Limits on Rule Making Power

LIMITS ON RULE MAKING POWER OLSEN v. ALDANESE APRIL 28, 1922 | JOHNS, J. | LIMITS ON RULE-MAKING POWER PETITIONER: Walter E. Olsen & Co., Inc. RESPONDENTS: Vicente Aldanese, as Insular Collector of Customs, and W. Trinidad, as Collector of Internal Revenue SUMMARY: Olsen & Co. assails provisions of Act. No. 2613 and Administrative Order No. 35, for limiting the export of cigars to those manufactured from long filler tobacco exclusively the product of the provinces of Cagayan, Isabela, or Nueva Vizcaya. SC rules that neither the Collector of Internal Revenue nor the Legislature itself has any power to discriminate in favor of one province against another in the production of tobacco or of any other product of the Islands. DOCTRINE: Under Clause A, Sec. 6 of said Act, the power of the Collector of Internal Revenue is specified and defined to the making of rules and regulations for the classification, marking and packing of leaf or manufactured tobacco of good quality and the handling of it under conditions. Any rules or regulations which are not within the scope of the Act are null and void. FACTS: 1. On February 4, 1916, the Philippine Legislature enacted Law No. 2613 entitled "An Act to improve the methods of production and the quality of tobacco in the Philippines and to develop the export trade therein." 2. Clause B of section 6 of the Act empowers the Collector of Internal Revenue (CIR) to establish rules defining the standard and the type of leaf and manufactured tobacco that may be exported into the United States. 3. CIR promulgated Administrative Order No. 35, known as "Tobacco Inspection Regulations." Section 9 thereof limits the exportation into the United States of Philippine cigars to those manufactured from long filler tobacco exclusively the product of the provinces of Cagayan, Isabela, or Nueva Vizcaya. 4. Act No. 2613 also directs the Internal Revenue Collector to certify to the Insular Collector that any tobacco or cigars offered for export to the United States shall comply with the Act. 5. Petitioner Olsen & Co., Inc. an exporter export of tobacco cigars grown from the Philippines, applied to the Collector of Internal Revenue for such a certificate to the Insular Collector of Customs for a consignment of 10,000 cigars manufactured by it from tobacco grown and produced in the Philippines, which was then and there offered for export to the United States, and was submitted for inspection and the issuance of the proper certificate of origin. 6. The Collector of Internal Revenue refused to issue such certificate of origin on the ground that said cigars were not manufactured of long filler tobacco produced exclusively in the provinces of Cagayan, Isabela or Nueva Vizcaya. 7. Petitioner now files a petition with the Supreme Court, praying that the abovementioned provisions of Act. 2613 and Administrative Order No. 35 be declared void. ISSUE: WON Act No. 2613 or AO No.35 may limit the export of tobacco within certain provinces – NO RATIO: 1. Clause A of section 6 of Act No. 2613 provides: "To establish general and local rules respecting the classification, marking, and packing of tobacco for domestic sale or for exportation to the United States so far as may be necessary to secure leaf tobacco of good quality and to secure its handling under sanitary conditions and to the end that leaf tobacco be not mixed, packed, and marked as of the same quality when it is not of the same class and origin." 2. The power of the Collector of Internal Revenue to make rules and regulations is confined to what is stated in Clause A. Hence, it must follow that any rules or regulations which are not within the scope of the Act are null and void.

3. Provisions of the legislative act are not limited to the provinces of Cagayan, Isabela, or Nueva Vizcaya, or to any province, and that there is no limitation as to the place where the tobacco should be grown in the Philippine Islands. The only power conferred is to establish general and local rules for the classification, marking, and packing of tobacco and the standard and the type of tobacco which may be exported to the United States. 4. Neither the Collector of Internal Revenue nor the Legislature itself has any power to discriminate in favor of one province against another in the production of tobacco or of any other product of the Islands. The purpose and intent of the Legislature was that a proper standard of the quality of tobacco should be fixed and defined, and that all of those who produce tobacco of the same standard should have equal rights and opportunities. It was never intended that a standard should be fixed which would limit the manufacture of cigars for export to certain provinces of the Islands, or that the tobacco produced in one province should be measured by another and different standard than the tobacco produced in any other province. That would amount to discrimination and class legislation, which, even the Legislature, would not have the power to enact. Again, the legislative Act does not say anything about the "filler," or whether it should be short or long. Neither does it say anything about the weight of the cigar. It is a matter of common knowledge that standard cigars are of different sizes, weights, and lengths, and that the purity and standard of the cigar does not depend upon either. NONRELEVANT PART 1. Defendants likened Act No. 2613 to the US Act of Congress entitled “An Act to prevent the importation of impure and unwholesome tea.” 2. That Act of Congress makes it unlawful to import into the United States any tea which is inferior "in purity, quality and fitness for consumption to the standards provided in section three of this act." That after its passage, the Secretary of the Treasury shall appoint a board of seven members, each of whom shall be expert in teas, and who shall prepare and submit to him standard samples of tea, etc., and that, upon the recommendation of the said board, he "shall fix and establish uniform standards of purity, quality and fitness for consumption of all kinds of teas imported into the United States." 3. SC ruled that Act No. 2613 is not similar to the US Act because the former does not provide any standard to determine the purity, quality and fitness of cigars exported from the Philippines.

SYMAN v JACINTO (1953) by Manalo Montemayor, J LIMITS ON RULE-MAKING POWER Summary: Alfredo Jacinto, the Collector of Customs for the Port of Manila ordered the seizure of two shipments of textile and a number of sewing machines consigned to SyMan. After due hearing, Collector of Customs for the Port of Manila rendered a decision that the articles covered are delivered to the importer after payment of the necessary customs duty, sales tax and other charges except the sewing machines which are hereby declared forfeited to the Government of the Republic of the Philippines to be sold at public auction in conformity with law if found saleable. Otherwise, it will be destroyed. SyMan received a copy of the decision of the Collector of Customs for the Port of Manila. The counsel for the petitioner sent a letter to the Collector of Customs for the Port of Manila and asked/requested for the execution of the decision, in view of the fact that it had become final and could no longer be reviewed by the Commissioner of Customs after the lapse of fifteen days from the date of notification thereof was given to the herein petitioner who did not appeal from said decision to the Commissioner of Customs within the aforesaid period of time. Doctrine: Under the current laws at the time, the Commissioner does not have the power to revise unappealed decisions of the Collector in seizure cases. if the law does not give the Commissioner the power to review and revise unappealed

decisions of the Collector of Customs in seizure cases, then the memorandum order even if duly approved and published in the Official Gazette, would equally have no effect for being inconsistent with law. Facts 1. On January 2, 1952, Alfredo Jacinto, the Collector of Customs for the Port of Manila ordered the seizure of two shipments of textile and a number of sewing machines consigned to SyMan. 2. After due hearing, Collector of Customs for the Port of Manila rendered a decision that the articles covered are delivered to the importer after payment of the necessary customs duty, sales tax and other charges except the sewing machines which are hereby declared forfeited to the Government of the Republic of the Philippines to be sold at public auction in conformity with law if found saleable. Otherwise, such will be destroyed. 3. SyMan received a copy of the decision of the Collector of Customs for the Port of Manila. The counsel for the petitioner sent a letter to the Collector of Customs for the Port of Manila and asked/requested for the execution of the decision, in view of the fact that it had become final and could no longer be reviewed by the Commissioner of Customs after the lapse of fifteen days from the date of notification thereof was given to the herein petitioner who did not appeal from said decision to the Commissioner of Customs within the aforesaid period of time. 4. Counsel also urged that the goods be released because of the decision. 5. Collector of Customs for the Port of Manila sent a letter and to the counsel of petitioner and informed them that such was endorsed to the Commissioner of Customs on July 13, 1951, requesting information whether the merchandise may now be delivered to the owner upon showing that the decision has become final and executory after fifteen (15) days from the receipt of a copy of the same by the claimant. 6. Sy Man’s petition sought two things: (1) to declare null and void that portion of the Memorandum Order promulgated by the Insular Collector of Customs dated August 18, 1947, which provides that as in protest cases, decisions of the Collector of Customs in seizure cases, whether appealed or not, are subject to review by the Insular Collector (now commissioner); that such decisions and their supporting papers be submitted to his office, and that pending action by him on such decisions, final disposal of the goods involved shall not be made; and (2) to order the Collector to deliver to the petitioner the shipments of textiles claimed to be final and executory. 7. The trial court granted the petition. Issue WON the Commissioner has the power to revise unappealed decisions of the Collector in seizure cases. à NO Held 1. NO. Section 551 of the Revised Administrative Code provides that every chief of bureau shall prescribe forms and make regulations or general orders not inconsistent with law to carry into full effect the laws relating to matters within the bureau's jurisdiction. But to become effective said forms and regulations must be approved by the Department head and published in the Official Gazette or otherwise publicly promulgated. Because of this failure of approval by the department head and of publication, the memorandum order of August 18, 1947 has therefore no legal effect. Moreover, a form or regulation promulgated by a Bureau Chief must not be inconsistent with law. Therefore, if the law does not give the Commissioner the power to review and revise unappealed decisions of the Collector of Customs in seizure cases, then the memorandum order even if duly approved and published in the Official Gazette, would equally have no effect for being inconsistent with law. 2. The Commissioner may order a reliquidation if he believes that the decision of the Collector was erroneous and unfavorable to the Government; and the Department Head in his turn if he believes that the decision of the Commissioner in any unprotested case of assessment of duties is erroneous and unfavorable to the Government, may require the Commissioner to order a reliquidation or he may direct the Commissioner to certify the case to the CFI. 3. The logical inference is that the lawmakers did not deem it necessary or advisable to provide for this supervisory authority or power of revision by the Commissioner and the Department Head on unappealed seizure cases; and it is highly possible that up to and until 1947, when the memorandum order of August 18th of that year was issued, it was not the practice of the Bureau of Customs to have unappealed seizure cases sent up by Collectors to the Commissioner's office for review and revision. This is seen in the memorandum order where the Commissioner observes that in seizure cases some collectors of customs merely submit to him their reports of their seizure and the subsequent final disposition

thereof without transmitting the records of their proceedings, and he therein asserts the right of the Commissioner of Customs to review decisions of Collector of Customs in seizure cases though unappealed. 4. If that right and that practice had existed from the beginning, it is not likely that Collectors would disregard and ignore it, to the extent that it was necessary to remind them of it by means of a memorandum order. In a seizure case, the Collector transmits all the papers in the cause to the Commissioner only when and after the importer notifies him in writing signifying his desire to have the matter reviewed by the Commissioner. The section does not say that without the notice of appeal, the Collector is called upon to transmit the papers of the case to the Commissioner. If this be true, then legally, a case of seizure unappealed ends right in the office of the Collector, without prejudice of course to the Collector subsequently making a report of his action to the Commissioner. 5. In a seizure case the owner or agent may, while the cause is yet before the collector, pay the fine imposed, or in case of forfeiture, pay the appraised value of the property, and thereafter such properties shall be surrendered and all liability which may attach to said property by virtue of the offense causing the seizure is to be deemed discharged, the conclusion to be drawn is that it is within the power and right of an importer, owner or agent to end the case in the office of the Collector, thereby precluding any intervention by the Commissioner in the way of reviewing and revising the decision of the Collector 6. The rule is and the law presumes that in seizure cases Collectors of Customs act honestly and correctly and as Government officials, always with an eye to the protection of the interests of the Government employing them. If mistakes are committed at all more often than not they are in favor of the Government and not against it, and that is the reason why when the importer feels aggrieved by their decision, he is given every chance and facility to protest the decision and appeal to the Commissioner. Cases of erroneous decisions against the interest of the Government of decisions rendered in collusion and connivance with importers are the exception. 7. If the seizure is important or unusual, the Commissioner may, if he so desires, order the Collector as his subordinate to withhold action on the seizure, or hold in abeyance, within a reasonable time, the promulgation of his decision until after he had conferred with the Commissioner or the latter had studied the case and given suggestions. At that stage of the proceedings before definite action is taken by the Collector, and a decision rendered by him, it would seem that any action by him as a subordinate is still subject to the supervisory authority and control of the Commissioner as his Chief, and the latter may still influence and direct the Collector's action if he finds occasion for doing so. If the Government deems it necessary to provide for review and revision by the Commissioner or even by the Department Head of the decisions of the Collector of Customs in unappealed seizure cases, the Legislature may be requested to insert a section in the Revised Administrative Code similar to Section 1393 which applies to unprotested cases of assessment duties. 8. The decision of the Collector of Customs in a seizure case if not protested and appealed by the importer to the Commissioner of Customs on time, becomes final not only as to him but against the Government as well. Neither the Commissioner nor the Department Head has the power to review, revise or modify such unappealed decision. The memorandum order of the Insular Collector of Customs of August 18, 1947, is void and of no effect, not only because it has not been duly approved by the Department Head and duly published as required by section 551 of the Revised Administrative Code but also because it is inconsistent with law.

5. People v. Maceren - Irvette Abary People v Maceren (1977) P: People R: Hon. Maceren (CFI Laguna), Jose Buenaventura, Godofredo Reyes, Benjamin Reyes, Nazario Aquino and Carlito del Rosario SUMMARY: Private respondents were charged for violating an administrative order which prohibits electro fishing. Now being assailed is the validity of the order for being in excess of the authority granted by the legislative. SC held that the Secretary exceeded his authority in providing said order and its punishment. The law from which the Secretary is granted authority didn’t prohibit electro fishing so the order. THus, being devoid of basis, said order is void. 1. 2. 3.

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FACTS: The question of the validity of the 1967 regulation penalizing electro fishing in fresh water fisheries arose when herein private respondents were charged by a constabulary investigator with violating the said regulation (Fisheries Administrative Order No. 84-1). It is alleged that private respondents caught fish thru electric current which destroyed the aquatic animals within its reach, to the detriment and prejudice of the populace. The municipal court quashed the complaint. CFI affirmed. a. CFI held: electro fishing cannot be penalized because electric current is not an obnoxious or poisonous substance. Since the law (Sec. 11 of the Fisheries Law prohibits “the use of any obnoxious or poisonous substance” in fishing.) does not clearly prohibit electro fishing, the executive and judicial departments cannot consider it unlawful. Initially enacted was the Fisheries law which does not expressly punish electro fishing. Nonetheless, the Secretary of Agriculture and Natural Resources (SANR) promulgated the now assailed order (Fisheries AO No. 84), prohibiting electro fishing in all PH waters. Said order also provided for a penalty of a fine of not exceeding five hundred pesos (P500.00) or imprisonment of not extending six (6) months or both at the discretion of the Court. a. AO was later amended: prohibition was limited from PH waters to fresh water fisheries. b. Note: Department of Fisheries prescribed their own penalty. Prosecution cites as the basis for the legal sanctions against electro fishing in fresh water fisheries the following: a. Rule-making authority of the Department Secretary (herein SANR) under Sec. 4 of the Fisheries Law b. Function of the Commissioner of Fisheries (COF) to enforce the provisions of the Fisheries Law c. Declared national policy to encourage, promote, and conserve our fishing resources d. Sec. 83 of the Fisheries Law providing, that “any other violation shall subject the offender to a fine…” ISSUES: W/N the Secretary of Agriculture and Natural Resources exceeded his authority/rule-making power in criminalizing electro fishing and providing for its penalty? YES, exceed authority.

1. 2.

LAWS: Fisheries Law or RA 3512 (promulgated by Congress) Fisheries AO 84 and 84-1 (promulgated by the Secretary of Agriculture and Natural Resources) RULING: 1. The SANR and the COF exceeded their authority in issuing Fisheries AO Nos. 84 and 84-1 and that those orders are not warranted under the Fisheries Law. RA 3512 does not expressly prohibit electro fishing. Nowhere in that law is electro fishing specifically punished. As electro fishing is not banned under that law, the SANR and COF are powerless to penalize it. Therefore, AO Nos. 84 and 84-1 are devoid of any legal basis. 2. As well, the amendment limiting the prohibition of electro fishing to fresh water fisheries created the impression that electro fishing is not condemnable per se. It could be tolerated in marine waters. That circumstance strengthens the view that the old law does not eschew all forms of electro fishing.

3. There is no question that the Secretary of Agriculture and Natural Resources has rule-making powers. Sec. 4 of the Fisheries law provides that the Secretary "shall from time to time issue instructions, orders, and regulations consistent" with that law, "as may be and proper to carry into effect the provisions thereof." However, he should not transcend the boundary provided 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. 4. Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution. In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law prevails because said rule or regulation cannot go beyond the terms and provisions of the basic law. 5. The lawmaking body cannot delegate to an executive official the power to declare what acts should constitute an offense. It can authorize the issuance of regulations and the imposition of the penalty provided for in the law itself. Administrative agents are clothed with rule-making powers because the lawmaking body finds it impracticable to anticipate and provide for the multifarious and complex situations that may be encountered in enforcing the law. All that is required is that the regulation should be: [1] germane to the defects and purposes of the law; and that [2] it should conform to the standards that the law prescribes. 6. Finally, to declare what shall constitute a crime and how it shall be punished is a power vested exclusively in the legislature, and it may not be delegated to any other body or agency. Herein regulation penalizing electro fishing is not strictly in accordance with the Fisheries Law because the law itself does not expressly punish electro fishing. A penal statute is strictly construed. While an administrative agency has the right to make ranks and regulations to carry into effect a law already enacted, that power should not be confused with the power to enact a criminal statute. An administrative agency can have only the administrative or policing powers expressly or by necessary implication conferred upon it. In a prosecution for a violation of an administrative order, it must clearly appear that the order is one which falls within the scope of the authority conferred upon the administrative body, and the order will be scrutinized with special care. DECISION: Herein private respondents are acquitted. Secretary deemed to have exceeded his authority. 6. toledo v. civil service commission - Jose Ramon Ampil TOLEDO v. CIVIL SERVICE COMMISSION (1965) Ampil PARAS, J. LIMITS ON RULE-MAKING POWER SUMMARY Petitioner Atty. Augusto Toledo was appointed as Manager of the Education and Information Department of the COMELEC when he was already more than 57 years old. However, the COMELEC later declared his appointment to be void because it violated Sec. 22, Rule III of the Civil Service Rules on Personnel Action and Policies (CSRPAP), which prohibited the appointment of persons 57 years old or above into government service without the prior approval of the Civil Service Commission (CSC). The Court declared the said provision to be invalid for two reasons: a) it had no basis in P.D. No. 807 (Civil Service Decree) and was purely the CSC’s creation; and b) it was not published. DOCTRINE The power vested in the Civil Service Commission is to implement the law or put it into effect, not to add to it; to carry the law into effect or execution, not to supply perceived omissions in it. By administrative regulations, the law itself cannot be extended; said regulations “cannot amend an act of Congress”. FACTS

1. Petitioner Atty. Augusto Toledo was appointed by then-COMELEC Chairman Ramon Felipe as Manager of the Education and Information Department of COMELEC on May 21, 1986. At the time of his appointment, Toledo was more than 57 years old, having been born on July 8, 1927. 2. Toledo’s appointment papers and his oath of office were endorsed by the COMELEC to the Civil Service Commission (CSC) for approval. However, no prior request for exemption from the provisions of Sec. 22, Rule III of the Civil Service Rules on Personnel Action and Policies (CSRPAP) was obtained. The said provision prohibited the appointment of persons 57 years old or above into government service without the CSC’s prior approval. 3. On January 29, 1989, upon discovery of the lack of authority under the aforementioned provision as well as CSC Memorandum Circular No. 5, Series of 1993, the COMELEC issued a Resolution declaring Toledo’s appointment to be void. 4. On appeal, the CSC declared that Toledo’s appointment was merely voidable, and that he was a de facto officer from the time he assumed office on June 16, 1986 up to the issuance of the COMELEC’s Resolution on January 29, 1989. ISSUE WON Sec. 22, Rule III of the Civil Service Rules on Personnel Action and Policies (CSRPAP) is invalid – YES RULING 1. Historical background: Pres. Ferdinand Marcos issued P.D. No. 807 (Civil Service Decree) on October 6, 1975, which established the CSC. P.D. No. 807 empowered the CSC to prescribe, amend, and enforce rules and regulations for implementing the decree’s provisions. The same law also provided that the said “rules and regulations shall become effective thirty (30) days after publication in the Official Gazette or in any newspaper of general circulation.” Pursuant to P.D. No. 807, the CSC adopted the CSRPAP on November 20, 1983. 2. Sec. 22, Rule III of the CSRPAP provides that “No person shall be appointed, reinstated, or reemployed in the service if he is already 57 years old, unless the President, or the Chief Justice of the Supreme Court, in the case of employees in the judiciary, determines that he possesses special qualifications urgently needed by the hiring agency.” 3. There is no provision in P.D. No. 807 dealing in any manner with the appointment, reinstatement or re-employment of any person already 57 years, or any particular age, in the government service. Sec. 22 is purely a creation of the CSC, having no reference to any provision of P.D. No. 807. 4. Moreover, the CSRPAP was never published in the Official Gazette or in any newspaper of general circulation at the time its provisions were applied to Toledo’s case. This fact was admitted by CSC Chairman Patricia Sto. Tomas in a letter to Toledo dated February 12, 1989, as well as in a Certification issued by the Director of the National Printing Office on January 30, 1989. 5. Even assuming that the assailed prohibition was enforceable, it can only apply expressly to employees under the supervision of the Chief Justice of the Supreme Court or the President.

7. Commissioner of Internal Revenue v. CA - Genesis Leal COMMISSIONER OF INTERNAL REVENUE v. CA (1995) Vitug, J. | Rules and regulations contrary to intent of law

Summary: BIR insists that the general amnesty declared by EO 41 for taxable years 1981-1985 does not include assessments already made before its promulgation. Court said BIR’s MO 4-87 implementing EO 41 ran contrary to the clear intent of the latter, that is, to declare a general amnesty. Facts: ● On August 22, 1986, Executive Order No. 41 (a law, since it was promulgated when Pres. Aquino still exercised legislative powers) was promulgated declaring a one-time tax amnesty on unpaid income taxes, later amended to include estate and donor's taxes and taxes on business, for the taxable years 1981 to 1985. ● R.O.H. Auto Products filed in October 1986 and November 1986, its Tax Amnesty Return and Supplemental Tax Amnesty, and paid the corresponding amnesty taxes due. Prior to this availment, Commissioner of Internal Revenue assessed ROH’s deficiency income and business taxes for fiscal years 1981 and 1982 in an aggregate amount of Php 1,410,157.71. The taxpayer wrote back that since it availed itself of the tax amnesty, the deficiency tax notice should be cancelled. ● BIR insists that according to Revenue Memorandum Order No. 4-87 which implements EO 41, only assessments issued by the BIR after the promulgation of the executive order are covered by the amnesty, not assessments made before. ● Court of Tax Appeals: rule in MO 4-87 is beyond the contemplation of Executive Order No. 41; such administrative legislation was quite contrary to the mandate of the law which the regulation ought to implement. CA uphelds CTA. Hence this appeal by CIR. Issue/Held: WON Revenue Memorandum Order No. 4-87 is valid - NO Ratio: ● It cannot be disputed that agency rules and regulations, as well as administrative opinions and rulings, ordinarily should deserve weight and respect by the courts. Much more fundamental than that, however, is the rule that all such issuances must not override, but must remain consistent and in harmony with the law they seek to apply and implement. Administrative rules and regulations are intended to carry out, neither to supplant nor to modify, the law. ● EO 41 is quite explicit on its scope (Sec. 1: A one-time tax amnesty covering unpaid income taxes for the years 1981 to 1985 is hereby declared) and exceptions. ● If EO 41 had not been intended to include 1981-1985 tax liabilities already assessed (administratively) prior to 22 August 1986, the law could have simply so provided in its exclusionary clauses. It did not. Hence, the EO has been designed to be in the nature of a general grant of tax amnesty subject only to the cases specifically excepted by it, to which exceptions ROH does not qualify. ● Rationale for the amnesty: there were calls for civil disobedience during the period covered, as protest to the Marcos regime. DISMISSED.

8. land bank of the philippines v ca (1995) - Verlin Amarante LAND BANK OF THE PHILIPPINES V. CA (1995) by Entena FRANCISCO, J. LIMITS ON RULE-MAKING POWER SUMMARY Landowners question the validity of DAR AO No. 9 series of 1990 in permitting the opening of trust accounts by Landbank instead of depositing IN CASH OR BONDS in an accessible bank as mandated by Section 16e of RA 6657. The Court held that the DAR overstepped the limits of its rule-making power, as the law (which the DAR by its rule-making power must simply implement, and the scope of which it CANNOT EXTEND) explicitly provides that the mode of deposit can only be in cash or LBP bonds. DOCTRINE: See underlined in RATIO (on issue #1) FACTS 1. Landowners (Private Rs) whose land was acquired by DAR under the Comprehensive Agrarian Reform Law (and were aggrieved by DAR and Landbank’s lapses in valuation and payment of just compensation) filed suit with the SC, to (A) question the validity of DAR Administrative Order No. 6, Series of 1992 and DAR Administrative Order No. 9, Series of 1990, and (B) to seek to compel the DAR to expedite proceedings to finally determine the just compensation of their properties, and the Landbank to deposit in cash and bonds the amounts respectively earmarked for them. On (A) 2. Private Rs’ position: AO No. 9, in permitting the opening of trust accounts by Landbank (instead of depositing in cash/bonds in an accessible bank the compensation for the land before it is taken and the titles are cancelled (despite clear mandate in Section 16(e) of RA 6657 that compensation must be deposited in cash/bonds), was issued without jurisdiction and with grave abuse of discretion. 3. DAR’s position: AO No. 9 is a valid exercise of rule-making power pursuant to Sec. 49* of RA 6657, that the word "deposit" as used in Section 16(e) of RA 6657 referred merely to the act of depositing without excluding trust accounts as a form of deposit, so DAR through the AO merely implemented the declared policies of RA 6657. On (B) 4. The landowners also assail the fact that the DAR and the Landbank merely "earmarked", "deposited in trust" or "reserved" the compensation in their names as landowners, such that they are unable to withdraw the amount pending final valuation. 5. Meanwhile, the DAR in effect distinguishes between deposit of compensation under Section 16(e) and payment of final compensation under Section 18. Following this, the right of the landowner to withdraw the amount deposited in his behalf pertains only to the final valuation as agreed upon or that adjudged by the court, and that the deposit is only provisional and intended to secure possession of property pending final valuation. Therefore, the issuance of the "Certificate of Deposit" by the Landbank was substantial compliance with Section 16(e). ISSUE 1. (PERTINENT) Did DAR clearly overstep the limits of its rulemaking power in issuing AO No. 9? YES 2. Are the landowners entitled to withdraw the amounts deposited in trust in their behalf pending the final resolution of the cases involving the final valuation of their properties? RATIO On issue #1

1. Section 16(e) of RA 6657 provides as follows: Sec. 16. Procedure for Acquisition of Private Lands - (e) Upon receipt by the landowner of the corresponding payment or, in case of rejection or no response from the landowner, upon the deposit with an accessible bank designated by the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. 2. Looking at the above provision, it is very explicit that the deposit must be made only in "cash" or in "LBP bonds". Nowhere can it be inferred that deposit can be made in any other form. If it were the intention to allow a "trust account," that should have been made express, or at least apparent from the phrasing. 3. The conclusive effect of administrative construction is not absolute. Action of an administrative agency may be disturbed or set aside by the judicial department if there is an error of law, a grave abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting with either the letter or the spirit of a legislative enactment. 4. The function of promulgating rules and regulations may be legitimately exercised only for the purpose of carrying the provisions of the law into effect. Corollary to this is that administrative regulations cannot extend the law and amend a legislative enactment, for settled is the rule that administrative regulations must be in harmony with the provisions of the law. In case there is a discrepancy between the basic law and an implementing rule or regulation, it is the former that prevails. 5. DAR cannot likewise invoke LRA Circular Nos. 29, 29-A and 54 because these implementing regulations cannot outweigh the clear provision of the law. On issue #2 1. The distinction between provisional compensation under Section 16(e) and final compensation under Section 18 is unnecessary. To withhold the right of the landowners to appropriate the amounts already deposited in their behalf as compensation for their properties simply because they rejected the DAR's valuation, and notwithstanding that they have already been deprived of the possession and use of such properties, is an oppressive exercise of eminent domain. The immediate effect in both situations is that the landowner is deprived of the use and possession of his property for which he should be fairly and immediately compensated. 2. Association of Small Landowners case (which Ps cited) in allowing a deviation from the traditional mode of payment of compensation, DID NOT however, dispense with the settled rule that there must be full payment of just compensation before the title to the expropriated property is transferred. 3. “The irresistible expropriation of the landowners' properties was painful enough for them. But DAR rubbed it in all the more by withholding that which rightfully belongs to private respondents in exchange for the taking. This is misery twice bestowed on private respondents, which the Court must rectify.”

*Sec. 49: The PARC and the DAR shall have the power to issue rules and regulations, whether substantive or procedural, to carry out the objects and purposes of this Act. Said rules shall take effect ten (10) days after the publication in two (2) national newspapers of general circulation.

GMCR v bell telecommunications - Mikee Resultan GMRC v Bell Telecom April 30, 1997| Hermosisima | Limit to Rule-Making power PETITIONER: GMCR, INC.; SMART COMMUNICATIONS, INC.; INTERNATIONAL COMMUNICATIONS CORP.; ISLA COMMUNICATIONS CO., INC. RESPONDENTS: BELL TELECOMMUNICATION PHILIPPINES, INC.; THE NATIONAL TELECOMMUNICATIONS COMMISSION and HON. SIMEON L. KINTANAR in his official capacity as Commissioner of the National Telecommunications SUMMARY: BellTell applied for a Certificate of Public Convenience and Necessity to Procure, Install, Operate and Maintain Nationwide Integrated Telecommunications Services and to Charge Rates Therefor and with Further Request for the Issuance of Provisional Authority. Eventually given a favorable recommendation of CCAD and approved by 2 of 3 members of the NTC commission but chairman of the commission denied application overriding the votes of the 2 deputy commissioners. Belltel avers said decision and argues the collegial nature of NTC which requires a majority vote to decide issues before them. CA and SC agreed with BellTel’s contention citing NTC as a collegial body and stating that NTC is not a 1-man commission to be headed solely by the chairman. DOCTRINE: Being collegial in nature requires a majority vote in deciding issues before it. The collegial nature of the commission can be inferred from the language of the laws governing it. In this case Sec 16 of EO 546 and section 15 of Rules of Procedure of BOC clearly show the intent of law-maker to have a majority vote as decisive to NTC’s decision in cases/application they are to resolve. FACTS: Oct 9,1993: Bell Telecommunication Philippines, Inc (BellTel) filed with the NTC an Application for a Certificate of Public Convenience and Necessity to Procure, Install, Operate and Maintain Nationwide Integrated Telecommunications Services and to Charge Rates Therefor and with Further Request for the Issuance of Provisional Authority. At the time of the filing of this application, private respondent BellTel had not been granted a legislative franchise to engage in the business of telecommunications service. BellTel being an unenfranchised applicant was excluded in the deliberations for service area agreements for local exchange carrier service, (only petitioners were beneficiaries of formal award of service are assignments) March 25, 1994: RA 7692 enacted, granting BellTel congressional franchise which gave BellTel the privilege and authority to carry on the business of providing telecommunications services in the Philippines. July 12, 1994: BellTel Filed 2 nd app. With NTC. (notable here is the addition of a proposal to install 2.6M telephone lines in 10 years using modern equipment to provide a100% digital local exchange tel. network. BellTel filed a formal evidence which was referred to CCAD which after its own investigation gave a favorable recommendation In view of these favorable recommendations by the CCAD and two members of the NTC, the Legal Department thereof prepared a working draft] of the order granting provisional authority to BellTel. Draft signed by 2 (dumlao and perez) deputy commissioners but not by the commissioner (kintanar). While ordinarily, a decision that is concurred in by two of the three members composing a quasi-judicial body is entitled to promulgation, petitioners claim that pursuant to the prevailing policy and the corresponding procedure and practice in the NTC, the exclusive authority to sign, validate and promulgate any and all orders, resolutions and decisions of the NTC is lodged in the Chairman only Commissioner Simeon Kintanar is recognized by the NTC Secretariat as the sole authority to sign any and all orders, resolutions and decisions of the NTC, only his vote counts; Deputy Commissioners Dumlao and Perez have allegedly no voting power. Because of NTCs inaction Belltel files an Urgent Ex-Parte Motion to Resolve Application and for the Issuance of a Provisional Authority and a motion to promulgate citing CCAD’s favorable recommendation and already made working draft order. –Motion denied BellTel argues that NTC is a collegial body and that 2 favorable votes out of a maximum 3 votes by the members of the commission, are enough to validly promulgate an NTC decision.

ISSUES/HELD: WoN NTC is a collegial body and thus needing the majority vote of the 3 commissioners to validly decide any case before it.-YES , vote of chairman alone not enough. RATIO: Commissioner Kintanar is not the National Telecommunications Commission. He alone does not speak for and in behalf of the NTC. The NTC acts through a three-man body, and the three members of the commission each has one vote to cast in every deliberation concerning a case or any incident therein that is subject to the jurisdiction of the NTC. When one considers the historical milieu in which the NTC evolved into the quasi-judicial agency it is now under Executive Order No. 146 which organized the NTC as a three-man commission and expose the illegality of all memorandum circulars negating the collegial nature of the NTC under Executive Order No. 146, one is left with only one logical conclusion: the NTC is a collegial body and was a collegial body even during the time when it was acting as a oneman regime. Also, sec 16[1] of EO 546 and Rule 15[2] of Rules of Procedure of BOC now the NTC are collegial in nature. Section 16 of EO 564 must be interpreted together with the whole EO. Basically, if Marcos intended a 1-man governmental body he did not need to make a commission and explicitly add the 2 deputy commissioners. While it may be true that the aforesaid Rules of Procedure was promulgated before the effectivity of Executive Order No. 546, however, the Rules of Procedure of BOC governed the rules of practice and procedure before the NTC when it was established under Executive Order No. 546. This was enunciated by the Supreme Court in the case of Philippine Consumers Foundation, Inc. versus National Telecommunications Commission [1] The Commission shall be composed of a Commissioner and two Deputy Commissioners, preferably one of whom shall be a lawyer and another an economist [2] In every case heard by the Board en banc, the orders, rulings, decisions and resolutions disposing of the merits of the matter within its jurisdiction shall be reached with the concurrence of at least two regular members after deliberation and consultation and thereafter assigned to a member for the writing of the opinion. Any member dissenting from the order, ruling, decision or resolution shall state in writing the reason for his dissent. In all other cases, a duly assigned Member shall issue all orders, rulings, decisions and resolutions pertinent to the case assigned to him. Copy of the decision on the merit of the case so assigned shall be furnished the Chairman of the Board.

10. assoc of phil. coconut desiccators v phil coconut auth. - Iris ASSOCIATION OF PHILIPPINE COCONUT DESICCATORS v. PHILIPPINE COCONUT AUTHORITY Feb. 10, 1998 | Mendoza, J. || en banc | PETITIONERS: Association of Philippine Coconut Desiccators RESPONDENTS: Philippine Coconut Authority SUMMARY: Philippine Coconut Authority(PCA) issued a Resolution which no longer require those wishing to engage in coconut processing to apply for licenses to engage in said business.. The purpose of which is to promote free enterprise unhampered by protective regulations and unnecessary bureaucratic red tapes. The Association of Philippine Coconut Desiccators (APCD) then filed a petition for mandamus. SC ruled that PCA Resolution and all certificates of registration issued under it are NULL and VOID for having been issued in excess of the power.. PCA acted in plain disregard of its legislative purpose when it adopted the Resolution which allows not only the indiscriminate opening of new coconut processing plants but the virtual dismantling of the regulatory infrastructure where the PCA limits its function to the "monitoring" & compliance by coconut millers with quality standards and volumes of production. (So PCA would simply be compiling statistical data, but in case of violations of standards there would be nothing much it would do.) DOCTRINE: Any change in policy must be made by the legislative department of the government. The regulatory system has been set up by law. It is beyond the power of an administrative agency to dismantle it. FACTS: 1. On November 5, 1992, seven desiccated coconut processing companies belonging to the APCD brought suit RTC to enjoin the PCA from issuing permits to certain applicants for the establishment of new desiccated coconut processing plants in areas considered "congested" – as such would violate PCA's Administrative Order No. 02, series of 1991. 2. TC issued a TRO and a writ of preliminary injunction; 3. While the case was pending in the RTC, the Governing Board of the PCA issued on March 24, 1993 Resolution No. 018-93, providing for the withdrawal of the PCA from all regulation of the coconut product processing industry. While it continues the registration of coconut product processors, the registration would be limited to the "monitoring" of their volumes of production and administration of quality standards. 4. The PCA then issued "certificates of registration" to those wishing to operate desiccated coconut processing plants, so petitioner appealed to the Office of the President(OP) but received no reply. (even inquired twice afterward, but still no reply) 5. PETITIONER alleges: that (1) PCA Board’s resolution is null and void for being an undue exercise of legislative power by an administrative body; (2) that it is a violation of both substantive and procedural due process. ( Of substantive: for being without any basis, arbitrary, and unreasonable.|| Of procedural: for being done without consultation. 6. RESPONDENT: petition should be denied on the ground that petitioner has a pending appeal before the OP, for forum-shopping in filing this petition and of failing to exhaust available administrative remedies before coming to this Court. ISSUES/HELD: WON the PCA can renounce the power to regulate implicit in the law creating it—No. PCA Resolution and all certificates of registration issued under it are hereby declared NULL and VOID for having been issued in excess of the power of PCA to adopt or issue. RATIO: By limiting the purpose of registration to merely "monitoring volumes of production [and] administration of quality standards" of coconut processing plants, the PCA in effect abdicates its role and leaves it almost completely to market forces how the coconut industry will develop ● PCA acted in plain disregard of the legislative purpose when it adopted the Resolution (which allows not only the indiscriminate opening of new coconut processing plants but the virtual dismantling of the regulatory infrastructure)where the PCA limits its function to the "monitoring" compliance by coconut millers with quality standards and volumes of production. (So PCA would simply be compiling statistical data, but in case of violations of standards there would be nothing much it would do.) ○

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The result can very well be a repeat of 1982 when free enterprise degenerated into a "free-for-all," resulting in cut-throat competition, underselling, the production of inferior products and the like, which badly affected the foreign trade performance of the coconut industry. That Instead of determining the qualifications of market players and preventing the entry into the field of those who are unfit, the PCA now relies entirely on competition — with all its wastefulness and inefficiency — to do the weeding out, in its naive belief in survival of the fittest.

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Our Constitutions, (starting w/ 1935 one), have repudiated laissez-faire as an economic principle. Although the present Constitution enshrines free enterprise as a policy, it nonetheless reserves to the government the power to intervene whenever necessary to promote the general welfare. (Sec. 6 and 19 of Art. XII of the Constitution: ) ○ Sec. 6. . . . Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands. ○ Sec. 19. 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. History of coconut industry: ● 1982: A total phase-out of some existing plants was ordered considering the limited market was not adequate to support all the existing processing plants. It was only in 1987, when the PCA started deregulating the industry. This form of "deregulation" was approved by President Aquino in her memorandum. ● These measures — the restriction in 1982 and then the lifting of the restrictions in 1987 — were adopted within the framework of regulation as established by law "to promote the rapid integrated development and growth of the coconut and other palm oil industry in all its aspects and to ensure that the coconut farmers become direct participants in, and beneficiaries of, such development and growth." Power given to the PCA is not a roving commission to adopt any program deemed necessary to promote the development of the coconut and other palm oils industry, but one to be exercised in the context of this regulatory structure. As to the rule of requiring exhaustion of administrative remedies before a party may seek judicial review: no application here. The resolution was issued by the PCA in the exercise of its rule-making or legislative power. However, only judicial review of decisions of administrative agencies made in the exercise of their quasi-judicial function is subject to the exhaustion doctrine. The exhaustion doctrine stands as a bar to an action which is not yet complete and it is clear, in the case at bar, that after its promulgation the resolution of the PCA abandoning regulation of the desiccated coconut industry became effective. ___________________________ è MENTIONS THE DISSENT: That contrary to what the Dissent thinks: There really is a renunciation of the power to regulate. (When the PCA no longer requires a license as condition for the establishment or operation of a plant, If a number of processing firms go to areas which are already congested, the PCA cannot stop them from doing so; If there is overproduction, the PCA cannot order a cut back in their production ____________________________ Pertinent laws: -

PD No. 232 created the PCA. Revised Coconut Code (P.D. No. 1468)made PCA into "an independent public corporation . . . directly reporting to, and supervised by, the President of the Philippines," and charged with carrying out the State's policy "to promote the rapid integrated development and growth of the coconut and other palm oil industry in all its aspects and to ensure that the coconut farmers become direct participants in, and beneficiaries of, such development and growth." through a regulatory scheme set up by law. The establishment of new plants could be authorized only upon determination by the PCA of the existence of certain economic conditions and the approval of the President of the Philippines.

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Sec. 1, EO No. 826 : Sec. 1. Prohibition. — Except as herein provided, no government agency or instrumentality shall hereafter authorize, approve or grant any permit or license for the establishment or operation of new desiccated coconut processing plants, including the importation of machinery or equipment for the purpose. In

the event of a need to establish a new plant, or expand the capacity, relocate or upgrade the efficiencies of any existing desiccated plant, the Philippine Coconut Authority may, upon proper determination of such need and evaluation of the condition relating to: a. the existing market demand; b. the production capacity prevailing in the country or locality; c. the level and flow of raw materials; and d. other circumstances which may affect the growth or viability of the industry concerned, authorize or grant the application for, the establishment or expansion of capacity, relocation or upgrading of efficiencies of such desiccated coconut processing plant, subject to the approval of the President. ____________________________ ROMERO, J., DISSENTING: Sees no merit in the petition; believes that the PCA did not overstep the limits of its power in issuing the assailed resolution. ● The past decade, a distinct worldwide trend towards economic deregulation has been evident. ● PCA's authority to the Resolution is clearly provided in Section 3(a) of P.D. No. 232 (“ To formulate and adopt a general program of development for the coconut and other palm oil industry.”) Considering the responsibilities and powers assigned to the PCA, as well as its underlying policy, the Resolution is a valid exercise of delegated legislation by the PCA-; in harmony with the objectives of the legislature ●

Sufficient standards to guide the PCA[1]: & measures to achieve these policies are better left to the administrative agencies tasked with implementing them.

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DID NOT DISREGARD LEGISLATIVE SCHEME: While the ponencia argues that the "legislative scheme" was disregarded when the PCA , this was actually effected pursuant to the PCA Board Resolution laying down the policy of deregulating the industry and authorizing the creation of additional desiccated coconut plants. NO RENUNCIATION OF THE POWER TO REGULATE: PCA did not limit itself "merely to monitoring . . ." as the ponencia states, but to "registering the . . . processors for the purpose of monitoring their volumes of production and administration of quality standards. . . .” In trimming down its functions to registration is not an abdication of the power to regulate but is regulation itself ○ That actually, the relevant provisions in the disputed resolution reads: “Resolved further, that the PCA shall limit itself only to simply registering the aforementioned coconut product processors for the purpose of monitoring their volumes of production, administration of quality standards with the corresponding service fees/charges.”

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Legislative discretion, as to the substantive contents of a law, cannot be delegated. What may be delegated is the discretion to determine how the law is to be enforced, not what the law should be, a prerogative of the legislature which it can neither abdicate nor surrender to the delegate. (based on the separation and allocation of powers) ○ The policy of deregulation must be determined by the circumstances prevailing in a certain situation. This Court is only concerned with the question of authority, not the wisdom of the measure involved which falls within the province of the Legislature. ○ The ponencia in saying: "The result can very well be a repeat of 1982 when free enterprise degenerated into a 'free-for-all,' resulting …" & that such policy as one characterized by "wastefulness and inefficiency . . . based on its naive faith in survival of the fittest --> Is not this a blatant incursion by the Court into the economic arena which is better left to the administrative agency precisely tasked to promote the growth of the industry, through the exercise of its studied discretion? Encroaching on legislative domain in questioning the wisdom of the action taken by the PCA which was accorded a broad mandate by the Congress?

BLAS F. OPLE v. RUBEN D. TORRES (1998) by Or PUNO, J. LIMITS ON RULE-MAKING POWER SUMMARY: Petitioner claims that A.O. No. 308 is not a mere administrative order but a law and hence, beyond the power of the President to issue. He alleges that A.O. No. 308 establishes a system of identification that affects the life and liberty of every Filipino citizen and foreign resident, and more particularly, violates their right to privacy and thus prays for its invalidation. Court grants the petition. FACTS 1. Petitioner Ople prays that we invalidate Administrative Order No. 308 entitled "Adoption of a National Computerized Identification Reference System" on two important constitutional grounds, viz: one, it is a usurpation of the power of Congress to legislate, and two, it impermissibly intrudes on our citizenry's protected zone of privacy. 2. A.O. No. 308 was issued by President Fidel V. Ramos On December 12, 1996 on the premise which “will require a computerized system to properly and efficiently identify persons seeking basic services on social security and reduce, if not totally eradicate fraudulent transactions and misrepresentations.” ISSUES 1. Establishment of the NCIRS requires a legislative act; is an unconstitutional usurpation of legislative powers. 2. Appropriation of public funds by President for implementation of AO is unconstitutional usurpation of congress’s exclusive right to appropriate public funds for expenditure. 3. The implementation of such AO insidiously lays the groundwork for a system which will violate the bill of rights. RULING 1. Procedurally: The ripeness for adjudication of the Petition is not affected by the fact that the implementing rules of A.O. No. 308 have yet to be promulgated. Ople assails A.O. No. 308 as invalid per se and as infirmed on its face. His action is not premature for the rules yet to be promulgated cannot cure its fatal defects. Moreover, respondents have started the implementation without waiting for the rules. 2. Legislative power is "the authority, under the Constitution, to make laws, and to alter and repeal them." The Constitution has vested this power in the Congress. Except as limited by the Constitution, expressly or impliedly, legislative power embraces all subjects and extends to matters of general concern or common interest. 3. Executive power is generally defined as the power to enforce and administer the laws. It is the power of carrying the laws into practical operation and enforcing their observance. Vested in the president. 4. President represents the government as a whole and sees to it that all laws are enforced by EEs of his department. He has the authority to assume directly the functions of department/bureau/office or interfere with the discretion of its officials and, as corollary, the duty of supervising the enforcement of laws. Thus he is granted administrative power over offices under his control to enable him to discharge his duties effectively. 5. Administrative power is concerned with the work of applying policies and enforcing orders. 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. 6. A.O. No. 308 involves a subject that is not appropriate to be covered by an administrative order. An administrative order is defined as 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.[1] 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.

We reject the argument that A.O. No. 308 implements the legislative policy of the Administrative Code of 1987. The Code is a general law and "incorporates in a unified document the major structural, functional and procedural principles of governance" and "embodies administrative structure and procedures." The Code covers both the internal administration of government, i.e, internal organization, personnel and recruitment, supervision and discipline, and the effects of the functions performed by administrative officials on private individuals or parties outside government. 7. Establishing the NCIRS requires a delicate adjustment of various contending state policies — the primacy of national security, the extent of privacy interest, etc. As said administrative order redefines the parameters of some basic rights of our citizenry vis-a-vis the State as well as the line that separates the administrative power of the President to make rules and the legislative power of Congress, it ought to be evident that it deals with a subject that should be covered by law. 8. Nor is it correct to argue that A.D. No. 308 is not a law because it confers no right, imposes no duty, affords no proctection, and creates no office. Under A.O. No. 308, a citizen cannot transact business with government agencies delivering basic services to the people without the contemplated identification card. W/o the ID, a citizen will have difficulty exercising his rights and enjoying his privileges. 9. (Assuming, arguendo, that A.O. No. 308 need not be the subject of a law, still it cannot pass constitutional muster because facially it violates the right to privacy. Need to prove compelling state interest. (1) The need to provides our citizens with the facility to conveniently transact business with basic service and (2) the need to reduce fraudulent transactions by persons seeking basic services are vague and overbroad.) KAPUNAN (DISSENTING): 1. The Administrative Code of 1987 has unequivocally vested the President with quasi-legislative powers in the form of executive orders, administrative orders, proclamations, memorandum orders and circulars and general or special orders. 2. The NCIRS was established pursuant to the aforaquoted provision precisely because its principal purpose, as expressly stated in the order, is to provide the people with "the facility to conveniently transact business" with the various government agencies providing basic services. Being the "administrative head," it is unquestionably the responsibility of the President to find ways and means to improve the government bureaucracy 3. To emphasize, the new identification reference system is created to streamline the bureaucracy, cut the red tape and ultimately achieve administrative efficiency. The project, therefore, relates to, is an appropriate subject and falls squarely within the ambit of the Chief Executive's administrative power 4. Understandably, strict adherence to the doctrine of separation of power spawns differences of opinion. For we cannot divide the branches of government into water-tight compartment. 5. Even if such is possible, it is neither desirable nor feasible. This blending of powers has become necessary to properly address the complexities brought about by a rapidly developing society

[1] ADMIN CODE BOOK III, CH. 2 SEC. 3

PBCOM vs. CIR (1999) by Bayudan J. Quisumbing Limits of rule-making power

SUMMARY: PBCom sought to refund an overpayment of their income tax return. They relied on a BIR Revenue Memorandum Circular which stated that the prescriptive period for filing an action for such has been extended from 2 years to 10 years. However, the CTA denied their petition, saying that it was filed beyond the reglementary period and that they opted for a tax credit to be applied to the succeeding year’s taxes and cannot ask for a refund. SC said that the BIR RMC should be nullified as it was inconsistent with the National Internal Revenue Code, and that PBCom cannot indeed ask for a refund as they themselves specified that they opted for a tax credit instead of a refund. DOCTRINE: Revenue memorandum-circulars are considered administrative rulings (in the sense of more specific and less general interpretations of tax laws) which are issued from time to time by the Commissioner of Internal Revenue. It is widely accepted that the interpretation placed upon a statute by the executive officers, whose duty is to enforce it, is entitled to great respect by the courts. Nevertheless, such interpretation is not conclusive and will be ignored if judicially found to be erroneous. Thus, courts will not countenance administrative issuances that override, instead of remaining consistent and in harmony with, the law they seek to apply and implement. FACTS 1. PBCom filed its quarterly income tax return for 1st and 2nd quarter 1985, paying P5,016,954 total income tax. This was settled by applying PBCom’s tax credit memos. 2. PBCom suffered losses, however, so it declared a net loss of P25M when it filed its annual income tax return. In 1986, it also reported a net loss of P14M. For both years, PBCom declared no tax payable for the year. 3. PBCom earned rental income from leased property in 1985-86. Lessees withheld and remitted P285,795 (1985) and P234,077 (1986) to the BIR. Hence, PBCom requested the CIR for a tax credit due to overpayment of taxes. Pending the CIR’s investigation, PBCom filed a petition for review at the Court of Tax Appeals. 4. CTA denied the tax refund, as it was filed beyond the 2 year reglementary period. The 1986 refund was denied as it was assumed that it was automatically credited to PBCom for the next year. PBCom filed an MR but was denied. 5. PBCom filed a petition for review of the CTA decision, but the CA affirmed it. Hence this petition for review. ISSUE W/N CA erred in denying PBCom’s tax refund on the ground of prescription, despite PBCom’s reliance on BIR RMC 7-85 which changed the prescriptive period from 2 years to 10 years - NO RATIO 1. The relaxation of revenue regulations by RMC 7-85 is not warranted as it disregards the two-year prescriptive period set by law. 2. Basic is the principle that taxes are the lifeblood of the nation. The primary purpose is to generate funds for the State to finance the needs of the citizenry and to advance the common weal. Due process of law under the Constitution does not require judicial proceedings in tax cases. This must necessarily be so because it is upon taxation that the government chiefly relies to obtain the means to carry on its operations and it is of utmost importance that the modes adopted to enforce the collection of taxes levied should be summary and interfered with as little as possible. 3. From the same perspective, claims for refund or tax credit should be exercised within the time fixed by law because the BIR being an administrative body enforced to collect taxes, its functions should not be unduly delayed or hampered by incidental matters. 4. Section 230 of the National Internal Revenue Code (NIRC) of 1977 (now Sec. 229, NIRC of 1997) provides for the prescriptive period for filing a court proceeding for the recovery of tax erroneously or illegally collected, viz.: a. Sec. 230. Recovery of tax erroneously or illegally collected. -- No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been

5.

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7. 8.

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10.

erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. b. In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment ; Provided however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid. (Italics supplied) c. The rule states that the taxpayer may file a claim for refund or credit with the Commissioner of Internal Revenue, within two (2) years after payment of tax, before any suit in CTA is commenced. The two-year prescriptive period provided, should be computed from the time of filing the Adjustment Return and final payment of the tax for the year. When the Acting Commissioner of Internal Revenue issued RMC 7-85, changing the prescriptive period of two years to ten years on claims of excess quarterly income tax payments, such circular created a clear inconsistency with the provision of Sec. 230 of 1977 NIRC. In so doing, the BIR did not simply interpret the law; rather it legislated guidelines contrary to the statute passed by Congress. Revenue memorandum-circulars are considered administrative rulings (in the sense of more specific and less general interpretations of tax laws) which are issued from time to time by the Commissioner of Internal Revenue. It is widely accepted that the interpretation placed upon a statute by the executive officers, whose duty is to enforce it, is entitled to great respect by the courts. Nevertheless, such interpretation is not conclusive and will be ignored if judicially found to be erroneous. Thus, courts will not countenance administrative issuances that override, instead of remaining consistent and in harmony with, the law they seek to apply and implement. People vs. Lim: rules and regulations issued by administrative officials to implement a law cannot go beyond the terms and provisions of the latter. The State cannot be put in estoppel by the mistakes or errors of its officials or agents. The nullification of RMC No. 7-85 issued by the Acting Commissioner of Internal Revenue is an administrative interpretation which is not in harmony with Sec. 230 of 1977 NIRC, for being contrary to the express provision of a statute. Hence, his interpretation could not be given weight for to do so would, in effect, amend the statute. The non-retroactivity of rulings by the Commissioner of Internal Revenue is not applicable in this case because the nullity of RMC No. 7-85 was declared by respondent courts and not by the Commissioner of Internal Revenue. A claim for refund is in the nature of a claim for exemption and should be construed in strictissimi juris against the taxpayer. Sec. 69 of the 1977 NIRC (now Sec. 76 of the 1997 NIRC) provides that any excess of the total quarterly payments over the actual income tax computed in the adjustment or final corporate income tax return, shall either (a) be refunded to the corporation, or (b) may be credited against the estimated quarterly income tax liabilities for the quarters of the succeeding taxable year. a. The corporation must signify in its annual corporate adjustment return (by marking the option box provided in the BIR form) its intention, whether to request for a refund or claim for an automatic tax credit for the succeeding taxable year. To ease the administration of tax collection, these remedies are in the alternative, and the choice of one precludes the other. In this case, PBCom opted for an automatic tax credit hence it can no longer ask for a refund.

CHINA BANKING CORP. v. THE MEMBERS OF THE BOARD OF TRUSTEES OF HDMF (1999) by Alimpolos GONZAGA-REYES, J. LIMITS ON RULE-MAKING POWER SUMMARY: Under PD 1752, employers who have their own provident and/or employee housing plans superior to that of the HDMF may apply for exemption from the coverage of the Fund. In the rules issued by the HDMF Board pursuant to its rule-making powers under the law, in order to be entitled to waiver/exemption, it required an employer to have both a retirement/provident and a housing plan which are both superior to that of the Fund. SC held that these issuances are invalid insofar as they impose a more stringent condition not envisioned by the law. The words and/or should be taken in its ordinary signification. The existence of either plan is sufficient; the concurrence of both is more than sufficient. DOCTRINE: While it may be conceded that the requirement of the concurrence of both plans to qualify for exemption would strengthen the Home Development Mutual Fund and make it more effective both as a savings generation and a house building program, the basic law should prevail as the embodiment of the legislative purpose, and the rules and regulations issued to implement said law cannot go beyond its terms and provisions. FACTS: 1. Under Sec 19 of PD 1752*, employers who have their own existing provident and/or employee-housing plans may register for certification for waiver or suspension from coverage or participation in the Home Development Mutual Fund (HDMF). 2. RA 7742, amending PD 1752 was approved (no change introduced to Sec 19). 3. HDMF Board (the Board) issued implementing rules (an amendment to the Rules and Regulations Implementing RA 7742** and HDMF Circular No. 124-B or the Revised Guidelines and Procedure for filing Application for Waiver of Suspension of Fund Coverage under PD 1752***). 4. Under the implementing rules, a company must have a provident/retirement and housing plan superior to that provided under the PAG-IBIG Fund to be entitled to exemption/waiver from fund coverage. 5. CBC and CBC-PCCI are employers who applied for renewal of waiver coverage from the fund but their applications were disapproved on the ground that (1) their retirement plan is not superior to that of the Fund and (2) that, to qualify for waiver, a company must have retirement/provident and housing plans both superior to that of the Fund. 6. CBC and CBC-PCCI filed a petition for certiorari and prohibition before the RTC seeking to annul and declare void the implementing rules alleging that, in requiring the employer to have both a retirement/provident plan and an employee housing plan in order to be entitled to a certificate of waiver or suspension of coverage from the HDMF, the Board exceeded its rule-making power. 7. RTC, upon the Board’s motion, dismissed the petition on the grounds (1) that the denial or grant of an application for waiver is within the power and authority of the Board and (2) that certiorari will not lie as a substitute for a lost remedy of appeal. 8. CBC and CBC-PCCI filed this petition for review. ISSUE 1. PROCEDURAL: WON certiorari is the proper remedy- YES 2. WON the Amendment and the Guidelines are valid- NO

RULING 1. (PROCEDURAL) Certiorari (not appeal) is the appropriate remedy to question the validity of the challenged issuances of the HDMF which are alleged to have been issued with grave abuse of discretion amounting to lack

of jurisdiction. CBC and CBC-PCCI sought the annulment of the Amendment and Guidelines and not merely of the denial by the Board of their applications for waiver/exemption. 2. The Amendment and Guidelines should be set aside insofar as they require that an employer must have both a superior retirement/provident plan and a superior employee housing plan to be entitled to exemption from the coverage of the fund. a. The controversy lies in the legal signification of the words and/or in Sec 19 of PD 1752. The legal meaning of the words and/or should be taken in its ordinary signification, i.e., either and or; e.g. butter and/or eggs means butter and eggs or butter or eggs. b. Sec 19 of PD 1752 intended that an employer with a provident plan or an employee housing plan superior to that of the fund may obtain exemption from the coverage. If the law had intended that the employer should have both in order to qualify for exemption, it would have used the word “and” instead of “and/or”. The existence of either plan is sufficient; the concurrence of both plans is more than sufficient. c. To require the existence of both would impose a more stringent condition not envisioned by the law. The Board has exceeded its authority by removing the disjunctive word “or” in the implementing rules. d. While it may be conceded that the requirement of the concurrence of both plans to qualify for exemption would strengthen the Home Development Mutual Fund and make it more effective both as a savings generation and a house building program, the basic law should prevail as the embodiment of the legislative purpose, and the rules and regulations issued to implement said law cannot go beyond its terms and provisions. ___________________________________________ *Section 19 of P.D. No. 1752: Existing Provident/Housing Plans. - An employer and/or employee-group who, at the time this Decree becomes effective have their own provident and/or employee-housing plans, may register with the Fund, for any of the following purposes: (a) For annual certification of waiver or suspension from coverage or participation in the Fund, xxx **Amendments to the Rules and Regulations Implementing Republic Act 7742: RULE VII. SECTION 1. Waiver or Suspension Because of Existing Provident/Retirement and Housing Plan. Any employer with a plan providing both for a provident/retirement and housing benefits for all his employees and existing as of December 14, 1980, the effectivity date of Presidential Decree No. 1752, may apply with the Fund for waiver or suspension of coverage xxx The provident/retirement and housing benefits as provided for under the plan must be superior to the provident/retirement and housing benefits offered by the Fund. ***DMF Circular No. 124B entitled Revised Guidelines and Procedure for Filing Applications for Waiver or Suspension of Fund Coverage under P.D. No. 1752, as amended by Republic Act No. 7742: ANY EMPLOYER WHO HAS A PROVIDENT, RETIREMENT, GRATUITY OR PENSION PLAN AND A HOUSING PLAN, EXISTING AS OF DECEMBER 14, 1980, THE EFFECTIVITY OF P.D. NO. 1752, may file an application for waiver or suspension from Fund coverage xxx

Maxima Realty Management & Dev’t Corp. v Parkway Real Estate Dev’t Corp by Bernabe FERNANDO, J. SUMMARY: Parkway and Maxima entered into an agreement to buy and sell a condominium unit. Maxima was not able to pay and thus Parkway cancelled the agreement. Maxima filed with HLURB a complaint for specific performance, HLURB sustained the nullification; The Board of Commissioners of HLURB modified the decision but still sustained the nullification of the Deed. The OP dismissed the appeal of Maxima for having been filed out of time. The Court held here that the applicable reglementary period was 15 days which is stipulated in PDs 957 and 1344 and not the 30 day regelementary period provided in the rules of procedure of the HLURB “[f]or it is axiomatic that administrative rules derive their validity from the statute that they are intended to implement. Any rule which is not consistent with [the] statute itself is null and void.” FACTS 1. Parkway and Maxima entered into an agreement to buy and sell, on installment basis Unit #702 of Heart Tower Condominium for 3 Million Pesos 2. Maxima defaulted but was granted several grace periods until it has paid a total of P1,180,000.00, leaving a balance of P1,820,000.00. 3. On May 10, 1990, Parkway, with the consent of Segovia (original owner), executed a Deed of Assignment transferring all its rights in the condominium unit in favor of Maxima to enable Maxima to use the same as security for P1,820,000.00 loan with RCBC, which amount will be used by Maxima to pay its obligation to Parkway. 4. On the other hand, Segovia and Maxima agreed to transfer title to the condominium unit directly in Maximas name subject to the condition that the latter shall pay Segovia the amount of P58,114.00, representing transfer fee, utility expenses, association dues and miscellaneous charges 5. June 5, 1990, RCBC informed Parkway of the approval of Maximas P1,820,000.00 loan subject to the submission of, among others, the Condominium Certificate of Title transferred in the name of Maxima and the Certificate of Completion and turn over of unit 6. Maxima failed to pay Segovia the amount of P58,114.00 for fees and charges. Thus, Segovia did not transfer the title of the condominium unit to Maxima. 7. Since Parkway was not paid the balance of P1,820,000.00, it cancelled its agreement to buy and sell and Deed of Assignment in favor of Maxima 8. May 2, 1991- Maxima filed with the Office of Appeals, Adjudication and Legal Affairs of the Housing and Land Use Regulatory Board (HLURB), a complaint for specific performance to enforce the agreement to buy and sell Unit #702. 9. December 17, 1992 - the HLURB Arbiter sustained the nullification of the Deed of Assignment and ordered Parkway to refund to Maxima the amount of P1,180,000.00. 10. Both Maxima and Parkway appealed to the Board of Commissioners of the HLURB (Board) a. During the pendency of the appeal, Maxima offered to pay the balance of P1,820,000.00, which was accepted by Parkway. b. The Board then ordered Maxima to deliver said amount in the form of managers check to Parkway; and directed Segovia to transfer title over the property to Maxima c. Maxima failed to make good its offer, which compelled Parkway to file a Manifestation that the appeal be resolved 11. March 14, 1994 - the Board rendered judgment modifying the decision of the HLURB Arbiter by forfeiting in favor of Parkway 50% of the total amount paid by Maxima and ordering Segovia to pay Parkway the amount of P10,000.00 as attorneys fees. (receipt: April 19) 12. May 10, 1994 - Maxima appealed ]to the Office of the President which dismissed the appeal for having been filed out of time 13. Maxima filed a petition for review with CA - affirmed in toto the Decision of the Office of the President. 14. Maxima filed a petition for review on certiorari w/ SC ISSUE: WN petitioners appeal before the Office of the President filed within the reglementary period -NO RATIO: 1. SGMC Realty Corporation v. Office of the President: a. it was settled that the period within which to appeal the decision of the Board of Commissioners of HLURB to the Office of the President is fifteen (15) days from receipt of the assailed decision, pursuant to Section 15 of Presidential Decree No. 957 (otherwise known as the Subdivision and Condominium Buyers Protection Decree) and Section 2 of Presidential Decree No. 1344. b. the thirty (30) day period to appeal to the Office of the President from decisions of the Board as provided in Section 27 of the 1994 HLURB Rules of Procedure is not applicable, because special laws providing for the remedy of appeal to the Office of the Presidentmust prevail over the HLURB Rules of Procedure.

2. P’s relied on a literal reading of cited rules without correlating them to current laws as well as presidential decrees on the matter. a. Section 27 of the 1994 HLURB Rules of Procedure. Appeal to the Office of the President. Any party may, upon notice to the Board and the other party, appeal the decision of the Board of Commissioners or its division to the Office of the President within thirty (30) days from receipt thereof pursuant to and in accordance with Administrative Order No. 18, of the Office of the President dated February 12, 1987. Decision of the President shall be final subject only to review by the Supreme Court on certiorari or on questions of law. b. Administrative Order No. 18, reads: Section 1. Unless otherwise governed by special laws, an appeal to the Office of the President shall be taken within thirty (30) days from receipt by the aggrieved party of the decision/resolution/order complained of or appealed from. c. The thirty-day period is subject to the qualification that there are no other statutory periods of appeal applicableThis is in line with the rule in statutory construction that an administrative rule or regulation, in order to be valid, must not contradict but conform to the provisions of the enabling law. 3. there are special laws that mandate a shorter period of fifteen (15) days within which to appeal a case to public respondent. a. First, Section 15 of Presidential Decree No. 957 provides that the decisions of the National Housing Authority (NHA) shall become final and executory after the lapse of fifteen (15) days from the date of receipt of the decision. b. Second, Section 2 of Presidential Decree No. 1344 states that decisions of the National Housing Authority shall become final and executory after the lapse of fifteen (15) days from the date of its receipt. The latter decree provides that the decisions of NHA is appealable only to the Office of the President. c. Accordingly, the period of appeal of thirty (30) days set forth in Section 27 of HLURB 1994 Rules of Procedure no longer holds true for being in conflict with the provisions of aforesaid presidential decrees. For it is axiomatic that administrative rules derive their validity from the statute that they are intended to implement. Any rule which is not consistent with [the] statute itself is null and void. 4. In the case at bar, Maxima had until May 4, 1994, the fifteenth day from receipt of the decision of the Board on April 19, 1994 to appeal to the Office of the President. The appeal which was filed on May 10, 1994 was clearly beyond the reglementary period. BARTOLOME V. SSS by Clyde Tan Velasco Jr., J. Limits on Rule Making Power DOCTRINE: Rule-making power must be confined to details for regulating the mode or proceedings in order to carry into effect the law as it has been enacted, and it cannot be extended to amend or expand the statutory requirements or to embrace matters not covered by the statute. Administrative regulations must always be in harmony with the provisions of the law because any resulting discrepancy between the two will always be resolved in favor of the basic law. FACTS: 1. During his employment as electrician in Scanmar Martitime Services, John Colcol was hit by steel plates and died. Since John was childless and unmarried, his biological mother Bernardina P. Bartolome claimed death benefits under PD 626 with the SSS. 2. Both the SSS and the Employees’ Compensation Commission, on appeal, denied her claim because John ColCol was legally adopted by Cornelio ColCol, his great grandfather. They denied petitioner’s claim on the ground that she is no longer the deceased’s legitimate parent, as required by the implementing rules. As held by the ECC, the adoption decree severed the relation between John and petitioner, effectively divesting her of the status of a legitimate parent, and, consequently, that of being a secondary beneficiary. RULE: LABOR CODE ART. 167. Definition of terms. – As used in this Title unless the context indicates otherwise: (j) 'Beneficiaries' means the dependent spouse until he remarries and dependent children, who are the primary beneficiaries. In their absence, the dependent parents and subject to the restrictions imposed on dependent children, the illegitimate children and legitimate descendants who are the secondary beneficiaries; Provided, that the dependent acknowledged natural child shall be considered as a primary beneficiary when there are no other dependent children who are qualified and eligible for monthly income benefit. AMENDED RULES ON EMPLOYEES’ COMPENSATION BY ECC RULE XV – BENEFICIARIES

SECTION 1. Definition. (c) The following beneficiaries shall be considered secondary: (1) The legitimate parents wholly dependent upon the employee for regular support; (2) The legitimate descendants and illegitimate children who are unmarried, not gainfully employed, and not over 21 years of age, or over 21 years of age provided that he is incapacitated and incapable of self support due to physical or mental defect which is congenital or acquired during minority. ISSUES/HELD: W/N Bernardina P. Bartolome is entitled to the death benefits? YES (this issue is hinged the issue of w/n the amended rules issued by ECC unduly restricted the term “dependent parents” in the Labor Code to “legitimate parents”) RATIO: 1. Rule XV, Sec. 1(c)(1) of the Amended Rules on Employees’ Compensation deviates from the clear language of Art. 167 (j) of the Labor Code, as amended 2. Rule XV of the Amended Rules on Employees’ Compensation is patently a wayward restriction of and a substantial deviation from Article 167 (j) of the Labor Code when it interpreted the phrase "dependent parents" to refer to "legitimate parents." 3. As we have previously declared, rule-making power must be confined to details for regulating the mode or proceedings in order to carry into effect the law as it has been enacted, and it cannot be extended to amend or expand the statutory requirements or to embrace matters not covered by the statute. Administrative regulations must always be in harmony with the provisions of the law because any resulting discrepancy between the two will always be resolved in favor of the basic law. 4. The term "parents" in the phrase "dependent parents" in the afore-quoted Article 167 (j) of the Labor Code is used and ought to be taken in its general sense and cannot be unduly limited to "legitimate parents" as what the ECC did. The phrase "dependent parents" should, therefore, include all parents, whether legitimate or illegitimate and whether by nature or by adoption. When the law does not distinguish, one should not distinguish. Plainly, "dependent parents" are parents, whether legitimate or illegitimate, biological or by adoption, who are in need of support or assistance.