ANA THERESIA “RISA” HONTIVEROS-BARAQUEL v.
3846, entitled "An Act
TOLL REGULATORY BOARD
FACTS: Philippine National Construction Corporation
(PNCC), pursuant to P.D. 1113 with the right, privilege, and
authority to construct, and operate toll facilities Toll
Expressways, in a series of agreements transferred authority to
perform operations of the South Metro Manila Skyway to
Skyway O & M Corporation (SOMCO). Legislators and the
Union of PNCC oppose the said transfer. They argue that the
Toll Operation Certificate issued by the The Toll Regulatory
Board (TRB) to SOMCO is highly irregular and that the
transfer of authority is grossly disadvantageous to the
government.
ISSUES:
1. Whether petitioners have standing;
2. Whether the TRB has the power to grant authority to
operate a toll facility;
3. Whether the assumption of toll operations by SOMCO is
disadvantageous to the government.
HELD:
1. Petitioner filed as a legislator in her capacity as party-list
representative of Akbayan. Hence, petitioners do not have the
requisite legal standing, and as such, she was only allowed to
sue to question the validity of any official action when it
infringes on their prerogatives as members of Congress.
2. The Court has ruled that first, it is clear that Congress does
not have the sole authority to grant franchises for the operation
of public utilities. Congress is not required before each and
every public utility may operate. Unless there is a law that
specifically requires a franchise for the operation of a public
utility, particular agencies in the executive branch may issue
authorizations and licenses for the operation of certain classes
of public utilities. The authority to operate a public utility can
be granted by administrative agencies when authorized by law.
3. The allegations of petitioners are nothing more than
speculations, apprehensions, and suppositions. It is
understandable that SOMCO does not yet have a proven track
record in toll operations, considering that it was only the
Amendment to the Supplemental Toll Operation Agreement
(ASTOA) and the Memorandum of Agreement that gave birth
to it.
ASSOCIATED COMMUNICATIONS & WIRELESS
SERVICES – UNITED BROADCASTING NETWORKS,
petitioner, vs.
NATIONAL TELECOMMUNICATIONS COMMISSION,
respondent.
(The question that has taken a long life is whether the
operation of a radio or television station requires a
congressional franchise.)
Facts: On November 11, 1931, Act No.
Providing for the Regulation of Radio Stations and Radio
Communications in the Philippines and for Other Purposes,"
was enacted. Sec. 1 of the law reads, viz:
"Sec. 1. No person, firm, company, association, or corporation
shall construct, install, establish, or operate a radio
transmitting station, or a radio receiving station used for
commercial purposes, or a radio broadcasting station, without
having first obtained a franchise therefor from the Congress of
the Philippines..."
Pursuant to the above provision, Congress enacted in 1965
R.A. No. 4551, entitled "An Act Granting Marcos J.
Villaverde, Jr. and Winfred E. Villaverde a Franchise to
Construct, Install, Maintain and Operate Public
Radiotelephone and Radiotelegraph Coastal Stations, and
Public Fixed and Public Based and Land Mobile Stations
within the Philippines… It gave the grantees a 50-year
franchise. In 1969, the franchise was transferred to petitioner
Associated Communications & Wireless Services – United
Broadcasting Network, Inc. (ACWS for brevity) through
Congress’ Concurrent Resolution No. 58. Petitioner ACWS
then engaged in the installation and operation of several radio
stations around the country.
In 1974, P.D. No. 576-A, "Regulating the Ownership and
Operation of Radio and Television Stations and for other
Purposes" was issued, with the following pertinent provisions
on franchise of radio and television broadcasting systems:
Sec. 1. No radio station or television channel may obtain a
franchise unless it has sufficient capital on the basis of equity
for its operation for at least one year, including purchase of
equipment.
Sec. 6. All franchises, grants, licenses, permits, certificates or
other forms of authority to operate radio or television
broadcasting systems shall terminate on December 31, 1981.
Thereafter, irrespective of any franchise, grant, license, permit,
certificate or other forms of authority to operate granted by
any office, agency or person, no radio or television station
shall be authorized to operate without the authority of the
Board of Communications and the Secretary of Public Works
and Communications or their successors who have the right
and authority to assign to qualified parties frequencies,
channels or other means of identifying broadcasting system.
A few years later or in 1979, E.O. No. 5464 was issued. It
integrated the Board of Communications and the
Telecommunications Control Bureau under the Integrated
Reorganization Plan of 1972 into the NTC.
Among the powers vested in the NTC under Sec. 15 of E.O.
No. 546 are the following:
a. Issue Certificate of Public Convenience for the operation of
communication utilities and services…
mc. Grant permits for the use of radio frequencies for wireless
telephone and telegraph systems and radio communication
systems…
Upon termination of petitioner’s franchise on December 31,
1981 pursuant to P.D. No. 576-A, it continued operating its
radio stations under permits granted by the NTC.
Issue: Has E.O. No 546 modified the franchising and licensing
arrangement for radio and television broadcasting systems
under Act No. 3846 and P.D. No. 576-A; consequently, the
requirement of obtaining a congressional/legislative franchise
can already be dispensed with?
Ruling: E.O. No. 546 integrated the Board of Communications
and the Telecommunications Bureau into a single entity
known as the NTC, and vested the new body with broad
powers, among them, the power to issue Certificates of Public
Convenience for the operation of communications utilities,
including radio and televisions broadcasting systems and the
power to grant permits for the use of radio frequencies.
Additionally, NTC was vested with broad rule making
authority ‘to encourage a larger and more effective use of
communications, radio and television broadcasting facilities,
and to maintain effective competition among private entities in
these activities whenever the Commission finds it reasonably
feasible.
In the recent case of Albano vs. Reyes (175 SCRA 264), the
Supreme Court held that ‘franchises issued by Congress are
not required before each and every public utility may operate.’
Administrative agencies may be empowered by law ‘to grant
licenses for or to authorize the operation of certain public
utilities.’ The Supreme Court stated that the provision in the
Constitution (Art. XII, Sec. 11) ‘that the issuance of a
franchise, certificate or other form of authorization for the
operation of a public utility shall be subject to amendment,
alteration or repeal by Congress, does not necessarily
imply . . . that only Congress has the power to grant such
authorization. Our statute books are replete with laws granting
specified agencies in the Executive Branch the power to issue
such authorization for certain classes of public utilities.’
We believe that E.O. No. 546 is one law which authorizes an
administrative agency, the NTC, to issue authorizations for the
operation of radio and television broadcasting systems without
need of a prior franchise issued by Congress.
However, on May 3, 1994, the NTC, the Committee on
Legislative Franchises of Congress, and the Kapisanan ng mga
Brodkaster sa Pilipinas of which petitioner is a member of
good standing, entered into a Memorandum of Understanding
(MOU) that requires a congressional franchise to operate radio
and television stations. The MOU states in part:
‘The NTC shall continue to issue and grant permits or
authorizations to operate radio and television broadcast
stations within their mandate under Section 15 of Executive
Order No. 546, provided that such temporary permits or
authorization to operate shall be valid for two (2) years within
which the permittee shall be required to file an application for
legislative franchise with Congress not later than December
31, 1994; provided finally, that if the permittee of the
temporary permit or authorization to operate fails to secure the
legislative franchise with Congress within this period, the
NTC shall not extend or renew its permit or authorization to
operate any further.’
Petitioner stresses that Act. No. 3846 covers only the
operation of radio and not television stations. the Court of
Appeals held that a congressional franchise is required for the
operation of radio and television broadcasting stations as this
requirement under Act No. 3846 was not expressly repealed
by P.D. No. 576-A nor E.O. No. 546.
The appellate court correctly ruled that a congressional
franchise is necessary for petitioner to operate television
Channel. Even assuming that Act No. 3846 applies only to
radio stations and not to television stations as petitioner
adamantly insists, the subsequent P.D. No. 576-A clearly
shows in Section 1 that a franchise is required to operate radio
as well as television stations.
There is nothing in P.D. No. 576-A which reveals any
intention to do away with the requirement of a franchise for
the operation of radio and television stations. Section 6 of P.D.
No. 576-A merely identifies the regulatory agencies from
whom authorizations, in addition to the required congressional
franchise, must be secured after December 31, 1981.
Thus, while it is correct to say that specified agencies in the
Executive Branch have the power to issue authorization for
certain classes of public utilities, this does not mean that the
authorization or CPC issued by the NTC dispenses with the
requirement of a franchise as this is clearly required under
P.D. No. 576-A.
The petitioner however insists that the Constitution provides in
Art. XII, Sec. 11 that the issuance of a franchise, certificate or
other form of authorization for the operation of a public utility
shall be subject to amendment, alteration or repeal by
Congress does not necessarily imply, as petitioner posits, that
only Congress has the power to grant such authorization. Our
statute books are replete with laws granting specified agencies
in the Executive Branch the power to issue such authorization
for certain classes of public utilities.
Where there is a law such as P.D. No. 576-A which requires a
franchise for the operation of radio and television stations, that
law must be followed until subsequently repealed. There is
nothing in the subsequent E.O. No. 546 which evinces an
intent to dispense with the franchise requirement. Thus, while
it is correct to say that specified agencies in the Executive
Branch have the power to issue authorization for certain
classes of public utilities, this does not mean that the
authorization or CPC issued by the NTC dispenses with the
requirement of a franchise as this is clearly required under
P.D. No. 576-A.
And whether or not the benefits of the Memorandum Circular
extend to petitioner, the fact is, as correctly pointed out by the
appellate court, petitioner failed to secure a legislative
franchise by December 31, 1999.
Therefore, as long as the law remains unchanged, the
requirement of a franchise to operate a television station must
be upheld. The call to dispense with the requisite legislative
franchise must, however, be addressed to Congress as the
lawmaker of the land for the Court’s function is to interpret
and not to rewrite the law.
So ordered.
G.R. No. 208566 November 19, 2013
BELGICA vs. EXECUTIVE SECRETARY
FACTS: The NBI Investigation was spawned by sworn
affidavits of six (6) whistle-blowers who declared that JLN
Corporation (Janet Lim Napoles) had swindled billions of
pesos from the public coffers for "ghost projects" using
dummy NGOs. Thus, Criminal complaints were filed before
the Office of the Ombudsman, charging five (5) lawmakers for
Plunder, and three (3) other lawmakers for Malversation,
Direct Bribery, and Violation of the Anti-Graft and Corrupt
Practices Act. Also recommended to be charged in the
complaints are some of the lawmakers’ chiefs -of-staff or
representatives, the heads and other officials of three (3)
implementing agencies, and the several presidents of the
NGOs set up by Napoles.
Whistle-blowers alleged that" at least P900 Million from
royalties in the operation of the Malampaya gas project off
Palawan province intended for agrarian reform beneficiaries
has gone into a dummy NGO. Several petitions were lodged
before the Court similarly seeking that the "Pork Barrel
System" be declared unconstitutional
G.R. No. 208493 – SJS filed a Petition for Prohibition seeking
that the "Pork Barrel System" be declared unconstitutional,
and a writ of prohibition be issued permanently
G.R. No. 208566 - Belgica, et al filed an Urgent Petition For
Certiorari and Prohibition With Prayer For The Immediate
Issuance of Temporary Restraining Order and/or Writ of
Preliminary Injunction seeking that the annual "Pork Barrel
System," presently embodied in the provisions of the GAA of
2013 which provided for the 2013 PDAF, and the Executive‘s
lump-sum, discretionary funds, such as the Malampaya Funds
and the Presidential Social Fund, be declared unconstitutional
and null and void for being acts constituting grave abuse of
discretion. Also, they pray that the Court issue a TRO against
respondents
UDK-14951 – A Petition filed seeking that the PDAF be
declared unconstitutional, and a cease and desist order be
issued restraining President Benigno Simeon S. Aquino III
(President Aquino) and Secretary Abad from releasing such
funds to Members of Congress
ISSUES:
1. Whether or not the 2013 PDAF Article and all other
Congressional Pork Barrel Laws similar thereto are
unconstitutional considering that they violate the principles
of/constitutional provisions on (a) separation of powers; (b)
non-delegability of legislative power; (c) checks and balances;
(d) accountability; (e) political dynasties; and (f) local
autonomy.
2. Whether or not the phrases (under Section 8 of PD
910,116 relating to the Malampaya Funds, and under Section
12 of PD 1869, as amended by PD 1993, relating to the
Presidential Social Fund, are unconstitutional insofar as they
constitute undue delegations of legislative power.
HELD:
1. Yes, the PDAF article is unconstitutional. The post-
enactment measures which govern the areas of project
identification, fund release and fund realignment are not
related to functions of congressional oversight and, hence,
allow legislators to intervene and/or assume duties that
properly belong to the sphere of budget execution. This
violates the principle of separation of powers. Congress‘role
must be confined to mere oversight that must be confined to:
(1) scrutiny and (2) investigation and monitoring of the
implementation of laws. Any action or step beyond that will
undermine the separation of powers guaranteed by the
constitution.
Thus, the court declares the 2013 pdaf article as well as all
other provisions of law which similarly allow legislators to
wield any form of post-enactment authority in the
implementation or enforcement of the budget, unrelated to
congressional oversight, as violative of the separation of
powers principle and thus unconstitutional.
2. Yes. Sec 8 of PD 910- the phrase “and for such other
purposes as may be hereafter directed by the President”‖
constitutes an undue delegation of legislative power insofar as
it does not lay down a sufficient standard to adequately
determine the limits of the President‘s authority with respect
to the purpose for which the Malampaya Funds may be used.
It gives the President wide latitude to use the Malampaya
Funds for any other purpose he may direct and, in effect,
allows him to unilaterally appropriate public funds beyond the
purview of the law.”
Section 12 of PD 1869, as amended by PD 1993- the phrases:
(b) "to finance the priority infrastructure development
projects” was declared constitutional. IT INDICATED
PURPOSE ADEQUATELY CURTAILS THE AUTHORITY
OF THE PRESIDENT TO SPEND THE PRESIDENTIAL
SOCIAL FUND ONLY FOR RESTORATION PURPOSES
WHICH ARISE FROM CALAMITIES.
(b)” and to finance the restoration of damaged or destroyed
facilities due to calamities, as may be directed and authorized
by the Office of the President of the Philippines” was declared
unconstitutional.IT GIVES THE PRESIDENT CARTE
BLANCHE AUTHORITY TO USE THE SAME FUND FOR
ANY INFRASTRUCTURE PROJECT HE MAY SO
DETERMINE AS A ―PRIORITY‖. VERILY, THE LAW
DOES NOT SUPPLY A DEFINITION OF ―PRIORITY
INFRASTRUCTURE DEVELOPMENT PROJECTS‖ AND
HENCE, LEAVES THE PRESIDENT WITHOUT ANY
GUIDELINE TO CONSTRUE THE SAME.
ABAKADA GURO PARTY LIST VS EXECUTIVE
SECRETARY
Facts:
Petitioners ABAKADA GURO Party List challenged the
constitutionality of R.A. No. 9337 particularly Sections 4, 5
and 6, amending Sections 106, 107 and 108, respectively, of
the National Internal Revenue Code (NIRC). These questioned
provisions contain a uniform proviso authorizing the
President, upon recommendation of the Secretary of Finance,
to raise the VAT rate to 12%, effective January 1, 2006, after
any of the following conditions have been satisfied, to wit:
. . . That the President, upon the recommendation of the
Secretary of Finance, shall, effective January 1, 2006, raise the
rate of value-added tax to twelve percent (12%), after any of
the following conditions has been satisfied:
(i) Value-added tax collection as a percentage of Gross
Domestic Product (GDP) of the previous year exceeds two and
four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of the
previous year exceeds one and one-half percent (1 ½%).
Petitioners argue that the law is unconstitutional, as it
constitutes abandonment by Congress of its exclusive
authority to fix the rate of taxes under Article VI, Section
28(2) of the 1987 Philippine Constitution. They further argue
that VAT is a tax levied on the sale or exchange of goods and
services and cannot be included within the purview of tariffs
under the exemption delegation since this refers to customs
duties, tolls or tribute payable upon merchandise to the
government and usually imposed on imported/exported goods.
They also said that the President has powers to cause,
influence or create the conditions provided by law to bring
about the conditions precedent. Moreover, they allege that no
guiding standards are made by law as to how the Secretary of
Finance will make the recommendation. They claim,
nonetheless, that any recommendation of the Secretary of
Finance can easily be brushed aside by the President since the
former is a mere alter ego of the latter, such that, ultimately, it
is the President who decides whether to impose the increased
tax rate or not.
Issues:
Whether or not R.A. No. 9337 has violated the provisions in
Article VI, Section 24, and Article VI, Section 26 (2) of the
Constitution.
Whether or not there was an undue delegation of legislative
power in violation of Article VI Sec 28 Par 1 and 2 of the
Constitution.
Whether or not there was a violation of the due process and
equal protection under Article III Sec. 1 of the Constitution.
Discussions:
Basing from the ruling of Tolentino case, it is not the law, but
the revenue bill which is required by the Constitution to
“originate exclusively” in the House of Representatives, but
Senate has the power not only to propose amendments, but
also to propose its own version even with respect to bills
which are required by the Constitution to originate in the
House. the Constitution simply means is that the initiative for
filing revenue, tariff or tax bills, bills authorizing an increase
of the public debt, private bills and bills of local application
must come from the House of Representatives on the theory
that, elected as they are from the districts, the members of the
House can be expected to be more sensitive to the local needs
and problems. On the other hand, the senators, who are elected
at large, are expected to approach the same problems from the
national perspective. Both views are thereby made to bear on
the enactment of such laws.
In testing whether a statute constitutes 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.
The equal protection clause under the Constitution means that
“no person or class of persons shall be deprived of the same
protection of laws which is enjoyed by other persons or other
classes in the same place and in like circumstances.”
Rulings:
R.A. No. 9337 has not violated the provisions. The revenue
bill exclusively originated in the House of Representatives, the
Senate was acting within its constitutional power to introduce
amendments to the House bill when it included provisions in
Senate Bill No. 1950 amending corporate income taxes,
percentage, excise and franchise taxes. Verily, Article VI,
Section 24 of the Constitution does not contain any prohibition
or limitation on the extent of the amendments that may be
introduced by the Senate to the House revenue bill.
There is no undue delegation of legislative power but only of
the discretion as to the execution of a law. This is
constitutionally permissible. Congress does not abdicate its
functions or unduly delegate power when it describes what job
must be done, who must do it, and what is the scope of his
authority; in our complex economy that is frequently the only
way in which the legislative process can go forward.
Supreme Court held no decision on this matter. The power of
the State to make reasonable and natural classifications for the
purposes of taxation has long been established. Whether it
relates to the subject of taxation, the kind of property, the rates
to be levied, or the amounts to be raised, the methods of
assessment, valuation and collection, the State’s power is
entitled to presumption of validity. As a rule, the judiciary will
not interfere with such power absent a clear showing of
unreasonableness, discrimination, or arbitrariness.
SECURITIES and EXCHANGE COMMISSION, vs.
UNIVERSAL RIGHTFIELD PROPERTY HOLDINGS,
INC.,
FACTS:
Petitioner is the Securities and Exchange Commission (SEC)
and Respondent is Universal Rightfield Property Holdings,
Inc. (URPHI). URPHI is a corporation duly registered and
existing under Philippine Law which is engaged in the
business of providing residential and leisure-related needs and
wants market.
SEC issued an Order revoking URPHI's Registration of SEC
for failure to timely file its Year 2001 Annual Report and Year
2002, 1st, 2nd, and 3rd Quarterly Reports which required
pursuant to Section 17 of the Securities Regulation Code
(SRC). On October 16, 2003, URPHI Filed a motion to set
aside the revocation order and reinstate registration after
complying with its reportorial requirements. On October 24,
2003, SEC granted the motion to lift the revocation order.
However, URPHI failed again to comply with the same
reportorial requirements.
On June 24, 2004, in a NOTICE OF HEARING, SEC directed
URPHI to show cause why its registration of Securities and
Certificate of Permit to Sell securities to the Public should not
be suspended for failure to submit said requirements in
violation of SRC Rule 17. On July 6, 2004, the scheduled
hearing, URPHI through its Chief accountant, informed SEC
why it failed to submit the reportorial requirement, viz:
(1) it was constrained to reduce its accounting staff due to
cost-cutting measures; thus, some of the audit requirements
were not completed within the original timetable;
(2) its audited financial statements for the period ending
December 31, 2003 could not be finalized by reason of the
delay in the completion of some of its audit requirements.
On July 27, 2004, SEC suspended URPHI's registration of
Securities and Permit to Sell Securities to the public for failure
to submit the reportorial requirements DESPITE THE LAPSO
OF THE EXTENTION PERION, and due to lack of sufficient
justification.
On August 23, 2004, SEC informed URPHI that it failed to
submit its 2004 2nd Quarter Report in violation of the
amended IRR of the SRC Rule 17.a (1)(A)(ii). It directed
URPHI to file the said report and show cause why it should
not be held in violation for the said rule.
On September 23, 2004, URPHI requested for a final
extension or until November 15, 2004. On December 1, 2004,
URPHI filed with SEC its 2003 Annual Report. On December
8, 2004, SEC revoked URPHI's Registration of Securities and
Permit to Sell Securities to the Public for its failure to submits
its reportorial requirements within the final extension period.
On December 9, 10 and 14, 2004, URPHI finally submitted to
the SEC its Quarterly Reports. URPHI appealed the SEC
Order of Revocation dated December 8, 2004 by filing a
Notice of Appeal and a Memorandum both dated January 3,
2005. On December 15, 2005, SEC denied URPHI's appeal
through a resolution. Aggrieved, URPHI filed a petition for
review with the CA.
Issue: Whether or not the URPHI was accorded all the
opportunity to be heard and comply with all the reportorial
requirements before the Order of Revocation was issued by
SEC.
Held: YES. SC granted the petition as meritorious stating that
there is no dispute that the violation of reportorial
requirements under Sec 17.1 of the Amended IRR of the SRC
is a ground for suspension or revocation of the registration of
securities pursuant to Sec 13.1 and 54.1 of the SRC to wit:
13.1. The Commission may reject a registration statement and
refuse registration of the security thereunder, or revoke the
effectivity of a registration statement and the registration of
the security thereunder after due notice and hearing by issuing
an order to such effect, setting forth its findings in respect
thereto, if it finds that:
a) The issuer:
xxx xxx xxx
(ii) Has violated any of the provisions of this Code, the rules
promulgated pursuant thereto, or any order of the
Commission of which the issuer has notice in connection with
the offering for which a registration statement has been filed;
54.1. If, after due notice and hearing, the Commission finds
that: (a) There is a violation of this Code, its rules, or its
orders; (b) Any registered broker or dealer, associated person
thereof has failed reasonably to supervise, with a view to
preventing violations, another person subject to supervision
who commits any such violation;
(c) Any registrant or other person has, in a registration
statement or in other reports, applications, accounts, records or
documents required by law or rules to be filed with the
Commission, made any
untrue statement of a material fact, or omitted to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading; or, in the case of an
underwriter, has failed to conduct an inquiry with reasonable
diligence to insure that a registration statement is accurate and
complete in all material respects;
or (d) Any person has refused to permit any lawful
examinations into its affairs, it shall, in its discretion, and
subject only to the limitations hereinafter prescribed, impose
any or all of the following sanctions as may be appropriate in
light of the facts and circumstances:
(i) Suspension, or revocation of any registration for the
offering of securities.
SC further held that the essence of due process is simply
giving an opportunity to be heard, or as applied to
administrative proceedings, an opportunity to explain one's
side or an opportunity to seek a reconsideration of the action
or ruling complained of. What the law prohibits is not the
absence of previous notice but the absolute absence thereof
and the lack of opportunity to be heard.
The due notice of revocation given to URPHI through the SEC
Order dated July 27, 2004, wherein the SEC expressly warned
that such registration would be revoked should it persistently
fail to comply with the said requirements. Still, URPHI
continuously failed to submit the required reports. Due notice
simply means the information must be given or made to a
particular person or to the public within a legally mandated
period of time so that its recipient will have the opportunity to
respond to a situation or to allegations that affect the
individual's or public's legal rights or duties.
Furthermore, the SC notes that SEC has both regulatory and
adjudicative functions. The revocation of registration of
securities and permit to sell them to the public is not an
exercise of the SEC's quasi-judicial power, but of its
regulatory power.
The case used by URPHI which is the Globe Telecom ruling is
different from the case at hand. The SC in Globe Case ruled
that the fined imposed by the NTC without notice and hearing
was null and void due to the denial of petitioner's right to due
process. The revocation of URPHI's registration of securities
and permit to sell them to the public cannot be considered a
penalty but a withdrawal of a privilege, which regulatory
power the SEC validly exercised after giving it due notice and
opportunity to be heard.
Thus, petition is granted and the decision of CA is reversed.
The requirements of due notice and hearing under Section 13.1
and 54.1 of the SRC were substantially complied with.
Comelec vs Español : 149164-73 : December 10, 2003 (417
SCRA 554)
Facts: Bautista filed before the LAw Department of the
Comelec a complaint against certain individuals for vote
buying. By virtue of a resolution, an information was filed
against respondents with the RTC. Meanwhile, criminal
complaints were filed against Bautista's witnesses for vote
selling.
the Law Department of the COMELEC later on recommended
that the resolutionof the Office of the Cavite Provincial
Prosecutor be nullified because the accused are exempt and
that the prosecution of election offesnses were under the sole
cotrol of the COMELEC.
Issue: Whether or not the review of the Provincial Prosecutor's
resolution by COMELEC and the subsequent request for its
nullification was proper.
Held: Under Article IX, Section 2(b) of the Constitution, the
petitioner is empowered to investigate and, when appropriate,
prosecute election offenses. The grant by the Constitution to
the petitioner of the express power to investigate and
prosecute election offenses is intended to enable the petitioner
to assure the people of a fine, orderly, honest, peaceful and
credible election. Under Section 265 of the Omnibus Election
Code, the petitioner, through its duly authorized legal officers,
has the exclusive power to conduct preliminary investigation
of all election offenses punishable under the Omnibus Election
Code, and to prosecute the same. The petitioner may avail of
the assistance of the prosecuting arms of the government but
as held in Margarejo vs.Escoses until revoked, the continuing
authority of the Provincial or City Prosecutors stays.
The power to grant exemptions is vested solely on the
petitioner. This power is concomitant with its authority to
enforce election laws, investigate election offenses and
prosecute those committing the same. The exercise of such
power should not be interfered with by the trial court. Neither
may this Court interfere with the petitioner’s exercise of its
discretion in denying or granting exemptions under the law,
unless the petitioner commits a grave abuse of its discretion
amounting to excess or lack of jurisdiction.
OLIVIA DA SILVA CERAFICA v. COMMISSION ON
ELECTIONS
G.R. No. 205136, 02 December 2014, EN BANC, (Perez, J.)
Facts: COMELEC has the ministerial duty to receive and
acknowledge receipt of COCs. The question of eligibility or
ineligibility of a candidate is thus beyond the usual and proper
cognizance of the COMELEC. On October 2012, Kimberly
filed her certificate of candidacy (COC) for Councilor, City of
Taguig for the 2013 Elections. Her COC stated that she was
born on 29 October 1992, or that she will be twenty (20) years
of age on the day of the
elections, in contravention of the requirement that one must be
at least twenty-three (23) years of age on the day of the
elections. As such, Kimberly was summoned to a clarificatory
hearing due to the age qualification. Instead of attending the
hearing, Kimberly opted to file a sworn Statement of
Withdrawal of COC. Simultaneously, Olivia filed her own
COC as a substitute of Kimberly.
The COMELEC rendered a decision ordering the cancellation
of Kimberly’s COC, and the denial of the substitution of
Kimberly by Olivia.
COMELEC argued that Olivia cannot substitute Kimberly as
the latter was never an official candidate because she was not
eligible for the post by reason of her age, and that; moreover,
the COC that Kimberly filed was invalid because it contained
a material misrepresentation relating to her eligibility for the
office she seeks to be elected to. Olivia countered that
although Kimberly may not be qualified to run for election
because of her age, it cannot be denied that she still filed a
valid COC and was, thus, an official candidate who may be
substituted. Olivia also claimed that there was no ground to
cancel or deny Kimberly’s COC on the ground of lack of
qualification and material misrepresentation because she did
not
misrepresent her birth date to qualify for the position of
councilor, and as there was no deliberate attempt to mislead
the electorate, which is precisely why she withdrew her COC
upon learning that she was not qualified.
ISSUE: Was there a valid substitution?
RULING: Yes, in declaring that Kimberly, being under age,
could not be considered to have filed a valid COC and, thus,
could not be validly substituted by Olivia, we find that the
COMELEC gravely abused its discretion. Firstly, subject to its
authority over nuisance candidates and its power to deny due
course to or cancel COCs under Sec. 78, Batas Pambansa
(B.P.) Blg. 881, the COMELEC has the ministerial duty to
receive and acknowledge receipt of COCs. The question of
eligibility or ineligibility of a candidate is thus beyond the
usual and proper cognizance of the COMELEC.
The next question then is whether Olivia complied with all of
the requirements for a valid substitution; we answer in the
affirmative. First, there was a valid withdrawal of Kimberly’s
COC after the last day for the filing of COCs; second, Olivia
belongs to and is certified to by the same political party to
which Kimberly belongs; and third, Olivia filed her COC not
later than mid-day of election day.
RUFINO O. ESLAO, in his capacity as President of
Pangasinan State University, vs. COMMISSION ON AUDIT,
respondent
FACTS: On 9 December 1988, PSU entered into a
Memorandum of Agreement ("MOA") with the Department of
Environment and Natural Resources ("DENR") for the
evaluation of eleven (11) government reforestation operations
in Pangasinan. The evaluation project was part of the
commitment of the Asian Development Bank ("ADB") under
the ADB/OECF Forestry Sector Program Loan to the Republic
of the Philippines and was one among identical project
agreements entered into by the DENR with sixteen (16) other
state universities. Per advice of the PSU Auditor-in-Charge
with respect to the payment of honoraria and per diems of
PSU personnel engaged in the review and evaluation project,
PSU Vice President for Research and Extension and Assistant
Project Director Victorino P. Espero requested the Office of
the President, PSU, to have the University's Board of Regents
("BOR") confirm the appointments or designations of involved
PSU personnel including the rates of honoraria and per diems
corresponding to their specific roles and functions. The BOR
approved the MOA and later on PSU issued Voucher No.
8902007 representing the amount of P70, 375 for payment of
honoraria to PSU personnel engaged in the project. Later,
however, the approved honoraria rates were found to be
somewhat higher than the rates provided for in the guidelines
of National Compensation Circular ("NCC") No. 53.
Accordingly, the amounts were adjusted downwards to
conform to NCC No. 53. Adjustments were made by
deducting amounts from subsequent disbursements of
honoraria. By June 1989, NCC No. 53 was being complied
with. Bonifacio Icu, COA resident auditor at PSU, alleging
that there were excess payments of honoraria, issued a "Notice
of Disallowance" disallowing P64,925 from the amount of
P70,37 stated in Voucher No. 8902007, mentioned earlier. The
resident auditor based his action on the premise that
Compensation Policy Guidelines ("CPG") No. 80-4 issued by
the Department of Budget and Management which provided
for lower rates than NCC No. 53, also issued by the
Department of Budget and Management, was the schedule for
honoraria and per diems applicable to work done under the
MOA of 9 December 1988between the PSU and the DENR.
ISSUE: Whether or not the evaluation project is in fact a
"special project" and that there were excess of payments of
honoraria
HELD:
Sec. 2.1 of CPG No. 80-4 defines "special project" as an inter-
agency or inter-committee activity or undertaking by a
composite group of officials/employees from various agencies
which [activity or undertaking] is not among the regular and
primary functions of the agencies involved. COA, under its
constitutional mandate, is not authorized to substitute its own
judgment for any applicable law or administrative regulation
with the wisdom or propriety of which, however, it does not
agree, at least not before such law or regulation is set aside by
the authorized agency of government–i.e., the courts–as
unconstitutional or illegal and void. The COA, like all other
government agencies, must respect the presumption of legality
and constitutionality to which statutes and administrative
regulations are entitled until such statute or regulation is
repealed or amended, or until set aside in appropriate case by a
competent court and ultimately the Supreme Court.
BPI Leasing Corp vs Court of Appeals
FACTS: BLC is a corporation engaged in the business of
leasing properties. For the calendar year 1986, BLC paid the
Commissioner of Internal Revenue (CIR) a total of
P1,139,041.49 representing 4% contractors percentage tax
then imposed by Section 205 of the National Internal Revenue
Code (NIRC), based on its gross rentals from equipment
leasing for the said year amounting to P27,783,725.42.
On November 10, 1986, the CIR issued Revenue Regulation
19-86. Section 6.2 thereof provided that finance and leasing
companies registered under Republic Act 5980 shall be subject
to gross receipt tax of 5%-3%-1% on actual income earned.
This means that companies registered under Republic Act
5980, such as BLC, are not liable for contractors percentage
tax under Section 205 but are, instead, subject to gross receipts
tax under Section 260 (now Section 122) of the NIRC. Since
BLC had earlier paid the aforementioned contractors
percentage tax, it re-computed its tax liabilities under the gross
receipts tax and arrived at the amount of P361,924.44.
On April 11, 1988, BLC filed a claim for a refund with the
CIR for the amount of P777,117.05, representing the
difference between the P1,139,041.49 it had paid as
contractors percentage tax and P361,924.44 it should have
paid for gross receipts tax. Four days later, to stop the running
of the prescriptive period for refunds, petitioner filed a petition
for review with the CTA. CTA dismissed the petition and
denied BLCs claim of refund. The CTA held that Revenue
Regulation 19-86, as amended, may only be applied
prospectively such that it only covers all leases written on or
after January 1, 1987. The CTA ruled that, since BLCs rental
income was all received prior to 1986, it follows that this was
derived from lease transactions prior to January 1, 1987, and
hence, not covered by the revenue regulation.
ISSUE:
1) Whether or not Revenue Regulation 19-86 is legislative
rather than interpretative in character
RULING: The Court finds the questioned revenue regulation
to be legislative in nature. LEGISLATIVE
2) Whether or not its application should be prospective or
retroactive. PROSPECTIVE
RULING:
1) Section 1 of Revenue Regulation 19-86 plainly states that it
was promulgated pursuant to Section 277 of the NIRC.
Section 277 (now Section 244) is an express grant of authority
to the Secretary of Finance to promulgate all needful rules and
regulations for the effective enforcement of the provisions of
the NIRC. The Court recognized that the application of
Section 277 calls for none other than the exercise of quasi-
legislative or rule-making authority. Verily, it cannot be
disputed that Revenue Regulation 19-86 was issued pursuant
to the rule-making power of the Secretary of Finance, thus
making it legislative, and not interpretative as alleged by BLC.
2) The principle is well entrenched that statutes, including
administrative rules and regulations, operate prospectively
only, unless the legislative intent to the contrary is manifest by
express terms or by necessary implication. In the present case,
there is no indication that the revenue regulation may operate
retroactively. Furthermore, there is an express provision
stating that it shall take effect on January 1, 1987, and that it
shall be applicable to all leases written on or after the said
date. Being clear on its prospective application, it must be
given its literal meaning and applied without further
interpretation. Thus, BLC is not in a position to invoke the
provisions of Revenue Regulation 19-86 for lease rentals it
received prior to January 1, 1987.
LA BUGAL B’LAAN TRIBAL ASSOCIATION INC., et. al.
v. V. O. RAMOS, Secretary Department of Environment and
Natural Resources; H. RAMOS, Director, Mines and
Geosciences Bureau (MGB-DENR); R. TORRES, Executive
Secretary; and WMC (PHILIPPINES) INC.
The constitutional provision allowing the President to enter
into FTAA is a exception to the rule that participation in the
nation’s natural resources is reserved exclusively to Filipinos.
Provision must be construed strictly against their enjoyment
by non-Filipinos.
RA 7942 (The Philippine Mining Act) took effect on April 9,
1995. Before the effectivity of RA 7942, or on March 30,
1995, the President signed a Financial and Technical
Assistance Agreement (FTAA) with WMCP, a corporation
organized under Philippine laws, covering close to 100,000
hectares of land in South Cotabato, Sultan Kudarat, Davao del
Sur and North Cotabato. On August 15, 1995, the
Environment Secretary Victor Ramos issued DENR
Administrative Order 95-23, which was later repealed by
DENR Administrative Order 96-40, adopted on December 20,
1996.
Petitioners prayed that RA 7942, its implementing rules, and
the FTAA between the government and WMCP be declared
unconstitutional on ground that they allow fully foreign owned
corporations like WMCP to exploit, explore and develop
Philippine mineral resources in contravention of Article XII
Section 2 paragraphs 2 and 4 of the Charter.
In January 2001, WMC – a publicly listed Australian mining
and exploration company – sold its whole stake in WMCP to
Sagittarius Mines, 60% of which is owned by Filipinos while
40% of which is owned by Indophil Resources, an Australian
company. DENR approved the transfer and registration of the
FTAA in Sagittarius‘ name but Lepanto Consolidated assailed
the same. The latter case is still pending before the Court of
Appeals.
EO 279, issued by former President Aquino on July 25, 1987,
authorizes the DENR to accept, consider and evaluate
proposals from foreign owned corporations or foreign
investors for contracts or agreements involving wither
technical or financial assistance for large scale exploration,
development and utilization of minerals which upon
appropriate recommendation of the (DENR) Secretary, the
President may execute with the foreign proponent. WMCP
likewise contended that the annulment of the FTAA would
violate a treaty between the Philippines and Australia which
provides for the protection of Australian investments.
ISSES:
1. Whether or not the Philippine Mining Act is
unconstitutional for allowing fully foreign-owned corporations
to exploit the Philippine mineral resources. 2. Whether or not
the FTAA between the government and WMCP is a ―service
contract that permits fully foreign owned companies to exploit
the Philippine mineral resources.
HELD:
First Issue: RA 7942 is Unconstitutional
RA 7942 or the Philippine Mining Act of 1995 is
unconstitutional for permitting fully foreign owned
corporations to exploit the Philippine natural resources.
Article XII Section 2 of the 1987 Constitution retained the
Regalian Doctrine which states that ―All lands of the public
domain, waters, minerals, coal, petroleum, and other minerals,
coal, petroleum, and other mineral oils, all forces of potential
energy, fisheries, forests or timber, wildlife, flora and fauna,
and other natural resources are owned by the State. The same
section also states that, ―the exploration and development
and utilization of natural resources shall be under the full
control and supervision of the State.
Conspicuously absent in Section 2 is the provision in the 1935
and 1973 Constitution authorizing the State to grant licenses,
concessions, or leases for the exploration, exploitation,
development, or utilization of natural resources. By such
omission, the utilization of inalienable lands of the public
domain through license, concession or lease is no longer
allowed under the 1987 Constitution.
Under the concession system, the concessionaire makes a
direct equity investment for the purpose of exploiting a
particular natural resource within a given area. The concession
amounts to complete control by the concessionaire over the
country‘s natural resource, for it is given exclusive and
plenary rights to exploit a particular resource at the point of
extraction.
The 1987 Constitution, moreover, has deleted the phrase
―management or other forms of assistance in the 1973
Charter. The present Constitution now allows only ―technical
and financial assistance. The management and the operation of
the mining activities by foreign contractors, the primary
feature of the service contracts was precisely the evil the
drafters of the 1987 Constitution sought to avoid.
The constitutional provision allowing the President to enter
into FTAAs is an exception to the rule that participation in the
nation‘s natural resources is reserved exclusively to Filipinos.
Accordingly, such provision must be construed strictly against
their enjoyment by non-Filipinos. Therefore, RA 7942 is
invalid insofar as the said act authorizes service contracts.
Although the statute employs the phrase ―financial and
technical agreements in accordance with the 1987
Constitution, its pertinent provisions actually treat these
agreements as service contracts that grant beneficial
ownership to foreign contractors contrary to the fundamental
law.
The underlying assumption in the provisions of the law is that
the foreign contractor manages the mineral resources just like
the foreign contractor in a service contract. By allowing
foreign contractors to manage or operate all the aspects of the
mining operation, RA 7942 has, in effect, conveyed beneficial
ownership over the nation‘s mineral resources to these
contractors, leaving the State with nothing but bare title
thereto.
The same provisions, whether by design or inadvertence,
permit a circumvention of the constitutionally ordained 60-
40% capitalization requirement for corporations or
associations engaged in the exploitation, development and
utilization of Philippine natural resources.
When 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, then if some parts are
unconstitutional, all provisions that are thus dependent,
conditional or connected, must fail with them.
Under Article XII Section 2 of the 1987 Charter, foreign
owned corporations are limited only to merely technical or
financial assistance to the State for large scale exploration,
development and utilization of minerals, petroleum and other
mineral oils.
Second Issue: RP Government-WMCP FTAA is a Service
Contract
The FTAA between he WMCP and the Philippine government
is likewise unconstitutional since the agreement itself is a
service contract. Section 1.3 of the FTAA grants WMCP a
fully foreign owned corporation, the exclusive right to explore,
exploit, utilize and dispose of all minerals and by-products that
may be produced from the contract area. Section 1.2 of the
same agreement provides that EMCP shall provide all
financing, technology, management, and personnel necessary
for the Mining Operations.
These contractual stipulations and related provisions in the
FTAA taken together, grant WMCP beneficial ownership over
natural resources that properly belong to the State and are
intended for the benefit of its citizens. These stipulations are
abhorrent to the 1987 Constitution. They are precisely the
vices that the fundamental law seeks to avoid, the evils that it
aims to suppress. Consequently, the contract from which they
spring must be struck down.
SECURITY BANK AND TRUST COMPANY v RTC-
MAKATI
G.R. No. 113926
October 23, 1996
FACTS: In 1983, Eusebio acquired 3 separate loans from
Security Bank amounting to P265k. The agreed interest rate
was 23% per annum. The promissory note was freely and
voluntarily signed by both parties. Leia Ventura was the co-
maker. Eusebio defaulted from paying. Security Bank sued for
collection.
DECISION OF LOWER COURTS:
* RTC: Judge Gorospe of the Makati RTC ordered Eusebio to
pay but he lowered the interest rate to 12% per annum.
* directly to SC in petition for certiorari.
ISSUES & RULING:
1. Should the rate of interest on a loan or forbearance of
money, goods or credits, as stipulated in a contract, far in
excess of the ceiling prescribed under or pursuant to the Usury
Law, prevail over Section 2 of Central Bank Circular No. 905
which prescribes that the rate of interest thereof shall continue
to be 12% per annum? or whether or not the 23% rate of
interest per annum agreed upon by petitioner bank and
respondents is allowable and not against the Usury Law?
Yes, the rate per contract prevails.
From the examination of the records, it appears that indeed the
agreed rate of interest as stipulated on the three (3) promissory
notes is 23% per annum. The applicable provision of law is
the Central Bank Circular No. 905 which took effect on
December 22, 1982:
Sec. 1. The rate of interest, including commissions, premiums,
fees and other charges, on a loan or forbearance of any money,
goods or credits, regardless of maturity and whether secured or
unsecured, that may be charged or collected by any person,
whether natural or judicial, shall not be subject to any ceiling
prescribed under or pursuant to the Usury Law, as amended.
Only in the absence of stipulations will the 12% rate be
applied or if the stipulated rate is grossly excessive.
Further, Eusebio never questioned the rate. He merely
expressed to negotiate the terms and conditions. The
promissory notes were signed by both parties voluntarily.
Therefore, stipulations therein are binding between them.
2. Do the Courts have the discretion to arbitrarily override
stipulated interest rates of promissory notes and stipulated
interest rates of promissory notes and thereby impose a 12%
interest on the loans, in the absence of evidence justifying the
imposition of a higher rate?
NO. The rate of interest was agreed upon by the parties freely.
Significantly, respondent did not question that rate. It is not for
respondent court a quo to change the stipulations in the
contract where it is not illegal. Furthermore, Article 1306 of
the New Civil Code provides that contracting parties may
establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to
law, morals, good customs, public order, or public policy. We
find no valid reason for the respondent court a quo to impose a
12% rate of interest on the principal balance owing to
petitioner by respondent in the presence of a valid stipulation.
In a loan or forbearance of money, the interest due should be
that stipulated in writing, and in the absence thereof, the rate
shall be 12% per annum. Hence, only in the absence of a
stipulation can the court impose the 12% rate of interest.
APPLICABLE PROVISION OF LAW:
Central Bank Circular No. 905 which took effect on December
22, 1982, particularly Sections 1 and 2 which state:
Sec. 1. The rate of interest, including commissions, premiums,
fees and other charges, on a loan or forbearance of any money,
goods or credits, regardless of maturity and whether secured or
unsecured, that may be charged or collected by any person,
whether natural or judicial, shall not be subject to any ceiling
prescribed under or pursuant to the Usury Law, as amended.
Sec. 2. The rate of interest for the loan or forbearance of any
money, goods or credits and the rate allowed in judgments, in
the absence of express contract as to such rate of interest, shall
continue to be twelve per cent (12%) per annum.
All the promissory notes were signed in 1983 and, therefore,
were already covered by CB Circular No. 905. Contrary to the
claim of respondent court, this circular did not repeal nor in
anyway amend the Usury Law but simply suspended the
latter's effectivity.
EXECUTIVE SECRETARY VS SOUTHWING HEAVY
INDUSTRIES, INC.
G.R. NO. 164171. FEBRUARY 20, 2006
FACTS: On December 12, 2002, President Gloria Macapagal
Arroyo issued Executive Order 156 entitled "Providing for a
comprehensive industrial policy and directions for the motor
vehicle development program and its implementing
guidelines." The said provision prohibits the importation of all
types of used motor vehicles in the country including the
Subic Bay Freeport, or the Freeport Zone, subject to a few
exceptions. Consequently, three separate actions for
declaratory relief were filed by Southwing Heavy Industries
Inc., Subic Integrated Macro Ventures Corp, and Motor
Vehicle Importers Association of Subic Bay Freeport Inc.
praying that judgment be rendered declaring Article 2,
Section3.1 of the EO 156 unconstitutional and illegal.
The RTC rendered a summary judgment declaring that Article
2, Section 3.1 of EO 156 constitutes an unlawful usurpation of
legislative power vested by the Constitution with Congress
and that the proviso is contrary to the mandate of Republic Act
7227(RA7227) or the Bases Conversion and Development Act
of 1992 which allows the free flow of goods and capital within
the Freeport.
Appeal in the CA was denied.
ISSUES: Whether or not the Executive Order banning the
importation of used vehicles through the Free Trade Zone is
valid.
HELD: NO. EO 156, exceeded the scope of its application by
extending the prohibition on the importation of used cars to
the Freeport, which RA 7227, considers to some extent, a
foreign territory. The domestic industry which the EO seeks
to protect is actually the "customs territory" which is defined
under the Rules and Regulations Implementing RA 7227
which states: "the portion of the Philippines outside the Subic
Bay Freeport where the Tariff and Customs Code of the
Philippines and other national tariff and customs laws are in
force and effect."
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs. SOLIDBANK CORPORATION, respondent. (G.R. No.
148191; November 25, 2003)
FACTS:
In 1995, Solidbank filed its Quarterly Percentage Tax Returns
(QPTR) reflecting gross receipts of more than 1.4 billion
pesos. Hence, it wanted to pay gross receipts tax at more than
73 million pesos.
Using ABC v. CIR, Solidbank alleged that the total gross
receipts in the amount of P1,474,691,693.44 included the sum
of P350,807,875.15 representing gross receipts from passive
income which was already subjected to 20% final withholding
tax. So, it wants to get tax refund or tax credit certification for
more than 3.5 million pesos. Without waiting for an action
from the CIR, Solidbank filed a petition for review with the
CTA to toll the 2-year prescriptive period for judicial refund
claims for overpaid internal revenue tax.
CTA ordered CIR to refund. Appeal to CA was unsuccessful.
ISSUE:
[1] Is the 20% FWT a part of the taxable gross receipts?
[2] Should accrued income form part of the GRT
computation?
[3] Is earmarking the same as withholding?
[4] Is Solidbank entitled to tax refund or tax credit
certification?
[5] Is there double taxation in this case?
HELD:
[1] Yes, the amount of interest income withheld in payment of
the 20% FWT forms part of gross receipts in computing for
the GRT on banks.
Under the Tax Code, the earnings of banks from passive
income are subject to a twenty percent final withholding tax
(20% FWT). This tax is withheld at source and is thus not
actually and physically received by the banks, because it is
paid directly to the government by the entities from which the
banks derived the income. Apart from the 20% FWT, banks
are also subject to a five percent gross receipts tax (5% GRT)
which is imposed by the Tax Code on their gross receipts,
including the passive income.
Since the 20% FWT is constructively received by the banks
and forms part of their gross receipts or earnings, it follows
that it is subject to the 5% GRT. After all, the amount withheld
is paid to the government on their behalf, in satisfaction of
their withholding taxes. That they do not actually receive the
amount does not alter the fact that it is remitted for their
benefit in satisfaction of their tax obligations.
Stated otherwise, the fact is that if there were no withholding
tax system in place in this country, this 20 percent portion of
the passive income of banks would actually be paid to the
banks and then remitted by them to the government in
payment of their income tax. The institution of the
withholding tax system does not alter the fact that the 20
percent portion of their passive income constitutes part of their
actual earnings, except that it is paid directly to the
government on their behalf in satisfaction of the 20 percent
final income tax due on their passive incomes.
[2] Accrual should not be confused with the concept of
constructive possession or receipt as earlier discussed.
Petitioner correctly points out that income that is merely
accrued -- earned, but not yet received -- does not form part of
the taxable gross receipts; income that has been received,
albeit constructively, does
[3] Earmarking is not the same as withholding. Amounts
earmarked do not form part of gross receipts, because,
although delivered or received, these are by law or regulation
reserved for some person other than the taxpayer. On the
contrary, amounts withheld form part of gross receipts,
because these are in constructive possession and not subject to
any reservation, the withholding agent being merely a conduit
in the collection process.
[4] No, Solidbank is not entitled to tax refund or tax credit
certification. Exemptions are the exception in taxation. No
exemptions are normally allowed when a GRT is imposed. It
is precisely designed to maintain simplicity in the tax
collection effort of the government and to assure its steady
source of revenue even during an economic slump.
[5] No, there is no double taxation here. The subject matter of
the FWT is the passive income generated in the form of
interest on deposits and yield on deposit substitutes, while the
subject matter of the GRT is the privilege of engaging in the
business of banking. Also, although both taxes are national in
scope because they are imposed by the same taxing authority
-- the national government under the Tax Code -- and operate
within the same Philippine jurisdiction for the same purpose of
raising revenues, the taxing periods they affect are different.
The FWT is deducted and withheld as soon as the income is
earned, and is paid after every calendar quarter in which it is
earned. On the other hand, the GRT is neither deducted nor
withheld, but is paid only after every taxable quarter in which
it is earned.
REVIEW CENTER ASSOCIATION OF PHILIPPINES v.
EXECUTIVE SECRETARY EDUARDO ERMITA, GR No.
180046, 2009-04-02
Facts:
On 11 and 12 June 2006, the Professional Regulation
Commission (PRC) conducted the Nursing Board
Examinations nationwide. In June 2006, licensure applicants
wrote the PRC to report that handwritten copies of two sets of
examinations were circulated during the examination period...
among the examinees reviewing at the R.A. Gapuz Review
Center and Inress Review Center.
George Cordero, Inress Review Center's President, was then
the incumbent President of the Philippine Nurses Association.
On 18 August 2006, the Court of Appeals restrained the PRC
from proceeding with the oath-taking of the successful
examinees set on 22 August 2006.
Consequently, President Gloria Macapagal-Arroyo (President
Arroyo) replaced all the members of the PRC's Board of
Nursing. President Arroyo also ordered the examinees to re-
take the Nursing Board Examinations.
On 8 September 2006, President Arroyo issued EO 566 which
authorized the CHED to supervise the establishment and
operation of all review centers and similar entities in the
Philippines.
the Review Center Association of the Philippines (petitioner),
an organization of independent review centers, asked the
CHED to "amend, if not withdraw" the IRR arguing, among
other things, that giving permits to... operate a review center to
Higher Education Institutions (HEIs) or consortia of HEIs and
professional organizations will effectively abolish independent
review centers.
EO 566- authorized ched to supervise the establishment and
operation of all review centers
In a letter dated 3 January 2007,[6] Chairman Puno wrote
petitioner, through its President Jose Antonio Fudolig
(Fudolig), that to suspend the implementation of the IRR
would be inconsistent with the mandate of EO 566.
On 7 May 2007, the CHED approved the RIRR. On 22 August
2007, petitioner filed before the CHED a Petition to
Clarify/Amend Revised Implementing Rules and
Regulations[8] praying for a ruling:
Amending the RIRR by excluding independent review centers
from the coverage of the CHED;
Clarifying the meaning of the requirement for existing review
centers to tie-up or be integrated with HEIs, consortium or
HEIs and PRC-recognized professional associations with
recognized programs, or in the alternative, to convert into
schools; and
Revising the rules to make it conform with Republic Act No.
7722 (RA 7722)[9] limiting the CHED's coverage to public
and private institutions of higher education as well as degree-
granting programs in post-secondary educational institutions.
CHED was given the authority to regulate and establish
review centers uner EO 566
While it may be true that regulation of review centers is not
one of the mandates of CHED under Republic Act 7722,
however, on September 8, 2006, Her Excellency, President
Gloria Macapagal-Arroyo, issued Executive Order No. 566
directing the Commission on Higher
Education to regulate the establishment and operation of
review centers and similar entities in the entire country.
With the issuance of the aforesaid Executive Order, the CHED
now is the agency that is mandated to regulate the
establishment and operation of all review centers as provided
for under Section 4 of the Executive Order which provides that
"No review center or similar... entities shall be established
and/or operate review classes without the favorable expressed
indorsement of the CHED and without the issuance of the
necessary permits or authorizations to conduct review classes.
x x x"
pertinent provision of the IRR
Section 1. Authority to Establish and Operate - Only CHED
recognized, accredited and reputable HEIs may be authorized
to establish and operate review center/course by the CHED
upon full compliance with the conditions and requirements
provided herein and in other pertinent laws,... rules and
regulations. In addition, a consortium or consortia of qualified
schools and/or entities may establish and operate review
centers or conduct review classes upon compliance with the
provisions of these Rules.
Issues:
The issues raised in this case are the following:
Whether EO 566 is an unconstitutional exercise by the
Executive of legislative power as it expands the CHED's
jurisdiction; and
Whether the RIRR is an invalid exercise of the Executive's
rule-making power.
Ruling:
The petition has merit.
The propensity of litigants and lawyers to disregard the
hierarchy of courts in our judicial system by seeking relief
directly from this Court must be put to a halt for two reasons:
(1) it would be an imposition upon the precious time of this
Court; and (2) it would... cause an inevitable and resultant
delay, intended or otherwise, in the adjudication of cases,
which in some instances had to be remanded or referred to the
lower court as the proper forum under the rules of procedure,
or as better equipped to resolve the issues because this
Court is not a trier of facts.
The rule, however, is not absolute, as when exceptional and
compelling circumstances justify the exercise of this Court of
its primary jurisdiction
The alleged violation of the Constitution by the Executive
Department when it issued EO 566 justifies the exercise by the
Court of its primary jurisdiction over the case. The Court is
not precluded from brushing aside technicalities and taking
cognizance of an... action due to its importance to the public
and in keeping with its duty to determine whether the other
branches of the Government have kept themselves within the
limits of the Constitution.
EO 566 Expands the Coverage of RA 7722
The OSG justifies its stand by claiming that the term
"programs x x x of higher learning" is broad enough to include
programs offered by review centers.
We do not agree.
Section 3 of RA 7722 provides:
Sec. 3. Creation of Commission on Higher Education. - In
pursuance of the abovementioned policies, the Commission on
Higher Education is hereby created, hereinafter referred to as
the Commission.
The Commission shall be independent and separate from the
Department of Education, Culture and Sports (DECS), and
attached to the Office of the President for administrative
purposes only. Its coverage shall be both public and private
institutions of higher education as well... as degree-granting
programs in all post-secondary educational institutions, public
and private. (Emphasis supplied)
Neither RA 7722 nor CHED Order No. 3, series of 1994
(Implementing Rules of RA 7722)[24] defines an institution of
higher learning or a program of higher learning.
Further, Articles 6 and 7 of the Implementing Rules provide:
Article 6. Scope of Application. - The coverage of the
Commission shall be both public and private institutions of
higher education as well as degree granting programs in all
post-secondary educational institutions, public and private.
These Rules shall apply to all public and private educational
institutions offering tertiary degree programs.
The establishment, conversion, or elevation of degree-granting
institutions shall be within the responsibility of the
Commission.
Clearly, HEIs refer to degree-granting institutions, or those
offering tertiary degree or post-secondary programs. In fact,
Republic Act No. 8292 or the Higher Education
Modernization Act of 1997 covers chartered state universities
and colleges. State universities and colleges... primarily offer
degree courses and programs.
The scopes of EO 566 and the RIRR clearly expand the
CHED's coverage under RA 7722. The CHED's coverage
under RA 7722 is limited to public and private institutions of
higher education and degree-granting programs in all public
and private post-secondary educational... institutions. EO 566
directed the CHED to formulate a framework for the
regulation of review centers and similar entities
Usurpation of Legislative Power

The President has no inherent or delegated legislative power to
amend the functions of the CHED under RA 7722. Legislative
power is the authority to make laws and to alter or repeal
them,[32] and this power is vested with the Congress under
Section 1,... Article VI of the 1987 Constitution which states:
Section 1. The legislative power shall be vested in the
Congress of the Philippines which shall consist of a Senate
and a House of Representatives, except to the extent reserved
to the people by the provision on initiative and referendum.
The line that delineates Legislative and Executive power is not
indistinct. Legislative power is "the authority, under the
Constitution, to make laws, and to alter and repeal them."
The Constitution, as the will of the people in their original,
sovereign and... unlimited capacity, has vested this power in
the Congress of the Philippines.
Main issue relating to Art. VII
As head of the Executive Department, the President is the
Chief Executive. He represents the government as a whole and
sees to it that all laws are enforced by the officials and
employees of his department. He has control over the
executive department, bureaus and offices. This... means that
he has the authority to assume directly the functions of the
executive department, bureau and office, or interfere with the
discretion of its officials. Corollary to the power of control, the
President also has the duty of supervising the enforcement of
laws for the... maintenance of general peace and public order.
Thus, he is granted administrative power over bureaus and
offices under his control to enable him to discharge his duties
effectively.
Administrative power is concerned with the work of applying
policies and enforcing orders as determined by proper
governmental organs. It enables the President to fix a uniform
standard of administrative efficiency and check the official
conduct of his agents. To this end, he... can issue
administrative orders, rules and regulations.
"Sec. 3. Administrative Orders. - Acts of the President which
relate to particular aspects of governmental operation in
pursuance of his duties as administrative head shall be
promulgated in administrative orders."
An administrative order is an ordinance issued by the
President which relates to specific aspects in the
administrative operation of government. It must be in harmony
with the law and should be for the sole purpose of
implementing the law and carrying out the legislative... policy.
x x x.
Since EO 566 is an invalid exercise of legislative power, the
RIRR is also an invalid exercise of the CHED's quasi-
legislative power.
Administrative agencies exercise their quasi-legislative or
rule-making power through the promulgation of rules and
regulations.[36] The CHED may only exercise its rule-making
power within the confines of its jurisdiction under RA 7722.
The RIRR covers... review centers and similar entities which
are neither institutions of higher education nor institutions
offering degree-granting programs.
Exercise of Police Power
Police power primarily rests with the legislature although it
may be exercised by the President and administrative boards
by virtue of a valid delegation
Here, no delegation of police power exists under RA 7722
authorizing the President... to regulate the operations of non-
degree granting review centers.
Republic Act No. 8981 is Not the Appropriate Law
There is no doubt that a principal mandate of the PRC is to
preserve the integrity of licensure examinations. The PRC has
the power to adopt measures to preserve the integrity and
inviolability of licensure examinations. However, this power
should properly be interpreted to... refer to the conduct of the
examinations
These powers of the PRC have nothing to do at all with the
regulation of review centers.
However, this power has nothing to do with the regulation of
review centers. The PRC has the power to bar PRB members
from conducting review classes in review centers. However,
to... interpret this power to extend to the power to regulate
review centers is clearly an unwarranted interpretation of RA
8981.
Section 7(y) of RA 8981 giving the PRC the power to perform
"such other functions and duties as may be necessary to carry
out the provisions" of RA 8981 does not extend to the
regulation of review centers. There is absolutely nothing in
RA 8981 that mentions regulation by the
PRC of review centers.
Similarly, the PRC has no mandate to regulate similar entities
whose reviewees will not even... take any licensure
examination given by the PRC.
WHEREFORE, we GRANT the petition and the petition-in-
intervention. We DECLARE Executive Order No. 566 and
Commission on Higher Education Memorandum Order No.
30, series of 2007 VOID for being unconstitutional.
SO ORDERED.