CASE DIGEST: CHAPTER III ADMINISTRATIVE LAW, LAW ON LOCAL GOVERNMENT & ELECTION LAW

Power of Rule-Making

1) LAGUNA LAKE DEVT AUTHORITY vs. CA

231 SCRA 292, G.R. No. 110120, March 16, 1994

2) RIZAL EMPIRE INSURANCE GROUP vs. NLRC

150 SCRA 565, G.R. No. 73140, May 29, 1987

3) TIO vs. VIDEOGRAM REGULATORY BOARD

151 SCRA 208, G.R. No. L-75697, June 18, 1987

4) PEOPLE vs. MACEREN

79 SCRA 450, G.R. No. L-32166, October 18, 1977

5) BOIE-TAKEDA CHEMICALS INC vs. DELA SERNA

228 SCRA 329, G.R. No. 92174, December 10, 1993

6) CIR vs. CA
261 SCRA 262, G.R. No. 119761, August 29, 1996

7) PERALTA vs. CIVIL SERVICE COMMISSION

212 SCRA 425, G.R. No. 95832, August 10, 1992

8) PHIL. AIRLINES INC. vs. CIVIL AERONAUTICS BOARD

270 SCRA 538, G.R. No. 119528, March 26, 1997

9) PHIL. ASSOC. SERVICE EXPORTERS INC. vs TORRES

212 SCRA 298, G.R. No. 101279, August 6, 1992

10) PHIL. CONSUMERS FOUNDATION INC. vs.

SECRETARY OF EDUCATION, CULTURE & SPORTS
153 SCRA 622, G.R. No. 78385, August 31, 1987

11) CIR vs. BICOLANDIA DRUG CORP.

Gr. No. 148083, July 21, 2006

12) HOLY SPIRIT HOMEOWNERS ASSOC. vs. MICHAEL

DEFENSOR ET AL
Gr. No. 163980, August 3, 2006

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CASE DIGEST: CHAPTER III ADMINISTRATIVE LAW, LAW ON LOCAL GOVERNMENT & ELECTION LAW
LAGUNA LAKE DEVT AUTHORITY vs. CA
231 SCRA 292, G.R. No. 110120, March 16, 1994
Facts:
The residents of Tala Estate, Barangay Camarin, Caloocan City
raised a complaint with the Laguna Lake Development Authority
(LLDA), seeking to stop the operation of the City Government of
Caloocan of an 8.6 hectare open garbage dumpsite in Tala Estate,
due to its harmful effects on the health of the residents and the
pollution of the surrounding water.
LLDA discovered that the City Government of Caloocan has
been maintaining the open dumpsite at the Camarin Area without a
requisite Environmental Compliance Certificate from the
Environmental Management Bureau of the DENR. They also found
the water to have been directly contaminated by the operation of
the dumpsite.
LLDA issued a Cease and Desist Order against the City
Government and other entities to completely halt, stop and desist
from dumping any form or kind of garbage and other waste matter
on the Camarin dumpsite.
The City Government went to the Regional Trial Court of
Caloocan City to file an action for the declaration of nullity of the
cease and desist order and sought to be declared as the sole
authority empowered to promote the health and safety and
enhance the right of the people in Caloocan City to a balanced
ecology within its territorial jurisdiction.
LLDA sought to dismiss the complaint, invoking the Pollution
Control Law that the review of cease and desist orders of that
nature falls under the Court of Appeals and not the RTC.
RTC denied LLDAs motion to dismiss, and issued a writ of
preliminary injunction enjoining LLDA from enforcing the cease and
desist order during the pendency of the case.
The Court of Appeals promulgated a decision that ruled that
the LLDA has no power and authority to issue a cease and desist
order enjoining the dumping of garbage. The residents seek a
review of the decision.
Issue:
Whether or not the LLDA has authority and power to issue
an order which, in its nature and effect was injunctive.
Held:
Yes.
City Government of Caloocan: As a local government unit,
pursuant to the general welfare provision of the Local Government
Code, they have the mandate to operate a dumpsite and determine
the effects to the ecological balance over its territorial jurisdiction.
LLDA: As an administrative agency which was granted regulatory and
adjudicatory powers and functions by RA No. 4850, it is invested
with the power and authority to issue a cease and desist order
pursuant to various provisions in EO No. 927..
LLDA is mandated by law to manage the environment, preserve
the quality of human life and ecological systems and prevent undue
ecological disturbances, deterioration and pollution in the Laguna
Lake area and surrounding provinces and cities, including Caloocan.
While pollution cases are generally under the Pollution
Adjudication Board under the Department of Environment and
Natural Resources, it does not preclude mandate from special laws
that provide another forum.
In this case, RA No. 4850 provides that mandate to the LLDA. It
is mandated to pass upon or approve or disapprove plans and
programs of local government offices and agencies within the region
and their underlying environmental/ecological repercussions.
The DENR even recognized the primary jurisdiction of the LLDA
over the case when the DENR acted as intermediary at a meeting
among the representatives of the city government, LLDA and the
residents.
LLDA has the authority to issue the cease and desist order. Explicit in
the law. 4, par. (3) explicitly authorizes the LLDA to make whatever
order may be necessary in the exercise of its jurisdiction. While LLDA
was not expressly conferred the power to issue an ex-parte cease
and desist order in that language, the provision granting authority
to make () orders requiring the discontinuance of pollution, has
the same effect.
Necessarily implied powers. Assuming arguendo that the
cease and desist order was not expressly conferred by law, there is
jurisprudence enough to the effect. While it is a fundamental rule
that an administrative agency has only such power as expressly
granted to it by law, it is likewise a settled rule that an
administrative agency has also such powers as are necessarily
implied in the exercise of its express powers. Otherwise, it will be
reduced to a toothless paper agency.
In Pollution Adjudication Board vs Court of Appeals, the
Court ruled that the PAB has the power to issue an ex-parte cease
and desist order on prima facie evidence of an establishment
exceeding the allowable standards set by the anti-pollution laws of
the country. LLDA has been vested with sufficiently broad powers in
the regulation of the projects within the Laguna Lake region, and
this includes the implementation of relevant anti-pollution laws in
the area.
RIZAL EMPIRE INSURANCE GROUP vs. NLRC
150 SCRA 565, G.R. No. 73140, May 29, 1987
Facts:
In August, 1977, herein private respondent Rogelio R.
Coria was hired by herein petitioner Rizal Empire Insurance Group as
a casual employee with a salary of P10.00 a day. On January 1, 1978,
he was made a regular employee, having been appointed as clerk-
typist.
Being a permanent employee, he was furnished a copy of
petitioner company's "General Information, Office Behavior and
Other Rules and Regulations." In the same year, without change in
his position-designation, he was transferred to the Claims
Department and his salary was increased.
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CASE DIGEST: CHAPTER III ADMINISTRATIVE LAW, LAW ON LOCAL GOVERNMENT & ELECTION LAW
In 1980, he was transferred to the Underwriting
Department and his salary was increased to P580.00 a month plus
cost of living allowance, until he was transferred to the Fire
Department as filing clerk. In July, 1983, he was made an inspector
of the Fire Division with a monthly salary of P685.00 plus allowances
and other benefits.
On October 15, 1983, private respondent Rogelio R. Coria
was dismissed from work, allegedly, on the grounds of tardiness and
unexcused absences.
Accordingly, he filed a complaint with the Ministry of
Labor and Employment (MOLE), and in a Decision dated March 14,
1985 (Record, pp. 80-87), Labor Arbiter Teodorico L. Ruiz reinstated
him to his position with back wages. Petitioner filed an appeal with
the National labor Relations Commission (NLRC) but, in a Resolution
dated November 15, 1985, the appeal was dismissed on the ground
that the same had been filed out of time. Hence, the instant petition
Issue:
Whether or not NLRC committed a grave abuse of
discretion amounting to lack of jurisdiction in dismissing petitioners
appeal on a technicality.
Held:
No. Rule VIII of the Revised Rules of the National Labor
Relations Commission on appeal, provides:
SECTION 1. (a) Appeal. Decision or orders of a labor
Arbiter shall be final and executory unless appealed to the
Commission by any or both of the parties within ten (10) calendar
days from receipt of notice thereof.
SECTION 6. No extension of period. No motion or
request for extension of the period within which to perfect an appeal
shall be entertained.
The record shows that the employer (petitioner herein)
received a copy of the decision of the Labor Arbiter on April 1, 1985.
It filed a Motion for Extension of Time to File Memorandum of
Appeal on April 11, 1985 and filed the Memorandum of Appeal on
April 22, 1985. Pursuant to the "no extension policy" of the National
Labor Relations Commission, aforesaid motion for extension of time
was denied in its resolution dated November 15, 1985 and the
appeal was dismissed for having been filed out of time.
The Revised Rules of the National Labor Relations
Commission are clear and explicit and leave no room for
interpretation.
Moreover, it is an elementary rule in administrative law
that administrative regulations and policies enacted by
administrative bodies to interpret the law which they are entrusted
to enforce, have the force of law, and are entitled to great respect
Under the above-quoted provisions of the Revised NLRC
Rules, the decision appealed from in this case has become final and
executory and can no longer be subject to appeal.
Even on the merits, the ruling of the Labor Arbiter appears
to be correct; the consistent promotions in rank and salary of the
private respondent indicate he must have been a highly efficient
worker, who should be retained despite occasional lapses in
punctuality and attendance. Perfection cannot after all be
demanded.
TIO vs. VIDEOGRAM REGULATORY BOARD
151 SCRA 208, G.R. No. L-75697, June 18, 1987
Facts:
Tio is a videogram operator who assailed the
constitutionality of PD 1987 entitled An Act Creating the Videogram
Regulatory Board with broad powers to regulate and supervise the
videogram industry. The PD was also reinforced by PD 1994 which
amended the National Internal Revenue Code.
The amendment provides that there shall be collected on
each processed video-tape cassette, ready for playback, regardless
of length, an annual tax of five pesos; Provided, that locally
manufactured or imported blank video tapes shall be subject to
sales tax. The said law was brought about by the need to regulate
the sale of videograms as it has adverse effects to the movie
industry. The proliferation of videograms has significantly lessened
the revenue being acquired from the movie industry, and that such
loss may be recovered if videograms are to be taxed. Sec 10 of the
PD imposes a 30% tax on the gross receipts payable to the LGUs.
Tio countered, among others, that the tax imposition
provision is a rider and is not germane to the subject matter of the
PD.PD 1994 issued a month thereafter reinforced PD 1987 and in
effect amended the National Internal Revenue Code (NIRC).
Petitioner's attack on the constitutionality of the DECREE
on the ground that there is undue delegation of power and
authority.
Issue:
Whether or not the PD 1987 is unconstitutional due to the
tax provision included.
Held:
No. The title of the decree, which calls for the creation of
the VRB is comprehensive enough to include the purposes expressed
in its Preamble and reasonably covered in all its provisions. It is
unnecessary to express all those objectives in the title or that the
latter be an index to the body of the decree.
The foregoing provision is allied and germane to, and is
reasonably necessary for the accomplishment of the general object
of the decree, which is the regulation of the video industry through
the VRB as expressed in its title. The tax provision is not inconsistent
with nor foreign to the general subject and title. As a tool for
regulation it is simply one of the regulatory and control mechanisms
scattered throughout the decree.
The express purpose of PD 1987 to include taxation of the
video industry in order to regulate and rationalize the heretofore
uncontrolled distribution of videos is evident from Preambles 2 and
5. Those preambles explain the motives of the lawmaker in
presenting the measure.
Neither can it be successfully argued that the DECREE
contains an undue delegation of legislative power. The grant in
Section 11 of the DECREE of authority to the BOARD to "solicit the
direct assistance of other agencies and units of the government and
deputize, for a fixed and limited period, the heads or personnel of
such agencies and units to perform enforcement functions for the
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CASE DIGEST: CHAPTER III ADMINISTRATIVE LAW, LAW ON LOCAL GOVERNMENT & ELECTION LAW

Board" is not a delegation of the power to legislate but merely a
conferment of authority or discretion as to its execution,
enforcement, and implementation.
"The true distinction is between the delegation of power
to make the law, which necessarily involves a discretion as to what it
shall be, and conferring authority or discretion as to its execution to
be exercised under and in pursuance of the law. The first cannot be
done; to the latter, no valid objection can be made."
PEOPLE vs. MACEREN
79 SCRA 450, G.R. No. L-32166, October 18, 1977
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 germane to the defects and purposes
of the law and that it should conform to the standards that the law
prescribes.
Administrative regulations adopted under legislative
authority by a particular department must be in harmony with the
provisions of the law, and should be for the sole purpose of carrying
into effect its general provisions. By such regulations, of course, the
law itself cannot be extended.
The rule-making power must be confined to details for
regulating the mode or proceeding to carry into effect the law as it
his been enacted. The power cannot be extended to amending or
expanding the statutory requirements or to embrace matters not
covered by the statute. Rules that subvert the statute cannot be
sanctioned.

Facts:
The respondents were charged with violating Fisheries
Administrative Order No. 84-1 which penalizes electro fishing in
fresh water fisheries. This was promulgated by the Secretary of
Agriculture and Natural Resources and the Commissioner of
Fisheries under the old Fisheries Law and the law creating the
BOIE-TAKEDA CHEMICALS INC vs. DELA SERNA
Fisheries Commission. The municipal court quashed the complaint
228 SCRA 329, G.R. No. 92174, December 10, 1993
and held that the law does not clearly prohibit electro fishing, hence
the executive and judicial departments cannot consider the same.
Facts:
On appeal, the CFI affirmed the dismissal. Hence, this appeal to the
P.D. No. 851 provides for the Thirteen-Month Pay Law.
SC.
Under Sec. 1 of said law, all employers are required to pay all their
employees receiving basic salary of not more than P 1,000.00 a
Issue:
month, regardless of the nature of the employment, and such
Whether or not the administrative order penalizing
should be paid on December 24 of every year.
electro fishing is valid.
The Rules and Regulations Implementing P.D. 851
contained provisions defining 13-month pay and basic salary and
Held:
the employers exempted from giving it and to whom it is made
NO. The Secretary of Agriculture and Natural Resources
applicable. Supplementary Rules and Regulations Implementing P.D.
and the Commissioner of Fisheries exceeded their authority in
851 were subsequently issued by Minister Ople which inter alia set
issuing the administrative order. The old Fisheries Law does not
items of compensation not included in the computation of 13-month
expressly prohibit electro fishing. As electro fishing is not banned
pay. (overtime pay, earnings and other remunerations which are not
under that law, the Secretary of Agriculture and Natural Resources
part of basic salary shall not be included in the computation of 13-
and the Commissioner of Fisheries are powerless to penalize it. Had
month pay).
the lawmaking body intended to punish electro fishing, a penal
Pres. Corazon Aquino promulgated on August 13, 1985
provision to that effect could have been easily embodied in the old
M.O. No. 28, containing a single provision that modifies P.D. 851 by
Fisheries Law.
removing the salary ceiling of P 1,000.00 a month. More than a year
The lawmaking body cannot delegate to an executive
later, Revised Guidelines on the Implementation of the 13-month
official the power to declare what acts should constitute an offense.
pay law was promulgated by the then Labor Secretary Franklin
It can authorize the issuance of regulations and the imposition of the
Drilon, among other things, defined particularly what remunerative
penalty provided for in the law itself.
items were and were not included in the concept of 13-month pay,
Where the legislature has delegated to executive or
and specifically dealt with employees who are paid a fixed or
administrative officers and boards authority to promulgate rules to
guaranteed wage plus commission or commissions were included in
carry out an express legislative purpose, the rules of administrative
the computation of 13th month pay)
officers and boards, which have the effect of extending, or which
A routine inspection was conducted in the premises of
conflict with the authority granting statute, do not represent a valid
petitioner. Finding that petitioner had not been including the
precise of the rule-making power but constitute an attempt by an
commissions earned by its medical representatives in the
administrative body to legislate
computation of their 1-month pay, a Notice of Inspection Result was
Administrative agent are clothed with rule-making powers
served on petitioner to effect restitution or correction of the
because the lawmaking body finds it impracticable, if not impossible,

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CASE DIGEST: CHAPTER III ADMINISTRATIVE LAW, LAW ON LOCAL GOVERNMENT & ELECTION LAW
underpayment of 13-month pay for the years, 1986 to 1988 of
Medical representatives.
Petitioner wrote the Labor Department contesting the
Notice of Inspection Results, and expressing the view that the
commission paid to its medical representatives are not to be
included in the computation of the 13-moth pay since the law and
its implementing rules speak of REGULAR or BASIC salary and
therefore exclude all remunerations which are not part of the
REGULAR salary.
Regional Dir. Luna Piezas issued an order for the payment
of underpaid 13-month pay for the years 1986, 1987 and 1988. A
motion for reconsideration was filed and the then Acting labor
Secretary Dionisio de la Serna affirmed the order with modification
that the sales commission earned of medical representatives before
August 13, 1989 (effectivity date of MO 28 and its implementing
guidelines) shall be excluded in the computation of the 13-month
pay.
Similar routine inspection was conducted in the premises
of Phil. Fuji Xerox where it was found there was underpayment of
13th month pay since commissions were not included. In their
almost identically-worded petitioner, petitioners, through common
counsel, attribute grave abuse of discretion to respondent labor
officials
Hon. Dionisio dela Serna and Undersecretary Cresenciano B.
Trajano.
Issue:
Whether or not commissions are included in the
computation of 13-month pay.
Held:
NO. Contrary to respondents contention, M.O No. 28 did
not repeal, supersede or abrogate P.D. 851. As may be gleaned from
the language of MO No. 28, it merely modified Section 1 of the
decree by removing the P 1,000.00 salary ceiling. The concept of
13th Month pay as envisioned, defined and implemented under P.D.
851 remained unaltered, and while entitlement to said benefit was
no longer limited to employees receiving a monthly basic salary of
not more than P 1,000.00 said benefit was, and still is, to be
computed on the basic salary of the employee-recipient as provided
under P.D. 851. Thus, the interpretation given to the term basic
salary was defined in PD 851 applies equally to basic salary under
M.O. No. 28. The term basic salary is to be understood in its
common, generally accepted meaning, i.e., as a rate of pay for a
standard work period exclusive of such additional payments as
bonuses and overtime. In remunerative schemes consists of a fixed
or guaranteed wage plus commission, the fixed or guaranteed wage
is patently the basic salary for this is what the employee receives
for a standard work period. Commissions are given for extra efforts
exerted in consummating sales of other related transactions. They
are, as such, additional pay, which the SC has made clear do not
from part of the basic salary.
Moreover, the Supreme Court said that, including
commissions in the computation of the 13th month pay, the second
paragraph of Section 5(a) of the Revised Guidelines on the
Implementation of the 13th Month Pay Law unduly expanded the
concept of "basic salary" as defined in P.D. 851.
It is a fundamental rule that implementing rules cannot
add to or detract from the provisions of the law it is designed to
implement. Administrative regulations adopted under legislative
authority by a particular department must be in harmony with the
provisions of the law they are intended to carry into effect. They
cannot widen its scope. An administrative agency cannot amend an
act of Congress.
CIR vs. CA
261 SCRA 262, G.R. No. 119761, August 29, 1996
Facts:
RA 7654 was enacted by Congress on June 10, 1993 and
took effect July 3, 1993. It amended partly Sec. 142 (c) of the NIRC1.
Fortune Tobacco manufactured the following cigaretter brands:
Hope, More and Champion. Prior to RA 7654, these 3 brands were
considered local brands subjected to an ad valorem tax of 20 to
45%. Applying the amendment and nothing else, the 3 brands
should fall under Sec 142 (c) (2) NIRC and be taxed at 20 to 45%.
However, on July 1, 1993, petitioner Commissioner of
Internal Revenue issued Revenue Memorandum Circular37-93 which
reclassified the 3 brands as locally manufactured cigarettes bearing
a foreign brand subject to the 55% ad valorem tax. The
reclassification was before RA 7654 took effect.
In effect, the memo circular subjected the 3 brands to the
provisions of Sec 142 (c) (1) NIRC imposing upon these brands a rate
of 55% instead of just 20 to 45% under Sec 142 (c) (2) NIRC. There
was no notice and hearing. CIR argued that the memo circular was
merely an interpretative ruling of the BIR which did
not require notice and hearing.
Issue:
Whether or not RMC 37-93 was valid and enforceable.
Held:
No; lack of notice and hearing violated due process
required for promulgated rules. Moreover, it infringed on uniformity
of taxation / equal protection since other local cigarettes bearing
foreign brands had
not been included within the scope of the memo circular.
Contrary to petitioners contention, the memo was not a
mere interpretative rule but a legislative rule in the nature of
subordinate legislation, designed to implement a primary legislation
by providing the details thereof. Promulgated legislative rules must
be published.
On the other hand, interpretative rules only provide
guidelines to the law which the administrative agency is in charge of
enforcing.
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CASE DIGEST: CHAPTER III ADMINISTRATIVE LAW, LAW ON LOCAL GOVERNMENT & ELECTION LAW
BIR, in reclassifying the 3 brands and raising their
applicable tax rate, did not simply interpret RA 7654 but legislated
under its quasi-legislative authority. BELLOSILLO separate opinion:
the administrative issuance was not quasi-legislative but quasi-
judicial. Due process should still be observed of course but use Ang
Tibay v. CIR.
One of the powers of administrative agencies like the
Bureau of Internal Revenue, is the power to make rules. The
necessity for vesting administrative agencies with this power stems
from the impracticability of the lawmakers providing general
regulations for various and varying details pertinent to a particular
legislation.
The rules that administrative agencies may promulgate
may either be legislative or interpretative. The former is a form of
subordinate legislation whereby the administrative agency is acting
in a legislative capacity, supplementing the statute, filling in the
details, pursuant to a specific delegation of legislative power.
It should be understandable that when an administrative
rule is merely interpretative in nature, its applicability needs nothing
further than its bare issuance for it gives no real consequence more
than what the law itself has already prescribed.
When, upon the other hand, the administrative rule goes
beyond merely providing for the means that can facilitate or render
least cumbersome the implementation of the law but substantially
adds to or increases the burden of those governed, it behooves the
agency to accord at least to those directly affected a chance to be
heard, and thereafter to be duly informed, before that new issuance
is given the force and effect of law.
PERALTA vs. CIVIL SERVICE COMMISSION
212 SCRA 425, G.R. No. 95832, August 10, 1992
Facts:
Petitioner was appointed Trade-Specialist II on 25
September 1989 in the Department of Trade and Industry (DTI). His
appointment was classified as "Reinstatement/Permanent". 120889
petitioner received his initial salary, covering the period from
September to October 1989. Since he had no accumulated leave
credits, DTI deducted from his salary the amount corresponding to
his absences during the covered period, inclusive of Saturdays and
Sundays.
Petitioner sent a memorandum to Amando T. Alvis (Chief,
General Administrative Service) inquiring as to the law on salary
deductions, if the employee has no leave credits. Amando T. Alvis
answered petitioner's query in a memorandumciting Chapter 5.49 of
the Handbook of Information on the Philippine Civil Service which
states that "when an employee is on leave without pay on a day
before or on a day immediately preceding a Saturday, Sunday or
Holiday, such Saturday, Sunday, or Holiday shall also be without pay.
Petitioner sent a letter addressed to CSC Chairman Patricia
Sto. Tomas raising the question: 'Is an employee who was on leave
of absence without pay on a day before or on a day time
immediately preceding a Saturday, Sunday or Holiday, also
considered on leave of absence without pay on such Saturday,
Sunday or Holiday? Petitioner: he cannot be deprived of his pay or
salary corresponding to the intervening Saturdays, Sundays or
Holidays (in the factual situation posed), and that the withholding
(or deduction) of the same is tantamount to a deprivation of
property without due process of law.
Respondent Commission promulgated Resolution No. 90-
497, ruling that the action of the DTI in deducting from the salary of
petitioner, a part
thereof corresponding to six (6) days is in order.
Issue:
Whether or not the CSC resolution is valid.
Held:
No. The court ruled that the construction by the
respondent Commission of R.A. 2625 is not in accordance with the
legislative intent. R.A. 2625 specifically provides that government
employees are entitled to fifteen (15) days vacation leave of absence
with full pay and fifteen (15) days sick leave with full pay, exclusive
of Saturdays, Sundays and Holidays in both cases. Thus, the law
speaks of the granting of a right and the law does not provide for a
distinction between those who have accumulated leave credits and
those who have exhausted their leave credits in order to enjoy such
right. The fact remains that government employees, whether or not
they have accumulated leave credits, are not required by law to
work on Saturdays, Sundays and Holidays and thus they can not be
declared absent on such non-working days. They cannot be or are
not considered absent on non-working days; they cannot and should
not be deprived of their salary corresponding to said non-working
days just because they were absent without pay on the day
immediately prior to, or after said non-working days. A different rule
would constitute a deprivation of property without due process.
Furthermore, before their amendment by R.A. 2625,
Sections 284 and 285-A of the Revised Administrative Code applied
to all government employee without any distinction. It follows that
the effect of the amendment similarly applies to all employees
enumerated in Sections 284 and 285-A, whether or not they have
accumulated leave credits.
The general rule vis-a-vis legislation is that an
unconstitutional act is not a law; it confers no rights; it imposes no
duties; it affords no protection; it creates no office; it is in legal
contemplation as inoperative as though it had never been passed.
When an administrative or executive agency renders an
opinion or issues a statement of policy, it merely interprets a pre-
existing law; and the administrative interpretation of the law is at
best advisory, for it is the courts that finally determine what the law
means.
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CASE DIGEST: CHAPTER III ADMINISTRATIVE LAW, LAW ON LOCAL GOVERNMENT & ELECTION LAW
PHIL. AIRLINES INC. vs. CIVIL AERONAUTICS BOARD
270 SCRA 538, G.R. No. 119528, March 26, 1997
Facts:
On November 24, 1994, GrandAir applied for a Certificate
of Public Convenience and Necessity with the Board. Accordingly,
the Chief Hearing Officer of the CAB issued a Notice of Hearing
setting the application for initial hearing and directing GrandAir to
serve a copy of the application and corresponding notice to all
scheduled Philippine Domestic operators.
GrandAir filed its Compliance, and requested for the
issuance of a Temporary Operating Permit. PAL, a holder of a
legislative franchise to operate air transport services, filed an
Opposition to the application for a Certificate of Public Convenience
and Necessity on December 16, 1995 on the following grounds: The
CAB has no jurisdiction to hear the petitioner's application until the
latter has first obtained a franchise to operate from Congress.
At the initial hearing for the application, petitioner raised
the issue of lack of jurisdiction of the Board to hear the application
because GrandAir did not possess a legislative franchise. Chief
Hearing Officer of CAB issued an Order denying petitioner's
Opposition.
PAL alleges that the CAB has no jurisdiction to hear the
petitioner's application until the latter has first obtained a franchise
to operate from Congress. The Civil Aeronautics Board has
jurisdiction to hear and resolve the application.
In Avia Filipina vs. CAB, CA G.R. No. 23365, it has been
ruled that under Section 10 (c) (I) of R.A. 776, the Board possesses
this specific power and duty. In view thereof, the opposition of PAL
on this ground is hereby denied.
Issue:
Whether or not the Congress , in enacting Republic Act
776, has delegated the authority to authorize the operation of
domestic air transport services to the respondent Board, such that
Congressional mandate for the approval of such authority is no
longer necessary.
Held:
Congress has granted certain administrative agencies the
power to grant licenses for, or to authorize the operation of certain
public utilities.
With the growing complexity of modern life, the
multiplication of the subjects of governmental regulation, and the
increased difficulty of administering the laws, there is a constantly
growing tendency towards the delegation of greater powers by the
legislature, and towards the approval of the practice by the courts.
It is generally recognized that a franchise may be derived
indirectly from the state through a duly designated agency, and to
this extent, the power to grant franchises has frequently been
delegated, even to agencies other than those of a legislative
nature. In pursuance of this, it has been held that privileges
conferred by grant by local authorities as agents for the state
constitute as much a legislative franchise as though the grant had
been made by an act of the Legislature.
"The franchise is a legislative grant, whether made directly
by the legislature itself, or by any one of its properly constituted
instrumentalities. The grant, when made, binds the public, and is,
directly or indirectly, the act of the state."
Congress, by giving the respondent Board the power to
issue permits for the operation of domestic transport services, has
delegated to the said body the authority to determine the capability
and competence of a prospective domestic air transport operator to
engage in such venture. This is not an instance of transforming the
respondent Board into a mini-legislative body, with unbridled
authority to choose who should be given authority to operate
domestic air transport services.
"To be valid, the delegation itself must be circumscribed
by legislative restrictions, not a "roving commission" that will give
the delegate unlimited legislative authority. It must not be a
delegation "running riot" and "not canalized with banks that keep it
from overflowing." Otherwise, the delegation is in legal effect an
abdication of legislative authority, a total surrender by the
legislature of its prerogatives in favor of the delegate."
PHIL. ASSOC. SERVICE EXPORTERS INC. vs TORRES
212 SCRA 298, G.R. No. 101279, August 6, 1992
Facts:
As a result of published stories regarding the abuses
suffered by Filipino housemaids employed in Hong Kong, then DOLE
Secretary Ruben Torres issued Department Order No. 16, Series of
1991, temporarily suspending the recruitment by private
employment agencies of Filipino domestic helpers going to Hong
Kong. The DOLE itself, through the POEA took over the business of
deploying such Hong Kong-bound workers. The POEA Administrator
also issued Memorandum Circular No. 37, Series of 1991, on the
processing of employment contracts of domestic workers for Hong
Kong.
PASEI filed a petition for prohibition to annul the
aforementioned DOLE and POEA circulars and to prohibit their
implementation on the grounds that DOLE and POEA acted with
grave abuse of discretion and/or in excess of their rule-making
authority in issuing said circulars; that the assailed DOLE and POEA
circulars are contrary to the Constitution, are unreasonable, unfair
and oppressive; and that the requirements of publication and filing
with the Office of the National Administrative Register were not
complied with.
Issue:
Whether or not the questioned circulars are a valid
exercise of the police power as delegated to the executive branch of
Government.
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Held:
Yes. It is noteworthy that the assailed circulars do not
prohibit the petitioner from engaging in the recruitment and
deployment of Filipino landbased workers for overseas employment.
A careful reading of the challenged administrative issuances
discloses that the same fall within the "administrative and policing
powers expressly or by necessary implication conferred" upon the
respondents (People vs. Maceren, 79 SCRA 450).
The power to "restrict and regulate conferred by Article 36
of the Labor Code involves a grant of police power (City of Naga vs.
Court of Appeals, 24 SCRA 898).
To "restrict" means "to confine, limit or stop" and whereas
the power to "regulate" means "the power to protect, foster,
promote, preserve, and control with due regard for the interests,
first and foremost, of the public, then of the utility and of its
patrons" (Philippine Communications Satellite Corporation vs.
Alcuaz, 180 SCRA 218).
The questioned circulars are therefore a valid exercise of
the police power as delegated to the executive branch of
Government.
Nevertheless, they are legally invalid, defective and
unenforceable for lack of power publication and filing in the Office
of the National Administrative Register as required in Article 2 of
the Civil Code, Article 5 of the Labor Code and Sections 3(1) and 4,
Chapter 2, Book VII of the Administrative Code of 1987 which
provide:
Art. 2. Laws shall take effect after fifteen (15) days
following the completion of their publication in the Official Gazatte,
unless it is otherwise provided. . . . (Civil Code.)
Art. 5. Rules and Regulations. The Department of Labor
and other government agencies charged with the administration and
enforcement of this Code or any of its parts shall promulgate the
necessary implementing rules and regulations. Such rules and
regulations shall become effective fifteen (15) days after
announcement of their adoption in newspapers of general
circulation. (Emphasis supplied, Labor Code, as amended.)
Sec. 3. Filing. (1) Every agency shall file with the
University of the Philippines Law Center, three (3) certified copies of
every rule adopted by it. Rules in force on the date of effectivity of
this Code which are not filed within three (3) months shall not
thereafter be the basis of any sanction against any party or persons.
(Emphasis supplied, Chapter 2, Book VII of the Administrative Code
of 1987.)
Sec. 4. Effectivity. In addition to other rule-making
requirements provided by law not inconsistent with this Book, each
rule shall become effective fifteen (15) days from the date of filing as
above provided unless a different date is fixed by law, or specified in
the rule in cases of imminent danger to public health, safety and
welfare, the existence of which must be expressed in a statement
accompanying the rule. The agency shall take appropriate measures
to make emergency rules known to persons who may be affected by
them. (Emphasis supplied, Chapter 2, Book VII of the Administrative
Code of 1987).
PHIL. CONSUMERS FOUNDATION INC. vs. SECRETARY OF
EDUCATION, CULTURE & SPORTS
153 SCRA 622, G.R. No. 78385, August 31, 1987
Facts:
Herein petitioner Philippine Consumers Foundation, Inc. is
a non-stock, nonprofit corporate entity duly organized and existing
under the laws of the Philippines. The herein respondent Secretary
of Education, Culture and Sports is a ranking cabinet member who
heads the Department of Education, Culture and Sports of the Office
of the President of the Philippines.
On February 21, 1987, the Task Force on Private Higher Education
created by the DECS submitted a report entitled "Report and
Recommendations on a Policy for Tuition and Other School Fees."
The DECS through the respondent Secretary of Education, Culture
and Sports (hereinafter referred to as the respondent Secretary),
issued an Order authorizing, inter alia, the 15% to 20% increase in
school fees as recommended by the Task Force.
The petitioner sought a reconsideration of the said Order,
apparently on the ground that the increases were too high.
Thereafter, the DECS issued Department Order No. 37 dated April
10, 1987 modifying its previous Order and reducing the increases to
a lower ceiling of 10% to 15%, accordingly. Despite this reduction,
the petitioner still opposed the increases.
Thus, the petitioner went to the Court and filed the instant Petition
for prohibition, seeking that judgment be rendered declaring the
questioned Department Order unconstitutional. The thrust of the
Petition is that the said Department Order was issued without any
legal basis.
In support of the first argument, the petitioner argues that
while the DECS is authorized by law to regulate school fees in
educational institutions, the power to regulate does not always
include the power to increase school fees.
Issue:
Whether or not the act of DECS in authorizing the increase
of school fees is valid.
Held:
Yes. The Court is not convinced by the argument that the
power to regulate school fees "does not always include the power to
increase" such fees. Section 57 (3) of Batas Pambansa Blg. 232,
otherwise known as The Education Act of 1982, vests the DECS with
the power to regulate the educational system in the country, to wit:
'SEC. 57. Educations and powers of the Ministry.The Ministry shall:
"x x x. "(3) Promulgate rules and regulations necessary for the
administration, supervision and regulation of the educational system
in accordance with declared policy. "x x x"
Section 70 of the same Act grants the DECS the power to
issue rules which are likewise necessary to discharge its functions
and duties under the law.
In the absence of a statute stating otherwise, this power
includes the power to prescribe school fees. No other government
agency has been vested with the authority to fix school fees and as
such, the power should be considered lodged with the DECS if it is to
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properly and effectively discharge its functions and duties under the
law.
The function of prescribing rates by an administrative
agency may be either a legislative or an adjudicative function. If it
were a legislative function, the grant of prior notice and hearing to
the affected parties is not a requirement of due process. As regards
rates prescribed by an administrative agency in the exercise of its
quasi-judicial function, prior notice and hearing are essential to the
validity of such rates.
When the rules and/or rates laid down by an
administrative agency are meant to apply to all enterprises of a
given kind throughout the country, they may partake of a legislative
character. Where the rules and the rates imposed apply exc usively
to a particular party, based upon a finding of fact, then its function is
quasijudicial in character.
Is Department Order No. 37 issued by the DECS in the
exercise of its legislative function? We believe so. The assailed
Department Order prescribes the maximum school fees that may be
charged by all private schools in the country for schoolyear 1987 to
1988. This being so, prior notice and hearing are not essential to the
validity of its issuance.
CIR vs. BICOLANDIA DRUG CORP.
Gr. No. 148083, July 21, 2006
Facts:
RA 7432, otherwise known as "An Act to Maximize the
Contribution of Senior Citizens to Nation Building, Grant Benefits
and Special Privileges and For Other Purposes," granted senior
citizens several privileges, one of which was obtaining a 20 percent
discount from all establishments relative to the use of
transportation services, hotels and similar lodging establishments,
restaurants and recreation centers and purchase of medicines
anywhere in the country.
The law also provided that the private establishments
giving the discount to senior citizens may claim the cost as tax credit.
BIR issued Revenue Regulations No. 2-94, which defined "tax credit"
as follows: Tax Credit refers to the amount representing the 20%
discount granted to a qualified senior citizen by all establishments
relative to their utilization of transportation services, hotels and
similar lodging establishments, restaurants, halls, circuses, carnivals
and other similar places of culture, leisure and amusement, which
discount shall be deducted by the said establishments from their
gross income for income tax purposes and from their gross sales for
value-added tax or other percentage tax purposes.
1995, respondent Bicolandia Drug Corporation, a
corporation engaged in the business of retailing pharmaceutical
products under the business style of "Mercury Drug," granted the 20
percent sales discount to qualified senior citizens purchasing their
medicines in compliance with R.A. No. 7432.
Respondent treated this discount as a deduction from its
gross income in compliance with RR No. 2-94, which implemented
R.A. No. 7432. 1996, respondent filed its 1995 Corporate Annual ITR
declaring a net loss position with nil income tax liability. On
December 27, 1996, respondent filed a claim for tax refund or credit
in the amount of PhP 259,659.00
Resp alleged that CIR erred in treating the 20 percent sales
discount given to senior citizens as a deduction from its gross
income for income tax purposes or other percentage tax purposes
rather than as a tax credit. 1998 resp appealed to CTA in order to
toll the running of 2-year prescriptive period to file a claim for
refund pursuant to Section 230 of the Tax Code then. Petitioner
maintained that Revenue Regulations No. 2-94 is valid since the law
tasked the Department of Finance, among other government offices,
with the issuance of the necessary rules and regulations to carry out
the objectives of the law.
CTA DECISION: R.A. No. 7432 would prevail over Section 2(i) of
RR No. 2-94, whose definition of "tax credit" deviated from the
intendment of the law; and as a result, partially granted the
respondent's claim for a refund. CA modified CTA decision; law
provided for tax credit not a tax refund.
Issue:
Whether or not the RR 2-94 is void. Yes.
Whether or not the 20 percent sales discount granted to
qualified senior citizens by the respondent pursuant to R.A. No. 7432
may be claimed as a tax credit, instead of a deduction from gross
income or gross sales. No.
Held:
Petition denied. Law grants a tax credit not a tax
deduction. RR 2-94 VOID. Resp entitled to tax credit
The problem stems from the issuance of RR. 2-94, which
was supposed to implement R.A. No. 7432, and the radical
departure it made when it defined the "tax credit" that would be
granted to establishments that give 20 percent discount to senior
citizens. It equated "tax credit" with "tax deduction," contrary to the
definition in Black's Law Dictionary, which defined tax credit as: An
amount subtracted from an individual's or entity's tax liability to
arrive at the total tax liability. A tax credit reduces the taxpayer's
liability x x x, compared to a deduction which reduces taxable
income upon which the tax liability is calculated. A credit differs
from deduction to the extent that the former is subtracted from the
tax while the latter is subtracted from income before the tax is
computed.
Petitioner argues that the tax credit is in the nature of a
tax refund and should be treated as a return for tax payments
erroneously or excessively assessed against a taxpayer, in line with
Section 204(c) of RA 8424, or the NIRC 1997. Payment first before
tax credit can be claimed.
SC: NIRC speaks of a tax credit for tax due, so payment of
the tax has not yet been made in that particular example. CA
correctly expressly recognized the differences between a "tax credit"
and a "tax refund," and stated that the same are not synonymous
with each other.
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RR No. 2-94 is still subordinate to R.A. No. 7432, and in
cases of conflict, the implementing rule will not prevail over the law
it seeks to implement. While seemingly conflicting laws must be
harmonized as far as practicable, in this particular case, the conflict
cannot be resolved in the manner the petitioner wishes.
Petitioner argues that should private establishments,
which count respondent in their number, be allowed to claim tax
credits for discounts given to senior citizens, they would be earning
and not just be reimbursed for the discounts given.
It cannot be denied that R.A. No. 7432 has a laudable goal.
The concerns of the affected private establishments were also
considered by the lawmakers. If the private establishments appear
to benefit more from the tax credit than originally intended, it is not
for petitioner to say that they shouldn't. The tax credit may actually
have provided greater incentive for the private establishments to
comply with R.A. No. 7432, or quicker relief from the cut into profits
of these businesses.
From the above discussion, it must be concluded that
Revenue Regulations No. 2-94 is null and void for failing to conform
to the law it sought to implement. 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. R.A. No. 7432 has
been amended by Republic Act No. 9257, the "Expanded Senior
Citizens Act of 2003." In this, the term "tax credit" is no longer used.
This time around, there is no conflict between the law and
the implementing Revenue Regulations. Under Revenue Regulations
No. 4-2006, "(o)nly the actual amount of the discount granted or a
sales discount not exceeding 20% of the gross selling price can be
deducted from the gross income, net of value added tax, if
applicable, for income tax purposes, and from gross sales or gross
receipts of the business enterprise concerned, for VAT or other
percentage tax purposes. Under the new law, there is no tax credit
to speak of, only deductions. But RA 7432 was the law in force then.
In cases of conflict between the law and the rules and
regulations implementing the law, the law shall always prevail.
Should Revenue Regulations deviate from the law they seek to
implement, they will be struck down.
HOLY SPIRIT HOMEOWNERS ASSOC. vs. MICHAEL DEFENSOR ET AL
Gr. No. 163980, August 3, 2006
Facts:
The instant petition for prohibition under Rule 65 of the
1997 Rules of Civil Procedure, with prayer for the issuance of a
temporary restraining order and/or writ of preliminary injunction,
seeks to prevent respondents from enforcing the implementing
rules and regulations (IRR) of Republic Act No. 9207, otherwise
known as the "National Government Center (NGC) Housing and Land
Utilization Act of 2003."
Petitioner Holy Spirit Homeowners Association, Inc.
(Association) is a homeowners association from the West Side of the
NGC.
Named respondents are the ex-officio members of the
National Government Center Administration Committee
(Committee). At the filing of the instant petition, the Committee was
composed of Secretary Michael Defensor, Chairman of the Housing
and Urban Development Coordinating Council (HUDCC), Atty.
Edgardo Pamintuan, General Manager of the National Housing
Authority (NHA), Mr. Percival Chavez, Chairman of the Presidential
Commission for Urban Poor (PCUP), Mayor Feliciano Belmonte of
Quezon City, Secretary Elisea Gozun of the Department of
Environment and Natural Resources (DENR), and Secretary Florante
Soriquez of the Department of Public Works and Highways (DPWH).
President Gloria Macapagal-Arroyo signed into law R.A.
No. 9207. In accordance with Section 5 of R.A. No. 9207, the
Committee formulated the Implementing Rules and Regulations
(IRR) of R.A. No. 9207 on June 29, 2004. Petitioners subsequently
filed the instant petition questioning its validity.
The OSG claims that the instant petition for prohibition is
an improper remedy because the writ of prohibition does not lie
against the exercise of a quasi-legislative function. Since in issuing
the questioned IRR of R.A. No. 9207, the Committee was not
exercising judicial, quasi-judicial or ministerial function, which is the
scope of a petition for prohibition under Section 2, Rule 65 of the
1997 Rules of Civil Procedure, the instant prohibition should be
dismissed outright, the OSG contends. For their part, respondent
Mayor of Quezon City and respondent NHA contend that petitioners
violated the doctrine of hierarchy of courts in filing the instant
petition with this Court and not with the Court of Appeals, which has
concurrent jurisdiction over a petition for prohibition.
Issue:
Whether or not a petition for prohibition is not the proper
remedy to assail an IRR issued in the exercise of a quasi-legislative
function.
Held:
Yes.The court ruled that a petition for prohibition is also
not the proper remedy to assail an IRR issued in the exercise of a
quasi-legislative function. Prohibition is an extraordinary writ
directed against any tribunal, corporation, board, officer or person,
whether exercising judicial, quasi-judicial or ministerial functions,
ordering said entity or person to desist from further proceedings
when said proceedings are without or in excess of said entitys or
persons jurisdiction, or are accompanied with grave abuse of
discretion, and there is no appeal or any other plain, speedy and
adequate remedy in the ordinary course of law. Prohibition lies
against judicial or ministerial functions, but not against legislative or
quasi-legislative functions. Generally, the purpose of a writ of
prohibition is to keep a lower court within the limits of its
jurisdiction in order to maintain the administration of justice in
orderly channels. Prohibition is the proper remedy to afford relief
against usurpation of jurisdiction or power by an inferior court, or
when, in the exercise of jurisdiction in handling matters clearly
within its cognizance the inferior court transgresses the bounds
prescribed to it by the law, or where there is no adequate remedy
available in the ordinary course of law by which such relief can be
obtained. Where the principal relief sought is to invalidate an IRR,
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petitioners remedy is an ordinary action for its nullification, an implementing rule or regulation is generally appellate in nature.
action which properly falls under the jurisdiction of the Regional Thus, following the doctrine of hierarchy of courts, the instant
Trial Court. In any case, petitioners allegation that "respondents are petition should have been initially filed with the Regional Trial Court.
performing or threatening to perform functions without or in excess
of their jurisdiction" may appropriately be enjoined by the trial court
through a writ of injunction or a temporary restraining order.
Administrative agencies possess quasi-legislative or rule-
making powers and quasi-judicial or administrative adjudicatory
powers. Quasi-legislative or rule-making power is the power to make
rules and regulations which results in delegated legislation that is
within the confines of the granting statute and the doctrine of non-
delegability and separability of powers.
In questioning the validity or constitutionality of a rule or
regulation issued by an administrative agency, a party need not
exhaust administrative remedies before going to court. This
principle, however, applies only where the act of the administrative
agency concerned was performed pursuant to its quasi-judicial
function, and not when the assailed act pertained to its rule-making
or quasi-legislative power.
The assailed IRR was issued pursuant to the quasi-
legislative power of the Committee expressly authorized by R.A. No.
9207. The petition rests mainly on the theory that the assailed IRR
issued by the Committee is invalid on the ground that it is not
germane to the object and purpose of the statute it seeks to
implement. Where what is assailed is the validity or constitutionality
of a rule or regulation issued by the administrative agency in the
performance of its quasi-legislative function, the regular courts have
jurisdiction to pass upon the same.
Since the regular courts have jurisdiction to pass upon the
validity of the assailed IRR issued by the Committee in the exercise
of its quasi-legislative power, the judicial course to assail its validity
must follow the doctrine of hierarchy of courts. Although the
Supreme Court, Court of Appeals and the Regional Trial Courts have
concurrent jurisdiction to issue writs of certiorari,
prohibition, mandamus, quo warranto, habeas corpus and
injunction, such concurrence does not give the petitioner
unrestricted freedom of choice of court forum.
True, this Court has the full discretionary power to take
cognizance of the petition filed directly with it if compelling reasons,
or the nature and importance of the issues raised, so warrant. A
direct invocation of the Courts original jurisdiction to issue these
writs should be allowed only when there are special and important
reasons therefor, clearly and specifically set out in the petition.
In Heirs of Bertuldo Hinog v. Melicor, the Court said that it
will not entertain direct resort to it unless the redress desired
cannot be obtained in the appropriate courts, and exceptional and
compelling circumstances, such as cases of national interest and of
serious implications, justify the availment of the extraordinary
remedy of writ of certiorari, calling for the exercise of its primary
jurisdiction. A perusal, however, of the petition for prohibition
shows no compelling, special or important reasons to warrant the *Cases are also found in the book, Administrative Law, Law on Local
Courts taking cognizance of the petition in the first instance. Government and Election Law, by Atty. Benedicto Gonzales, Jr.*

Petitioner also failed to state any reason that precludes the lower
courts from passing upon the validity of the questioned IRR.
Moreover, as provided in Section 5, Article VIII of the
Constitution, the Courts power to evaluate the validity of an

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