BIRAOGO vs PHIL TRUTH COMMISSION

Pres. Aquino signed E. O. No. 1 establishing Philippine Truth Commission of 2010 (PTC) dated July 30, 2010.

PTC is a mere ad hoc body formed under the Office of the President with the primary task to investigate reports
of graft and corruption committed by third-level public officers and employees, their co-principals, accomplices
and accessories during the previous administration, and to submit its finding and recommendations to the
President, Congress and the Ombudsman. PTC has all the powers of an investigative body. But it is not a quasi-
judicial body as it cannot adjudicate, arbitrate, resolve, settle, or render awards in disputes between contending
parties. All it can do is gather, collect and assess evidence of graft and corruption and make recommendations. It
may have subpoena powers but it has no power to cite people in contempt, much less order their arrest.
Although it is a fact-finding body, it cannot determine from such facts if probable cause exists as to warrant the
filing of an information in our courts of law.

Petitioners asked the Court to declare it unconstitutional and to enjoin the PTC from performing its functions.
They argued that:

(a) E.O. No. 1 violates separation of powers as it arrogates the power of the Congress to create a public office
and appropriate funds for its operation.

(b) The provision of Book III, Chapter 10, Section 31 of the Administrative Code of 1987 cannot legitimize
E.O. No. 1 because the delegated authority of the President to structurally reorganize the Office of the President
to achieve economy, simplicity and efficiency does not include the power to create an entirely new public office
which was hitherto inexistent like the “Truth Commission.”

(c) E.O. No. 1 illegally amended the Constitution and statutes when it vested the “Truth Commission” with
quasi-judicial powers duplicating, if not superseding, those of the Office of the Ombudsman created under the
1987 Constitution and the DOJ created under the Administrative Code of 1987.

(d) E.O. No. 1 violates the equal protection clause as it selectively targets for investigation and prosecution
officials and personnel of the previous administration as if corruption is their peculiar species even as it excludes
those of the other administrations, past and present, who may be indictable.

Respondents, through OSG, questioned the legal standing of petitioners and argued that:

1] E.O. No. 1 does not arrogate the powers of Congress because the President’s executive power and power of
control necessarily include the inherent power to conduct investigations to ensure that laws are faithfully
executed and that, in any event, the Constitution, Revised Administrative Code of 1987, PD No. 141616 (as
amended), R.A. No. 9970 and settled jurisprudence, authorize the President to create or form such bodies.

2] E.O. No. 1 does not usurp the power of Congress to appropriate funds because there is no appropriation but a
mere allocation of funds already appropriated by Congress.
3] The Truth Commission does not duplicate or supersede the functions of the Ombudsman and the DOJ,
because it is a fact-finding body and not a quasi-judicial body and its functions do not duplicate, supplant or
erode the latter’s jurisdiction.

4] The Truth Commission does not violate the equal protection clause because it was validly created for
laudable purposes.

ISSUES:

1. WON the petitioners have legal standing to file the petitions and question E. O. No. 1;

2. WON E. O. No. 1 violates the principle of separation of powers by usurping the powers of Congress to create
and to appropriate funds for public offices, agencies and commissions;

3. WON E. O. No. 1 supplants the powers of the Ombudsman and the DOJ;

4. WON E. O. No. 1 violates the equal protection clause.

RULING:

The power of judicial review is subject to limitations, to wit: (1) there must be an actual case or controversy
calling for the exercise of judicial power; (2) the person challenging the act must have the standing to question
the validity of the subject act or issuance; otherwise stated, he must have a personal and substantial interest in
the case such that he has sustained, or will sustain, direct injury as a result of its enforcement; (3) the question of
constitutionality must be raised at the earliest opportunity; and (4) the issue of constitutionality must be the very
lis mota of the case.

1. The petition primarily invokes usurpation of the power of the Congress as a body to which they belong as
members. To the extent the powers of Congress are impaired, so is the power of each member thereof, since his
office confers a right to participate in the exercise of the powers of that institution.

Legislators have a legal standing to see to it that the prerogative, powers and privileges vested by the
Constitution in their office remain inviolate. Thus, they are allowed to question the validity of any official action
which, to their mind, infringes on their prerogatives as legislators.

With regard to Biraogo, he has not shown that he sustained, or is in danger of sustaining, any personal and direct
injury attributable to the implementation of E. O. No. 1.

Locus standi is “a right of appearance in a court of justice on a given question.” In private suits, standing is
governed by the “real-parties-in interest” rule. It provides that “every action must be prosecuted or defended in
the name of the real party in interest.” Real-party-in interest is “the party who stands to be benefited or injured
by the judgment in the suit or the party entitled to the avails of the suit.”

Difficulty of determining locus standi arises in public suits. Here, the plaintiff who asserts a “public right” in
assailing an allegedly illegal official action, does so as a representative of the general public. He has to show
that he is entitled to seek judicial protection. He has to make out a sufficient interest in the vindication of the
public order and the securing of relief as a “citizen” or “taxpayer.

The person who impugns the validity of a statute must have “a personal and substantial interest in the case such
that he has sustained, or will sustain direct injury as a result.” The Court, however, finds reason in Biraogo’s
assertion that the petition covers matters of transcendental importance to justify the exercise of jurisdiction by
the Court. There are constitutional issues in the petition which deserve the attention of this Court in view of their
seriousness, novelty and weight as precedents

The Executive is given much leeway in ensuring that our laws are faithfully executed. The powers of the
President are not limited to those specific powers under the Constitution. One of the recognized powers of the
President granted pursuant to this constitutionally-mandated duty is the power to create ad hoc committees. This
flows from the obvious need to ascertain facts and determine if laws have been faithfully executed. The purpose
of allowing ad hoc investigating bodies to exist is to allow an inquiry into matters which the President is entitled
to know so that he can be properly advised and guided in the performance of his duties relative to the execution
and enforcement of the laws of the land.

2. There will be no appropriation but only an allotment or allocations of existing funds already appropriated.
There is no usurpation on the part of the Executive of the power of Congress to appropriate funds. There is no
need to specify the amount to be earmarked for the operation of the commission because, whatever funds the
Congress has provided for the Office of the President will be the very source of the funds for the commission.
The amount that would be allocated to the PTC shall be subject to existing auditing rules and regulations so
there is no impropriety in the funding.

3. PTC will not supplant the Ombudsman or the DOJ or erode their respective powers. If at all, the investigative
function of the commission will complement those of the two offices. The function of determining probable
cause for the filing of the appropriate complaints before the courts remains to be with the DOJ and the
Ombudsman. PTC’s power to investigate is limited to obtaining facts so that it can advise and guide the
President in the performance of his duties relative to the execution and enforcement of the laws of the land.

4. Court finds difficulty in upholding the constitutionality of Executive Order No. 1 in view of its apparent
transgression of the equal protection clause enshrined in Section 1, Article III (Bill of Rights) of the 1987
Constitution.

Equal protection requires that all persons or things similarly situated should be treated alike, both as to rights
conferred and responsibilities imposed. It requires public bodies and institutions to treat similarly situated
individuals in a similar manner. The purpose of the equal protection clause is to secure every person within a
state’s jurisdiction against intentional and arbitrary discrimination, whether occasioned by the express terms of a
statue or by its improper execution through the state’s duly constituted authorities.

There must be equality among equals as determined according to a valid classification. Equal protection clause
permits classification. Such classification, however, to be valid must pass the test of reasonableness. The test has
four requisites: (1) The classification rests on substantial distinctions; (2) It is germane to the purpose of the law;
(3) It is not limited to existing conditions only; and (4) It applies equally to all members of the same class.
The classification will be regarded as invalid if all the members of the class are not similarly treated, both as to
rights conferred and obligations imposed.

Executive Order No. 1 should be struck down as violative of the equal protection clause. The clear mandate of
truth commission is to investigate and find out the truth concerning the reported cases of graft and corruption
during the previous administration only. The intent to single out the previous administration is plain, patent and
manifest.

Arroyo administration is but just a member of a class, that is, a class of past administrations. It is not a class of
its own. Not to include past administrations similarly situated constitutes arbitrariness which the equal
protection clause cannot sanction. Such discriminating differentiation clearly reverberates to label the
commission as a vehicle for vindictiveness and selective retribution. Superficial differences do not make for a
valid classification.

The PTC must not exclude the other past administrations. The PTC must, at least, have the authority to
investigate all past administrations.

The Constitution is the fundamental and paramount law of the nation to which all other laws must conform and
in accordance with which all private rights determined and all public authority administered. Laws that do not
conform to the Constitution should be stricken down for being unconstitutional.

WHEREFORE, the petitions are GRANTED. Executive Order No. 1 is hereby declared
UNCONSTITUTIONAL insofar as it is violative of the equal protection clause of the Constitution.

MAURICIO CRUZ, petitioner-appellant,

vs.

STANTON YOUNGBERG, Director of the Bureau of Animal Industry, respondent-appellee.

Jose Yulo for appellant.

Office of the Solicitor-General Reyes for appellee.

OSTRAND, J.:

This is a petition brought originally before the Court of First Instance of Manila for the issuance of a writ of
mandatory injunction against the respondent, Stanton Youngberg, as Director of the Bureau of Animal Industry,
requiring him to issue a permit for the landing of ten large cattle imported by the petitioner and for the slaughter
thereof. The petitioner attacked the constitutionality of Act No. 3155, which at present prohibits the importation
of cattle from foreign countries into the Philippine Islands.

Among other things in the allegation of the petition, it is asserted that "Act No. 3155 of the Philippine
Legislature was enacted for the sole purpose of preventing the introduction of cattle diseases into the Philippine
Islands from foreign countries, as shown by an explanatory note and text of Senate Bill No. 328 as introduced in
the Philippine Legislature, ... ." The Act in question reads as follows:

SECTION 1. After March thirty-first, nineteen hundred and twenty-five existing contracts for the importation of
cattle into this country to the contrary notwithstanding, it shall be strictly prohibited to import, bring or
introduce into the Philippine Islands any cattle from foreign countries: Provided, however, That at any time after
said date, the Governor-General, with the concurrence of the presiding officers of both Houses, may raise such
prohibition entirely or in part if the conditions of the country make this advisable or if decease among foreign
cattle has ceased to be a menace to the agriculture and live stock of the lands.

SEC. 2. All acts or parts of acts inconsistent with this Act are hereby repealed.

SEC. 3. This Act shall take effect on its approval.

Approved, March 8, 1924.

The respondent demurred to the petition on the ground that it did not state facts sufficient to constitute a cause
of action. The demurrer was based on two reasons, namely, (1) that if Act No. 3155 were declared
unconstitutional and void, the petitioner would not be entitled to the relief demanded because Act No. 3052
would automatically become effective and would prohibit the respondent from giving the permit prayed for; and
(2) that Act No. 3155 was constitutional and, therefore, valid.

The court sustained the demurrer and the complaint was dismissed by reason of the failure of the petitioner to
file another complaint. From that order of dismissal, the petitioner appealed to this court.

The appellee contends that even if Act No. 3155 be declared unconstitutional by the fact alleged by the
petitioner in his complaint, still the petitioner can not be allowed to import cattle from Australia for the reason
that, while Act No. 3155 were declared unconstitutional, Act No. 3052 would automatically become effective.
Act No. 3052 reads as follows:

SECTION 1. Section seventeen hundred and sixty-two of Act Numbered Twenty-seven hundred and eleven,
known as the Administrative Code, is hereby amended to read as follows:

"SEC. 1762. Bringing of animals imported from foreign countries into the Philippine Islands. — It shall be
unlawful for any person or corporation to import, bring or introduce live cattle into the Philippine Islands from
any foreign country. The Director of Agriculture may, with the approval of the head of the department first had,
authorize the importation, bringing or introduction of various classes of thoroughbred cattle from foreign
countries for breeding the same to the native cattle of these Islands, and such as may be necessary for the
improvement of the breed, not to exceed five hundred head per annum: Provided, however, That the Director of
Agriculture shall in all cases permit the importation, bringing or introduction of draft cattle and bovine cattle for
the manufacture of serum: Provided, further, That all live cattle from foreign countries the importation, bringing
or introduction of which into the Islands is authorized by this Act, shall be submitted to regulations issued by the
Director of Agriculture, with the approval of the head of the department, prior to authorizing its transfer to other
provinces.
"At the time of the approval of this Act, the Governor-General shall issue regulations and others to provide
against a raising of the price of both fresh and refrigerated meat. The Governor-General also may, by executive
order, suspend, this prohibition for a fixed period in case local conditions require it."

SEC. 2. This Act shall take effect six months after approval.

Approved, March 14, 1922.

The petitioner does not present any allegations in regard to Act No. 3052 to show its nullity or
unconstitutionality though it appears clearly that in the absence of Act No. 3155 the former act would make it
impossible for the Director of the Bureau of Animal Industry to grant the petitioner a permit for the importation
of the cattle without the approval of the head of the corresponding department.

An unconstitutional statute can have no effect to repeal former laws or parts of laws by implication, since, being
void, it is not inconsistent with such former laws. (I Lewis Sutherland, Statutory Construction 2nd ed., p. 458,
citing McAllister vs. Hamlin, 83 Cal., 361; 23 Pac., 357; Orange Country vs. Harris, 97 Cal., 600; 32 Pac., 594;
Carr vs. State, 127 Ind., 204; 11 L.R.A., 370, etc.)

This court has several times declared that it will not pass upon the constitutionality of statutes unless it is
necessary to do so (McGirr vs. Hamilton and Abreu, 30 Phil., 563, 568; Walter E. Olsen & Co. vs. Aldanese and
Trinidad, 43 Phil., 259) but in this case it is not necessary to pass upon the validity of the statute attacked by the
petitioner because even if it were declared unconstitutional, the petitioner would not be entitled to relief
inasmuch as Act No. 3052 is not in issue.

But aside from the provisions of Act No. 3052, we are of the opinion that Act No. 3155 is entirely valid. As
shown in paragraph 8 of the amended petition, the Legislature passed Act No. 3155 to protect the cattle industry
of the country and to prevent the introduction of cattle diseases through importation of foreign cattle. It is now
generally recognized that the promotion of industries affecting the public welfare and the development of the
resources of the country are objects within the scope of the police power (12 C.J., 927; 6 R.C.L., 203-206 and
decisions cited therein; Reid vs. Colorado, 187 U.S., 137, 147, 152; Yeazel vs. Alexander, 58 Ill., 254). In this
connection it is said in the case of Punzalan vs. Ferriols and Provincial Board of Batangas (19 Phil., 214), that
the provisions of the Act of Congress of July 1, 1902, did not have the effect of denying to the Government of
the Philippine Islands the right to the exercise of the sovereign police power in the promotion of the general
welfare and the public interest. The facts recited in paragraph 8 of the amended petition shows that at the time
the Act No. 3155 was promulgated there was reasonable necessity therefor and it cannot be said that the
Legislature exceeded its power in passing the Act. That being so, it is not for this court to avoid or vacate the
Act upon constitutional grounds nor will it assume to determine whether the measures are wise or the best that
might have been adopted. (6 R.C.L., 243 and decisions cited therein.)1awphil.net

In his third assignment of error the petitioner claims that "The lower court erred in not holding that the power
given by Act No. 3155 to the Governor-General to suspend or not, at his discretion, the prohibition provided in
the act constitutes an unlawful delegation of the legislative powers." We do not think that such is the case; as
Judge Ranney of the Ohio Supreme Court in Cincinnati, Wilmington and Zanesville Railroad Co. vs.
Commissioners of Clinton County (1 Ohio St., 77, 88) said in such case:
The true distinction, therefore, is between the delegation of power to make the law, which necessarily involves a
discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be exercised
under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made.

Under his fourth assignment of error the appellant argues that Act No. 3155 amends section 3 of the Tariff Law,
but it will be noted that Act No. 3155 is not an absolute prohibition of the importation of cattle and it does not
add any provision to section 3 of the Tariff Law. As stated in the brief of the Attorney-General: "It is a complete
statute in itself. It does not make any reference to the Tariff Law. It does not permit the importation of articles,
whose importation is prohibited by the Tariff Law. It is not a tariff measure but a quarantine measure, a statute
adopted under the police power of the Philippine Government. It is at most a `supplement' or an `addition' to the
Tariff Law. (See MacLeary vs. Babcock, 82 N.E., 453, 455; 169 Ind., 228 for distinction between
`supplemental' and `amendatory' and O'Pry vs. U.S., 249 U.S., 323; 63 Law. ed., 626, for distinction between
`addition' and `amendment.')"

The decision appealed from is affirmed with the costs against the appellant. So ordered.

SALVADOR A. ARANETA v. THE HON. MAGNO S. GATMAITAN. G.R. Nos. L-8895 and L-9191. April
30, 1957.

FACTS:

The President issued EO 22 - prohibiting the use of trawls in San Miguel Bay, and the EO 66 and 80 as
amendments to EO 22, as a response for the general clamor among the majority of people living in the coastal
towns of San Miguel Bay that the said resources of the area are in danger of major depletion because of the
effects of trawl fishing.

A group of Otter trawl operators took the matter to the court by filing a complaint for injunction and/or
declaratory relief with preliminary injunction with the Court of First Instance of Manila, docketed as Civil Case
No. 24867, praying that a writ of preliminary injunction be issued to restrain the Secretary of Agriculture and
Natural Resources and the Director of Fisheries from enforcing said executive order; to declare the same null
and void, and for such other relief as may be just and equitable in the premises.

ISSUE: Whether Executive Orders Nos. 22, 66 and 80 were valid, for the issuance thereof was not in the
exercise of legislative powers unduly delegated to the President.

RULING:

Yes. As already held by this Court, the true distinction between delegation of the power to legislate and the
conferring of authority or discretion as to the execution of law consists in that the former necessary involves a
discretion as to what the law shall be, while in the latter the authority or discretion as to its execution has to be
exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be
made.
In the case of U. S. vs. Ang Tang Ho, 43 Phil. 1, We also held, the power to delegate - the Legislature cannot
delegate legislative power to enact any law. If Act No. 2868 is a law unto itself, and it does nothing more than to
authorize the Governor-General to make rules and regulations to carry it into effect, then the Legislature created
the law. There is no delegation of power and it is valid. On the other hand, if the act within itself does not define
a crime and is not complete, and some legislative act remains to be done to make it a law or a crime, the doing
of which is vested in the Governor-General, the act is delegation of legislative power, is unconstitutional and
void.

Congress provided under the Fisheries Act that a.) it is unlawful to take or catch fry or fish eggs in the waters of
the Philippines and b.) it authorizes Sec. of Agriculture and Natural Resources to provide regulations/
restrictions as may be deemed necessary. The Act was complete in itself and leaves it to the Sec. to carry into
effect its legislative intent. The President did nothing but show an anxious regard for the welfare of the
inhabitants and dispose of issues of general concern which were in consonance and strict conformity with law.

PEOPLE vs MACEREN

FACTS: This is a case involving the validity of a 1967 regulation, penalizing electro fishing in fresh water
fisheries, promulgated by the Secretary of Agriculture and Natural Resources and the Commissioner of Fisheries
under the old Fisheries Law and the law creating the Fisheries Commission.

Jose Buenaventura, Godofredo Reyes, Benjamin Reyes, Nazario Aquino and Carlito del Rosario were charged
by a Constabulary investigator in the municipal court of Sta. Cruz, Laguna with having violated Fisheries
Administrative Order No. 84-1.

The lower court held that electro fishing cannot be penalize because electric current is not an obnoxious or
poisonous substance as contemplated in section I I of the Fisheries Law and that it is not a substance at all but a
form of energy conducted or transmitted by substances. The lower court further held that, since the law does not
clearly prohibit electro fishing, the executive and judicial departments cannot consider it unlawful.

As legal background, it should be stated that section 11 of the Fisheries Law prohibits "the use of any obnoxious
or poisonous substance" in fishing.

Section 76 of the same law punishes any person who uses an obnoxious or poisonous substance in fishing with a
fine of not more than five hundred pesos nor more than five thousand, and by imprisonment for not less than six
months nor more than five years.

It is noteworthy that the Fisheries Law does not expressly punish .electro fishing."

The Secretary of Agriculture and Natural Resources, upon the recommendation of the Fisheries Commission,
issued Fisheries Administrative Order No. 84-1, amending section 2 of Administrative Order No. 84, by
restricting the ban against electro fishing to fresh water fisheries (63 O.G. 9963).

Thus, the phrase "in any portion of the Philippine waters" found in section 2, was changed by the amendatory
order to read as follows: "in fresh water fisheries in the Philippines, such as rivers, lakes, swamps, dams,
irrigation canals and other bodies of fresh water."
ISSUE: WHETHER OR NOT THE SECRETARY OF AGRICULTURE EXCEEDED ITS AUTHORITY IN
ISSUING ADMINISTARTIVE ORDERS.

HELD: The Court is of the opinion that the Secretary of Agriculture and Natural Resources and the
Commissioner of Fisheries exceeded their authority in issuing Fisheries Administrative Orders Nos. 84 and 84-1
and that those orders are not warranted under the Fisheries Commission, Republic Act No. 3512.

The reason is that the Fisheries Law does not expressly prohibit electro fishing. As electro fishing is not banned
under that law, the Secretary of Agriculture and Natural Resources and the Commissioner of Fisheries are
powerless to penalize it. In other words, Administrative Orders Nos. 84 and 84-1, in penalizing electro fishing,
are devoid of any legal basis.

Had the lawmaking body intended to punish electro fishing, a penal provision to that effect could have been
easily embodied in the old Fisheries Law.

That law punishes (1) the use of obnoxious or poisonous substance, or explosive in fishing; (2) unlawful fishing
in deepsea fisheries; (3) unlawful taking of marine molusca, (4) illegal taking of sponges; (5) failure of licensed
fishermen to report the kind and quantity of fish caught, and (6) other violations.

Nowhere in that law is electro fishing specifically punished. Administrative Order No. 84, in punishing electro
fishing, does not contemplate that such an offense fails within the category of "other violations" because, as
already shown, the penalty for electro fishing is the penalty next lower to the penalty for fishing with the use of
obnoxious or poisonous substances, fixed in section 76, and is not the same as the penalty for "other violations"
of the law and regulations fixed in section 83 of the Fisheries Law.

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. (People vs. Exconde 101 Phil. 11 25, citing 11 Am. Jur. 965 on p. 11 32).

However, at present, there is no more doubt that electro fishing is punishable under the Fisheries Law and that it
cannot be penalized merely by executive revolution because Presidential Decree No. 704, which is a revision
and consolidation of all laws and decrees affecting fishing and fisheries and which was promulgated on May 16,
1975 (71 O.G. 4269), expressly punishes electro fishing in fresh water and salt water areas.

n examination of the rule-making power of executive officials and administrative agencies and, in particular, of
the Secretary of Agriculture and Natural Resources (now Secretary of Natural Resources) under the Fisheries
Law sustains the view that he ex his authority in penalizing electro fishing by means of an administrative order.

Administrative agent are clothed with rule-making powers because the lawmaking body finds it impracticable, if
not impossible, 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 (People vs. Exconde 101 Phil. 1125;
Director of Forestry vs. Muñ;oz, L-24796, June 28, 1968, 23 SCRA 1183, 1198; Geukeko vs. Araneta, 102 Phil.
706, 712).

The lawmaking body cannot possibly provide for all the details in the enforcement of a particular statute (U.S.
vs. Tupasi Molina, 29 Phil. 119, 125, citing U.S. vs. Grimaud 220 U.S. 506; Interprovincial Autobus Co., Inc.
vs. Coll. of Internal Revenue, 98 Phil. 290, 295-6).

The grant of the rule-making power to administrative agencies is a relaxation of the principle of separation of
powers and is an exception to the nondeleption of legislative, powers. Administrative regulations or
"subordinate legislation calculated to promote the public interest are necessary because of "the growing
complexity of modem life, the multiplication of the subjects of governmental regulations, and the increased
difficulty of administering the law" Calalang vs. Williams, 70 Phil. 726; People vs. Rosenthal and Osmeñ;a, 68
Phil. 328).

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. (U.S. vs. Tupasi Molina, supra). An
administrative agency cannot amend an act of Congress (Santos vs. Estenzo, 109 Phil. 419, 422; Teoxon vs.
Members of the d of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel vs. General Auditing
Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao vs. Casteel, L-21906, August 29, 1969, 29 SCRA
350).

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. (University
of Santo Tomas vs. Board of Tax A 93 Phil. 376, 382, citing 12 C.J. 845-46. As to invalid regulations, see of
Internal Revenue vs. Villaflor 69 Phil. 319, Wise & Co. vs. Meer, 78 Phil. 655, 676; Del March vs. Phil.
Veterans Administrative, L-27299, June 27, 1973, 51 SCRA 340, 349).

BAUTISTA vs JUINIO

FACTS: The President of the Philippines issued a Letter of Instruction No. 869 on May 31, 1979 in response to
the protracted oil crisis that dated back to 1974. Pursuant thereto, respondent Alfredo L. Juinio, then Minister of
Public Works, Transportation and Communications and respondent Romeo P. Edu, then Commissioner of Land
Transportation Commission issued Memorandum Circular No. 39, which imposed "the penalties of fine,
confiscation of vehicle and cancellation of registration on owners of the specified vehicles" found violating such
Letter of Instruction. Spouses Mary Concepcion Bautista and Enrique Bautista questioned the validity of the
energy conservation measure through a prohibition proceeding with the Supreme Court. It was alleged by
petitioners that "while the purpose for the issuance of the LOI 869 is laudable, to wit, energy conservation, the
provision banning the use private motor vehicles with H and EH plates is unfair, discriminatory, [amounting to
an] arbitrary classification" and thus in contravention of the equal protection clause. Moreover, for them, such
Letter of Instruction is a denial of due process, more specifically,” of their right to use and enjoy their private
property and of their freedom to travel and hold family gatherings, reunions and outings on week-ends and
holidays." It would follow, so they contend that Memorandum Circular No. 39 imposing penalties of fine,
confiscation of the vehicle and cancellation of license is likewise unconstitutional, for being violative of the
doctrine of "undue delegation of legislative power."

ISSUE: Whether or not Letter of Instruction 869 as implemented by Memorandum Circular No. 39 is violative
of certain constitutional rights.
HELD: The petition was dismissed because of the "presumption of constitutionality" or in slightly different
words "a presumption that such an act falls within constitutional limitations." There is need then for a factual
foundation of invalidity. The principle has been nowhere better expressed than in the leading case of O'Gorman
& Young v. Hartford Fire Insurance Co., where the American Supreme Court summed up the matter thus: 'The
statute here questioned deals with a subject clearly within the scope of the police power. We are asked to declare
it void on the ground that the specific method of regulation prescribed is unreasonable and hence deprives the
plaintiff of due process of law. As underlying questions of fact may condition the constitutionality of legislation
of this character, the presumption of constitutionality must prevail in the absence of some factual foundation of
record for overthrowing the statute.' "

In fact, the recital of the whereas clauses of the Letter of Instruction makes it clear that the substantive due
process, which is the epitome of reasonableness and fair play, was not ignored, much less infringed.
Furthermore, in the interplay between such a fundamental right and police power, especially so where the
assailed governmental action deals with the use of one's property, the latter is accorded much leeway. Due
process, therefore, cannot be validly invoked. As stressed in the Ermita-Malate Hotel decision: "To hold
otherwise would be to unduly restrict and narrow the scope of police power which has been properly
characterized as the most essential, insistent and the least limitable of powers, extending as it does 'to all the
great public needs.' It would be to destroy the very purpose of the state if it could be deprived or allowed itself
to be deprived of its competence to promote public health, public morals, public safety and the general welfare.
Negatively put, police power is 'that inherent and plenary power in the State which enables it to prohibit all that
is hurtful to the comfort, safety, and welfare of society.' "

Furthermore, the Court observed that there was no violation of equal protection. There was a situation that
called for a corrective measure and LOI was the solution which for the President expressing a power validly
lodged in him, recommended itself. He decided that what was issued by him would do just that or, at the very
least, help in easing the situation. If it did not cover other matters which could very well have been regulated
does not call for a declaration of nullity. The President "is not required by the Constitution to adhere to the
policy of all or none" (Lutz v. Araneta).

Absent, therefore, of the alleged infringement of constitutional rights, more precisely the due process and equal
protection guarantees, the Court cannot adjudge Letter of Instruction No. 869 as tainted by unconstitutionality.
The Memorandum Circular No. 39 was likewise considered valid for as long as it is limited to what is provided
for in the legislative enactment and it relates solely to carrying into effect the provisions of the law.

ERNESTO M. MACEDA, petitioner,

vs.
ENERGY REGULATORY BOARD, CALTEX (Philippines), INC., PILIPINAS SHELL PETROLEUM
CORPORATION AND PETRON CORPORATION, respondents.

G.R. No. 96349 July 18, 1991

EUGENIO O. ORIGINAL, IRENEO N. AARON, JR., RENE LEDESMA, ROLANDO VALLE,

ORLANDO MONTANO, STEVE ABITANG, NERI JINON, WILFREDO DELEONIO, RENATO
BORRO, RODRIGO DE VERA, ALVIN BAYUANG, JESUS MELENDEZ, NUMERIANO CAJILIG
JR., RUFINO DE LA CRUZ AND JOVELINO G. TIPON, petitioners,
vs.
ENERGY REGULATORY BOARD, CALTEX (Philippines), INC., PILIPINAS SHELL PETROLEUM
CORPORATION AND PETRON CORPORATION, respondents.

G.R. No. 96284 July 18,1991

CEFERINO S. PAREDES, JR., petitioner,
vs.
ENERGY REGULATORY BOARD, CALTEX (Philippines), INC., PILIPINAS SHELL, INC. AND
PETROPHIL CORPORATION, respondents.

RESOLUTION

MEDIALDEA, J.:

In G.R. No. 96266, petitioner Maceda seeks nullification of the Energy Regulatory Board (ERB) Orders dated
December 5 and 6, 1990 on the ground that the hearings conducted on the second provisional increase in oil
prices did not allow him substantial cross-examination, in effect, allegedly, a denial of due process.

The facts of the case are as follows:

Upon the outbreak of the Persian Gulf conflict on August 2, 1990, private respondents oil companies filed with
the ERB their respective applications on oil price increases (docketed as ERB Case Nos. 90-106, 90-382 and 90-
384, respectively).

On September 21, 1990, the ERB issued an order granting a provisional increase of P1.42 per liter. Petitioner
Maceda filed a petition for Prohibition on September 26, 1990 (E. Maceda v. ERB, et al., G.R. No. 95203),
seeking to nullify the provisional increase. We dismissed the petition on December 18, 1990, reaffirming ERB's
authority to grant provisional increase even without prior hearing, pursuant to Sec. 8 of E.O. No. 172, clarifying
as follows:

What must be stressed is that while under Executive Order No. 172, a hearing is indispensable, it does
not preclude the Board from ordering, ex-parte, a provisional increase, as it did here, subject to its final
disposition of whether or not: (1) to make it permanent; (2) to reduce or increase it further; or (3) to
deny the application. Section 3, paragraph (e) is akin to a temporary restraining order or a writ of
preliminary attachment issued by the courts, which are given ex-parte and which are subject to the
resolution of the main case.

Section 3, paragraph (e) and Section 8 do not negate each other, or otherwise, operate exclusively of
the other, in that the Board may resort to one but not to both at the same time. Section 3(e) outlines the
jurisdiction of the Board and the grounds for which it may decree a price adjustment, subject to the
requirements of notice and hearing. Pending that, however, it may order, under Section 8, an authority
to increase provisionally, without need of a hearing, subject to the final outcome of the proceeding. The
Board, of course, is not prevented from conducting a hearing on the grant of provisional authority-
which is of course, the better procedure — however, it cannot be stigmatized later if it failed to conduct
one. (pp. 129-130, Rollo) (Emphasis supplied)

In the same order of September 21, 1990, authorizing provisional increase, the ERB set the applications for
hearing with due notice to all interested parties on October 16, 1990. Petitioner Maceda failed to appear at said
hearing as well as on the second hearing on October 17, 1990.

To afford registered oppositors the opportunity to cross-examine the witnesses, the ERB set the continuation of
the hearing to October 24, 1990. This was postponed to November 5, 1990, on written notice of petitioner
Maceda.

On November 5, 1990, the three oil companies filed their respective motions for leave to file or admit
amended/supplemental applications to further increase the prices of petroleum products.
The ERB admitted the respective supplemental/amended petitions on November 6, 1990 at the same time
requiring applicants to publish the corresponding Notices of Public Hearing in two newspapers of general
circulation (p. 4, Rollo and Annexes "F" and "G," pp. 60 and 62, Rollo).

Hearing for the presentation of the evidence-in-chief commenced on November 21, 1990 with ERB ruling that
testimonies of witnesses were to be in the form of Affidavits (p. 6, Rollo). ERB subsequently outlined the
procedure to be observed in the reception of evidence, as follows:

CHAIRMAN FERNANDO:

Well, at the last hearing, applicant Caltex presented its evidence-in-chief and there is an understanding
or it is the Board's wish that for purposes of good order in the presentation of the evidence considering
that these are being heard together, we will defer the cross-examination of applicant Caltex's witness
and ask the other applicants to present their evidence-in-chief so that the oppositors win have a better
Idea of what an of these will lead to because as I mentioned earlier, it has been traditional and it is the
intention of the Board to act on these applications on an industry-wide basis, whether to accept, reject,
modify or whatever, the Board win do it on an industry wide basis, so, the best way to have (sic) the
oppositors and the Board a clear picture of what the applicants are asking for is to have all the
evidence-in-chief to be placed on record first and then the examination will come later, the cross-
examination will come later. . . . (pp. 5-6, tsn., November 23, 1990, ERB Cases Nos. 90-106, 90382
and 90-384). (p. 162, Rollo)

Petitioner Maceda maintains that this order of proof deprived him of his right to finish his cross-examination of
Petron's witnesses and denied him his right to cross-examine each of the witnesses of Caltex and Shell. He
points out that this relaxed procedure resulted in the denial of due process.

We disagree. The Solicitor General has pointed out:

. . . The order of testimony both with respect to the examination of the particular witness and to the
general course of the trial is within the discretion of the court and the exercise of this discretion in
permitting to be introduced out of the order prescribed by the rules is not improper (88 C.J.S. 206-207).

Such a relaxed procedure is especially true in administrative bodies, such as the ERB which in matters
of rate or price fixing is considered as exercising a quasi-legislative, not quasi-judicial, function As
such administrative agency, it is not bound by the strict or technical rules of evidence governing court
proceedings (Sec. 29, Public Service Act; Dickenson v. United States, 346, U.S. 389, 98 L. ed. 132, 74
S. St. 152). (Emphasis supplied)

In fact, Section 2, Rule I of the Rules of Practice and Procedure Governing Hearings Before the ERB
provides that —

These Rules shall govern pleadings, practice and procedure before the Energy Regulatory Board in all
matters of inquiry, study, hearing, investigation and/or any other proceedings within the jurisdiction of
the Board. However, in the broader interest of justice, the Board may, in any particular matter, except
itself from these rules and apply such suitable procedure as shall promote the objectives of the Order.

(pp. 163-164, Rollo)

Petitioner Maceda also claims that there is no substantial evidence on record to support the provisional relief.

We have, in G.R. Nos. 95203-05, previously taken judicial notice of matters and events related to the oil
industry, as follows:

. . . (1) as of June 30, 1990, the OPSF has incurred a deficit of P6.1 Billion; (2) the exchange rate has
fallen to P28.00 to $1.00; (3) the country's balance of payments is expected to reach $1 Billion; (4) our
trade deficit is at P2.855 Billion as of the first nine months of the year.
 . . . (p. 150, Rollo)

The Solicitor General likewise commented:

Among the pieces of evidence considered by ERB in the grant of the contested provisional relief were:
(1) certified copies of bins of lading issued by crude oil suppliers to the private respondents; (2) reports
of the Bankers Association of the Philippines on the peso-dollar exchange rate at the BAP oil pit; and
(3) OPSF status reports of the Office of Energy Affairs. The ERB was likewise guided in the
determination of international crude oil prices by traditional authoritative sources of information on
crude oil and petroleum products, such as Platt's Oilgram and Petroleum Intelligence Weekly. (p.
158, Rollo)

Thus, We concede ERB's authority to grant the provisional increase in oil price, as We note that the Order of
December 5, 1990 explicitly stated:

in the light, therefore, of the rise in crude oil importation costs, which as earlier mentioned, reached an
average of $30.3318 per barrel at $25.551/US $ in September-October 1990; the huge OPSF deficit
which, as reported by the Office of Energy Affairs, has amounted to P5.7 Billion (based on filed claims
only and net of the P5 Billion OPSF) as of September 30, 1990, and is estimated to further increase to
over P10 Billion by end December 1990; the decision of the government to discontinue subsidizing oil
prices in view of inflationary pressures; the apparent inadequacy of the proposed additional P5.1
Billion government appropriation for the OPSF and the sharp drop in the value of the peso in relation
to the US dollar to P28/US $, this Board is left with no other recourse but to grant applicants oil
companies further relief by increasing the prices of petroleum products sold by them. (p. 161, Rollo)

Petitioner Maceda together with petitioner Original (G.R. No. 96349) also claim that the provisional increase
involved amounts over and above that sought by the petitioning oil companies.

The Solicitor General has pointed out that aside from the increase in crude oil prices, all the applications of the
respondent oil companies filed with the ERB covered claims from the OPSF.

We shall thus respect the ERB's Order of December 5, 1990 granting a provisional price increase on petroleum
products premised on the oil companies' OPSF claims, crude cost peso differentials, forex risk for a subsidy on
sale to NPC (p. 167, Rollo), since the oil companies are "entitled to as much relief as the fact alleged
constituting the course of action may warrant," (Javellana v. D.O. Plaza Enterprises, Inc., G.R. No. L-28297,
March 30, 1970, 32 SCRA 261 citing Rosales v. Reyes, 25 Phil. 495; Aguilar v. Rubiato, 40 Phil. 470) as
follows:

Per Liter

Weighted

Petron Shell Caltex Average

Crude Cost P3.11 P3.6047 P2.9248 P3.1523

Peso Cost

Diffn'l 2.1747 1.5203 1.5669 1.8123

Forex Risk

Fee -0.1089 -0,0719 -0.0790 -0.0896

Subsidy on
 Sales to NPC 0.1955 0.0685 0.0590 0.1203

Total Price

Increase

Applied for P59.3713 P5.1216 P4.4717 P4.9954

Less: September 21 Price

Relief

Actual Price Increase P1.42

Actual Tax Reduction:

Ad Valorem Tax

(per Sept. 1, 1990

price build-up) P1.3333

Specific Tax (per

Oct. 5, 1990 price

build-up) .6264 .7069 2.1269

Net Price Increase

Applied for 2.8685

Nonetheless, it is relevant to point out that on December 10, 1990, the ERB, in response to the President's
appeal, brought back the increases in Premium and Regular gasoline to the levels mandated by the December 5,
1990 Order (P6.9600 and P6.3900, respectively), as follows:

Product In Pesos Per Liter

OPSF

Premium Gasoline 6.9600

Regular Gasoline 6.3900

Avturbo 4.9950

Kerosene 1.4100

Diesel Oil 1.4100

Fuel Oil/Feedstock 0.2405

LPG 1.2200

Asphalt 2.5000
 Thinner 2.5000

In G.R. No. 96349, petitioner Original additionally claims that if the price increase will be used to augment the
OPSF this will constitute illegal taxation. In the Maceda case, (G.R. Nos. 95203-05, supra) this Court has
already ruled that "the Board Order authorizing the proceeds generated by the increase to be deposited to the
OPSF is not an act of taxation but is authorized by Presidential Decree No. 1956, as amended by Executive
Order No. 137.

The petitions of E.O. Original et al. (G.R. No. 96349) and C.S. Povedas, Jr. (G.R. No. 96284), insofar as they
question the ERB's authority under Sec. 8 of E.O. 172, have become moot and academic.

We lament Our helplessness over this second provisional increase in oil price. We have stated that this "is a
question best judged by the political leadership" (G.R. Nos. 95203-05, G.R. Nos. 95119-21, supra). We wish to
reiterate Our previous pronouncements therein that while the government is able to justify a provisional
increase, these findings "are not final, and it is up to petitioners to demonstrate that the present economic picture
does not warrant a permanent increase."

In this regard, We also note the Solicitor General's comments that "the ERB is not averse to the idea of a
presidential review of its decision," except that there is no law at present authorizing the same. Perhaps, as
pointed out by Justice Padilla, our lawmakers may see the wisdom of allowing presidential review of the
decisions of the ERB since, despite its being a quasi-judicial body, it is still "an administrative body under the
Office of the President whose decisions should be appealed to the President under the established principle of
exhaustion of administrative remedies," especially on a matter as transcendental as oil price increases which
affect the lives of almost an Filipinos.

ACCORDINGLY, the petitions are hereby DISMISSED.

SO ORDERED.

Narvasa, Melencio-Herrera, Feliciano, Gancayco, Bidin, Griño-Aquino and Regalado, JJ., concur.
Davide, J., concurs in the result.

Fernan, C.J., took no part.

Separate Opinions

PARAS, J., dissenting:

I dissent. As I have long previously indicated, the ERB has absolutely no power to tax which is solely the
prerogative of Congress. This is what the ERB is precisely doing by getting money from the people
to ultimately subsidize the ravenous oil companies. Additionally, the stubborn refusal of the ERB to effectively
rollback oil prices is a continuing bestial insult to the intelligence of our countrymen, and a gross abandonment
of the people in their hour of economic misery. I therefore vote for a complete and effective rollback of all oil
prices.

Cruz, J., concurs.

PADILLA, J., dissenting:

I regret that I can not concur in the majority opinion.

In the matter of price increases of oil products, which vitally affects the people, especially those in the middle
and low income groups, any increase, provisional or otherwise, should be allowed only after the Energy
Regulatory Board (ERB) shall have fully determined, through bona fide and full-dress hearings, that it is
absolutely necessary and by how much it shall be effected. The people, represented by reputable oppositors,
deserve to be given full opportunity to be heard in their opposition to any increase in the prices of fuel. The right
to be heard includes not only the right to present one's case and submit evidence in support thereof, but also the
right to confront and cross-examine the witnesses of the adverse parties.

Because of the procedure adopted by the ERB in the reception of evidence leading to the price increases of 5
and 6 December 1990, petitioner Maceda was not able to finish his cross-examination of Petron's sole witness.
And, even before each of the witnesses of Shell and Caltex could be cross-examined by petitioners and before
they could present evidence in support of their opposition to the increase, the ERB had already issued its 5
December 1990 order allowing a "provisional increase" sought by the oil companies in their respective
supplemental applications.

That there were postponements of scheduled hearings before the ERB, at the instance of oppositor Maceda, did
not justify a denial of the right of oppositors to be heard. The postponements were not intended to delay the
proceedings. In fact, the resetting of the scheduled hearings on November 14, 15 and 16 to a later date, upon
motion of petitioner Maceda, was to enable him to file a written opposition to the supplemental applications
filed by the oil companies.

The ERB acted hastily in granting the provisional increases sought by the oil companies even before the
oppositors could submit evidence in support of their opposition. The fact that the questioned orders merely
allowed a provisional increase is beside the point, for past experiences have shown that so-called provisional
increases" allowed by the ERB ultimately became permanent.

ERB's claim that the second provisional increase was duly supported by evidence, is belied by its own act of
modifying said order (of provisional increase) not only once but twice, upon the "request" of the President. First,
the ERB rolled back the prices of fuel just a day after it issued the questioned order, altering the allocation of the
increase. Second, on 10 December 1990, the ERB further modified the price of petroleum products resulting in
reduction of the weighted average provisional increase from P2.82 to P2.05 per liter, but only after the President
had announced that she would meet with the leaders of both Houses of Congress, to discuss the creation of a
special fund to be raised from additional taxes, to subsidize the prices of petroleum products. 1

These acts of the ERB ostensibly sparked by "presidential requests" clearly demonstrate that the evidence did
not, in the first place, justify the price increases it had ordered on 5 and 6 December 1990. Furthermore, the
ERB never came out with a categorical and official declaration of how much was the so-called deficit of the Oil
Price Stabilization Fund (OPSF) and how much of the oil price increases was intended to cover such deficit.

In the midst of a national crisis related to oil price increases, each and every one is called upon to assume his/its
share of continuing sacrifices. The public, the government, as well as the oil companies should work hand in
hand in solving the present problem that confronts us. We are not unmindful of the fact that the oil companies
are profit-oriented. However, profits should not be their only concern in times of deepening inability of the
people to cope with their prices with "built-in-margins". A reduction of profits during these crucial and trying
times, is certainly in order considering that in the past, the oil companies had unquestionably made tremendous
profits.

In view of the foregoing, I vote to GRANT the petition for the nullification of the 5 and 6 December 1990
orders of the ERB and for a roll-back of the prices of oil products to levels existing before 5 and 6 December
1990 until hearings before the ERB are finally concluded.

Before closing, I also would like to submit for congressional consideration two (2) proposals in the public
interest. They are:

(1) to do away with the present scheme of allowing provisional price increases of oil products. This scheme, to
my mind, is misleading and serves as an excuse for unilateral and arbitrary ERB-action. As already noted, these
provisional price increases are, to all intents and purposes, permanent when fixed. To that extent, the scheme is
a fraud on the people.
(2) all decisions and orders of the ERB should be expressly made appealable by statute to the President of the
Philippines whose decisions shall be final, except in cases involving questions of law or grave abuse of
discretion which may be elevated to the Supreme Court in a special civil action for certiorari under Rule 65 of
the Rules of Court.

While at present, decisions and orders of the ERB are, in my considered opinion, appealable to the President
under the principle of "exhaustion of administrative remedies", it is nevertheless desirable that the appealability
of ERB decisions and orders to the President be placed beyond any and all doubts. In this way, the President of
the Philippines has to assume full responsibility for all price increases in oil products, which should be the case
because the matter involved is not only one of national interest but profoundly one of people's survival.

Gutierrez, Jr. and Cruz, JJ., concur.

SARMIENTO, J., separate opinion:

I would like to point out a few things in view of the majority's reliance on the first Maceda case.1

The first Maceda case was a challenge on provisional oil price increases decreed by the Energy Regulatory
Board (ERB). This Court sustained the Board, as it is sustaining the Board in this case, on a few economic
outputs, namely, the Oil Price Stabilization Fund (OPSF) deficit, the deteriorating exchange rate, and the
balance of payments and trade gaps.

As I held in my dissent in yet another Maceda case, Maceda v. Macaraig, 2 the current oil price increases were
(are) also the result of the devaluation of the currency, since a devalued peso forced oil companies to pay more
pesos for oil worth in dollars.

I simply wish to state what has apparently been left unstated in the course of debate and perhaps, the real score
behind recurring oil price hikes and why the ERB has been very quick in granting them.

The truth is that petroleum prices have been dictated by the Government's economic maneuvers, and not rather
the vagaries of the world market. The truth is that the recent oil hikes have nothing to do with Saddam Hussein
or the Gulf crisis (during which oil prices in fact dropped) and are, rather, the natural consequences of calculated
moves by the Government in its effort to meet so-called International Monetary Fund (IMF) targets.

In 1989, the Government of the Republic of the Philippines submitted its letter of intent to the IMF outlining the
country's economic program from 1989 through 1992. In its paragraph 19, it states that:

The Government intends to continue with the floating exchange rate system established in October
1984 . . .3

Since exchange control was abolished and the floating rate system was established, the Philippine peso has seen
a series of devaluations that have progressively pushed up prices, significantly, prices of petroleum. According
to one authority, devaluation has been a "standard prescription" to correct balance of payments (BOP)
deficits.4 It makes dollars expensive, discourages import and encourages exports, and forces dollars
conservation.5

It is a matter of opinion whether or not devaluation has been good for the country and whether or not it has
realized these objectives. The truth is that, whatever it has accomplished, oil — which is imported — has been
subject to the effects of devaluation.

Early this year, Governor Jose Cuisia of the Central Bank, Secretary Jesus Estanislao of the Department of
Finance, and Secretary Guillermo Carague of the Budget and Management Department, wrote Mr. Michael
Camdessus of the International Monetary Fund (the letter of intent) and informed him of the country's
"Economic Stabilization Plan, 1991-92". The Plan recognized certain economic imbalances that have
supposedly inhibited growth, in particular, inflation and an increasing balance of payments deficit, and drew a
program centered on "a strong effort to bring down the overall fiscal deficit "through, among other things, "the
gradual elimination of the deficit of the Oil Price Stabilization Fund." 6 It spelled out, among other things, a
"[r]estoration of a sustainable external position requir[ing] the continuation of a flexible exchange rate policy . .
. "7 and described in detail an "Oil Price and Energy Policy" focused on wiping out the OPSF deficit, to wit:

xxx xxx xxx

A substantial erosion in the overall fiscal position occurred in 1989 and 1990 as a result of official
price support for oil products provided through the OPSF. Despite a lowering of the excise tax on oil in
September 1990 and average domestic oil price increases of about 30 percent in September and 32
percent in December 1990, the fund continued to incur a deficit during the second half of 1990. The
cumulative OPSF deficit (excluding unfiled claims) at end December 1990 is estimated at P8.8 billion,
and this deficit will rise in the first part of 1991. However the cumulative OPSF deficit is to be
eliminated by the end of the third quarter of 1991. To this end, the Government intends to follow a
pricing policy that ensures attainment of zero balance within the specific time. In particular, the
Government will maintain present price levels despite projected world price declines. In addition, a
budgetary transfer of P5 billion will be provided in 1991 to settle outstanding claim of the OPSF.

15. Full deregulation of oil prices continues to be an important objective of the Government once calm
has been restored to world oil markets. Meanwhile the technical and legal groundwork is being laid
with a view to full deregulation as soon as practicable.

16. The principal objectives of the Government's policy in the energy sector are: (i) the development of
economically viable indigenous energy resources, mainly thermal, geothermal and hydro-electric
power, together with ensuring adequate maintenance of existing facilities; (ii) promoting more efficient
use of energy resources through various energy conservation measures; and (ii) the elimination of
distortions in every resource allocation through appropriate pricing policies. 8

xxx xxx xxx

As I said, Philippine oil prices today have nothing to do with the law on supply and demand, if they had
anything to do with it in recent years. (I also gather that the Government is intending to re-adjust the prices of
gasoline and diesel fuel soon since apparently, low diesel prices have reduced the demand for gasoline resulting
in "distortions".)

As the Court held in the first Maceda v. Energy Regulatory Board, 9 oil pricing "is a question best judged by the
political leadership" and oil prices are (and have been apparently), political, rather than economic, decisions.

I am not to be mistaken as accepting the "letter of intent" as a correct prescription –– much less a necessary
medicine — although I will be lacking in candor if I did not say that it is a bitter pill to swallow. What I must be
understood as saying is that "oil" is a political card to be played on a political board rather than the courts, so
long, of course, as nobody has done anything illegal.

The "politics of oil" as spelled out in the Government's letter of intent likewise bring to light the true nature of
the ERB Under the Memorandum on Philippine Economic Stabilization Plan:

xxx xxx xxx

In the past, energy prices had been set to broadly reflect the average cost of supply. However, the lack
of transparency of the pricing mechanism and subsidization of consumption have increasingly become
a cause for concern. To alleviate some of these problems, in mid-1987, the Government established the
Energy Regulatory Board ERB a quasi-judicial body empowered with the setting and regulation of the
pricing of petroleum products and electricity tariffs, the regulation of additions to oil refining capacity,
and the regulation of importing, transporting, processing and distributing all energy resources.
(Petroleum pricing policy is described in paragraphs 14 and 15.) In addition to the full pass-through of
changes in oil prices to power tariffs, the Government is committed to the adoption of longrun marginal
cost pricing for electricity. To this end, NPC intends to introduce a marginal cost imported-has tariff
structure to ensure that it meets its target of achieving a rate of return of eight percent on its rate base. 10
it is apparent that the Board, in spite of its "independence" (from the Office of the President), is bound by the
terms of the program and that it has after all, no genuine discretion to deny requests for price adjustments by oil
companies. I seriously doubt whether or not it is possessed of that discretion judging, first, from its performance
since 1987 (in which it has not overruled the Government on "oil cases") and the fact that the exchange rate, the
balance of payment deficit, and the OPSF deficiency are matters of simple arithmetic.

And certainly, the Board can not possibly overrule the Government's "letter of intent."

The first Maceda case sustained the grant of provisional price increases ex parte not only because Section 8 of
Executive Order No. 172 authorized the grant of provisional relief without a hearing but because fluctuations in
the foreign exchange rates, for instance, were, and are, a matter of judicial notice, and a hearing thereafter was
necessary only to see whether or not the ERB determined the rates correctly.

This likewise brings to light the necessity for an ERB to fix rates since it does not, after all fix (meaning decide)
rates but merely announces their imminence on demonstrable figures of higher rates. The Court however can not
question the wisdom of a statute and after all, I suppose the Government can make use of an accountant.

I agree with Justice Padilla insofar as he refers to the "present scheme of allowing provisional price increase" as
a "scheme [to defraud] the people." I would like to go further. As I indicated the ERB does no more than to
punch calculators for the Government-which decides oil price increases. The comedy of December, 1990, when
the Board adjusted prices in a matter of days, is a confirmation of this point. As Justice Padilla noted, the re-
adjustment of December 10, 1990 was in fact prompted by "presidential requests" which does not speak well of
the Board's independence and which in fact bares the truth as to who really makes the decision. (The
readjustment, consisting in the reduction in diesel fuel and a corresponding increase in gasoline, sought to
mollify the indignation of the public.)

I agree with Justice Padilla that it amounts to fraud on the people to make them believe that the ERB can give
them a fair hearing, indeed, if it can do anything at all.

I agree, finally, with Justice Padilla that the nation is one in crisis, and evidently, the "ravenous" oil companies
Justice Paras refers to, have not helped any. I submit however that we have not succeeded in fingering the real
villain the letter of intent. Saddam's Middle East folly has nothing to do with that.

Separate Opinions

PARAS, J., dissenting:

I dissent. As I have long previously indicated, the ERB has absolutely no power to tax which is solely the
prerogative of Congress. This is what the ERB is precisely doing by getting money from the people
to ultimately subsidize the ravenous oil companies. Additionally, the stubborn refusal of the ERB to effectively
rollback oil prices is a continuing bestial insult to the intelligence of our countrymen, and a gross abandonment
of the people in their hour of economic misery. I therefore vote for a complete and effective rollback of all oil
prices.

Cruz, J., concurs.

PADILLA, J., dissenting:

I regret that I can not concur in the majority opinion.

In the matter of price increases of oil products, which vitally affects the people, especially those in the middle
and low income groups, any increase, provisional or otherwise, should be allowed only after the Energy
Regulatory Board (ERB) shall have fully determined, through bona fide and full-dress hearings, that it is
absolutely necessary and by how much it shall be effected. The people, represented by reputable oppositors,
deserve to be given full opportunity to be heard in their opposition to any increase in the prices of fuel. The right
to be heard includes not only the right to present one's case and submit evidence in support thereof, but also the
right to confront and cross-examine the witnesses of the adverse parties.

Because of the procedure adopted by the ERB in the reception of evidence leading to the price increases of 5
and 6 December 1990, petitioner Maceda was not able to finish his cross-examination of Petron's sole witness.
And, even before each of the witnesses of Shell and Caltex could be cross-examined by petitioners and before
they could present evidence in support of their opposition to the increase, the ERB had already issued its 5
December 1990 order allowing a "provisional increase" sought by the oil companies in their respective
supplemental applications.

That there were postponements of scheduled hearings before the ERB, at the instance of oppositor Maceda, did
not justify a denial of the right of oppositors to be heard. The postponements were not intended to delay the
proceedings. In fact, the resetting of the scheduled hearings on November 14, 15 and 16 to a later date, upon
motion of petitioner Maceda, was to enable him to file a written opposition to the supplemental applications
filed by the oil companies.

The ERB acted hastily in granting the provisional increases sought by the oil companies even before the
oppositors could submit evidence in support of their opposition. The fact that the questioned orders merely
allowed a provisional increase is beside the point, for past experiences have shown that so-called provisional
increases" allowed by the ERB ultimately became permanent.

ERB's claim that the second provisional increase was duly supported by evidence, is belied by its own act of
modifying said order (of provisional increase) not only once but twice, upon the "request" of the President. First,
the ERB rolled back the prices of fuel just a day after it issued the questioned order, altering the allocation of the
increase. Second, on 10 December 1990, the ERB further modified the price of petroleum products resulting in
reduction of the weighted average provisional increase from P2.82 to P2.05 per liter, but only after the President
had announced that she would meet with the leaders of both Houses of Congress, to discuss the creation of a
special fund to be raised from additional taxes, to subsidize the prices of petroleum products. 1

These acts of the ERB ostensibly sparked by "presidential requests" clearly demonstrate that the evidence did
not, in the first place, justify the price increases it had ordered on 5 and 6 December 1990. Furthermore, the
ERB never came out with a categorical and official declaration of how much was the so-called deficit of the Oil
Price Stabilization Fund (OPSF) and how much of the oil price increases was intended to cover such deficit.

In the midst of a national crisis related to oil price increases, each and every one is called upon to assume his/its
share of continuing sacrifices. The public, the government, as well as the oil companies should work hand in
hand in solving the present problem that confronts us. We are not unmindful of the fact that the oil companies
are profit-oriented. However, profits should not be their only concern in times of deepening inability of the
people to cope with their prices with "built-in-margins". A reduction of profits during these crucial and trying
times, is certainly in order considering that in the past, the oil companies had unquestionably made tremendous
profits.

In view of the foregoing, I vote to GRANT the petition for the nullification of the 5 and 6 December 1990
orders of the ERB and for a roll-back of the prices of oil products to levels existing before 5 and 6 December
1990 until hearings before the ERB are finally concluded.

Before closing, I also would like to submit for congressional consideration two (2) proposals in the public
interest. They are:

(1) to do away with the present scheme of allowing provisional price increases of oil products. This scheme, to
my mind, is misleading and serves as an excuse for unilateral and arbitrary ERB-action. As already noted, these
provisional price increases are, to all intents and purposes, permanent when fixed. To that extent, the scheme is
a fraud on the people.

(2) all decisions and orders of the ERB should be expressly made appealable by statute to the President of the
Philippines whose decisions shall be final, except in cases involving questions of law or grave abuse of
discretion which may be elevated to the Supreme Court in a special civil action for certiorari under Rule 65 of
the Rules of Court.
While at present, decisions and orders of the ERB are, in my considered opinion, appealable to the President
under the principle of "exhaustion of administrative remedies", it is nevertheless desirable that the appealability
of ERB decisions and orders to the President be placed beyond any and all doubts. In this way, the President of
the Philippines has to assume full responsibility for all price increases in oil products, which should be the case
because the matter involved is not only one of national interest but profoundly one of people's survival.

Gutierrez, Jr. and Cruz, JJ., concur.

SARMIENTO, J., separate opinion:

I would like to point out a few things in view of the majority's reliance on the first Maceda case.1

The first Maceda case was a challenge on provisional oil price increases decreed by the Energy Regulatory
Board (ERB). This Court sustained the Board, as it is sustaining the Board in this case, on a few economic
outputs, namely, the Oil Price Stabilization Fund (OPSF) deficit, the deteriorating exchange rate, and the
balance of payments and trade gaps.

As I held in my dissent in yet another Maceda case, Maceda v. Macaraig, 2 the current oil price increases were
(are) also the result of the devaluation of the currency, since a devalued peso forced oil companies to pay more
pesos for oil worth in dollars.

I simply wish to state what has apparently been left unstated in the course of debate and perhaps, the real score
behind recurring oil price hikes and why the ERB has been very quick in granting them.

The truth is that petroleum prices have been dictated by the Government's economic maneuvers, and not rather
the vagaries of the world market. The truth is that the recent oil hikes have nothing to do with Saddam Hussein
or the Gulf crisis (during which oil prices in fact dropped) and are, rather, the natural consequences of calculated
moves by the Government in its effort to meet so-called International Monetary Fund (IMF) targets.

In 1989, the Government of the Republic of the Philippines submitted its letter of intent to the IMF outlining the
country's economic program from 1989 through 1992. In its paragraph 19, it states that:

The Government intends to continue with the floating exchange rate system established in October
1984 . . .3

Since exchange control was abolished and the floating rate system was established, the Philippine peso has seen
a series of devaluations that have progressively pushed up prices, significantly, prices of petroleum. According
to one authority, devaluation has been a "standard prescription" to correct balance of payments (BOP)
deficits.4 It makes dollars expensive, discourages import and encourages exports, and forces dollars
conservation.5

It is a matter of opinion whether or not devaluation has been good for the country and whether or not it has
realized these objectives. The truth is that, whatever it has accomplished, oil — which is imported — has been
subject to the effects of devaluation.

Early this year, Governor Jose Cuisia of the Central Bank, Secretary Jesus Estanislao of the Department of
Finance, and Secretary Guillermo Carague of the Budget and Management Department, wrote Mr. Michael
Camdessus of the International Monetary Fund (the letter of intent) and informed him of the country's
"Economic Stabilization Plan, 1991-92". The Plan recognized certain economic imbalances that have
supposedly inhibited growth, in particular, inflation and an increasing balance of payments deficit, and drew a
program centered on "a strong effort to bring down the overall fiscal deficit "through, among other things, "the
gradual elimination of the deficit of the Oil Price Stabilization Fund." 6 It spelled out, among other things, a
"[r]estoration of a sustainable external position requir[ing] the continuation of a flexible exchange rate policy . .
. "7 and described in detail an "Oil Price and Energy Policy" focused on wiping out the OPSF deficit, to wit:

xxx xxx xxx

 A substantial erosion in the overall fiscal position occurred in 1989 and 1990 as a result of official
price support for oil products provided through the OPSF. Despite a lowering of the excise tax on oil in
September 1990 and average domestic oil price increases of about 30 percent in September and 32
percent in December 1990, the fund continued to incur a deficit during the second half of 1990. The
cumulative OPSF deficit (excluding unfiled claims) at end December 1990 is estimated at P8.8 billion,
and this deficit will rise in the first part of 1991. However the cumulative OPSF deficit is to be
eliminated by the end of the third quarter of 1991. To this end, the Government intends to follow a
pricing policy that ensures attainment of zero balance within the specific time. In particular, the
Government will maintain present price levels despite projected world price declines. In addition, a
budgetary transfer of P5 billion will be provided in 1991 to settle outstanding claim of the OPSF.

15. Full deregulation of oil prices continues to be an important objective of the Government once calm
has been restored to world oil markets. Meanwhile the technical and legal groundwork is being laid
with a view to full deregulation as soon as practicable.

16. The principal objectives of the Government's policy in the energy sector are: (i) the development of
economically viable indigenous energy resources, mainly thermal, geothermal and hydro-electric
power, together with ensuring adequate maintenance of existing facilities; (ii) promoting more efficient
use of energy resources through various energy conservation measures; and (ii) the elimination of
distortions in every resource allocation through appropriate pricing policies. 8

xxx xxx xxx

As I said, Philippine oil prices today have nothing to do with the law on supply and demand, if they had
anything to do with it in recent years. (I also gather that the Government is intending to re-adjust the prices of
gasoline and diesel fuel soon since apparently, low diesel prices have reduced the demand for gasoline resulting
in "distortions".)

As the Court held in the first Maceda v. Energy Regulatory Board, 9 oil pricing "is a question best judged by the
political leadership" and oil prices are (and have been apparently), political, rather than economic, decisions.

I am not to be mistaken as accepting the "letter of intent" as a correct prescription –– much less a necessary
medicine — although I will be lacking in candor if I did not say that it is a bitter pill to swallow. What I must be
understood as saying is that "oil" is a political card to be played on a political board rather than the courts, so
long, of course, as nobody has done anything illegal.

The "politics of oil" as spelled out in the Government's letter of intent likewise bring to light the true nature of
the ERB Under the Memorandum on Philippine Economic Stabilization Plan:

xxx xxx xxx

In the past, energy prices had been set to broadly reflect the average cost of supply. However, the lack
of transparency of the pricing mechanism and subsidization of consumption have increasingly become
a cause for concern. To alleviate some of these problems, in mid-1987, the Government established the
Energy Regulatory Board ERB a quasi-judicial body empowered with the setting and regulation of the
pricing of petroleum products and electricity tariffs, the regulation of additions to oil refining capacity,
and the regulation of importing, transporting, processing and distributing all energy resources.
(Petroleum pricing policy is described in paragraphs 14 and 15.) In addition to the full pass-through of
changes in oil prices to power tariffs, the Government is committed to the adoption of longrun marginal
cost pricing for electricity. To this end, NPC intends to introduce a marginal cost imported-has tariff
structure to ensure that it meets its target of achieving a rate of return of eight percent on its rate base.10

it is apparent that the Board, in spite of its "independence" (from the Office of the President), is bound by the
terms of the program and that it has after all, no genuine discretion to deny requests for price adjustments by oil
companies. I seriously doubt whether or not it is possessed of that discretion judging, first, from its performance
since 1987 (in which it has not overruled the Government on "oil cases") and the fact that the exchange rate, the
balance of payment deficit, and the OPSF deficiency are matters of simple arithmetic.
And certainly, the Board can not possibly overrule the Government's "letter of intent."

The first Maceda case sustained the grant of provisional price increases ex parte not only because Section 8 of
Executive Order No. 172 authorized the grant of provisional relief without a hearing but because fluctuations in
the foreign exchange rates, for instance, were, and are, a matter of judicial notice, and a hearing thereafter was
necessary only to see whether or not the ERB determined the rates correctly.

This likewise brings to light the necessity for an ERB to fix rates since it does not, after all fix (meaning decide)
rates but merely announces their imminence on demonstrable figures of higher rates. The Court however can not
question the wisdom of a statute and after all, I suppose the Government can make use of an accountant.

I agree with Justice Padilla insofar as he refers to the "present scheme of allowing provisional price increase" as
a "scheme [to defraud] the people." I would like to go further. As I indicated the ERB does no more than to
punch calculators for the Government-which decides oil price increases. The comedy of December, 1990, when
the Board adjusted prices in a matter of days, is a confirmation of this point. As Justice Padilla noted, the re-
adjustment of December 10, 1990 was in fact prompted by "presidential requests" which does not speak well of
the Board's independence and which in fact bares the truth as to who really makes the decision. (The
readjustment, consisting in the reduction in diesel fuel and a corresponding increase in gasoline, sought to
mollify the indignation of the public.)

I agree with Justice Padilla that it amounts to fraud on the people to make them believe that the ERB can give
them a fair hearing, indeed, if it can do anything at all.

I agree, finally, with Justice Padilla that the nation is one in crisis, and evidently, the "ravenous" oil companies
Justice Paras refers to, have not helped any. I submit however that we have not succeeded in fingering the real
villain the letter of intent. Saddam's Middle East folly has nothing to do with that.