of Directors
but as adviser to the PTA;

e. The term of office of the Board of Directors and its Officers shall be one (1)
year from the date of election. In no case shall a PTA Board Director serve
for more than two (2) consecutive terms;

f. In case of vacancy in the Board of Directors as a result of expulsion,

resignation or death, the vacancy shall be filled, for the unexpired term of the
office, by a majority vote of the Board of Directors from among the Presidents
of Homeroom PTAs in a special meeting called for such purpose.
 g. Among the committees that may be formed to handle specific activities of
the PTAs are: a) Committee on Finance; b) Committee on Programs and
Projects; c) Audit Committee; d) Election Committee; e) Grievance
Committee; f) Ways and Means Committee; g) Committee on External and
Community Affairs;

h. The heads of the committees shall preferably come from the Board of
Directors, Homeroom Presidents and Homeroom Advisers; and

i. The PTA may or may not be incorporated with the Securities and Exchange
Commission (SEC). If incorporated, the registered entity shall, as far as
practicable, be used in the organization of the PTA by the elected Board of
Directors. In any event, the formal notification by the elected Board of
Directors outlined below and the issuance of the Certificate of Recognition by
the School Head shall be the operative act to recognize the PTA.

V. Recognition and Monitoring of PTAs

1. There shall be only one PTA that will operate in a school which shall be
recognized by the School Head upon formal notification in writing by the elected
Board of Directors. The recognition shall be valid for one year from the date of
election.

2. Together with the formal notification in writing, the elected Board of Directors shall
submit Oaths of Office of the Board of Directors and Officers (Enclosure No. 1)
including a list of directors and officers.

3. A Division PTA Affairs Committee shall be created in the Division Office to be

composed of the following:

Chairperson - Schools Division Superintendent

Members - Assistant Schools Division Superintendent
Division Administrative Officer
Division Education Supervisor (In-Charge of PTA)
Division PESPA President (Elementary) or Division NAPSSHI
President (Secondary)
President of the Division Federation of PTA
President of the Division Federation of SSG

4. The Division PTA Affairs Committee shall monitor the activities of the PTAs and
their compliance with reports and other requirements, arbitrate disputes and settle
matters that may be submitted to it for resolution especially on PTA representation
issue.

VI. Privileges of Recognized PTAs

 1. A PTA is authorized to collect voluntary contributions from parents/ guardian-
members once it has been duly recognized and given a Certificate of Recognition by
the School Head (Enclosure No. 2). Such collections, however, shall be subject to
pertinent issuances of the DepED and/or existing pertinent ordinances of the local
government unit concerned, if any.

2. In addition, a duly recognized PTA shall have the following privileges:

a. The use of any available space within the school premises as its office or
headquarters, provided, that costs pertinent to electricity, water and other
utilities shall be for the account of the PTA; provided however, that should the
school need such space, the PTA shall so vacate the space immediately.
The maintenance and improvement of the office shall be in accordance with
the School Improvement Plan.

The DepED may allow the PTA to construct a building or structure within the
school premises for its office, provided however, that the PTA shall donate
such building or structure and other permanent fixtures to the school. Any
improvement made on such building, structure or fixture that cannot be
removed from such building or structure without causing damage thereto
shall be deemed the property of the school. A written agreement shall be
executed before the improvement or construction. A Deed of Donation shall
also be executed by and between the PTA and the school immediately after
the completion of the improvement or construction;

b. Representation in the School Governing Council;

c. Authorization to undertake fund-raising activities to support the school's

academic and co-curricular programs, projects and activities subject to
pertinent DepED guidelines;

d. Participation in the school’s inspection and acceptance committee and as

an observer in the school's procurement activities subject to the provisions of
R.A. No. 9184; and

e. Collaboration in relevant school activities.

VII. Activities

All PTA activities within the school premises or which involve the school, its personnel or students
shall be with prior consultation and approval of the School Head. 57

Moreover, the Department Order provides measures "to ensure transparency and accountability in
the safekeeping and utilization of funds[.] . . . [S]tringent measures were introduced to eliminate the
increasing number of reported incidents wherein officers of PTAs take undue advantage of their
positions."  Specifically, Article VIII (on financial matters) of the Department Order provides for a
58

detailed policy and conditions on collections of contributions, safekeeping of funds, financial

reporting, and other measures for transparency and accountability:

VIII. Financial Matters

1. Policy on Collection of Contributions Cognizant of the need of an organization for
adequate funds to sustain its operations, a duly recognized PTA may collect
voluntary financial contributions from members and outside sources to enable it to
fund and sustain its operation and the implementation of its programs and projects
exclusively for the benefit of the students and the school where it operates. The
PTA’s programs and projects shall be in line with the School Improvement Plan
(SIP).

Such collections shall be made by the PTA subject to the following conditions:

a. The contributions should be a reasonable amount as may be determined

by the PTA Board of Directors;

b. Non-payment of the contributions by the parent member shall not be a

basis for non-admission or non-issuance of clearance(s) to the child by the
school concerned;

c. The contributions shall be collected by the PTA Treasurer on a per parent-

member basis regardless of the number of their children in school;

d. No collection of PTA contributions shall be done during the enrollment

period; and

e. No teacher or any school personnel shall be involved in such collection

activities.

If collection of the School Publications Fee, Supreme Student Government (SSG)

Developmental Fund and other club membership fees and contributions is coursed
through the PTA as requested by the concerned organization, the amount collected
shall be remitted immediately to the school, SSG or other student organizations
concerned on the day it was collected. The pertinent organization shall deposit the
funds with a reputable bank on the next banking day under the organization's
account. No service fee shall be charged against any student organization by the
PTA.

Non-compliance or any violation of the aforementioned conditions shall be a ground

for the cancellation of the PTA's recognition and/or the filing of appropriate charges
as the case may be.

2. Safekeeping of Funds

All collections of contributions or proceeds of fundraising activities shall be deposited

in a reputable banking institution as determined by the Board of Directors. The PTA’s
Treasurer or a duly authorized representative shall undertake the collection and shall
issue official receipts/acknowledgement receipts.

In no case shall any school official or personnel be entrusted with the safekeeping
and disbursement of collections made by the PTA. All disbursements of funds shall
be in accordance with generally accepted accounting and auditing rules and
regulations.
 All disbursements shall be accompanied by appropriate resolutions indicating thereof
the purposes for which such disbursements are made.

No cash advances shall be allowed without valid liquidation of previous cash

advances.

3. Financial Statement Report

The books of accounts and other financial records of the PTA shall be made
available for inspection by the School Head and/or the Division PTA Affairs
Committee at any time.

An Annual Financial Statement signed jointly by the PTA President, Treasurer and
Auditor shall be submitted to the School Head not later than thirty (30) days after the
last day of classes. Such financial statement shall be audited by an external and
independent auditor, posted in the PTA Bulletin Board, and presented to the General
Assembly during the next school year.

The PTA shall also submit to the School Head not later than November 30, a mid-
school year financial statement report ending October 30 duly audited and signed by
the members of the PTA’s audit committee.

Failure to submit such financial statement report shall be a ground for the
cancellation of the recognition of the PTA by the Division PTA Affairs Committee
upon the recommendation of the School Head.

4. Transparency and Accountability

For purposes of transparency and accountability, all documents pertaining to the

operations of the PTA shall be open to public examination. PTA[s] are required to
install a PTA Bulletin Board outside of its office where announcements, approved
resolutions, required reports and financial statements shall be posted. 59

Article IX of the Department Order’s details the acts and practices in which PTAs are prohibited from
engaging. It also stipulates the cancellation of a PTA’s recognition as a consequence of engaging in
prohibited activities:

IX. Prohibited Activities and Sanctions

1. PTAs are prohibited from:

a. Interfering in the academic and administrative management and

operations of the school, and of the DepED, in general;

b. Engaging in any partisan political activity within school premises;

c. Operating a canteen/school supplies store, or being a concessionaire

thereof inside the school or nearby premises, or offering these services to the
school as its client either directly or indirectly;
 d. Selling insurance, pre-need plans or similar schemes or programs to
students and/ or their parents; and

e. Such other acts or circumstances analogous to the foregoing.

2. PTA Officers and members of the Board of Directors are prohibited from collecting
salaries, honoraria, emoluments or other forms of compensation from any of the
funds collected or received by the PTA.

3. PTAs shall have no right to disburse, or charge any fees as service fees or
percentages against the amount collected pertinent to the School Publication Fee,
Supreme Student Government (SSG) Developmental Fund and other club
membership fees and contributions.

4. In no case shall a PTA or any of its officers or members of the Board of Directors
call upon students and teachers for purposes of investigation or disciplinary action.

5. The recognition of any PTA shall be cancelled by the Division PTA Affairs
Committee upon the recommendation of the School Head concerned for any
violation of the above-mentioned prohibited activities and these Guidelines.

Thereafter, the School Head may call for a special election to replace the Board of Directors of the
PTA whose recognition was cancelled. Criminal, civil and/or administrative actions may be taken
against any member or officer of the Board of the PTA who may appear responsible for failure to
submit the necessary annual financial statements or for failure to account the funds of the PTA. 60

Consistent with rationalizing the mechanism for granting official recognition to PTAs, Article X of the
Department Order provides for the following transitory provision:

X. Transitory Provision

Existing and duly recognized PTCAs and its Federations shall no longer be given recognition
effective School Year 2009-2010. They shall cease operation at the end of School Year 2008–2009
and given until June 30, 2009 to dissolve, wind up their activities, submit their financial reports and
turn-over all documents to the School Heads and Schools Division Superintendents, respectively. 61

Petitioner insists that the Department Order is an invalid exercise of the rule-making power
delegated to the Secretary of Education as it supposedly disregards PTAs’ and PTCAs’ purposes,
not only as partners of the Department of Education in the implementation of programs, but also as a
watchdog against "abuses, mismanagement, inefficiency[,] and excesses of public officials within the
public school system."  Petitioner also assails the Department Order’s limitation of official
62

recognition to PTAs, and no longer to PTCAs, as being contrary to law.

VI

Petitioner is in error for asserting that the assailed Department Order is contrary to the statutes it
aims to put into effect as it fails to put PTCAs on the same footing as PTAs.

Article 77 of the Child and Youth Welfare Code provides for the organization and purposes of PTAs:
Article 77. Parent-Teacher Associations. – Every elementary and secondary school shall organize a
parent-teacher association for the purpose of providing a forum for the discussion of problems and
their solutions, relating to the total school program, and for insuring the full cooperation of parents in
the efficient implementation of such program. All parents who have children enrolled in a school are
encouraged to be active members of its PTA, and to comply with whatever obligations and
responsibilities such membership entails.

Parent-Teacher Association[s] all over the country shall aid the municipal and other local authorities
and school officials in the enforcement of juvenile delinquency control measures, and in the
implementation of programs and activities to promote child welfare.

(Emphasis supplied)

The Education Act of 1982, a statute adopted subsequent to the Child and Youth Welfare Code,
expressly recognizes the right of parents to organize by themselves and/or with teachers:

Section 8. Rights of Parents. – In addition to other rights under existing laws, all parents who have
children enrolled in a school have the following rights:

1. The right to organize by themselves and/or with teachers for the purpose of

providing a forum for the discussion of matters relating to the total school program,
and for ensuring the full cooperation of parents and teachers in the formulation and
efficient implementation of such programs.

2. The right to access to any official record directly relating to the children who are
under their parental responsibility. (Emphasis supplied)

As is evident from the Child and Youth Welfare Code’s use of the word "shall," it is mandatory for
PTAs to be organized in elementary and secondary schools. As against this, the Child and Youth
Welfare Code is silent on the creation of PTCAs. The Education Act of 1982 is equally silent on this.
Hence, while the creation and/or organization of PTAs are statutorily mandated, the same could not
be said of PTCAs. However, petitioner argues differently. In support of its position, it cites Republic
Act No. 9155, otherwise known as the Basic Education Act of 2001, more specifically its Section
3(d), on its purposes and objectives:

Section 3. Purposes and Objectives. - The purposes and objectives of this Act are:

....

(d) To ensure that schools and learning centers receive the kind of focused attention they deserve
and that educational programs, projects and services take into account the interests of all members
of the community[.]

Petitioner also cites Republic Act No. 8980, otherwise known as the Early Childhood Care and
Development Act. More specifically, petitioner cites Section 7(a)(1) on implementing arrangements
and operational structures:

Sec. 7. Implementing Arrangements and Operational Structures. – The implementation of the

National [Early Childhood Care and Development or] ECCD System shall be the joint responsibility
of the national government agencies, local government units, non-government organizations, and
private organizations that are accredited to deliver the services or to provide training and technical
assistance.

(a) Responsibilities of the National Government – National government agencies

shall be responsible for developing policies and programs, providing technical
assistance and support to the ECCD service providers in consultation with
coordinating committees at the provincial, city/municipal, and barangay levels, as
provided for in Section 8 of this Act, and monitoring of ECCD service benefits and
outcomes. The Department of Social Welfare and Development (DSWD), the
Department of Education, Culture and Sports (DECS), the Department of Health
(DOH), the Department of the Interior and Local Government (DILG), the Department
of Labor and Employment (DOLE), the Department of Agriculture (DA), the
Department of Justice (DOJ), the National Economic and Development Authority
(NEDA), and the National Nutrition Council (NNC) shall jointly prepare annual ECCD
for work plans that will coordinate their respective technical assistance and support
for the National ECCD Program. They shall consolidate existing program
implementing guidelines that ensure consistency in integrated service delivery within
the National ECCD System.

(1) The DECS shall promote the National ECCD Progman in schools. ECCD
programs in public schools shall be under the joint responsibility of their respective
school principal/school-head and parents-teachers-community association (PTCA)
within the standards set forth in the National ECCD System and under the guidance
of the City/Municipal ECCD Coordinating Committee for the effective and equitable
delivery of ECCD services. It shall also make available existing facilities of public
elementary schools for ECCD classes.

Neither Republic Act No. 9155 nor Republic Act No. 8980 supports petitioner’s contentions that
PTCAs should stand on the same footing as PTAs and that their existence is statutorily mandated.

Republic Act No. 9155 does not even mention or otherwise refer to PTCAs. All it does is exhort that
the interest of all members of the community should be taken into account in the administration of
the country’s basic education system. The Department Order does not run afoul of this. On the
contrary, the Department Order specifically provides for PTAs’ collaboration with members of the
community:

I. General Policy

1. Every elementary and secondary school shall organize a Parents-Teachers Association (PTA) for
the purpose of providing a forum for the discussion of issues and their solutions related to the total
school program and to ensure the full cooperation of parents in the efficient implementation of such
program.

Every PTA shall provide mechanisms to ensure proper coordination with the members of the
community, provide an avenue for discussing relevant concerns and provide assistance and support
to the school for the promotion of their common interest. Standing committees may be created within
the PTA organization to coordinate with community members. Regular fora may be conducted with
local government units, civic organizations and other stakeholders to foster unity and
cooperation.  (Emphasis supplied)
63

Republic Act No. 8980 does mention PTCAs, but this is only in the specific context of the National
Early Childhood Care and Development (ECCD) System. The ECCD System "refers to the full range
of . . . programs that provide for the basic holistic needs of young children from birth to age six
(6)."  It is not even an education program and does not involve the age range of students—
64

elementary to high school—that is relevant to the Department Order. In any case, an isolated and
passing mention does not equate to a mandate.

Petitioner’s invocation of Republic Act Nos. 9155 and 8980 only serve to muddle the issues by
entreating considerations that are irrelevant to the purposes of the statute (i.e., the Child and Youth
Welfare Code) that actually pertains to and requires the organization of PTAs.

From the previously quoted provisions of the Child and Youth Welfare Code and the Education Act
of 1982, the purposes for which the organization of PTAs is mandated are clear. First, a PTA is to be
a forum for discussion. Second, a PTA exists to ensure the full cooperation of parents in the
implementation of school programs. The assailed Department Order serves these purposes.

By ensuring fiscal transparency and accountability, and by providing the basic framework for
organization and official recognition, the Department Order ensures that PTAs exist and function in a
manner that remains consistent with the articulated purposes of PTAs under the Child and Youth
Welfare Code and the Education Act of 1982. A framework for organization ensures that PTAs are
properly organized and are both adequately representative of and limited only to those interests that
are appropriate to the education of children in elementary and high school.

Measures for fiscal transparency and accountability ensure that PTAs are not hampered by
pecuniary or proprietary interests that have nothing to do with the effective implementation of school
programs. Finally, mechanisms for official recognition ensure that only those associations that
organize and conduct themselves in a manner that is consistent with these purposes are privileged
with state sanction.

VII

Contrary to petitioner’s contentions, the adoption of the Department Order is not tainted with fatal
procedural defects.

Petitioner decries the supposed lack of public consultations as being violative of its right to due
process.

Notice and hearing are not essential when an administrative agency acts pursuant to its rule-making
power. In Central Bank of the Philippines v. Cloribel: 65

Previous notice and hearing, as elements of due process, are constitutionally required for the
protection of life or vested property rights, as well as of liberty, when its limitation or loss takes place
in consequence of a judicial or quasi-judicial proceeding, generally dependent upon a past act or
event which has to be established or ascertained. It is not essential to the validity of general rules or
regulations promulgated to govern future conduct of a class of persons or enterprises, unless the law
provides otherwise[:]

....

"It is also clear from the authorities that where the function of the administrative body
is legislative, notice of hearing is not required by due process of law. See
Oppenheimer, Administrative Law, 2 Md. L.R. 185, 204, supra, where it is said: ‘If the
nature of the administrative agency is essentially legislative, the requirements of
 notice and hearing are not necessary. The validity of a rule of future action which
affects a group, if vested rights of liberty or property are not involved, is not
determined according to the same rules which apply in the case of the direct
application of a policy to a specific individual.’ . . .

It is said in 73 C.J.S. Public Administrative Bodies and Procedure, sec. 130, pages 452 and 453:
Aside from statute, the necessity of notice and hearing in an administrative proceeding depends on
the character of the proceeding and the circumstances involved. In so far as generalization is
possible in view of the great variety of administrative proceedings, it may be stated as a general rule
that notice and hearing are not essential to the validity of administrative action where the
administrative body acts in the exercise of executive, administrative, or legislative functions; but
where a public administrative body acts in a judicial or quasi-judicial matter, and its acts are
particular and immediate rather than general and prospective, the person whose rights or property
may be affected by the action is entitled to notice and hearing." 66

In any case, petitioner’s claim that no consultations were held is belied by the Department of
Education’s detailed recollection of the actions it took before the adoption of the assailed
Department Order:

1. On March 1, 2003, pursuant to D.O. No.14, s. 2004, respondent DepEd created a task
force to review, revise, or modify D.O. No. 23, s. 2003 (the existing guidelines), in order to
address numerous complaints involving PTAs and PTCAs and to resolve disputes relative to
the recognition and administration of said associations. The task force came up with draft
guidelines after consultations with parents, teachers and students;

2. On May 3, 2003, pursuant to D.O. No. 28, s. 2007, the task force was reconstituted to
evaluate the draft guidelines prepared by the original task force and to review the provisions
of D.O. No. 23;

3. On February 2, 2009, the reconstituted task force, after soliciting comments, suggestions

and recommendations from school heads and presidents of PTAs or PTCAs, submitted a
draft of the "Revised Guidelines governing PTAs/PTCAs at the School Level;"

4. The draft was submitted for comments and suggestions to the participants to the Third
National Federation Supreme Student Governments (NFSSG) Conference held in February
2009. The participants, composed of regional education supervisors, presidents of regional
federations of Supreme Student Governments (SSG), and representatives from the SSG
advisers, submitted another set of revised guidelines;

5. The draft was subjected to further review and consultations, which resulted in the final
draft of D.O. No. 54, s. 2009.  (Emphasis supplied)
67

Apart from claiming that no consultations were held, petitioner decries the non-publication, by the
Department of Education itself, of the assailed Department Order.

This does not invalidate the Department Order. As is evident from the previously quoted provisions
of Book VII, Chapter 2 of the Administrative Code, all that is required for the validity of rules
promulgated by administrative agencies is the filing of three (3) certified copies with the University of
the Philippine Law Center. Within 15 days of filing, administrative rules become effective. 68

VIII
Pointing to Article II (2) of the assailed Department Order, which calls for the approval of the school
head in the organizing of homeroom PTAs, petitioner claims that the Department Order undermines
the organizational independence of PTAs. It claims that the assailed Department Order lacks
standards or guidelines and effectively gives the school head unbridled discretion to impede the
organizing of PTAs.

This is erroneous.

To begin with, and as previously noted, the organizing of PTAs is mandated by statute. Under Article
77 of the Child and Youth Welfare Code, every elementary school and high school is required to
have a PTA. School heads are bound by this requirement. Moreover, the mandatory nature of
organizing PTAs is recognized by the assailed Department Order itself. Article I (1) of the
Department Order provides that "[e]very elementary and secondary school shall organize a Parents-
Teachers Association."

Likewise, Article I of the assailed Department Order echoes the Child and Youth Welfare Code and
the Education Act of 1982 in providing for the purposes and functions of PTAs. In doing so, it lays
out the standards that are to guide school heads in deciding on whether official sanction shall be
vested in a group seeking recognition as a PTA:

I. General Policy

1. Every elementary and secondary school shall organize a Parents-Teachers Association (PTA) for
the purpose of providing a forum for the discussion of issues and their solutions related to the
total school program and to ensure the full cooperation of parents in the efficient implementation
of such program.

Every PTA shall provide mechanisms to ensure proper coordination with the members of the
community, provide an avenue for discussing relevant concerns and provide assistance and
support to the school for the promotion of their common interest. Standing committees may be
created within the PTA organization to coordinate with community members. Regular fora may be
conducted with local government units, civic organizations and other stakeholders to foster unity and
cooperation.

2. As an organization operating in the school, the PTA shall adhere to all existing policies and
implementing guidelines issued or hereinafter may be issued by the Department of Education.

The PTA shall serve as support group and as a significant partner of the school whose relationship
shall be defined by cooperative and open dialogue to promote the welfare of

the students.  (Emphasis supplied)

69

The involvement of school heads is limited to the initial stages of formation of PTAs. Once
organized, the school heads hold no power over PTAs as they are limited to acting in an advisory
capacity. Article IV (1) (d) of the Department Order categorically provides:

IV. Board of Directors and Officers

1. The administration of the affairs and management of activities of the PTA is vested with the Board
of Directors and its officers in accordance with these guidelines or their respective Constitution and
By-Laws, if any, which shall adhere to the following:
....

d. The School Head shall not serve as a member of the Board of Directors but as adviser to the
PTA[.]  (Emphasis supplied)
70

Petitioner makes much of how "the assailed Department Order provides that the recognition of the
PTCA or any PTA shall be cancelled by the Division PTA Affairs Committee upon the mere
recommendation of the School Head. And in case of cancellation of the recognition of the PTA, the
School Head is given the power the [sic] call a special election to replace the Board of Directors of
the PTA whose recognition was cancelled."  It claims that this buttresses its claim that the
71

Department Order 2009 undermines the organizational independence of PTAs.

In the first place, all that a school head has is recommending authority. More importantly, petitioner
overlooks the qualifier to the school head’s recommending authority:

IX. Prohibited Activities and Sanctions

....

5. The recognition of any PTA shall be cancelled by the Division PTA Affairs Committee upon the
recommendation of the School Head concerned for any violation of the above-mentioned prohibited
activities and these Guidelines.

Thereafter, the School Head may call for a special election to replace the Board of Directors of the
PTA whose recognition was cancelled.  Criminal, civil and/or administrative actions may be taken
1âwphi1

against any member or officer of the Board of the PTA who may appear responsible for failure to
submit the necessary annual financial statements or for failure to account the funds of the
PTA.  (Emphasis supplied)
72

It is evident that the recommending authority of the school head is not as "unbridled" as petitioner
claims it to be. On the contrary, the assailed Department Order specifically limits a school head’s
competence to recommend cancellation of recognition to the instances defined by Article IX as
prohibited activities.

IX

Reference to an approving authority in order that an organization may be given official recognition by
state organs, and thus vested with the competencies and privileges attendant to such recognition, is
by no means unique to PTAs. By way of example, similar processes and requirements are observed
and adhered to by organizations seeking recognition as business organizations (e.g.,
corporations),  government contractors,  legitimate labor organizations,  and political parties
73 74 75

participating in the party-list system.

76

The demarcation of the broad right to form associations vis-à-vis regulations such as registration,
requisite approval by defined authorities, and other such formalities is settled in jurisprudence.

In Philippine Association of Free Labor Unions v. Secretary of Labor,  this court was confronted with
77

allegations that Section 23  of Republic Act No. 875, otherwise known as the Industrial Peace Act,
78

which spelled out the requirements for registration of labor organizations, "unduly curtail[ed] the
freedom of assembly and association guaranteed in the Bill of Rights." 79
Sustaining the validity of Section 23, this court put to rest any qualms about how registration and
approval, as requisites to the acquisition of legal personality and the exercise of rights and privileges
that are accorded to an officially recognized organization, are not incompatible with the right to form
associations. On the contrary, this court underscored that the establishment of these requirements is
a valid exercise of police power as public interest underlies the conduct of associations seeking state
recognition:

The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails the freedom of
assembly and association guaranteed in the Bill of Rights is devoid of factual basis. The registration
prescribed in paragraph (b) of said Section is not a limitation to the right of assembly or association,
which may be exercised with or without said registration. The latter is merely a condition sine qua
non for the acquisition of legal personality by labor organizations, associations or unions and the
possession of the "rights and privileges granted by law to legitimate labor organizations." The
Constitution does not guarantee these rights and privileges, much less said personality, which are
mere statutory creations, for the possession and exercise of which registration is required to protect
both labor and the public against abuses, fraud, or impostors who pose as organizers, although not
truly accredited agents of the union they purport to represent. Such requirement is a valid exercise of
the police power, because the activities in which labor organizations, associations and union of
workers are engaged affect public interest, which should be protected. Furthermore, the obligation to
submit financial statements, as a condition for the non-cancellation of a certificate of registration, is a
reasonable regulation for the benefit of the members of the organization, considering that the same
generally solicits funds or membership, as well as oftentimes collects, on behalf of its members,
huge amounts of money due to them or to the organization.  (Citations omitted)
80

The right to organize does not equate to the state’s obligation to accord official status to every single
association that comes into existence. It is one thing for individuals to galvanize themselves as a
collective, but it is another for the group that they formed to not only be formally recognized by the
state, but also bedecked with all the benefits and privileges that are attendant to official status. In
pursuit of public interest, the state can set reasonable regulations—procedural, formal, and
substantive—with which organizations seeking state imprimatur must comply.

In this court’s January 9, 1973 Resolution, In the Matter of the Integration of the Bar of the
Philippines,  this court underscored the importance of the state’s regulation of the collectivity
81

(although hitherto "unorganized and incohesive" ) of those who, by their admission to the bar, are
82

burdened with responsibilities to society, courts, colleagues, and clients.

This court quoted with approval the following statements made by the Commission on Bar
Integration:

In all cases where the validity of Bar integration measures has been put in issue, the Courts have
upheld their constitutionality.

The judicial pronouncements support this reasoning:

— Courts have inherent power to supervise and regulate the practice of law.

— The practice of law is not a vested right but a privilege; a privilege, moreover,
clothed with public interest, because a lawyer owes duties not only to his client, but
also to his brethren in the profession, to the courts, and to the nation; and takes part
in one of the most important functions of the State, the administration of justice, as
an officer of the court.
 — Because the practice of law is privilege clothed with public interest, it is far and
just that the exercise of that privilege be regulated to assure compliance with the
lawyer's public responsibilities[.] 83

For the same purpose of protecting and advancing public interest, this court has sustained the
validity not only of those requirements relating to the establishment and registration of associations,
but also the substantive standards delimiting who may join organizations. This is illustrated in United
Pepsi-Cola Supervisory Union v. Laguesma,  where this court recognized the validity of the first
84

sentence of Art. 245 of the Labor Code,  which prohibits managerial employees from forming,
85

assisting, or joining labor organizations, in relation to Article III, Section 8 of the 1987 Constitution.
Here, this court recognized that a classification distinguishing managerial employees from rank-and-
file employees permitted to form and join labor organizations is grounded on identifiable and
appreciable differences. Thus, "there is a rational basis for prohibiting managerial employees from
forming or joining labor organizations;"  and, "as to [managerial employees] the right of self-
86

organization may be regulated and even abridged." 87

Nor is the guarantee of organizational right in Art. III, §8 infringed by a ban against managerial
employees forming a union. The right guaranteed in Art. III, §8 is subject to the condition that its
exercise should be for purposes "not contrary to law." In the case of Art. 245, there is a rational basis
for prohibiting managerial employees from forming or joining labor organizations. As Justice Davide,
Jr., himself a constitutional commissioner, said in his ponencia in Philips Industrial Development,
Inc. v. NLRC:

In the first place, all these employees, with the exception of the service engineers and the sales
force personnel, are confidential employees. Their classification as such is not seriously disputed by
PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them as
confidential employees. By the very nature of their functions, they assist and act in a confidential
capacity to, or have access to confidential matters of, persons who exercise managerial functions in
the field of labor relations. As such, the rationale behind the ineligibility of managerial employees to
form, assist or joint a labor union equally applies to them.

In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court elaborated on this rationale,
thus:

". . . The rationale for this inhibition has been stated to be, because if these managerial employees
would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the
Union in view of evident conflict of interests. The Union can also become company-dominated with
the presence of managerial employees in Union membership."

To be sure, the Court in Philips Industrial was dealing with the right of confidential employees to
organize. But the same reason for denying them the right to organize justifies even more the ban on
managerial employees from forming unions. After all, those who qualify as top or middle managers
are executives who receive from their employers information that not only is confidential but also is
not generally available to the public, or to their competitors, or to other employees. It is hardly
necessary to point out that to say that the first sentence of Art. 245 is unconstitutional would be to
contradict the decision in that case.88

Our educational system demonstrates the integral role of parents. It is a system founded not just on
the relationship between students on the one hand and educators or schools on the other, but as
much on the participation of parents and guardians. Parents and guardians are foremost in the
Education Act of 1982’s enumeration of the "members and elements of the educational community":
Section 6. Definition and Coverage – "Educational community" refers to those persons or groups of
persons as such or associated in institutions involved in organized teaching and learning systems.

The members and elements of the educational community are:

1. "Parents" or guardians or the head of the institution or foster home which has custody of
the pupil or student.

2. "Students," or those enrolled in and who regularly attend and educational institution of
secondary or higher level of a person engaged in formal study. "Pupils," are those who
regularly attend a school of elementary level under the supervision and tutelage of a teacher.

3 "School personnel," or all persons working for an educational institution, which includes the
following:

a. "Teaching or academic staff," or all persons engaged in actual teaching and/or

research assignments, either on full-time or part-time basis, in all levels of the
educational system.

b. "School administrators," or all persons occupying policy implementing positions

having to do with the functions of the school in all levels.

c. "Academic non-teaching personnel," or those persons holding some academic

qualifications and performing academic functions directly supportive of teaching,
such as registrars, librarians, research assistants, research aides, and similar staff.

d. "Non-academic personnel," or all other school personnel not falling under the
definition and coverage of teaching and academic staff, school administrators and
academic non-teaching personnel.

4. "Schools," or institutions recognized by the State which undertake educational operations.

A parent-teacher association is a mechanism for effecting the role of parents (who would otherwise
be viewed as outsiders) as an indispensable element of educational communities. Rather than being
totally independent of or removed from schools, a parent-teacher association is more aptly
considered an adjunct of an educational community having a particular school as its locus. It is an
"arm" of the school. Given this view, the importance of regulation vis-à-vis investiture of official status
becomes manifest. According a parent-teacher association official status not only enables it to avail
itself of benefits and privileges but also establishes upon it its solemn duty as a pillar of the
educational system.

WHEREFORE, in light of the foregoing, the Petition is DISMISSED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 110571 March 10, 1994

FIRST LEPANTO CERAMICS, INC., petitioner,

vs.
THE COURT OF APPEALS and MARIWASA MANUFACTURING, INC., respondents.

Castillo, Laman, Tan & Pantaleon for petitioner.

De Borja, Medialdea, Ata, Bello, Guevarra & Serapio for private respondent.

NOCON, J.:

Brought to fore in this petition for certiorari and prohibition with application for preliminary injunction
is the novel question of where and in what manner appeals from decisions of the Board of
Investments (BOI) should be filed. A thorough scrutiny of the conflicting provisions of Batas
Pambansa Bilang 129, otherwise known as the "Judiciary Reorganization Act of 1980," Executive
Order No. 226, also known as the Omnibus Investments Code of 1987 and Supreme Court Circular
No. 1-91 is, thus, called for.

Briefly, this question of law arose when BOI, in its decision dated December 10, 1992 in BOI Case
No. 92-005 granted petitioner First Lepanto Ceramics, Inc.'s application to amend its BOI certificate
of registration by changing the scope of its registered product from "glazed floor tiles" to "ceramic
tiles." Eventually, oppositor Mariwasa filed a motion for reconsideration of the said BOI decision
while oppositor Fil-Hispano Ceramics, Inc. did not move to reconsider the same nor appeal
therefrom. Soon rebuffed in its bid for reconsideration, Mariwasa filed a petition for review with
respondent Court of Appeals pursuant to Circular 1-91.

Acting on the petition, respondent court required the BOI and petitioner to comment on Mariwasa's
petition and to show cause why no injunction should issue. On February 17, 1993, respondent court
temporarily restrained the BOI from implementing its decision. This temporary restraining order
lapsed by its own terms on March 9, 1993, twenty (20) days after its issuance, without respondent
court issuing any preliminary injunction.
On February 24, 1993, petitioner filed a "Motion to Dismiss Petition and to Lift Restraining Order" on
the ground that respondent court has no appellate jurisdiction over BOI Case No. 92-005, the same
being exclusively vested with the Supreme Court pursuant to Article 82 of the Omnibus Investments
Code of 1987.

On May 25, 1993, respondent court denied petitioner's motion to dismiss, the dispositive portion of
which reads as follows:

WHEREFORE, private respondent's motion to dismiss the petition is hereby

DENIED, for lack of merit.

Private respondent is hereby given an inextendible period of ten (10) days from
receipt hereof within which to file its comment to the petition. 1

Upon receipt of a copy of the above resolution on June 4, 1993, petitioner decided not to file any
motion for reconsideration as the question involved is essentially legal in nature and immediately
filed a petition for certiorari and prohibition before this Court.

Petitioner posits the view that respondent court acted without or in excess of its jurisdiction in issuing
the questioned resolution of May 25, 1993, for the following reasons:

I. Respondent court has no jurisdiction to entertain Mariwasa's appeal from the BOI's
decision in BOI Case No. 92-005, which has become final.

II. The appellate jurisdiction conferred by statute upon this Honorable Court cannot
be amended or superseded by Circular No. 1-91. 2

Petitioner then concludes that:

III. Mariwasa has lost it right to appeal . . . in this case. 3

Petitioner argues that the Judiciary Reorganization Act of 1980 or Batas Pambansa Bilang 129 and
Circular 1-91, "Prescribing the Rules Governing Appeals to the Court of Appeals from a Final Order
or Decision of the Court of Tax Appeals and Quasi-Judicial Agencies" cannot be the basis of
Mariwasa's appeal to respondent court because the procedure for appeal laid down therein runs
contrary to Article 82 of E.O. 226, which provides that appeals from decisions or orders of the BOI
shall be filed directly with this Court, to wit:

Judicial relief. — All orders or decisions of the Board

(of Investments) in cases involving the provisions of this Code shall immediately be
executory. No appeal from the order or decision of the Board by the party adversely
affected shall stay such an order or decision; Provided, that all appeals shall be filed
directly with the Supreme Court within thirty (30) days from receipt of the order or
decision.

On the other hand, Mariwasa maintains that whatever "obvious inconsistency" or "irreconcilable
repugnancy" there may have been between B.P. 129 and Article 82 of E.O. 226 on the question of
venue for appeal has already been resolved by Circular 1-91 of the Supreme Court, which was
promulgated on February 27, 1991 or four (4) years after E.O. 226 was enacted.

Sections 1, 2 and 3 of Circular 1-91, is herein quoted below:

 1. Scope. — These rules shall apply to appeals from final orders or decisions of the
Court of Tax Appeals. They shall also apply to appeals from final orders or decisions
of any quasi-judicial agency from which an appeal is now allowed by statute to the
Court of Appeals or the Supreme Court. Among these agencies are the Securities
and Exchange Commission, Land Registration Authority, Social Security
Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and
Technology Transfer, National Electrification Administration, Energy Regulatory
Board, National Telecommunications Commission, Secretary of Agrarian Reform and
Special Agrarian Courts under RA 6657, Government Service Insurance System,
Employees Compensation Commission, Agricultural Inventions Board, Insurance
Commission and Philippine Atomic Energy Commission.

2. Cases not covered. — These rules shall not apply to decisions and interlocutory
orders of the National Labor Relations Commission or the Secretary of Labor and
Employment under the Labor Code of the Philippines, the Central Board of
Assessment Appeals, and other quasi-judicial agencies from which no appeal to the
courts is prescribed or allowed by statute.

3. Who may appeal and where to appeal. — The appeal of a party affected by a final
order, decision, or judgment of the Court of Tax Appeals or of a quasi-judicial agency
shall be taken to the Court of Appeals within the period and in the manner herein
provided, whether the appeal involves questions of fact or of law or mixed questions
of fact and law. From final judgments or decisions of the Court of Appeals, the
aggrieved party may appeal by certiorari to the Supreme Court as provided in Rule
45 of the Rules of Court.

It may be called that Section 9(3) of B.P. 129 vests appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of quasi-judicial agencies on the Court of Appeals, to wit:

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders, 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 Intermediate Appellate Court shall have the power to try cases and conduct
hearings, receive evidence and perform any and all acts necessary to resolve factual
issues raised in cases falling within its original and appellate jurisdiction, including
the power to grant and conduct new trials or further proceedings.

These provisions shall not apply to decisions and interlocutory orders issued under
the Labor Code of the Philippines and by the Central Board of Assessment Appeals.

Clearly evident in the aforequoted provision of B.P. 129 is the laudable objective of providing a
uniform procedure of appeal from decisions of all quasi-judicial agencies for the benefit of the bench
and the bar. Equally laudable is the twin objective of B.P. 129 of unclogging the docket of this Court
to enable it to attend to more important tasks, which in the words of Dean Vicente G. Sinco, as
quoted in our decision in Conde v. Intermediate Appellate Court  is "less concerned with the
4

decisions of cases that begin and end with the transient rights and obligations of particular
individuals but is more intertwined with the direction of national policies, momentous economic and
social problems, the delimitation of governmental authority and its impact upon fundamental rights.

In Development Bank of the Philippines vs. Court of Appeals,  this Court noted that B.P. 129 did not
5

deal only with "changes in the rules on procedures" and that not only was the Court of Appeals
reorganized, but its jurisdiction and powers were also broadened by Section 9 thereof. Explaining
the changes, this Court said:

. . . Its original jurisdiction to issue writs of mandamus,

prohibition, certiorari and habeas corpus, which theretofore could be exercised only
in aid of its appellate jurisdiction, was expanded by (1) extending it so as to include
the writ of quo warranto, and also (2) empowering it to issue all said extraordinary
writs "whether or not in aid of its appellate jurisdiction." Its appellate jurisdiction was
also extended to cover not only final judgments of Regional Trial Courts, but also "all
final judgments, decisions, resolutions, orders or awards of . . . 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 sub-paragraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948,"
it being noteworthy in this connection that the text of the law is broad and
comprehensive, and the explicitly stated exceptions have no reference whatever to
the Court of Tax Appeals. Indeed, the intention to expand the original and appellate
jurisdiction of the Court of Appeals over quasi-judicial agencies, instrumentalities,
boards, or commissions, is further stressed by the last paragraph of Section 9 which
excludes from its provisions, only the "decisions and interlocutory orders issued
under the Labor Code of the Philippines and by the Central Board of Assessment
Appeals." 6

However, it cannot be denied that the lawmaking system of the country is far from perfect. During
the transitional period after the country emerged from the Marcos regime, the lawmaking power was
lodged on the Executive Department. The obvious lack of deliberation in the drafting of our laws
could perhaps explain the deviation of some of our laws from the goal of uniform procedure which
B.P. 129 sought to promote.

In exempli gratia, Executive Order No. 226 or the Omnibus Investments Code of 1987 provides that
all appeals shall be filed directly with the Supreme Court within thirty (30) days from receipt of the
order or decision.

Noteworthy is the fact that presently, the Supreme Court entertains ordinary appeals only from
decisions of the Regional Trial Courts in criminal cases where the penalty imposed is reclusion
perpetua or higher. Judgments of regional trial courts may be appealed to the Supreme Court only
by petition for review on certiorari within fifteen (15) days from notice of judgment in accordance with
Rule 45 of the Rules of Court in relation to Section 17 of the Judiciary Act of 1948, as amended, this
being the clear intendment of the provision of the Interim Rules that "(a)ppeals to the Supreme Court
shall be taken by petition for certiorari which shall be governed by Rule 45 of the Rules of Court."
Thus, the right of appeal provided in E.O. 226 within thirty (30) days from receipt of the order or
decision is clearly not in consonance with the present procedure before this Court. Only decisions,
orders or rulings of a Constitutional Commission (Civil Service Commission, Commission on
Elections or Commission on Audit), may be brought to the Supreme Court on original petitions
for certiorari under Rule 65 by the aggrieved party within thirty (30) days form receipt of a copy
thereof.
7
Under this contextual backdrop, this Court, pursuant to its Constitutional power under Section 5(5),
Article VIII of the 1987 Constitution to promulgate rules concerning pleading, practice and procedure
in all courts, and by way of implementation of B.P. 129, issued Circular 1-91 prescribing the rules
governing appeals to the Court of Appeals from final orders or decisions of the Court of Tax Appeals
and quasi-judicial agencies to eliminate unnecessary contradictions and confusing rules of
procedure.

Contrary to petitioner's contention, although a circular is not strictly a statute or law, it has, however,
the force and effect of law according to settled jurisprudence.  In Inciong v. de Guia,  a circular of this
8 9

Court was treated as law. In adopting the recommendation of the Investigating Judge to impose a
sanction on a judge who violated Circular No. 7 of this Court dated
September 23, 1974, as amended by Circular No. 3 dated April 24, 1975 and Circular No. 20 dated
October 4, 1979, requiring raffling of cases, this Court quoted the ratiocination of the Investigating
Judge, brushing aside the contention of respondent judge that assigning cases instead of raffling is a
common practice and holding that respondent could not go against the circular of this Court until it is
repealed or otherwise modified, as "(L)aws are repealed only by subsequent ones, and their violation
or non-observance shall not be excused by disuse, or customs or practice to the contrary." 10

The argument that Article 82 of E.O. 226 cannot be validly repealed by Circular 1-91 because the
former grants a substantive right which, under the Constitution cannot be modified, diminished or
increased by this Court in the exercise of its rule-making powers is not entirely defensible as it
seems. Respondent correctly argued that Article 82 of E.O. 226 grants the right of appeal from
decisions or final orders of the BOI and in granting such right, it also provided where and in what
manner such appeal can be brought. These latter portions simply deal with procedural aspects
which this Court has the power to regulate by virtue of its constitutional rule-making powers.

The case of Bustos v. Lucero  distinguished between rights created by a substantive law and those
11

arising from procedural law:

Substantive law creates substantive rights . . . . Substantive rights is a term which

includes those rights which one enjoys under the legal system prior to the
disturbance of normal relations (60 C.J., 980). Substantive law is that part of the law
which creates, defines and regulates rights, or which regulates rights and duties
which give rise to a cause of action, as oppossed to adjective or remedial law, which
prescribes the method of enforcing rights or obtains a redress for their invasion. 12

Indeed, the question of where and in what manner appeals from decisions of the BOI should be
brought pertains only to procedure or the method of enforcing the substantive right to appeal granted
by E.O. 226. In other words, the right to appeal from decisions or final orders of the BOI under E.O.
226 remains and continues to be respected. Circular 1-91 simply transferred the venue of appeals
from decisions of this agency to respondent Court of Appeals and provided a different period of
appeal, i.e., fifteen (15) days from notice. It did not make an incursion into the substantive right to
appeal.

The fact that BOI is not expressly included in the list of quasi-judicial agencies found in the third
sentence of Section 1 of Circular 1-91 does not mean that said circular does not apply to appeals
from final orders or decision of the BOI. The second sentence of Section 1 thereof expressly states
that "(T)hey shall also apply to appeals from final orders or decisions of any quasi-judicial agency
from which an appeal is now allowed by statute to the Court of Appeals or the Supreme Court." E.O.
266 is one such statute. Besides, the enumeration is preceded by the words "(A)mong these
agencies are . . . ," strongly implying that there are other quasi-judicial agencies which are covered
by the Circular but which have not been expressly listed therein. More importantly, BOI does not fall
within the purview of the exclusions listed in Section 2 of the circular. Only the following final
decisions and interlocutory orders are expressly excluded from the circular, namely, those of: (1) the
National Labor Relations Commission; (2) the Secretary of Labor and Employment; (3) the Central
Board of Assessment Appeals and (4) other quasi-judicial agencies from which no appeal to the
courts is prescribed or allowed by statute. Since in DBP v. CA  we upheld the appellate jurisdiction
13

of the Court of Appeals over the Court of Tax Appeals despite the fact that the same is not among
the agencies reorganized by B.P. 129, on the ground that B.P. 129 is broad and comprehensive,
there is no reason why BOI should be excluded from
Circular 1-91, which is but implementary of said law.

Clearly, Circular 1-91 effectively repealed or superseded Article 82 of E.O. 226 insofar as the
manner and method of enforcing the right to appeal from decisions of the BOI are concerned.
Appeals from decisions of the BOI, which by statute was previously allowed to be filed directly with
the Supreme Court, should now be brought to the Court of Appeals.

WHEREFORE, in view of the foregoing reasons, the instant petition for certiorari and prohibition with
application for temporary restraining order and preliminary injunction is hereby DISMISSED for lack
of merit. The Temporary Restraining Order issued on July 19, 1993 is hereby LIFTED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 129742 September 16, 1998

TERESITA G. FABIAN, petitioner,
vs.
HON. ANIANO A. DESIERTO, in his capacity as Ombudsman; HON. JESUS F. GUERRERO, in
his capacity as Deputy Ombudsman for Luzon; and NESTOR V. AGUSTIN, respondents.

REGALADO, J.:

Petitioner has appealed to us by certiorari under Rule 45 of the Rules of Court from the "Joint Order"
issued by public respondents on June 18, 1997 in OMB-Adm. Case No. 0-95-0411 which granted
the motion for reconsideration of and absolved private respondent from administrative charges
for inter alia grave misconduct committed by him as then Assistant Regional Director, Region IV-A,
Department of Public Works and Highways (DPWH).

It appears from the statement and counter-statement of facts of the parties that petitioner Teresita G.
Fabian was the major stockholder and president of PROMAT Construction Development Corporation
(PROMAT) which was engaged in the construction business. Private respondent Nestor V. Agustin
was the incumbent District Engineer of the First Metro Manila Engineering District (FMED) when he
allegedly committed the offenses for which he was administratively charged in the Office of the
Ombudsman.

PROMAT participated in the bidding for government construction projects including those under the
FMED, and private respondent, reportedly taking advantage of his official position, inveigled
petitioner into an amorous relationship. Their affair lasted for some time, in the course of which
private respondent gifted PROMAT with public works contracts and interceded for it in problems
concerning the same in his office.

Later, misunderstandings and unpleasant incidents developed between the parties and when
petitioner tried to terminate their relationship, private respondent refused and resisted her attempts
to do so to the extent of employing acts of harassment, intimidation and threats. She eventually filed
the aforementioned administrative case against him in a letter-complaint dated July 24, 1995.

The said complaint sought the dismissal of private respondent for violation of Section 19, Republic
Act No. 6770 (Ombudsman Act of 1989) and Section 36 of Presidential Decree No. 807 (Civil
Service Decree), with an ancillary prayer for his preventive suspension. For purposes of this case,
the charges referred to may be subsumed under the category of oppression, misconduct, and
disgraceful or immoral conduct.

On January 31, 1996, Graft Investigator Eduardo R. Benitez issued a resolution finding private
respondent guilty of grave misconduct and ordering his dismissal from the service with forfeiture of
all benefits under the law. His resolution bore the approval of Director Napoleon Baldrias and
Assistant Ombudsman Abelardo Aportadera of their office.

Herein respondent Ombudsman, in an Order dated February 26, 1996, approved the aforesaid
resolution with modifications, by finding private respondent guilty of misconduct and meting out the
penalty of suspension without pay for one year. After private respondent moved for reconsideration,
respondent Ombudsman discovered that the former's new counsel had been his "classmate and
close associate" hence he inhibited himself. The case was transferred to respondent Deputy
Ombudsman Jesus F. Guerrero who, in the now challenged Joint Order of June 18, 1997, set aside
the February 26, 1997 Order of respondent Ombudsman and exonerated private respondent from
the administrative charges.

II

In the present appeal, petitioner argues that Section 27 of Republic Act No. 6770 (Ombudsman Act
of 1989)   pertinently provides that —
1

In all administrative disciplinary cases, orders, directives or decisions of the Office of

the Ombudsman may be appealed to the Supreme Court by filing a petition
for certiorari within ten (10) days from receipt of the written notice of the order,
directive or decision or denial of the motion for reconsideration in accordance with
Rule 45 of the Rules of Court (Emphasis supplied)

However, she points out that under Section 7, Rule III of Administrative Order No. 07 (Rules of
Procedure of the Office of the Ombudsman),   when a respondent is absolved of the charges in an
2

administrative proceeding the decision of the Ombudsman is final and unappealable. She
accordingly submits that the Office of the Ombudsman has no authority under the law to restrict, in
the manner provided in its aforesaid Rules, the right of appeal allowed by Republic Act No. 6770, nor
to limit the power of review of this Court. Because of the aforecited provision in those Rules of
Procedure, she claims that she found it "necessary to take an alternative recourse under Rule 65 of
the Rules of Court, because of the doubt it creates on the availability of appeal under Rule 45 of the
Rules of Court.

Respondents filed their respective comments and rejoined that the Office of the Ombudsman is
empowered by the Constitution and the law to promulgate its own rules of procedure. Section 13(8),
Article XI of the 1987 Constitution provides, among others, that the Office of the Ombudsman can
"(p)romulgate its rules of procedure and exercise such other powers or perform such functions or
duties as may be provided by law."

Republic Act No. 6770 duly implements the Constitutional mandate with these relevant provisions:
 Sec. 14. Restrictions. — . . . No court shall hear any appeal or application for remedy
against the decision or findings of the Ombudsman except the Supreme Court on
pure questions of law.

x x x           x x x          x x x

Sec. 18. Rules of Procedure. — (1) The Office of the Ombudsman shall promulgate
its own rules of procedure for the effective exercise or performance of its powers,
functions, and duties.

x x x           x x x          x x x

Sec. 23. Formal Investigation. — (1) Administrative investigations by the Office of the
Ombudsman shall be in accordance with its rules of procedure and consistent with
due process. . . . .

x x x           x x x          x x x

Sec. 27. Effectivity and Finality of Decisions. — All previsionary orders at the Office
of the Ombudsman are immediately effective and executory.

A motion for reconsideration of any order, directive or decision of the Office of the
Ombudsman must be filed within five (5) days after receipt of written notice and shall
be entertained only on any of the following grounds:

x x x           x x x          x x x

Findings of fact by the Office of the Ombudsman when supported by substantial

evidence are conclusive. Any order, directive or decision imposing the penalty of
public censure or reprimand, suspension of not more than one month salary shall be
final and unappealable.

In all administrative disciplinary cases, orders, directives or decisions of the Office of

the Ombudsman may be appealed to the Supreme Court by filing a petition
for certiorari within ten (10) days from receipt of the written notice of the order,
directive or decision or denial of the motion for reconsideration in accordance with
Rule 45 of the Rules of Court.

The above rules may be amended or modified by the Office of the Ombudsman as
the interest of justice may require.

Respondents consequently contend that, on the foregoing constitutional and statutory authority,
petitioner cannot assail the validity of the rules of procedure formulated by the Office of the
Ombudsman governing the conduct of proceedings before it, including those rules with respect to
the availability or non-availability of appeal in administrative cases, such as Section 7, Rule III of
Administrative Order No. 07.

Respondents also question the propriety of petitioner's proposition that, although she definitely
prefaced her petition by categorizing the same as "an appeal by certiorari under Rule 45 of the Rules
of Court," she makes the aforequoted ambivalent statement which in effect asks that, should the
remedy under Rule 45 be unavailable, her petition be treated in the alternative as an original action
for certiorari under Rule 65. The parties thereafter engage in a discussion of the differences between
a petition for review on certiorari under Rule 45 and a special civil action of certiorari under Rule 65.

Ultimately, they also attempt to review and rationalize the decisions of this Court applying Section 27
of Republic Act. No. 6770 vis-a-vis Section 7, Rule III of Administrative Order No. 07. As correctly
pointed out by public respondent, Ocampo IV vs. Ombudsman, et al.  and Young vs. Office of the
3

Ombudsman, et al.  were original actions for certiorari under Rule 65. Yabut vs. Office of the
4

Ombudsman, et al.   was commenced by a petition for review on certiorari under Rule 45. Then
5

came Cruz, Jr. vs. People, et al.,  Olivas vs. Office of the Ombudsman, et al.,  Olivarez vs.
6 7

Sandiganbayan, et al.,  and Jao, et al. vs. Vasquez,  which were for certiorari, prohibition and/or
8 9

mandamus under Rule 65. Alba vs. Nitorreda, et al.   was initiated by a pleading unlikely
10

denominated as an "Appeal/Petition for Certiorari and/or Prohibition," with a prayer for ancillary

remedies, and ultimately followed by Constantino vs. Hon. Ombudsman Aniano Desierto, et
al.   which was a special civil action for certiorari.
11

Considering, however, the view that this Court now takes of the case at bar and the issues therein
which will shortly be explained, it refrains from preemptively resolving the controverted points raised
by the parties on the nature and propriety of application of the writ of certiorari when used as a mode
of appeal or as the basis of a special original action, and whether or not they may be resorted to
concurrently or alternatively, obvious though the answers thereto appear to be. Besides, some
seemingly obiter statements in Yabut and Alba could bear reexamination and clarification. Hence,
we will merely observe and lay down the rule at this juncture that Section 27 of Republic Act No.
6770 is involved only whenever an appeal by certiorari under Rule 45 is taken from a decision in an
administrative disciplinary action. It cannot be taken into account where an original action
for certiorari under Rule 65 is resorted to as a remedy for judicial review, such as from an incident in
a criminal action.

III

After respondents' separate comments had been filed, the Court was intrigued by the fact, which
does not appear to have been seriously considered before, that the administrative liability of a public
official could fall under the jurisdiction of both the Civil Service Commission and the Office of the
Ombudsman. Thus, the offenses imputed to herein private respondent were based on both Section
19 of Republic Act No. 6770 and Section 36 of Presidential Decree No. 807. Yet, pursuant to the
amendment of Section 9, Batas Pambansa Blg. 129 by Republic Act No. 7902, all adjudications by
the Civil Service Commission in administrative disciplinary cases were made appealable to the Court
of Appeals effective March 18, 1995, while those of the Office of the Ombudsman are appealable to
this Court.

It could thus be possible that in the same administrative case involving two respondents, the
proceedings against one could eventually have been elevated to the Court of Appeals, while the
other may have found its way to the Ombudsman from which it is sought to be brought to this Court.
Yet systematic and efficient case management would dictate the consolidation of those cases in the
Court of Appeals, both for expediency and to avoid possible conflicting decisions.

Then there is the consideration that Section 30, Article VI of the 1987 Constitution provides that "(n)o
law shall be passed increasing the appellate jurisdiction of the Supreme Court as provided in this
Constitution without its advice and consent," and that Republic Act No. 6770, with its challenged
Section 27, took effect on November 17, 1989, obviously in spite of that constitutional prohibition.
The conventional rule, however, is that a challenge on constitutional grounds must be raised by a
party to the case, neither of whom did so in this case, but that is not an inflexible rule, as we shall
explain.
Since the constitution is intended for the observance of the judiciary and other departments of the
government and the judges are sworn to support its provisions; the courts are not at liberty to
overlook or disregard its commands or countenance evasions thereof. When it is clear that a statute
transgresses the authority vested in a legislative body, it is the duty of the courts to declare that the
constitution, and not the statute, governs in a case before them for
judgment.  12

Thus, while courts will not ordinarily pass upon constitutional questions which are not raised in the
pleadings,   the rule has been recognized to admit of certain exceptions. It does not preclude a court
13

from inquiring into its own jurisdiction or compel it to enter a judgment that it lacks jurisdiction to
enter. If a statute on which a court's jurisdiction in a proceeding depends is unconstitutional, the
court has no jurisdiction in the proceeding, and since it may determine whether or not it has
jurisdiction, it necessarily follows that it may inquire into the constitutionality of the statute. 
14

Constitutional questions, not raised in the regular and orderly procedure in the trial are ordinarily
rejected unless the jurisdiction of the court below or that of the appellate court is involved in which
case it may be raised at any time or on the court's own motion.   The Court ex mero motu may take
15

cognizance of lack of jurisdiction at any point in the case where that fact is developed.   The court
16

has a clearly recognized right to determine its own jurisdiction in any proceeding.  17

The foregoing authorities notwithstanding, the Court believed that the parties hereto should be
further heard on this constitutional question. Correspondingly, the following resolution was issued on
May 14, 1998, the material parts stating as follows:

The Court observes that the present petition, from the very allegations thereof, is "an
appeal by certiorari under Rule 45 of the Rules of Court from the "Joint Order (Re:
Motion for Reconsideration)" issued in OMB-Adm. Case No. 0-95-0411, entitled
"Teresita G. Fabian vs. Engr. Nestor V. Agustin, Asst. Regional Director, Region IV-
A, EDSA, Quezon City," which absolved the latter from the administrative charges for
grave misconduct, among others.

It is further averred therein that the present appeal to this Court is allowed under
Section 27 of the Ombudsman Act of 1987 (R.A. No. 6770) and, pursuant thereto,
the Office of the Ombudsman issued its Rules of Procedure, Section 7 whereof is
assailed by petitioner in this proceeding. It will be recalled that R.A. No. 6770 was
enacted on November 17, 1989, with Section 27 thereof pertinently providing that all
administrative disciplinary cases, orders, directives or decisions of the Office of the
Ombudsman may be appealed to this Court in accordance with Rule 45 of the Rules
of Court.

The Court notes, however, that neither the petition nor the two comments thereon
took into account or discussed the validity of the aforestated Section 27 of R.A. No.
8770 in light of the provisions of Section 30, Article VI of the 1987 Constitution that
"(n)o law shall be passed increasing the appellate jurisdiction of the Supreme Court
as provided in this Constitution without its advice and consent."

The Court also invites the attention of the parties to its relevant ruling in First
Lepanto Ceramics, Inc. vs. The Court of Appeals, et al. (G.R. No. 110571, October 7,
1994, 237 SCRA 519) and the provisions of its former Circular No. 1-91 and Revised
Administrative Circular No. 1-95, as now substantially reproduced in Rule 43 of the
1997 revision of the Rules of Civil Procedure.
 In view of the fact that the appellate jurisdiction of the Court is invoked and involved
in this case, and the foregoing legal considerations appear to impugn the
constitutionality and validity of the grant of said appellate jurisdiction to it, the Court
deems it necessary that the parties be heard thereon and the issue be first resolved
before conducting further proceedings in this appellate review.

ACCORDINGLY, the Court Resolved to require the parties to SUBMIT their position
and arguments on the matter subject of this resolution by filing their corresponding
pleadings within ten (10) days from notice hereof.

IV

The records do not show that the Office of the Solicitor General has complied with such requirement,
hence the Court dispenses with any submission it should have presented. On the other hand,
petitioner espouses the theory that the provision in Section 27 of Republic Act No. 6770 which
authorizes an appeal by certiorari to this Court of the aforementioned adjudications of the Office of
the Ombudsman is not violative of Section 30, Article VI of the Constitution. She claims that what is
proscribed is the passage of a law "increasing" the appellate jurisdiction of this Court "as provided in
this Constitution," and such appellate jurisdiction includes "all cases in which only an error or
question of law is involved." Since Section 5(2)(e), Article VIII of the Constitution authorizes this
Court to review, revise, reverse, modify, or affirm on appeal or certiorari the aforesaid final judgment
or orders "as the law or the Rules of Court may provide," said Section 27 does not increase this
Court's appellate jurisdiction since, by providing that the mode of appeal shall be by petition
for certiorari under Rule 45, then what may be raised therein are only questions of law of which this
Court already has jurisdiction.

We are not impressed by this discourse. It overlooks the fact that by jurisprudential developments
over the years, this Court has allowed appeals by certiorari under Rule 45 in a substantial number of
cases and instances even if questions of fact are directly involved and have to be resolved by the
appellate court.   Also, the very provision cited by petitioner specifies that the appellate jurisdiction of
18

this Court contemplated therein is to be exercised over "final judgments and orders of lower courts,"
that is, the courts composing the integrated judicial system. It does not include the quasi-judicial
bodies or agencies, hence whenever the legislature intends that the decisions or resolutions of the
quasi-judicial agency shall be reviewable by the Supreme Court or the Court of Appeals, a specific
provision to that effect is included in the law creating that quasi-judicial agency and, for that matter,
any special statutory court. No such provision on appellate procedure is required for the regular
courts of the integrated judicial system because they are what are referred to and already provided
for, in Section 5, Article VIII of the Constitution.

Apropos to the foregoing, and as correctly observed by private respondent, the revised Rules of Civil
Procedure   preclude appeals from quasi-judicial agencies to the Supreme Court via a petition for
19

review on certiorari under Rule 45. In the 1997 Rules of Civil Procedure, Section 1 of Rule 45, on
"Appeal by Certiorari to the Supreme Court," explicitly states:

Sec. 1. Filing of petition with Supreme Court. — A person desiring to appeal

by certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by
law, may file with the Supreme Court a verified petition for review on certiorari. The
petition shall raise only questions of law which must be distinctly set forth. (Emphasis
ours).
This differs from the former Rule 45 of the 1964 Rules of Court which made mention only of the
Court of Appeals, and had to be adopted in statutes creating and providing for appeals from certain
administrative or quasi-judicial agencies, whenever the purpose was to restrict the scope of the
appeal to questions of law. That intended limitation on appellate review, as we have just discussed,
was not fully subserved by recourse to the former Rule 45 but, then, at that time there was no
uniform rule on appeals from quasi-judicial agencies.

Under the present Rule 45, appeals may be brought through a petition for review on certiorari but
only from judgments and final orders of the courts enumerated in Section 1 thereof. Appeals from
judgments and final orders of quasi-judicial agencies   are now required to be brought to the Court
20

of Appeals on a verified petition for review, under the requirements and conditions in Rule 43 which
was precisely formulated and adopted to provide for a uniform rule of appellate procedure for quasi-
judicial agencies. 
21

It is suggested, however, that the provisions of Rule 43 should apply only to "ordinary" quasi-judicial
agencies, but not to the Office of the Ombudsman which is a "high constitutional body." We see no
reason for this distinction for, if hierarchical rank should be a criterion, that proposition thereby
disregards the fact that Rule 43 even includes the Office of the President and the Civil Service
Commission, although the latter is even an independent constitutional commission, unlike the Office
of the Ombudsman which is a constitutionally-mandated but statutorily created body.

Regarding the misgiving that the review of the decision of the Office of the Ombudsman by the Court
of Appeals would cover questions of law, of fact or of both, we do not perceive that as an
objectionable feature. After all, factual controversies are usually involved in administrative
disciplinary actions, just like those coming from the Civil Service Commission, and the Court of
Appeals as a trier of fact is better prepared than this Court to resolve the same. On the other hand,
we cannot have this situation covered by Rule 45 since it now applies only to appeals from the
regular courts. Neither can we place it under Rule 65 since the review therein is limited to
jurisdictional questions. *

The submission that because this Court has taken cognizance of cases involving Section 27 of
Republic Act No. 6770, that fact may be viewed as "acquiescence" or "acceptance" by it of the
appellate jurisdiction contemplated in said Section 27, is unfortunately too tenuous. The jurisdiction
of a court is not a question of acquiescence as a matter of fact but an issue of conferment as a
matter of law. Besides, we have already discussed the cases referred to, including the inaccuracies
of some statements therein, and we have pointed out the instances when Rule 45 is involved, hence
covered by Section 27 of Republic Act No. 6770 now under discussion, and when that provision
would not apply if it is a judicial review under Rule 65.

Private respondent invokes the rule that courts generally avoid having to decide a constitutional
question, especially when the case can be decided on other grounds. As a general proposition that
is correct. Here, however, there is an actual case susceptible of judicial determination. Also, the
constitutional question, at the instance of this Court, was raised by the proper parties, although there
was even no need for that because the Court can rule on the matter sua sponte when its appellate
jurisdiction is involved. The constitutional question was timely raised, although it could even be
raised any time likewise by reason of the jurisdictional issue confronting the Court. Finally, the
resolution of the constitutional issue here is obviously necessary for the resolution of the present
case. 22

It is, however, suggested that this case could also be decided on other grounds, short of passing
upon the constitutional question. We appreciate the ratiocination of private respondent but regret
that we must reject the same. That private respondent could be absolved of the charge because the
decision exonerating him is final and unappealable assumes that Section 7, Rule III of Administrative
Order No. 07 is valid, but that is precisely one of the issues here. The prevailing rule that the Court
should not interfere with the discretion of the Ombudsman in prosecuting or dismissing a complaint
is not applicable in this administrative case, as earlier explained. That two decisions rendered by this
Court supposedly imply the validity of the aforementioned Section 7 of Rule III is precisely under
review here because of some statements therein somewhat at odds with settled rules and the
decisions of this Court on the same issues, hence to invoke the same would be to beg the question.

Taking all the foregoing circumstances in their true legal roles and effects, therefore, Section 27 of
Republic Act No. 6770 cannot validly authorize an appeal to this Court from decisions of the Office of
the Ombudsman in administrative disciplinary cases. It consequently violates the proscription in
Section 30, Article VI of the Constitution against a law which increases the appellate jurisdiction of
this Court. No countervailing argument has been cogently presented to justify such disregard of the
constitutional prohibition which, as correctly explained in First Lepanto Ceramics, Inc. vs. The Court
of Appeals, et al.   was intended to give this Court a measure of control over cases placed under its
23

appellate jurisdiction. Otherwise, the indiscriminate enactment of legislation enlarging its appellate
jurisdiction would unnecessarily burden the Court.  24

We perforce have to likewise reject the supposed inconsistency of the ruling in First Lepanto
Ceramics and some statements in Yabut and Alba, not only because of the difference in the factual
settings, but also because those isolated cryptic statements in Yabut and Alba should best be
clarified in the adjudication on the merits of this case. By way of anticipation, that will have to be
undertaken by the proper court of competent jurisdiction.

Furthermore, in addition to our preceding discussion on whether Section 27 of Republic Act No.
6770 expanded the jurisdiction of this Court without its advice and consent, private respondent's
position paper correctly yields the legislative background of Republic Act No. 6770. On September
26, 1989, the Conference Committee Report on S.B. No. 453 and H.B. No. 13646, setting forth the
new version of what would later be Republic Act No. 6770, was approved on second reading by the
House of Representatives.   The Senate was informed of the approval of the final version of the Act
25

on October 2, 1989   and the same was thereafter enacted into law by President Aquino on
26

November 17, 1989.

Submitted with said position paper is an excerpt showing that the Senate, in the deliberations on the
procedure for appeal from the Office of the Ombudsman to this Court, was aware of the provisions of
Section 30, Article III of the Constitution. It also reveals that Senator Edgardo Angara, as a co-author
and the principal sponsor of S.B. No. 543 admitted that the said provision will expand this Court's
jurisdiction, and that the Committee on Justice and Human Rights had not consulted this Court on
the matter, thus:

INTERPELLATION OF SENATOR SHAHANI

x x x           x x x          x x x

Thereafter, with reference to Section 22(4) which provides that the decisions of the
Office of the Ombudsman may be appealed to the Supreme Court, in reply to
Senator Shahani's query whether the Supreme Court would agree to such provision
in the light of Section 30, Article VI of the Constitution which requires its advice and
concurrence in laws increasing its appellate jurisdiction, Senator Angara informed
that the Committee has not yet consulted the Supreme Court regarding the matter.
 He agreed that the provision will expand the Supreme Court's jurisdiction by allowing
appeals through petitions for review, adding that they should be appeals
on certiorari. 
27

There is no showing that even up to its enactment, Republic Act No. 6770 was ever referred
to this Court for its advice and consent. 
28

VI

As a consequence of our ratiocination that Section 27 of Republic Act No. 6770 should be struck
down as unconstitutional, and in line with the regulatory philosophy adopted in appeals from quasi-
judicial agencies in the 1997 Revised Rules of Civil Procedure, appeals from decisions of the Office
of the Ombudsman in administrative disciplinary cases should be taken to the Court of Appeals
under the provisions of Rule 43.

There is an intimation in the pleadings, however, that said Section 27 refers to appellate jurisdiction
which, being substantive in nature, cannot be disregarded by this Court under its rule-making power,
especially if it results in a diminution, increase or modification of substantive rights. Obviously,
however, where the law is procedural in essence and purpose, the foregoing consideration would
not pose a proscriptive issue against the exercise of the rule-making power of this Court. This brings
to fore the question of whether Section 27 of Republic Act No. 6770 is substantive or procedural.

It will be noted that no definitive line can be drawn between those rules or statutes which are
procedural, hence within the scope of this Court's rule-making power, and those which are
substantive. In fact, a particular rule may be procedural in one context and substantive in
another.   It is admitted that what is procedural and what is substantive is frequently a question of
29

great
difficulty.   It is not, however, an insurmountable problem if a rational and pragmatic approach is
30

taken within the context of our own procedural and jurisdictional system.

In determining whether a rule prescribed by the Supreme Court, for the practice and procedure of
the lower courts, abridges, enlarges, or modifies any substantive right, the test is whether the rule
really regulates procedure, that is, the judicial process for enforcing rights and duties recognized by
substantive law and for justly administering remedy and redress for a disregard or infraction of
them.   If the rule takes away a vested right, it is no; procedural. If the rule creates a right such as
31

the right to appeal, it may be classified as a substantive matter; but if it operates as a means of
implementing an existing right then the rule deals merely with procedure.  32

In the situation under consideration, a transfer by the Supreme Court, in the exercise of its rule-
making power, of pending cases involving a review of decisions of the Office of the Ombudsman in
administrative disciplinary actions to the Court of Appeals which shall now be vested with exclusive
appellate jurisdiction thereover, relates to procedure only.   This is so because it is not the right to
33

appeal of an aggrieved party which is affected by the law. That right has been preserved. Only
the procedure by which the appeal is to be made or decided has been changed. The rationale for
this is that no litigant has a vested right in a particular remedy, which may be changed by
substitution without impairing vested rights, hence he can have none in rules of procedure which
relate to the remedy.  34

Furthermore, it cannot be said that the transfer of appellate jurisdiction to the Court of Appeals in this
case is an act of creating a new right of appeal because such power of the Supreme Court to
transfer appeals to subordinate appellate courts is purely a procedural and not a substantive power.
Neither can we consider such transfer as impairing a vested right because the parties have still a
remedy and still a competent tribunal to administer that remedy.  35

Thus, it has been generally held that rules or statutes involving a transfer of cases from one court to
another, are procedural and remedial merely and that, as such, they are applicable to actions
pending at the time the statute went into effect   or, in the case at bar, when its invalidity was
36

declared. Accordingly, even from the standpoint of jurisdiction ex hypothesi, the validity of the
transfer of appeals in said cases to the Court of Appeals can be sustained.

WHEREFORE, Section 27 of Republic Act No. 6770 (Ombudsman Act of 1989), together with
Section 7, Rule III of Administrative Order No. 07 (Rules of Procedure of the Office of the
Ombudsman), and any other provision of law or issuance implementing the aforesaid Act and insofar
as they provide for appeals in administrative disciplinary cases from the Office of the Ombudsman to
the Supreme Court, are hereby declared INVALID and of no further force and effect.

The instant petition is hereby referred and transferred to the Court of Appeals for final disposition,
with said petition to be considered by the Court of Appeals pro hoc vice as a petition for review
under Rule 43, without prejudice to its requiring the parties to submit such amended or supplemental
pleadings and additional documents or records as it may deem necessary and proper.

SO ORDERED.
 Republic of the Philippines
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 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,   which cites Pineda vs. Lantin   and Philippine Pacific Fishing, Inc. vs.
4 5

Luna,   where this Court held that a Court of First Instance cannot interfere with the orders of the
6

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 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.   Well settled in our
8

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,   this rule was thoroughly
9

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,   is another case in point. Here, "the
11

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 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).   (Emphasis supplied.)
12

In San Miguel Corporation vs. Avelino,   We ruled that a judge of the Court of First Instance has the
13

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 .   This does not cover rules and regulations of general applicability issued by the
14

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.   In this case,
15

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:

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.   Here, petitioner Central Bank, like respondent in this case, argued that under Section
18
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

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,   regarding academic
24

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.

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.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-63915 April 24, 1985

LORENZO M. TAÑADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR

BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. [MABINI], petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON.
JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President ,
MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacañang Records Office, and
FLORENDO S. PABLO, in his capacity as Director, Bureau of Printing, respondents.

ESCOLIN, J.:

Invoking the people's right to be informed on matters of public concern, a right recognized in Section
6, Article IV of the 1973 Philippine Constitution,   as well as the principle that laws to be valid and
1

enforceable must be published in the Official Gazette or otherwise effectively promulgated,

petitioners seek a writ of mandamus to compel respondent public officials to publish, and/or cause
the publication in the Official Gazette of various presidential decrees, letters of instructions, general
orders, proclamations, executive orders, letter of implementation and administrative orders.

Specifically, the publication of the following presidential issuances is sought:

a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200,
234, 265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404,
406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574,
594, 599, 644, 658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961,
1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166, 1242, 1246, 1250, 1278,
1279, 1300, 1644, 1772, 1808, 1810, 1813-1817, 1819-1826, 1829-1840, 1842-
1847.
 b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153,
155, 161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-224,
226-228, 231-239, 241-245, 248, 251, 253-261, 263-269, 271-273, 275-283, 285-
289, 291, 293, 297-299, 301-303, 309, 312-315, 325, 327, 343, 346, 349, 357, 358,
362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444- 445, 473, 486, 488, 498,
501, 399, 527, 561, 576, 587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642,
665, 702, 712-713, 726, 837-839, 878-879, 881, 882, 939-940, 964,997,1149-
1178,1180-1278.

c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.

d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529,
1532, 1535, 1538, 1540-1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600, 1606-
1609, 1612-1628, 1630-1649, 1694-1695, 1697-1701, 1705-1723, 1731-1734, 1737-
1742, 1744, 1746-1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797, 1800,
1802-1804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829, 1831-1832, 1835-1836,
1839-1840, 1843-1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870,
1876-1889, 1892, 1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984,
1986-2028, 2030-2044, 2046-2145, 2147-2161, 2163-2244.

e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507,
509-510, 522, 524-528, 531-532, 536, 538, 543-544, 549, 551-553, 560, 563, 567-
568, 570, 574, 593, 594, 598-604, 609, 611- 647, 649-677, 679-703, 705-707, 712-
786, 788-852, 854-857.

f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81,
92, 94, 95, 107, 120, 122, 123.

g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439.

The respondents, through the Solicitor General, would have this case dismissed outright on the
ground that petitioners have no legal personality or standing to bring the instant petition. The view is
submitted that in the absence of any showing that petitioners are personally and directly affected or
prejudiced by the alleged non-publication of the presidential issuances in question   said petitioners
2

are without the requisite legal personality to institute this mandamus proceeding, they are not being
"aggrieved parties" within the meaning of Section 3, Rule 65 of the Rules of Court, which we quote:

SEC. 3. Petition for Mandamus.—When any tribunal, corporation, board or person

unlawfully neglects the performance of an act which the law specifically enjoins as a
duty resulting from an office, trust, or station, or unlawfully excludes another from the
use a rd enjoyment of a right or office to which such other is entitled, and there is no
other plain, speedy and adequate remedy in the ordinary course of law, the person
aggrieved thereby may file a verified petition in the proper court alleging the facts
with certainty and praying that judgment be rendered commanding the defendant,
immediately or at some other specified time, to do the act required to be done to
Protect the rights of the petitioner, and to pay the damages sustained by the
petitioner by reason of the wrongful acts of the defendant.

Upon the other hand, petitioners maintain that since the subject of the petition concerns a public
right and its object is to compel the performance of a public duty, they need not show any specific
interest for their petition to be given due course.
The issue posed is not one of first impression. As early as the 1910 case of Severino vs. Governor
General,   this Court held that while the general rule is that "a writ of mandamus would be granted to
3

a private individual only in those cases where he has some private or particular interest to be
subserved, or some particular right to be protected, independent of that which he holds with the
public at large," and "it is for the public officers exclusively to apply for the writ when public rights are
to be subserved [Mithchell vs. Boardmen, 79 M.e., 469]," nevertheless, "when the question is one of
public right and the object of the mandamus is to procure the enforcement of a public duty, the
people are regarded as the real party in interest and the relator at whose instigation the proceedings
are instituted need not show that he has any legal or special interest in the result, it being sufficient
to show that he is a citizen and as such interested in the execution of the laws [High, Extraordinary
Legal Remedies, 3rd ed., sec. 431].

Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a proper
party to the mandamus proceedings brought to compel the Governor General to call a special
election for the position of municipal president in the town of Silay, Negros Occidental. Speaking for
this Court, Mr. Justice Grant T. Trent said:

We are therefore of the opinion that the weight of authority supports the proposition
that the relator is a proper party to proceedings of this character when a public right
is sought to be enforced. If the general rule in America were otherwise, we think that
it would not be applicable to the case at bar for the reason 'that it is always
dangerous to apply a general rule to a particular case without keeping in mind the
reason for the rule, because, if under the particular circumstances the reason for the
rule does not exist, the rule itself is not applicable and reliance upon the rule may
well lead to error'

No reason exists in the case at bar for applying the general rule insisted upon by
counsel for the respondent. The circumstances which surround this case are different
from those in the United States, inasmuch as if the relator is not a proper party to
these proceedings no other person could be, as we have seen that it is not the duty
of the law officer of the Government to appear and represent the people in cases of
this character.

The reasons given by the Court in recognizing a private citizen's legal personality in the
aforementioned case apply squarely to the present petition. Clearly, the right sought to be enforced
by petitioners herein is a public right recognized by no less than the fundamental law of the land. If
petitioners were not allowed to institute this proceeding, it would indeed be difficult to conceive of
any other person to initiate the same, considering that the Solicitor General, the government officer
generally empowered to represent the people, has entered his appearance for respondents in this
case.

Respondents further contend that publication in the Official Gazette is not a sine qua non
requirement for the effectivity of laws where the laws themselves provide for their own effectivity
dates. It is thus submitted that since the presidential issuances in question contain special provisions
as to the date they are to take effect, publication in the Official Gazette is not indispensable for their
effectivity. The point stressed is anchored on Article 2 of the Civil Code:

Art. 2. Laws shall take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided, ...

The interpretation given by respondent is in accord with this Court's construction of said article. In a
long line of decisions,  this Court has ruled that publication in the Official Gazette is necessary in
4
those cases where the legislation itself does not provide for its effectivity date-for then the date of
publication is material for determining its date of effectivity, which is the fifteenth day following its
publication-but not when the law itself provides for the date when it goes into effect.

Respondents' argument, however, is logically correct only insofar as it equates the effectivity of laws
with the fact of publication. Considered in the light of other statutes applicable to the issue at hand,
the conclusion is easily reached that said Article 2 does not preclude the requirement of publication
in the Official Gazette, even if the law itself provides for the date of its effectivity. Thus, Section 1 of
Commonwealth Act 638 provides as follows:

Section 1. There shall be published in the Official Gazette [1] all important legisiative
acts and resolutions of a public nature of the, Congress of the Philippines; [2] all
executive and administrative orders and proclamations, except such as have no
general applicability; [3] decisions or abstracts of decisions of the Supreme Court
and the Court of Appeals as may be deemed by said courts of sufficient importance
to be so published; [4] such documents or classes of documents as may be required
so to be published by law; and [5] such documents or classes of documents as the
President of the Philippines shall determine from time to time to have general
applicability and legal effect, or which he may authorize so to be published. ...

The clear object of the above-quoted provision is to give the general public adequate notice of the
various laws which are to regulate their actions and conduct as citizens. Without such notice and
publication, there would be no basis for the application of the maxim "ignorantia legis non excusat."
It would be the height of injustice to punish or otherwise burden a citizen for the transgression of a
law of which he had no notice whatsoever, not even a constructive one.

Perhaps at no time since the establishment of the Philippine Republic has the publication of laws
taken so vital significance that at this time when the people have bestowed upon the President a
power heretofore enjoyed solely by the legislature. While the people are kept abreast by the mass
media of the debates and deliberations in the Batasan Pambansa—and for the diligent ones, ready
access to the legislative records—no such publicity accompanies the law-making process of the
President. Thus, without publication, the people have no means of knowing what presidential
decrees have actually been promulgated, much less a definite way of informing themselves of the
specific contents and texts of such decrees. As the Supreme Court of Spain ruled: "Bajo la
denominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos,
Instrucciones, Circulares y Reales ordines dictadas de conformidad con las mismas por el Gobierno
en uso de su potestad. 5

The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published in the
Official Gazette ... ." The word "shall" used therein imposes upon respondent officials an imperative
duty. That duty must be enforced if the Constitutional right of the people to be informed on matters of
public concern is to be given substance and reality. The law itself makes a list of what should be
published in the Official Gazette. Such listing, to our mind, leaves respondents with no discretion
whatsoever as to what must be included or excluded from such publication.

The publication of all presidential issuances "of a public nature" or "of general applicability" is
mandated by law. Obviously, presidential decrees that provide for fines, forfeitures or penalties for
their violation or otherwise impose a burden or. the people, such as tax and revenue measures, fall
within this category. Other presidential issuances which apply only to particular persons or class of
persons such as administrative and executive orders need not be published on the assumption that
they have been circularized to all concerned.  6
It is needless to add that the publication of presidential issuances "of a public nature" or "of general
applicability" is a requirement of due process. It is a rule of law that before a person may be bound
by law, he must first be officially and specifically informed of its contents. As Justice Claudio
Teehankee said in Peralta vs. COMELEC  : 7

In a time of proliferating decrees, orders and letters of instructions which all form part
of the law of the land, the requirement of due process and the Rule of Law demand
that the Official Gazette as the official government repository promulgate and publish
the texts of all such decrees, orders and instructions so that the people may know
where to obtain their official and specific contents.

The Court therefore declares that presidential issuances of general application, which have not been
published, shall have no force and effect. Some members of the Court, quite apprehensive about the
possible unsettling effect this decision might have on acts done in reliance of the validity of those
presidential decrees which were published only during the pendency of this petition, have put the
question as to whether the Court's declaration of invalidity apply to P.D.s which had been enforced
or implemented prior to their publication. The answer is all too familiar. In similar situations in the
past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage
District vs. Baxter Bank   to wit:
8

The courts below have proceeded on the theory that the Act of Congress, having
been found to be unconstitutional, was not a law; that it was inoperative, conferring
no rights and imposing no duties, and hence affording no basis for the challenged
decree. Norton v. Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry. Co. v.
Hackett, 228 U.S. 559, 566. It is quite clear, however, that such broad statements as
to the effect of a determination of unconstitutionality must be taken with
qualifications. The actual existence of a statute, prior to such a determination, is an
operative fact and may have consequences which cannot justly be ignored. The past
cannot always be erased by a new judicial declaration. The effect of the subsequent
ruling as to invalidity may have to be considered in various aspects-with respect to
particular conduct, private and official. Questions of rights claimed to have become
vested, of status, of prior determinations deemed to have finality and acted upon
accordingly, of public policy in the light of the nature both of the statute and of its
previous application, demand examination. These questions are among the most
difficult of those which have engaged the attention of courts, state and federal and it
is manifest from numerous decisions that an all-inclusive statement of a principle of
absolute retroactive invalidity cannot be justified.

Consistently with the above principle, this Court in Rutter vs. Esteban   sustained the right of a party
9

under the Moratorium Law, albeit said right had accrued in his favor before said law was declared
unconstitutional by this Court.

Similarly, the implementation/enforcement of presidential decrees prior to their publication in the

Official Gazette is "an operative fact which may have consequences which cannot be justly ignored.
The past cannot always be erased by a new judicial declaration ... that an all-inclusive statement of a
principle of absolute retroactive invalidity cannot be justified."

From the report submitted to the Court by the Clerk of Court, it appears that of the presidential
decrees sought by petitioners to be published in the Official Gazette, only Presidential Decrees Nos.
1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive, have not been so published.   Neither
10

the subject matters nor the texts of these PDs can be ascertained since no copies thereof are
available. But whatever their subject matter may be, it is undisputed that none of these unpublished
PDs has ever been implemented or enforced by the government. In Pesigan vs. Angeles,   the 11

Court, through Justice Ramon Aquino, ruled that "publication is necessary to apprise the public of
the contents of [penal] regulations and make the said penalties binding on the persons affected
thereby. " The cogency of this holding is apparently recognized by respondent officials considering
the manifestation in their comment that "the government, as a matter of policy, refrains from
prosecuting violations of criminal laws until the same shall have been published in the Official
Gazette or in some other publication, even though some criminal laws provide that they shall take
effect immediately.

WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all
unpublished presidential issuances which are of general application, and unless so published, they
shall have no binding force and effect.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 17122             February 27, 1922

THE UNITED STATES, plaintiff-appellee,

vs.
ANG TANG HO, defendant-appellant.

Williams & Ferrier for appellant.

Acting Attorney-General Tuason for appellee.

JOHNS, J.:

At its special session of 1919, the Philippine Legislature passed Act No. 2868, entitled "An Act
penalizing the monopoly and holding of, and speculation in, palay, rice, and corn under extraordinary
circumstances, regulating the distribution and sale thereof, and authorizing the Governor-General,
with the consent of the Council of State, to issue the necessary rules and regulations therefor, and
making an appropriation for this purpose," the material provisions of which are as follows:

Section 1. The Governor-General is hereby authorized, whenever, for any cause, conditions
arise resulting in an extraordinary rise in the price of palay, rice or corn, to issue and
promulgate, with the consent of the Council of State, temporary rules and emergency
measures for carrying out the purpose of this Act, to wit:

(a) To prevent the monopoly and hoarding of, and speculation in, palay, rice or corn.

(b) To establish and maintain a government control of the distribution or sale of the
commodities referred to or have such distribution or sale made by the Government itself.

(c) To fix, from time to time the quantities of palay rice, or corn that a company or individual
may acquire, and the maximum sale price that the industrial or merchant may demand.
 (d) . . .

SEC. 2. It shall be unlawful to destroy, limit, prevent or in any other manner obstruct the
production or milling of palay, rice or corn for the purpose of raising the prices thereof; to
corner or hoard said products as defined in section three of this Act; . . .

Section 3 defines what shall constitute a monopoly or hoarding of palay, rice or corn within the
meaning of this Act, but does not specify the price of rice or define any basic for fixing the price.

SEC. 4. The violations of any of the provisions of this Act or of the regulations, orders and
decrees promulgated in accordance therewith shall be punished by a fine of not more than
five thousands pesos, or by imprisonment for not more than two years, or both, in the
discretion of the court: Provided, That in the case of companies or corporations the manager
or administrator shall be criminally liable.

SEC. 7. At any time that the Governor-General, with the consent of the Council of State,
shall consider that the public interest requires the application of the provisions of this Act, he
shall so declare by proclamation, and any provisions of other laws inconsistent herewith shall
from then on be temporarily suspended.

Upon the cessation of the reasons for which such proclamation was issued, the Governor-
General, with the consent of the Council of State, shall declare the application of this Act to
have likewise terminated, and all laws temporarily suspended by virtue of the same shall
again take effect, but such termination shall not prevent the prosecution of any proceedings
or cause begun prior to such termination, nor the filing of any proceedings for an offense
committed during the period covered by the Governor-General's proclamation.

August 1, 1919, the Governor-General issued a proclamation fixing the price at which rice should be
sold.

August 8, 1919, a complaint was filed against the defendant, Ang Tang Ho, charging him with the
sale of rice at an excessive price as follows:

The undersigned accuses Ang Tang Ho of a violation of Executive Order No. 53 of the
Governor-General of the Philippines, dated the 1st of August, 1919, in relation with the
provisions of sections 1, 2 and 4 of Act No. 2868, committed as follows:

That on or about the 6th day of August, 1919, in the city of Manila, Philippine Islands, the
said Ang Tang Ho, voluntarily, illegally and criminally sold to Pedro Trinidad, one ganta of
rice at the price of eighty centavos (P.80), which is a price greater than that fixed by
Executive Order No. 53 of the Governor-General of the Philippines, dated the 1st of August,
1919, under the authority of section 1 of Act No. 2868. Contrary to law.

Upon this charge, he was tried, found guilty and sentenced to five months' imprisonment and to pay
a fine of P500, from which he appealed to this court, claiming that the lower court erred in finding
Executive Order No. 53 of 1919, to be of any force and effect, in finding the accused guilty of the
offense charged, and in imposing the sentence.

The official records show that the Act was to take effect on its approval; that it was approved July 30,
1919; that the Governor-General issued his proclamation on the 1st of August, 1919; and that the
law was first published on the 13th of August, 1919; and that the proclamation itself was first
published on the 20th of August, 1919.

The question here involves an analysis and construction of Act No. 2868, in so far as it authorizes
the Governor-General to fix the price at which rice should be sold. It will be noted that section 1
authorizes the Governor-General, with the consent of the Council of State, for any cause resulting in
an extraordinary rise in the price of palay, rice or corn, to issue and promulgate temporary rules and
emergency measures for carrying out the purposes of the Act. By its very terms, the promulgation of
temporary rules and emergency measures is left to the discretion of the Governor-General. The
Legislature does not undertake to specify or define under what conditions or for what reasons the
Governor-General shall issue the proclamation, but says that it may be issued "for any cause," and
leaves the question as to what is "any cause" to the discretion of the Governor-General. The Act
also says: "For any cause, conditions arise resulting in an extraordinary rise in the price of palay, rice
or corn." The Legislature does not specify or define what is "an extraordinary rise." That is also left to
the discretion of the Governor-General. The Act also says that the Governor-General, "with the
consent of the Council of State," is authorized to issue and promulgate "temporary rules and
emergency measures for carrying out the purposes of this Act." It does not specify or define what is
a temporary rule or an emergency measure, or how long such temporary rules or emergency
measures shall remain in force and effect, or when they shall take effect. That is to say, the
Legislature itself has not in any manner specified or defined any basis for the order, but has left it to
the sole judgement and discretion of the Governor-General to say what is or what is not "a cause,"
and what is or what is not "an extraordinary rise in the price of rice," and as to what is a temporary
rule or an emergency measure for the carrying out the purposes of the Act. Under this state of facts,
if the law is valid and the Governor-General issues a proclamation fixing the minimum price at which
rice should be sold, any dealer who, with or without notice, sells rice at a higher price, is a criminal.
There may not have been any cause, and the price may not have been extraordinary, and there may
not have been an emergency, but, if the Governor-General found the existence of such facts and
issued a proclamation, and rice is sold at any higher price, the seller commits a crime.

By the organic law of the Philippine Islands and the Constitution of the United States all powers are
vested in the Legislative, Executive and Judiciary. It is the duty of the Legislature to make the law; of
the Executive to execute the law; and of the Judiciary to construe the law. The Legislature has no
authority to execute or construe the law, the Executive has no authority to make or construe the law,
and the Judiciary has no power to make or execute the law. Subject to the Constitution only, the
power of each branch is supreme within its own jurisdiction, and it is for the Judiciary only to say
when any Act of the Legislature is or is not constitutional. Assuming, without deciding, that the
Legislature itself has the power to fix the price at which rice is to be sold, can it delegate that power
to another, and, if so, was that power legally delegated by Act No. 2868? In other words, does the
Act delegate legislative power to the Governor-General? By the Organic Law, all Legislative power is
vested in the Legislature, and the power conferred upon the Legislature to make laws cannot be
delegated to the Governor-General, or any one else. The Legislature cannot delegate the legislative
power to enact any law. If Act no 2868 is a law unto itself and within itself, and it does nothing more
than to authorize the Governor-General to make rules and regulations to carry the law into effect,
then the Legislature itself created the law. There is no delegation of power and it is valid. On the
other hand, if the Act within itself does not define crime, and is not a law, and some legislative act
remains to be done to make it a law or a crime, the doing of which is vested in the Governor-
General, then the Act is a delegation of legislative power, is unconstitutional and void.

The Supreme Court of the United States in what is known as the Granger Cases (94 U.S., 183-187;
24 L. ed., 94), first laid down the rule:
 Railroad companies are engaged in a public employment affecting the public interest and,
under the decision in Munn vs. Ill., ante, 77, are subject to legislative control as to their rates
of fare and freight unless protected by their charters.

The Illinois statute of Mar. 23, 1874, to establish reasonable maximum rates of charges for
the transportation of freights and passengers on the different railroads of the State is not void
as being repugnant to the Constitution of the United States or to that of the State.

It was there for the first time held in substance that a railroad was a public utility, and that, being a
public utility, the State had power to establish reasonable maximum freight and passenger rates.
This was followed by the State of Minnesota in enacting a similar law, providing for, and
empowering, a railroad commission to hear and determine what was a just and reasonable rate. The
constitutionality of this law was attacked and upheld by the Supreme Court of Minnesota in a learned
and exhaustive opinion by Justice Mitchell, in the case of State vs. Chicago, Milwaukee & St. Paul
ry. Co. (38 Minn., 281), in which the court held:

Regulations of railway tariffs — Conclusiveness of commission's tariffs. — Under Laws 1887,

c. 10, sec. 8, the determination of the railroad and warehouse commission as to what are
equal and reasonable fares and rates for the transportation of persons and property by a
railway company is conclusive, and, in proceedings by mandamus to compel compliance
with the tariff of rates recommended and published by them, no issue can be raised or
inquiry had on that question.

Same — constitution — Delegation of power to commission. — The authority thus given to

the commission to determine, in the exercise of their discretion and judgement, what are
equal and reasonable rates, is not a delegation of legislative power.

It will be noted that the law creating the railroad commission expressly provides —

That all charges by any common carrier for the transportation of passengers and property
shall be equal and reasonable.

With that as a basis for the law, power is then given to the railroad commission to investigate all the
facts, to hear and determine what is a just and reasonable rate. Even then that law does not make
the violation of the order of the commission a crime. The only remedy is a civil proceeding. It was
there held —

That the legislative itself has the power to regulate railroad charges is now too well settled to
require either argument or citation of authority.

The difference between the power to say what the law shall be, and the power to adopt rules
and regulations, or to investigate and determine the facts, in order to carry into effect a law
already passed, is apparent. The true distinction is between the delegation of power to make
the law, which necessarily involves a discretion as to what it shall be, and the conferring an
authority or discretion to be exercised under and in pursuance of the law.

The legislature enacts that all freights rates and passenger fares should be just and
reasonable. It had the undoubted power to fix these rates at whatever it deemed equal and
reasonable.
 They have not delegated to the commission any authority or discretion as to what the law
shall be, — which would not be allowable, — but have merely conferred upon it an authority
and discretion, to be exercised in the execution of the law, and under and in pursuance of it,
which is entirely permissible. The legislature itself has passed upon the expediency of the
law, and what is shall be. The commission is intrusted with no authority or discretion upon
these questions. It can neither make nor unmake a single provision of law. It is merely
charged with the administration of the law, and with no other power.

The delegation of legislative power was before the Supreme Court of Wisconsin in
Dowling vs. Lancoshire Ins. Co. (92 Wis., 63). The opinion says:

"The true distinction is between the delegation of power to make the law, which necessarily
involves a discretion as to what it shall be, and conferring 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."

The act, in our judgment, wholly fails to provide definitely and clearly what the standard policy should
contain, so that it could be put in use as a uniform policy required to take the place of all others,
without the determination of the insurance commissioner in respect to maters involving the exercise
of a legislative discretion that could not be delegated, and without which the act could not possibly
be put in use as an act in confirmity to which all fire insurance policies were required to be issued.

The result of all the cases on this subject is that a law must be complete, in all its terms and
provisions, when it leaves the legislative branch of the government, and nothing must be left to the
judgement of the electors or other appointee or delegate of the legislature, so that, in form and
substance, it is a law in all its details in presenti, but which may be left to take effect in futuro, if
necessary, upon the ascertainment of any prescribed fact or event.

The delegation of legislative power was before the Supreme Court in United States vs. Grimaud
(220 U.S., 506; 55 L. ed., 563), where it was held that the rules and regulations of the Secretary of
Agriculture as to a trespass on government land in a forest reserve were valid constitutional. The Act
there provided that the Secretary of Agriculture ". . . may make such rules and regulations and
establish such service as will insure the object of such reservations; namely, to regulate their
occupancy and use, and to preserve the forests thereon from destruction; and any violation of the
provisions of this act or such rules and regulations shall be punished, . . ."

The brief of the United States Solicitor-General says:

In refusing permits to use a forest reservation for stock grazing, except upon stated terms or
in stated ways, the Secretary of Agriculture merely assert and enforces the proprietary right
of the United States over land which it owns. The regulation of the Secretary, therefore, is
not an exercise of legislative, or even of administrative, power; but is an ordinary and
legitimate refusal of the landowner's authorized agent to allow person having no right in the
land to use it as they will. The right of proprietary control is altogether different from
governmental authority.

The opinion says:

From the beginning of the government, various acts have been passed conferring upon
executive officers power to make rules and regulations, — not for the government of their
departments, but for administering the laws which did govern. None of these statutes could
confer legislative power. But when Congress had legislated power. But when Congress had
 legislated and indicated its will, it could give to those who were to act under such general
provisions "power to fill up the details" by the establishment of administrative rules and
regulations, the violation of which could be punished by fine or imprisonment fixed by
Congress, or by penalties fixed by Congress, or measured by the injury done.

That "Congress cannot delegate legislative power is a principle universally recognized as

vital to the integrity and maintenance of the system of government ordained by the
Constitution."

If, after the passage of the act and the promulgation of the rule, the defendants drove and
grazed their sheep upon the reserve, in violation of the regulations, they were making an
unlawful use of the government's property. In doing so they thereby made themselves liable
to the penalty imposed by Congress.

The subjects as to which the Secretary can regulate are defined. The lands are set apart as a forest
reserve. He is required to make provisions to protect them from depredations and from harmful uses.
He is authorized 'to regulate the occupancy and use and to preserve the forests from destruction.' A
violation of reasonable rules regulating the use and occupancy of the property is made a crime, not
by the Secretary, but by Congress."

The above are leading cases in the United States on the question of delegating legislative power. It
will be noted that in the "Granger Cases," it was held that a railroad company was a public
corporation, and that a railroad was a public utility, and that, for such reasons, the legislature had the
power to fix and determine just and reasonable rates for freight and passengers.

The Minnesota case held that, so long as the rates were just and reasonable, the legislature could
delegate the power to ascertain the facts and determine from the facts what were just and
reasonable rates,. and that in vesting the commission with such power was not a delegation of
legislative power.

The Wisconsin case was a civil action founded upon a "Wisconsin standard policy of fire insurance,"
and the court held that "the act, . . . wholly fails to provide definitely and clearly what the standard
policy should contain, so that it could be put in use as a uniform policy required to take the place of
all others, without the determination of the insurance commissioner in respect to matters involving
the exercise of a legislative discretion that could not be delegated."

The case of the United States Supreme Court, supra dealt with rules and regulations which were
promulgated by the Secretary of Agriculture for Government land in the forest reserve.

These decisions hold that the legislative only can enact a law, and that it cannot delegate it
legislative authority.

The line of cleavage between what is and what is not a delegation of legislative power is pointed out
and clearly defined. As the Supreme Court of Wisconsin says:

That no part of the legislative power can be delegated by the legislature to any other
department of the government, executive or judicial, is a fundamental principle in
constitutional law, essential to the integrity and maintenance of the system of government
established by the constitution.
 Where an act is clothed with all the forms of law, and is complete in and of itself, it may be
provided that it shall become operative only upon some certain act or event, or, in like
manner, that its operation shall be suspended.

The legislature cannot delegate its power to make a law, but it can make a law to delegate a
power to determine some fact or state of things upon which the law makes, or intends to
make, its own action to depend.

The Village of Little Chute enacted an ordinance which provides:

All saloons in said village shall be closed at 11 o'clock P.M. each day and remain closed until
5 o'clock on the following morning, unless by special permission of the president.

Construing it in 136 Wis., 526; 128 A. S. R., 1100, 1 the Supreme Court of that State says:

We regard the ordinance as void for two reasons; First, because it attempts to confer
arbitrary power upon an executive officer, and allows him, in executing the ordinance, to
make unjust and groundless discriminations among persons similarly situated; second,
because the power to regulate saloons is a law-making power vested in the village board,
which cannot be delegated. A legislative body cannot delegate to a mere administrative
officer power to make a law, but it can make a law with provisions that it shall go into effect
or be suspended in its operations upon the ascertainment of a fact or state of facts by an
administrative officer or board. In the present case the ordinance by its terms gives power to
the president to decide arbitrary, and in the exercise of his own discretion, when a saloon
shall close. This is an attempt to vest legislative discretion in him, and cannot be sustained.

The legal principle involved there is squarely in point here.

It must be conceded that, after the passage of act No. 2868, and before any rules and regulations
were promulgated by the Governor-General, a dealer in rice could sell it at any price, even at a peso
per "ganta," and that he would not commit a crime, because there would be no law fixing the price of
rice, and the sale of it at any price would not be a crime. That is to say, in the absence of a
proclamation, it was not a crime to sell rice at any price. Hence, it must follow that, if the defendant
committed a crime, it was because the Governor-General issued the proclamation. There was no act
of the Legislature making it a crime to sell rice at any price, and without the proclamation, the sale of
it at any price was to a crime.

The Executive order2 provides:

(5) The maximum selling price of palay, rice or corn is hereby fixed, for the time being as
follows:

In Manila —

Palay at P6.75 per sack of 57½ kilos, or 29 centavos per ganta.

Rice at P15 per sack of 57½ kilos, or 63 centavos per ganta.

Corn at P8 per sack of 57½ kilos, or 34 centavos per ganta.

 In the provinces producing palay, rice and corn, the maximum price shall be the Manila price
less the cost of transportation from the source of supply and necessary handling expenses to
the place of sale, to be determined by the provincial treasurers or their deputies.

In provinces, obtaining their supplies from Manila or other producing provinces, the
maximum price shall be the authorized price at the place of supply or the Manila price as the
case may be, plus the transportation cost, from the place of supply and the necessary
handling expenses, to the place of sale, to be determined by the provincial treasurers or their
deputies.

(6) Provincial treasurers and their deputies are hereby directed to communicate with, and
execute all instructions emanating from the Director of Commerce and Industry, for the most
effective and proper enforcement of the above regulations in their respective localities.

The law says that the Governor-General may fix "the maximum sale price that the industrial or
merchant may demand." The law is a general law and not a local or special law.

The proclamation undertakes to fix one price for rice in Manila and other and different prices in other
and different provinces in the Philippine Islands, and delegates the power to determine the other and
different prices to provincial treasurers and their deputies. Here, then, you would have a delegation
of legislative power to the Governor-General, and a delegation by him of that power to provincial
treasurers and their deputies, who "are hereby directed to communicate with, and execute all
instructions emanating from the Director of Commerce and Industry, for the most effective and
proper enforcement of the above regulations in their respective localities." The issuance of the
proclamation by the Governor-General was the exercise of the delegation of a delegated power, and
was even a sub delegation of that power.

Assuming that it is valid, Act No. 2868 is a general law and does not authorize the Governor-General
to fix one price of rice in Manila and another price in Iloilo. It only purports to authorize him to fix the
price of rice in the Philippine Islands under a law, which is General and uniform, and not local or
special. Under the terms of the law, the price of rice fixed in the proclamation must be the same all
over the Islands. There cannot be one price at Manila and another at Iloilo. Again, it is a mater of
common knowledge, and of which this court will take judicial notice, that there are many kinds of rice
with different and corresponding market values, and that there is a wide range in the price, which
varies with the grade and quality. Act No. 2868 makes no distinction in price for the grade or quality
of the rice, and the proclamation, upon which the defendant was tried and convicted, fixes the selling
price of rice in Manila "at P15 per sack of 57½ kilos, or 63 centavos per ganta," and is uniform as to
all grades of rice, and says nothing about grade or quality. Again, it will be noted that the law is
confined to palay, rice and corn. They are products of the Philippine Islands. Hemp, tobacco,
coconut, chickens, eggs, and many other things are also products. Any law which single out palay,
rice or corn from the numerous other products of the Islands is not general or uniform, but is a local
or special law. If such a law is valid, then by the same principle, the Governor-General could be
authorized by proclamation to fix the price of meat, eggs, chickens, coconut, hemp, and tobacco, or
any other product of the Islands. In the very nature of things, all of that class of laws should be
general and uniform. Otherwise, there would be an unjust discrimination of property rights, which,
under the law, must be equal and inform. Act No. 2868 is nothing more than a floating law, which, in
the discretion and by a proclamation of the Governor-General, makes it a floating crime to sell rice at
a price in excess of the proclamation, without regard to grade or quality.

When Act No. 2868 is analyzed, it is the violation of the proclamation of the Governor-General which
constitutes the crime. Without that proclamation, it was no crime to sell rice at any price. In other
words, the Legislature left it to the sole discretion of the Governor-General to say what was and what
was not "any cause" for enforcing the act, and what was and what was not "an extraordinary rise in
the price of palay, rice or corn," and under certain undefined conditions to fix the price at which rice
should be sold, without regard to grade or quality, also to say whether a proclamation should be
issued, if so, when, and whether or not the law should be enforced, how long it should be enforced,
and when the law should be suspended. The Legislature did not specify or define what was "any
cause," or what was "an extraordinary rise in the price of rice, palay or corn," Neither did it specify or
define the conditions upon which the proclamation should be issued. In the absence of the
proclamation no crime was committed. The alleged sale was made a crime, if at all, because the
Governor-General issued the proclamation. The act or proclamation does not say anything about the
different grades or qualities of rice, and the defendant is charged with the sale "of one ganta of rice
at the price of eighty centavos (P0.80) which is a price greater than that fixed by Executive order No.
53."

We are clearly of the opinion and hold that Act No. 2868, in so far as it undertakes to authorized the
Governor-General in his discretion to issue a proclamation, fixing the price of rice, and to make the
sale of rice in violation of the price of rice, and to make the sale of rice in violation of the
proclamation a crime, is unconstitutional and void.

It may be urged that there was an extraordinary rise in the price of rice and profiteering, which
worked a severe hardship on the poorer classes, and that an emergency existed, but the question
here presented is the constitutionality of a particular portion of a statute, and none of such matters is
an argument for, or against, its constitutionality.

The Constitution is something solid, permanent an substantial. Its stability protects the life, liberty
and property rights of the rich and the poor alike, and that protection ought not to change with the
wind or any emergency condition. The fundamental question involved in this case is the right of the
people of the Philippine Islands to be and live under a republican form of government. We make the
broad statement that no state or nation, living under republican form of government, under the terms
and conditions specified in Act No. 2868, has ever enacted a law delegating the power to any one, to
fix the price at which rice should be sold. That power can never be delegated under a republican
form of government.

In the fixing of the price at which the defendant should sell his rice, the law was not dealing with
government property. It was dealing with private property and private rights, which are sacred under
the Constitution. If this law should be sustained, upon the same principle and for the same reason,
the Legislature could authorize the Governor-General to fix the price of every product or commodity
in the Philippine Islands, and empower him to make it a crime to sell any product at any other or
different price.

It may be said that this was a war measure, and that for such reason the provision of the
Constitution should be suspended. But the Stubborn fact remains that at all times the judicial power
was in full force and effect, and that while that power was in force and effect, such a provision of the
Constitution could not be, and was not, suspended even in times of war. It may be claimed that
during the war, the United States Government undertook to, and did, fix the price at which wheat and
flour should be bought and sold, and that is true. There, the United States had declared war, and at
the time was at war with other nations, and it was a war measure, but it is also true that in doing so,
and as a part of the same act, the United States commandeered all the wheat and flour, and took
possession of it, either actual or constructive, and the government itself became the owner of the
wheat and flour, and fixed the price to be paid for it. That is not this case. Here the rice sold was the
personal and private property of the defendant, who sold it to one of his customers. The government
had not bought and did not claim to own the rice, or have any interest in it, and at the time of the
alleged sale, it was the personal, private property of the defendant. It may be that the law was
passed in the interest of the public, but the members of this court have taken on solemn oath to
uphold and defend the Constitution, and it ought not to be construed to meet the changing winds or
emergency conditions. Again, we say that no state or nation under a republican form of government
ever enacted a law authorizing any executive, under the conditions states, to fix the price at which a
price person would sell his own rice, and make the broad statement that no decision of any court, on
principle or by analogy, will ever be found which sustains the constitutionality of the particular portion
of Act No. 2868 here in question. By the terms of the Organic Act, subject only to constitutional
limitations, the power to legislate and enact laws is vested exclusively in the Legislative, which is
elected by a direct vote of the people of the Philippine Islands. As to the question here involved, the
authority of the Governor-General to fix the maximum price at which palay, rice and corn may be
sold in the manner power in violation of the organic law.

This opinion is confined to the particular question here involved, which is the right of the Governor-
General, upon the terms and conditions stated in the Act, to fix the price of rice and make it a crime
to sell it at a higher price, and which holds that portions of the Act unconstitutional. It does not decide
or undertake to construe the constitutionality of any of the remaining portions of the Act.

The judgment of the lower court is reversed, and the defendant discharged. So ordered.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 74457 March 20, 1987

RESTITUTO YNOT, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, THE STATION COMMANDER, INTEGRATED NATIONAL
POLICE, BAROTAC NUEVO, ILOILO and THE REGIONAL DIRECTOR, BUREAU OF ANIMAL
INDUSTRY, REGION IV, ILOILO CITY, respondents.

Ramon A. Gonzales for petitioner.

CRUZ, J.:

The essence of due process is distilled in the immortal cry of Themistocles to Alcibiades "Strike —
but hear me first!" It is this cry that the petitioner in effect repeats here as he challenges the
constitutionality of Executive Order No. 626-A.

The said executive order reads in full as follows:

 WHEREAS, the President has given orders prohibiting the interprovincial movement
of carabaos and the slaughtering of carabaos not complying with the requirements of
Executive Order No. 626 particularly with respect to age;

WHEREAS, it has been observed that despite such orders the violators still manage
to circumvent the prohibition against inter-provincial movement of carabaos by
transporting carabeef instead; and

WHEREAS, in order to achieve the purposes and objectives of Executive Order No.
626 and the prohibition against interprovincial movement of carabaos, it is necessary
to strengthen the said Executive Order and provide for the disposition of the
carabaos and carabeef subject of the violation;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by

virtue of the powers vested in me by the Constitution, do hereby promulgate the
following:

SECTION 1. Executive Order No. 626 is hereby amended such that henceforth, no
carabao regardless of age, sex, physical condition or purpose and no carabeef shall
be transported from one province to another. The carabao or carabeef transported in
violation of this Executive Order as amended shall be subject to confiscation and
forfeiture by the government, to be distributed to charitable institutions and other
similar institutions as the Chairman of the National Meat Inspection Commission may
ay see fit, in the case of carabeef, and to deserving farmers through dispersal as the
Director of Animal Industry may see fit, in the case of carabaos.

SECTION 2. This Executive Order shall take effect immediately.

Done in the City of Manila, this 25th day of October, in the year of Our Lord, nineteen
hundred and eighty.

(SGD.) FERDINAND
E. MARCOS

Preside
nt

Republic of the
Philippines

The petitioner had transported six carabaos in a pump boat from Masbate to Iloilo on January 13,
1984, when they were confiscated by the police station commander of Barotac Nuevo, Iloilo, for
violation of the above measure. 1 The petitioner sued for recovery, and the Regional Trial Court of Iloilo City issued a writ
of replevin upon his filing of a supersedeas bond of P12,000.00. After considering the merits of the case, the court sustained the confiscation
of the carabaos and, since they could no longer be produced, ordered the confiscation of the bond. The court also declined to rule on the
constitutionality of the executive order, as raise by the petitioner, for lack of authority and also for its presumed validity. 2

The petitioner appealed the decision to the Intermediate Appellate Court, *   which upheld the trial court, ** and
3

he has now come before us in this petition for review on certiorari.

The thrust of his petition is that the executive order is unconstitutional insofar as it authorizes outright
confiscation of the carabao or carabeef being transported across provincial boundaries. His claim is
that the penalty is invalid because it is imposed without according the owner a right to be heard
before a competent and impartial court as guaranteed by due process. He complains that the
measure should not have been presumed, and so sustained, as constitutional. There is also a
challenge to the improper exercise of the legislative power by the former President under
Amendment No. 6 of the 1973 Constitution.  4

While also involving the same executive order, the case of Pesigan v. Angeles   is not applicable
5

here. The question raised there was the necessity of the previous publication of the measure in the
Official Gazette before it could be considered enforceable. We imposed the requirement then on the
basis of due process of law. In doing so, however, this Court did not, as contended by the Solicitor
General, impliedly affirm the constitutionality of Executive Order No. 626-A. That is an entirely
different matter.

This Court has declared that while lower courts should observe a becoming modesty in examining
constitutional questions, they are nonetheless not prevented from resolving the same whenever
warranted, subject only to review by the highest tribunal.   We have jurisdiction under the
6

Constitution to "review, revise, reverse, modify or affirm on appeal or certiorari, as the law or rules of
court may provide," final judgments and orders of lower courts in, among others, all cases involving
the constitutionality of certain measures.   This simply means that the resolution of such cases may
7

be made in the first instance by these lower courts.

And while it is true that laws are presumed to be constitutional, that presumption is not by any
means conclusive and in fact may be rebutted. Indeed, if there be a clear showing of their invalidity,
and of the need to declare them so, then "will be the time to make the hammer fall, and heavily,"   to8

recall Justice Laurel's trenchant warning. Stated otherwise, courts should not follow the path of least
resistance by simply presuming the constitutionality of a law when it is questioned. On the contrary,
they should probe the issue more deeply, to relieve the abscess, paraphrasing another distinguished
jurist,   and so heal the wound or excise the affliction.
9

Judicial power authorizes this; and when the exercise is demanded, there should be no shirking of
the task for fear of retaliation, or loss of favor, or popular censure, or any other similar inhibition
unworthy of the bench, especially this Court.

The challenged measure is denominated an executive order but it is really presidential decree,
promulgating a new rule instead of merely implementing an existing law. It was issued by President
Marcos not for the purpose of taking care that the laws were faithfully executed but in the exercise of
his legislative authority under Amendment No. 6. It was provided thereunder that whenever in his
judgment there existed a grave emergency or a threat or imminence thereof or whenever the
legislature failed or was unable to act adequately on any matter that in his judgment required
immediate action, he could, in order to meet the exigency, issue decrees, orders or letters of
instruction that were to have the force and effect of law. As there is no showing of any exigency to
justify the exercise of that extraordinary power then, the petitioner has reason, indeed, to question
the validity of the executive order. Nevertheless, since the determination of the grounds was
supposed to have been made by the President "in his judgment, " a phrase that will lead to
protracted discussion not really necessary at this time, we reserve resolution of this matter until a
more appropriate occasion. For the nonce, we confine ourselves to the more fundamental question
of due process.

It is part of the art of constitution-making that the provisions of the charter be cast in precise and
unmistakable language to avoid controversies that might arise on their correct interpretation. That is
the Ideal. In the case of the due process clause, however, this rule was deliberately not followed and
the wording was purposely kept ambiguous. In fact, a proposal to delineate it more clearly was
submitted in the Constitutional Convention of 1934, but it was rejected by Delegate Jose P. Laurel,
Chairman of the Committee on the Bill of Rights, who forcefully argued against it. He was sustained
by the body. 10

The due process clause was kept intentionally vague so it would remain also conveniently resilient. This was felt necessary because due
process is not, like some provisions of the fundamental law, an "iron rule" laying down an implacable and immutable command for all
seasons and all persons. Flexibility must be the best virtue of the guaranty. The very elasticity of the due process clause was meant to make
it adapt easily to every situation, enlarging or constricting its protection as the changing times and circumstances may require.

Aware of this, the courts have also hesitated to adopt their own specific description of due process
lest they confine themselves in a legal straitjacket that will deprive them of the elbow room they may
need to vary the meaning of the clause whenever indicated. Instead, they have preferred to leave
the import of the protection open-ended, as it were, to be "gradually ascertained by the process of
inclusion and exclusion in the course of the decision of cases as they arise." 11 Thus, Justice Felix Frankfurter
of the U.S. Supreme Court, for example, would go no farther than to define due process — and in so doing sums it all up — as nothing more
and nothing less than "the embodiment of the sporting Idea of fair play." 12

When the barons of England extracted from their sovereign liege the reluctant promise that that Crown would thenceforth not proceed
against the life liberty or property of any of its subjects except by the lawful judgment of his peers or the law of the land, they thereby won for
themselves and their progeny that splendid guaranty of fairness that is now the hallmark of the free society. The solemn vow that King John
made at Runnymede in 1215 has since then resounded through the ages, as a ringing reminder to all rulers, benevolent or base, that every
person, when confronted by the stern visage of the law, is entitled to have his say in a fair and open hearing of his cause.

The closed mind has no place in the open society. It is part of the sporting Idea of fair play to hear
"the other side" before an opinion is formed or a decision is made by those who sit in judgment.
Obviously, one side is only one-half of the question; the other half must also be considered if an
impartial verdict is to be reached based on an informed appreciation of the issues in contention. It is
indispensable that the two sides complement each other, as unto the bow the arrow, in leading to
the correct ruling after examination of the problem not from one or the other perspective only but in
its totality. A judgment based on less that this full appraisal, on the pretext that a hearing is
unnecessary or useless, is tainted with the vice of bias or intolerance or ignorance, or worst of all, in
repressive regimes, the insolence of power.

The minimum requirements of due process are notice and hearing 13 which, generally speaking, may not be
dispensed with because they are intended as a safeguard against official arbitrariness. It is a gratifying commentary on our judicial system
that the jurisprudence of this country is rich with applications of this guaranty as proof of our fealty to the rule of law and the ancient
rudiments of fair play. We have consistently declared that every person, faced by the awesome power of the State, is entitled to "the law of
the land," which Daniel Webster described almost two hundred years ago in the famous Dartmouth College Case, 14 as "the law which hears
before it condemns, which proceeds upon inquiry and renders judgment only after trial." It has to be so if the rights of every person are to be
secured beyond the reach of officials who, out of mistaken zeal or plain arrogance, would degrade the due process clause into a worn and
empty catchword.

This is not to say that notice and hearing are imperative in every case for, to be sure, there are a
number of admitted exceptions. The conclusive presumption, for example, bars the admission of
contrary evidence as long as such presumption is based on human experience or there is a rational
connection between the fact proved and the fact ultimately presumed therefrom. 15 There are instances
when the need for expeditions action will justify omission of these requisites, as in the summary abatement of a nuisance per se, like a mad
dog on the loose, which may be killed on sight because of the immediate danger it poses to the safety and lives of the people. Pornographic
materials, contaminated meat and narcotic drugs are inherently pernicious and may be summarily destroyed. The passport of a person
sought for a criminal offense may be cancelled without hearing, to compel his return to the country he has fled. 16 Filthy restaurants may be
summarily padlocked in the interest of the public health and bawdy houses to protect the public morals. 17 In such instances, previous
judicial hearing may be omitted without violation of due process in view of the nature of the property involved or the urgency of the need to
protect the general welfare from a clear and present danger.

The protection of the general welfare is the particular function of the police power which both
restraints and is restrained by due process. The police power is simply defined as the power
inherent in the State to regulate liberty and property for the promotion of the general welfare. 18 By
reason of its function, it extends to all the great public needs and is described as the most pervasive, the least limitable and the most
demanding of the three inherent powers of the State, far outpacing taxation and eminent domain. The individual, as a member of society, is
hemmed in by the police power, which affects him even before he is born and follows him still after he is dead — from the womb to beyond
the tomb — in practically everything he does or owns. Its reach is virtually limitless. It is a ubiquitous and often unwelcome intrusion. Even
so, as long as the activity or the property has some relevance to the public welfare, its regulation under the police power is not only proper
but necessary. And the justification is found in the venerable Latin maxims, Salus populi est suprema lex and Sic utere tuo ut alienum non
laedas, which call for the subordination of individual interests to the benefit of the greater number.

It is this power that is now invoked by the government to justify Executive Order No. 626-A,
amending the basic rule in Executive Order No. 626, prohibiting the slaughter of carabaos except
under certain conditions. The original measure was issued for the reason, as expressed in one of its
Whereases, that "present conditions demand that the carabaos and the buffaloes be conserved for
the benefit of the small farmers who rely on them for energy needs." We affirm at the outset the need
for such a measure. In the face of the worsening energy crisis and the increased dependence of our
farms on these traditional beasts of burden, the government would have been remiss, indeed, if it
had not taken steps to protect and preserve them.

A similar prohibition was challenged in United States v. Toribio, 19 where a law regulating the registration, branding
and slaughter of large cattle was claimed to be a deprivation of property without due process of law. The defendant had been convicted
thereunder for having slaughtered his own carabao without the required permit, and he appealed to the Supreme Court. The conviction was
affirmed. The law was sustained as a valid police measure to prevent the indiscriminate killing of carabaos, which were then badly needed by
farmers. An epidemic had stricken many of these animals and the reduction of their number had resulted in an acute decline in agricultural
output, which in turn had caused an incipient famine. Furthermore, because of the scarcity of the animals and the consequent increase in
their price, cattle-rustling had spread alarmingly, necessitating more effective measures for the registration and branding of these animals.
The Court held that the questioned statute was a valid exercise of the police power and declared in part as follows:

To justify the State in thus interposing its authority in behalf of the public, it must
appear, first, that the interests of the public generally, as distinguished from those of
a particular class, require such interference; and second, that the means are
reasonably necessary for the accomplishment of the purpose, and not unduly
oppressive upon individuals. ...

From what has been said, we think it is clear that the enactment of the provisions of
the statute under consideration was required by "the interests of the public generally,
as distinguished from those of a particular class" and that the prohibition of the
slaughter of carabaos for human consumption, so long as these animals are fit for
agricultural work or draft purposes was a "reasonably necessary" limitation on private
ownership, to protect the community from the loss of the services of such animals by
their slaughter by improvident owners, tempted either by greed of momentary gain,
or by a desire to enjoy the luxury of animal food, even when by so doing the
productive power of the community may be measurably and dangerously affected.

In the light of the tests mentioned above, we hold with the Toribio Case that the carabao, as the poor
man's tractor, so to speak, has a direct relevance to the public welfare and so is a lawful subject of
Executive Order No. 626. The method chosen in the basic measure is also reasonably necessary for
the purpose sought to be achieved and not unduly oppressive upon individuals, again following the
above-cited doctrine. There is no doubt that by banning the slaughter of these animals except where
they are at least seven years old if male and eleven years old if female upon issuance of the
necessary permit, the executive order will be conserving those still fit for farm work or breeding and
preventing their improvident depletion.

But while conceding that the amendatory measure has the same lawful subject as the original
executive order, we cannot say with equal certainty that it complies with the second
requirement, viz., that there be a lawful method. We note that to strengthen the original measure,
Executive Order No. 626-A imposes an absolute ban not on the slaughter of the carabaos but on
their movement, providing that "no carabao regardless of age, sex, physical condition or purpose
(sic) and no carabeef shall be transported from one province to another." The object of the
prohibition escapes us. The reasonable connection between the means employed and the purpose
sought to be achieved by the questioned measure is missing

We do not see how the prohibition of the inter-provincial transport of carabaos can prevent their
indiscriminate slaughter, considering that they can be killed anywhere, with no less difficulty in one
province than in another. Obviously, retaining the carabaos in one province will not prevent their
slaughter there, any more than moving them to another province will make it easier to kill them there.
As for the carabeef, the prohibition is made to apply to it as otherwise, so says executive order, it
could be easily circumvented by simply killing the animal. Perhaps so. However, if the movement of
the live animals for the purpose of preventing their slaughter cannot be prohibited, it should follow
that there is no reason either to prohibit their transfer as, not to be flippant dead meat.

Even if a reasonable relation between the means and the end were to be assumed, we would still
have to reckon with the sanction that the measure applies for violation of the prohibition. The penalty
is outright confiscation of the carabao or carabeef being transported, to be meted out by the
executive authorities, usually the police only. In the Toribio Case, the statute was sustained because
the penalty prescribed was fine and imprisonment, to be imposed by the court after trial and
conviction of the accused. Under the challenged measure, significantly, no such trial is prescribed,
and the property being transported is immediately impounded by the police and declared, by the
measure itself, as forfeited to the government.

In the instant case, the carabaos were arbitrarily confiscated by the police station commander, were
returned to the petitioner only after he had filed a complaint for recovery and given
a supersedeas bond of P12,000.00, which was ordered confiscated upon his failure to produce the
carabaos when ordered by the trial court. The executive order defined the prohibition, convicted the
petitioner and immediately imposed punishment, which was carried out forthright. The measure
struck at once and pounced upon the petitioner without giving him a chance to be heard, thus
denying him the centuries-old guaranty of elementary fair play.

It has already been remarked that there are occasions when notice and hearing may be validly
dispensed with notwithstanding the usual requirement for these minimum guarantees of due
process. It is also conceded that summary action may be validly taken in administrative proceedings
as procedural due process is not necessarily judicial only.   In the exceptional cases accepted,
20

however. there is a justification for the omission of the right to a previous hearing, to wit,
the immediacy of the problem sought to be corrected and the urgency of the need to correct it.

In the case before us, there was no such pressure of time or action calling for the petitioner's
peremptory treatment. The properties involved were not even inimical per se as to require their
instant destruction. There certainly was no reason why the offense prohibited by the executive order
should not have been proved first in a court of justice, with the accused being accorded all the rights
safeguarded to him under the Constitution. Considering that, as we held in Pesigan v.
Angeles,   Executive Order No. 626-A is penal in nature, the violation thereof should have been
21

pronounced not by the police only but by a court of justice, which alone would have had the authority
to impose the prescribed penalty, and only after trial and conviction of the accused.

We also mark, on top of all this, the questionable manner of the disposition of the confiscated
property as prescribed in the questioned executive order. It is there authorized that the seized
property shall "be distributed to charitable institutions and other similar institutions as the Chairman
of the National Meat Inspection Commission may see fit, in the case of carabeef, and to deserving
farmers through dispersal as the Director of Animal Industry may see fit, in the case of carabaos."
(Emphasis supplied.) The phrase "may see fit" is an extremely generous and dangerous condition, if
condition it is. It is laden with perilous opportunities for partiality and abuse, and even corruption.
One searches in vain for the usual standard and the reasonable guidelines, or better still, the
limitations that the said officers must observe when they make their distribution. There is none. Their
options are apparently boundless. Who shall be the fortunate beneficiaries of their generosity and by
what criteria shall they be chosen? Only the officers named can supply the answer, they and they
alone may choose the grantee as they see fit, and in their own exclusive discretion. Definitely, there
is here a "roving commission," a wide and sweeping authority that is not "canalized within banks that
keep it from overflowing," in short, a clearly profligate and therefore invalid delegation of legislative
powers.

To sum up then, we find that the challenged measure is an invalid exercise of the police power
because the method employed to conserve the carabaos is not reasonably necessary to the purpose
of the law and, worse, is unduly oppressive. Due process is violated because the owner of the
property confiscated is denied the right to be heard in his defense and is immediately condemned
and punished. The conferment on the administrative authorities of the power to adjudge the guilt of
the supposed offender is a clear encroachment on judicial functions and militates against the
doctrine of separation of powers. There is, finally, also an invalid delegation of legislative powers to
the officers mentioned therein who are granted unlimited discretion in the distribution of the
properties arbitrarily taken. For these reasons, we hereby declare Executive Order No. 626-A
unconstitutional.

We agree with the respondent court, however, that the police station commander who confiscated
the petitioner's carabaos is not liable in damages for enforcing the executive order in accordance
with its mandate. The law was at that time presumptively valid, and it was his obligation, as a
member of the police, to enforce it. It would have been impertinent of him, being a mere subordinate
of the President, to declare the executive order unconstitutional and, on his own responsibility alone,
refuse to execute it. Even the trial court, in fact, and the Court of Appeals itself did not feel they had
the competence, for all their superior authority, to question the order we now annul.

The Court notes that if the petitioner had not seen fit to assert and protect his rights as he saw them,
this case would never have reached us and the taking of his property under the challenged measure
would have become a fait accompli despite its invalidity. We commend him for his spirit. Without the
present challenge, the matter would have ended in that pump boat in Masbate and another violation
of the Constitution, for all its obviousness, would have been perpetrated, allowed without protest,
and soon forgotten in the limbo of relinquished rights.

The strength of democracy lies not in the rights it guarantees but in the courage of the people to
invoke them whenever they are ignored or violated. Rights are but weapons on the wall if, like
expensive tapestry, all they do is embellish and impress. Rights, as weapons, must be a promise of
protection. They become truly meaningful, and fulfill the role assigned to them in the free society, if
they are kept bright and sharp with use by those who are not afraid to assert them.

WHEREFORE, Executive Order No. 626-A is hereby declared unconstitutional. Except as affirmed
above, the decision of the Court of Appeals is reversed. The supersedeas bond is cancelled and the
amount thereof is ordered restored to the petitioner. No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

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

THE PEOPLE OF THE PHILIPPINE ISLANDS and HONGKONG & SHANGHAI BANKING
CORPORATION, petitioners,
vs.
JOSE O. VERA, Judge . of the Court of First Instance of Manila, and MARIANO CU
UNJIENG, respondents.

Office of the Solicitor General Tuason and City Fiscal Diaz for the Government.
De Witt, Perkins and Ponce Enrile for the Hongkong and Shanghai Banking Corporation.
Vicente J. Francisco, Feria and La O, Orense and Belmonte, and Gibbs and McDonough for
respondent Cu Unjieng.
No appearance for respondent Judge.

LAUREL, J.:

This is an original action instituted in this court on August 19, 1937, for the issuance of the writ
of certiorari and of prohibition to the Court of First Instance of Manila so that this court may review
the actuations of the aforesaid Court of First Instance in criminal case No. 42649 entitled "The
People of the Philippine Islands vs. Mariano Cu Unjieng, et al.", more particularly the application of
the defendant Mariano Cu Unjieng therein for probation under the provisions of Act No. 4221, and
thereafter prohibit the said Court of First Instance from taking any further action or entertaining
further the aforementioned application for probation, to the end that the defendant Mariano Cu
Unjieng may be forthwith committed to prison in accordance with the final judgment of conviction
rendered by this court in said case (G. R. No. 41200).  1

Petitioners herein, the People of the Philippine and the Hongkong and Shanghai Banking
Corporation, are respectively the plaintiff and the offended party, and the respondent herein Mariano
Cu Unjieng is one of the defendants, in the criminal case entitled "The People of the Philippine
Islands vs. Mariano Cu Unjieng, et al.", criminal case No. 42649 of the Court of First Instance of
Manila and G.R. No. 41200 of this court. Respondent herein, Hon. Jose O. Vera, is the Judge ad
interim of the seventh branch of the Court of First Instance of Manila, who heard the application of
the defendant Mariano Cu Unjieng for probation in the aforesaid criminal case.

The information in the aforesaid criminal case was filed with the Court of First Instance of Manila on
October 15, 1931, petitioner herein Hongkong and Shanghai Banking Corporation intervening in the
case as private prosecutor. After a protracted trial unparalleled in the annals of Philippine
jurisprudence both in the length of time spent by the court as well as in the volume in the testimony
and the bulk of the exhibits presented, the Court of First Instance of Manila, on January 8, 1934,
rendered a judgment of conviction sentencing the defendant Mariano Cu Unjieng to indeterminate
penalty ranging from four years and two months of prision correccional to eight years of prision
mayor, to pay the costs and with reservation of civil action to the offended party, the Hongkong and
Shanghai Banking Corporation. Upon appeal, the court, on March 26, 1935, modified the sentence
to an indeterminate penalty of from five years and six months of prision correccional to seven years,
six months and twenty-seven days of prision mayor, but affirmed the judgment in all other respects.
Mariano Cu Unjieng filed a motion for reconsideration and four successive motions for new trial
which were denied on December 17, 1935, and final judgment was accordingly entered on
December 18, 1935. The defendant thereupon sought to have the case elevated on certiorari to the
Supreme Court of the United States but the latter denied the petition for certiorari in            
November, 1936. This court, on             November 24, 1936, denied the petition subsequently filed
by the defendant for leave to file a second alternative motion for reconsideration or new trial and
thereafter remanded the case to the court of origin for execution of the judgment.

The instant proceedings have to do with the application for probation filed by the herein respondent
Mariano Cu Unjieng on             November 27, 1936, before the trial court, under the provisions of Act
No. 4221 of the defunct Philippine Legislature. Herein respondent Mariano Cu Unjieng states in his
petition, inter alia, that he is innocent of the crime of which he was convicted, that he has no criminal
record and that he would observe good conduct in the future. The Court of First Instance of Manila,
Judge Pedro Tuason presiding, referred the application for probation of the Insular Probation Office
which recommended denial of the same June 18, 1937. Thereafter, the Court of First Instance of
Manila, seventh branch, Judge Jose O. Vera presiding, set the petition for hearing on April 5, 1937.

On April 2, 1937, the Fiscal of the City of Manila filed an opposition to the granting of probation to the
herein respondent Mariano Cu Unjieng. The private prosecution also filed an opposition on April 5,
1937, alleging, among other things, that Act No. 4221, assuming that it has not been repealed by
section 2 of Article XV of the Constitution, is nevertheless violative of section 1, subsection (1),
Article III of the Constitution guaranteeing equal protection of the laws for the reason that its
applicability is not uniform throughout the Islands and because section 11 of the said Act endows the
provincial boards with the power to make said law effective or otherwise in their respective or
otherwise in their respective provinces. The private prosecution also filed a supplementary
opposition on April 19, 1937, elaborating on the alleged unconstitutionality on Act No. 4221, as an
undue delegation of legislative power to the provincial boards of several provinces (sec. 1, Art. VI,
Constitution). The City Fiscal concurred in the opposition of the private prosecution except with
respect to the questions raised concerning the constitutionality of Act No. 4221.

On June 28, 1937, herein respondent Judge Jose O. Vera promulgated a resolution with a finding
that "las pruebas no han establecido de unamanera concluyente la culpabilidad del peticionario y
que todos los hechos probados no son inconsistentes o incongrentes con su inocencia" and
concludes that the herein respondent Mariano Cu Unjieng "es inocente por duda racional" of the
crime of which he stands convicted by this court in G.R. No. 41200, but denying the latter's petition
for probation for the reason that:

. . . Si este Juzgado concediera la poblacion solicitada por las circunstancias y la historia

social que se han expuesto en el cuerpo de esta resolucion, que hacen al peticionario
acreedor de la misma, una parte de la opinion publica, atizada por los recelos y las
suspicacias, podria levantarse indignada contra un sistema de probacion que permite atisbar
en los procedimientos ordinarios de una causa criminal perturbando la quietud y la eficacia
de las decisiones ya recaidas al traer a la superficie conclusiones enteramente differentes,
en menoscabo del interes publico que demanda el respeto de las leyes y del veredicto
judicial.

On July 3, 1937, counsel for the herein respondent Mariano Cu Unjieng filed an exception to the
resolution denying probation and a notice of intention to file a motion for reconsideration. An
alternative motion for reconsideration or new trial was filed by counsel on July 13, 1937. This was
supplemented by an additional motion for reconsideration submitted on July 14, 1937. The aforesaid
motions were set for hearing on July 31, 1937, but said hearing was postponed at the petition of
counsel for the respondent Mariano Cu Unjieng because a motion for leave to intervene in the case
as amici curiae signed by thirty-three (thirty-four) attorneys had just been filed with the trial court.
Attorney Eulalio Chaves whose signature appears in the aforesaid motion subsequently filed a
petition for leave to withdraw his appearance as amicus curiae on the ground that the motion for
leave to intervene as amici curiae was circulated at a banquet given by counsel for Mariano Cu
Unjieng on the evening of July 30, 1937, and that he signed the same "without mature deliberation
and purely as a matter of courtesy to the person who invited me (him)."

On August 6, 1937, the Fiscal of the City of Manila filed a motion with the trial court for the issuance
of an order of execution of the judgment of this court in said case and forthwith to commit the herein
respondent Mariano Cu Unjieng to jail in obedience to said judgment.

On August 7, 1937, the private prosecution filed its opposition to the motion for leave to intervene
as amici curiae aforementioned, asking that a date be set for a hearing of the same and that, at all
events, said motion should be denied with respect to certain attorneys signing the same who were
members of the legal staff of the several counsel for Mariano Cu Unjieng. On August 10, 1937,
herein respondent Judge Jose O. Vera issued an order requiring all parties including the movants for
intervention as amici curiae to appear before the court on August 14, 1937. On the last-mentioned
date, the Fiscal of the City of Manila moved for the hearing of his motion for execution of judgment in
preference to the motion for leave to intervene as amici curiae but, upon objection of counsel for
Mariano Cu Unjieng, he moved for the postponement of the hearing of both motions. The
respondent judge thereupon set the hearing of the motion for execution on August 21, 1937, but
proceeded to consider the motion for leave to intervene as amici curiae as in order. Evidence as to
the circumstances under which said motion for leave to intervene as amici curiae was signed and
submitted to court was to have been heard on August 19, 1937. But at this juncture, herein
petitioners came to this court on extraordinary legal process to put an end to what they alleged was
an interminable proceeding in the Court of First Instance of Manila which fostered "the campaign of
the defendant Mariano Cu Unjieng for delay in the execution of the sentence imposed by this
Honorable Court on him, exposing the courts to criticism and ridicule because of the apparent
inability of the judicial machinery to make effective a final judgment of this court imposed on the
defendant Mariano Cu Unjieng."

The scheduled hearing before the trial court was accordingly suspended upon the issuance of a
temporary restraining order by this court on August 21, 1937.

To support their petition for the issuance of the extraordinary writs of certiorari and prohibition, herein
petitioners allege that the respondent judge has acted without jurisdiction or in excess of his
jurisdiction:

I. Because said respondent judge lacks the power to place respondent Mariano Cu Unjieng under
probation for the following reason:

(1) Under section 11 of Act No. 4221, the said of the Philippine Legislature is made
to apply only to the provinces of the Philippines; it nowhere states that it is to be
made applicable to chartered cities like the City of Manila.

(2) While section 37 of the Administrative Code contains a proviso to the effect that in
the absence of a special provision, the term "province" may be construed to include
the City of Manila for the purpose of giving effect to laws of general application, it is
also true that Act No. 4221 is not a law of general application because it is made to
apply only to those provinces in which the respective provincial boards shall have
provided for the salary of a probation officer.

(3) Even if the City of Manila were considered to be a province, still, Act No. 4221
would not be applicable to it because it has provided for the salary of a probation
officer as required by section 11 thereof; it being immaterial that there is an Insular
Probation Officer willing to act for the City of Manila, said Probation Officer provided
for in section 10 of Act No. 4221 being different and distinct from the Probation
Officer provided for in section 11 of the same Act.

II. Because even if the respondent judge originally had jurisdiction to entertain the application for
probation of the respondent Mariano Cu Unjieng, he nevertheless acted without jurisdiction or in
excess thereof in continuing to entertain the motion for reconsideration and by failing to commit
Mariano Cu Unjieng to prison after he had promulgated his resolution of June 28, 1937, denying
Mariano Cu Unjieng's application for probation, for the reason that:

(1) His jurisdiction and power in probation proceedings is limited by Act No. 4221 to
the granting or denying of applications for probation.

(2) After he had issued the order denying Mariano Cu Unjieng's petition for probation
on June 28, 1937, it became final and executory at the moment of its rendition.

(3) No right on appeal exists in such cases.

(4) The respondent judge lacks the power to grant a rehearing of said order or to
modify or change the same.
III. Because the respondent judge made a finding that Mariano Cu Unjieng is innocent of the crime
for which he was convicted by final judgment of this court, which finding is not only presumptuous
but without foundation in fact and in law, and is furthermore in contempt of this court and a violation
of the respondent's oath of office as ad interim judge of first instance.

IV. Because the respondent judge has violated and continues to violate his duty, which became
imperative when he issued his order of June 28, 1937, denying the application for probation, to
commit his co-respondent to jail.

Petitioners also avers that they have no other plain, speedy and adequate remedy in the ordinary
course of law.

In a supplementary petition filed on September 9, 1937, the petitioner Hongkong and Shanghai
Banking Corporation further contends that Act No. 4221 of the Philippine Legislature providing for a
system of probation for persons eighteen years of age or over who are convicted of crime, is
unconstitutional because it is violative of section 1, subsection (1), Article III, of the Constitution of
the Philippines guaranteeing equal protection of the laws because it confers upon the provincial
board of its province the absolute discretion to make said law operative or otherwise in their
respective provinces, because it constitutes an unlawful and improper delegation to the provincial
boards of the several provinces of the legislative power lodged by the Jones Law (section 8) in the
Philippine Legislature and by the Constitution (section 1, Art. VI) in the National Assembly; and for
the further reason that it gives the provincial boards, in contravention of the Constitution (section 2,
Art. VIII) and the Jones Law (section 28), the authority to enlarge the powers of the Court of First
Instance of different provinces without uniformity. In another supplementary petition dated
September 14, 1937, the Fiscal of the City of Manila, in behalf of one of the petitioners, the People of
the Philippine Islands, concurs for the first time with the issues raised by other petitioner regarding
the constitutionality of Act No. 4221, and on the oral argument held on October 6, 1937, further
elaborated on the theory that probation is a form of reprieve and therefore Act. No. 4221 is an
encroachment on the exclusive power of the Chief Executive to grant pardons and reprieves. On
October 7, 1937, the City Fiscal filed two memorandums in which he contended that Act No. 4221
not only encroaches upon the pardoning power to the executive, but also constitute an unwarranted
delegation of legislative power and a denial of the equal protection of the laws. On October 9, 1937,
two memorandums, signed jointly by the City Fiscal and the Solicitor-General, acting in behalf of the
People of the Philippine Islands, and by counsel for the petitioner, the Hongkong and Shanghai
Banking Corporation, one sustaining the power of the state to impugn the validity of its own laws and
the other contending that Act No. 4221 constitutes an unwarranted delegation of legislative power,
were presented. Another joint memorandum was filed by the same persons on the same day,
October 9, 1937, alleging that Act No. 4221 is unconstitutional because it denies the equal protection
of the laws and constitutes an unlawful delegation of legislative power and, further, that the whole
Act is void: that the Commonwealth is not estopped from questioning the validity of its laws; that the
private prosecution may intervene in probation proceedings and may attack the probation law as
unconstitutional; and that this court may pass upon the constitutional question in prohibition
proceedings.

Respondents in their answer dated August 31, 1937, as well as in their oral argument and
memorandums, challenge each and every one of the foregoing proposition raised by the petitioners.

As special defenses, respondents allege:

(1) That the present petition does not state facts sufficient in law to warrant the
issuance of the writ of certiorari or of prohibition.
(2) That the aforesaid petition is premature because the remedy sought by the
petitioners is the very same remedy prayed for by them before the trial court and was
still pending resolution before the trial court when the present petition was filed with
this court.

(3) That the petitioners having themselves raised the question as to the execution of
judgment before the trial court, said trial court has acquired exclusive jurisdiction to
resolve the same under the theory that its resolution denying probation is
unappealable.

(4) That upon the hypothesis that this court has concurrent jurisdiction with the Court
of First Instance to decide the question as to whether or not the execution will lie, this
court nevertheless cannot exercise said jurisdiction while the Court of First Instance
has assumed jurisdiction over the same upon motion of herein petitioners
themselves.

(5) That upon the procedure followed by the herein petitioners in seeking to deprive
the trial court of its jurisdiction over the case and elevate the proceedings to this
court, should not be tolerated because it impairs the authority and dignity of the trial
court which court while sitting in the probation cases is "a court of limited jurisdiction
but of great dignity."

(6) That under the supposition that this court has jurisdiction to resolve the question
submitted to and pending resolution by the trial court, the present action would not lie
because the resolution of the trial court denying probation is appealable; for although
the Probation Law does not specifically provide that an applicant for probation may
appeal from a resolution of the Court of First Instance denying probation, still it is a
general rule in this jurisdiction that a final order, resolution or decision of an inferior
court is appealable to the superior court.

(7) That the resolution of the trial court denying probation of herein respondent
Mariano Cu Unjieng being appealable, the same had not become final and executory
for the reason that the said respondent had filed an alternative motion for
reconsideration and new trial within the requisite period of fifteen days, which motion
the trial court was able to resolve in view of the restraining order improvidently and
erroneously issued by this court. lawphi1 .net

(8) That the Fiscal of the City of Manila had by implication admitted that the
resolution of the trial court denying probation is not final and unappealable when he
presented his answer to the motion for reconsideration and agreed to the
postponement of the hearing of the said motion.

(9) That under the supposition that the order of the trial court denying probation is not
appealable, it is incumbent upon the accused to file an action for the issuance of the
writ of certiorari with mandamus, it appearing that the trial court, although it believed
that the accused was entitled to probation, nevertheless denied probation for fear of
criticism because the accused is a rich man; and that, before a petition
for certiorari grounded on an irregular exercise of jurisdiction by the trial court could
lie, it is incumbent upon the petitioner to file a motion for reconsideration specifying
the error committed so that the trial court could have an opportunity to correct or cure
the same.
 (10) That on hypothesis that the resolution of this court is not appealable, the trial
court retains its jurisdiction within a reasonable time to correct or modify it in
accordance with law and justice; that this power to alter or modify an order or
resolution is inherent in the courts and may be exercise either motu proprio or upon
petition of the proper party, the petition in the latter case taking the form of a motion
for reconsideration.

(11) That on the hypothesis that the resolution of the trial court is appealable as
respondent allege, said court cannot order execution of the same while it is on
appeal, for then the appeal would not be availing because the doors of probation will
be closed from the moment the accused commences to serve his sentence (Act No.
4221, sec. 1; U.S. vs. Cook, 19 Fed. [2d], 827).

In their memorandums filed on October 23, 1937, counsel for the respondents maintain that Act No.
4221 is constitutional because, contrary to the allegations of the petitioners, it does not constitute an
undue delegation of legislative power, does not infringe the equal protection clause of the
Constitution, and does not encroach upon the pardoning power of the Executive. In an additional
memorandum filed on the same date, counsel for the respondents reiterate the view that section 11
of Act No. 4221 is free from constitutional objections and contend, in addition, that the private
prosecution may not intervene in probation proceedings, much less question the validity of Act No.
4221; that both the City Fiscal and the Solicitor-General are estopped from questioning the validity of
the Act; that the validity of Act cannot be attacked for the first time before this court; that probation in
unavailable; and that, in any event, section 11 of the Act No. 4221 is separable from the rest of the
Act. The last memorandum for the respondent Mariano Cu Unjieng was denied for having been filed
out of time but was admitted by resolution of this court and filed anew on             November 5, 1937.
This memorandum elaborates on some of the points raised by the respondents and refutes those
brought up by the petitioners.

In the scrutiny of the pleadings and examination of the various aspects of the present case, we
noted that the court below, in passing upon the merits of the application of the respondent Mariano
Cu Unjieng and in denying said application assumed the task not only of considering the merits of
the application, but of passing upon the culpability of the applicant, notwithstanding the final
pronouncement of guilt by this court. (G.R. No. 41200.) Probation implies guilt be final judgment.
While a probation case may look into the circumstances attending the commission of the offense,
this does not authorize it to reverse the findings and conclusive of this court, either directly or
indirectly, especially wherefrom its own admission reliance was merely had on the printed briefs,
averments, and pleadings of the parties. As already observed by this court in Shioji vs.
Harvey ([1922], 43 Phil., 333, 337), and reiterated in subsequent cases, "if each and every Court of
First Instance could enjoy the privilege of overruling decisions of the Supreme Court, there would be
no end to litigation, and judicial chaos would result." A becoming modesty of inferior courts demands
conscious realization of the position that they occupy in the interrelation and operation of the
intergrated judicial system of the nation.

After threshing carefully the multifarious issues raised by both counsel for the petitioners and the
respondents, this court prefers to cut the Gordian knot and take up at once the two fundamental
questions presented, namely, (1) whether or not the constitutionality of Act No. 4221 has been
properly raised in these proceedings; and (2) in the affirmative, whether or not said Act is
constitutional. Considerations of these issues will involve a discussion of certain incidental questions
raised by the parties.

To arrive at a correct conclusion on the first question, resort to certain guiding principles is
necessary. It is a well-settled rule that the constitutionality of an act of the legislature will not be
determined by the courts unless that question is properly raised and presented inappropriate cases
and is necessary to a determination of the case; i.e., the issue of constitutionality must be the
very lis mota presented. (McGirr vs. Hamilton and Abreu [1915], 30 Phil., 563, 568; 6 R. C. L., pp.
76, 77; 12 C. J., pp. 780-782, 783.)

The question of the constitutionality of an act of the legislature is frequently raised in ordinary
actions. Nevertheless, resort may be made to extraordinary legal remedies, particularly where the
remedies in the ordinary course of law even if available, are not plain, speedy and adequate. Thus,
in Cu Unjieng vs. Patstone ([1922]), 42 Phil., 818), this court held that the question of the
constitutionality of a statute may be raised by the petitioner in mandamus proceedings (see, also, 12
C. J., p. 783); and in Government of the Philippine Islands vs. Springer ([1927], 50 Phil., 259
[affirmed in Springer vs. Government of the Philippine Islands (1928), 277 U. S., 189; 72 Law. ed.,
845]), this court declared an act of the legislature unconstitutional in an action of quo
warranto brought in the name of the Government of the Philippines. It has also been held that the
constitutionality of a statute may be questioned in habeas corpus proceedings (12 C. J., p. 783;
Bailey on Habeas Corpus, Vol. I, pp. 97, 117), although there are authorities to the contrary; on an
application for injunction to restrain action under the challenged statute (mandatory, see Cruz vs.
Youngberg [1931], 56 Phil., 234); and even on an application for preliminary injunction where the
determination of the constitutional question is necessary to a decision of the case. (12 C. J., p. 783.)
The same may be said as regards prohibition and certiorari.(Yu Cong Eng vs. Trinidad [1925], 47
Phil., 385; [1926], 271 U. S., 500; 70 Law. ed., 1059; Bell vs. First Judicial District Court [1905], 28
Nev., 280; 81 Pac., 875; 113 A. S. R., 854; 6 Ann. Cas., 982; 1 L. R. A. [N. S], 843, and cases cited).
The case of Yu Cong Eng vs. Trinidad, supra, decided by this court twelve years ago was, like the
present one, an original action for certiorari and prohibition. The constitutionality of Act No. 2972,
popularly known as the Chinese Bookkeeping Law, was there challenged by the petitioners, and the
constitutional issue was not met squarely by the respondent in a demurrer. A point was raised
"relating to the propriety of the constitutional question being decided in original proceedings in
prohibition." This court decided to take up the constitutional question and, with two justices
dissenting, held that Act No. 2972 was constitutional. The case was elevated on writ of certiorari to
the Supreme Court of the United States which reversed the judgment of this court and held that the
Act was invalid. (271 U. S., 500; 70 Law. ed., 1059.) On the question of jurisdiction, however, the
Federal Supreme Court, though its Chief Justice, said:

By the Code of Civil Procedure of the Philippine Islands, section 516, the Philippine supreme
court is granted concurrent jurisdiction in prohibition with courts of first instance over inferior
tribunals or persons, and original jurisdiction over courts of first instance, when such courts
are exercising functions without or in excess of their jurisdiction. It has been held by that
court that the question of the validity of the criminal statute must usually be raised by a
defendant in the trial court and be carried regularly in review to the Supreme Court.
(Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26 Phil., 192). But in this case where a
new act seriously affected numerous persons and extensive property rights, and was likely to
cause a multiplicity of actions, the Supreme Court exercised its discretion to bring the issue
to the act's validity promptly before it and decide in the interest of the orderly administration
of justice. The court relied by analogy upon the cases of Ex parte Young (209 U. S., 123;52
Law ed., 714; 13 L. R. A. [N. S.] 932; 28 Sup. Ct. Rep., 441; 14 Ann. Ca., 764; Traux vs.
Raich, 239 U. S., 33; 60 Law. ed., 131; L. R. A. 1916D, 545; 36 Sup. Ct. Rep., 7; Ann. Cas.,
1917B, 283; and Wilson vs. New, 243 U. S., 332; 61 Law. ed., 755; L. R. A. 1917E, 938; 37
Sup. Ct. Rep., 298; Ann. Cas. 1918A, 1024). Although objection to the jurisdiction was raise
by demurrer to the petition, this is now disclaimed on behalf of the respondents, and both
parties ask a decision on the merits. In view of the broad powers in prohibition granted to
that court under the Island Code, we acquiesce in the desire of the parties.
The writ of prohibition is an extraordinary judicial writ issuing out of a court of superior jurisdiction
and directed to an inferior court, for the purpose of preventing the inferior tribunal from usurping a
jurisdiction with which it is not legally vested. (High, Extraordinary Legal Remedies, p. 705.) The
general rule, although there is a conflict in the cases, is that the merit of prohibition will not lie
whether the inferior court has jurisdiction independent of the statute the constitutionality of which is
questioned, because in such cases the interior court having jurisdiction may itself determine the
constitutionality of the statute, and its decision may be subject to review, and consequently the
complainant in such cases ordinarily has adequate remedy by appeal without resort to the writ of
prohibition. But where the inferior court or tribunal derives its jurisdiction exclusively from an
unconstitutional statute, it may be prevented by the writ of prohibition from enforcing that statute. (50
C. J., 670; Ex parte Round tree [1874, 51 Ala., 42; In re Macfarland, 30 App. [D. C.], 365; Curtis vs.
Cornish [1912], 109 Me., 384; 84 A., 799; Pennington vs. Woolfolk [1880], 79 Ky., 13; State vs.
Godfrey [1903], 54 W. Va., 54; 46 S. E., 185; Arnold vs. Shields [1837], 5 Dana, 19; 30 Am. Dec.,
669.)

Courts of First Instance sitting in probation proceedings derived their jurisdiction solely from Act No.
4221 which prescribes in detailed manner the procedure for granting probation to accused persons
after their conviction has become final and before they have served their sentence. It is true that at
common law the authority of the courts to suspend temporarily the execution of the sentence is
recognized and, according to a number of state courts, including those of Massachusetts, Michigan,
New York, and Ohio, the power is inherent in the courts (Commonwealth vs. Dowdican's Bail [1874],
115 Mass., 133; People vs. Stickel [1909], 156 Mich., 557; 121 N. W., 497; People ex rel. Forsyth vs.
Court of Session [1894], 141 N. Y., 288; Weber vs. State [1898], 58 Ohio St., 616). But, in the
leading case of Ex parte United States ([1916], 242 U. S., 27; 61 Law. ed., 129; L. R. A., 1917E,
1178; 37 Sup. Ct. Rep., 72; Ann. Cas. 1917B, 355), the Supreme Court of the United States
expressed the opinion that under the common law the power of the court was limited to temporary
suspension, and brushed aside the contention as to inherent judicial power saying, through Chief
Justice White:

Indisputably under our constitutional system the right to try offenses against the criminal laws
and upon conviction to impose the punishment provided by law is judicial, and it is equally to
be conceded that, in exerting the powers vested in them on such subject, courts inherently
possess ample right to exercise reasonable, that is, judicial, discretion to enable them to
wisely exert their authority. But these concessions afford no ground for the contention as to
power here made, since it must rest upon the proposition that the power to enforce begets
inherently a discretion to permanently refuse to do so. And the effect of the proposition urged
upon the distribution of powers made by the Constitution will become apparent when it is
observed that indisputable also is it that the authority to define and fix the punishment for
crime is legislative and includes the right in advance to bring within judicial discretion, for the
purpose of executing the statute, elements of consideration which would be otherwise
beyond the scope of judicial authority, and that the right to relieve from the punishment, fixed
by law and ascertained according to the methods by it provided belongs to the executive
department.

Justice Carson, in his illuminating concurring opinion in the case of Director of Prisons vs. Judge of
First Instance of Cavite (29 Phil., 265), decided by this court in 1915, also reached the conclusion
that the power to suspend the execution of sentences pronounced in criminal cases is not inherent in
the judicial function. "All are agreed", he said, "that in the absence of statutory authority, it does not
lie within the power of the courts to grant such suspensions." (at p. 278.) Both petitioner and
respondents are correct, therefore, when they argue that a Court of First Instance sitting in probation
proceedings is a court of limited jurisdiction. Its jurisdiction in such proceedings is conferred
exclusively by Act No. 4221 of the Philippine Legislature.
It is, of course, true that the constitutionality of a statute will not be considered on application for
prohibition where the question has not been properly brought to the attention of the court by
objection of some kind (Hill vs. Tarver [1901], 130 Ala., 592; 30 S., 499; State ex rel. Kelly vs. Kirby
[1914], 260 Mo., 120; 168 S. W., 746). In the case at bar, it is unquestionable that the constitutional
issue has been squarely presented not only before this court by the petitioners but also before the
trial court by the private prosecution. The respondent, Hon. Jose O Vera, however, acting as judge
of the court below, declined to pass upon the question on the ground that the private prosecutor, not
being a party whose rights are affected by the statute, may not raise said question. The respondent
judge cited Cooley on Constitutional Limitations (Vol. I, p. 339; 12 C. J., sec. 177, pp. 760 and 762),
and McGlue vs. Essex County ([1916], 225 Mass., 59; 113 N. E., 742, 743), as authority for the
proposition that a court will not consider any attack made on the constitutionality of a statute by one
who has no interest in defeating it because his rights are not affected by its operation. The
respondent judge further stated that it may not motu proprio take up the constitutional question and,
agreeing with Cooley that "the power to declare a legislative enactment void is one which the judge,
conscious of the fallibility of the human judgment, will shrink from exercising in any case where he
can conscientiously and with due regard to duty and official oath decline the responsibility"
(Constitutional Limitations, 8th ed., Vol. I, p. 332), proceeded on the assumption that Act No. 4221 is
constitutional. While therefore, the court a quo admits that the constitutional question was raised
before it, it refused to consider the question solely because it was not raised by a proper party.
Respondents herein reiterates this view. The argument is advanced that the private prosecution has
no personality to appear in the hearing of the application for probation of defendant Mariano Cu
Unjieng in criminal case No. 42648 of the Court of First Instance of Manila, and hence the issue of
constitutionality was not properly raised in the lower court. Although, as a general rule, 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.(12 C. J., sec. 184, p. 766.) And, even if we were to
concede that the issue was not properly raised in the court below by the proper party, it does not
follow that the issue may not be here raised in an original action of certiorari and prohibitions. It is
true that, as a general rule, the question of constitutionality must be raised at the earliest opportunity,
so that if not raised by the pleadings, ordinarily it may not be raised at the trial, and if not raised in
the trial court, it will not considered on appeal. (12 C. J., p. 786. See, also, Cadwallader-Gibson
Lumber Co. vs. Del Rosario, 26 Phil., 192, 193-195.) But we must state that the general rule admits
of exceptions. Courts, in the exercise of sounds discretion, may determine the time when a question
affecting the constitutionality of a statute should be presented. (In re Woolsey [1884], 95 N. Y., 135,
144.) Thus, in criminal cases, although there is a very sharp conflict of authorities, it is said that the
question may be raised for the first time at any stage of the proceedings, either in the trial court or on
appeal. (12 C. J., p. 786.) Even in civil cases, it has been held that it is the duty of a court to pass on
the constitutional question, though raised for the first time on appeal, if it appears that a
determination of the question is necessary to a decision of the case. (McCabe's Adm'x vs. Maysville
& B. S. R. Co., [1910], 136 ky., 674; 124 S. W., 892; Lohmeyer vs. St. Louis Cordage Co. [1908],
214 Mo., 685; 113 S. W. 1108; Carmody vs. St. Louis Transit Co., [1905], 188 Mo., 572; 87 S. W.,
913.) And it has been held that a constitutional question will be considered by an appellate court at
any time, where it involves the jurisdiction of the court below (State vs. Burke [1911], 175 Ala., 561;
57 S., 870.) As to the power of this court to consider the constitutional question raised for the first
time before this court in these proceedings, we turn again and point with emphasis to the case of Yu
Cong Eng vs. Trinidad, supra. And on the hypotheses that the Hongkong & Shanghai Banking
Corporation, represented by the private prosecution, is not the proper party to raise the constitutional
question here — a point we do not now have to decide — we are of the opinion that the People of
the Philippines, represented by the Solicitor-General and the Fiscal of the City of Manila, is such a
proper party in the present proceedings. The unchallenged rule is that the person who impugns the
validity of a statute must have a personal and substantial interest in the case such that he has
sustained, or will sustained, direct injury as a result of its enforcement. It goes without saying that if
Act No. 4221 really violates the constitution, the People of the Philippines, in whose name the
present action is brought, has a substantial interest in having it set aside. Of grater import than the
damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon the
fundamental law by the enforcement of an invalid statute. Hence, the well-settled rule that the state
can challenge the validity of its own laws. In Government of the Philippine Islands vs. Springer
([1927]), 50 Phil., 259 (affirmed in Springer vs. Government of the Philippine Islands [1928], 277
U.S., 189; 72 Law. ed., 845), this court declared an act of the legislature unconstitutional in an action
instituted in behalf of the Government of the Philippines. In Attorney General vs. Perkins ([1889], 73
Mich., 303, 311, 312; 41 N. W. 426, 428, 429), the State of Michigan, through its Attorney General,
instituted quo warranto proceedings to test the right of the respondents to renew a mining
corporation, alleging that the statute under which the respondents base their right was
unconstitutional because it impaired the obligation of contracts. The capacity of the chief law officer
of the state to question the constitutionality of the statute was though, as a general rule, 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 in void, where the
jurisdiction of the court depends on the validity of the statute in question, the issue of constitutionality
will be considered on its being brought to the attention of the court by persons interested in the effect
to begin the statute. (12 C.J., sec. 184, p. 766.) And, even if we were to concede that the issue was
not properly raised in the court below by the proper party, it does not follow that the issue may not be
here raised in an original action of certiorari and prohibition. It is true that, as a general rule, the
question of constitutionality must be raised at the earliest opportunity, so that if not raised by the
pleadings, ordinarily it may not be raised a the trial, and if not raised in the trial court, it will not be
considered on appeal. (12 C.J., p. 786. See, also, Cadwallader-Gibson Lumber Co. vs. Del Rosario,
26 Phil., 192, 193-195.) But we must state that the general rule admits of exceptions. Courts, in the
exercise of sound discretion, may determine the time when a question affecting the constitutionality
of a statute should be presented. (In re Woolsey [19884], 95 N.Y., 135, 144.) Thus, in criminal
cases, although there is a very sharp conflict of authorities, it is said that the question may be raised
for the first time at any state of the proceedings, either in the trial court or on appeal. (12 C.J., p.
786.) Even in civil cases, it has been held that it is the duty of a court to pass on the constitutional
question, though raised for first time on appeal, if it appears that a determination of the question is
necessary to a decision of the case. (McCabe's Adm'x vs. Maysville & B. S. R. Co. [1910], 136 Ky.,
674; 124 S. W., 892; Lohmeyer vs. St. Louis, Cordage Co. [1908], 214 Mo. 685; 113 S. W., 1108;
Carmody vs. St. Louis Transit Co. [1905], 188 Mo., 572; 87 S. W., 913.) And it has been held that a
constitutional question will be considered by an appellate court at any time, where it involves the
jurisdiction of the court below (State vs. Burke [1911], 175 Ala., 561; 57 S., 870.) As to the power of
this court to consider the constitutional question raised for the first time before this court in these
proceedings, we turn again and point with emphasis to the case of Yu Cong Eng. vs. Trinidad,
supra. And on the hypothesis that the Hongkong & Shanghai Banking Corporation, represented by
the private prosecution, is not the proper party to raise the constitutional question here — a point we
do not now have to decide — we are of the opinion that the People of the Philippines, represented
by the Solicitor-General and the Fiscal of the City of Manila, is such a proper party in the present
proceedings. The unchallenged rule is that the person who impugns the validity of a statute must
have a personal and substantial interest in the case such that he has sustained, or will sustain, direct
injury as a result of its enforcement. It goes without saying that if Act No. 4221 really violates the
Constitution, the People of the Philippines, in whose name the present action is brought, has a
substantial interest in having it set aside. Of greater import than the damage caused by the illegal
expenditure of public funds is the mortal wound inflicted upon the fundamental law by the
enforcement of an invalid statute. Hence, the well-settled rule that the state can challenge the
validity of its own laws. In Government of the Philippine Islands vs. Springer ([1927]), 50 Phil., 259
(affirmed in Springer vs. Government of the Philippine Islands [1928], 277 U.S., 189; 72 Law. ed.,
845), this court declared an act of the legislature unconstitutional in an action instituted in behalf of
the Government of the Philippines. In Attorney General vs. Perkings([1889], 73 Mich., 303, 311, 312;
41 N.W., 426, 428, 429), the State of Michigan, through its Attorney General, instituted quo warranto
proceedings to test the right of the respondents to renew a mining corporation, alleging that the
statute under which the respondents base their right was unconstitutional because it impaired the
obligation of contracts. The capacity of the chief law officer of the state to question the
constitutionality of the statute was itself questioned. Said the Supreme Court of Michigan, through
Champlin, J.:

. . . The idea seems to be that the people are estopped from questioning the validity of a law
enacted by their representatives; that to an accusation by the people of Michigan of
usurpation their government, a statute enacted by the people of Michigan is an adequate
answer. The last proposition is true, but, if the statute relied on in justification is
unconstitutional, it is statute only in form, and lacks the force of law, and is of no more saving
effect to justify action under it than if it had never been enacted. The constitution is the
supreme law, and to its behests the courts, the legislature, and the people must bow . . . The
legislature and the respondents are not the only parties in interest upon such constitutional
questions. As was remarked by Mr. Justice Story, in speaking of an acquiescence by a party
affected by an unconstitutional act of the legislature: "The people have a deep and vested
interest in maintaining all the constitutional limitations upon the exercise of legislative
powers." (Allen vs. Mckeen, 1 Sum., 314.)

In State vs. Doane ([1916], 98 Kan., 435; 158 Pac., 38, 40), an original action (mandamus) was
brought by the Attorney-General of Kansas to test the constitutionality of a statute of the state. In
disposing of the question whether or not the state may bring the action, the Supreme Court of
Kansas said:

. . . the state is a proper party — indeed, the proper party — to bring this action. The state is
always interested where the integrity of its Constitution or statutes is involved.

"It has an interest in seeing that the will of the Legislature is not disregarded,
and need not, as an individual plaintiff must, show grounds of fearing more
specific injury. (State vs. Kansas City 60 Kan., 518 [57 Pac., 118])." (State vs.
Lawrence, 80 Kan., 707; 103 Pac., 839.)

Where the constitutionality of a statute is in doubt the state's law officer, its Attorney-General,
or county attorney, may exercise his bet judgment as to what sort of action he will bring to
have the matter determined, either by quo warranto to challenge its validity (State vs.
Johnson, 61 Kan., 803; 60 Pac., 1068; 49 L.R.A., 662), by mandamus to compel obedience
to its terms (State vs. Dolley, 82 Kan., 533; 108 Pac., 846), or by injunction to restrain
proceedings under its questionable provisions (State ex rel. vs. City of Neodesha, 3 Kan.
App., 319; 45 Pac., 122).

Other courts have reached the same conclusion (See State vs. St. Louis S. W. Ry. Co. [1917], 197
S. W., 1006; State vs. S.H. Kress & Co. [1934], 155 S., 823; State vs. Walmsley [1935], 181 La.,
597; 160 S., 91; State vs. Board of County Comr's [1934], 39 Pac. [2d], 286; First Const. Co. of
Brooklyn vs. State [1917], 211 N.Y., 295; 116 N.E., 1020; Bush vs. State {1918], 187 Ind., 339; 119
N.E., 417; State vs. Watkins [1933], 176 La., 837; 147 S., 8, 10, 11). In the case last cited, the
Supreme Court of Luisiana said:

It is contended by counsel for Herbert Watkins that a district attorney, being charged with the
duty of enforcing the laws, has no right to plead that a law is unconstitutional. In support of
the argument three decisions are cited, viz.: State ex rel. Hall, District Attorney, vs. Judge of
Tenth Judicial District (33 La. Ann., 1222); State ex rel. Nicholls, Governor vs. Shakespeare,
 Mayor of New Orleans (41 Ann., 156; 6 So., 592); and State ex rel., Banking Co., etc. vs.
Heard, Auditor (47 La. Ann., 1679; 18 So., 746; 47 L. R. A., 512). These decisions do not
forbid a district attorney to plead that a statute is unconstitutional if he finds if in conflict with
one which it is his duty to enforce. In State ex rel. Hall, District Attorney, vs. Judge, etc., the
ruling was the judge should not, merely because he believed a certain statute to be
unconstitutional forbid the district attorney to file a bill of information charging a person with a
violation of the statute. In other words, a judge should not judicially declare a statute
unconstitutional until the question of constitutionality is tendered for decision, and unless it
must be decided in order to determine the right of a party litigant. State ex rel. Nicholls,
Governor, etc., is authority for the proposition merely that an officer on whom a statute
imposes the duty of enforcing its provisions cannot avoid the duty upon the ground that he
considers the statute unconstitutional, and hence in enforcing the statute he is immune from
responsibility if the statute be unconstitutional. State ex rel. Banking Co., etc., is authority for
the proposition merely that executive officers, e.g., the state auditor and state treasurer,
should not decline to perform ministerial duties imposed upon them by a statute, on the
ground that they believe the statute is unconstitutional.

It is the duty of a district attorney to enforce the criminal laws of the state, and, above all, to
support the Constitution of the state. If, in the performance of his duty he finds two statutes in
conflict with each other, or one which repeals another, and if, in his judgment, one of the two
statutes is unconstitutional, it is his duty to enforce the other; and, in order to do so, he is
compelled to submit to the court, by way of a plea, that one of the statutes is
unconstitutional. If it were not so, the power of the Legislature would be free from
constitutional limitations in the enactment of criminal laws.

The respondents do not seem to doubt seriously the correctness of the general proposition that the
state may impugn the validity of its laws. They have not cited any authority running clearly in the
opposite direction. In fact, they appear to have proceeded on the assumption that the rule as stated
is sound but that it has no application in the present case, nor may it be invoked by the City Fiscal in
behalf of the People of the Philippines, one of the petitioners herein, the principal reasons being that
the validity before this court, that the City Fiscal is estopped from attacking the validity of the Act
and, not authorized challenge the validity of the Act in its application outside said city. (Additional
memorandum of respondents, October 23, 1937, pp. 8,. 10, 17 and 23.)

The mere fact that the Probation Act has been repeatedly relied upon the past and all that time has
not been attacked as unconstitutional by the Fiscal of Manila but, on the contrary, has been impliedly
regarded by him as constitutional, is no reason for considering the People of the Philippines
estopped from nor assailing its validity. For courts will pass upon a constitutional questions only
when presented before it in bona fide cases for determination, and the fact that the question has not
been raised before is not a valid reason for refusing to allow it to be raised later. The fiscal and all
others are justified in relying upon the statute and treating it as valid until it is held void by the courts
in proper cases.

It remains to consider whether the determination of the constitutionality of Act No. 4221 is necessary
to the resolution of the instant case. For, ". . . while the court will meet the question with firmness,
where its decision is indispensable, it is the part of wisdom, and just respect for the legislature,
renders it proper, to waive it, if the case in which it arises, can be decided on other points." (Ex
parte Randolph [1833], 20 F. Cas. No. 11, 558; 2 Brock., 447. Vide, also Hoover vs. wood [1857], 9
Ind., 286, 287.) It has been held that the determination of a constitutional question is necessary
whenever it is essential to the decision of the case (12 C. J., p. 782, citing Long Sault Dev. Co. vs.
Kennedy [1913], 158 App. Div., 398; 143 N. Y. Supp., 454 [aff. 212 N.Y., 1: 105 N. E., 849; Ann.
Cas. 1915D, 56; and app dism 242 U.S., 272]; Hesse vs. Ledesma, 7 Porto Rico Fed., 520; Cowan
vs. Doddridge, 22 Gratt [63 Va.], 458; Union Line Co., vs. Wisconsin R. Commn., 146 Wis., 523; 129
N. W., 605), as where the right of a party is founded solely on a statute the validity of which is
attacked. (12 C.J., p. 782, citing Central Glass Co. vs. Niagrara F. Ins. Co., 131 La., 513; 59 S., 972;
Cheney vs. Beverly, 188 Mass., 81; 74 N.E., 306). There is no doubt that the respondent Cu Unjieng
draws his privilege to probation solely from Act No. 4221 now being assailed.

Apart from the foregoing considerations, that court will also take cognizance of the fact that the
Probation Act is a new addition to our statute books and its validity has never before been passed
upon by the courts; that may persons accused and convicted of crime in the City of Manila have
applied for probation; that some of them are already on probation; that more people will likely take
advantage of the Probation Act in the future; and that the respondent Mariano Cu Unjieng has been
at large for a period of about four years since his first conviction. All wait the decision of this court on
the constitutional question. Considering, therefore, the importance which the instant case has
assumed and to prevent multiplicity of suits, strong reasons of public policy demand that the
constitutionality of Act No. 4221 be now resolved. (Yu Cong Eng vs. Trinidad [1925], 47 Phil., 385;
[1926], 271 U.S., 500; 70 Law. ed., 1059. See 6 R.C.L., pp. 77, 78; People vs. Kennedy [1913], 207
N.Y., 533; 101 N.E., 442, 444; Ann. Cas. 1914C, 616; Borginis vs. Falk Co. [1911], 147 Wis., 327;
133 N.W., 209, 211; 37 L.R.A. [N.S.] 489; Dimayuga and Fajardo vs. Fernandez [1922], 43 Phil.,
304.) In Yu Cong Eng vs. Trinidad, supra, an analogous situation confronted us. We said: "Inasmuch
as the property and personal rights of nearly twelve thousand merchants are affected by these
proceedings, and inasmuch as Act No. 2972 is a new law not yet interpreted by the courts, in the
interest of the public welfare and for the advancement of public policy, we have determined to
overrule the defense of want of jurisdiction in order that we may decide the main issue. We have
here an extraordinary situation which calls for a relaxation of the general rule." Our ruling on this
point was sustained by the Supreme Court of the United States. A more binding authority in support
of the view we have taken can not be found.

We have reached the conclusion that the question of the constitutionality of Act No. 4221 has been
properly raised. Now for the main inquiry: Is the Act unconstitutional?

Under a doctrine peculiarly American, it is the office and duty of the judiciary to enforce the
Constitution. This court, by clear implication from the provisions of section 2, subsection 1, and
section 10, of Article VIII of the Constitution, may declare an act of the national legislature invalid
because in conflict with the fundamental lay. It will not shirk from its sworn duty to enforce the
Constitution. And, in clear cases, it will not hesitate to give effect to the supreme law by setting aside
a statute in conflict therewith. This is of the essence of judicial duty.

This court is not unmindful of the fundamental criteria in cases of this nature that all reasonable
doubts should be resolved in favor of the constitutionality of a statute. An act of the legislature
approved by the executive, is presumed to be within constitutional limitations. The responsibility of
upholding the Constitution rests not on the courts alone but on the legislature as well. "The question
of the validity of every statute is first determined by the legislative department of the government
itself." (U.S. vs. Ten Yu [1912], 24 Phil., 1, 10; Case vs. Board of Health and Heiser [1913], 24 Phil.,
250, 276; U.S. vs. Joson [1913], 26 Phil., 1.) And a statute finally comes before the courts sustained
by the sanction of the executive. The members of the Legislature and the Chief Executive have
taken an oath to support the Constitution and it must be presumed that they have been true to this
oath and that in enacting and sanctioning a particular law they did not intend to violate the
Constitution. The courts cannot but cautiously exercise its power to overturn the solemn declarations
of two of the three grand departments of the governments. (6 R.C.L., p. 101.) Then, there is that
peculiar political philosophy which bids the judiciary to reflect the wisdom of the people as expressed
through an elective Legislature and an elective Chief Executive. It follows, therefore, that the courts
will not set aside a law as violative of the Constitution except in a clear case. This is a proposition
too plain to require a citation of authorities.

One of the counsel for respondents, in the course of his impassioned argument, called attention to
the fact that the President of the Philippines had already expressed his opinion against the
constitutionality of the Probation Act, adverting that as to the Executive the resolution of this question
was a foregone conclusion. Counsel, however, reiterated his confidence in the integrity and
independence of this court. We take notice of the fact that the President in his message dated
September 1, 1937, recommended to the National Assembly the immediate repeal of the Probation
Act (No. 4221); that this message resulted in the approval of Bill No. 2417 of the Nationality
Assembly repealing the probation Act, subject to certain conditions therein mentioned; but that said
bill was vetoed by the President on September 13, 1937, much against his wish, "to have stricken
out from the statute books of the Commonwealth a law . . . unfair and very likely unconstitutional." It
is sufficient to observe in this connection that, in vetoing the bill referred to, the President exercised
his constitutional prerogative. He may express the reasons which he may deem proper for taking
such a step, but his reasons are not binding upon us in the determination of actual controversies
submitted for our determination. Whether or not the Executive should express or in any manner
insinuate his opinion on a matter encompassed within his broad constitutional power of veto but
which happens to be at the same time pending determination in this court is a question of propriety
for him exclusively to decide or determine. Whatever opinion is expressed by him under these
circumstances, however, cannot sway our judgment on way or another and prevent us from taking
what in our opinion is the proper course of action to take in a given case. It if is ever necessary for us
to make any vehement affirmance during this formative period of our political history, it is that we are
independent of the Executive no less than of the Legislative department of our government —
independent in the performance of our functions, undeterred by any consideration, free from politics,
indifferent to popularity, and unafraid of criticism in the accomplishment of our sworn duty as we see
it and as we understand it.

The constitutionality of Act No. 4221 is challenged on three principal grounds: (1) That said Act
encroaches upon the pardoning power of the Executive; (2) that its constitutes an undue delegation
of legislative power and (3) that it denies the equal protection of the laws.

1. Section 21 of the Act of Congress of August 29, 1916, commonly known as the Jones Law, in
force at the time of the approval of Act No. 4221, otherwise known as the Probation Act, vests in the
Governor-General of the Philippines "the exclusive power to grant pardons and reprieves and remit
fines and forfeitures". This power is now vested in the President of the Philippines. (Art. VII, sec. 11,
subsec. 6.) The provisions of the Jones Law and the Constitution differ in some respects. The
adjective "exclusive" found in the Jones Law has been omitted from the Constitution. Under the
Jones Law, as at common law, pardon could be granted any time after the commission of the
offense, either before or after conviction (Vide Constitution of the United States, Art. II, sec. 2; In
re Lontok [1922], 43 Phil., 293). The Governor-General of the Philippines was thus empowered, like
the President of the United States, to pardon a person before the facts of the case were fully brought
to light. The framers of our Constitution thought this undesirable and, following most of the state
constitutions, provided that the pardoning power can only be exercised "after conviction". So, too,
under the new Constitution, the pardoning power does not extend to "cases of impeachment". This is
also the rule generally followed in the United States (Vide Constitution of the United States, Art. II,
sec. 2). The rule in England is different. There, a royal pardon can not be pleaded in bar of an
impeachment; "but," says Blackstone, "after the impeachment has been solemnly heard and
determined, it is not understood that the king's royal grace is further restrained or abridged." (Vide,
Ex parte Wells [1856], 18 How., 307; 15 Law. ed., 421; Com. vs. Lockwood [1872], 109 Mass., 323;
12 Am. Rep., 699; Sterling vs. Drake [1876], 29 Ohio St., 457; 23 am. Rep., 762.) The reason for the
distinction is obvious. In England, Judgment on impeachment is not confined to mere "removal from
office and disqualification to hold and enjoy any office of honor, trust, or profit under the
Government" (Art. IX, sec. 4, Constitution of the Philippines) but extends to the whole punishment
attached by law to the offense committed. The House of Lords, on a conviction may, by its sentence,
inflict capital punishment, perpetual banishment, perpetual banishment, fine or imprisonment,
depending upon the gravity of the offense committed, together with removal from office and
incapacity to hold office. (Com. vs. Lockwood, supra.) Our Constitution also makes specific mention
of "commutation" and of the power of the executive to impose, in the pardons he may grant, such
conditions, restrictions and limitations as he may deem proper. Amnesty may be granted by the
President under the Constitution but only with the concurrence of the National Assembly. We need
not dwell at length on the significance of these fundamental changes. It is sufficient for our purposes
to state that the pardoning power has remained essentially the same. The question is: Has the
pardoning power of the Chief Executive under the Jones Law been impaired by the Probation Act?

As already stated, the Jones Law vests the pardoning power exclusively in the Chief Executive. The
exercise of the power may not, therefore, be vested in anyone else.
". . . The benign prerogative of mercy reposed in the executive cannot be taken away nor fettered by
any legislative restrictions, nor can like power be given by the legislature to any other officer or
authority. The coordinate departments of government have nothing to do with the pardoning power,
since no person properly belonging to one of the departments can exercise any powers appertaining
to either of the others except in cases expressly provided for by the constitution." (20 R.C.L., pp., ,
and cases cited.) " . . . where the pardoning power is conferred on the executive without express or
implied limitations, the grant is exclusive, and the legislature can neither exercise such power itself
nor delegate it elsewhere, nor interfere with or control the proper exercise thereof, . . ." (12 C.J., pp.
838, 839, and cases cited.) If Act No. 4221, then, confers any pardoning power upon the courts it is
for that reason unconstitutional and void. But does it?

In the famous Killitts decision involving an embezzlement case, the Supreme Court of the United
States ruled in 1916 that an order indefinitely suspending sentenced was void. (Ex parte United
States [1916], 242 U.S., 27; 61 Law. ed., 129; L.R.A. 1917E, 1178; 37 Sup. Ct. Rep., 72; Ann. Cas.
1917B, 355.) Chief Justice White, after an exhaustive review of the authorities, expressed the
opinion of the court that under the common law the power of the court was limited to temporary
suspension and that the right to suspend sentenced absolutely and permanently was vested in the
executive branch of the government and not in the judiciary. But, the right of Congress to establish
probation by statute was conceded. Said the court through its Chief Justice: ". . . and so far as the
future is concerned, that is, the causing of the imposition of penalties as fixed to be subject, by
probation legislation or such other means as the legislative mind may devise, to such judicial
discretion as may be adequate to enable courts to meet by the exercise of an enlarged but wise
discretion the infinite variations which may be presented to them for judgment, recourse must be had
Congress whose legislative power on the subject is in the very nature of things adequately
complete." (Quoted in Riggs vs. United States [1926], 14 F. [2d], 5, 6.) This decision led the National
Probation Association and others to agitate for the enactment by Congress of a federal probation
law. Such action was finally taken on March 4, 1925 (chap. 521, 43 Stat. L. 159, U.S.C. title 18, sec.
724). This was followed by an appropriation to defray the salaries and expenses of a certain number
of probation officers chosen by civil service. (Johnson, Probation for Juveniles and Adults, p. 14.)

In United States vs. Murray ([1925], 275 U.S., 347; 48 Sup. Ct. Rep., 146; 72 Law. ed., 309), the
Supreme Court of the United States, through Chief Justice Taft, held that when a person sentenced
to imprisonment by a district court has begun to serve his sentence, that court has no power under
the Probation Act of March 4, 1925 to grant him probation even though the term at which sentence
was imposed had not yet expired. In this case of Murray, the constitutionality of the probation Act
was not considered but was assumed. The court traced the history of the Act and quoted from the
report of the Committee on the Judiciary of the United States House of Representatives (Report No.
1377, 68th Congress, 2 Session) the following statement:
 Prior to the so-called Killitts case, rendered in December, 1916, the district courts exercised
a form of probation either, by suspending sentence or by placing the defendants under state
probation officers or volunteers. In this case, however (Ex parte United States, 242 U.S., 27;
61 L. Ed., 129; L.R.A., 1917E, 1178; 37 Sup. Ct. Rep., 72 Ann. Cas. 1917B, 355), the
Supreme Court denied the right of the district courts to suspend sentenced. In the same
opinion the court pointed out the necessity for action by Congress if the courts were to
exercise probation powers in the future . . .

Since this decision was rendered, two attempts have been made to enact probation
legislation. In 1917, a bill was favorably reported by the Judiciary Committee and passed the
House. In 1920, the judiciary Committee again favorably reported a probation bill to the
House, but it was never reached for definite action.

If this bill is enacted into law, it will bring the policy of the Federal government with reference
to its treatment of those convicted of violations of its criminal laws in harmony with that of the
states of the Union. At the present time every state has a probation law, and in all but twelve
states the law applies both to adult and juvenile offenders. (see, also, Johnson, Probation for
Juveniles and Adults [1928], Chap. I.)

The constitutionality of the federal probation law has been sustained by inferior federal courts. In
Riggs vs. United States supra, the Circuit Court of Appeals of the Fourth Circuit said:

Since the passage of the Probation Act of March 4, 1925, the questions under consideration
have been reviewed by the Circuit Court of Appeals of the Ninth Circuit (7 F. [2d], 590), and
the constitutionality of the act fully sustained, and the same held in no manner to encroach
upon the pardoning power of the President. This case will be found to contain an able and
comprehensive review of the law applicable here. It arose under the act we have to consider,
and to it and the authorities cited therein special reference is made (Nix vs. James, 7 F. [2d],
590, 594), as is also to a decision of the Circuit Court of Appeals of the Seventh Circuit
(Kriebel vs. U.S., 10 F. [2d], 762), likewise construing the Probation Act.

We have seen that in 1916 the Supreme Court of the United States; in plain and unequivocal
language, pointed to Congress as possessing the requisite power to enact probation laws, that a
federal probation law as actually enacted in 1925, and that the constitutionality of the Act has been
assumed by the Supreme Court of the United States in 1928 and consistently sustained by the
inferior federal courts in a number of earlier cases.

We are fully convinced that the Philippine Legislature, like the Congress of the United States, may
legally enact a probation law under its broad power to fix the punishment of any and all penal
offenses. This conclusion is supported by other authorities. In Ex parte Bates ([1915], 20 N. M., 542;
L.R.A. 1916A, 1285; 151 Pac., 698, the court said: "It is clearly within the province of the Legislature
to denominate and define all classes of crime, and to prescribe for each a minimum and maximum
punishment." And in State vs. Abbott ([1910], 87 S.C., 466; 33 L.R.A. [N. S.], 112; 70 S. E., 6; Ann.
Cas. 1912B, 1189), the court said: "The legislative power to set punishment for crime is very broad,
and in the exercise of this power the general assembly may confer on trial judges, if it sees fit, the
largest discretion as to the sentence to be imposed, as to the beginning and end of the punishment
and whether it should be certain or indeterminate or conditional." (Quoted in State vs. Teal [1918],
108 S. C., 455; 95 S. E., 69.) Indeed, the Philippine Legislature has defined all crimes and fixed the
penalties for their violation. Invariably, the legislature has demonstrated the desire to vest in the
courts — particularly the trial courts — large discretion in imposing the penalties which the law
prescribes in particular cases. It is believed that justice can best be served by vesting this power in
the courts, they being in a position to best determine the penalties which an individual convict,
peculiarly circumstanced, should suffer. Thus, while courts are not allowed to refrain from imposing a
sentence merely because, taking into consideration the degree of malice and the injury caused by
the offense, the penalty provided by law is clearly excessive, the courts being allowed in such case
to submit to the Chief Executive, through the Department of Justice, such statement as it may deem
proper (see art. 5, Revised Penal Code), in cases where both mitigating and aggravating
circumstances are attendant in the commission of a crime and the law provides for a penalty
composed of two indivisible penalties, the courts may allow such circumstances to offset one
another in consideration of their number and importance, and to apply the penalty according to the
result of such compensation. (Art. 63, rule 4, Revised Penal Code; U.S. vs. Reguera and Asuategui
[1921], 41 Phil., 506.) Again, article 64, paragraph 7, of the Revised Penal Code empowers the
courts to determine, within the limits of each periods, in case the penalty prescribed by law contains
three periods, the extent of the evil produced by the crime. In the imposition of fines, the courts are
allowed to fix any amount within the limits established by law, considering not only the mitigating and
aggravating circumstances, but more particularly the wealth or means of the culprit. (Art. 66, Revised
Penal Code.) Article 68, paragraph 1, of the same Code provides that "a discretionary penalty shall
be imposed" upon a person under fifteen but over nine years of age, who has not acted without
discernment, but always lower by two degrees at least than that prescribed by law for the crime
which he has committed. Article 69 of the same Code provides that in case of "incomplete self-
defense", i.e., when the crime committed is not wholly excusable by reason of the lack of some of
the conditions required to justify the same or to exempt from criminal liability in the several cases
mentioned in article 11 and 12 of the Code, "the courts shall impose the penalty in the period which
may be deemed proper, in view of the number and nature of the conditions of exemption present or
lacking." And, in case the commission of what are known as "impossible" crimes, "the court, having
in mind the social danger and the degree of criminality shown by the offender," shall impose upon
him either arresto mayor or a fine ranging from 200 to 500 pesos. (Art. 59, Revised Penal Code.)

Under our Revised Penal Code, also, one-half of the period of preventive imprisonment is deducted
form the entire term of imprisonment, except in certain cases expressly mentioned (art. 29); the
death penalty is not imposed when the guilty person is more than seventy years of age, or where
upon appeal or revision of the case by the Supreme Court, all the members thereof are not
unanimous in their voting as to the propriety of the imposition of the death penalty (art. 47, see also,
sec. 133, Revised Administrative Code, as amended by Commonwealth Act No. 3); the death
sentence is not to be inflicted upon a woman within the three years next following the date of the
sentence or while she is pregnant, or upon any person over seventy years of age (art. 83); and when
a convict shall become insane or an imbecile after final sentence has been pronounced, or while he
is serving his sentenced, the execution of said sentence shall be suspended with regard to the
personal penalty during the period of such insanity or imbecility (art. 79).

But the desire of the legislature to relax what might result in the undue harshness of the penal laws
is more clearly demonstrated in various other enactments, including the probation Act. There is the
Indeterminate Sentence Law enacted in 1933 as Act No. 4103 and subsequently amended by Act
No. 4225, establishing a system of parole (secs. 5 to 100 and granting the courts large discretion in
imposing the penalties of the law. Section 1 of the law as amended provides; "hereafter, in imposing
a prison sentence for an offenses punished by the Revised Penal Code, or its amendments, the
court shall sentence the accused to an indeterminate sentence the maximum term of which shall be
that which, in view of the attending circumstances, could be properly imposed under the rules of the
said Code, and to a minimum which shall be within the range of the penalty next lower to that
prescribed by the Code for the offense; and if the offense is punished by any other law, the court
shall sentence the accused to an indeterminate sentence, the maximum term of which shall not
exceed the maximum fixed by said law and the minimum shall not be less than the minimum term
prescribed by the same." Certain classes of convicts are, by section 2 of the law, excluded from the
operation thereof. The Legislature has also enacted the Juvenile Delinquency Law (Act No. 3203)
which was subsequently amended by Act No. 3559. Section 7 of the original Act and section 1 of the
amendatory Act have become article 80 of the Revised Penal Code, amended by Act No. 4117 of
the Philippine Legislature and recently reamended by Commonwealth Act No. 99 of the National
Assembly. In this Act is again manifested the intention of the legislature to "humanize" the penal
laws. It allows, in effect, the modification in particular cases of the penalties prescribed by law by
permitting the suspension of the execution of the judgment in the discretion of the trial court, after
due hearing and after investigation of the particular circumstances of the offenses, the criminal
record, if any, of the convict, and his social history. The Legislature has in reality decreed that in
certain cases no punishment at all shall be suffered by the convict as long as the conditions of
probation are faithfully observed. It this be so, then, it cannot be said that the Probation Act comes in
conflict with the power of the Chief Executive to grant pardons and reprieves, because, to use the
language of the Supreme Court of New Mexico, "the element of punishment or the penalty for the
commission of a wrong, while to be declared by the courts as a judicial function under and within the
limits of law as announced by legislative acts, concerns solely the procedure and conduct of criminal
causes, with which the executive can have nothing to do." (Ex parte Bates, supra.) In Williams vs.
State ([1926], 162 Ga., 327; 133 S.E., 843), the court upheld the constitutionality of the Georgia
probation statute against the contention that it attempted to delegate to the courts the pardoning
power lodged by the constitution in the governor alone is vested with the power to pardon after final
sentence has been imposed by the courts, the power of the courts to imposed any penalty which
may be from time to time prescribed by law and in such manner as may be defined cannot be
questioned."

We realize, of course, the conflict which the American cases disclose. Some cases hold it unlawful
for the legislature to vest in the courts the power to suspend the operation of a sentenced, by
probation or otherwise, as to do so would encroach upon the pardoning power of the executive. (In
re Webb [1895], 89 Wis., 354; 27 L.R.A., 356; 46 Am. St. Rep., 846; 62 N.W., 177; 9 Am. Crim.,
Rep., 702; State ex rel. Summerfield vs. Moran [1919], 43 Nev., 150; 182 Pac., 927; Ex
parte Clendenning [1908], 22 Okla., 108; 1 Okla. Crim. Rep., 227; 19 L.R.A. [N.S.], 1041; 132 Am.
St. Rep., 628; 97 Pac., 650; People vs. Barrett [1903], 202 Ill, 287; 67 N.E., 23; 63 L.R.A., 82; 95
Am. St. Rep., 230; Snodgrass vs. State [1912], 67 Tex. Crim. Rep., 615; 41 L. R. A. [N. S.], 1144;
150 S. W., 162; Ex parte Shelor [1910], 33 Nev., 361;111 Pac., 291; Neal vs. State [1898], 104 Ga.,
509; 42 L. R. A., 190; 69 Am. St. Rep., 175; 30 S. E. 858; State ex rel. Payne vs. Anderson [1921],
43 S. D., 630; 181 N. W., 839; People vs. Brown, 54 Mich., 15; 19 N. W., 571; States vs. Dalton
[1903], 109 Tenn., 544; 72 S. W., 456.)

Other cases, however, hold contra. (Nix vs. James [1925; C. C. A., 9th], 7 F. [2d], 590; Archer vs.
Snook [1926; D. C.], 10 F. [2d], 567; Riggs. vs. United States [1926; C. C. A. 4th], 14]) [2d], 5;
Murphy vs. States [1926], 171 Ark., 620; 286 S. W., 871; 48 A. L. R., 1189; Re Giannini [1912], 18
Cal. App., 166; 122 Pac., 831; Re Nachnaber [1928], 89 Cal. App., 530; 265 Pac., 392; Ex parte De
Voe [1931], 114 Cal. App., 730; 300 Pac., 874; People vs. Patrick [1897], 118 Cal., 332; 50 Pac.,
425; Martin vs. People [1917], 69 Colo., 60; 168 Pac., 1171; Belden vs. Hugo [1914], 88 Conn., 50;
91 A., 369, 370, 371; Williams vs. State [1926], 162 Ga., 327; 133 S. E., 843; People vs. Heise
[1913], 257 Ill., 443; 100 N. E., 1000; Parker vs. State [1893], 135 Ind., 534; 35 N. E., 179; 23 L. R.
A., 859; St. Hillarie, Petitioner [1906], 101 Me., 522; 64 Atl., 882; People vs. Stickle [1909], 156
Mich., 557; 121 N. W., 497; State vs. Fjolander [1914], 125 Minn., 529; State ex rel. Bottomnly vs.
District Court [1925], 73 Mont., 541; 237 Pac., 525; State vs. Everitt [1913], 164 N. C., 399; 79 S. E.,
274; 47 L. R. A. [N. S.], 848; State ex rel. Buckley vs. Drew [1909], 75 N. H., 402; 74 Atl., 875; State
vs. Osborne [1911], 79 N. J. Eq., 430; 82 Atl. 424; Ex parte Bates [1915], 20 N. M., 542; L. R. A.,
1916 A. 1285; 151 Pac., 698; People vs. ex rel. Forsyth vs. Court of Session [1894], 141 N. Y., 288;
23 L. R. A., 856; 36 N. E., 386; 15 Am. Crim. Rep., 675; People ex rel. Sullivan vs. Flynn [1907], 55
Misc., 639; 106 N. Y. Supp., 928; People vs. Goodrich [1914], 149 N. Y. Supp., 406; Moore vs.
Thorn [1935], 245 App. Div., 180; 281 N. Y. Supp., 49; Re Hart [1914], 29 N. D., 38; L. R. A., 1915C,
1169; 149 N. W., 568; Ex parte Eaton [1925], 29 Okla., Crim. Rep., 275; 233 P., 781; State vs. Teal
[1918], 108 S. C., 455; 95 S. E., 69; State vs. Abbot [1910], 87 S. C., 466; 33 L.R.A., [N. S.], 112; 70
S. E., 6; Ann. Cas., 1912B, 1189; Fults vs. States [1854],34 Tenn., 232; Woods vs. State [1814], 130
Tenn., 100; 169 S. W., 558; Baker vs. State [1814], 130 Tenn., 100; 169 S. W., 558; Baker vs. State
[1913],70 Tex., Crim. Rep., 618; 158 S. W., 998; Cook vs. State [1914], 73 Tex. Crim. Rep., 548;
165 S. W., 573; King vs. State [1914], 72 Tex. Crim. Rep., 394; 162 S. W., 890; Clare vs. State
[1932], 122 Tex. Crim. Rep., 394; 162 S. W., 890; Clare vs. State [1932], 122 Tex. Crim. Rep., 211;
54 S. W. [2d], 127; Re Hall [1927], 100 Vt., 197; 136 A., 24; Richardson vs. Com. [1921], 131 Va.,
802; 109 S.E., 460; State vs. Mallahan [1911], 65 Wash., 287; 118 Pac., 42; State ex rel. Tingstand
vs. Starwich [1922], 119 Wash., 561; 206 Pac., 29; 26 A. L. R., 393; 396.) We elect to follow this
long catena of authorities holding that the courts may be legally authorized by the legislature to
suspend sentence by the establishment of a system of probation however characterized. State ex
rel. Tingstand vs. Starwich ([1922], 119 Wash., 561; 206 Pac., 29; 26 A. L. R., 393), deserved
particular mention. In that case, a statute enacted in 1921 which provided for the suspension of the
execution of a sentence until otherwise ordered by the court, and required that the convicted person
be placed under the charge of a parole or peace officer during the term of such suspension, on such
terms as the court may determine, was held constitutional and as not giving the court a power in
violation of the constitutional provision vesting the pardoning power in the chief executive of the
state. (Vide, also, Re Giannini [1912], 18 Cal App., 166; 122 Pac., 831.)

Probation and pardon are not coterminous; nor are they the same. They are actually district and
different from each other, both in origin and in nature. In People ex rel. Forsyth vs. Court of Sessions
([1894], 141 N. Y., 288, 294; 36 N. E., 386, 388; 23 L. R. A., 856; 15 Am. Crim. Rep., 675), the Court
of Appeals of New York said:

. . . The power to suspend sentence and the power to grant reprieves and pardons, as
understood when the constitution was adopted, are totally distinct and different in their
nature. The former was always a part of the judicial power; the latter was always a part of the
executive power. The suspension of the sentence simply postpones the judgment of the
court temporarily or indefinitely, but the conviction and liability following it, and the civil
disabilities, remain and become operative when judgment is rendered. A pardon reaches
both the punishment prescribed for the offense and the guilt of the offender. It releases the
punishment, and blots out of existence the guilt, so that in the eye of the law, the offender is
as innocent as if he had never committed the offense. It removes the penalties and
disabilities, and restores him to all his civil rights. It makes him, as it were, a new man, and
gives him a new credit and capacity. (Ex parte Garland, 71 U. S., 4 Wall., 333; 18 Law. ed.,
366; U. S. vs. Klein, 80 U. S., 13 Wall., 128; 20 Law. ed., 519; Knote vs. U. S., 95 U. S., 149;
24 Law. ed., 442.)

The framers of the federal and the state constitutions were perfectly familiar with the
principles governing the power to grant pardons, and it was conferred by these instruments
upon the executive with full knowledge of the law upon the subject, and the words of the
constitution were used to express the authority formerly exercised by the English crown, or
by its representatives in the colonies. (Ex parte Wells, 59 U. S., 18 How., 307; 15 Law. ed.,
421.) As this power was understood, it did not comprehend any part of the judicial functions
to suspend sentence, and it was never intended that the authority to grant reprieves and
pardons should abrogate, or in any degree restrict, the exercise of that power in regard to its
own judgments, that criminal courts has so long maintained. The two powers, so distinct and
different in their nature and character, were still left separate and distinct, the one to be
exercised by the executive, and the other by the judicial department. We therefore conclude
that a statute which, in terms, authorizes courts of criminal jurisdiction to suspend sentence
in certain cases after conviction, — a power inherent in such courts at common law, which
was understood when the constitution was adopted to be an ordinary judicial function, and
which, ever since its adoption, has been exercised of legislative power under the
constitution. It does not encroach, in any just sense, upon the powers of the executive, as
 they have been understood and practiced from the earliest times. (Quoted with approval in
Directors of Prisons vs. Judge of First Instance of Cavite [1915], 29 Phil., 265, Carson, J.,
concurring, at pp. 294, 295.)

In probation, the probationer is in no true sense, as in pardon, a free man. He is not finally and
completely exonerated. He is not exempt from the entire punishment which the law inflicts. Under
the Probation Act, the probationer's case is not terminated by the mere fact that he is placed on
probation. Section 4 of the Act provides that the probation may be definitely terminated and the
probationer finally discharged from supervision only after the period of probation shall have been
terminated and the probation officer shall have submitted a report, and the court shall have found
that the probationer has complied with the conditions of probation. The probationer, then, during the
period of probation, remains in legal custody — subject to the control of the probation officer and of
the court; and, he may be rearrested upon the non-fulfillment of the conditions of probation and,
when rearrested, may be committed to prison to serve the sentence originally imposed upon him.
(Secs. 2, 3, 5 and 6, Act No. 4221.)

The probation described in the act is not pardon. It is not complete liberty, and may be far
from it. It is really a new mode of punishment, to be applied by the judge in a proper case, in
substitution of the imprisonment and find prescribed by the criminal laws. For this reason its
application is as purely a judicial act as any other sentence carrying out the law deemed
applicable to the offense. The executive act of pardon, on the contrary, is against the
criminal law, which binds and directs the judges, or rather is outside of and above it. There is
thus no conflict with the pardoning power, and no possible unconstitutionality of the
Probation Act for this cause. (Archer vs. Snook [1926], 10 F. [2d], 567, 569.)

Probation should also be distinguished from reprieve and from commutation of the sentence.
Snodgrass vs. State ([1912], 67 Tex. Crim. Rep., 615;41 L. R. A. [N. S.], 1144; 150 S. W., 162), is
relied upon most strongly by the petitioners as authority in support of their contention that the power
to grant pardons and reprieves, having been vested exclusively upon the Chief Executive by the
Jones Law, may not be conferred by the legislature upon the courts by means of probation law
authorizing the indefinite judicial suspension of sentence. We have examined that case and found
that although the Court of Criminal Appeals of Texas held that the probation statute of the state in
terms conferred on the district courts the power to grant pardons to persons convicted of crime, it
also distinguished between suspensions sentence on the one hand, and reprieve and commutation
of sentence on the other. Said the court, through Harper, J.:

That the power to suspend the sentence does not conflict with the power of the Governor to
grant reprieves is settled by the decisions of the various courts; it being held that the
distinction between a "reprieve" and a suspension of sentence is that a reprieve postpones
the execution of the sentence to a day certain, whereas a suspension is for an indefinite
time. (Carnal vs. People, 1 Parker, Cr. R., 262; In re Buchanan, 146 N. Y., 264; 40 N. E.,
883), and cases cited in 7 Words & Phrases, pp. 6115, 6116. This law cannot be hold in
conflict with the power confiding in the Governor to grant commutations of punishment, for a
commutations is not but to change the punishment assessed to a less punishment.

In State ex rel. Bottomnly vs. District Court ([1925], 73 Mont., 541; 237 Pac., 525), the Supreme
Court of Montana had under consideration the validity of the adult probation law of the state enacted
in 1913, now found in sections 12078-12086, Revised Codes of 1921. The court held the law valid
as not impinging upon the pardoning power of the executive. In a unanimous decision penned by
Justice Holloway, the court said:
 . . . . the term "pardon", "commutation", and "respite" each had a well understood meaning at
the time our Constitution was adopted, and no one of them was intended to comprehend the
suspension of the execution of the judgment as that phrase is employed in sections 12078-
12086. A "pardon" is an act of grace, proceeding from the power intrusted with the execution
of the laws which exempts the individual on whom it is bestowed from the punishment the
law inflicts for a crime he has committed (United States vs. Wilson, 7 Pet., 150; 8 Law. ed.,
640); It is a remission of guilt (State vs. Lewis, 111 La., 693; 35 So., 816), a forgiveness of
the offense (Cook vs. Middlesex County, 26 N. J. Law, 326; Ex parte Powell, 73 Ala., 517;
49 Am. Rep., 71). "Commutation" is a remission of a part of the punishment; a substitution of
a less penalty for the one originally imposed (Lee vs. Murphy, 22 Grat. [Va.] 789; 12 Am.
Rep., 563; Rich vs. Chamberlain, 107 Mich., 381; 65 N. W., 235). A "reprieve" or "respite" is
the withholding of the sentence for an interval of time (4 Blackstone's Commentaries, 394), a
postponement of execution (Carnal vs. People, 1 Parker, Cr. R. [N. Y.], 272), a temporary
suspension of execution (Butler vs. State, 97 Ind., 373).

Few adjudicated cases are to be found in which the validity of a statute similar to our section
12078 has been determined; but the same objections have been urged against parole
statutes which vest the power to parole in persons other than those to whom the power of
pardon is granted, and these statutes have been upheld quite uniformly, as a reference to
the numerous cases cited in the notes to Woods vs. State (130 Tenn., 100; 169 S. W.,558,
reported in L. R. A., 1915F, 531), will disclose. (See, also, 20 R. C. L., 524.)

We conclude that the Probation Act does not conflict with the pardoning power of the Executive. The
pardoning power, in respect to those serving their probationary sentences, remains as full and
complete as if the Probation Law had never been enacted. The President may yet pardon the
probationer and thus place it beyond the power of the court to order his rearrest and imprisonment.
(Riggs vs. United States [1926],
14 F. [2d], 5, 7.)

2. But while the Probation Law does not encroach upon the pardoning power of the executive and is
not for that reason void, does section 11 thereof constitute, as contended, an undue delegation of
legislative power?

Under the constitutional system, the powers of government are distributed among three coordinate
and substantially independent organs: the legislative, the executive and the judicial. Each of these
departments of the government derives its authority from the Constitution which, in turn, is the
highest expression of popular will. Each has exclusive cognizance of the matters within its
jurisdiction, and is supreme within its own sphere.

The power to make laws — the legislative power — is vested in a bicameral Legislature by the
Jones Law (sec. 12) and in a unicamiral National Assembly by the Constitution (Act. VI, sec. 1,
Constitution of the Philippines). The Philippine Legislature or the National Assembly may not escape
its duties and responsibilities by delegating that power to any other body or authority. Any attempt to
abdicate the power is unconstitutional and void, on the principle that potestas delegata non delegare
potest. This principle is said to have originated with the glossators, was introduced into English law
through a misreading of Bracton, there developed as a principle of agency, was established by Lord
Coke in the English public law in decisions forbidding the delegation of judicial power, and found its
way into America as an enlightened principle of free government. It has since become an accepted
corollary of the principle of separation of powers. (5 Encyc. of the Social Sciences, p. 66.) The
classic statement of the rule is that of Locke, namely: "The legislative neither must nor can transfer
the power of making laws to anybody else, or place it anywhere but where the people have." (Locke
on Civil Government, sec. 142.) Judge Cooley enunciates the doctrine in the following oft-quoted
language: "One of the settled maxims in constitutional law is, that the power conferred upon the
legislature to make laws cannot be delegated by that department to any other body or authority.
Where the sovereign power of the state has located the authority, there it must remain; and by the
constitutional agency alone the laws must be made until the Constitution itself is charged. The power
to whose judgment, wisdom, and patriotism this high prerogative has been intrusted cannot relieve
itself of the responsibilities by choosing other agencies upon which the power shall be devolved, nor
can it substitute the judgment, wisdom, and patriotism of any other body for those to which alone the
people have seen fit to confide this sovereign trust." (Cooley on Constitutional Limitations, 8th ed.,
Vol. I, p. 224. Quoted with approval in U. S. vs. Barrias [1908], 11 Phil., 327.) This court posits the
doctrine "on the ethical principle that such a 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. (U. S. vs. Barrias, supra, at
p. 330.)

The rule, however, which forbids the delegation of legislative power is not absolute and inflexible. It
admits of exceptions. An exceptions sanctioned by immemorial practice permits the central
legislative body to delegate legislative powers to local authorities. (Rubi vs. Provincial Board of
Mindoro [1919], 39 Phil., 660; U. S. vs. Salaveria [1918], 39 Phil., 102; Stoutenburgh vs. Hennick
[1889], 129 U. S., 141; 32 Law. ed., 637; 9 Sup. Ct. Rep., 256; State vs. Noyes [1855], 30 N. H.,
279.) "It is a cardinal principle of our system of government, that local affairs shall be managed by
local authorities, and general affairs by the central authorities; and hence while the rule is also
fundamental that the power to make laws cannot be delegated, the creation of the municipalities
exercising local self government has never been held to trench upon that rule. Such legislation is not
regarded as a transfer of general legislative power, but rather as the grant of the authority to
prescribed local regulations, according to immemorial practice, subject of course to the interposition
of the superior in cases of necessity." (Stoutenburgh vs. Hennick, supra.) On quite the same
principle, Congress is powered to delegate legislative power to such agencies in the territories of the
United States as it may select. A territory stands in the same relation to Congress as a municipality
or city to the state government. (United States vs. Heinszen [1907], 206 U. S., 370; 27 Sup. Ct.
Rep., 742; 51 L. ed., 1098; 11 Ann. Cas., 688; Dorr vs. United States [1904], 195 U.S., 138; 24 Sup.
Ct. Rep., 808; 49 Law. ed., 128; 1 Ann. Cas., 697.) Courts have also sustained the delegation of
legislative power to the people at large. Some authorities maintain that this may not be done (12 C.
J., pp. 841, 842; 6 R. C. L., p. 164, citing People vs. Kennedy [1913], 207 N. Y., 533; 101 N. E., 442;
Ann. Cas., 1914C, 616). However, the question of whether or not a state has ceased to be
republican in form because of its adoption of the initiative and referendum has been held not to be a
judicial but a political question (Pacific States Tel. & Tel. Co. vs. Oregon [1912], 223 U. S., 118; 56
Law. ed., 377; 32 Sup. Cet. Rep., 224), and as the constitutionality of such laws has been looked
upon with favor by certain progressive courts, the sting of the decisions of the more conservative
courts has been pretty well drawn. (Opinions of the Justices [1894], 160 Mass., 586; 36 N. E., 488;
23 L. R. A., 113; Kiernan vs. Portland [1910], 57 Ore., 454; 111 Pac., 379; 1132 Pac., 402; 37 L. R.
A. [N. S.], 332; Pacific States Tel. & Tel. Co. vs. Oregon, supra.) Doubtless, also, legislative power
may be delegated by the Constitution itself. Section 14, paragraph 2, of article VI of the Constitution
of the Philippines provides that "The National Assembly may by law authorize the President, subject
to such limitations and restrictions as it may impose, to fix within specified limits, tariff rates, import
or export quotas, and tonnage and wharfage dues." And section 16 of the same article of the
Constitution provides that "In times of war or other national emergency, the National Assembly may
by law authorize the President, for a limited period and subject to such restrictions as it may
prescribed, to promulgate rules and regulations to carry out a declared national policy." It is beyond
the scope of this decision to determine whether or not, in the absence of the foregoing constitutional
provisions, the President could be authorized to exercise the powers thereby vested in him. Upon
the other hand, whatever doubt may have existed has been removed by the Constitution itself.

The case before us does not fall under any of the exceptions hereinabove mentioned.
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. (Emphasis ours.)

In testing whether a statute constitute an undue delegation of legislative power or not, it is usual to
inquire whether the statute was complete in all its terms and provisions when it left the hands of the
legislature so that nothing was left to the judgment of any other appointee or delegate of the
legislature. (6 R. C. L., p. 165.) In the United States vs. Ang Tang Ho ([1922], 43 Phil., 1), this court
adhered to the foregoing rule when it held an act of the legislature void in so far as it undertook to
authorize the Governor-General, in his discretion, to issue a proclamation fixing the price of rice and
to make the sale of it in violation of the proclamation a crime. (See and cf. Compañia General de
Tabacos vs. Board of Public Utility Commissioners [1916], 34 Phil., 136.) The general rule, however,
is limited by another rule that to a certain extent matters of detail may be left to be filled in by rules
and regulations to be adopted or promulgated by executive officers and administrative boards. (6 R.
C. L., pp. 177-179.)

For the purpose of Probation Act, the provincial boards may be regarded as administrative bodies
endowed with power to determine when the Act should take effect in their respective provinces.
They are the agents or delegates of the legislature in this respect. The rules governing delegation of
legislative power to administrative and executive officers are applicable or are at least indicative of
the rule which should be here adopted. An examination of a variety of cases on delegation of power
to administrative bodies will show that the ratio decidendi is at variance but, it can be broadly
asserted that the rationale revolves around the presence or absence of a standard or rule of action
— or the sufficiency thereof — in the statute, to aid the delegate in exercising the granted discretion.
In some cases, it is held that the standard is sufficient; in others that is insufficient; and in still others
that it is entirely lacking. As a rule, an act of the legislature is incomplete and hence invalid if it 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. (See Schecter vs. United States [1925],
295 U. S., 495; 79 L. ed., 1570; 55 Sup. Ct. Rep., 837; 97 A.L.R., 947; People ex rel. Rice vs. Wilson
Oil Co. [1936], 364 Ill., 406; 4 N. E. [2d], 847; 107 A.L.R., 1500 and cases cited. See also R. C. L.,
title "Constitutional Law", sec 174.) In the case at bar, what rules are to guide the provincial boards
in the exercise of their discretionary power to determine whether or not the Probation Act shall apply
in their respective provinces? What standards are fixed by the Act? We do not find any and none
has been pointed to us by the respondents. The probation Act does not, by the force of any of its
provisions, fix and impose upon the provincial boards any standard or guide in the exercise of their
discretionary power. What is granted, if we may use the language of Justice Cardozo in the recent
case of Schecter, supra, is a "roving commission" which enables the provincial boards to exercise
arbitrary discretion. By section 11 if the Act, the legislature does not seemingly on its own authority
extend the benefits of the Probation Act to the provinces but in reality leaves the entire matter for the
various provincial boards to determine. In other words, the provincial boards of the various provinces
are to determine for themselves, whether the Probation Law shall apply to their provinces or not at
all. The applicability and application of the Probation Act are entirely placed in the hands of the
provincial boards. If the provincial board does not wish to have the Act applied in its province, all that
it has to do is to decline to appropriate the needed amount for the salary of a probation officer. The
plain language of the Act is not susceptible of any other interpretation. This, to our minds, is a virtual
surrender of legislative power to the provincial boards.

"The true distinction", says Judge Ranney, "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." (Cincinnati, W. & Z. R. Co. vs. Clinton County
Comrs. [1852]; 1 Ohio St., 77, 88. See also, Sutherland on Statutory Construction, sec 68.) To the
same effect are the decision of this court in Municipality of Cardona vs. Municipality of
Binangonan ([1917], 36 Phil., 547); Rubi vs. Provincial Board of Mindoro ([1919],39 Phil., 660)
and Cruz vs. Youngberg ([1931], 56 Phil., 234). In the first of these cases, this court sustained the
validity of the law conferring upon the Governor-General authority to adjust provincial and municipal
boundaries. In the second case, this court held it lawful for the legislature to direct non-Christian
inhabitants to take up their habitation on unoccupied lands to be selected by the provincial governor
and approved by the provincial board. In the third case, it was held proper for the legislature to vest
in the Governor-General authority to suspend or not, at his discretion, the prohibition of the
importation of the foreign cattle, such prohibition to be raised "if the conditions of the country make
this advisable or if deceased among foreign cattle has ceased to be a menace to the agriculture and
livestock of the lands."

It should be observed that in the case at bar we are not concerned with the simple transference of
details of execution or the promulgation by executive or administrative officials of rules and
regulations to carry into effect the provisions of a law. If we were, recurrence to our own decisions
would be sufficient. (U. S. vs. Barrias [1908], 11 Phil., 327; U.S. vs. Molina [1914], 29 Phil., 119;
Alegre vs. Collector of Customs [1929], 53 Phil., 394; Cebu Autobus Co. vs. De Jesus [1931], 56
Phil., 446; U. S. vs. Gomez [1915], 31 Phil., 218; Rubi vs. Provincial Board of Mindoro [1919], 39
Phil., 660.)

It is connected, however, that a legislative act may be made to the effect as law after it leaves the
hands of the legislature. It is true that laws may be made effective on certain contingencies, as by
proclamation of the executive or the adoption by the people of a particular community (6 R. C. L.,
116, 170-172; Cooley, Constitutional Limitations, 8th ed., Vol. I, p. 227). In Wayman vs. Southard
([1825], 10 Wheat. 1; 6 Law. ed., 253), the Supreme Court of the United State ruled that the
legislature may delegate a power not legislative which it may itself rightfully exercise.(Vide, also,
Dowling vs. Lancashire Ins. Co. [1896], 92 Wis., 63; 65 N. W., 738; 31 L. R. A., 112.) The power to
ascertain facts is such a power which may be delegated. There is nothing essentially legislative in
ascertaining the existence of facts or conditions as the basis of the taking into effect of a law. That is
a mental process common to all branches of the government. (Dowling vs. Lancashire Ins.
Co., supra; In re Village of North Milwaukee [1896], 93 Wis., 616; 97 N.W., 1033; 33 L.R.A., 938;
Nash vs. Fries [1906], 129 Wis., 120; 108 N.W., 210; Field vs. Clark [1892], 143 U.S., 649; 12 Sup.
Ct., 495; 36 Law. ed., 294.) Notwithstanding the apparent tendency, however, to relax the rule
prohibiting delegation of legislative authority on account of the complexity arising from social and
economic forces at work in this modern industrial age (Pfiffner, Public Administration [1936] ch. XX;
Laski, "The Mother of Parliaments", foreign Affairs, July, 1931, Vol. IX, No. 4, pp. 569-579; Beard,
"Squirt-Gun Politics", in Harper's Monthly Magazine, July, 1930, Vol. CLXI, pp. 147, 152), the
orthodox pronouncement of Judge Cooley in his work on Constitutional Limitations finds restatement
in Prof. Willoughby's treatise on the Constitution of the United States in the following language —
speaking of declaration of legislative power to administrative agencies: "The principle which permits
the legislature to provide that the administrative agent may determine when the circumstances are
such as require the application of a law is defended upon the ground that at the time this authority is
granted, the rule of public policy, which is the essence of the legislative act, is determined by the
legislature. In other words, the legislature, as it its duty to do, determines that, under given
circumstances, certain executive or administrative action is to be taken, and that, under other
circumstances, different of no action at all is to be taken. What is thus left to the administrative
official is not the legislative determination of what public policy demands, but simply the
ascertainment of what the facts of the case require to be done according to the terms of the law by
which he is governed." (Willoughby on the Constitution of the United States, 2nd ed., Vol. II, p.
1637.) In Miller vs. Mayer, etc., of New York [1883], 109 U.S., 3 Sup. Ct. Rep., 228; 27 Law. ed.,
971, 974), it was said: "The efficiency of an Act as a declaration of legislative will must, of course,
come from Congress, but the ascertainment of the contingency upon which the Act shall take effect
may be left to such agencies as it may designate." (See, also, 12 C.J., p. 864; State vs. Parker
[1854], 26 Vt., 357; Blanding vs. Burr [1859], 13 Cal., 343, 258.) The legislature, then may provide
that a contingencies leaving to some other person or body the power to determine when the
specified contingencies has arisen. But, in the case at bar, the legislature has not made the
operation of the Prohibition Act contingent upon specified facts or conditions to be ascertained by
the provincial board. It leaves, as we have already said, the entire operation or non-operation of the
law upon the provincial board. the discretion vested is arbitrary because it is absolute and unlimited.
A provincial board need not investigate conditions or find any fact, or await the happening of any
specified contingency. It is bound by no rule, — limited by no principle of expendiency announced by
the legislature. It may take into consideration certain facts or conditions; and, again, it may not. It
may have any purpose or no purpose at all. It need not give any reason whatsoever for refusing or
failing to appropriate any funds for the salary of a probation officer. This is a matter which rest
entirely at its pleasure. The fact that at some future time — we cannot say when — the provincial
boards may appropriate funds for the salaries of probation officers and thus put the law into
operation in the various provinces will not save the statute. The time of its taking into effect, we
reiterate, would yet be based solely upon the will of the provincial boards and not upon the
happening of a certain specified contingency, or upon the ascertainment of certain facts or
conditions by a person or body other than legislature itself.

The various provincial boards are, in practical effect, endowed with the power of suspending the
operation of the Probation Law in their respective provinces. In some jurisdiction, constitutions
provided that laws may be suspended only by the legislature or by its authority. Thus, section 28,
article I of the Constitution of Texas provides that "No power of suspending laws in this state shall be
exercised except by the legislature"; and section 26, article I of the Constitution of Indiana provides
"That the operation of the laws shall never be suspended, except by authority of the General
Assembly." Yet, even provisions of this sort do not confer absolute power of suspension upon the
legislature. While it may be undoubted that the legislature may suspend a law, or the execution or
operation of a law, a law may not be suspended as to certain individuals only, leaving the law to be
enjoyed by others. The suspension must be general, and cannot be made for individual cases or for
particular localities. In Holden vs. James ([1814], 11 Mass., 396; 6 Am. Dec., 174, 177, 178), it was
said:

By the twentieth article of the declaration of rights in the constitution of this commonwealth, it
is declared that the power of suspending the laws, or the execution of the laws, ought never
to be exercised but by the legislature, or by authority derived from it, to be exercised in such
particular cases only as the legislature shall expressly provide for. Many of the articles in that
declaration of rights were adopted from the Magna Charta of England, and from the bill of
rights passed in the reign of William and Mary. The bill of rights contains an enumeration of
the oppressive acts of James II, tending to subvert and extirpate the protestant religion, and
the laws and liberties of the kingdom; and the first of them is the assuming and exercising a
power of dispensing with and suspending the laws, and the execution of the laws without
consent of parliament. The first article in the claim or declaration of rights contained in the
statute is, that the exercise of such power, by legal authority without consent of parliament, is
illegal. In the tenth section of the same statute it is further declared and enacted, that "No
dispensation by non obstante of or to any statute, or part thereof, should be allowed; but the
same should be held void and of no effect, except a dispensation be allowed of in such
statute." There is an implied reservation of authority in the parliament to exercise the power
here mentioned; because, according to the theory of the English Constitution, "that absolute
despotic power, which must in all governments reside somewhere," is intrusted to the
parliament: 1 Bl. Com., 160.
 The principles of our government are widely different in this particular. Here the sovereign
and absolute power resides in the people; and the legislature can only exercise what is
delegated to them according to the constitution. It is obvious that the exercise of the power in
question would be equally oppressive to the subject, and subversive of his right to protection,
"according to standing laws," whether exercised by one man or by a number of men. It
cannot be supposed that the people when adopting this general principle from the English
bill of rights and inserting it in our constitution, intended to bestow by implication on the
general court one of the most odious and oppressive prerogatives of the ancient kings of
England. It is manifestly contrary to the first principles of civil liberty and natural justice, and
to the spirit of our constitution and laws, that any one citizen should enjoy privileges and
advantages which are denied to all others under like circumstances; or that ant one should
be subject to losses, damages, suits, or actions from which all others under like
circumstances are exempted.

To illustrate the principle: A section of a statute relative to dogs made the owner of any dog liable to
the owner of domestic animals wounded by it for the damages without proving a knowledge of it
vicious disposition. By a provision of the act, power was given to the board of supervisors to
determine whether or not during the current year their county should be governed by the provisions
of the act of which that section constituted a part. It was held that the legislature could not confer that
power. The court observed that it could no more confer such a power than to authorize the board of
supervisors of a county to abolish in such county the days of grace on commercial paper, or to
suspend the statute of limitations. (Slinger vs. Henneman [1875], 38 Wis., 504.) A similar statute in
Missouri was held void for the same reason in State vs. Field ([1853, 17 Mo., 529;59 Am. Dec., 275.)
In that case a general statute formulating a road system contained a provision that "if the county
court of any county should be of opinion that the provisions of the act should not be enforced, they
might, in their discretion, suspend the operation of the same for any specified length of time, and
thereupon the act should become inoperative in such county for the period specified in such order;
and thereupon order the roads to be opened and kept in good repair, under the laws theretofore in
force." Said the court: ". . . this act, by its own provisions, repeals the inconsistent provisions of a
former act, and yet it is left to the county court to say which act shall be enforce in their county. The
act does not submit the question to the county court as an original question, to be decided by that
tribunal, whether the act shall commence its operation within the county; but it became by its own
terms a law in every county not excepted by name in the act. It did not, then, require the county court
to do any act in order to give it effect. But being the law in the county, and having by its provisions
superseded and abrogated the inconsistent provisions of previous laws, the county court is . . .
empowered, to suspend this act and revive the repealed provisions of the former act. When the
question is before the county court for that tribunal to determine which law shall be in force, it is urge
before us that the power then to be exercised by the court is strictly legislative power, which under
our constitution, cannot be delegated to that tribunal or to any other body of men in the state. In the
present case, the question is not presented in the abstract; for the county court of Saline county,
after the act had been for several months in force in that county, did by order suspend its operation;
and during that suspension the offense was committed which is the subject of the present indictment
. . . ." (See Mitchell vs. State [1901], 134 Ala., 392; 32 S., 687.)

True, the legislature may enact laws for a particular locality different from those applicable to other
localities and, while recognizing the force of the principle hereinabove expressed, courts in may
jurisdiction have sustained the constitutionality of the submission of option laws to the vote of the
people. (6 R.C.L., p. 171.) But option laws thus sustained treat of subjects purely local in character
which should receive different treatment in different localities placed under different circumstances.
"They relate to subjects which, like the retailing of intoxicating drinks, or the running at large of cattle
in the highways, may be differently regarded in different localities, and they are sustained on what
seems to us the impregnable ground, that the subject, though not embraced within the ordinary
powers of municipalities to make by-laws and ordinances, is nevertheless within the class of public
regulations, in respect to which it is proper that the local judgment should control." (Cooley on
Constitutional Limitations, 5th ed., p. 148.) So that, while we do not deny the right of local self-
government and the propriety of leaving matters of purely local concern in the hands of local
authorities or for the people of small communities to pass upon, we believe that in matters of general
of general legislation like that which treats of criminals in general, and as regards the general subject
of probation, discretion may not be vested in a manner so unqualified and absolute as provided in
Act No. 4221. True, the statute does not expressly state that the provincial boards may suspend the
operation of the Probation Act in particular provinces but, considering that, in being vested with the
authority to appropriate or not the necessary funds for the salaries of probation officers, they thereby
are given absolute discretion to determine whether or not the law should take effect or operate in
their respective provinces, the provincial boards are in reality empowered by the legislature to
suspend the operation of the Probation Act in particular provinces, the Act to be held in abeyance
until the provincial boards should decide otherwise by appropriating the necessary funds. The
validity of a law is not tested by what has been done but by what may be done under its provisions.
(Walter E. Olsen & Co. vs. Aldanese and Trinidad [1922], 43 Phil., 259; 12 C. J., p. 786.)

It in conceded that a great deal of latitude should be granted to the legislature not only in the
expression of what may be termed legislative policy but in the elaboration and execution thereof.
"Without this power, legislation would become oppressive and yet imbecile." (People vs. Reynolds, 5
Gilman, 1.) It has been said that popular government lives because of the inexhaustible reservoir of
power behind it. It is unquestionable that the mass of powers of government is vested in the
representatives of the people and that these representatives are no further restrained under our
system than by the express language of the instrument imposing the restraint, or by particular
provisions which by clear intendment, have that effect. (Angara vs. Electoral Commission [1936], 35
Off. Ga., 23; Schneckenburger vs. Moran [1936], 35 Off. Gaz., 1317.) But, it should be borne in mind
that a constitution is both a grant and a limitation of power and one of these time-honored limitations
is that, subject to certain exceptions, legislative power shall not be delegated.

We conclude that section 11 of Act No. 4221 constitutes an improper and unlawful delegation of
legislative authority to the provincial boards and is, for this reason, unconstitutional and void.

3. It is also contended that the Probation Act violates the provisions of our Bill of Rights which
prohibits the denial to any person of the equal protection of the laws (Act. III, sec. 1 subsec. 1.
Constitution of the Philippines.)

This basic individual right sheltered by the Constitution is a restraint on all the tree grand
departments of our government and on the subordinate instrumentalities and subdivision thereof,
and on many constitutional power, like the police power, taxation and eminent domain. The equal
protection of laws, sententiously observes the Supreme Court of the United States, "is a pledge of
the protection of equal laws." (Yick Wo vs. Hopkins [1886], 118 U. S., 356; 30 Law. ed., 220; 6 Sup.
Ct. Rep., 10464; Perley vs. North Carolina, 249 U. S., 510; 39 Sup. Ct. Rep., 357; 63 Law. ed., 735.)
Of course, what may be regarded as a denial of the equal protection of the laws in a question not
always easily determined. No rule that will cover every case can be formulated. (Connolly vs. Union
Sewer Pipe Co. [1902], 184, U. S., 540; 22 Sup. Ct., Rep., 431; 46 Law. ed., 679.) Class legislation
discriminating against some and favoring others in prohibited. But classification on a reasonable
basis, and nor made arbitrarily or capriciously, is permitted. (Finely vs. California [1911], 222 U. S.,
28; 56 Law. ed., 75; 32 Sup. Ct. Rep., 13; Gulf. C. & S. F. Ry Co. vs. Ellis [1897], 165 U. S., 150; 41
Law. ed., 666; 17 Sup. Ct. Rep., 255; Smith, Bell & Co. vs. Natividad [1919], 40 Phil., 136.) The
classification, however, to be reasonable must be based on substantial distinctions which make real
differences; it must be germane to the purposes of the law; it must not be limited to existing
conditions only, and must apply equally to each member of the class. (Borgnis vs. Falk. Co. [1911],
147 Wis., 327, 353; 133 N. W., 209; 3 N. C. C. A., 649; 37 L. R. A. [N. S.], 489; State vs. Cooley, 56
Minn., 540; 530-552; 58 N. W., 150; Lindsley vs. Natural Carbonic Gas Co.[1911], 220 U. S., 61, 79,
55 Law. ed., 369, 377; 31 Sup. Ct. Rep., 337; Ann. Cas., 1912C, 160; Lake Shore & M. S. R. Co. vs.
Clough [1917], 242 U.S., 375; 37 Sup. Ct. Rep., 144; 61 Law. ed., 374; Southern Ry. Co. vs. Greene
[1910], 216 U. S., 400; 30 Sup. Ct. Rep., 287; 54 Law. ed., 536; 17 Ann. Cas., 1247; Truax vs.
Corrigan [1921], 257 U. S., 312; 12 C. J., pp. 1148, 1149.)

In the case at bar, however, the resultant inequality may be said to flow from the unwarranted
delegation of legislative power, although perhaps this is not necessarily the result in every case.
Adopting the example given by one of the counsel for the petitioners in the course of his oral
argument, one province may appropriate the necessary fund to defray the salary of a probation
officer, while another province may refuse or fail to do so. In such a case, the Probation Act would
be in operation in the former province but not in the latter. This means that a person otherwise
coming within the purview of the law would be liable to enjoy the benefits of probation in one
province while another person similarly situated in another province would be denied those same
benefits. This is obnoxious discrimination. Contrariwise, it is also possible for all the provincial
boards to appropriate the necessary funds for the salaries of the probation officers in their respective
provinces, in which case no inequality would result for the obvious reason that probation would be in
operation in each and every province by the affirmative action of appropriation by all the provincial
boards. On that hypothesis, every person coming within the purview of the Probation Act would be
entitled to avail of the benefits of the Act. Neither will there be any resulting inequality if no province,
through its provincial board, should appropriate any amount for the salary of the probation officer —
which is the situation now — and, also, if we accept the contention that, for the purpose of the
Probation Act, the City of Manila should be considered as a province and that the municipal board of
said city has not made any appropriation for the salary of the probation officer. These different
situations suggested show, indeed, that while inequality may result in the application of the law and
in the conferment of the benefits therein provided, inequality is not in all cases the necessary result.
But whatever may be the case, it is clear that in section 11 of the Probation Act creates a situation in
which discrimination and inequality are permitted or allowed. There are, to be sure, abundant
authorities requiring actual denial of the equal protection of the law before court should assume the
task of setting aside a law vulnerable on that score, but premises and circumstances considered, we
are of the opinion that section 11 of Act No. 4221 permits of the denial of the equal protection of the
law and is on that account bad. We see no difference between a law which permits of such denial. A
law may appear to be fair on its face and impartial in appearance, yet, if it permits of unjust and
illegal discrimination, it is within the constitutional prohibitions. (By analogy, Chy Lung vs. Freeman
[1876], 292 U. S., 275; 23 Law. ed., 550; Henderson vs. Mayor [1876], 92 U. S., 259; 23 Law. ed.,
543; Ex parte Virginia [1880], 100 U. S., 339; 25 Law. ed., 676; Neal vs. Delaware [1881], 103 U. S.,
370; 26 Law. ed., 567; Soon Hing vs. Crowley [1885], 113 U. S., 703; 28 Law. ed., 1145, Yick Wo
vs. Hopkins [1886],118 U. S., 356; 30 Law. ed., 220; Williams vs. Mississippi [1897], 170 U. S., 218;
18 Sup. Ct. Rep., 583; 42 Law. ed., 1012; Bailey vs. Alabama [1911], 219 U. S., 219; 31 Sup. Ct.
Rep. 145; 55 Law. ed., Sunday Lake Iron Co. vs. Wakefield [1918], 247 U. S., 450; 38 Sup. Ct. Rep.,
495; 62 Law. ed., 1154.) In other words, statutes may be adjudged unconstitutional because of their
effect in operation (General Oil Co. vs. Clain [1907], 209 U. S., 211; 28 Sup. Ct. Rep., 475; 52 Law.
ed., 754; State vs. Clement Nat. Bank [1911], 84 Vt., 167; 78 Atl., 944; Ann. Cas., 1912D, 22). If the
law has the effect of denying the equal protection of the law it is unconstitutional. (6 R. C. L. p. 372;
Civil Rights Cases, 109 U. S., 3; 3 Sup. Ct. Rep., 18; 27 Law. ed., 835; Yick Wo vs. Hopkins, supra;
State vs. Montgomery, 94 Me., 192; 47 Atl., 165; 80 A. S. R., 386; State vs. Dering, 84 Wis., 585; 54
N. W., 1104; 36 A. S. R., 948; 19 L. R. A., 858.) Under section 11 of the Probation Act, not only may
said Act be in force in one or several provinces and not be in force in other provinces, but one
province may appropriate for the salary of the probation officer of a given year — and have probation
during that year — and thereafter decline to make further appropriation, and have no probation is
subsequent years. While this situation goes rather to the abuse of discretion which delegation
implies, it is here indicated to show that the Probation Act sanctions a situation which is intolerable in
a government of laws, and to prove how easy it is, under the Act, to make the guaranty of the
equality clause but "a rope of sand". (Brewer, J. Gulf C. & S. F. Ry. Co. vs. Ellis [1897], 165 U. S.,
150 154; 41 Law. ed., 666; 17 Sup. Ct. Rep., 255.) lawph!1.net

Great reliance is placed by counsel for the respondents on the case of Ocampo vs. United States
([1914], 234 U. S., 91; 58 Law. ed., 1231). In that case, the Supreme Court of the United States
affirmed the decision of this court (18 Phil., 1) by declining to uphold the contention that there was a
denial of the equal protection of the laws because, as held in Missouri vs. Lewis (Bowman vs. Lewis)
decided in 1880 (101 U. S., 220; 25 Law. ed., 991), the guaranty of the equality clause does not
require territorial uniformity. It should be observed, however, that this case concerns the right to
preliminary investigations in criminal cases originally granted by General Orders No. 58. No question
of legislative authority was involved and the alleged denial of the equal protection of the laws was
the result of the subsequent enactment of Act No. 612, amending the charter of the City of Manila
(Act No. 813) and providing in section 2 thereof that "in cases triable only in the court of first instance
of the City of Manila, the defendant . . . shall not be entitled as of right to a preliminary examination
in any case where the prosecuting attorney, after a due investigation of the facts . . . shall have
presented an information against him in proper form . . . ." Upon the other hand, an analysis of the
arguments and the decision indicates that the investigation by the prosecuting attorney — although
not in the form had in the provinces — was considered a reasonable substitute for the City of Manila,
considering the peculiar conditions of the city as found and taken into account by the legislature
itself.

Reliance is also placed on the case of Missouri vs. Lewis, supra. That case has reference to a
situation where the constitution of Missouri permits appeals to the Supreme Court of the state from
final judgments of any circuit court, except those in certain counties for which counties the
constitution establishes a separate court of appeals called St. Louis Court of Appeals. The provision
complained of, then, is found in the constitution itself and it is the constitution that makes the
apportionment of territorial jurisdiction.

We are of the opinion that section 11 of the Probation Act is unconstitutional and void because it is
also repugnant to equal-protection clause of our Constitution.

Section 11 of the Probation Act being unconstitutional and void for the reasons already stated, the
next inquiry is whether or not the entire Act should be avoided.

In seeking the legislative intent, the presumption is against any mutilation of a statute, and
the courts will resort to elimination only where an unconstitutional provision is interjected into
a statute otherwise valid, and is so independent and separable that its removal will leave the
constitutional features and purposes of the act substantially unaffected by the process.
(Riccio vs. Hoboken, 69 N. J. Law., 649, 662; 63 L. R. A., 485; 55 Atl., 1109, quoted in
Williams vs. Standard Oil Co. [1929], 278 U.S., 235, 240; 73 Law. ed., 287, 309; 49 Sup. Ct.
Rep., 115; 60 A. L. R., 596.) In Barrameda vs. Moir ([1913], 25 Phil., 44, 47), this court
stated the well-established rule concerning partial invalidity of statutes in the following
language:

. . . where part of the a statute is void, as repugnant to the Organic Law, while another part is
valid, the valid portion, if separable from the valid, may stand and be enforced. But in order
to do this, the valid portion must be in so far independent of the invalid portion that it is fair to
presume that the Legislative would have enacted it by itself if they had supposed that they
could not constitutionally enact the other. (Mutual Loan Co. vs. Martell, 200 Mass., 482; 86
N. E., 916; 128 A. S. R., 446; Supervisors of Holmes Co. vs. Black Creek Drainage District,
99 Miss., 739; 55 Sou., 963.) Enough must remain to make a complete, intelligible, and valid
statute, which carries out the legislative intent. (Pearson vs. Bass. 132 Ga., 117; 63 S. E.,
 798.) The void provisions must be eliminated without causing results affecting the main
purpose of the Act, in a manner contrary to the intention of the Legislature. (State vs. A. C. L.
R., Co., 56 Fla., 617, 642; 47 Sou., 969; Harper vs. Galloway, 58 Fla., 255; 51 Sou., 226; 26
L. R. A., N. S., 794; Connolly vs. Union Sewer Pipe Co., 184 U. S., 540, 565; People vs.
Strassheim, 240 Ill., 279, 300; 88 N. E., 821; 22 L. R. A., N. S., 1135; State vs. Cognevich,
124 La., 414; 50 Sou., 439.) The language used in the invalid part of a statute can have no
legal force or efficacy for any purpose whatever, and what remains must express the
legislative will, independently of the void part, since the court has no power to legislate.
(State vs. Junkin, 85 Neb., 1; 122 N. W., 473; 23 L. R. A., N. S., 839; Vide, also,. U. S., vs.
Rodriguez [1918], 38 Phil., 759; Pollock vs. Farmers' Loan and Trust Co. [1895], 158 U. S.,
601, 635; 39 Law. ed., 1108, 1125; 15 Sup. Ct. Rep., 912; 6 R.C.L., 121.)

It is contended that even if section 11, which makes the Probation Act applicable only in those
provinces in which the respective provincial boards provided for the salaries of probation officers
were inoperative on constitutional grounds, the remainder of the Act would still be valid and may be
enforced. We should be inclined to accept the suggestions but for the fact that said section is, in our
opinion, is inseparably linked with the other portions of the Act that with the elimination of the section
what would be left is the bare idealism of the system, devoid of any practical benefit to a large
number of people who may be deserving of the intended beneficial result of that system. The clear
policy of the law, as may be gleaned from a careful examination of the whole context, is to make the
application of the system dependent entirely upon the affirmative action of the different provincial
boards through appropriation of the salaries for probation officers at rates not lower than those
provided for provincial fiscals. Without such action on the part of the various boards, no probation
officers would be appointed by the Secretary of Justice to act in the provinces. The Philippines is
divided or subdivided into provinces and it needs no argument to show that if not one of the
provinces — and this is the actual situation now — appropriate the necessary fund for the salary of a
probation officer, probation under Act No. 4221 would be illusory. There can be no probation without
a probation officer. Neither can there be a probation officer without the probation system.

Section 2 of the Acts provides that the probation officer shall supervise and visit the probationer.
Every probation officer is given, as to the person placed in probation under his care, the powers of
the police officer. It is the duty of the probation officer to see that the conditions which are imposed
by the court upon the probationer under his care are complied with. Among those conditions, the
following are enumerated in section 3 of the Act:

That the probationer (a) shall indulge in no injurious or vicious habits;

(b) Shall avoid places or persons of disreputable or harmful character;

(c) Shall report to the probation officer as directed by the court or probation officers;

(d) Shall permit the probation officer to visit him at reasonable times at his place of abode or
elsewhere;

(e) Shall truthfully answer any reasonable inquiries on the part of the probation officer
concerning his conduct or condition; "(f) Shall endeavor to be employed regularly; "(g) Shall
remain or reside within a specified place or locality;

(f) Shall make reparation or restitution to the aggrieved parties for actual damages or losses
caused by his offense;

(g) Shall comply with such orders as the court may from time to time make; and
 (h) Shall refrain from violating any law, statute, ordinance, or any by-law or regulation,
promulgated in accordance with law.

The court is required to notify the probation officer in writing of the period and terms of probation.
Under section 4, it is only after the period of probation, the submission of a report of the probation
officer and appropriate finding of the court that the probationer has complied with the conditions of
probation that probation may be definitely terminated and the probationer finally discharged from
supervision. Under section 5, if the court finds that there is non-compliance with said conditions, as
reported by the probation officer, it may issue a warrant for the arrest of the probationer and said
probationer may be committed with or without bail. Upon arraignment and after an opportunity to be
heard, the court may revoke, continue or modify the probation, and if revoked, the court shall order
the execution of the sentence originally imposed. Section 6 prescribes the duties of probation
officers: "It shall be the duty of every probation officer to furnish to all persons placed on probation
under his supervision a statement of the period and conditions of their probation, and to instruct
them concerning the same; to keep informed concerning their conduct and condition; to aid and
encourage them by friendly advice and admonition, and by such other measures, not inconsistent
with the conditions imposed by court as may seem most suitable, to bring about improvement in their
conduct and condition; to report in writing to the court having jurisdiction over said probationers at
least once every two months concerning their conduct and condition; to keep records of their work;
make such report as are necessary for the information of the Secretary of Justice and as the latter
may require; and to perform such other duties as are consistent with the functions of the probation
officer and as the court or judge may direct. The probation officers provided for in this Act may act as
parole officers for any penal or reformatory institution for adults when so requested by the authorities
thereof, and, when designated by the Secretary of Justice shall act as parole officer of persons
released on parole under Act Number Forty-one Hundred and Three, without additional
compensation."

It is argued, however, that even without section 11 probation officers maybe appointed in the
provinces under section 10 of Act which provides as follows:

There is hereby created in the Department of Justice and subject to its supervision and
control, a Probation Office under the direction of a Chief Probation Officer to be appointed by
the Governor-General with the advise and consent of the Senate who shall receive a salary
of four eight hundred pesos per annum. To carry out this Act there is hereby appropriated
out of any funds in the Insular Treasury not otherwise appropriated, the sum of fifty thousand
pesos to be disbursed by the Secretary of Justice, who is hereby authorized to appoint
probation officers and the administrative personnel of the probation officer under civil service
regulations from among those who possess the qualifications, training and experience
prescribed by the Bureau of Civil Service, and shall fix the compensation of such probation
officers and administrative personnel until such positions shall have been included in the
Appropriation Act.

But the probation officers and the administrative personnel referred to in the foregoing section are
clearly not those probation officers required to be appointed for the provinces under section 11. It
may be said, reddendo singula singulis, that the probation officers referred to in section 10 above-
quoted are to act as such, not in the various provinces, but in the central office known as the
Probation Office established in the Department of Justice, under the supervision of the Chief
Probation Officer. When the law provides that "the probation officer" shall investigate and make
reports to the court (secs. 1 and 4); that "the probation officer" shall supervise and visit the
probationer (sec. 2; sec. 6, par. d); that the probationer shall report to the "probationer officer" (sec.
3, par. c.), shall allow "the probationer officer" to visit him (sec. 3, par. d), shall truthfully answer any
reasonable inquiries on the part of "the probation officer" concerning his conduct or condition (sec. 3,
par. 4); that the court shall notify "the probation officer" in writing of the period and terms of probation
(sec. 3, last par.), it means the probation officer who is in charge of a particular probationer in a
particular province. It never could have been intention of the legislature, for instance, to require the
probationer in Batanes, to report to a probationer officer in the City of Manila, or to require a
probation officer in Manila to visit the probationer in the said province of Batanes, to place him under
his care, to supervise his conduct, to instruct him concerning the conditions of his probation or to
perform such other functions as are assigned to him by law. That under section 10 the Secretary of
Justice may appoint as many probation officers as there are provinces or groups of provinces is, of
course possible. But this would be arguing on what the law may be or should be and not on what the
law is. Between is and ought there is a far cry. The wisdom and propriety of legislation is not for us
to pass upon. We may think a law better otherwise than it is. But much as has been said regarding
progressive interpretation and judicial legislation we decline to amend the law. We are not permitted
to read into the law matters and provisions which are not there. Not for any purpose — not even to
save a statute from the doom of invalidity.

Upon the other hand, the clear intention and policy of the law is not to make the Insular Government
defray the salaries of probation officers in the provinces but to make the provinces defray them
should they desire to have the Probation Act apply thereto. The sum of P50,000, appropriated "to
carry out the purposes of this Act", is to be applied, among other things, for the salaries of probation
officers in the central office at Manila. These probation officers are to receive such compensations
as the Secretary of Justice may fix "until such positions shall have been included in the Appropriation
Act". It was the intention of the legislature to empower the Secretary of Justice to fix the salaries of
the probation officers in the provinces or later on to include said salaries in an appropriation act.
Considering, further, that the sum of P50,000 appropriated in section 10 is to cover, among other
things, the salaries of the administrative personnel of the Probation Office, what would be left of the
amount can hardly be said to be sufficient to pay even nominal salaries to probation officers in the
provinces. We take judicial notice of the fact that there are 48 provinces in the Philippines and we do
not think it is seriously contended that, with the fifty thousand pesos appropriated for the central
office, there can be in each province, as intended, a probation officer with a salary not lower than
that of a provincial fiscal. If this a correct, the contention that without section 11 of Act No. 4221 said
act is complete is an impracticable thing under the remainder of the Act, unless it is conceded that in
our case there can be a system of probation in the provinces without probation officers.

Probation as a development of a modern penology is a commendable system. Probation laws have

been enacted, here and in other countries, to permit what modern criminologist call the
"individualization of the punishment", the adjustment of the penalty to the character of the criminal
and the circumstances of his particular case. It provides a period of grace in order to aid in the
rehabilitation of a penitent offender. It is believed that, in any cases, convicts may be reformed and
their development into hardened criminals aborted. It, therefore, takes advantage of an opportunity
for reformation and avoids imprisonment so long as the convicts gives promise of reform. (United
States vs. Murray [1925], 275 U. S., 347 357, 358; 72 Law. ed., 309; 312, 313; 48 Sup. Ct. Rep.,
146; Kaplan vs. Hecht, 24 F. [2d], 664, 665.) The Welfare of society is its chief end and aim. The
benefit to the individual convict is merely incidental. But while we believe that probation is
commendable as a system and its implantation into the Philippines should be welcomed, we are
forced by our inescapable duty to set the law aside because of the repugnancy to our fundamental
law.

In arriving at this conclusion, we have endeavored to consider the different aspects presented by
able counsel for both parties, as well in their memorandums as in their oral argument. We have
examined the cases brought to our attention, and others we have been able to reach in the short
time at our command for the study and deliberation of this case. In the examination of the cases and
in then analysis of the legal principles involved we have inclined to adopt the line of action which in
our opinion, is supported better reasoned authorities and is more conducive to the general welfare.
(Smith, Bell & Co. vs. Natividad [1919], 40 Phil., 136.) Realizing the conflict of authorities, we have
declined to be bound by certain adjudicated cases brought to our attention, except where the point
or principle is settled directly or by clear implication by the more authoritative pronouncements of the
Supreme Court of the United States. This line of approach is justified because:

(a) The constitutional relations between the Federal and the State governments of the United
States and the dual character of the American Government is a situation which does not
obtain in the Philippines;

(b) The situation of s state of the American Union of the District of Columbia with reference to
the Federal Government of the United States is not the situation of the province with respect
to the Insular Government (Art. I, sec. 8 cl. 17 and 10th Amendment, Constitution of the
United States; Sims vs. Rives, 84 Fed. [2d], 871),

(c) The distinct federal and the state judicial organizations of the United States do not
embrace the integrated judicial system of the Philippines (Schneckenburger vs. Moran
[1936], 35 Off. Gaz., p. 1317);

(d) "General propositions do not decide concrete cases" (Justice Holmes in Lochner vs. New
York [1904], 198 U. S., 45, 76; 49 Law. ed., 937, 949) and, "to keep pace with . . . new
developments of times and circumstances" (Chief Justice Waite in Pensacola Tel. Co. vs.
Western Union Tel. Co. [1899], 96 U. S., 1, 9; 24 Law. ed., 708; Yale Law Journal, Vol. XXIX,
No. 2, Dec. 1919, 141, 142), fundamental principles should be interpreted having in view
existing local conditions and environment.

Act No. 4221 is hereby declared unconstitutional and void and the writ of prohibition is, accordingly,
granted. Without any pronouncement regarding costs. So ordered.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-23825      December 24, 1965

EMMANUEL PELAEZ, petitioner,
vs.
THE AUDITOR GENERAL, respondent.

Zulueta, Gonzales, Paculdo and Associates for petitioner.

Office of the Solicitor General for respondent.

CONCEPCION, J.:

During the period from September 4 to October 29, 1964 the President of the Philippines, purporting
to act pursuant to Section 68 of the Revised Administrative Code, issued Executive Orders Nos. 93
to 121, 124 and 126 to 129; creating thirty-three (33) municipalities enumerated in the margin. 1 Soon
after the date last mentioned, or on November 10, 1964 petitioner Emmanuel Pelaez, as Vice
President of the Philippines and as taxpayer, instituted the present special civil action, for a writ of
prohibition with preliminary injunction, against the Auditor General, to restrain him, as well as his
representatives and agents, from passing in audit any expenditure of public funds in implementation
of said executive orders and/or any disbursement by said municipalities.

Petitioner alleges that said executive orders are null and void, upon the ground that said Section 68
has been impliedly repealed by Republic Act No. 2370 and constitutes an undue delegation of
legislative power. Respondent maintains the contrary view and avers that the present action is
premature and that not all proper parties — referring to the officials of the new political subdivisions
in question — have been impleaded. Subsequently, the mayors of several municipalities adversely
affected by the aforementioned executive orders — because the latter have taken away from the
former the barrios composing the new political subdivisions — intervened in the case. Moreover,
Attorneys Enrique M. Fernando and Emma Quisumbing-Fernando were allowed to and did appear
as amici curiae.

The third paragraph of Section 3 of Republic Act No. 2370, reads:

Barrios shall not be created or their boundaries altered nor their names changed except
under the provisions of this Act or by Act of Congress.

Pursuant to the first two (2) paragraphs of the same Section 3:

All barrios existing at the time of the passage of this Act shall come under the provisions
hereof.

Upon petition of a majority of the voters in the areas affected, a new barrio may be created or
the name of an existing one may be changed by the provincial board of the province, upon
recommendation of the council of the municipality or municipalities in which the proposed
barrio is stipulated. The recommendation of the municipal council shall be embodied in a
resolution approved by at least two-thirds of the entire membership of the said council:
Provided, however, That no new barrio may be created if its population is less than five
hundred persons.

Hence, since January 1, 1960, when Republic Act No. 2370 became effective, barrios may "not be
created or their boundaries altered nor their names changed" except by Act of Congress or of the
corresponding provincial board "upon petition of a majority of the voters in the areas affected" and
the "recommendation of the council of the municipality or municipalities in which the proposed barrio
is situated." Petitioner argues, accordingly: "If the President, under this new law, cannot even create
a barrio, can he create a municipality which is composed of several barrios, since barrios are units of
municipalities?"

Respondent answers in the affirmative, upon the theory that a new municipality can be created
without creating new barrios, such as, by placing old barrios under the jurisdiction of the new
municipality. This theory overlooks, however, the main import of the petitioner's argument, which is
that the statutory denial of the presidential authority to create a new barrio implies a negation of the
bigger power to create municipalities, each of which consists of several barrios. The cogency and
force of this argument is too obvious to be denied or even questioned. Founded upon logic and
experience, it cannot be offset except by a clear manifestation of the intent of Congress to the
contrary, and no such manifestation, subsequent to the passage of Republic Act No. 2379, has been
brought to our attention.

Moreover, section 68 of the Revised Administrative Code, upon which the disputed executive orders
are based, provides:
 The (Governor-General) President of the Philippines may by executive order define the
boundary, or boundaries, of any province, subprovince, municipality, [township] municipal
district, or other political subdivision, and increase or diminish the territory comprised therein,
may divide any province into one or more subprovinces, separate any political division other
than a province, into such portions as may be required, merge any of such subdivisions or
portions with another, name any new subdivision so created, and may change the seat of
government within any subdivision to such place therein as the public welfare may require:
Provided, That the authorization of the (Philippine Legislature) Congress of the Philippines
shall first be obtained whenever the boundary of any province or subprovince is to be
defined or any province is to be divided into one or more subprovinces. When action by the
(Governor-General) President of the Philippines in accordance herewith makes necessary a
change of the territory under the jurisdiction of any administrative officer or any judicial
officer, the (Governor-General) President of the Philippines, with the recommendation and
advice of the head of the Department having executive control of such officer, shall redistrict
the territory of the several officers affected and assign such officers to the new districts so
formed.

Upon the changing of the limits of political divisions in pursuance of the foregoing authority,
an equitable distribution of the funds and obligations of the divisions thereby affected shall
be made in such manner as may be recommended by the (Insular Auditor) Auditor General
and approved by the (Governor-General) President of the Philippines.

Respondent alleges that the power of the President to create municipalities under this section does
not amount to an undue delegation of legislative power, relying upon Municipality of Cardona vs.
Municipality of Binañgonan (36 Phil. 547), which, he claims, has settled it. Such claim is untenable,
for said case involved, not the creation of a new municipality, but a mere transfer of territory — from
an already existing municipality (Cardona) to another municipality (Binañgonan), likewise, existing at
the time of and prior to said transfer (See Gov't of the P.I. ex rel. Municipality of Cardona vs.
Municipality, of Binañgonan [34 Phil. 518, 519-5201) — in consequence of the fixing and definition,
pursuant to Act No. 1748, of the common boundaries of two municipalities.

It is obvious, however, that, whereas the power to fix such common boundary, in order to avoid or
settle conflicts of jurisdiction between adjoining municipalities, may partake of
an administrative nature — involving, as it does, the adoption of means and ways to carry into
effect the law creating said municipalities — the authority to create municipal corporations is
essentially legislative in nature. In the language of other courts, it is "strictly a legislative function"
(State ex rel. Higgins vs. Aicklen, 119 S. 425, January 2, 1959) or "solely and exclusively the
exercise of legislative power" (Udall vs. Severn, May 29, 1938, 79 P. 2d 347-349). As the Supreme
Court of Washington has put it (Territory ex rel. Kelly vs. Stewart, February 13, 1890, 23 Pac. 405,
409), "municipal corporations are purely the creatures of statutes."

Although1a Congress may delegate to another branch of the Government the power to fill in the
details in the execution, enforcement or administration of a law, it is essential, to forestall a violation
of the principle of separation of powers, that said law: (a) be complete in itself — it must set forth
therein the policy to be executed, carried out or implemented by the delegate 2 — and (b) fix a
standard — the limits of which are sufficiently determinate or determinable — to which the delegate
must conform in the performance of his functions.2a Indeed, without a statutory declaration of policy,
the delegate would in effect, make or formulate such policy, which is the essence of every law; and,
without the aforementioned standard, there would be no means to determine, with reasonable
certainty, whether the delegate has acted within or beyond the scope of his authority. 2b Hence, he
could thereby arrogate upon himself the power, not only to make the law, but, also — and this is
worse — to unmake it, by adopting measures inconsistent with the end sought to be attained by the
Act of Congress, thus nullifying the principle of separation of powers and the system of checks and
balances, and, consequently, undermining the very foundation of our Republican system.

Section 68 of the Revised Administrative Code does not meet these well settled requirements for a
valid delegation of the power to fix the details in the enforcement of a law. It does not enunciate any
policy to be carried out or implemented by the President. Neither does it give a standard sufficiently
precise to avoid the evil effects above referred to. In this connection, we do not overlook the fact
that, under the last clause of the first sentence of Section 68, the President:

... may change the seat of the government within any subdivision to such place therein as
the public welfare may require.

It is apparent, however, from the language of this clause, that the phrase "as the public welfare may
require" qualified, not the clauses preceding the one just quoted, but only the place to which the seat
of the government may be transferred. This fact becomes more apparent when we consider that said
Section 68 was originally Section 1 of Act No. 1748, 3 which provided that, "whenever in the judgment
of the Governor-General the public welfare requires, he may, by executive order," effect the changes
enumerated therein (as in said section 68), including the change of the seat of the government "to
such place ... as the public interest requires." The opening statement of said Section 1 of Act No.
1748 — which was not included in Section 68 of the Revised Administrative Code — governed the
time at which, or the conditions under which, the powers therein conferred could be exercised;
whereas the last part of the first sentence of said section referred exclusively to the place to which
the seat of the government was to be transferred.

At any rate, the conclusion would be the same, insofar as the case at bar is concerned, even if we
assumed that the phrase "as the public welfare may require," in said Section 68, qualifies all other
clauses thereof. It is true that in Calalang vs. Williams (70 Phil. 726) and People vs. Rosenthal (68
Phil. 328), this Court had upheld "public welfare" and "public interest," respectively, as sufficient
standards for a valid delegation of the authority to execute the law. But, the doctrine laid down in
these cases — as all judicial pronouncements — must be construed in relation to the specific facts
and issues involved therein, outside of which they do not constitute precedents and have no binding
effect.4 The law construed in the Calalang case conferred upon the Director of Public Works, with the
approval of the Secretary of Public Works and Communications, the power to issue rules and
regulations to promote safe transit upon national roads and streets. Upon the other hand, the
Rosenthal case referred to the authority of the Insular Treasurer, under Act No. 2581, to issue and
cancel certificates or permits for the sale of speculative securities. Both cases involved grants
to administrative officers of powers related to the exercise of their administrative functions, calling for
the determination of questions of fact.

Such is not the nature of the powers dealt with in section 68. As above indicated, the creation of
municipalities, is not an administrative function, but one which is essentially and eminently
legislative in character. The question of whether or not "public interest" demands the exercise of
such power is not one of fact. it is "purely a legislative question "(Carolina-Virginia Coastal Highway
vs. Coastal Turnpike Authority, 74 S.E. 2d. 310-313, 315-318), or a political question (Udall vs.
Severn, 79 P. 2d. 347-349). As the Supreme Court of Wisconsin has aptly characterized it, "the
question as to whether incorporation is for the best interest of the community in any case is
emphatically a question of public policy and statecraft" (In re Village of North Milwaukee, 67 N.W.
1033, 1035-1037).

For this reason, courts of justice have annulled, as constituting undue delegation of legislative
powers, state laws granting the judicial department, the power to determine whether certain
territories should be annexed to a particular municipality (Udall vs. Severn, supra, 258-359); or
vesting in a Commission the right to determine the plan and frame of government of proposed
villages and what functions shall be exercised by the same, although the powers and functions of the
village are specifically limited by statute (In re Municipal Charters, 86 Atl. 307-308); or conferring
upon courts the authority to declare a given town or village incorporated, and designate its metes
and bounds, upon petition of a majority of the taxable inhabitants thereof, setting forth the area
desired to be included in such village (Territory ex rel Kelly vs. Stewart, 23 Pac. 405-409); or
authorizing the territory of a town, containing a given area and population, to be incorporated as a
town, on certain steps being taken by the inhabitants thereof and on certain determination by a court
and subsequent vote of the inhabitants in favor thereof, insofar as the court is allowed to determine
whether the lands embraced in the petition "ought justly" to be included in the village, and whether
the interest of the inhabitants will be promoted by such incorporation, and to enlarge and diminish
the boundaries of the proposed village "as justice may require" (In re Villages of North Milwaukee,
67 N.W. 1035-1037); or creating a Municipal Board of Control which shall determine whether or not
the laying out, construction or operation of a toll road is in the "public interest" and whether the
requirements of the law had been complied with, in which case the board shall enter an order
creating a municipal corporation and fixing the name of the same (Carolina-Virginia Coastal Highway
vs. Coastal Turnpike Authority, 74 S.E. 2d. 310).

Insofar as the validity of a delegation of power by Congress to the President is concerned, the case
of Schechter Poultry Corporation vs. U.S. (79 L. Ed. 1570) is quite relevant to the one at bar. The
Schechter case involved the constitutionality of Section 3 of the National Industrial Recovery Act
authorizing the President of the United States to approve "codes of fair competition" submitted to
him by one or more trade or industrial associations or corporations which "impose no inequitable
restrictions on admission to membership therein and are truly representative," provided that such
codes are not designed "to promote monopolies or to eliminate or oppress small enterprises and will
not operate to discriminate against them, and will tend to effectuate the policy" of said Act. The
Federal Supreme Court held:

To summarize and conclude upon this point: Sec. 3 of the Recovery Act is without
precedent. It supplies no standards for any trade, industry or activity. It does not undertake to
prescribe rules of conduct to be applied to particular states of fact determined by appropriate
administrative procedure. Instead of prescribing rules of conduct, it authorizes the making of
codes to prescribe them. For that legislative undertaking, Sec. 3 sets up no standards, aside
from the statement of the general aims of rehabilitation, correction and expansion described
in Sec. 1. In view of the scope of that broad declaration, and of the nature of the few
restrictions that are imposed, the discretion of the President in approving or prescribing
codes, and thus enacting laws for the government of trade and industry throughout the
country, is virtually unfettered. We think that the code making authority thus conferred is an
unconstitutional delegation of legislative power.

If the term "unfair competition" is so broad as to vest in the President a discretion that is "virtually
unfettered." and, consequently, tantamount to a delegation of legislative power, it is obvious that
"public welfare," which has even a broader connotation, leads to the same result. In fact, if the
validity of the delegation of powers made in Section 68 were upheld, there would no longer be any
legal impediment to a statutory grant of authority to the President to do anything which, in his
opinion, may be required by public welfare or public interest. Such grant of authority would be a
virtual abdication of the powers of Congress in favor of the Executive, and would bring about a total
collapse of the democratic system established by our Constitution, which it is the special duty and
privilege of this Court to uphold.

It may not be amiss to note that the executive orders in question were issued after the legislative
bills for the creation of the municipalities involved in this case had failed to pass Congress. A better
proof of the fact that the issuance of said executive orders entails the exercise of purely legislative
functions can hardly be given.

Again, Section 10 (1) of Article VII of our fundamental law ordains:

The President shall have control of all the executive departments, bureaus, or offices,
exercise general supervision over all local governments as may be provided by law, and take
care that the laws be faithfully executed.

The power of control under this provision implies the right of the President to interfere in the exercise
of such discretion as may be vested by law in the officers of the executive departments, bureaus, or
offices of the national government, as well as to act in lieu of such officers. This power is denied by
the Constitution to the Executive, insofar as local governments are concerned. With respect to the
latter, the fundamental law permits him to wield no more authority than that of checking whether said
local governments or the officers thereof perform their duties as provided by statutory enactments.
Hence, the President cannot interfere with local governments, so long as the same or its officers act
Within the scope of their authority. He may not enact an ordinance which the municipal council has
failed or refused to pass, even if it had thereby violated a duty imposed thereto by law, although he
may see to it that the corresponding provincial officials take appropriate disciplinary action therefor.
Neither may he vote, set aside or annul an ordinance passed by said council within the scope of its
jurisdiction, no matter how patently unwise it may be. He may not even suspend an elective official
of a regular municipality or take any disciplinary action against him, except on appeal from a
decision of the corresponding provincial board.5

Upon the other hand if the President could create a municipality, he could, in effect, remove any of
its officials, by creating a new municipality and including therein the barrio in which the official
concerned resides, for his office would thereby become vacant. 6 Thus, by merely brandishing the
power to create a new municipality (if he had it), without actually creating it, he could compel local
officials to submit to his dictation, thereby, in effect, exercising over them the power of control denied
to him by the Constitution.

Then, also, the power of control of the President over executive departments, bureaus or offices
implies no more than the authority to assume directly the functions thereof or to interfere in the
exercise of discretion by its officials. Manifestly, such control does not include the authority either to
abolish an executive department or bureau, or to create a new one. As a consequence, the alleged
power of the President to create municipal corporations would necessarily connote the exercise by
him of an authority even greater than that of control which he has over the executive departments,
bureaus or offices. In other words, Section 68 of the Revised Administrative Code does not merely
fail to comply with the constitutional mandate above quoted. Instead of giving the President less
power over local governments than that vested in him over the executive departments, bureaus or
offices, it reverses the process and does the exact opposite, by conferring upon him more power
over municipal corporations than that which he has over said executive departments, bureaus or
offices.

In short, even if it did entail an undue delegation of legislative powers, as it certainly does, said
Section 68, as part of the Revised Administrative Code, approved on March 10, 1917, must be
deemed repealed by the subsequent adoption of the Constitution, in 1935, which is utterly
incompatible and inconsistent with said statutory enactment. 7

There are only two (2) other points left for consideration, namely, respondent's claim (a) that "not all
the proper parties" — referring to the officers of the newly created municipalities — "have been
impleaded in this case," and (b) that "the present petition is premature."
As regards the first point, suffice it to say that the records do not show, and the parties do not claim,
that the officers of any of said municipalities have been appointed or elected and assumed office. At
any rate, the Solicitor General, who has appeared on behalf of respondent Auditor General, is the
officer authorized by law "to act and represent the Government of the Philippines, its offices and
agents, in any official investigation, proceeding or matter requiring the services of a lawyer" (Section
1661, Revised Administrative Code), and, in connection with the creation of the aforementioned
municipalities, which involves a political, not proprietary, function, said local officials, if any, are mere
agents or representatives of the national government. Their interest in the case at bar has,
accordingly, been, in effect, duly represented. 8

With respect to the second point, respondent alleges that he has not as yet acted on any of the
executive order & in question and has not intimated how he would act in connection therewith. It is,
however, a matter of common, public knowledge, subject to judicial cognizance, that the President
has, for many years, issued executive orders creating municipal corporations and that the same
have been organized and in actual operation, thus indicating, without peradventure of doubt, that the
expenditures incidental thereto have been sanctioned, approved or passed in audit by the General
Auditing Office and its officials. There is no reason to believe, therefore, that respondent would adopt
a different policy as regards the new municipalities involved in this case, in the absence of an
allegation to such effect, and none has been made by him.

WHEREFORE, the Executive Orders in question are hereby declared null and void ab initio and the
respondent permanently restrained from passing in audit any expenditure of public funds in
implementation of said Executive Orders or any disbursement by the municipalities above referred
to. It is so ordered.

Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barrera and Dizon, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-16704             March 17, 1962

VICTORIAS MILLING COMPANY, INC., petitioner-appellant,

vs.
SOCIAL SECURITY COMMISSION, respondent-appellee.

Ross, Selph and Carrascoso for petitioner-appellant.

Office of the Solicitor General and Ernesto T. Duran for respondent-appellee.

BARRERA, J.:

On October 15, 1958, the Social Security Commission issued its Circular No. 22 of the following
tenor: .

Effective November 1, 1958, all Employers in computing the premiums due the System, will
take into consideration and include in the Employee's remuneration all bonuses and overtime
pay, as well as the cash value of other media of remuneration. All these will comprise the
 Employee's remuneration or earnings, upon which the 3-1/2% and 2-1/2% contributions will
be based, up to a maximum of P500 for any one month.

Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc., through counsel, wrote the
Social Security Commission in effect protesting against the circular as contradictory to a previous
Circular No. 7, dated October 7, 1957 expressly excluding overtime pay and bonus in the
computation of the employers' and employees' respective monthly premium contributions, and
submitting, "In order to assist your System in arriving at a proper interpretation of the term
'compensation' for the purposes of" such computation, their observations on Republic Act 1161 and
its amendment and on the general interpretation of the words "compensation", "remuneration" and
"wages". Counsel further questioned the validity of the circular for lack of authority on the part of the
Social Security Commission to promulgate it without the approval of the President and for lack of
publication in the Official Gazette.

Overruling these objections, the Social Security Commission ruled that Circular No. 22 is not a rule
or regulation that needed the approval of the President and publication in the Official Gazette to be
effective, but a mere administrative interpretation of the statute, a mere statement of general policy
or opinion as to how the law should be construed.

Not satisfied with this ruling, petitioner comes to this Court on appeal.

The single issue involved in this appeal is whether or not Circular No. 22 is a rule or regulation, as
contemplated in Section 4(a) of Republic Act 1161 empowering the Social Security Commission "to
adopt, amend and repeal subject to the approval of the President such rules and regulations as may
be necessary to carry out the provisions and purposes of this Act."

There can be no doubt that there is a distinction between an administrative rule or regulation and an
administrative interpretation of a law whose enforcement is entrusted to an administrative body.
When an administrative agency promulgates rules and regulations, it "makes" a new law with the
force and effect of a valid law, while when it renders an opinion or gives a statement of policy, it
merely interprets a pre-existing law (Parker, Administrative Law, p. 197; Davis, Administrative Law,
p. 194). 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 often
times 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. (Davis, op. cit., p. 194.) .

A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its
scope is within the statutory authority granted by the legislature, even if the courts are not in
agreement with the policy stated therein or its innate wisdom (Davis, op. cit., 195-197). On the other
hand, administrative interpretation of the law is at best merely advisory, for it is the courts that finally
determine what the law means.

Circular No. 22 in question was issued by the Social Security Commission, in view of the
amendment of the provisions of the Social Security Law defining the term "compensation" contained
in Section 8 (f) of Republic Act No. 1161 which, before its amendment, reads as follows: .

(f) Compensation — All remuneration for employment include the cash value of any
remuneration paid in any medium other than cash except (1) that part of the remuneration in
 excess of P500 received during the month; (2) bonuses, allowances or overtime pay; and (3)
dismissal and all other payments which the employer may make, although not legally
required to do so.

Republic Act No. 1792 changed the definition of "compensation" to:

(f) Compensation — All remuneration for employment include the cash value of any
remuneration paid in any medium other than cash except that part of the remuneration in
excess of P500.00 received during the month.

It will thus be seen that whereas prior to the amendment, bonuses, allowances, and overtime pay
given in addition to the regular or base pay were expressly excluded, or exempted from the definition
of the term "compensation", such exemption or exclusion was deleted by the amendatory law. It thus
became necessary for the Social Security Commission to interpret the effect of such deletion or
elimination. Circular No. 22 was, therefore, issued to apprise those concerned of the interpretation or
understanding of the Commission, of the law as amended, which it was its duty to enforce. It did not
add any duty or detail that was not already in the law as amended. It merely stated and circularized
the opinion of the Commission as to how the law should be construed.  1äwphï1.ñët

The case of People v. Jolliffe (G.R. No. L-9553, promulgated on May 30, 1959) cited by appellant,
does not support its contention that the circular in question is a rule or regulation. What was there
said was merely that a regulation may be incorporated in the form of a circular. Such statement
simply meant that the substance and not the form of a regulation is decisive in determining its
nature. It does not lay down a general proposition of law that any circular, regardless of its
substance and even if it is only interpretative, constitutes a rule or regulation which must be
published in the Official Gazette before it could take effect.

The case of People v. Que Po Lay (50 O.G. 2850) also cited by appellant is not applicable to the
present case, because the penalty that may be incurred by employers and employees if they refuse
to pay the corresponding premiums on bonus, overtime pay, etc. which the employer pays to his
employees, is not by reason of non-compliance with Circular No. 22, but for violation of the specific
legal provisions contained in Section 27(c) and (f) of Republic Act No. 1161.

We find, therefore, that Circular No. 22 purports merely to advise employers-members of the System
of what, in the light of the amendment of the law, they should include in determining the monthly
compensation of their employees upon which the social security contributions should be based, and
that such circular did not require presidential approval and publication in the Official Gazette for its
effectivity.

It hardly need be said that the Commission's interpretation of the amendment embodied in its
Circular No. 22, is correct. The express elimination among the exemptions excluded in the old law,
of all bonuses, allowances and overtime pay in the determination of the "compensation" paid to
employees makes it imperative that such bonuses and overtime pay must now be included in the
employee's remuneration in pursuance of the amendatory law. It is true that in previous cases, this
Court has held that bonus is not demandable because it is not part of the wage, salary, or
compensation of the employee. But the question in the instant case is not whether bonus is
demandable or not as part of compensation, but whether, after the employer does, in fact, give or
pay bonus to his employees, such bonuses shall be considered compensation under the Social
Security Act after they have been received by the employees. While it is true that terms or words are
to be interpreted in accordance with their well-accepted meaning in law, nevertheless, when such
term or word is specifically defined in a particular law, such interpretation must be adopted in
enforcing that particular law, for it can not be gainsaid that a particular phrase or term may have one
meaning for one purpose and another meaning for some other purpose. Such is the case that is now
before us. Republic Act 1161 specifically defined what "compensation" should mean "For the
purposes of this Act". Republic Act 1792 amended such definition by deleting same exemptions
authorized in the original Act. By virtue of this express substantial change in the phraseology of the
law, whatever prior executive or judicial construction may have been given to the phrase in question
should give way to the clear mandate of the new law.

IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby affirmed, with costs against
appellant. So ordered.

EN BANC

[G.R. NO. 163935 : February 2, 2006]

NATIONAL ASSOCIATION OF ELECTRICITY CONSUMERS FOR REFORMS

(NASECORE), represented by PETRONILO ILAGAN, FEDERATION OF VILLAGE
ASSOCIATIONS (FOVA), represented by SIEGFRIEDO VELOSO, and
FEDERATION OF LAS PIÑAS HOMEOWNERS ASSOCIATIONS (FOLPHA),
represented by BONIFACIO DAZO, Petitioners, v. ENERGY REGULATORY
COMMISSION (ERC) and MANILA ELECTRIC and COMPANY
(MERALCO) Respondents.

DECISION

CALLEJO, SR., J.:
Before the Court is the petition for certiorari, prohibition and injunction filed by National
Association of Electricity Consumers for Reforms (NASECORE), Federation of Village
Associations (FOVA) and Federation of Las Piñas Homeowners Associations
(FOLPHA),1 seeking to nullify the Order dated June 2, 2004 of the Energy Regulation
Commission (ERC) in ERC Case No. 2004-112. The assailed order approved the
increase of respondent Manila Electric Company's (MERALCO's) generation charge
from P3.1886 per kilowatthour (kWh) to P3.3213 per kWh effective immediately.

Factual and Procedural Antecedents

Congress enacted Republic Act (RA) No. 9136, known as the Electric Power Industry
Reform Act of 2001 (EPIRA) on June 8, 2001. Among others, EPIRA declares as policy
of the State the following:

(b) To ensure the quality, reliability, security and affordability of the supply of electric
power;

(c) To ensure transparent and reasonable prices of electricity in a regime of free and
fair competition and full public accountability to achieve greater operational and
economic efficiency and enhance the competitiveness of Philippine products in the
global market;

(d) To enhance the inflow of private capital and broaden the ownership base of the
power generation, transmission and distribution sectors;

(e) To ensure fair and non-discriminatory treatment of public and private sector entities
in the process of restructuring the electric power industry;

(j) To establish a strong and purely independent regulatory body and system to ensure
consumer protection and enhance the competitive operation of the electricity market; '2

The ERC was created under the EPIRA.3 The said regulatory body superseded the
Energy Regulatory Board (ERB) which was created under Executive Order (EO) No. 172,
as amended.4 The ERC is tasked to promote competition, encourage market
development, ensure customer choice and penalize abuse of market power in the
restructured electricity industry.5 Towards this end, the ERC is granted, inter alia, the
following functions:

(a) Enforce the implementing rules and regulations of this Act;

(b) Within six (6) months from the effectivity of this Act, promulgate and enforce, in
accordance with law, a National Grid Code and a Distribution Code which shall include,
but not limited to, the following:

(c) Enforce the rules and regulations governing the operations of the electricity spot
market and the activities of the spot market operator and other participants in the spot
market, for the purpose of ensuring a greater supply and rational pricing of electricity;
(d) Determine the level of cross subsidies in the existing retail rate until the same is
removed pursuant to Section 74 hereof;

(e) Amend or revoke, after due notice and hearing, the authority to operate of any
person or entity which fails to comply with the provisions hereof, the IRR or any order
or resolution of the ERC. In the event that a divestment is required, the ERC shall allow
the affected party sufficient time to remedy the infraction or for an orderly disposal, but
in no case exceed twelve (12) months from the issuance of the order;

(f) In the public interest, establish and enforce a methodology for setting transmission
and distribution wheeling rates and retail rates for the captive market of a distribution
utility, taking into account all relevant considerations, including the efficiency or
inefficiency of the regulated entities. The rates must be such as to allow the recovery of
just and reasonable costs and a reasonable return on rate base (RORB) to enable the
entity to operate viably. The ERC may adopt alternative forms of internationally-
accepted rate-setting methodology as it may deem appropriate. The rate-setting
methodology so adopted and applied must ensure a reasonable price of electricity. The
rates prescribed shall be non-discriminatory. To achieve this objective and to ensure
the complete removal of cross subsidies, the cap on the recoverable rate of system
losses prescribed in Section 10 of Republic Act No. 7832, is hereby amended and shall
be replaced by caps which shall be determined by the ERC based on load density, sales
mix, cost of service, delivery voltage and other technical considerations it may
promulgate. The ERC shall determine such form of rate-setting methodology, which
shall promote efficiency. In case the rate-setting methodology used is RORB, it shall be
subject to the following guidelines:

(u) The ERC shall have the original and exclusive jurisdiction over all cases contesting
rates, fees, fines and penalties imposed by the ERC in the exercise of the
abovementioned powers, functions and responsibilities and over all cases involving
disputes between and among participants or players in the energy sector.

All notices of hearings to be conducted by the ERC for the purpose of fixing rates or
fees shall be published at least twice for two successive weeks in two (2) newspapers of
nationwide circulation.6

Section 36 of the EPIRA required every distribution utility to file its revised rates for the
approval of the ERC. The said provision reads:

Sec. 36. Unbundling of Rates and Functions. - Within six (6) months from the effectivity
of this Act, NPC [National Power Corporation] shall file with the ERC its revised rates.
The rates of NPC shall be unbundled between transmission and generation rates and
the rates shall reflect the respective costs of providing each service. Inter-grid and
intra-grid cross subsidies for both the transmission and the generation rates shall be
removed in accordance with this Act.

Within six (6) months from the effectivity of this Act, each distribution utility shall file
its revised rates for the approval by the ERC. The distribution wheeling charge shall be
unbundled from the retail rate and the rates shall reflect the respective costs of
providing each service. For both the distribution retail wheeling and supplier's charges,
inter-class subsidies shall be removed in accordance with this Act.
Within six (6) months from the date of submission of revised rates by NPC and each
distribution utility, the ERC shall notify the entities of their approval.

Any electric power industry participant shall functionally and structurally unbundle its
business activities and rates in accordance with the sectors as identified in Section 5
hereof. The ERC shall ensure full compliance with this provision.

On October 30, 2001, pursuant to the above provision, the ERC issued an Order
requiring all distribution utilities to file their application for unbundled rates. In
compliance therewith, respondent MERALCO filed on December 26, 2001 its application
with the ERC for the approval of its unbundled rates and appraisal of its properties. The
case was docketed as ERC Case No. 2001-9007 and consolidated with ERC Case No.
2001-646.8

Acting thereon, the ERC issued an Order and a Notice of Public Hearing both dated
February 1, 2002 setting the case for initial hearing on March 11 and 12, 2002. In the
same order, MERALCO was directed to cause the publication of the notice of public
hearing at its own expense twice for two successive weeks in two newspapers of
nationwide circulation, the last date of publication to be made not later than two weeks
before the scheduled date of initial hearing.

The Office of the Solicitor General (OSG), the Commission on Audit and the Committees
on Energy of both Houses of Congress were furnished with copies of the order and the
notice of public hearing and were requested to have their respective duly authorized
representatives present at the said hearing. Likewise, the Offices of the Municipal/City
Mayors within MERALCO's franchise area were furnished with copies of the order and
the notice of public hearing for the appropriate posting thereof on their respective
bulletin boards.

At the initial hearing, representatives of MERALCO were present. Also at the said
hearing were a representative from the OSG for the public and oppositors to the
application including Mr. Pete Ilagan, representing herein petitioner NASECORE.

After a series of hearings, the ERC rendered the Decision dated March 20, 2003,
approving MERALCO's unbundled schedule of rates effective on the next billing cycle.
However, in the same decision, the ERC directed MERALCO, among others:

a) To discontinue charging the PPA [Purchased Power Adjustment] upon effectivity of

the approved unbundled rates; any change in the cost of power purchased shall be
reflected as deferred charges or credits which shall be recovered through the
Generation Rate Adjustment Mechanism (GRAM) approved by the Commission for
implementation per ERC Order effective February 24, 2003;9

In other words, MERALCO was directed to recover the costs of power purchased from
the National Power Corporation (NAPOCOR) through a new adjustment mechanism
called the Generation Rate Adjustment Mechanism (GRAM). Prior thereto, the said costs
were recovered through the Purchased Power Adjustment (PPA) mechanism.
It appears that in another proceeding, ERC Case No. 2003-44,10 the ERC issued an
Order dated January 29, 2003 setting for public consultation on February 17, 2003 its
proposed Implementing Rules for the Recovery of Deferred Fuel and Independent Power
Producers Costs (DÉCOR) and Deferred Incremental Currency Exchange Recovery
(DICER). The proposed DÉCOR and DICER were formulated by the ERC to replace
the PPA and the Currency Exchange Rate Adjustment (CERA), the automatic
adjustment mechanisms then in effect, on its view that they (PPA and CERA) did not
meet the goal of balancing the need for timely recoveries of costs by the utilities with
the ERC's need to review the reasonableness and prudence of such costs.

A notice of the public consultation on the proposed implementing rules for the recovery
of DÉCOR and DICER was caused to be published by the ERC in the Philippine Star
on February 3, 2003. In the said notice and order, the ERC directed the parties to
submit their comments on the proposed implementing rules on or before February 12,
2003.

Several distribution utilities and consumer groups, including petitioner NASECORE, filed
their respective comments on the said proposed implementing rules for the recovery of
DÉCOR and DICER. Most of the utilities manifested their strong objections to the
adoption of the DÉCOR and DICER contending that these mechanisms would defeat
the purpose of escalator clauses such as the PPA and CERA. For their part, the
consumer groups expressed that the ERC should have taken into consideration
consumer protection in the drafting of the proposed implementing rules.

At the public consultation on February 17, 2003, the distribution utilities and consumer
groups appeared with their respective representatives. The consumer groups requested
for a separate consultation exclusively for them and the same was granted by the ERC.
Another public consultation was set on February 21, 2003 for the consumer groups. At
the said consultation, representatives of NASECORE and other consumer groups were
present. The ERC explained to these groups the DÉCOR and DICER. On the other
hand, MERALCO explained the PPA and the computation thereof. The consumer groups
manifested their concerns and these were noted by the ERC.

After taking into consideration the positions of the distribution utilities and the
consumer groups, the ERC promulgated the Order dated February 24, 2003 in ERC
Case No. 2003-44. In the said order, the ERC adopted the Implementing Rules for the
Recovery of Fuel and Independent Power Producer Costs: Generation Rate Adjustment
Mechanism (GRAM) and the Implementing Rules for the Recovery of the Incremental
Currency Exchange Rate Adjustment (ICERA). These implementing rules were all
contained or incorporated in the aforesaid order.

The GRAM replaced the PPA and the basic differences between these two recovery
mechanisms were outlined by the ERC thus:11

ELEMENTS PPA GRAM

1. Review by the 1. After the cost had 1. Before the cost may
 be
regulatory body been passed on to the
passed on to the
consumers.
consumers.

2. Change in rates 2. Monthly 2. Quarterly

3. Change in 3. Automatic but subject 3. Only through a

recovery of petition
to confirmation by the
fixed costs of to adjust generation rate
generation ERC.
subject to approval by
the

ERC within a maximum

period of forty five (45)

days.

4. Transmission 4. Included 4. Excluded

5. System loss and 5. Included 5. Excluded

franchise tax

6. Carrying cost 6. Without carrying cost 6. With carrying cost

On the other hand, the ICERA replaced the CERA and the basic differences between
these two recovery mechanisms were outlined by the ERC thus:12

ELEMENTS CERA ICERA

1. Review by the 1. After the cost had 1. Before the cost may
be passed on to the
regulatory body been passed on to the
consumers.
consumers.

2. Change in rates 2. Monthly 2. Quarterly

3. Carrying cost 3. Without carrying cost 3. With carrying cost

The respective effectivity clauses of the implementing rules of the GRAM and the ICERA
provided that they shall take effect immediately.13

Thereafter, in consonance with the Decision dated March 20, 2003 in ERC Cases Nos.
2001-646 and 2001-900 and the Order dated February 24, 2003 in ERC Case No. 2003-
44, respondent MERALCO filed with the ERC an amended application entitled "In the
Matter of the Application for the Recovery of the Independent Power Producer Costs
under the Generation Rate Adjustment Mechanism (GRAM)," docketed as ERC Case No.
2004-112.

Earlier, acting on respondent MERALCO's 1st application under the GRAM, the ERC, in
the Order dated January 21, 2004 in ERC Case No. 2004-20, approved the generation
charge of P3.1886 per kWh, inclusive of the deferred PPA.

In the amended application, respondent MERALCO averred that it had recalculated its
proposed generation charge aimed at updating the generation charge of P3.1886 per
kWh allowed in the January 21, 2004 Order to P3.4664 per kWh inclusive of the
following:

A. Computed Deferred Accounting Adjustment (DAA) of P0.0028 per kWh inclusive of

the remaining balance in the DAA under the first GRAM;

b. Deferred PPA of P0.1248 per kWh, increasing by P0.0022 from the P0.1226

previously authorized under ERC Case 2004-20. The increase is to account for the
remaining 2 months (December 2003 and January 2004) IPP VAT savings passed on as
part of the Mandated Rate Reduction (MRR).14

Among others, respondent MERALCO averred that the proposed generation charge
of P3.4664 per kWh was computed in conformity with the generation rate formula in
Section 615 of the Implementing Rules for the Recovery of Fuel and Independent Power
Producer Costs or the Generation Rate Adjustment Mechanism (GRAM), hereinafter
referred to as the GRAM Implementing Rules. It thus prayed that the said proposed
generation charge be approved for its implementation.

In the assailed Order dated June 2, 2004, the ERC approved the increase of respondent
MERALCO's generation charge albeit only from P3.1886 to P3.3213 per kWh, the same
to take effect immediately.

The Petitioners' Case

Petitioners NASECORE, et al. forthwith filed with this Court the present petition
for certiorari seeking to nullify the said June 2, 2004 ERC Order for lack of requisite
publication of respondent MERALCO's amended application, thereby depriving the
petitioners of procedural due process. In addition, they invoke Section 4(e), Rule 3 of
the Implementing Rules and Regulations (IRR) of the EPIRA which provides:

(e) Any application or petition for rate adjustment or for any relief affecting the
consumers must be verified, and accompanied with an acknowledgement of receipt of a
copy thereof by the LGU Legislative Body of the locality where the applicant or
petitioner principally operates together with the certification of the notice of publication
thereof in a newspaper of general circulation in the same locality.

The ERC may grant provisionally or deny the relief prayed for not later than seventy-
five (75) calendar days from the filing of the application or petition, based on the same
and the supporting documents attached thereto and such comments or pleadings the
consumers or the LGU concerned may have filed within thirty (30) calendar days from
receipt of a copy of the application or petition or from the publication thereof as the
case may be.

Thereafter, the ERC shall conduct a formal hearing on the application or petition, giving
proper notices to all parties concerned, with at least one public hearing in the affected
locality, and shall decide the matter on the merits not later than twelve (12) months
from the issuance of the aforementioned provisional order.

This Section 4(e) shall not apply to those applications or petitions already filed as of 26
December 2001 in compliance with Section 36 of the Act.

According to the petitioners, the June 2, 2004 ERC Order is devoid of any basis as
respondent MERALCO did not comply with the requisite publication, i.e., its amended
application was not published in a newspaper of general circulation. As a result of the
omission, petitioners were not able to file their comments on respondent MERALCO's
amended application for the increase of its generation charge. Invoking the Court's
pronouncements in Freedom from Debt Coalition v. ERC and MERALCO,16 petitioners
conclude that failure to comply with the publication requirement renders the June 2,
2004 ERC Order null and void.

Respondent MERALCO's Counter-arguments

Respondent MERALCO, for its part, urges the Court to uphold the validity of the assailed
ERC Order approving the increase of its generation charge. In essence, it contends that
its amended application for the increase of its generation charge is excluded and/or
exempted from the application of the publication requirement, among others, in Sec.
4(e), Rule 3 of the IRR of the EPIRA. The applicable rules are the GRAM Implementing
Rules embodied in the ERC Order dated February 24, 2003. These rules govern any
petition for the recovery of fuel and purchased power costs.

In support of this contention, respondent MERALCO explains the nature and history of
the PPA, later replaced by the GRAM, in this wise: In 1974, respondent MERALCO
owned and operated all the power plants it was using. At the time, it charged the basic
power rates based on the cost of fuel and exchange rate at the time of the application
for approval of the adjusted rates. Some time in 1975, it sold to NAPOCOR its five base
load generating power plants.17

As a result of the sale, respondent MERALCO entered into an agreement with NAPOCOR
for the latter to supply all the electric power needed by the former to service its
customers within its franchise areas. Under the agreement, the electric power and
energy purchased by respondent MERALCO from NAPOCOR would be priced at thermal
generating cost, subject to fuel cost adjustment by NAPOCOR. The fuel cost adjustment
allows the latter to recover the increases in fuel oil over and above a base price.
In 1978, respondent MERALCO applied with the Board of Power and Waterworks (BPW)
for the approval of Purchased Power Cost Adjustment to cover the increase in the cost
of electric power and energy being purchased from NAPOCOR. It (respondent
MERALCO) also applied for the approval of a fuel adjustment clause for the three
peakload plants over which it retained ownership.

In 1980, the Board of Energy (BOE), which took over the functions of the BPW,
authorized the PPA clause stating that it was "strictly for the purpose of cost recovery
only." In other words, every increase in the cost of fuel oil to NAPOCOR above a base
price is reflected in its fuel cost adjustment. NAPOCOR thus increases correspondingly
the price of the power sold to respondent MERALCO, which then passes the same to the
customers under the authority of the PPA clause.

In 1987, under EO No. 172, the Energy Regulatory Board (ERB) was created. It was
granted regulatory and adjudicatory powers and functions covering the energy sector.
Also enacted was EO No. 215 opening the business of electric power generation to the
private sector and allowed private corporations, cooperatives and similar associations,
or the independent power producers (IPPs), to operate electric generating plants within
the country.

In addition to its various powers and functions, the ERB was mandated to enforce the
pertinent provisions of RA No. 7832, otherwise known as the "Anti-Electricity and
Electric Transmission Lines/Materials Pilferage Act of 1994." To ensure the viability of
private electric utilities, RA No. 7832 allows distribution utilities to pass on to its
consumers system losses equivalent to either the actual kilowatt energy lost due to
technical and non-technical/pilferage causes, or the cap imposed by law, whichever is
lower. Said law provides that in no case shall the system loss cap be lower than 9%.18

Pursuant to RA No. 7832, the ERB adopted a formula to be used in computing the PPA
to be charged by respondent MERALCO to its customers. The new PPA formula included
among its components the system loss, franchise tax, the automatic cost adjustments
and other adjustments of NAPOCOR and other IPPs and the generation cost of
electricity.

The said PPA formula subsequently underwent several modifications. Each revision was
approved by the ERB after service of the notices of public hearing on the respective
mayors of the cities and municipalities within respondent MERALCO's franchise area,
posting thereof on the respective bulletin boards of the said local government units,
and publication in two newspapers of general circulation.

Thereafter, the EPIRA was enacted on June 8, 2001. As stated earlier, among other
reforms in the electric power industry, the said law created the ERC. Section 36 of the
EPIRA directed all distribution utilities to file with the ERC an application for the
approval of their unbundled rates. Respondent MERALCO complied therewith and acting
on its application, the ERC, in the Decision dated March 20, 2003 approved its
unbundled rates. However, respondent MERALCO was directed to discontinue charging
the PPA upon effectivity of the approved unbundled rates. The said order provided that
any change in the cost of power purchased shall be reflected as deferred charges or
credits which shall be recovered through the GRAM approved by the ERC for
implementation per ERC Order dated February 24, 2003 in ERC Case No. 2003-44.
According to respondent MERALCO, the GRAM is an adjustment recovery mechanism
which replaces the automatic recovery adjustment mechanisms (Fuel and Purchased
Power Cost Adjustments) of NAPOCOR and the PPA of the distribution utilities. The
GRAM would allow the periodic (quarterly) adjustment of the generation charge to
reflect changes in fuel and purchased power costs after review by the ERC and before
the costs are passed on to the customers.

The authority of the ERC to promulgate the GRAM Implementing Rules is found in
Section 43 of the EPIRA which requires the said regulatory body to, among others,
"establish and enforce a methodology for setting transmission and distribution wheeling
rates and retail rates for the captive market of a distribution utility, taking into account
all relevant considerations, including the efficiency or inefficiency of the regulated
entities. The rates must be such as to allow the recovery of just and reasonable costs
and a reasonable return on rate base (RORB) to enable the entity to operate viably..."

Respondent MERALCO asserts that Section 4(e), Rule 3 of the IRR of the EPIRA
requiring the publication of its application in a newspaper of general circulation and the
service of a copy thereof to the concerned local government units is inapplicable.
Rather, its amended application for the increase of its generation charge is governed by
the GRAM Implementing Rules adopted by ERC in the Order dated February 24, 2003 in
ERC Case No. 2003-44. The pertinent portion of the latter rules reads:

Sec. 5. Generation Cost Accounting Application

1. A utility shall file a deferred generation cost accounting application setting forth its
calculations of the generation rate. For NPC, said filing shall be for a particular grid. The
filing shall be made every three (3) months.

2. Applications by NPC shall be grid specific and are not required to be filed
concurrently.

3. An application must be filed not later than thirty (30) days after the adjustment date.

4. The proposed generation rate must be based on the volumes and allowable costs for
the test period designated by the Commission and calculated in accordance with
Section 6 hereof.

5. The Commission shall issue a decision no later than forty-five (45) days from the
date the petition is accepted for filing. Should the Commission fail to act within forty-
five (45) days the petition is deemed approved in full.

Respondent MERALCO opines that to require it to comply with the requirements of

Section 4(e), Rule 3 of the IRR of the EPIRA would defeat the reason behind the
implementation of the adjustment mechanism which, quoting the ERC, is "to balance
the need for timely recoveries of costs by the Utilities with the Commission's need to
review the reasonableness and prudence of such costs."

Respondent MERALCO points out that Section 4(e), Rule 3 of the IRR of the EPIRA is
inconsistent with the GRAM Implementing Rules specifically with respect to the period
within which the ERC is mandated to render its decision on the application. Under the
former, the ERC may issue a provisional authority within seventy-five (75) days from
the filing of the application or petition and shall decide the matter on the merits not
later than twelve (12) months from the issuance of said provisional order. On the other
hand, the GRAM Implementing Rules allows the distribution utilities to apply for
adjustment quarterly and the ERC must decide the application within forty-five (45)
days from receipt thereof, before the costs may be passed on to the consumers.
Otherwise, the application shall be deemed approved.

Respondent MERALCO notes that the cost recovery mechanism is dictated by the
situation whereby the cost of purchased power is unstable due principally to escalating
fuel oil prices and fluctuations in the foreign exchange rates. The GRAM Implementing
Rules was so promulgated to address this situation and answer the need for timely
recoveries of costs by utilities, by allowing them to file every three (3) months an
application for the recovery of the fuel and purchased power costs.

Respondent MERALCO posits that in formulating the GRAM Implementing Rules, the
ERC's primary objective was the protection of the consumers by ensuring that any
application for the fuel and purchased power costs is subject to its review to determine
the reasonableness and prudence of such cost, before they are passed on to the
consumers. Further, unlike the PPA which is an automatic adjustment and subject to
confirmation by the regulatory body only after the costs had been passed on to the
consumers, the GRAM Implementing Rules provides for a regulatory lag of six (6)
months within which the distribution utilities are authorized to recover their fuel and
purchased power costs. The latter is therefore beneficial to the consumers.

Respondent MERALCO maintains that the GRAM is a revenue-neutral recovery process,

which means that it (respondent MERALCO) pays for the fuel and purchased power
costs to its suppliers even before it could fully collect from its customers. And that out
of these collections from its customers, not a single centavo is retained by respondent
MERALCO, except for the carrying cost, but turned over to NAPOCOR and the other
IPPs.

It would be allegedly violative of due process to require respondent MERALCO to comply

with Section 4(e), Rule 3 of the IRR of the EPIRA and subject it to a long and tedious
process of recovering its fuel and purchased power costs. Such would be contrary to the
intent and purpose of the GRAM Implementing Rules.

On the other hand, respondent MERALCO refutes the petitioners' claim of denial of due
process. It alleges that the petitioners were given every opportunity to be heard in a
public consultation and submit their written comments. Respondent MERALCO quotes
the ERC Order dated February 24, 2003 containing the GRAM Implementing Rules
which states that the same was issued only after the ERC "has taken into consideration
all the documents, data, comments and concerns raised by all the parties concerned
who have submitted their respective positions thereon."

Respondent MERALCO contends that the petitioners cannot deny any knowledge of the
GRAM Implementing Rules particularly on the manner and timeline for filing an
application for GRAM and the period within which the ERC must act and decide thereon.
Accordingly, even without need of publication, posting and service to the local
government units concerned, the petitioners should have allegedly filed their opposition
to respondent MERALCO's amended application to increase its generation charge.
Further, they should have filed their comment or opposition thereon within the forty-
five (45) day-period within which the ERC was required to render its decision. The
petitioners' omission is allegedly fatal to their present cause of action.

Respondent MERALCO observes that the petitioners did not appeal the Order dated
February 24, 2003 of the ERC adopting the GRAM Implementing Rules. Neither have
they allegedly shown that they were deprived of their right to be heard when the said
rules were promulgated. For this lapse, respondent MERALCO stresses that the
petitioners have no personality to claim denial of due process and prays that the Court
dismiss the present petition.

ERC's Counter-arguments

The ERC, through the Office of the Solicitor General (OSG), defends the validity of its
June 2, 2004 Order approving the increase of respondent MERALCO's generation charge
from P3.1886 to P3.3213 per kWh effective immediately. According to the ERC, the said
order was issued in accordance with the GRAM Implementing Rules it promulgated in
the Order dated February 24, 2003 in ERC Case No 2003-44.

Prior to the EPIRA, the ERB adopted the Rules and Regulations Implementing RA No.
7832. A provision of the said implementing rules provided for the "automatic cost
adjustment formula" applicable to private distribution utilities and electric cooperatives,
which became known as the PPA. Under this provision, the distribution utilities were
authorized to adopt a restructured rate schedule including its PPA formula, subject to
the approval of the ERB. Respondent MERALCO's rate schedule and PPA, and the
subsequent revisions thereon, were approved by the ERB.

The ERC now anchors its authority to promulgate the GRAM Implementing Rules on
Section 43(f)19 of the EPIRA which, among others, expressly authorizes it to establish
and enforce a methodology for setting transmission and distribution wheeling rates and
retail rates for the captive market of a distribution utility. In relation thereto, Section 25
of the same law also provides that "the retail rates charged by distribution utilities for
the supply of electricity in their captive market shall be subject to regulation by the ERC
based on the principle of full recovery of prudent and reasonable economic costs
incurred, or such other principles that will promote efficiency."

Section 43(u) thereof is also cited which vests the ERC with "the original and exclusive
jurisdiction over all cases contesting rates, fees, fines and penalties imposed by the
ERC in the exercise of the abovementioned powers, functions and responsibilities and
over all cases involving disputes between and among participants or players in the
energy sector." Section 36 thereof directed the distribution utilities to file their revised
rates for the approval by the ERC and that the distribution wheeling charges shall be
unbundled from the retail rate and the rate shall reflect the respective costs of
providing each service.

The ERC explains that it adopted the GRAM Implementing Rules as it noted certain
problems with the then existing PPA mechanism. Among these problems were the non-
uniform implementation due to the use of different formulas by the distribution utilities;
the confirmation process was conducted long after the costs had been recovered from
the consumers and; the rates were changed without the order of the ERC.

Among others, the GRAM Implementing Rules provides for a uniform formula to arrive
at the generation rate of a distribution utility.20 The said implementing rules also
provide for a formula for deferred accounting adjustment (DAA) which must be
established in an application for deferred generation cost accounting relief. The
distribution utilities are allowed to adjust their respective generation rates quarterly
upon filing of a petition with the ERC, which shall decide thereon within a maximum
period of forty-five (45) days.

According to the ERC, respondent MERALCO filed its 1st GRAM application on January
16, 2004 docketed as ERC Case No. 2004-20. In the said application, respondent
MERALCO proposed a generation charge of P3.2041 per kWh. The ERC, in its Order
dated January 21, 2004, approved the generation charge of P3.1886 per kWh effective
immediately.

Consistent with the GRAM being an adjustment mechanism which had to be filed every
quarter, respondent MERALCO filed on April 19, 2004 its amended application under the
GRAM for the increase of its generation charge from P3.1886 to P3.4664 per kWh. The
case was docketed as ERC Case No. 2004-112. Resolving the same, the ERC rendered
the assailed Order dated June 2, 2004 approving the increase of respondent MERALCO's
generation charge to P3.3212 per kWh effective immediately.

The ERC denies having committed any grave abuse of discretion in issuing the assailed
order. Like respondent MERALCO, the ERC asserts that the procedure prescribed under
the GRAM Implementing Rules, particularly Section 221 and 522 thereof, radically differs
from that provided for in Section 4(e), Rule 3 of the IRR of the EPIRA. Specifically, the
GRAM Implementing Rules do not require that the application of a distribution utility
like respondent MERALCO under the said rules be published or that comments of local
government units and the consumers thereon be solicited.

The procedure prescribed by the GRAM Implementing Rules is markedly different from
that of the IRR of the EPIRA because the GRAM was intended to be an adjustment
mechanism and not an independent rate application by itself. Only the latter falls within
the contemplation of the IRR of the EPIRA. Explaining the nature and purpose of an
adjustment mechanism, the ERC quotes the following disquisition:

The fuel and purchased power adjustment clause is a widely used regulatory tool which
can avoid the necessity of repeated general rate proceedings, and which can allow for
an intense and specialized review of fuel and purchased power costs (Re Arizona Pub.
Service Co., 76 PUR 4th 399, 1986). Although the authority to approve automatic fuel
adjustment clauses was not granted expressly in the District of Columbia Code, the
commission held that the code, under its broad grant of authority to the commission,
impliedly permitted the clause (Re Potomac Electric Power Co., 2 DC PSC 391, Formal
Case No. 725, Order No. 7428, Dec. 23, 1981).

Automatic adjustment clauses have been adopted for the recovery of certain utility
costs only under the following limited and well-recognized circumstances: (1) when
such costs are extremely volatile, changing rapidly over short periods of time, e.g, the
cost of coal or other fuel burned to generate electricity or the cost of natural gas; (2)
when such volatile cost changes represent significant portions of total utility operating
expenses, and (3) when such volatile cost changes are beyond the ability of the utility
to control, e.g., a utility must purchase coal or gas at whatever prices that procedures
or pipelines are willing to sell (Re Mountain States Teleph. & Teleg. Co., 78 PUR 4th
287, 1986). The Oregon Public Utility Commission recently described the purpose of an
"escalator" clause, which it euphemistically called a "tracker" as follows: "It purports to
track a particular cost, increasing or decreasing revenues just enough to offset the
alleged change in cost. The isolated cost is ordinarily one over which the utility has no
influence and about which there is little likelihood of dispute" (Re Portland General
Electric Co., 104 PUR 4th 266, 268, Or. P.U.C., 1989).

It is clear from the foregoing that "escalator" or "tracker" or any other similar automatic
adjustment clauses are merely cost recovery or cost "flow-through" mechanisms; that
what they purport to cover are operating costs only which are very volatile and
unstable in nature and over which the utility has no control; and that the use of the
said clauses is deemed necessary to enable the utility to make the consequent
adjustments on the billings to its customers so that ultimately its rate of return would
not be quickly eroded by the escalations in said costs of operation. The total of all rate
adjustments should not operate to increase overall rate of return for a particular utility
company above the basic rates approved in the last previous rate case (Re Adjustment
Clause in Telephone Rate Schedules, 3 PUR 4th 298, N.J. Bd. of Pub. Util.Comm rs.,
1973. Affirmed 66 N.J. 476, 33 A.2d 4, 8 PUR 4th 36, N.J.,1975).23

The ERC stresses that the GRAM Implementing Rules set forth in its Order dated
February 24, 2003 was duly published and submitted for exhaustive public consultation.
The ERC points out that, as recounted in the said order, the following procedural steps
were taken leading to the adoption of the GRAM and ICERA Implementing Rules:

On January 29, 2003, the Commission issued an Order setting for public consultation its
proposed Implementing Rules for the Recovery of Deferred Fuel and Independent Power
Producer Costs (DÉCOR) and the Deferred Incremental Currency Exchange Recovery
(DICER) on February 17, 2003. Likewise, a Notice of the same tenor as the above
mentioned Order was published by the Commission in the Philippine Star on February
3, 2003.

In the aforesaid Order and Notice, interested parties were directed to submit their
written comments on the said proposed implementing rules on or before February 12,
2003.

In compliance therewith, the following parties filed their respective comments on

various dates:

1. Manila Electric Company (MERALCO);

2. Dagupan Electric Corporation (DECORP);

3. National Power Corporation (NPC);

4. First Gas Holdings Corporation (FGHC);

5. Angeles Electric Corporation (AEC);

6. National Power Corporation (NPC);

7. Small Power Utilities Group - NPC (NPC-SPUG);

8. Cotabato Light Company (COLIGHT);

9. Iligan Light Power Incorporated (ILPI);

10. Visayan Electric Company (VECO);

11. Tarlac Electric Incorporated (TEI);

12.Cagayan Electric Power and Light Company, Inc. (CEPALCO);

13. Davao Light and Power Company, Inc. (DLPC);

14. People Opposed Against Warrantless Electricity

Rates (POWER);

15. National Association of Electricity Consumers for Reforms

(NASECORE); and cralawlibrary

16. Mr. Genaro Lualhati.

As culled from their comments, most of the Utilities manifested their strong objections
to the adoption of the DÉCOR and DICER. In general, they alleged that the adoption
of said mechanisms would defeat the purpose of escalator clauses such as the
Purchased Power Adjustment (PPA) and Currency Exchange Rate Adjustment (CERA)
clauses. More particularly, their common primary concerns, among others, were: a) the
regulatory lag; b) the carrying charge; and c) the recovery period.

At the scheduled public consultation on February 17, 2003, representatives of the

various distribution utilities appeared and were given opportunities to present their
submitted written comments. They were, likewise, allowed to manifest their additional
comments.

On the other hand, the consumer sector was represented in the said public consultation
by the following: 1) Mr. Pete Ilagan from NASECORE; 2) Mr. Mike Ocampo, from the
Consumers Union of the Philippines (CUP); 3) Atty. Jose T. Baldonado; 4) Mr. Genaro
Lualhati; and 5) Mr. Renato Reyes from POWER. The primary concerns of the consumer
sector were: a) the Commission should have involved the public as early as in the
drafting of the proposed implementing rules; b) the Commission should have taken into
consideration consumer protection in the drafting of the proposed implementing rules;
c) the Commission should not change the term Purchase Power Adjustment (PPA) into
DÉCOR as it may confuse the consumers into assuming that the PPA will no longer
be a part of their electric bill, when in fact, it still is; d) the Commission should first
decide whether the electric power that is going to be recovered is actually used by the
consumers; e) the Recovery of IPP contract costs through the PPA, and now through
the DÉCOR, had been consistently objected to by the consumers as these are the
result of private commercial contracts between distribution utilities and their IPPs, thus,
should not bind the consumers; and f) the PPA for the "undelivered" power should be
reflected separately from the PPA for the delivered ones.

During the same public consultation, representatives from the consumer sector
requested that a separate consultation be conducted exclusively for the consumers to
enable them to fully understand the nature and effects of the DÉCOR and the DICER.
Said request was granted by the Commission. Accordingly, another consultation for the
consumers was set on February 21, 2003.

At the February 21, 2003 consultation, representatives from various consumer groups
headed by NASECORE, CUP and POWER appeared. In the same consultation, the
Commission presented and explained the DÉCOR and the DICER. Moreover,
MERALCO representatives likewise presented their explanation of the PPA and the
computation thereof. Consumer representatives then manifested their various concerns,
which were noted by the Commission.24

As can be gleaned, the DÉCOR and the DICER were eventually discarded and,
instead, the GRAM and ICERA Implementing Rules were adopted. It is underscored by
the ERC that a number of distribution utilities and consumer groups were present at the
public consultation and submitted their comments on the said implementing rules. In
fact, petitioner NASECORE's representative, Mr. Ilagan, was present at the public
consultation, participated therein and submitted petitioner NASECORE's comment. If
they had any objections to the GRAM Implementing Rules, they should have appealed
the ERC Order dated February 24, 2003. Petitioners did not do so. Neither did they
complain when respondent MERALCO's 1st GRAM application resulted in the reduction
of the generation charge per ERC Order dated in January 21, 2004 in ERC Case No.
2004-20.

Hence, petitioners cannot now claim denial of due process due to the non-publication of
respondent MERALCO's amended application. The ERC contends that it resolved the
same in accordance with the GRAM Implementing Rules which, unlike the PPA, allowed
the ERC to validate the costs associated in generating electricity before they are passed
on to the consumers. Consequently, respondent ERC did not commit grave abuse of
discretion when it issued the Order dated June 2, 2004 in ERC Case No. 2004-112
approving respondent MERALCO's revised generation charge at P3.3213 per kWh in
accordance with the GRAM Implementing Rules set forth in its February 24, 2003 Order
in ERC Case No. 2003-44.

Finally, the ERC informs the Court that the GRAM Implementing Rules have been
superseded with the promulgation by the ERC on October 13, 2004 of the Guidelines for
the Automatic Adjustment of Generation Rates and System Loss Rates by Distribution
Utilities (AGRA).25 The AGRA allows distribution utilities to calculate their monthly
generation rates by summing up the net generation costs from the previous month over
total kilowatt-hours purchased for the previous month to automatically implement,
subject to a post verification audit by the ERC, the corresponding adjustment in
generation charges.

Issue

The issue raised by the parties is whether the ERC committed grave abuse of discretion
in issuing the Order dated June 2, 2004 in ERC Case No. 2004-112 which approved the
increase of respondent MERALCO's generation charge from P3.1886 to P3.3213 per
kWh effective immediately without publication of the latter's amended application.

The Court's Ruling

The petition is granted.

Contrary to the stance taken by the respondents, the amended application of

respondent MERALCO for the increase of its generation charge is covered by Section
4(e), Rule 3 of the IRR of the EPIRA. For clarity, the said provision is quoted anew:

(e) Any application or petition for rate adjustment or for any relief affecting the
consumers must be verified, and accompanied with an acknowledgement of receipt of a
copy thereof by the LGU Legislative Body of the locality where the applicant or
petitioner principally operates together with the certification of the notice of publication
thereof in a newspaper of general circulation in the same locality.

The ERC may grant provisionally or deny the relief prayed for not later than seventy-
five (75) calendar days from the filing of the application or petition, based on the same
and the supporting documents attached thereto and such comments or pleadings the
consumers or the LGU concerned may have filed within thirty (30) calendar days from
receipt of a copy of the application or petition or from the publication thereof as the
case may be.

Thereafter, the ERC shall conduct a formal hearing on the application or petition, giving
proper notices to all parties concerned, with at least one public hearing in the affected
locality, and shall decide the matter on the merits not later than twelve (12) months
from the issuance of the aforementioned provisional order.

This Section 4(e) shall not apply to those applications or petitions already filed as of 26
December 2001 in compliance with Section 36 of the Act.

The respondents contend that this provision applies only to independent rate
applications and not to adjustment mechanisms like the GRAM; hence, respondent
MERALCO's amended application for the increase of its generation charge is excluded
and/or exempted from the application of the requirements of the above-quoted
provision. This contention is erroneous. Section 4(e), Rule 3 of the IRR of the EPIRA
could not be any clearer with respect to its coverage as it refers to "any application or
petition for rate adjustment or for any relief affecting the consumers."

In this connection, the EPIRA's definition of "retail rate" is instructive:

(ss) "Retail Rate" refers to the total price paid by the end-users consisting of the
charges for generation, transmission and related ancillary services, distribution, supply
and other related charges for electric service.26

Section 4(e), Rule 3 of the IRR of the EPIRA speaks of "any application or petition for
rate adjustment" without making any distinctions. Hence, any application or petition
that would result in the adjustment or change in the total price (retail rate) paid by the
end-users, whether this change or adjustment is occasioned by the adjustment or
change in the charges for generation, transmission, distribution, supply, etc., falls
within its contemplation.

In any case, that respondent MERALCO's amended application is covered by the said
provision is mandated by the fact that the relief prayed for therein clearly affects the
consumers as it results in the increase of the costs of their electricity consumption.

In Freedom from Debt Coalition v. ERC,27 the Court outlined the requirements of

Section 4(e), Rule 3 of the IRR of the EPIRA as follows:

(1) The applicant must file with the ERC a verified application/petition for rate
adjustment. It must indicate that a copy thereof was received by the legislative body of
the LGU concerned. It must also include a certification of the notice of publication
thereof in a newspaper of general circulation in the same locality.

(2) Within 30 days from receipt of the application/petition or the publication thereof,
any consumer affected by the proposed rate adjustment or the LGU concerned may file
its comment on the application/petition, as well as on the motion for provisional rate
adjustment.

(3) If such comment is filed, the ERC must consider it in its action on the motion for
provisional rate adjustment, together with the documents submitted by the applicant in
support of its application/petition. If no such comment is filed within the 30-day period,
then and only then may the ERC resolve the provisional rate adjustment on the basis of
the documents submitted by the applicant.

(4) However, the ERC need not conduct a hearing on the motion for provisional rate
adjustment. It is sufficient that it consider the written comment, if there is any.

(5) The ERC must resolve the motion for provisional rate adjustment within 75 days
from the filing of the application/petition.

(6) Thereafter, the ERC must conduct a full-blown hearing on the application/petition
not later than 30 days from the date of issuance of the provisional order. Effectively,
this provision limits the lifetime of the provisional order to only 12 months.28

Among the important requirements introduced under the foregoing process are: first,
the publication of the application itself, not merely the notice of hearing issued by the
ERC, in a newspaper of general circulation in the locality where the applicant operates
and; second, the need for the ERC to consider the comments or pleadings of the
customers and LGU concerned in its action on the application or motion for provisional
rate adjustment.29

The Court reasoned that the publication and comment requirements are in keeping with
the avowed policies of the EPIRA, to wit:

'[T]o protect the public interest vis - à-vis the rates and services of electric utilities and
other providers of electric power, to ensure transparent and reasonable prices of
electricity in a regime of free and fair competition and full public accountability for
greater operational and economic efficiency, to enhance the competitiveness of
Philippine products in the global market, and to balance the interests of the consumers
and the public utilities providing electric power through the fair and non-discriminatory
treatment of the two sectors.

Clearly, therefore, although the new requirements are procedural in character, they
represent significant reforms in public utility regulation as they engender substantial
benefits to the consumers. It is in this light that the new requirements should be
appreciated and their observance enforced.30

The lack of publication of respondent MERALCO's amended application for the increase
of its generation charge is thus fatal. By this omission, the consumers were deprived of
the right to file their comments thereon. Consequently, the assailed Order dated June
2, 2004 issued by the ERC, approving the increase of respondent MERALCO's
generation charge from P3.1886 to P3.3213 per kWh effective immediately, was made
without giving the consumers any opportunity to file their comments thereon in
violation of Section 4(e), Rule 3 of the IRR of the EPIRA.

Indeed, the basic postulate of due process ordains that the consumers be notified of
any application, and be apprised of its contents, that would result in compounding their
economic burden. In this case, the consumers have the right to be informed of the
bases of respondent MERALCO's amended application for the increase of its generation
charge in order to, if they so desire, effectively contest the same. The following
pronouncements are quite apropos:

Obviously, the new requirements are aimed at protecting the consumers and
diminishing the disparity or imbalance between the utility and the consumers. The
publication requirement gives them enhanced opportunity to consciously weigh the
application in terms of the additional financial burden which the proposed rate increase
entails and the basis for the application. With the publication of the application itself,
the consumers would right from the start be equipped with the needed information to
determine for themselves whether to contest the application or not and if they so
decide, to take the needed further steps to repulse the application. On the other hand,
the imposition on the ERC to consider the comments of the customers and the LGUs
concerned extends the comforting assurance that their interest will be taken into
account. Indeed, the requirements address the right of the consuming public to due
process at the same time advance the cause of people empowerment which is also a
policy goal of the EPIRA along with consumer protection.31

It has also been stated that:

The requirement of due process is not some favor or grace that the ERC may dole out
on a bout of whim or on occasion of charity. Rather, it is a statutory right to which the
consuming public is entitled.

The requirement of publication in applications for rate adjustment is not without reason
or purpose. It is ancillary to the due process requirement of notice and hearing. Its
purpose is not merely to inform the consumers that an application for rate adjustment
has been filed by the public utility. It is to adequately inform them that an application
has been made for the adjustment of the rates being implemented by the public utility
in order to afford them the opportunity to be heard and submit their stand as to the
propriety and reasonableness of the of the rates within the period allowed by the Rule.
Without the publication of the application, the consumers are left to second-guess the
substance and merits of the application.32

At this point, it should be stated that the Court is not convinced by respondent
MERALCO's argument that to require it to comply with Section 4(e), Rule 3 of the IRR of
the EPIRA would be a violation of its right to due process because it would be subjected
to a long and tedious process of recovering its fuel and purchased power costs. In
Freedom from Debt Coalition, the Court categorically upheld the ERC's power to grant
provisional adjustments or power of interim rate-regulation. Such power is intended
precisely for the ERC to, as Mr. Justice Reynato S. Puno in his Concurring and
Dissenting Opinion succinctly put it, "be able to swiftly and flexibly respond to the
exigencies of the times."33 He elucidated further on the raison d etre of the power of
interim rate-regulation particularly in the context of our country's economic history:

'Our economic history teaches us that the Philippines is vulnerable to the rapid
fluctuations in the exchange rate. In recent years, we saw how numerous industries
failed to survive the Asian financial crises fueled by the uncertainties of exchange rates.
All these have had adverse financial impact on public utilities such as Meralco in terms
of skyrocketing costs of debt servicing, and maintenance and operating expenses. A
regulator such as the ERC should have sufficient power to respond in real time to
changes wrought by multifarious factors affecting public utilities.34

Thus, respondent MERALCO's apprehension of being subjected to a long and tedious

process with respect to the recovery of its fuel and purchased power costs is, in fact,
addressed by the power of the ERC to grant provisional rate adjustments. The ERC is
not, of course, precluded from promulgating rules, guidelines or methodology, such as
the GRAM, for the recovery by the distribution utilities of their fuel and purchased
power costs. However, these rules, guidelines or methodology so adopted should
conform to the requirements of pertinent laws, including Section 4(e), Rule 3 of the IRR
of the EPIRA.35

There is another compelling reason why reliance by respondent MERALCO and the ERC
on the GRAM Implementing Rules is unavailing. To recall, they advance the view that
the June 2, 2004 ERC Order is valid, notwithstanding the fact that respondent
MERALCO's amended application was not published in a newspaper of general
circulation, because the same was issued in accordance with the GRAM Implementing
Rules which does not require such publication.
It does not appear from the records, however, that the GRAM Implementing Rules, as
set forth in the ERC Order dated February 24, 2003 in ERC Case No. 2003-44, has been
published in the Official Gazette or in a newspaper of general circulation.

Executive Order No. 200, which repealed Article 2 of the Civil Code, provides that "laws
shall take after fifteen days following the completion of their publication either in the
Official Gazette or in a newspaper of general circulation in the Philippines, unless it is
otherwise provided."

The basic requirement of publication of statutes was explained in Tañada v.

Tuvera36 as follows:

We hold therefore that all statutes, including those of local application and private laws,
shall be published as a condition for their effectivity, which shall begin 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 enforce or implement
existing law pursuant also 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.37

A careful review of the procedural steps undertaken by the ERC leading to its issuance
of the Order dated February 24, 2003 in ERC Case No. 2003-44, which set forth the
GRAM Implementing Rules, as well as the Order dated June 2, 2004 in ERC Case No.
2004-112, which approved the increase of respondent MERALCO's generation charge
purportedly in accordance with the GRAM Implementing Rules, shows that there was no
publication of the same in the Official Gazette or in a newspaper of general circulation.

The procedural antecedents leading to the adoption of the GRAM Implementing Rules
and the approval of respondent MERALCO's generation charge are outlined below based
on the ERC's own account thereof:

q On January 29, 2003, the ERC issued an Order setting for public consultation its
proposed Implementing Rules for the Recovery of Deferred Fuel and Independent Power
Producer Costs (DÉCOR) and Deferred Incremental Currency Exchange Recovery
(DICER) on February 17, 2003;

q Notice of the said public consultation was published in the Philippine Star on February
3, 2003;
q In the said notice and order, interested parties were directed to submit their written
comments on the proposed Implementing Rules for the Recovery of the DÉCOR and
DICER on or before February 12, 2003;

q In compliance therewith, several distribution utilities like respondent MERALCO and

consumer groups like petitioner NASECORE submitted their written comments. The
distribution utilities manifested their objections to the adoption of the DÉCOR and
DICER while the consumer groups expressed that the ERC should have taken into
consideration consumer protection when it drafted the proposed rules;

q On February 17, 2003, the public consultation took place where representatives of
various distribution utilities and consumer groups were present;

q Upon the request of the consumer groups, another public consultation was held for
them on February 21, 2003;

q On February 24, 2003, the ERC promulgated the Order setting forth the GRAM and
ICERA Implementing Rules. The said implementing rules provide that they shall take
effect immediately;

q On January 16, 2004 respondent MERALCO filed an application entitled In the Matter
of the Application for the Recovery of the Independent Power Producer Costs under the
Generation Rate Adjustment Mechanism (GRAM), docketed as ERC Case No. 2004-20.
In the said application, respondent MERALCO proposed that a generation charge
of P3.2041 per kWh be approved;

q On January 21, 2004, the ERC approved respondent MERALCO's generation charge
of P3.1886 per kWh effective immediately;

q On April 19, 2004, respondent MERALCO filed an amended application under the
GRAM for the approval of its proposed generation charge of P3.4664 per kWh, docketed
as ERC Case No. 2004-12.

q On June 2, 2004, the ERC promulgated the assailed Order approving respondent
MERALCO's generation charge of P3.213 per kWh effective immediately.

Nowhere from the above narration does it show that the GRAM Implementing Rules was
published in the Official Gazette or in a newspaper of general circulation. Significantly,
the effectivity clauses of both the GRAM and ICERA Implementing Rules uniformly
provide that they "shall take effect immediately." These clauses made no mention of
their publication in either the Official Gazette or in a newspaper of general circulation.
Moreover, per the Certification dated January 11, 2006 of the Office of the National
Administrative Register (ONAR), the said implementing rules and regulations were not
likewise filed with the said office in contravention of the Administrative Code of 1987.38

Applying the doctrine enunciated in Tañada, the Court has previously declared as
having no force and effect the following administrative issuances: (1) Rules and
Regulations issued by the Joint Ministry of Health-Ministry of Labor and Employment
Accreditation Committee regarding the accreditation of hospitals, medical clinics and
laboratories;39 (2) Letter of Instruction No. 1416 ordering the suspension of payments
due and payable by distressed copper mining companies to the national
government;40 (3) Memorandum Circulars issued by the Philippine Overseas
Employment Administration regulating the recruitment of domestic helpers to Hong
Kong;41 (4) Administrative Order No. SOCPEC 89-08-01 issued by the Philippine
International Trading Corporation regulating applications for importation from the
People's Republic of China;42 (5) Corporation Compensation Circular No. 10 issued by
the Department of Budget and Management discontinuing the payment of other
allowances and fringe benefits to government officials and employees;43 and (6) POEA
Memorandum Circular No. 2 Series of 1983 which provided for the schedule of
placement and documentation fees for private employment agencies or authority
holders.44

In all these cited cases, the administrative issuances questioned therein were uniformly
struck down as they were not published or filed with the National Administrative
Register. On the other hand, in Republic v. Express Telecommunications Co., Inc.,45 the
Court declared that the 1993 Revised Rules of the National Telecommunications
Commission had not become effective despite the fact that it was filed with the National
Administrative Register because the same had not been published at the time. The
Court emphasized therein that "publication in the Official Gazette or a newspaper of
general circulation is a condition sine qua non before statutes, rules or regulations can
take effect."46

In this case, the GRAM Implementing Rules must be declared ineffective as the same
was never published or filed with the National Administrative Register. To show that
there was compliance with the publication requirement, respondents MERALCO and the
ERC dwell lengthily on the fact that the parties, particularly the distribution utilities and
consumer groups, were duly notified of the public consultation on the ERC's proposed
implementing rules. These parties participated in the said public consultation and even
submitted their comments thereon.

However, the fact that the parties participated in the public consultation and submitted
their respective comments is not compliance with the fundamental rule that the GRAM
Implementing Rules, or any administrative rules whose purpose is to enforce or
implement existing law, must be published in the Official Gazette or in a newspaper of
general circulation. The requirement of publication of implementing rules of statutes is
mandatory and may not be dispensed with altogether even if, as in this case, there was
public consultation and submission by the parties of their comments.

The public consultation and submission by the parties of their comments were
procedures prior to the adoption of the GRAM Implementing Rules. In fact, at the time,
the ERC's proposed implementing rules were denominated Implementing Rules for the
Recovery of DÉCOR and DICER. These procedural steps (public consultation and
submission of comments) are entirely different from the publication of statutes
mandated by law, which occurs after their promulgation or adoption.

The obvious purpose of the preliminary procedures of public consultation and

submission of comments is to give the parties the opportunity to air their views and
express their concerns on particular subject matters before legislative measures or
implementing rules and regulations addressing these matters are promulgated. On the
other hand, the avowed rationale for the requirement of publication of statutes is to
apprise the public of the contents of the laws or rules and regulations that have already
been promulgated or adopted. As the Court ratiocinated in Tañada:

It is not correct to say that under the disputed clause publication may be dispensed
with altogether. The reason is that such omission would offend due process insofar as it
would deny the public knowledge of the laws that are supposed to govern it. Surely, if
the legislature could validly provide that a law shall become effective immediately upon
its approval notwithstanding the lack of publication (or after an unreasonably short
period after publication), it is not unlikely that persons not aware of it would be
prejudiced as a result; and they would be so not because of a failure to comply with it
simply because they did not know of its existence. Significantly, this is not true only of
penal laws as is commonly supposed. One can think of many non-penal measures, like
a law on prescription, which must also be communicated to the persons they may affect
before they began to operate.47

The Court likewise emphasized therein that the Bill of Rights recognizes "the right of
the people to information on matters of public concern."48

With respect to the GRAM Implementing Rules, its publication in the Official Gazette or
in a newspaper of general circulation is mandated by the fact that these rules seek to
implement key provisions of the EPIRA. More importantly, the GRAM Implementing
Rules, insofar as it lays down the procedure by which generation costs of distribution
utilities are recovered, affect ultimately the public as consumers of electricity and who
pay the charges therefor.

Clearly, the GRAM Implementing Rules affects the public inasmuch as it determines the
costs of electricity consumption. The public, not only the parties to the cases before the
ERC, has the right to be apprised of the contents of the GRAM Implementing Rules by
publication of the same in the Official Gazette or in a newspaper of general circulation
in the Philippines - to the end that it be given amplest opportunity to voice out
whatever opposition it may have, and to ventilate its stance on the matter.49

In light of the foregoing disquisition, the assailed ERC Order dated June 2, 2004 in ERC
Case No. 2004-112 approving the increase of respondent MERALCO's generation charge
from P3.1886 to P3.3213 per kWh effective immediately is nullified for having been
issued with grave abuse of discretion.

WHEREFORE, premises considered, the petition is GRANTED. The assailed ERC Order
dated June 2, 2004 in ERC Case No. 2004-112 is DECLARED VOID and accordingly SET
ASIDE.

SO ORDERED.
 THIRD DIVISION

January 20, 2016

G.R. No.176549

DEPARTMENT OF AGRARIAN REFORM, QUEZON CITY & PABLO MENDOZA, Petitioners,

vs.
ROMEO C. CARRIEDO, Respondent.
 DECISION

JARDELEZA, J.:

This is a Petition for Review on Certiorari  assailing the Court of Appeals Decision dated October 5,
1

2006  and Resolution dated January 10, 2007  in CA-G.R. SP No. 88935. The Decision and
2 3

Resolution reversed the Order dated February 22, 2005  issued by the Department of Agrarian
4

Reform-Central Office (DAR-CO) in Administrative Case No. A-9999-03-CV-008-03 which directed

that a 5.0001 hectare piece of agricultural land (land) be placed under the Comprehensive Agrarian
Reform Program pursuant to Republic Act (RA) No. 6657 or the Comprehensive Agrarian Reform
Law.

The Facts

The land originally formed part of the agricultural land covered by Transfer Certificate of Title (TCT)
No. 17680,  which in turn, formed part of the total of 73.3157 hectares of agricultural land owned by
5

Roman De Jesus (Roman). 6

On May 23, 1972, petitioner Pablo Mendoza (Mendoza) became the tenant of the land by virtue of
a Contrato King Pamamuisan  executed between him and Roman. Pursuant to the Contrato,
7

Mendoza has been paying twenty-five (25) piculs of sugar every crop year as lease rental to Roman.
It was later changed to Two Thousand Pesos (P2, 000.00) per crop year, the land being no longer
devoted to sugarcane. 8

On November 7, 1979, Roman died leaving the entire 73.3157 hectares to his surviving wife Alberta
Constales (Alberta), and their two sons Mario De Jesus (Mario) and Antonio De Jesus (Antonio).  On 9

August 23, 1984, Antonio executed a Deed of Extrajudicial Succession with Waiver of Right  which
10

made Alberta and Mario co-owners in equal proportion of the agricultural land left by Roman. 11

On June 26, 1986, Mario sold  approximately 70.4788 hectares to respondent Romeo C. Carriedo
12

(Carriedo), covered by the following titles and tax declarations, to wit:

1. TCT No. 35055

2. (Tax Declaration) TD No. 48354

3. TCT No. 17681

4. TCT No. 56897

5. TCT No. 17680

The area sold to Carriedo included the land tenanted by Mendoza (forming part of the area covered
by TCT No. 17680). Mendoza alleged that the sale took place without his knowledge and consent.

In June of 1990, Carriedo sold all of these landholdings to the Peoples’ Livelihood Foundation, Inc.
(PLFI) represented by its president, Bernabe Buscayno.  All the lands, except that covered by TCT
13

No. 17680, were subjected to Voluntary Land Transfer/Direct Payment Scheme and were awarded
to agrarian reform beneficiaries in 1997.14

The parties to this case were involved in three cases concerning the land, to wit:
The Ejectment Case (DARAB Case No. 163-T-90 | CAG.R. SP No. 44521 | G.R. No. 143416)

On October 1, 1990, Carriedo filed a Complaint for Ejectment and Collection of Unpaid Rentals
against Mendoza before the Provincial Agrarian Reform Adjudication Board (PARAD) of Tarlac
docketed as DARAB Case No. 163-T-90. He subsequently filed an Amended Complaint on October
30, 1990. 15

In a Decision dated June 4, 1992,  the PARAD ruled that Mendoza had knowledge of the sale,
16

hence, he could not deny the fact nor assail the validity of the conveyance. Mendoza violated
Section 2 of Presidential Decree (PD) No. 816,  Section 50 of RA No. 1199  and Section 36 of RA
17 18

No. 3844,  and thus, the PARAD declared the leasehold contract terminated, and ordered Mendoza
19

to vacate the premises. 20

Mendoza filed an appeal with the Department of Agrarian Reform Adjudication Board (DARAB).  In a 1âwphi1

Decision dated February 8, 1996,  the DARAB affirmed the PARAD Decision in toto. The DARAB
21

ruled that ownership of the land belongs to Carriedo. That the deed of sale was unregistered did not
affect Carriedo’s title to the land. By virtue of his ownership, Carriedo was subrogated to the rights
and obligation of the former landowner, Roman. 22

Mendoza then filed a Petition for Review with the Court of Appeals (CA). The case was docketed as
CA-G.R. SP No. 44521. In a Decision dated September 7, 1998,  the CA affirmed the DARAB
23

decision in toto. The CA ruled that Mendoza’s reliance on Section 6 of RA No. 6657 as ground to
nullify the sale between De Jesus and Carriedo was misplaced, the section being limited to retention
limits. It reiterated that registration was not a condition for the validity of the contract of sale between
the parties.  Mendoza’s Motions for Reconsideration and New Trial were subsequently denied.
24 25

Mendoza thus filed a Petition for Review on Certiorari with this Court, docketed as G.R. No. 143416.
In a Resolution dated August 9, 2000,  this Court denied the petition for failure to comply with the
26

requirements under Rule 45 of the Rules of Court. An Entry of Judgment was issued on October 25,
2000.  In effect, the Decision of the CA was affirmed, and the following issues were settled with
27

finality:

1) Carriedo is the absolute owner of the five (5) hectare land;

2) Mendoza had knowledge of the sale between Carriedo and Mario De Jesus, hence he is
bound by the sale; and

3) Due to his failure and refusal to pay the lease rentals, the tenancy relationship between
Carriedo and Mendoza had been terminated.

Meanwhile, on October 5, 1999, the landholding covered by TCT No. 17680 with an area of 12.1065
hectares was divided into sub-lots. 7.1065 hectares was transferred to Bernabe Buscayno et al.
through a Deed of Transfer  under PD No. 27.  Eventually, TCT No. 17680 was partially cancelled,
28 29

and in lieu thereof, emancipation patents (EPs) were issued to Bernabe, Rod and Juanito, all
surnamed Buscayno. These lots were identified as Lots C, D and E covered by TCT Nos. 44384 to
44386 issued on September 10, 1999.  Lots A and B, consisting of approximately 5.0001 hectares
30

and which is the land being occupied by Mendoza, were registered in the name of Carriedo and
covered by TCT No. 344281  and TCT No. 344282.
31 32

The Redemption Case (DARAB III-T-1476-97 | CA-G.R. SP No. 88936)

On July 21, 1997, Mendoza filed a Petition for Redemption  with the PARAD. In an Order dated
33

January 15, 2001,  the PARAD dismissed his petition on the grounds of litis pendentia and lack of
34

the required certification against forum-shopping. It dismissed the petition so that the pending
appeal of DARAB Case No. 163-T-90 (the ejectment case discussed above) with the CA can run its
full course, since its outcome partakes of a prejudicial question determinative of the tenability of
Mendoza’s right to redeem the land under tenancy. 35

Mendoza appealed to the DARAB which reversed the PARAD Order in a Decision dated November
12, 2003.  The DARAB granted Mendoza redemption rights over the land. It ruled that at the time
36

Carriedo filed his complaint for ejectment on October 1, 1990, he was no longer the owner of the
land, having sold the land to PLFI in June of 1990. Hence, the cause of action pertains to PLFI and
not to him.  It also ruled that Mendoza was not notified of the sale of the land to Carriedo and of the
37

latter’s subsequent sale of it to PLFI. The absence of the mandatory requirement of notice did not
stop the running of the 180 day-period within which Mendoza could exercise his right of
redemption.  Carriedo’s Motion for Reconsideration was subsequently denied.
38 39

Carriedo filed a Petition for Review with the CA. In a Decision dated December 29, 2006,  the CA
40

reversed the DARAB Decision. It ruled that Carriedo’s ownership of the land had been conclusively
established and even affirmed by this Court. Mendoza was not able to substantiate his claim that
Carriedo was no longer the owner of the land at the time the latter filed his complaint for ejectment. It
held that the DARAB erred when it ruled that Mendoza was not guilty of forum-shopping.  Mendoza
41

did not appeal the decision of the CA.

The Coverage Case (ADM Case No. A-9999-03-CV-008-03 | CA-G.R. SP No. 88935)

On February 26, 2002, Mendoza, his daughter Corazon Mendoza (Corazon) and Orlando Gomez
(Orlando) filed a Petition for Coverage  of the land under RA No. 6657. They claimed that they had
42

been in physical and material possession of the land as tenants since 1956, and made the land
productive.  They prayed (1) that an order be issued placing the land under Comprehensive
43

Agrarian Reform Program (CARP); and (2) that the DAR, the Provincial Agrarian Reform Officer
(PARO) and the Municipal Agrarian Reform Officer (MARO) of Tarlac City be ordered to proceed
with the acquisition and distribution of the land in their favor.  The petition was granted by the
44

Regional Director (RD) in an Order dated October 2, 2002,  the dispositive portion of which reads:
45

WHEREFORE, foregoing premises considered, the petition for coverage under CARP filed by Pablo
Mendoza, et al[.], is given due course. Accordingly, the MARO and PARO are hereby directed to
place within the ambit of RA 6657 the landholding registered in the name of Romeo Carriedo
covered and embraced by TCT Nos. 334281 and 334282, with an aggregate area of 45,000 and
5,001 square meters, respectively, and to distribute the same to qualified farmer-beneficiaries.

SO ORDERED. 46

On October 23, 2002, Carriedo filed a Protest with Motion to Reconsider the Order dated October 2,
2002 and to Lift Coverage  on the ground that he was denied his constitutional right to due process.
47

He alleged that he was not notified of the filing of the Petition for Coverage, and became aware of
the same only upon receipt of the challenged Order.

On October 24, 2002, Carriedo received a copy of a Notice of Coverage dated October 21,
2002  from MARO Maximo E. Santiago informing him that the land had been placed under the
48

coverage of the CARP.  On December 16, 2002, the RD denied Carriedo’s protest in an Order dated
49

December 5, 2002.  Carriedo filed an appeal to the DAR-CO.

50
In an Order dated February 22, 2005,  the DAR-CO, through Secretary Rene C. Villa, affirmed the
51

Order of the RD granting coverage. The DAR-CO ruled that Carriedo was no longer allowed to retain
the land due to his violation of the provisions of RA No. 6657. His act of disposing his agricultural
landholdings was tantamount to the exercise of his retention right, or an act amounting to a valid
waiver of such right in accordance with applicable laws and jurisprudence.  However, it did not rule
52

whether Mendoza was qualified to be a farmer-beneficiary of the land. The dispositive portion of the
Order reads:

WHEREFORE, premises considered, the instant appeal is hereby DISMISSED for lack of merit.

Consequently, the Order dated 2 October 2002 of the Regional Director of DAR III, is
hereby AFFIRMED.

SO ORDERED. 53

Carriedo filed a Petition for Review  with the CA assailing the DAR-CO Order. The appeal was
54

docketed as CA-G.R. SP No. 88935. In a Decision dated October 5, 2006, the CA reversed the
DAR-CO, and declared the land as Carriedo’s retained area. The CA ruled that the right of retention
is a constitutionally-guaranteed right, subject to certain qualifications specified by the legislature.  It
55

serves to mitigate the effects of compulsory land acquisition by balancing the rights of the landowner
and the tenant by implementing the doctrine that social justice was not meant to perpetrate an
injustice against the landowner.  It held that Carriedo did not commit any of the acts which would
56

constitute waiver of his retention rights found under Section 6 of DAR Administrative Order No. 02,
S.2003.  The dispositive portion of the Decision reads:
57

WHEREFORE, premises considered and pursuant to applicable law and jurisprudence on the
matter, the present Petition is hereby GRANTED. Accordingly, the assailed Order of the Department
of Agrarian Reform-Central Office, Elliptical Road, Diliman, Quezon City (dated February 22, 2005)
is hereby REVERSED and SET ASIDE and a new one entered—DECLARING the subject
landholding as the Petitioner’s retained area. No pronouncements as to costs.

SO ORDERED. 58

Hence, this petition.

Petitioners maintain that the CA committed a reversible error in declaring the land as Carriedo’s
retained area.59

They claim that Paragraph 4, Section 6 of RA No. 6657 prohibits any sale, disposition, lease,
management contract or transfer of possession of private lands upon effectivity of the law.  Thus,
60

Regional Director Renato Herrera correctly observed that Carriedo’s act of disposing his agricultural
property would be tantamount to his exercise of retention under the law. By violating the law,
Carriedo could no longer retain what was left of his property. "To rule otherwise would be a
roundabout way of rewarding a landowner who has violated the explicit provisions of the
Comprehensive Agrarian Reform Law." 61

They also assert that Carriedo waived his right to retain for failure or neglect for an unreasonable
length of time to do that which he may have done earlier by exercising due diligence, warranting a
presumption that he abandoned his right or declined to assert it.  Petitioners claim that Carriedo has
62

not filed an Application for Retention over the subject land over a considerable passage of time since
the same was acquired for distribution to qualified farmer beneficiaries. 63
Lastly, they argue that Certificates of Land Ownership Awards (CLOAs) already generated in favor
of his co-petitioners Corazon Mendoza and Rolando Gomez cannot be set aside. CLOAs under RA
No. 6657 are enrolled in the Torrens system of registration which makes them indefeasible as
certificates of title issued in registration proceedings.
64

The Issue

The sole issue for our consideration is whether Carriedo has the right to retain the land.

Our Ruling

We rule in the affirmative. Carriedo did not waive his right of retention over the land. 1âwphi1

The 1987 Constitution expressly recognizes landowner retention rights under Article XIII, Section 4,
to wit:

Section 4. The State shall, by law, undertake an agrarian reform program founded on the right of
farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till
or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the
State shall encourage and undertake the just distribution of all agricultural lands, subject to
such priorities and reasonable retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of small landowners.
The State shall further provide incentives for voluntary land-sharing. (Emphasis supplied.)

RA No. 6657 implements this directive, thus:

Section 6. Retention Limits. — Except as otherwise provided in this Act, no person may own or
retain, directly or indirectly, any public or private agricultural land, the size of which shall vary
according to factors governing a viable family-size farm, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council (PARC)
created hereunder, but in no case shall retention by the landowner exceed five (5) hectares.

xxx

The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to
the landowner: Provided, however, That in case the area selected for retention by the landowner is
tenanted, the tenant shall have the option to choose whether to remain therein or be a beneficiary in
the same or another agricultural land with similar or comparable features. In case the tenant
chooses to remain in the retained area, he shall be considered a leaseholder and shall lose his right
to be a beneficiary under this Act. In case the tenant chooses to be a beneficiary in another
agricultural land, he loses his right as a leaseholder to the land retained by the landowner. The
tenant must exercise this option within a period of one (1) year from the time the landowner
manifests his choice of the area for retention. In all cases, the security of tenure of the farmers or
farmworkers on the land prior to the approval of this Act shall be respected. xxx (Emphasis
supplied.)

In Danan v. Court of Appeals,  we explained the rationale for the grant of the right of retention under
65

agrarian reform laws such as RA No. 6657 and its predecessor PD No. 27, to wit:
The right of retention is a constitutionally guaranteed right, which is subject to qualification by the
legislature. It serves to mitigate the effects of compulsory land acquisition by balancing the rights of
the landowner and the tenant and by implementing the doctrine that social justice was not meant to
perpetrate an injustice against the landowner. A retained area, as its name denotes, is land which is
not supposed to anymore leave the landowner's dominion, thus sparing the government from the
inconvenience of taking land only to return it to the landowner afterwards, which would be a
pointless process. For as long as the area to be retained is compact or contiguous and does not
exceed the retention ceiling of five (5) hectares, a landowner's choice of the area to be retained must
prevail. xxx
66

To interpret Section 6 of RA No. 6657, DAR issued Administrative Order No. 02, Series of 2003
(DAR AO 02-03). Section 6 of DAR AO 02-03 provides for the instances when a landowner is
deemed to have waived his right of retention, to wit:

Section 6. Waiver of the Right of Retention. – The landowner waives his right to retain by committing
any of the following act or omission:

6.1 Failure to manifest an intention to exercise his right to retain within sixty (60) calendar
days from receipt of notice of CARP coverage.

6.2 Failure to state such intention upon offer to sell or application under the [Voluntary Land
Transfer (VLT)]/[Direct Payment Scheme (DPS)] scheme.

6.3 Execution of any document stating that he expressly waives his right to retain. The
MARO and/or PARO and/or Regional Director shall attest to the due execution of such
document.

6.4 Execution of a Landowner Tenant Production Agreement and Farmer’s

Undertaking (LTPA-FU) or Application to Purchase and Farmer’s Undertaking (APFU)
covering subject property.

6.5 Entering into a VLT/DPS or [Voluntary Offer to Sell (VOS)] but failing to manifest an
intention to exercise his right to retain upon filing of the application for VLT/DPS or VOS.

6.6 Execution and submission of any document indicating that he is consenting to the CARP
coverage of his entire landholding.

6.7 Performing any act constituting estoppel by laches which is the failure or neglect for an
unreasonable length of time to do that which he may have done earlier by exercising due
diligence, warranting a presumption that he abandoned his right or declined to assert it.

Petitioners cannot rely on the RD’s Order dated October 2, 2002 which granted Mendoza’s petition
for coverage on the ground that Carriedo violated paragraph 4 Section 6  of RA No. 6657 for
67

disposing of his agricultural land, consequently losing his right of retention. At the time when the
Order was rendered, up to the time when it was affirmed by the DAR-CO in its Order dated February
22, 2005, the applicable law is Section 6 of DAR 02-03. Section 6 clearly shows that the disposition
of agricultural land is not an act constituting waiver of the right of retention.

Thus, as correctly held by the CA, Carriedo "[n]ever committed any of the acts or omissions above-
stated (DAR AO 02-03). Not even the sale made by the herein petitioner in favor of PLFI can be
considered as a waiver of his right of retention. Likewise, the Records of the present case is bereft of
any showing that the herein petitioner expressly waived (in writing) his right of retention as required
under sub-section 6.3, section 6, DAR Administrative Order No. 02-S.2003." 68

Petitioners claim that Carriedo’s alleged failure to exercise his right of retention after a long period of
time constituted a waiver of his retention rights, as envisioned in Item 6.7 of DAR AO 02-03.

We disagree.

Laches is defined as the failure or neglect for an unreasonable and unexplained length of time, to do
that which by exercising due diligence could or should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting a presumption that the party entitled
to assert it either has abandoned it or declined to assert it.  Where a party sleeps on his rights and
69

allows laches to set in, the same is fatal to his case.70

Section 4 of DAR AO 02-03 provides:

Section 4. Period to Exercise Right of Retention under RA 6657

4.1 The landowner may exercise his right of retention at any time before receipt of notice of
coverage.

4.2 Under the Compulsory Acquisition (CA) scheme, the landowner shall exercise his right of
retention within sixty (60) days from receipt of notice of coverage.

4.3 Under the Voluntary Offer to Sell (VOS) and the Voluntary Land Transfer (VLT)/Direct
Payment Scheme (DPS), the landowner shall exercise his right of retention simultaneously at
the time of offer for sale or transfer.

The foregoing rules give Carriedo any time before receipt of the notice of coverage to exercise his
right of retention, or if under compulsory acquisition (as in this case), within sixty (60) days from
receipt of the notice of coverage. The validity of the notice of coverage is the very subject of the
controversy before this court. Thus, the period within which Carriedo should exercise his right of
retention cannot commence until final resolution of this case.

Even assuming that the period within which Carriedo could exercise his right of retention has
commenced, Carriedo cannot be said to have neglected to assert his right of retention over the land.
The records show that per Legal Report dated December 13, 199971 prepared by Legal Officer Ariel
Reyes, Carriedo filed an application for retention which was even contested by Pablo Mendoza’s
son, Fernando.72 Though Carriedo subsequently withdrew his application, his act of filing an
application for retention belies the allegation that he abandoned his right of retention or declined to
assert it.

In their Memorandum  however, petitioners, for the first time, invoke estoppel, citing DAR
73

Administrative Order No. 05 Series of 2006  (DAR AO 05-06) to support their argument that
74

Carriedo waived his right of retention.  DAR AO 05-06 provides for the rules and regulations
75

governing the acquisition and distribution of agricultural lands subject of conveyances under
Sections 6, 70  and 73 (a)  of RA No. 6657. Petitioners particularly cite Item no. 4 of the Statement
76 77

of Policies of DAR AO 05-06, to wit:

II. Statement of Policies

4. Where the transfer/sale involves more than the five (5) hectares retention area, the transfer is
considered violative of Sec. 6 of R.A. No. 6657.

In case of multiple or series of transfers/sales, the first five (5) hectares sold/conveyed without DAR
clearance and the corresponding titles issued by the Register of Deeds (ROD) in the name of the
transferee shall, under the principle of estoppel, be considered valid and shall be treated as
the transferor/s’ retained area but in no case shall the transferee exceed the five-hectare
landholding ceiling pursuant to Sections 6, 70 and 73(a) of R.A. No. 6657. Insofar as the excess
area is concerned, the same shall likewise be covered considering that the transferor has no right of
disposition since CARP coverage has been vested as of 15 June 1988. Any landholding still
registered in the name of the landowner after earlier dispositions totaling an aggregate of five (5)
hectares can no longer be part of his retention area and therefore shall be covered under CARP.
(Emphasis supplied.)

Citing this provision, petitioners argue that Carriedo lost his right of retention over the land because
he had already sold or disposed, after the effectivity of RA No. 6657, more than fifty (50) hectares of
land in favor of another. 78

In his Memorandum,  Carriedo maintains that petitioners cannot invoke any administrative regulation
79

to defeat his right of retention. He argues that "administrative regulation must be in harmony with the
provisions of law otherwise the latter prevails."
80

We cannot sustain petitioners' argument. Their reliance on DAR AO 05-06 is misplaced. As will be
seen below, nowhere in the relevant provisions of RA No. 6657 does it indicate that a multiple or
series of transfers/sales of land would result in the loss of retention rights. Neither do they provide
that the multiple or series of transfers or sales amounts to the waiver of such right.

The relevant portion of Section 6 of RA No. 6657 referred to in Item no. 4 of DAR AO 05-06
provides:

Section 6. Retention Limits. – Except as otherwise provided in this Act, no person may own or retain,
directly or indirectly, any public or private agricultural land, the size of which shall vary according to
factors governing a viable family-size farm, such as the commodity produced, terrain, infrastructure,
and soil fertility as determined by the Presidential Agrarian Reform Council (PARC) created
hereunder, but in no case shall retention by the landowner exceed five (5) hectares. xxx

Upon the effectivity of this Act, any sale, disposition, lease, management, contract or transfer of
possession of private lands executed by the original landowner in violation of the Act shall
be null and void: Provided, however, That those executed prior to this Act shall be valid only when
registered with the Register of Deeds within a period of three (3) months after the effectivity of this
Act. Thereafter, all Registers of Deeds shall inform the Department of Agrarian Reform (DAR) within
thirty (30) days of any transaction involving agricultural lands in excess of five (5) hectares.
(Emphasis supplied.)

Section 70 of RA No. 6657, also referred to in Item no. 4 of DAR AO 05-06 partly provides:

The sale or disposition of agricultural lands retained by a landowner as a consequence of Section 6

hereof shall be valid as long as the total landholdings that shall be owned by the transferee thereof
inclusive of the land to be acquired shall not exceed the landholding ceilings provided for in this
Act. Any sale or disposition of agricultural lands after the effectivity of this Act found to be
contrary to the provisions hereof shall be null and void. xxx (Emphasis supplied.)
Finally, Section 73 (a) of RA No. 6657 as referred to in Item No. 4 of DAR AO 05-06 provides,

Section 73. Prohibited Acts and Omissions. – The following are prohibited:

(a) The ownership or possession, for the purpose of circumventing the provisions of this Act, of
agricultural lands in excess of the total retention limits or award ceilings by any person, natural or
juridical, except those under collective ownership by farmer-beneficiaries; xxx

Sections 6 and 70 are clear in stating that any sale and disposition of agricultural lands in violation of
the RA No. 6657 shall be null and void. Under the facts of this case, the reasonable reading of these
three provisions in relation to the constitutional right of retention should be that the consequence of
nullity pertains to the area/s which were sold, or owned by the transferee, in excess of the 5-hectare
land ceiling. Thus, the CA was correct in declaring that the land is Carriedo’s retained area. 81

Item no. 4 of DAR AO 05-06 attempts to defeat the above reading by providing that, under the
principle of estoppel, the sale of the first five hectares is valid. But, it hastens to add that the first five
hectares sold corresponds to the transferor/s’ retained area. Thus, since the sale of the first five
hectares is valid, therefore, the landowner loses the five hectares because it happens to be, at the
same time, the retained area limit. In reality, Item No. 4 of DAR AO 05-06 operates as a forfeiture
provision in the guise of estoppel. It punishes the landowner who sells in excess of five hectares.
Forfeitures, however, partake of a criminal penalty. 82

In Perez v. LPG Refillers Association of the Philippines, Inc.,  this Court said that for an
83

administrative regulation to have the force of a penal law, (1) the violation of the administrative
regulation must be made a crime by the delegating statute itself; and (2) the penalty for such
violation must be provided by the statute itself. 84

Sections 6, 70 and 73 (a) of RA No. 6657 clearly do not provide that a sale or disposition of land in
excess of 5 hectares results in a forfeiture of the five hectare retention area. Item no. 4 of DAR AO
05-06 imposes a penalty where none was provided by law.

As this Court also held in People v. Maceren,  to wit:

85

The reason is that the Fisheries law does not expressly prohibit electro fishing. As electro fishing is
not banned under the law, the Secretary of Agriculture and Natural Resources and the Natural
Resources and the Commissioner of Fisheries are powerless to penalize it. In other words,
Administrative Order 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. 86

The repugnancy between the law and Item no. 4 of DAR AO 05-06 is apparent by a simple
comparison of their texts. The conflict undermines the statutorily-guaranteed right of the landowner
to choose the land he shall retain, and DAR AO 05-06, in effect, amends RA No. 6657.

In Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles (RMBSA) v. Home Development

Mutual Fund (HDMF),  this Court was confronted with the issue of the validity of the amendments to
87

the rules and regulations implementing PD No. 1752.  In that case, PD No. 1752 (as amended by
88

RA No. 7742) exempted RMBSA from the Pag-Ibig Fund coverage for the period January 1 to
December 31, 1995. In September 1995, however, the HDMF Board of Trustees issued a board
resolution amending and modifying the rules and regulations implementing RA No. 7742. As
amended, the rules now required that for a company to be entitled to a waiver or suspension of fund
coverage, it must have a plan providing for both provident/retirement and housing benefits superior
to those provided in the Pag-Ibig Fund. In ruling against the amendment and modification of the
rules, this Court held that—

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. Only Congress can repeal or amend the law.  (Citations omitted;
89

underscoring supplied.)

Laws, as well as the issuances promulgated to implement them, enjoy the presumption of
validity.  However, administrative regulations that alter or amend the statute or enlarge or impair its
90

scope are void, and courts not only may, but it is their obligation to strike down such
regulations.  Thus, in this case, because Item no. 4 of DAR AO 05-06 is patently null and void, the
91

presumption of validity cannot be accorded to it. The invalidity of this provision constrains us to strike
it down for being ultra vires.

In Conte v. Commission on Audit,  the sole issue of whether the Commission on Audit (COA) acted
92

in grave abuse of discretion when it disallowed in audit therein petitioners' claim of financial
assistance under Social Security System (SSS) Resolution No. 56 was presented before this Court.
The COA disallowed the claims because the financial assistance under the challenged resolution is
similar to a separate retirement plan which results in the increase of benefits beyond what is allowed
under existing laws. This Court, sitting en banc, upheld the findings of the COA, and invalidated SSS
Resolution No. 56 for being ultra vires, to wit:

xxx Said Sec. 28 (b) as amended by RA 4968 in no uncertain terms 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 [iniquitous] proliferation of such plans. It is beyond cavil that Res. 56
contravenes the said provision of law and is therefore invalid, void and of no effect. xxx

We are not unmindful of the laudable purposes for promulgating Res. 56, and the positive results it
must have had xxx. But it is simply beyond dispute that the SSS had no authority to maintain and
implement such retirement plan, particularly in the face of the statutory prohibition. The SSS cannot,
in the guise of rule-making, legislate or amend laws or worse, render them nugatory.

It is doctrinal that in case of conflict between a statute and an administrative order, the former must
prevail. A rule or regulation must conform to and be consistent with the provisions of the enabling
statute in order for such rule or regulation to be valid. The rule-making power of a public
administrative body is a delegated legislative power, which it may not use either to abridge the
authority given it by the Congress or the Constitution or to enlarge its power beyond the scope
intended. xxx Though well-settled is the rule that retirement laws are liberally interpreted in favor of
the retiree, nevertheless, there is really nothing to interpret in either RA 4968 or Res. 56, and
correspondingly, the absence of any doubt as to the ultra-vires nature and illegality of the
disputed resolution constrains us to rule against petitioners.  (Citations omitted; emphasis and
93

underscoring supplied.)
Administrative regulations must be in harmony with the provisions of the law for administrative
regulations cannot extend the law or amend a legislative enactment.  Administrative issuances must
94

not override, but must remain consistent with the law they seek to apply and implement. They are
intended to carry out, not to supplant or modify the law.  Administrative or executive acts, orders and
95

regulations shall be valid only when they are not contrary to the laws or the
Constitution.  Administrative regulations issued by a Department Head in conformity with law have
96

the force of law.  As he exercises the rule-making power by delegation of the lawmaking body, it is a
97

requisite that he should not transcend the bounds 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. 98

If the implementing rules and regulations are issued in excess of the rule-making authority of the
administrative agency, they are without binding effect upon the courts. At best, the same may be
treated as administrative interpretations of the law and as such, they may be set aside by the
Supreme Court in the final determination of what the law means. 99

While this Court is mindful of the DAR’s commitment to the implementation of agrarian reform, it
must be conceded that departmental zeal may not be permitted to outrun the authority conferred by
statute.  Neither the high dignity of the office nor the righteousness of the motive then is an
100

acceptable substitute; otherwise the rule of law becomes a myth. 101

As a necessary consequence of the invalidity of Item no. 4 of DAR AO 05-06 for being ultra vires, we
hold that Carriedo did not waive his right to retain the land, nor can he be considered to be
in estoppel.

Finally, petitioners cannot argue that the CLOAs allegedly granted in favor of his co-petitioners
Corazon and Orlando cannot be set aside. They claim that CLOAs under RA No. 6657 are enrolled
in the Torrens system of registration which makes them indefeasible as certificates of title issued in
registration proceedings.  Even as these allegedly issued CLOAs are not in the records, we hold
102

that CLOAs are not equivalent to a Torrens certificate of title, and thus are not indefeasible.

CLOAs and EPs are similar in nature to a Certificate of Land Transfer (CLT) in ordinary land
registration proceedings. CLTs, and in turn the CLOAs and EPs, are issued merely as preparatory
steps for the eventual issuance of a certificate of title. They do not possess the indefeasibility of
certificates of title. Justice Oswald D. Agcaoili, in Property Registration Decree and Related Laws
(Land Titles and Deeds),  notes, to wit:
103

Under PD No. 27, beneficiaries arc issued certificates of land transfers (ClTs) to entitle them to
possess lands. Thereafter, they are issued emancipation patents (EPs) after compliance with all
necessary conditions. Such EPs, upon their presentation to the Register of Deeds, shall be the basis
for the issuance of the corresponding transfer certificates of title (TCTs) in favor of the corresponding
beneficiaries.

Under RA No. 6657, the procedure has been simplified. Only certificates of land ownership award
(CLOAs) are issued, in lieu of EPs, after compliance with all prerequisites. Upon presentation of the
CLOAs to the Register of Deeds, TCTs are issued to the designated beneficiaries. CLTs are no
longer issued.

The issuance of EPs or CLOAs to beneficiaries does not absolutely bar the landowner from retaining
the area covered thereby. Under AO No. 2, series of 1994, an EP or CLOA may be cancelled if the
land covered is later found to be part of the landowner's retained area. (Citations omitted;
underscoring supplied.)
The issue, however, involving the issuance, recall or cancellation of EPs or CLOAs, is lodged with
the DAR,  which has the primary jurisdiction over the matter.
104 105

WHEREFORE, premises considered, the Petition is hereby DENIED for lack of merit. The assailed

Decision of the Court of Appeals dated October 5, 2006 is AFFIRMED. Item no. 4 of DAR
Administrative Order No. 05, Series of 2006 is hereby declared INVALID, VOID and OF NO
EFFECT for being ultra vires.

SO ORDERED.