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ADMINISTRATIVE LAW: POWERS OF ADMINISTRATIVE AGENCIES 1

G.R. No. 111812 May 31, 1995

DIONISIO M. RABOR, petitioner,vs.

CIVIL SERVICE COMMISSION, respondent.

FELICIANO, J.:  

Petitioner Dionisio M. Rabor is a Utility Worker in the Office of

the Mayor, Davao City. He entered the government service as a

Utility worker on 10 April 1978 at the age of 55 years.

Sometime in May 1991, 1 Alma, D. Pagatpatan, an official in the

Office of the Mayor of Davao City, advised Dionisio M. Rabor

to apply for retirement, considering that he had already reached

the age of sixty-eight (68) years and seven (7) months, with

thirteen (13) years and one (1) month of government service.

Rabor responded to this advice by exhibiting a "Certificate of

Membership" 2 issued by the Government Service Insurance

System ("GSIS") and dated 12 May 1988. At the bottom of this

"Certificate of Membership" is a typewritten statement of the

following tenor: "Service extended to comply 15 years service

reqts." This statement is followed by a non-legible initial with

the following date "2/28/91."

Thereupon, the Davao City Government, through Ms.

Pagatpatan, wrote to the Regional Director of the Civil Service

Commission, Region XI, Davao City ("CSRO-XI"), informing

the latter of the foregoing and requesting advice "as to what

action [should] be taken on this matter."

In a letter dated 26 July 1991, Director Filemon B. Cawad of

CSRO-XI advised Davao City Mayor Rodrigo R. Duterte as

follows:

Please be informed that the extension of services of Mr. Rabor is

contrary to M.C. No. 65 of the Office of the President, the

relevant portion of which is hereunder quoted:

Officials and employees who have reached the compulsory

retirement age of 65 years shall not be retained the service,

except for extremely meritorious reasons in which case the

retention shall not exceed six (6) months.

IN VIEW WHEREFORE, please be advised that the services of

Mr. Dominador [M.] Rabor as Utility Worker in that office, is

already non-extend[i]ble. 3 

Accordingly, on 8 August l991, Mayor Duterte furnished a copy

of the 26 July 1991 letter of Director Cawad to Rabor and

advised him "to stop reporting for work effective August 16,

1991." 4 

Petitioner Rabor then sent to the Regional Director, CSRO-XI, a

letter dated 14 August 1991, asking for extension of his services

in the City Government until he "shall have completed the

fifteen (15) years service [requirement] in the Government so

that [he] could also avail of the benefits of the retirement laws

given to employees of the Government." The extension he was

asking for was about two (2) years. Asserting that he was "still in

good health and very able to perform the duties and functions of

[his] position as Utility Worker," Rabor sought "extension of

[his] service as an exception to Memorandum Circular No. 65 of

the Office of the President." 5 This request was denied by

Director Cawad on 15 August 1991.

Petitioner Rabor next wrote to the Office of the President on 29

January 1992 seeking reconsideration of the decision of Director

Cawad, CSRO-XI. The Office of the President referred Mr.

Rabor's letter to the Chairman of the Civil Service Commission

on 5 March 1992.

In its Resolution No. 92-594, dated 28 April 1992, the Civil

Service Commission dismissed the appeal of Mr. Rabor and

affirmed the action of Director Cawad embodied in the latter's

letter of 26 July 1991. This Resolution stated in part:

In his appeal, Rabor requested that he be allowed to continue

rendering services as Utility Worker in order to complete the

fifteen (15) year service requirement under P.D. 1146.

CSC Memorandum Circular No. 27, s. 1990 provides, in part:

1. Any request for extension of service of compulsory retirees to

complete the fifteen years service requirement for retirement

shall be allowed only to permanent appointees in the career

service who are regular members of the Government Service

Insurance System (GSIS) and shall be granted for a period of

not exceeding one (1) year .

Considering that as early as October 18, 1988, Rabor was

already due for retirement, his request for further extension of

service cannot be given due course. 6 (Emphasis in the original)

On 28 October 1992, Mr. Rabor sought reconsideration of

Resolution No. 92-594 of the Civil Service Commission this

time invoking the Decision of this Court in Cena v. Civil Service

Commission. 7 Petitioner also asked for reinstatement with back

salaries and benefits, having been separated from the

government service effective 16 August 1991. Rabor's motion

for reconsideration was denied by the Commission.

Petitioner Rabor sent another letter dated 16 April 1993 to the

Office of the Mayor, Davao City, again requesting that he be

allowed to continue rendering service to the Davao City

Government as Utility Worker in order to complete the fifteen

(15) years service requirement under P.D. No. 1146. This request

was once more denied by Mayor Duterte in a letter to petitionerdated 19 May 1993. In this letter, Mayor Duterte pointed out

that, under Cena grant of the extension of service was

discretionary on the part of the City Mayor, but that he could not

grant the extension requested. Mayor Duterte's letter, in relevant

 part, read:

The matter was referred to the City Legal Office and the

Chairman of the Civil Service Commission, in the advent of the

decision of the Supreme Court in the Cena vs. CSC, et al. (G.R.

 No. 97419 dated July 3, 1992), for legal opinion. Both the City

Legal Officer and the Chairman of the Civil Service Commission

are one in these opinion that extending you an appointment inorder that you may be able to complete the fifteen-year service

requirement is discretionary [on the part of] the City Mayor .

Much as we desire to extend you an appointment but

circumstances are that we can no longer do so. As you are

already nearing your 70th birthday may no longer be able to

 perform the duties attached to your position. Moreover, the

 position you had vacated was already filled up.

We therefore regret to inform you that we cannot act favorably

on your request. 8 (Emphases supplied)

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ADMINISTRATIVE LAW: POWERS OF ADMINISTRATIVE AGENCIES 2

At this point, Mr. Rabor decided to come to this Court. He filed

a Letter/Petition dated 6 July 1993 appealing from Civil Service

Resolution No. 92-594 and from Mayor Duterte's letter of 10

May 1993.

The Court required petitioner Rabor to comply with the formal

requirements for instituting a special civil action of certiorari to

review the assailed Resolution of the Civil Service Commission.

In turn, the Commission was required to comment on petitioner'sLetter/Petition. 9 The Court subsequently noted petitioner's Letter

of 13 September 1993 relating to compliance with the mentioned

formal requirements and directed the Clerk of Court to advise

 petitioner to engage the services of counsel or to ask for legal

assistance from the Public Attorney's Office (PAO). 10 

The Civil Service Commission, through the Office of the

Solicitor General, filed its comment on 16 November 1993. The

Court then resolved to give due course to the Petition and

required the parties to file memoranda. Both the Commission

and Mr. Rabor (the latter through PAO counsel) did so.

In this proceeding, petitioner Rabor contends that his claim falls

squarely within the ruling of this Court in Cena v. Civil Service

Commission. 11 

Upon the other hand, the Commission seeks to distinguish this

case from Cena. The Commission, through the Solicitor General,

stressed that in Cena, this Court had ruled that the employer

agency, the Land Registration Authority of the Department of

Justice, was vested with discretion to grant to Cena the extension

requested by him. The Land Registration Authority had chosen

not to exercise its discretion to grant or deny such extension. In

contrast, in the instant case, the Davao City Government didexercise its discretion on the matter and decided to deny the

extension sought by petitioner Rabor for legitimate reasons.

While the Cena decision is barely three (3) years old, the Court

considers that it must reexamine the doctrine of Cena and the

theoretical and policy underpinnings thereof. 12 

We start by recalling the factual setting of Cena.

Gaudencio Cena was appointed Registrar of the Register of

Deeds of Malabon, Metropolitan Manila, on 16 July 1987. He

reached the compulsory retirement age of sixty-five (65) years

on 22 January 1991. By the latt er date, his government service

would have reached a total of eleven (11) years, nine (9) months

and six (6) days. Before reaching his 65th birthday, Cena

requested the Secretary of Justice, through the Administrator of

the Land Registration Authority ("LRA") that he be allowed to

extend his service to complete the fifteen-year service

requirement to enable him to retire with the full benefit of an

Old-Age Pension under Section 11 (b) of P.D. No. 1146. IfCena's request were granted, he would complete fifteen (15)

years of government service on 15 April 1994, at the age of

sixty-eight (68) years.

The LRA Administrator sought a ruling from the Civil Service

Commission on whether or not Cena's request could be granted

considering that Cena was covered by Civil Service

Memorandum No. 27, Series of 1990. On 17 October 1990, the

Commission allowed Cena a one (1) year extension of his

service from 22 January 1991 to 22 January 1992 under its

Memorandum Circular No. 27. Dissatisfied, Cena moved for

reconsideration, without success. He then came to th is Court,claiming that he was entitled to an extension of three (3) years,

three (3) months and twenty-four (24) days to complete the

fifteen-year service requirement for retirement with full benefits

under Section 11 (b) of P.D. No. 1146.

This Court granted Cena' s petition in its Decision of 3 July

1992. Speaking through Mr. Justice Medialdea, the Court held

that a government employee who has reached the compulsory

retirement age of sixty-five (65) years, but at the same time has

not yet completed fifteen (15) years of government service

required under Section 11 (b) of P.D. No. 1146 to qualify for the

Old-Age Pension Benefit, may be granted an extension of hisgovernment service for such period of time as may be necessary

to "fill up" or comply with the fifteen (15)-year service

requirement. The Court also held that the authority to grant the

extension was a discretionary one vested in the head of the

agency concerned. Thus the Court concluded:

Accordingly, the Petition is GRANTED. The Land Registration

Authority (LRA) and Department of Justice has the discretion to

allow petitioner Gaudencio Cena to extend his 11 years, 9

months and 6 days of government to complete the fifteen-year

 service so that he may retire with full benefits under Section 11,

 paragraph (b) of P.D. 1146. 13 (Emphases supplied)

The Court reached the above conclusion primarily on the basis

of the "plain and ordinary meaning" of Section 11 (b) of P.D.

 No. 1146. Section 11 may be quoted in its entirety:

Sec. 11 Conditions for Old-Age Pension. —  (a) Old-Age

Pension shall be paid to a member who

(1) has at least fifteen (15) years of service;

(2) is at least sixty (60) years of age; and

(3) is separated from the service.

(b) unless the service is extended by appropriate authorities,

retirement shall be compulsory for an employee at sixty-five-

(65) years of age with at least fifteen (15) years of service;

Provided, that if he has less than fifteen (15) years of service, he

shall he allowed to continue in the service to completed the

fifteen (15) years. (Emphases supplied)

The Court went on to rely upon the canon of liberal construction

which has often been invoked in respect of retirement statutes:

Being remedial in character, a statute granting a pension or

establishing [a] retirement plan should be liberally construed and

administered in favor of persons intended to be benefitted

thereby. The liberal approach aims to achieve the humanitarian

 purposes of the law in order that efficiency, security and well-

 being of government employees may be enhanced. 14 (Citations

omitted)

While Section 11 (b) appeared cast in verbally unqualified terms,

there were (and still are) two (2) administrative issuances which

 prescribe limitations on the extension of service that may be

granted to an employee who has reached sixty-five (65) years of

age.

The first administrative issuance is Civil Service Commission

Circular No. 27, Series of 1990, which should be quoted in its

entirety:

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ADMINISTRATIVE LAW: POWERS OF ADMINISTRATIVE AGENCIES 3

TO : ALL HEADS OF DEPARTMENTS, BUREAUS AND

AGENCIES OF THE NATIONAL/LOCAL GOVERNMENTS

INCLUDING GOVERNMENT- OWNED AND/OR

CONTROLLED CORPORATIONS WITH ORIGINAL

CHARTERS.

SUBJECT : Extension of Service of Compulsory Retiree to

Complete the Fifteen Years Service Requirement for Retirement

 Purposes.

Pursuant to CSC Resolution No. 90-454 dated May 21, 1990, the

Civil Service Commission hereby adopts and promulgates the

following policies and guidelines in the extension of services of

compulsory retirees to complete the fifteen years service

requirement for retirement purposes:

1. Any request for the extension of service of compulsory retirees

to complete the fifteen (15) years service requirement  for

retirement shall be allowed only to permanent appointees in the

career service who are regular members of the Government

Service Insurance System (GSIS), and shall be granted for a period not exceeding one (1) year .

2. Any request for the extension of service of compulsory retiree

to complete the fifteen (15) years service requirement for

retirement who entered the government service at 57 years of

age or over upon prior grant of authority to appoint him or her,

shall no longer be granted.

3. Any request for the extension of service to complete the

fifteen (15) years service requirement of retirement shall be

filled not later than three (3) years prior to the date of

compulsory retirement.

4. Any request for the extension of service of a compulsory

retiree who meets the minimum number of years of service for

retirement purposes may be granted for six (6) months only with

no further extension.

This Memorandum Circular shall take effect immediately.

(Emphases supplied)

The second administrative issuance  —  Memorandum Circular

 No. 65 of the Office of the President, dated 14 June 1988 —  

 provides:

xxx xxx xxx

WHEREAS, this Office has been. receiving requests for

reinstatement and/or retention in the service of employees who

have reached the compulsory retirement age of 65 years, despite

the strict conditions provided for in Memorandum Circular No.

163, dated March 5, 1968, as amended.

WHEREAS, the President has recently adopted a policy to

adhere more strictly to the law providing for compulsory

retirement age of 65 years and, in extremely meritorious cases,

to limit the service beyond the age of 65 years to six (6) months

only.

WHEREFORE, the pertinent provision of Memorandum

Circular No. 163 or on the retention in the service of officials or

employees who have reached the compulsory retirement age of

65 years, is hereby amended to read as follows:

Officials or employees who have reached the compulsory

retirement age of 65 yearsshall not be retained in the

service, except for extremely meritorious reasons in which case

the retention shall not exceed six (6) months.

All heads of departments, bureaus, offices and instrumentalities

of the government including government-owned or controlled

corporations, are hereby enjoined to require their respective

offices to strictly comply with this circular.

This Circular shall take effect immediately.

By authority of the President

(Sgd.)

CATALINO MACARAIG, JR.

Executive Secretary

Manila, June 14, 1988. 15 (Emphasis supplied)

Medialdea, J . resolved the challenges posed by the above two (2)

administrative regulations by, firstly, considering as invalid  Civil

Service Memorandum No. 27 and, secondly, by interpreting the

Office of the President's Memorandum Circular No. 65

as inapplicable to the case of Gaudencio T. Cena.

We turn first to the Civil Service Commission's Memorandum

Circular No. 27. Medialdea, J. wrote:

The Civil Service Commission Memorandum Circular No. 27

 being in the nature of an administrative regulation, must be

governed by the principle that 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 (People

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

450; Teoxon v. Members of the Board of Administrators, L-

25619, June 30, 1970, 33 SCRA 585; Manuel v. General

Auditing Office, L-28952, December 29, 1971, 42 SCRA 660;

Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350). . .

. . The rule on limiting to one the year the extension of service ofan employee who has reached the compulsory retirement age of

sixty-five (65) years, but has less than fifteen (15) years of

service under Civil Service Memorandum Circular No. 27, S.

1990, cannot likewise be accorded validity because it has no

relationship or connection with any provision of P.D. 1146

 supposed to be carried into effect . The rule was an addition to or

extension of the law, not merely a mode of carrying it into effect .

The Civil Service Commission has no power to supply perceived

omissions in P.D. 1146. 16 (Emphasis supplied)

It will be seen that Cena, in striking down Civil Service

Commission Memorandum No. 27, took a very narrow view onthe question of what subordinate rule-making by an

administrative agency is permissible and valid. That restrictive

view must be contrasted with this Court's earlier ruling in  People

v. Exconde, 17 where Mr. Justice J.B.L. Reyes said:

It is well established in this jurisdiction that, while the making of

laws is a non-delegable activity that corresponds exclusively to

Congress, nevertheless, the latter may constitutionally delegate

authority and promulgate rules and regulations to implement a

given legislation and effectuate its policies, for the reason

that the legislature often finds it impracticable (if not impossible)

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ADMINISTRATIVE LAW: POWERS OF ADMINISTRATIVE AGENCIES 4

to anticipate and provide for the multifarious and complex

 situations that may be met in carrying the law into effect.  All that

is required is that the regulation should be germane to the

objects and purposes of the law; that the regulation be not in

contradiction with it, but conform to standards that the law

 prescribes. 18(Emphasis supplied)

In Tablarin v. Gutierrez , 19 the Court, in sustaining the validity

of a MECS Order which established passing a uniformadmission test called the National Medical Admission Test

(NMAT) as a prerequisite for eligibility for admission into

medical schools in the Philippines, said:

The standards set for subordinate legislation in the exercise of

rule making authority by an administrative agency like the

Board of Medical Education are  necessarily broad and highly

abstract . As explained by then Mr. Justice Fernando in Edu v.

 Ericta (35 SCRA 481 [1970])  —  

The standards may be either expressed  or implied . If the former,

the non-delegation objection is easily met.The Standard thoughdoes not have to be spelled out specifically. It could be implied

 from the policy and purpose of the act considered as a whole. In

the Reflector Law, clearly the legislative objective is public

 safety. What is sought to be attained in Calalang v. William is

"safe transit upon the roads."  

We believe and so hold that the necessary standards are set

 forth in Section 1 of the 1959 Medical Act: "the standardization

and regulation of medical education" and in Section 5 (a) and 7

of the same Act, the body of the statute itself, and that these

considered together are sufficient compliance with the

requirements of the non-delegation principle. 20

 (Citationsomitted; emphasis partly in the original and partly supplied)

In Edu v. Ericta, 21 then Mr. Justice Fernando stressed the

abstract and very general nature of the standards which our

Court has in prior case law upheld as sufficient for purposes of

compliance with the requirements for validity of subordinate or

administrative rule-making:

This Court has considered as sufficient standards, "public

welfare,"  (Municipality of Cardona v. Municipality of

Binangonan, 36 Phil. 547 [1917]); "necessary in the interest of

law and order,"  (Rubi v. Provincial Board, 39 Phil. 660

[1919]); "public interest,"  (People v. Rosenthal, 68 Phil. 328

[1939]); and "justice and equity and substantial merits of the

case,"  (International Hardwood v. Pangil Federation of Labor,

17 Phil. 602 [1940]). 22 (Emphasis supplied)

Clearly, therefore, Cena when it required a considerably higher

degree of detail in the statute to be implemented, went against

 prevailing doctrine. It seems clear that if the governing orenabling statute is quite detailed and specific to begin with, there

would be very little need (or occasion) for implementing

administrative regulations. It is, however, precisely the inability

of legislative bodies to anticipate all (or many) possible detailed

situations in respect of any relatively complex subject matter,

that makes subordinate, delegated rule-making by administrative

agencies so important and unavoidable. All that may be

reasonably; demanded is a showing that the delegated legislation

consisting of administrative regulations are germane to the

general purposes projected by the governing or enabling statute.

This is the test that is appropriately applied in respect of Civil

Service Memorandum Circular No. 27, Series of 1990, and tothis test we now turn.

We consider that the enabling statute that should appropriately

 be examined is the present Civil Service law —  found in Book

V, Title I, Subtitle A, of Executive Order No. 292 dated 25 July

1987, otherwise known as the Administrative Code of 1987  —  

and not alone P.D. No. 1146, otherwise known as the "Revised

Government Service Insurance Act of 1977." For the matter of

extension of service of retirees who have reached sixty-five (65)

years of age is an area that is covered by both statutes and not

alone by Section 11 (b) of P.D. 1146. This is crystal clear from

examination of many provisions of the present civil service law.

Section 12 of the present Civil Service law set out in the 1987

Administrative Code provides, in relevant part, as follows:

Sec. 12 Powers and Functions.  —  The [Civil Service]

Commission shall have the following powers and functions:

xxx xxx xxx

(2) Prescribe, amend and enforce rules and regulations

for carrying into effect the provisions of the Civil Service

 Law and other pertinent laws;

(3) Promulgate policies, standards and guidelines for the Civil

Service and adopt plans and programsto promote economical,

efficient and effective personnel administration in the

government;

xxx xxx xxx

(10) Formulate, administer and evaluate programs relative to

the development and retention of aqualified and competent work

 force in the public service;

xxx xxx xxx

(14) Take appropriate action on all appointments and other

 personnel matters in the Civil Serviceincluding extension of

 service beyond retirement age;

xxx xxx xxx

(17) Administer the retirement program for government officials

and employees, and accredit government services and evaluate

qualifications for retirement ;

xxx xxx xxx

(19) Perform all functions properly belonging to a central

 personnel agency and such other functions as may be provided

 by law. (Emphasis supplied)

It was on the bases of the above quoted provisions of the 1987Administrative Code that the Civil Service Commission

 promulgated its Memorandum Circular No. 27. In doing so, the

Commission was acting as "the cent ral personnel agency of the

government empowered to promulgate policies, standards and

guidelines for efficient, responsive and effective personnel

administration in the government." 23 It was also discharging its

function of "administering the retirement program for

government officials and employees" and of "evaluat[ing]

qualifications for retirement ."

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ADMINISTRATIVE LAW: POWERS OF ADMINISTRATIVE AGENCIES 5

In addition, the Civil Service Commission is charged by the

1987 Administrative Code with providing leadership and

assistance "in the development  and retention of qualified and

efficient work force in the Civil Service" (Section 16 [10]) and

with the "enforcement of the constitutional and statutory

 provisions, relative to retirement and the regulation for

the effective implementation of the retirement of government

officials and employees" (Section 16 [14]).

We find it very difficult to suppose that the limitation of

 permissible extensions of service after an employee has reached

sixty-five (65) years of age has no reasonable relationship or is

not germane to the foregoing provisions of the present Civil

Service Law. The physiological and psychological processes

associated with ageing in human beings are in fact related to the

efficiency and quality of the service that may be expected from

individual persons. The policy considerations which guided the

Civil Service Commission in limiting the maximum extension of

service allowable for compulsory retirees, were summarized by

Griño-Aquino, J . in her dissenting opinion in Cena:

Worth pondering also are the points raised by the Civil Service

Commission that extending the service of compulsory retirees

for longer than one (1) year would: (1) give a premium to late-

comersin the government service and in effect discriminate

against those who enter the service at a younger age; (2) delay

the promotion of the latter and of next-in-rank employees; and

(3) prejudice the chances for employment of qualified young civil

 service applicants who have already passed the various

government examination but must wait for jobs to be vacated by

"extendees" who have long passed the mandatory retirement age

 but are enjoying extension of their government service to

complete 15 years so they may qualify for old-age pension. 24 (Emphasis supplied).

Cena laid heavy stress on the interest of retirees or would be

retirees, something that is, in itself, quite appropriate. At the

same time, however, we are bound to note that there should be

countervailing stress on the interests of the employer agency and

of other government employees as a whole. The results flowing

from the striking down of the limitation established in Civil

Service Memorandum Circular No. 27 may well be "absurd and

inequitable," as suggested by Mme. Justice Griño-Aquino in her

dissenting opinion. An employee who has rendered only three

(3) years of government service at age sixty-five (65) can have

his service extended for twelve (12) years and finally retire at the

age of seventy-seven (77). This reduces the significance of the

general principle of compulsory retirement at age sixty-five (65)

very close to the vanishing point.

The very real difficulties posed by the Cena doctrine for rational

 personnel administration and management in the Civil Service,

are aggravated when Cena is considered together with the case

of Toledo v. Civil Service Commission. 25 Toledo involved the

 provisions of Rule III, Section 22, of the Civil Service Rules on

Personnel Action and Policies (CSRPAP) which prohibited the

appointment of persons fifty-seven (57) years old or above in

government service without prior approval of the Civil Service

Commission. Civil Service Memorandum Circular No. 5, Series

of 1983 provided that a person fifty- seven (57) years of age may

 be appointed to the Civil Service provided that the exigencies of

the government service so required and provided that the

appointee possesses special qualifications not possessed by other

officers or employees in the Civil Service and that the vacancy

cannot be filled by promotion of qualified officers or employeesof the Civil Service. Petitioner Toledo was appointed Manager

of the Education and Information Division of the Commission

on Elections when he was almost fifty-nine (59) years old. No

authority for such appointment had been obtained either from the

President of the Philippines or from the Civil Service

Commission and the Commission found that the other conditions

laid down in Section 22 of Rule III, CSRPAP, did not exist. The

Court nevertheless struck down Section 22, Rule III on the same

exceedingly restrictive view of permissible administrative

legislation that Cena relied on. 26 

When one combines the doctrine of Toledo with the rulingin Cena, very strange results follow. Under these combined

doctrines, a person sixty-four (64) years of age may be appointed

to the government service and one (1) year later may demand

extension of his service for the next fourteen (14) years; he

would retire at age seventy-nine (79). The net effect is thus that

the general statutory policy of compulsory retirement at sixty-

five (65) years is heavily eroded and effectively becomes

unenforceable. That general statutory policy may be seen to

embody the notion that there should be a certain minimum turn-

over in the government service and that opportunities for

government service should be distributed as broadly as possible,

specially to younger people, considering that the bulk of our

 population is below thirty (30) years of age. That same general

 policy also reflects the life expectancy of our people which is

still significantly lower than the life expectancy of, e.g., people

in Northern and Western Europe, North America and Japan.

Our conclusion is that the doctrine of Cena should be and is

hereby modified to this extent: that Civil Service Memorandum

Circular No. 27, Series of 1990, more specifically paragraph (1)

thereof, is hereby declared valid and effective. Section 11 (b) of

P.D. No. 1146 must, accordingly, be read together with

Memorandum Circular No. 27. We reiterate, however, the

holding in Cena that the head of the government agency

concerned is vested with discretionary authority to allow or

disallow extension of the service of an official or employee who

has reached sixty-five (65) years of age without completing

fifteen (15) years of government service; this discretion is,

nevertheless, to be exercised conformably with the provisions of

Civil Service Memorandum Circular No. 27, Series of 1990.

We do not believe it necessary to deal specifically withMemorandum Circular No. 65 of the Office of the President

dated 14 June 1988. It will be noted from the text

quoted supra (pp. 11-12) that the text itself of Memorandum

Circular No. 65 (and for that matter, that of Memorandum

Circular No. 163, also of the Office of the President, dated 5

March 1968) 27 does not purport to apply only to officers or

employees who have reached the age of sixty-five (65) years and

who have at least fifteen (l5) years of government service. We

noted earlier that Cena interpreted Memorandum Circular No. 65

as referring only to officers and employees who have both

reached the compulsory retirement age of sixty-five (65) and

completed the fifteen (15) years of government service. Cena sointerpreted this Memorandum Circular precisely

 because Cena had reached the conclusion that employees who

have reached sixty-five (65) years of age, but who have less than

fifteen (15) years of government service, may be allowed such

extension of service as may be needed to complete fifteen (15)

years of service. In other words, Cena read Memorandum

Circular No. 65 in such a way as to comfort with Cena's own

conclusion reached without regard to that Memorandum

Circular. In view of the conclusion that we today reached in the

instant case, this last ruling of Cena is properly regarded as

merely orbiter .

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ADMINISTRATIVE LAW: POWERS OF ADMINISTRATIVE AGENCIES 6

We also do not believe it necessary to determine whether Civil

Service Memorandum Circular No. 27 is fully compatible with

Office of the President's Memorandum Circular No. 65; this

question must be reserved for detailed analysis in some future

 justiciable case.

Applying now the results of our reexamination of Cena to the

instant case, we believe and so hold that Civil Service Resolution

 No. 92-594 dated 28 April 1992 dismissing the appeal of

 petitioner Rabor and affirming the action of CSRO-XI Director

Cawad dated 26 July 1991, must be upheld and affirmed.

ACCORDINGLY, for all the foregoing, the Petition

for Certiorari is hereby DISMISSED for lack of merit. No

 pronouncement as to costs.

SO ORDERED.

G.R. No. 170463 February 2, 2011

THE BOARD OF TRUSTEES 

OF THE GOVERNMENT SERVICE INSURANCESYSTEM and WINSTON F. GARCIA, in his capacityasGSIS President and General Manager, Petitioners, - versus -

ALBERT M. VELASCO and MARIO I. MOLINA,Respondents.

D E C I S I O N 

CARPIO, J.: 

The Case 

This is a petition for review1 of the 24 September 2004

Decision2 and the 7 October 2005 Order 3 of the Regional Trial

Court of Manila, Branch 19 (trial court), in Civil Case No. 03-

108389. In its 24 September 2004 Decision, the trial court

granted respondents Albert M. Velasco4 and Mario I.

Molinas5 (respondents) petition for prohibition. In its 7 October

2005 Order, the trial court denied petitioners Board of Trustees

of the Government Service Insurance System (GSIS) and

Winston F. Garcias (petitioners) motion for reconsideration.

The Facts 

On 23 May 2002, petitioners charged respondents

administratively with grave misconduct and placed them under

 preventive suspension for 90 days.6 Respondents were charged

for their alleged participation in the demonstration held by some

GSIS employees denouncing the alleged corruption in the GSIS

and calling for the ouster of its president and general manager,

 petitioner Winston F. Garcia.7 

In a letter dated 4 April 2003, respondent Mario I. Molina

(respondent Molina) requested GSIS Senior Vice President

Concepcion L. Madarang (SVP Madarang) for the

implementation of his step increment.8 On 22 April 2003,

SVP Madarang denied the request citing GSIS Board Resolution

 No. 372 (Resolution No. 372)9 issued by petitioner Board of

Trustees of the GSIS (petit ioner GSIS Board) which approved

the new GSIS salary structure, its implementing rules and

regulations, and the adoption of the supplemental guidelines on

step increment and promotion.10 The pertinent provision of

Resolution No. 372 provides:

A. Step Increment

x x x x

III. Specific Rules:

x x xx

3. The step increment adjustment of an employee who is on

 preventive suspension shall be withheld until such time that a

decision on the case has been rendered. x x x x

Respondents also asked that they be allowed to avail of the

employee privileges under GSIS Board Resolution No. 306

(Resolution No. 306) approving Christmas raffle benefits for all

GSIS officials and employees effective year

2002.11 Respondents request was again denied because of their

 pending administrative case.

On 27 August 2003, petitioner GSIS Board issued Board

Resolution No. 197 (Resolution No. 197) approving the

following policy recommendations:

B. On the disqualification from promotion of an employee with a

 pending administrative case

To adopt the policy that an employee with pending

administrative case shall be disqualified from the following

during the pendency of the case:

a) Promotion;

 b) Step Increment;

c) Performance-Based Bonus; and

d) Other benefits and privileges.

On 14 November 2003, respondents filed before the t rial court a

 petition for prohibition with prayer for a writ of preliminary

injunction.12 Respondents claimed that they were denied the

 benefits which GSIS employees were entitled under Resolution

 No. 306. Respondents also sought to restrain and prohibit

 petitioners from implementing Resolution Nos. 197 and 372.

Respondents claimed that the denial of the employee benefitsdue them on the ground of their pending administrative cases

violates their right to be presumed innocent and that they are

 being punished without hearing. Respondent Molina also added

that he had already earned his right to the step increment before

Resolution No. 372 was enacted. Respondents also argued that

the three resolutions were ineffective because they were not

registered with the University of the Philippines (UP) Law

Center pursuant to the Revised Administrative Code of 1987.13 

On 24 November 2003, petitioners filed their comment with

motion to dismiss and opposition.14 On 2 December 2003,

respondents filed their opposition to the motion to dismiss.15 On

5 December 2003, petitioners filed their reply.16 

On 16 January 2004, the trial court denied petitioners motion to

dismiss and granted respondents prayer for a writ of preliminary

injunction.17 

Petitioners filed a motion for reconsideration.18 In its 26

February 2004 Order, the trial court denied petit ioners motion.19 

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ADMINISTRATIVE LAW: POWERS OF ADMINISTRATIVE AGENCIES 7

In its 24 September 2004 Decision, the trial court granted

respondents petition for prohibition. The dispositive portion of

the 24 September 2004 Decision provides:

WHEREFORE, the petition is GRANTED and respondents

Board Resolution No. 197 of August 27, 2003 and No. 372 of

 November 21, 2000 are hereby declared null and void. The writ

of preliminary injunction issued by this Court is hereby made

 permanent.

SO ORDERED.20 

Petitioners filed a motion for reconsideration. In its 7 October

2005 Order, the trial court denied petitioners motion.

Hence, this petition.

The Ruling of the Trial Court 

On the issue of jurisdiction, the trial court said it can take

cognizance of the petition because the territorial area referred to

in Section 4, Rule 65 of the Rules of Court does not necessarilydelimit to a particular locality but rather to the judicial region

where the office or agency is situated so that the prohibitive writ

can be enforced.

On the merits of the case, the trial court ruled that respondents

were entitled to all employee benefits as provided under the law

 by reason of their employment. According to the trial court, to

deny respondents these employee benefits for the reason alone

that they have pending administrative cases is unjusti fied since it

would deprive them of what is legally due them without due

 process of law, inflict punishment on them without hearing, and

violate their right to be presumed innocent.

The trial court also found that the assailed resolutions were not

registered with the UP Law Center, per certification of the Office

of the National Administrative Register (ONAR).21 Since they

were not registered, the trial court declared that the assailed

resolutions have not become effective citing Sections 3 and 4,

Chapter 2, Book 7 of the Revised Administrative Code of

1987.22 

The Issues 

Petitioners raise the following issues:

I

Whether the jurisdiction over the subject matter of Civil Case

 No. 03-108389 (Velasco, et al. vs. The Board of Trustees of

GSIS, et al., RTC-Manila, Branch 19) lies with the Civil Service

Commission (CSC) and not with the Regional Trial Court of

Manila, Branch 19.

II

Whether a Special Civil Action for Prohibition against the GSIS

Board or its President and General Manager exercising quasi-

legislative and administrative functions in Pasay City is outside

the territorial jurisdiction of RTC-Manila, Branch 19.

III

Whether internal rules and regulations need not require

 publication with the Office of the National [Administrative]

Register for their effectivity, contrary to the conclusion of theRTC-Manila, Branch 19.

IV

Whether a regulation, which disqualifies government employees

who have pending administrative cases from the grant of step

increment and Christmas raffle benefits is unconstitutional.

V

Whether the nullification of GSIS Board Resolutions is beyond

an action for prohibition, and a writ of preliminary injunctioncannot be made permanent without a decision ordering the

issuance of a writ of prohibition.23 

The Ruling of the Court 

The petition is partly meritorious.

Petitioners argue that the Civil Service Commission (CSC), not

the trial court, has jurisdiction over Civil Case No. 03-108389

 because it involves claims of employee benefits. Petitioners

 point out that the trial court should have dismissed the case for

lack of jurisdiction.

Sections 2 and 4, Rule 65 of the Rules of Court provide:

Sec. 2. Petition for Prohibition. - When the proceedings of any

tribunal, corporation, board, officer or person, whether

exercising judicial, quasi-judicial or ministerial functions, are

without or in excess of its jurisdiction, or with grave abuse of

discretion amounting to lack or excess of jurisdiction, and there

is no appeal or any other plain, speedy, and adequate remedy in

the ordinary course of law, a person aggrieved thereby may file a

verified petition in the proper court, alleging the facts with

certainty and praying that judgment be renderedcommanding the respondent to desist from furtherproceedings in the action or matter specified therein, orotherwise granting such incidental reliefs as law and justice may

require.

Sec. 4. Where petition filed . - The petition may be filed not later

than sixty (60) days from notice of the judgment, order or

resolution sought to be assailed in the Supreme Court or, if itrelated to acts or omissions of a lower court or of acorporation, board, officer or person in the Regional TrialCourt exercising jurisdiction over the territorial area asdefined by the Supreme Court. It may also be filed in theCourt of Appeals whether or not the same is in aid of its

appellate jurisdiction, or in the Sandiganbayan if it is in aid of its

 jurisdiction. If it involves the acts or omissions of a quasi-

 judicial agency, and unless otherwise provided by law or these

Rules, the petition shall be filed in and cognizable only by the

Court of Appeals. (Emphasis supplied)

Civil Case No. 03-108389 is a petition for prohibition with

 prayer for the issuance of a writ of preliminary injunction.

Respondents prayed that the trial court declare all acts emanating

from Resolution Nos. 372, 197, and 306 void and to prohibit

 petitioners from further enforcing the said

resolutions.24 Therefore, the trial court, not the CSC, has

 jurisdiction over respondents petition for prohibition.

Petitioners also claim that the petition for prohibition was filed

in the wrong territorial jurisdiction because the acts sought to be

 prohibited are the acts of petitioners who hold their principal

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office in Pasay City, while the petition for prohibition was filed

in Manila.

Section 18 of Batas Pambansa Blg. 129 (BP 129)25  provides:

SEC. 18. Authority to define territory appurtenant to each

branch. - The Supreme Court shall define the territory over

which a branch of the Regional Trial Court shall exercise itsauthority. The territory thus defined shall be deemed to bethe territorial area of the branch concerned for purposes ofdetermining the venue of all suits, proceedings or actions,whether civil or criminal, as well as determining theMetropolitan Trial Courts, Municipal Trial Courts, and

Municipal Circuit Trial Courts over which the said branch may

exercise appellate jurisdiction. The power herein granted shall be

exercised with a view to making the courts readily accessible to

the people of the different parts of the region and making

attendance of litigants and witnesses as inexpensive as possible.

(Emphasis supplied)

In line with this, the Supreme Court issued Administrative Order

 No. 326 defining the territorial jurisdiction of the regional trial

courts in the National Capital Judicial Region, as follows:

a. Branches I to LXXXII, inclusive, with seats at Manila over the

City of Manila only.

 b. Branches LXXXIII to CVII, inclusive, with seats at Quezon

City over Quezon City only.

c. Branches CVIII to CXIX, inclusive, with seats at Pasay City

over Pasay City only.

x x x x

The petition for prohibition filed by respondents is a special civil

action which may be filed in the Supreme Court, the Court of

Appeals, the Sandiganbayan or the regional trial court, as the

case may be.27 It is also a personal action because it does not

affect the title to, or possession of real property, or interest

therein. Thus, it may be commenced and tried where the plaintiff

or any of the principal plaintiffs resides, or where the defendant

or any of the principal defendants resides, at the election of the

 plaintiff .28 Since respondent Velasco, plaintiff before the tri al

court, is a resident of the City of Manila,29 the petition could

 properly be filed in the City of Manila.30 The choice of venue is

sanctioned by Section 2, Rule 4 of the Rules of Court.

Moreover, Section 21(1) of BP 129 provides:

Sec. 21. Original jurisdiction in other cases. - Regional Trial

Courts shall exercise original jurisdiction:

(1) In the issuance of writsof certiorari, prohibition, mandamus, quo warranto, habeascorpus and injunction, which may be enforced in any part oftheir respective regions; x x x(Emphasis supplied)

Since the National Capital Judicial Region is comprised of the

cities of Manila, Quezon, Pasay,

Caloocan, Malabon, Mandaluyong, Makati, Pasig,

Marikina, Paraaque, LasPias, Muntinlupa, and Valenzuela and

the municipalities of Navotas, San Juan, Pateros, and Taguig, a

writ of prohibition issued by the regional trial court sitting in the

City of Manila, is enforceable in Pasay City. Clearly, the RTC

did not err when it took cognizance of respondents petition for

 prohibition because it had jurisdiction over the action and the

venue was properly laid before it.

Petitioners also argue that Resolution Nos. 372, 197, and 306

need not be filed with the UP Law Center ONAR since they are,

at most, regulations which are merely internal in nature

regulating only the personnel of the GSIS and not the public.

 Not all rules and regulations adopted by every government

agency are to be filed with the UP Law Center. Only those of

general or of permanent character are to be filed. According to

the UP Law Centers guidelines for receiving and publication of

rules and regulations, interpretative regulations and those merely

internal in nature, that is, regulating only the personnel of the

Administrative agency and not the public, need not be filed with

the UP Law Center.

Resolution No. 372 was about the new GSIS salary structure,

Resolution No. 306 was about the authority to pay the 2002

Christmas Package, and Resolution No. 197 was about the GSIS

merit selection and promotion plan. Clearly, the assailed

resolutions pertained only to internal rules meant to regulate the

 personnel of the GSIS. There was no need for the publication or

filing of these resolutions with the UP Law Center.

Petitioners insist that petitioner GSIS Board has the power to

issue the assailed resolutions. According to petit ioners, it was

within the power of petitioner GSIS Board to disqualify

respondents for step increment and from receiving GSIS benefits

from the time formal administrative charges were filed against

them until the cases are resolved.

The Court notes that the trial court only declared Resolution

 Nos. 197 and 372 void. The trial court made no ruling on

Resolution No. 306 and respondents did not appeal this matter.

Therefore, we will limit our discussion to Resolution Nos. 197

and 372, particularly to the effects of preventive suspension on

the grant of step increment because thi s was what respondents

raised before the trial court.

First, entitlement to step increment depends on the rules relative

to the grant of such benefit. In point are Section 1(b), Rule II and

Section 2, Rule III of Joint Circular No. 1, series of 1990, which

 provide:

Rule II. Selection Criteria

Section 1. Step increments shall be granted to all deserving

officials and employees x x x

(b) Length of Service For those who have rendered continuous

satisfactory service in a particular position for at least three (3)

years.

Rule III. Step Increments

x x x x

Section 2. Length of Service A one (1) step increment shall be

granted officials and employees for every three (3) years of

continuous satisfactory service in the position. Years of service

in the position shall include the following:

(a) Those rendered before the position was reclassified to a

 position title with a lower or the same salary grade allocation;

and

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(b) Those rendered before the incumbent was transferred to

another position within the same agency or to another agency

without a change in position title and salary grade allocation.

In the initial implementation of step increments in 1990, an

incumbent shall be granted step increments equivalent to one (1)

step for every three (3) years of continuous satisfactory service

in a given position occupied as of January 1, 1990.

A grant of step increment on the basis of length of service

requires that an employee must have rendered at least three years

of continuous and satisfactory service in the same position to

which he is an incumbent.31 To determine whether service is

continuous, it is necessary to define what actual service

is.32 Actual service refers to the period of continuous service

since the appointment of the official or employee concerned,

including the period or periods covered by any previously

approved leave with pay.33 

Second, while there are no specific rules on the effects of

 preventive suspension on step increment, we can refer to the

CSC rules and rulings on the effects of the penalty of suspension

and approved vacation leaves without pay on the grant of step

increment for guidance.

Section 56(d), Rule IV of the Uniform Rules on Administrative

Cases in the Civil Service provides:

Section 56. Duration and effect of administrative penalties. -

The following rules shall govern in the imposition of

administrative penalties: x x x

(d) The penalty of suspension shall result in the temporary

cessation of work for a period not exceeding one (1) year.

Suspension of one day or more shall be considered a gap in the

continuity of service. During the period of suspension,

respondent shall not be entitled to all money benefits including

leave credits.

If an employee is suspended as a penalty, it effectively interrupts

the continuity of his government service at the commencement

of the service of the said suspension. This is because a person

under penalty of suspension is not rendering actual service. The

suspension will undoubtedly be considered a gap in the

continuity of the service for purposes of the computation of the

three year period in the grant of step increment.34 However, this

does not mean that the employee will only be entitled to the step

increment after completing another three years of continuous

satisfactory service reckoned from the time the employee has

fully served the penalty of suspension.35 The CSC has taken this

to mean that the computation of the three year period

requirement will only be extended by the number of days that theemployee was under suspension.36 In other words, the grant of

step increment will only be delayed by the same number of days

that the employee was under suspension.

This is akin to the status of an employee who incurred vacation

leave without pay for purposes of the grant of step

increment.37 Employees who were on approved vacation leave

without pay enjoy the liberal application of the rule on the grant

of step increment under Section 60 of CSC Memorandum

Circular No. 41, series of 1998, which provides:

Section 60. Effect of vacation leave without pay on the grant oflength of service step increment. - For purposes of computing the

length of service for the grant of step increment, approved

vacation leave without pay for an aggregate of fifteen (15) days

shall not interrupt the continuity of the three-year service

requirement for the grant of step increment. However, if the total

number of authorized vacation leave without pay included within

the three-year period exceeds fifteen (15) days, the grant of one-

step increment will only be delayed for the same number ofdays that an official or employee was absent without pay.(Emphasis supplied)

Third, on preventive suspension, Sections 51 and 52, Chapter 7,Subtitle A, Title I, Book V of the Revised Administrative Code

of 1987 provide:

SEC. 51. Preventive Suspension. - The proper disciplining

authority may preventively suspend any subordinate officer or

employee under his authority pending an investigation, if the

charge against such officer or employee involves dishonesty,

oppression or grave misconduct, or neglect in the performance of

duty, or if there are reasons to believe that the respondent is

guilty of charges which would warrant his removal from the

service.

SEC. 52. Lifting of Preventive Suspension. Pending

 Administrative Investigation. - When the administrative caseagainst the officer or employee under preventive suspensionis not finally decided by the disciplining authority within theperiod of ninety (90) days after the date of suspension of therespondent who is not a presidential appointee, therespondent shall be automatically reinstated in theservice: Provided , That when the delay in the disposition of the

case is due to the fault, negligence or petition of the respondent,the period of delay shall not be counted in computing the period

of suspension herein provided. (Emphasis supplied)

Preventive suspension pending investigation is not a penalty.38 It

is a measure intended to enable the disciplining authority to

investigate charges against respondent by preventing the latter

from intimidating or in any way influencing witnesses against

him.39 If the investigation is not finished and a decision is not

rendered within that period, the suspension will be lifted and the

respondent will automatically be reinstated.

Therefore, on the matter of step increment, if an employee whowas suspended as a penalty will be treated like an employee on

approved vacation leave without pay,40 then it is only fair and

reasonable to apply the same rules to an employee who was

 preventively suspended, more so considering that preventive

suspension is not a penalty. If an employee is preventively

suspended, the employee is not rendering actual service and this

will also effectively interrupt the continuity of his government

service. Consequently, an employee who was preventively

suspended will still be entitled to step increment after serving the

time of his preventive suspension even if the pending

administrative case against him has not yet been resolved or

dismissed. The grant of step increment will only be delayed forthe same number of days, which must not exceed 90 days, that

an official or employee was serving the preventive suspension.

Fourth, the trial court was correct in declaring that respondents

had the right to be presumed innocent until proven guilty. This

means that an employee who has a pending administrative case

filed against him is given the benefit of the doubt and is

considered innocent until the contrary is proven.41 

In this case, respondents were placed under preventive

suspension for 90 days beginning on 23 May 2002. Their

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ADMINISTRATIVE LAW: POWERS OF ADMINISTRATIVE AGENCIES 10

 preventive suspension ended on 21 August 2002. Therefore,

after serving the period of their preventive suspension and

without the administrative case being finally resolved,

respondents should have been reinstated and, after serving the

same number of days of their suspension, entitled to the grant of

step increment.

On a final note, social legislation like the circular on the grant of

step increment, being remedial in character, should be liberally

construed and administered in favor of the persons to be

 benefited. The liberal approach aims to achieve humanitarian

 purposes of the law in order that the efficiency, security and

well-being of government employees may be enhanced.42 

WHEREFORE, we DENY the petition. We AFFIRM withMODIFICATION the 24 September 2004 Decision and the 7October 2005 Order of the Regional Trial Court of Manila,

Branch 19 in Civil Case No. 03-108389. We DECLARE theassailed provisions on step increment in GSIS Board Resolution

 Nos. 197 and 372 VOID. WeMODIFY the 24 September 2004

Decision of the Regional Trial Court of Manila, Branch 19 andrule that GSIS Board Resolution Nos. 197, 306 and 372 need not

 be filed with the University of the Philippines Law Center.

SO ORDERED.

WILLIAM C. DAGAN, CARLOS G.R. No. 175220

H. REYES, NARCISO MORALES, BONIFACIO

MANTILLA, Present:

CESAR AZURIN, WEITONG LIM, MA.

TERESA TRINIDAD, MA. PUNO, C.J ., CARMELITA

FLORENTINO, QUISUMBING, Petitioners,

- versus –  

CARPIO MORALES, AZCUNA, TINGA,

CHICO-NAZARIO, VELASCO, JR.,

PHILIPPINE RACING COMMISSION, NACHURA,

MANILA JOCKEY CLUB, INC., and LEONARDO DE

CASTRO, PHILIPPINE RACING CLUB, INC., BRION, and

Respondents

PERALTA, JJ . February 12, 2009

x ----------------------------------------------------------------------------

------- x

D E C I S I O N 

TINGA, J . 

The subject of this petition for certiorari is the decision[1] of the

Court of Appeals in CA-G.R. SP No. 95212,

affirming in toto the judgment[2] of the Regional Trial Court of

Makati in Civil Case No. 04-1228.

The controversy stemmed from the 11 August

2004 directive[3] issued by the Philippine Racing Commission

(Philracom) directing the Manila Jockey Club, Inc. (MJCI) and

Philippine Racing Club, Inc. (PRCI) to immediately come upwith their respective Clubs House Rule to address Equine

Infectious Anemia (EIA)[4] problem and to rid their facilities of

horses infected with EIA. Said directive was issued pursuant to

Administrative Order No. 5[5] dated 28 March 1994 by the

Department of Agriculture declaring it unlawful for any person,

firm or corporation to ship, drive, or transport horses from any

locality or place except when accompanied by a certificate

issued by the authority of the Director of the Bureau of Animal

Industry (BAI).[6] 

In compliance with the directive, MJCI and PRCI ordered the

owners of racehorses stable in their establishments to submit the

horses to blood sampling and administration of the Coggins

Test to determine whether they are afflicted with the EIA

virus. Subsequently, on 17 September 2004, Philracom issued

copies of the guidelines for the monitoring and eradication of

EIA.[7] 

Petitioners and racehorse owners William Dagan (Dagan),

Carlos Reyes, Narciso Morales, Bonifacio Montilla, Cezar

Azurin, Weitong Lim, Ma. Teresa Trinidad and Ma. Carmelita

Florentino refused to comply with the directive. First, they

alleged that there had been no prior consultation with horse

owners. Second, they claimed that neither official guidelines nor

regulations had been issued relative to the taking of blood

samples. And third, they asserted that no documented case of

EIA had been presented to justi fy the undertaking.[8] 

Despite resistance from petitioners, the blood testing

 proceeded. The horses, whose owners refused to comply were

 banned from the races, were removed from the actual day of

race, prohibited from renewing their licenses or evicted from

their stables.

When their complaint went unheeded, the racehorse owners

lodged a complaint before the Office of the President (OP)

which in turn issued a directive instructing Philracom to

investigate the matter.

For failure of Philracom to act upon the directive of the OP,

 petitioners filed a petition for injunction with application for the

issuance of a temporary restraining order (TRO). In an

order [9] dated 11 November 2004, the trial court issued a TRO.

Dagan refused to comply with the directives because, according

to him, the same are unfair as there are no implementing rules on

the banning of sick horses from races. Consequently, his horses

were evicted from the stables and transferred to an isolation

area. He also admitted that three of his horses had been found

 positive for EIA.[10] 

Confronted with two issues, namely: whether there were valid

grounds for the issuance of a writ of injunction and whether

respondents had acted with whim and caprice in the

implementation of the contested guideline, the tri al court

resolved both queries in the negative.

The trial court found that most racehorse owners, except for

Dagan, had already subjected their racehorses to EIA

testing. Their act constituted demonstrated compliance with the

contested guidelines, according to the trial court. Hence, the acts

sought to be enjoined had been rendered moot and academic.

With respect to the subject guidelines, the trial court upheld their

validity as an exercise of police power, thus:

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The Petitioners submission that the subject guidelines are

oppressive and hence confiscatory of proprietary rights is

likewise viewed by this Court to be barren of factual and legal

support. The horseracing industry, needless to state, is imbued

with public interest deserving of utmost concern if not constant

vigilance. The Petitioners do not dispute this. It is because of this

 basic fact that respondents are expected to police the concerned

individuals and adopt measures that will promote and protect the

interests of all the stakeholders starting from the moneyed horse-owners, gawking bettors down to the lowly maintainers of the

stables. This is a clear and valid exercise of police power with

the respondents acting for the State. Participation in the business

of horseracing is but a privilege; it is not a right. And no clear

acquiescence to this postulation can there be than the Petitioners'

own undertaking to abide by the rules and conditions issued and

imposed by the respondents as specifically shown by their

contracts of lease with MCJI.[11] 

Petitioners appealed to the Court of Appeals. In its Decision

dated 27 October 2006, the appellate court affirmed in toto the

decision of the trial court.

The appellate court upheld the authority of Philracom to

formulate guidelines since it is vested with exclusive jurisdiction

over and control of the horse-racing industry per Section 8 of

Presidential Decree (P.D.) No. 8. The appellate court further

 pointed out that P.D. No. 420 also endows Philracom with the

 power to prescribe additional rules and regulations not otherwise

inconsistent with the said presidential decree[12] and to perform

such duties and exercise all powers incidental or necessary to the

accomplishment of its aims and objectives.[13] It similarly

concluded that the petition for prohibition should be dismissed

on the ground of mootness in light of evidence indicating that petitioners had already reconsidered their refusal to have their

horses tested and had, in fact, subsequently requested the

administration of the test to the horses.[14] 

Aggrieved by the appellate courts decision, petitioners filed the

instant certiorari petition[15] imputing grave abuse of discretion

on the part of respondents in compelling petitioners to subject

their racehorses to blood testing.

In their amended petition,[16]  petitioners allege that Philracoms

unsigned and undated implementing guidelines suffer from

several infirmities. They maintain that the assailed guidelines do

not comply with due process requirements. Petitioners insist that

racehorses already in the MJCI stables were allowed to be so

quartered because the individual horse owners had already

complied with the Philracom regulation that horses should not

 bear any disease. There was neither a directive nor a rule that

racehorses already lodged in the stables of the racing clubs

should again be subjected to the collection of blood samples

 preparatory to the conduct of the EIA tests,

[17]

  petitionersnote. Thus, it came as a surprise to horse owners when told about

the administration of a new Coggins Tests on old horses since

the matter had not been taken up with them.[18]  No investigation

or at least a summary proceeding was conducted affording

 petitioners an opportunity to be heard.[19] Petitioners also aver

that the assailed guidelines are ultra vires in that the sanctions

imposed for refusing to submit to medical examination are

summary eviction from the stables or arbitrary banning of

 participation in the races, notwithstanding the penalties

 prescribed in the contract of lease.[20] 

In its Comment,[21]

 the PRCI emphasizes that it merely obeyedthe terms of its franchise and abided by the rules enacted by

Philracom.[22] For its part, Philracom, through the Office of the

Solicitor-General (OSG), stresses that the case has become moot

and academic since most of petitioners had complied with the

guidelines by subjecting their race horses to EIA testing. The

horses found unafflicted with the disease were eventually

allowed to join the races.[23] Philracom also justified its right

under the law to regulate horse racing.[24] MJCI adds that

Philracom need not delegate its rule-making power to the former

since MJCIs right to formulate its internal rules is subsumed

under the franchise granted to it by Congress.[25] 

In their Reply,[26]  petitioners raise for the first time the issue that

Philracom had unconstitutionally delegated its rule-making

 power to PRCI and MJCI i