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click here for freelancing tutoring sitesQUASI-LEGISLATIVE

Prepared by: Atty. Judiel M. Pareja

A. In GeneralPeople vs. Maceran, October 18, 1977FACTS: Jose Buenaventura, Godofredo Reyes, Benjamin Reyes, Nazario Aquino and Carlito del Rosario were charged with having violated Fisheries Administrative Order No. 84-1. It alleged that the five accused resorted to electro fishing in the waters of Barrio San Pablo Norte, Sta. Cruz by using their own motor banca, equipped with motor and electrocuting device locally known as sensored with a somewhat webbed copper wire on the tip or other end of a bamboo pole with electric wire attachment which was attached to the dynamo direct and with the use of these devices or equipments catches fish thru electric current, which destroy any aquatic animals within its cuffed reach, to the detriment and prejudice of the populace.

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Sec. 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 or more than five years.It is noteworthy that the Fisheries Law does not expressly punish electro fishing. Notwithstanding the silence of the law, the Secretary of Agriculture and Natural Resources, upon the recommendation of the Commissioner of Fisheries, promulgated Fisheries Administrative Order No. 84 (62 O.G. 1224), prohibiting electro fishing in all Philippine watersOn June 28, 1967 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 Secretary of Agriculture and Natural Resources and the Commissioner of Fisheries exceeded their authority in issuing Fisheries Administrative Orders Nos. 84 and 84-1 Held:

Yes. They exceeded their authority.The rule-making power confined to details for regulating the mode or proceeding to carry into effect the law as it has been enacted. The power cannot be extended to amending or expanding the statutory requirements or to embrace matters not covered by the statuteThe Fisheries Law does not expressly prohibit electro fishing .As electro fishing is not banned under that law. Hence, the Secretary of Agriculture and Natural Resources and the Commissioner of Fisheries are powerless to penalize it. 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. Nowhere in the said law is electro fishing specifically punished. Administrative agents 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.Smart Communications, Inc. vs. NTC, August 12, 2003

FACTS: Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission issued a Memorandum Circulars on the billing of telecommunications services and on measures in minimizing, if not eliminating, the incidence of stealing of cellular phone unit. Isla Communications Co., Inc. (IslaCom) and Pilipino Telephone Corporation (PilTel) filed an action for the declaration of nullity of the memorandum circulars, alleging that NTC has no jurisdiction to regulate the sale of consumer goods as stated in the subject memorandum circulars. Such jurisdiction belongs to the DTI under the Consumer Acts of the Philippines. Soon thereafter, Globe Telecom, Inc. and Smart Communications, Inc. filed a joint motion for leave to intervene and to admit complaint-in-intervention. This was granted by the trial court.

The trial court issued a TRO enjoining NTC from implementing the MCs. NTC filed a Motion to Dismiss, on the ground that petitioners failed to exhaust administrative remedies. The defendant's MD is denied for lack of merit. NTC filed a MR but was later on denied by the

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trial court. The CA, upon NTC's filing of a special action for certiorari and prohibition, reversed the decision of the lower court. Hence this petition.

ISSUE: W/N the CA erred in holding that the private respondents failed to exhaust administrative remedies?

RULING: Administrative agencies possess quasi-legislative or rule-making powers and quasi-judicial or administrative adjudicatory powers. Quasi-legislative or rule-making power is the power to make rules and regulations which results in delegated legislation that is within the confines of the granting statute and the doctrine of non-delegability and separability of powers.

The rules and regulations that administrative agencies promulgate, which are the product of a delegated legislative power to create new and additional legal provisions that have the effect of law, should be within the scope of the statutory authority granted by the legislature to the administrative agency. It is required that the regulation be germane to the objects and purposes of the law, and be not in contradiction to, but in conformity with, the standards prescribed by law. They must conform to and be consistent with the provisions of the enabling statute in order for such rule or regulation to be valid. Constitutional and statutory provisions control with respect to what rules and regulations may be promulgated by an administrative body, as well as with respect to what fields are subject to regulation by it. It may not make rules and regulations which are inconsistent with the provisions of the Constitution or a statute, particularly the statute it is administering or which created it, or which are in derogation of, or defeat, the purpose of a statute. In case of conflict between a statute and an administrative order, the former must prevail.

Not to be confused with the quasi-legislative or rule-making power of an administrative agency is its quasi-judicial or administrative adjudicatory power. This is the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in enforcing and administering the same law. The administrative body exercises its quasi-judicial power when it performs in a judicial manner an act which is essentially of an executive or administrative nature, where the power to act in such manner is incidental to or reasonably necessary for the performance of the executive or administrative duty entrusted to it. In carrying out their quasi-judicial functions, the administrative officers or bodies are required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature.

The doctrine of primary jurisdiction applies only where the administrative agency exercises its quasi-judicial or adjudicatory function. Thus, in cases involving specialized disputes, the practice has been to refer the same to an administrative agency of special competence pursuant to the doctrine of primary jurisdiction. The courts will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the premises of the regulatory statute administered. The objective of the doctrine of primary jurisdiction is to guide a court in determining whether it should refrain from exercising its jurisdiction until after an

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administrative agency has determined some question or some aspect of some question arising in the proceeding before the court. It applies where the claim is originally cognizable in the courts and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, has been placed within the special competence of an administrative body; in such case, the judicial process is suspended pending referral of such issues to the administrative body for its view.

However, where what is assailed is the validity or constitutionality of a rule or regulation issued by the administrative agency in the performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts. This is within the scope of judicial power, which includes the authority of the courts to determine in an appropriate action the validity of the acts of the political departments. Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.

B. Delegation of Legislative PowerCompania General de Tabacos de Filipinas vs. Board of Public Utility, March 06,1916COMPANIA GENERAL DE TABACOS DE FILIPINAS vs. THE BOARD OF PUBLIC UTILITY COMMISSIONERSG.R. No. L-11216 March 6, 1916

Facts:

COMPANIA GENERAL DE TABACOS DE FILIPINAS is a foreign corporation organized under the laws of Spain and engaged in business in the Philippine Islands as a common carrier of passengers and merchandise by water: On June 7, 1915, the Board of Public Utility Commissioners issued and caused to be served an order to show cause why they should not be required to present detailed annual reports respecting its finances and operations respecting the vessels owned and operated by it, in the form and containing the matters indicated by the model attached to the petition.

They are ordered to present annually on or before March first of each year a detailed report of finances and operations of such vessels as are operated by it as a common carrier within the Philippine Islands, in the form and containing the matters indicated in the model of annual report which accompanied the order to show cause herein.

COMPANIA GENERAL DE TABACOS DE FILIPINAS denied the authority of the board to require the report asked for on the ground that the provision of Act No. 2307 relied on by said board as authority for such requirement was, if construed as conferring such power, invalid as constituting an unlawful attempt on the part of the Legislature to delegate legislative power

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to the board. It is cumbersome and unnecessarily prolix and that the preparation of the same would entail an immense amount of clerical work."

ISSUE:

Whether or not it is constitutional to require COMPANIA GENERAL DE TABACOS DE FILIPINAS to pass a detailed report to the Board of Public Utility Commissioners of the Philippine Islands?Whether the power to require the detailed report is strictly legislative, or administrative, or merely relates to the execution of the law?

HELD:

The order appealed from is set aside and the cause is returned to the Board of Public Utility Commissioners with instructions to dismiss the proceeding.

RULING:

The section of Act No. 2307 under which the Board of Public Utility Commissioners relies for its authority, so far as pertinent to the case at hand, reads as follows: Sec. 16. The Board shall have power, after hearing, upon notice, by order in writing, to require every public utility as herein defined: (e) To furnish annually a detailed report of finances and operations, in such form and containing such matters as the Board may from time to time by order prescribe.

The statute which authorizes a Board of Public Utility Commissioners to require detailed reports from public utilities, leaving the nature of the report, the contents thereof, the general lines which it shall follow, the principle upon which it shall proceed, indeed, all other matters whatsoever, to the exclusive discretion of the board, is not expressing its own will or the will of the State with respect to the public utilities to which it refers.

Such a provision does not declare, or set out, or indicate what information the State requires, what is valuable to it, what it needs in order to impose correct and just taxation, supervision or control, or the facts which the State must have in order to deal justly and equitably with such public utilities and to require them to deal justly and equitably with the State. The Legislature seems simply to have authorized the Board of Public Utility Commissioners to require what information the board wants. It would seem that the Legislature, by the provision in question, delegated to the Board of Public Utility Commissioners all of its powers over a given subject-matter in a manner almost absolute, and without laying down a rule or even making a suggestion by which that power is to be directed, guided or applied.

The true distinction is between the delegation of power to make the law, which necessarily involves a discretion as to what shall be, and conferring authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made.

The Supreme Court held that there was no delegation of legislative power, it said:

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The Congress may not delegate its purely legislative powers to a commission, but, having laid down the general rules of action under which a commission shall proceed, it may require of that commission the application of such rules to particular situations and the investigation of facts, with a view to making orders in a particular matter within the rules laid down by the Congress.

In section 20 (of the Commerce Act), Congress has authorized the commission to require annual reports. The act itself prescribes in detail what those reports shall contain. In other words, Congress has laid down general rules for the guidance of the Commission, leaving to it merely the carrying out of details in the exercise of the power so conferred. This, we think, is not a delegation of legislative authority.

In the case at bar the provision complained of does not lay "down the general rules of action under which the commission shall proceed." nor does it itself prescribe in detail what those reports shall contain. Practically everything is left to the judgment and discretion of the Board of Public Utility Commissioners, which is unrestrained as to when it shall act, why it shall act, how it shall act, to what extent it shall act, or what it shall act upon.

The Legislature, by the provision in question, has abdicated its powers and functions in favor of the Board of Public Utility Commissioners with respect to the matters therein referred to, and that such Act is in violation of the Act of Congress of July 1, 1902. The Legislature, by the provision referred to, has not asked for the information which the State wants but has authorized and board to obtain the information which the board wants.

People vs. Vera, November 16, 1937 2. But while the Probation Law does not encroach upon the pardoning power of the executive and is not for that reason void, does section 11 thereof constitute, as contended, an undue delegation of legislative power?

Under the constitutional system, the powers of government are distributed among three coordinate and substantially independent organs: the legislative, the executive and the judicial. Each of these departments of the government derives its authority from the Constitution which, in turn, is the highest expression of popular will. Each has exclusive cognizance of the matters within its jurisdiction, and is supreme within its own sphere.

The power to make laws — the legislative power — is vested in a bicameral Legislature by the Jones Law (sec. 12) and in a unicamiral National Assembly by the Constitution (Act. VI, sec. 1, Constitution of the Philippines). The Philippine Legislature or the National Assembly may not escape its duties and responsibilities by delegating that power to any other body or authority. Any attempt to abdicate the power is unconstitutional and void, on the principle that potestas delegata non delegare potest. This principle is said to have originated with the glossators, was introduced into English law through a misreading of Bracton, there developed as a principle of agency, was established by Lord Coke in the English public law in decisions forbidding the delegation of judicial power, and found its way into America as an enlightened principle of free government. It has since become an accepted corollary of the principle of separation of powers. (5 Encyc. of the Social Sciences, p. 66.) The classic statement of the rule is that of Locke, namely: "The legislative neither must nor can transfer the power of making laws to anybody else, or place it anywhere but

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where the people have." (Locke on Civil Government, sec. 142.) Judge Cooley enunciates the doctrine in the following oft-quoted language: "One of the settled maxims in constitutional law is, that the power conferred upon the legislature to make laws cannot be delegated by that department to any other body or authority. Where the sovereign power of the state has located the authority, there it must remain; and by the constitutional agency alone the laws must be made until the Constitution itself is charged. The power to whose judgment, wisdom, and patriotism this high prerogative has been intrusted cannot relieve itself of the responsibilities by choosing other agencies upon which the power shall be devolved, nor can it substitute the judgment, wisdom, and patriotism of any other body for those to which alone the people have seen fit to confide this sovereign trust." (Cooley on Constitutional Limitations, 8th ed., Vol. I, p. 224. Quoted with approval in U. S. vs. Barrias [1908], 11 Phil., 327.) This court posits the doctrine "on the ethical principle that such a delegated power constitutes not only a right but a duty to be performed by the delegate by the instrumentality of his own judgment acting immediately upon the matter of legislation and not through the intervening mind of another. (U. S. vs. Barrias, supra, at p. 330.)

The rule, however, which forbids the delegation of legislative power is not absolute and inflexible. It admits of exceptions. An exceptions sanctioned by immemorial practice permits the central legislative body to delegate legislative powers to local authorities. (Rubi vs. Provincial Board of Mindoro [1919], 39 Phil., 660; U. S. vs. Salaveria [1918], 39 Phil., 102; Stoutenburgh vs. Hennick [1889], 129 U. S., 141; 32 Law. ed., 637; 9 Sup. Ct. Rep., 256; State vs. Noyes [1855], 30 N. H., 279.) "It is a cardinal principle of our system of government, that local affairs shall be managed by local authorities, and general affairs by the central authorities; and hence while the rule is also fundamental that the power to make laws cannot be delegated, the creation of the municipalities exercising local self government has never been held to trench upon that rule. Such legislation is not regarded as a transfer of general legislative power, but rather as the grant of the authority to prescribed local regulations, according to immemorial practice, subject of course to the interposition of the superior in cases of necessity." (Stoutenburgh vs. Hennick, supra.) On quite the same principle, Congress is powered to delegate legislative power to such agencies in the territories of the United States as it may select. A territory stands in the same relation to Congress as a municipality or city to the state government. (United States vs. Heinszen [1907], 206 U. S., 370; 27 Sup. Ct. Rep., 742; 51 L. ed., 1098; 11 Ann. Cas., 688; Dorr vs. United States [1904], 195 U.S., 138; 24 Sup. Ct. Rep., 808; 49 Law. ed., 128; 1 Ann. Cas., 697.) Courts have also sustained the delegation of legislative power to the people at large. Some authorities maintain that this may not be done (12 C. J., pp. 841, 842; 6 R. C. L., p. 164, citing People vs. Kennedy [1913], 207 N. Y., 533; 101 N. E., 442; Ann. Cas., 1914C, 616). However, the question of whether or not a state has ceased to be republican in form because of its adoption of the initiative and referendum has been held not to be a judicial but a political question (Pacific States Tel. & Tel. Co. vs. Oregon [1912], 223 U. S., 118; 56 Law. ed., 377; 32 Sup. Cet. Rep., 224), and as the constitutionality of such laws has been looked upon with favor by certain progressive courts, the sting of the decisions of the more conservative courts has been pretty well drawn. (Opinions of the Justices [1894], 160 Mass., 586; 36 N. E., 488; 23 L. R. A., 113; Kiernan vs. Portland [1910], 57 Ore., 454; 111 Pac., 379; 1132 Pac., 402; 37 L. R. A. [N. S.], 332; Pacific States Tel. & Tel. Co. vs. Oregon, supra.) Doubtless, also, legislative power may be delegated by the Constitution itself. Section 14, paragraph 2, of article VI of the Constitution of the Philippines provides that "The National Assembly may by law authorize the President, subject to such limitations and restrictions as

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it may impose, to fix within specified limits, tariff rates, import or export quotas, and tonnage and wharfage dues." And section 16 of the same article of the Constitution provides that "In times of war or other national emergency, the National Assembly may by law authorize the President, for a limited period and subject to such restrictions as it may prescribed, to promulgate rules and regulations to carry out a declared national policy." It is beyond the scope of this decision to determine whether or not, in the absence of the foregoing constitutional provisions, the President could be authorized to exercise the powers thereby vested in him. Upon the other hand, whatever doubt may have existed has been removed by the Constitution itself.

The case before us does not fall under any of the exceptions hereinabove mentioned. The challenged section of Act No. 4221 in section 11 which reads as follows:

This Act shall apply only in those provinces in which the respective provincial boards have provided for the salary of a probation officer at rates not lower than those now provided for provincial fiscals. Said probation officer shall be appointed by the Secretary of Justice and shall be subject to the direction of the Probation Office. (Emphasis ours.)

In testing whether a statute constitute an undue delegation of legislative power or not, it is usual to inquire whether the statute was complete in all its terms and provisions when it left the hands of the legislature so that nothing was left to the judgment of any other appointee or delegate of the legislature. (6 R. C. L., p. 165.) In the United States vs. Ang Tang Ho ([1922], 43 Phil., 1), this court adhered to the foregoing rule when it held an act of the legislature void in so far as it undertook to authorize the Governor-General, in his discretion, to issue a proclamation fixing the price of rice and to make the sale of it in violation of the proclamation a crime. (See and cf. Compañia General de Tabacos vs. Board of Public Utility Commissioners [1916], 34 Phil., 136.) The general rule, however, is limited by another rule that to a certain extent matters of detail may be left to be filled in by rules and regulations to be adopted or promulgated by executive officers and administrative boards. (6 R. C. L., pp. 177-179.)

For the purpose of Probation Act, the provincial boards may be regarded as administrative bodies endowed with power to determine when the Act should take effect in their respective provinces. They are the agents or delegates of the legislature in this respect. The rules governing delegation of legislative power to administrative and executive officers are applicable or are at least indicative of the rule which should be here adopted. An examination of a variety of cases on delegation of power to administrative bodies will show that the ratio decidendi is at variance but, it can be broadly asserted that the rationale revolves around the presence or absence of a standard or rule of action — or the sufficiency thereof — in the statute, to aid the delegate in exercising the granted discretion. In some cases, it is held that the standard is sufficient; in others that is insufficient; and in still others that it is entirely lacking. As a rule, an act of the legislature is incomplete and hence invalid if it does not lay down any rule or definite standard by which the administrative officer or board may be guided in the exercise of the discretionary powers delegated to it. (See Schecter vs. United States [1925], 295 U. S., 495; 79 L. ed., 1570; 55 Sup. Ct. Rep., 837; 97 A.L.R., 947; People ex rel. Rice vs. Wilson Oil Co. [1936], 364 Ill., 406; 4 N. E. [2d], 847; 107 A.L.R., 1500 and cases cited. See also R. C. L., title "Constitutional Law", sec 174.) In the case at bar, what rules are to guide the provincial boards in the exercise of their

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discretionary power to determine whether or not the Probation Act shall apply in their respective provinces? What standards are fixed by the Act? We do not find any and none has been pointed to us by the respondents. The probation Act does not, by the force of any of its provisions, fix and impose upon the provincial boards any standard or guide in the exercise of their discretionary power. What is granted, if we may use the language of Justice Cardozo in the recent case of Schecter, supra, is a "roving commission" which enables the provincial boards to exercise arbitrary discretion. By section 11 if the Act, the legislature does not seemingly on its own authority extend the benefits of the Probation Act to the provinces but in reality leaves the entire matter for the various provincial boards to determine. In other words, the provincial boards of the various provinces are to determine for themselves, whether the Probation Law shall apply to their provinces or not at all. The applicability and application of the Probation Act are entirely placed in the hands of the provincial boards. If the provincial board does not wish to have the Act applied in its province, all that it has to do is to decline to appropriate the needed amount for the salary of a probation officer. The plain language of the Act is not susceptible of any other interpretation. This, to our minds, is a virtual surrender of legislative power to the provincial boards.

"The true distinction", says Judge Ranney, "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." (Cincinnati, W. & Z. R. Co. vs. Clinton County Comrs. [1852]; 1 Ohio St., 77, 88. See also, Sutherland on Statutory Construction, sec 68.) To the same effect are the decision of this court in Municipality of Cardona vs. Municipality of Binangonan ([1917], 36 Phil., 547); Rubi vs. Provincial Board of Mindoro ([1919],39 Phil., 660) and Cruz vs. Youngberg ([1931], 56 Phil., 234). In the first of these cases, this court sustained the validity of the law conferring upon the Governor-General authority to adjust provincial and municipal boundaries. In the second case, this court held it lawful for the legislature to direct non-Christian inhabitants to take up their habitation on unoccupied lands to be selected by the provincial governor and approved by the provincial board. In the third case, it was held proper for the legislature to vest in the Governor-General authority to suspend or not, at his discretion, the prohibition of the importation of the foreign cattle, such prohibition to be raised "if the conditions of the country make this advisable or if deceased among foreign cattle has ceased to be a menace to the agriculture and livestock of the lands."

It should be observed that in the case at bar we are not concerned with the simple transference of details of execution or the promulgation by executive or administrative officials of rules and regulations to carry into effect the provisions of a law. If we were, recurrence to our own decisions would be sufficient. (U. S. vs. Barrias [1908], 11 Phil., 327; U.S. vs. Molina [1914], 29 Phil., 119; Alegre vs. Collector of Customs [1929], 53 Phil., 394; Cebu Autobus Co. vs. De Jesus [1931], 56 Phil., 446; U. S. vs. Gomez [1915], 31 Phil., 218; Rubi vs. Provincial Board of Mindoro [1919], 39 Phil., 660.)

It is connected, however, that a legislative act may be made to the effect as law after it leaves the hands of the legislature. It is true that laws may be made effective on certain contingencies, as by proclamation of the executive or the adoption by the people of a particular community (6 R. C. L., 116, 170-172; Cooley, Constitutional Limitations, 8th ed., Vol. I, p. 227). In Wayman vs. Southard ([1825], 10 Wheat. 1; 6 Law. ed., 253), the Supreme

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Court of the United State ruled that the legislature may delegate a power not legislative which it may itself rightfully exercise.(Vide, also, Dowling vs. Lancashire Ins. Co. [1896], 92 Wis., 63; 65 N. W., 738; 31 L. R. A., 112.) The power to ascertain facts is such a power which may be delegated. There is nothing essentially legislative in ascertaining the existence of facts or conditions as the basis of the taking into effect of a law. That is a mental process common to all branches of the government. (Dowling vs. Lancashire Ins. Co., supra; In re Village of North Milwaukee [1896], 93 Wis., 616; 97 N.W., 1033; 33 L.R.A., 938; Nash vs. Fries [1906], 129 Wis., 120; 108 N.W., 210; Field vs. Clark [1892], 143 U.S., 649; 12 Sup. Ct., 495; 36 Law. ed., 294.) Notwithstanding the apparent tendency, however, to relax the rule prohibiting delegation of legislative authority on account of the complexity arising from social and economic forces at work in this modern industrial age (Pfiffner, Public Administration [1936] ch. XX; Laski, "The Mother of Parliaments", foreign Affairs, July, 1931, Vol. IX, No. 4, pp. 569-579; Beard, "Squirt-Gun Politics", in Harper's Monthly Magazine, July, 1930, Vol. CLXI, pp. 147, 152), the orthodox pronouncement of Judge Cooley in his work on Constitutional Limitations finds restatement in Prof. Willoughby's treatise on the Constitution of the United States in the following language — speaking of declaration of legislative power to administrative agencies: "The principle which permits the legislature to provide that the administrative agent may determine when the circumstances are such as require the application of a law is defended upon the ground that at the time this authority is granted, the rule of public policy, which is the essence of the legislative act, is determined by the legislature. In other words, the legislature, as it its duty to do, determines that, under given circumstances, certain executive or administrative action is to be taken, and that, under other circumstances, different of no action at all is to be taken. What is thus left to the administrative official is not the legislative determination of what public policy demands, but simply the ascertainment of what the facts of the case require to be done according to the terms of the law by which he is governed." (Willoughby on the Constitution of the United States, 2nd ed., Vol. II, p. 1637.) In Miller vs. Mayer, etc., of New York [1883], 109 U.S., 3 Sup. Ct. Rep., 228; 27 Law. ed., 971, 974), it was said: "The efficiency of an Act as a declaration of legislative will must, of course, come from Congress, but the ascertainment of the contingency upon which the Act shall take effect may be left to such agencies as it may designate." (See, also, 12 C.J., p. 864; State vs. Parker [1854], 26 Vt., 357; Blanding vs. Burr [1859], 13 Cal., 343, 258.) The legislature, then may provide that a contingencies leaving to some other person or body the power to determine when the specified contingencies has arisen. But, in the case at bar, the legislature has not made the operation of the Prohibition Act contingent upon specified facts or conditions to be ascertained by the provincial board. It leaves, as we have already said, the entire operation or non-operation of the law upon the provincial board. the discretion vested is arbitrary because it is absolute and unlimited. A provincial board need not investigate conditions or find any fact, or await the happening of any specified contingency. It is bound by no rule, — limited by no principle of expendiency announced by the legislature. It may take into consideration certain facts or conditions; and, again, it may not. It may have any purpose or no purpose at all. It need not give any reason whatsoever for refusing or failing to appropriate any funds for the salary of a probation officer. This is a matter which rest entirely at its pleasure. The fact that at some future time — we cannot say when — the provincial boards may appropriate funds for the salaries of probation officers and thus put the law into operation in the various provinces will not save the statute. The time of its taking into effect, we reiterate, would yet be based solely upon the will of the provincial boards and not upon the happening of a certain specified

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contingency, or upon the ascertainment of certain facts or conditions by a person or body other than legislature itself.

The various provincial boards are, in practical effect, endowed with the power of suspending the operation of the Probation Law in their respective provinces. In some jurisdiction, constitutions provided that laws may be suspended only by the legislature or by its authority. Thus, section 28, article I of the Constitution of Texas provides that "No power of suspending laws in this state shall be exercised except by the legislature"; and section 26, article I of the Constitution of Indiana provides "That the operation of the laws shall never be suspended, except by authority of the General Assembly." Yet, even provisions of this sort do not confer absolute power of suspension upon the legislature. While it may be undoubted that the legislature may suspend a law, or the execution or operation of a law, a law may not be suspended as to certain individuals only, leaving the law to be enjoyed by others. The suspension must be general, and cannot be made for individual cases or for particular localities. In Holden vs. James ([1814], 11 Mass., 396; 6 Am. Dec., 174, 177, 178), it was said:

By the twentieth article of the declaration of rights in the constitution of this commonwealth, it is declared that the power of suspending the laws, or the execution of the laws, ought never to be exercised but by the legislature, or by authority derived from it, to be exercised in such particular cases only as the legislature shall expressly provide for. Many of the articles in that declaration of rights were adopted from the Magna Charta of England, and from the bill of rights passed in the reign of William and Mary. The bill of rights contains an enumeration of the oppressive acts of James II, tending to subvert and extirpate the protestant religion, and the laws and liberties of the kingdom; and the first of them is the assuming and exercising a power of dispensing with and suspending the laws, and the execution of the laws without consent of parliament. The first article in the claim or declaration of rights contained in the statute is, that the exercise of such power, by legal authority without consent of parliament, is illegal. In the tenth section of the same statute it is further declared and enacted, that "No dispensation by non obstante of or to any statute, or part thereof, should be allowed; but the same should be held void and of no effect, except a dispensation be allowed of in such statute." There is an implied reservation of authority in the parliament to exercise the power here mentioned; because, according to the theory of the English Constitution, "that absolute despotic power, which must in all governments reside somewhere," is intrusted to the parliament: 1 Bl. Com., 160.

The principles of our government are widely different in this particular. Here the sovereign and absolute power resides in the people; and the legislature can only exercise what is delegated to them according to the constitution. It is obvious that the exercise of the power in question would be equally oppressive to the subject, and subversive of his right to protection, "according to standing laws," whether exercised by one man or by a number of men. It cannot be supposed that the people when adopting this general principle from the English bill of rights and inserting it in our constitution, intended to bestow by implication on the general court one of the most odious and oppressive prerogatives of the ancient kings of England. It is manifestly contrary to the first principles of civil liberty and natural justice, and to the spirit of our constitution and laws, that any one citizen should enjoy privileges and advantages which are denied to all others under like circumstances; or that ant one should

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be subject to losses, damages, suits, or actions from which all others under like circumstances are exempted.

To illustrate the principle: A section of a statute relative to dogs made the owner of any dog liable to the owner of domestic animals wounded by it for the damages without proving a knowledge of it vicious disposition. By a provision of the act, power was given to the board of supervisors to determine whether or not during the current year their county should be governed by the provisions of the act of which that section constituted a part. It was held that the legislature could not confer that power. The court observed that it could no more confer such a power than to authorize the board of supervisors of a county to abolish in such county the days of grace on commercial paper, or to suspend the statute of limitations. (Slinger vs. Henneman [1875], 38 Wis., 504.) A similar statute in Missouri was held void for the same reason in State vs. Field ([1853, 17 Mo., 529;59 Am. Dec., 275.) In that case a general statute formulating a road system contained a provision that "if the county court of any county should be of opinion that the provisions of the act should not be enforced, they might, in their discretion, suspend the operation of the same for any specified length of time, and thereupon the act should become inoperative in such county for the period specified in such order; and thereupon order the roads to be opened and kept in good repair, under the laws theretofore in force." Said the court: ". . . this act, by its own provisions, repeals the inconsistent provisions of a former act, and yet it is left to the county court to say which act shall be enforce in their county. The act does not submit the question to the county court as an original question, to be decided by that tribunal, whether the act shall commence its operation within the county; but it became by its own terms a law in every county not excepted by name in the act. It did not, then, require the county court to do any act in order to give it effect. But being the law in the county, and having by its provisions superseded and abrogated the inconsistent provisions of previous laws, the county court is . . . empowered, to suspend this act and revive the repealed provisions of the former act. When the question is before the county court for that tribunal to determine which law shall be in force, it is urge before us that the power then to be exercised by the court is strictly legislative power, which under our constitution, cannot be delegated to that tribunal or to any other body of men in the state. In the present case, the question is not presented in the abstract; for the county court of Saline county, after the act had been for several months in force in that county, did by order suspend its operation; and during that suspension the offense was committed which is the subject of the present indictment . . . ." (See Mitchell vs. State [1901], 134 Ala., 392; 32 S., 687.)

True, the legislature may enact laws for a particular locality different from those applicable to other localities and, while recognizing the force of the principle hereinabove expressed, courts in may jurisdiction have sustained the constitutionality of the submission of option laws to the vote of the people. (6 R.C.L., p. 171.) But option laws thus sustained treat of subjects purely local in character which should receive different treatment in different localities placed under different circumstances. "They relate to subjects which, like the retailing of intoxicating drinks, or the running at large of cattle in the highways, may be differently regarded in different localities, and they are sustained on what seems to us the impregnable ground, that the subject, though not embraced within the ordinary powers of municipalities to make by-laws and ordinances, is nevertheless within the class of public regulations, in respect to which it is proper that the local judgment should control." (Cooley on Constitutional Limitations, 5th ed., p. 148.) So that, while we do not deny the right of

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local self-government and the propriety of leaving matters of purely local concern in the hands of local authorities or for the people of small communities to pass upon, we believe that in matters of general of general legislation like that which treats of criminals in general, and as regards the general subject of probation, discretion may not be vested in a manner so unqualified and absolute as provided in Act No. 4221. True, the statute does not expressly state that the provincial boards may suspend the operation of the Probation Act in particular provinces but, considering that, in being vested with the authority to appropriate or not the necessary funds for the salaries of probation officers, they thereby are given absolute discretion to determine whether or not the law should take effect or operate in their respective provinces, the provincial boards are in reality empowered by the legislature to suspend the operation of the Probation Act in particular provinces, the Act to be held in abeyance until the provincial boards should decide otherwise by appropriating the necessary funds. The validity of a law is not tested by what has been done but by what may be done under its provisions. (Walter E. Olsen & Co. vs. Aldanese and Trinidad [1922], 43 Phil., 259; 12 C. J., p. 786.)

It in conceded that a great deal of latitude should be granted to the legislature not only in the expression of what may be termed legislative policy but in the elaboration and execution thereof. "Without this power, legislation would become oppressive and yet imbecile." (People vs. Reynolds, 5 Gilman, 1.) It has been said that popular government lives because of the inexhaustible reservoir of power behind it. It is unquestionable that the mass of powers of government is vested in the representatives of the people and that these representatives are no further restrained under our system than by the express language of the instrument imposing the restraint, or by particular provisions which by clear intendment, have that effect. (Angara vs. Electoral Commission [1936], 35 Off. Ga., 23; Schneckenburger vs. Moran [1936], 35 Off. Gaz., 1317.) But, it should be borne in mind that a constitution is both a grant and a limitation of power and one of these time-honored limitations is that, subject to certain exceptions, legislative power shall not be delegated.

We conclude that section 11 of Act No. 4221 constitutes an improper and unlawful delegation of legislative authority to the provincial boards and is, for this reason, unconstitutional and void.Ynot vs. IAC, March 20, 1987Facts: Petitioner, Ynot in this case, challenges the constitutionality of E.O No. 626-A which prohibits the interprovincial movement of carabaos without first, complying the requirements of said order, particularly the age. The said E.O also provides that the seized property shall be distributed to charitable institutions and other similar institutions as the Chairman of the National Meat Inspection Commission “may see fit”, in the case of carabeef, and to deserving farmers through dispersal as the Director of Animal Industry “may see fit”, in the case of carabaos. On January 13, 1984, Ynot transported six carabaos in a pump boat from Masbate to Iloilo when the same were confiscated by the police station commander of Barotac Nuevo, Iloilo for the violation of E.O 626-A. a case was then filed by Ynot questioning the validity of E.O 626-A and also for the recovery of the carabaos.Issues: 1. WON E.O No. 626-A is constitutional.2. WON there is a valid delegation of legislative powers with regard to the distribution of carabeef and carabaos.

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Held: 1. No, E.O 626-A is not constitutional. The executive defined the prohibition, convicted the petitioner and immediately imposed punishment, which was carried out forthright. Due process was not properly observed therefore. It cannot also be said that the said order is a valid exercise of police power because although the subject of E.O 626-A is lawful, the means employed to meet the ends are not justifiable. In this case, the reasonable connection between the means employed and the purpose sought to be achieved by the questioned measure is missing.2. There is no valid delegation of legislative power because of the phrase “may see fit” which leaves discretion upon the Chairman of the National Meat Inspection Commission and the Director of Animal Industry to choose the subjects of distribution. It is laden with perilous opportunities for partiality and abuse, and even corruption. There are no sufficient standard and reasonable guidelines which the said officers must observe when making their distribution. There options, therefore, are apparently boundless.Pelaez vs. Auditor General, December 24, 1965

FACTS:From Sept 04 to Oct 29, 1964, the President (Marcos) issued executive orders creating 33 municipalities – this is purportedly in pursuant to Sec 68 of the Revised Administrative Code which provides that the President of the Philippines may by executive order define the boundary, or boundaries, of any province, sub-province, municipality, [township] municipal district or other political subdivision, and increase or diminish the territory comprised therein, may divide any province into one or more subprovinces…The VP Emmanuel Pelaez and a taxpayer filed a special civil action to prohibit the auditor general from disbursing funds to be appropriated for the said municipalities. Pelaez claims that the EOs are unconstitutional. He said that Sec 68 of the RAC has been impliedly repealed by Sec 3 of RA 2370 which provides that barrios may “not be created or their boundaries altered nor their names changed” except by Act of Congress or of the corresponding provincial board “upon petition of a majority of the voters in the areas affected” and the “recommendation of the council of the municipality or municipalities in which the proposed barrio is situated.” Pelaez argues, accordingly: “If the President, under this new law, cannot even create a barrio, can he create a municipality which is composed of several barrios, since barrios are units of municipalities?” The Auditor General countered that only barrios are barred from being created by the President. Municipalities are exempt from the bar and that t a municipality can be created without creating barrios. Existing barrios can just be placed into the new municipality. This theory overlooks, however, the main import of Pelaez’ argument, which is that the statutory denial of the presidential authority to create a new barrio implies a negation of the bigger power to create municipalities, each of which consists of several barrios.

ISSUE: Whether or not Congress has delegated the power to create barrios to the President by virtue of Sec 68 of the RAC.

HELD: Although Congress may delegate to another branch of the government the power to fill in the details in the execution, enforcement or administration of a law, it is essential, to forestall a violation of the principle of separation of powers, that said law: (a) be complete in itself — it must set forth therein the policy to be executed, carried out or implemented by the delegate — and (b) fix a standard — the limits of which are sufficiently determinate or determinable — to which the delegate must conform in the performance of his functions. Indeed, without a statutory declaration of policy, the delegate would, in effect, make or formulate such policy, which is the essence of every law; and, without the aforementioned

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standard, there would be no means to determine, with reasonable certainty, whether the delegate has acted within or beyond the scope of his authority. Section 68 of the Revised Administrative Code does not meet these well settled requirements for a valid delegation of the power to fix the details in the enforcement of a law. It does not enunciate any policy to be carried out or implemented by the President. Neither does it give a standard sufficiently precise to avoid the evil effects above referred to.

In the case at bar, the power to create municipalities is eminently legislative in character not administrative.

Eastern Shipping Lines vs. POEA, October 18, 1988

But the petitioner questions the validity of Memorandum Circular No. 2 itself as violative of the principle of non-delegation of legislative power. It contends that no authority had been given the POEA to promulgate the said regulation; and even with such authorization, the regulation represents an exercise of legislative discretion which, under the principle, is not subject to delegation.

The authority to issue the said regulation is clearly provided in Section 4(a) of Executive Order No. 797, reading as follows:

... The governing Board of the Administration (POEA), as hereunder provided shall promulgate the necessary rules and regulations to govern the exercise of the adjudicatory functions of the Administration (POEA).

Similar authorization had been granted the National Seamen Board, which, as earlier observed, had itself prescribed a standard shipping contract substantially the same as the format adopted by the POEA.

The second challenge is more serious as it is true that legislative discretion as to the substantive contents of the law cannot be delegated. What can be delegated is the discretion to determine how the law may be enforced, not what the law shall be. The ascertainment of the latter subject is a prerogative of the legislature. This prerogative cannot be abdicated or surrendered by the legislature to the delegate.

Edu vs. Ericta, October 24, 1970

FACTS:

Petitioner Romeo Edu, the Land Transportation Commissioner issued Administrative Order No. 2, which took effect on April 17, 1990, which provides as follows:

“ No motor vehicles of whatever style, kind, make, class or denomination shall be registered if not equipped with reflectors. Such reflectors shall either be factory built-in-reflector commercial glass reflectors, reflection tape or luminous paint. The luminosity shall have an intensity to be maintained visible and clean at all times such that if struck by a beam of light shall be visible 100 meters away at night.” Then came a section on

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dimensions, placement and color. As to dimensions the following is provided for: “Glass reflectors- not less than 3 inches in diameter or not less than 3 inches square; Reflectorized tape- at least 3 inches wide and 12 inches long. The painted or taped area may be bigger at the discretion of the vehicle owner. Provision is then made as to how such reflectors are to be placed, installed, pasted or painted. There is the further requirement that in addition to such reflectors there shall be installed, pasted or painted four reflectors on each side of the motor vehicle parallel to those installed, pasted or painted in front and those in the rear end of the body thereof. The color required of each reflectors, whether built-in, commercial glass, reflectorized tape or reflectorized paint placed in the front part of any motor vehicle shall be amber or yellow and those placed on the sides and in the rear shall all be red.

“Non compliance with the requirements contained in this Order shall be sufficient cause to refuse registration of the motor vehicle affected and if already registered, its registration maybe suspended in pursuance of the provisions of Section 16 or RA 4136; Provided, however, that in the case of the violation of Section 1(a) and (b) and paragraph (8) Section 3 hereof, a fine of not less than ten nor more than fifty pesos shall be imposed. It is not be lost sight of that under Republic Act no. 4136, of which the Reflector Law is an amendment, petitioner, as the Land Transportation Commissioner, may, with the approval of the Secretary of Public Works and Communication, issue rules and regulations for its implementation for as long as they do not conflict with its provision. It is likewise an express provision of the above statute that for a violation of any of its provisions or regulations promulgated pursuant thereto a fine of not less than P10 nor less than P50 could be imposed.

Respondent Galo on his behalf and that of other motorist filed on May 20, 1970 a suit for certiorari and prohibition with preliminary injunction assailing the validity of the challenged Act as an invalid exercise of the police power, for being violative of the due process clause. This he followed on May 28, 1970 with a manifestation wherein he sought as an alternative remedy that, in the event that respondent Judge Ericta would hold said statuted constitutional, Administrative Order No. 2 of the Land Transportation Commissioner, now petitioner, implementing such legislation be nullified as an undue exercise of legislative power. There was a hearing on the plea for the issuance of writ of preliminary injunction held on May 27, 1970 where both parties were duly represented, but no evidence was presented. The next day, on May 28, 1970, respondent Judge ordered the issuance of preliminary injunction directed against the enforcement of such administrative order.

ISSUE

WON there has been undue delegation of legislative power which as a result of such Administrative Order issued in furtherance of the delegated power is null and void?

HELD:

It is a fundamental principle flowing from the doctrine of separation of powers that Congress may not delegate its legislative power to the two other branches of government, subject to the exception that local governments may over local affairs participate in its exercise. What

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cannot be delegated is the authority under the Constitution to make laws and to alter and repeal them; the test is the completeness of the statute in all its terms and provisions when it leaves the hands of the legislature. To determine whether or not there is an undue delegation of legislative power the inquiry must be directed to the scope and definiteness of the measure enacted. The legislature does not abdicate its functions when it describes what job must be done, who is to do it, and what is the scope of his authority. For a complex economy, that may indeed be the only way in which the legislative process can go forward. A distinction has rightfully been made between delegation of power to make the laws which necessarily involves a discretion as to what it shall be, which constitutionally may not be done, and delegation of authority or discretion as to its execution to exercised under and in pursuance of the law, to which no valid objection call be made. The Constitution is thus not to be regarded as denying the legislature the necessary resources of flexibility and practicability.

To avoid the taint of unlawful delegation, there must be a standard, which implies at the very least that the legislature itself determines matters of principle and lay down fundamental policy. Otherwise, the charge of complete abdication may be hard to repel. A standard thus defines legislative policy, marks its limits, its maps out its boundaries and specifies the public agency to apply it. It indicates the circumstances under which the legislative command is to be effected. It is the criterion by which legislative purpose may be carried out. Thereafter, the executive or administrative office designated may in pursuance of the above guidelines promulgate supplemental rules and regulations.

This is to adhere to the recognition given expression by Justice Laurel in a decision announced not long after the Constitution came into force and effect that the principle of non-delegation "has been made to adapt itself the complexities of modern governments, giving rise to the adoption, within certain limits, of the principle of "subordinate legislation" not only in the United States and England but in practically all modern governments." 44 He continued: "Accordingly, with the growing complexity of modern life, the multiplication of the subjects of governmental regulation, and the increased difficulty of administering the laws, there is a constantly growing tendency toward the delegation of greater powers by the legislature and toward the approval of the practice by the courts." 45 Consistency with the conceptual approach requires the reminder that what is delegated is authority non-legislative in character, the completeness of the statute when it leaves the hands of Congress being assumed

WHEREFORE, the writs of certiorari and prohibition prayed for are granted, the orders of May 28, 1970 of respondent Judge for the issuance of a writ of preliminary injunction, the writ of preliminary injunction of June 1, 1970 and his order of June 9, 1970 denying reconsideration are annulled and set aside. Respondent Judge is likewise directed to dismiss the petition for certiorari and prohibition filed by respondent Teddy C. Galo, there being no cause of action as the Reflector Law and Administrative Order No. 2 of petitioner have not been shown to be tainted by invalidity. Without pronouncement as to costs.

Beltran vs. Secretary of Health, November 25, 2005

Facts:

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In January of 1994, the New Tropical Medicine Foundation, with the assistance of the U.S. Agency for International Development (USAID) released its final report of a study on the Philippine blood banking system entitled “Project to Evaluate the Safety of the Philippine Blood Banking System.” It was revealed that of the blood units collected in 1992, 64.4 % were supplied by commercial blood banks, 14.5% by the PNRC, 13.7% by government hospital-based blood banks, and 7.4% by private hospital-based blood banks ; showing that the Philippines heavily relied on commercial sources of blood. It was further found, among other things, that blood sold by persons to blood commercial banks are three times more likely to have any of the four (4) tested infections or blood transfusion transmissible diseases, namely, malaria, syphilis, Hepatitis B and Acquired Immune Deficiency Syndrome (AIDS) than those donated to PNRC.Republic Act No. 7719 or the National Blood Services Act of 1994 was then enacted into law on April 2, 1994. The Act seeks to provide an adequate supply of safe blood by promoting voluntary blood donation and by regulating blood banks in the country. One of the provisions of the said act was the phasing out of commercial blood banks within 2 years from its effectivity.

Petitioners, comprising the majority of the Board of Directors of the Philippine Association of Blood Banks assail the constitutionality of RA 7719 on the ground among others that it is an improper and unwarranted delegation of legislative power. According to petitioners, the Act was incomplete when it was passed by the Legislature, and the latter failed to fix a standard to which the Secretary of Health must conform in the performance of his functions. Petitioners also contend that the two-year extension period that may be granted by the Secretary of Health for the phasing out of commercial blood banks pursuant to Section 7 of the Act constrained the Secretary to legislate, thus constituting undue delegation of legislative power.

Issue: WHETHER OR NOT SECTION 7 OF R.A. 7719 CONSTITUTES UNDUE DELEGATION OF LEGISLATIVE POWER

Held: No.

In testing whether a statute constitutes an undue delegation of legislative power or not, it is usual to inquire whether the statute was complete in all its terms and provisions when it left the hands of the Legislature so that nothing was left to the judgment of the administrative body or any other appointee or delegate of the Legislature. Except as to matters of detail that may be left to be filled in by rules and regulations to be adopted or promulgated by executive officers and administrative boards, an act of the Legislature, as a general rule, is incomplete and hence invalid if it does not lay down any rule or definite standard by which the administrative board may be guided in the exercise of the discretionary powers delegated to it.

Republic Act No. 7719 or the National Blood Services Act of 1994 is complete in itself. It is clear from the provisions of the Act that the Legislature intended primarily to safeguard the health of the people and has mandated several measures to attain this objective. One of these is the phase out of commercial blood banks in the country. The law has sufficiently provided a definite standard for the guidance of the Secretary of Health in carrying out its provisions, that is, the promotion of public health by providing a safe and adequate supply of

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blood through voluntary blood donation. By its provisions, it has conferred the power and authority to the Secretary of Health as to its execution, to be exercised under and in pursuance of the law.The Secretary of Health has been given, under Republic Act No. 7719, broad powers to execute the provisions of said Act. Specifically, Section 23 of Administrative Order No. 9 provides that the phase-out period for commercial blood banks shall be extended for another two years until May 28, 1998 “based on the result of a careful study and review of the blood supply and demand and public safety.” This power to ascertain the existence of facts and conditions upon which the Secretary may effect a period of extension for said phase-out can be delegated by Congress. The true distinction between the power to make laws and discretion as to its execution is illustrated by the fact that 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.

1. Carbonilla vs. BAR, September 14, 2011

C. Kinds of Administrative Rules and Regulations1. BPI Leasing Corporation vs. CA, November 18, 2003

BLC attempts to convince the Court that Revenue Regulation 19-86 is legislative rather than interpretative in character and hence, should retroact to the date of effectivity of the law it seeks to interpret.

Administrative issuances may be distinguished according to their nature and substance: legislative and interpretative. A legislative rule is in the matter of subordinate legislation, designed to implement a primary legislation by providing the details thereof. An interpretative rule, on the other hand, is designed to provide guidelines to the law which the administrative agency is in charge of enforcing.[15]

The Court finds the questioned revenue regulation to be legislative in nature. Section 1 of Revenue Regulation 19-86 plainly states that it was promulgated pursuant to Section 277 of the NIRC. Section 277 (now Section 244) is an express grant of authority to the Secretary of Finance to promulgate all needful rules and regulations for the effective enforcement of the provisions of the NIRC. In Paper Industries Corporation of the Philippines v. Court of Appeals,[16] the Court recognized that the application of Section 277 calls for none other than the exercise of quasi-legislative or rule-making authority. Verily, it cannot be disputed that Revenue Regulation 19-86 was issued pursuant to the rule-making power of the Secretary of Finance, thus making it legislative, and not interpretative as alleged by BLC.

BLC further posits that, assuming the revenue regulation is legislative in nature, it is invalid for want of due process as no prior notice, publication and public hearing attended the issuance thereof. To support its view, BLC cited CIR v. Fortune Tobacco, et al.,[17] wherein the Court nullified a revenue memorandum circular which reclassified certain cigarettes and subjected them to a higher tax rate, holding it invalid for lack of notice, publication and public hearing.

The doctrine enunciated in Fortune Tobacco, and reiterated in CIR v. Michel J. Lhuillier Pawnshop, Inc.,[18] is that when an administrative rule goes beyond merely providing for

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the means that can facilitate or render less cumbersome the implementation of the law and substantially increases the burden of those governed, it behooves the agency to accord at least to those directly affected a chance to be heard and, thereafter, to be duly informed, before the issuance is given the force and effect of law. In Lhuillier and Fortune Tobacco, the Court invalidated the revenue memoranda concerned because the same increased the tax liabilities of the affected taxpayers without affording them due process. In this case, Revenue Regulation 19-86 would be beneficial to the taxpayers as they are subjected to lesser taxes. Petitioner, in fact, is invoking Revenue Regulation 19-86 as the very basis of its claim for refund. If it were invalid, then petitioner all the more has no right to a refund.

After upholding the validity of Revenue Regulation 19-86, the Court now resolves whether its application should be prospective or retroactive.

The principle is well entrenched that statutes, including administrative rules and regulations, operate prospectively only, unless the legislative intent to the contrary is manifest by express terms or by necessary implication.[19] In the present case, there is no indication that the revenue regulation may operate retroactively. Furthermore, there is an express provision stating that it “shall take effect on January 1, 1987,” and that it “shall be applicable to all leases written on or after the said date.” Being clear on its prospective application, it must be given its literal meaning and applied without further interpretation.[20] Thus, BLC is not in a position to invoke the provisions of Revenue Regulation 19-86 for lease rentals it received prior to January 1, 1987.

It is also apt to add that tax refunds are in the nature of tax exemptions. As such, these are regarded as in derogation of sovereign authority and are to be strictly construed against the person or entity claiming the exemption. The burden of proof is upon him who claims the exemption and he must be able to justify his claim by the clearest grant under Constitutional or statutory law, and he cannot be permitted to rely upon vague implications.[21] Nothing that BLC has raised justifies a tax refund.

It is not necessary to rule on the remaining issues.

WHEREFORE, the petition for review is hereby DENIED, and the assailed decision and resolution of the Court of Appeals are AFFIRMED. No pronouncement as to costs.

SO ORDERED.

1. Commissioner of Internal Revenue vs. CA (Bellosillo’s Separate Opinion), August 29, 1996

A. Requisites for ValidityExecutive Secretary vs. Southwing Heavy Industries, February 20, 2006

FACTS:

This instant consolidated petitions seek to annul the decisions of the Regional Trial Court which declared Article 2, Section 3.1 of Executive Order 156 unconstitutional. Said EO 156 prohibits the importation of used vehicles in the country inclusive of the Subic Bay Freeport Zone.

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On December 12, 2002, President Gloria Macapagal Arroyo issued Executive Order 156 entitled "Providing for a comprehensive industrial policy and directions for the motor vehicle development program and its implementing guidelines."The said provision prohibits the importation of all types of used motor vehicles in the country including the Subic Bay Freeport, or the Freeport Zone, subject to a few exceptions.

Consequently, three separate actions for declaratory relief were filed by Southwing Heavy Industries Inc, Subic Integrated Macro Ventures Corp, and Motor Vehicle Importers Association of Subic Bay Freeport Inc. praying that judgment be rendered declaring Article 2, Section3.1 of the EO 156 unconstitutional and illegal.

The RTC rendered a summary judgment declaring that Article 2, Section 3.1 of EO 156 constitutes an unlawful usurpation of legislative power vested by the Constitution with Congress and that the proviso is contrary to the mandate of Republic Act 7227(RA 7227) or the Bases Conversion and Development Act of 1992 which allows the free flow of goods and capital within the Freeport.

The petitioner appealed in the CA but was denied on the ground of lack of any statutory basis for the President to issue the same. It held that the prohibition on the importation of use motor vehicles is an exercise of police power vested on the legislature and absent any enabling law, the exercise thereof by the President through an executive issuance is void.

ISSUES:

1.Whether or not the Private Respondents have the legal standing in questionaing the said law?

2.Whether or not Article2, Section 3.1 of EO 156 is a valid exercise of the President’s quasi-legislative power.

HELD:

1.YES. Petitioners argue that respondents will not be affected by the importation ban considering that their certificate of registration and tax exemption do not authorize them to engage in the importation and/or trading of used cars.

The established rule that the constitutionality of a law or administrative issuance can be challenged by one who will sustain a direct injury as a result of its enforcementhas been satisfied in the instant case. The broad subject of the prohibited importation is “all types of used motor vehicles.” Respondents would definitely suffer a direct injury from the implementation of EO 156 because their certificate of registration and tax exemption authorize them to trade and/or import new and used motor vehicles and spare parts, except “used cars.” Other types of motor vehicles imported and/or traded by respondents and not falling within the category of used cars would thus be subjected to the ban to the prejudice of their business. Undoubtedly, respondents have the legal standing to assail the validity of EO 156.

2. YES BUT

Police power is inherent in a government to enact laws, within constitutional limits, to promote the order, safety, health, morals, and general welfare of society. It is lodged

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primarily with the legislature. By virtue of a valid delegation of legislative power, it may also be exercised by the President and administrative boards, as well as the lawmaking bodies on all municipal levels, including the barangay.

Such delegation confers upon the President quasi-legislative power which may be defined as the authority delegated by the law-making body to the administrative body to adopt rules and regulations intended to carry out the provisions of the law and implement legislative policy provided that it must comply with the following requisites:

(1) Its promulgation must be authorized by the legislature;(2) It must be promulgated in accordance with the prescribed procedure; (3) (3) It must be within the scope of the authority given by the legislature; and (4) It must be reasonable.

The first requisite was actually satisfied since EO 156 has both constitutional and statutory bases. Anent the second requisite, that the order must be issued or promulgated in accordance with the prescribed procedure, the presumption is that the said executive issuance duly complied with the procedures and limitations imposed by law since the respondents never questioned the procedure that paved way for the issuance of EO 156 but instead, what they challenged was the absence of substantive due process in the issuance of the EO. In the third requisite, the Court held that the importation ban runs afoul with the third requisite as administrative issuances must not be ultra vires or beyond the limits of the authority conferred. In the instant case, the subject matter of the laws authorizing the President to regulate or forbid importation of used motor vehicles, is the domestic industry. EO 156, however, exceeded the scope of its application by extending the prohibition on the importation of used cars to the Freeport, which RA 7227, considers to some extent, a foreign territory. The domestic industry which the EO seeks to protect is actually the "customs territory" which is defined under the Rules and Regulations Implementing RA 7227 which states: "the portion of the Philippines outside the Subic Bay Freeport where the Tariff and Customs Code of the Philippines and other national tariff and customs laws are in force and effect."

Regarding the fourth requisite, the Court finds that the issuance of EO is unreasonable. Since the nature of EO 156 is to protect the domestic industry from the deterioration of the local motor manufacturing firms, the Court however, finds no logic in all the encompassing application of the assailed provision to the Freeport Zone which is outside the customs territory of the Philippines. As long as the used motor vehicles do not enter the customs territory, the injury or harm sought to be prevented or remedied will not arise. The Court finds that Article 2, Section 3.1 of EO 156 is VOID insofar as it is made applicable within the secured fenced-in former Subic Naval Base area but is declared VALID insofar as it applies to the customs territory or the Philippine territory outside the presently secured fenced-in former Subic Naval Base area as stated in Section 1.1 of EO 97-A (an EO executed by Pres. Fidel V. Ramos in 1993 providing the Tax and Duty Free Privilege within the Subic Freeport Zone). Hence, used motor vehicles that come into the Philippine territory via the secured fenced-in former Subic Naval Base area may be stored, used or traded therein, or exported out of the Philippine territory, but they cannot be imported into the Philippine territory outside of the secured fenced-in former Subic Naval Base

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area. Petitions are PARTIALLY GRANTED provided that said provision is declared VALID insofar as it applies to the Philippine territory outside the presently fenced-in former Subic Naval Base area and VOID with respect to its application to the secured fenced-in former Subic Naval Base area.

1. Dagan vs. Philippine Racing Commission, February 12, 2009

B. Fact-finding and Rate-FixingLovina vs. Moreno, November 29, 1963

Facts: Numerous residents of Macabebe, Pampanga complained that appellees had blocked the "Sapang Bulati", a navigable river in the same municipality and asked that the obstructions be ordered removed, under the provisions of Republic Act No. 2056. After notice and hearing to the parties, the said Secretary of Public Works and Communications found the constructions to be a public nuisance in navigable waters, and ordered the land owners, spouses Lovina, to remove five (5) closures of Sapang Bulati. After receipt of the decision, the appellees filed a petition in CFI of Manila to restrain the Secretary from enforcing his decision. The trial court, after due hearing, granted a permanent injunction. It held that Republic Act No. 2056 is unconstitutional and that Sapang Bulati is not a navigable river but a private stream. The appellees’ contention is that Republic Act No. 2056 is unconstitutional because it invests the Secretary of Public Works and Communications with sweeping, unrestrained, final and unappealable authority to pass upon the issues of whether a river or stream is public and navigable, whether a dam encroaches upon such waters and is constitutive as a public nuisance, and whether the law applies to the state of facts, thereby Constituting an alleged unlawful delegation of judicial power to the Secretary of Public Works and Communications.

Issue: Whether or not there is an unlawful delegation of judicial power.

Held: The contentions of the appellees are not tenable. R.A. 2056 merely empowers the Secretary to remove unauthorized obstructions or encroachments upon public streams, constructions that no private person was anyway entitled to make, because the bed of navigable streams is public property, and ownership thereof is not acquirable by adverse possession. It is true that the exercise of the Secretary's power under the Act necessarily involves the determination of some questions of fact, such as the existence of the stream and its previous navigable character; but these functions, whether judicial or quasi-judicial, are merely incidental to the exercise of the power granted by law to clear navigable streams of unauthorized obstructions or encroachments, and authorities are clear that they are, validly conferable upon executive officials provided the party affected is given opportunity to be heard, as is expressly required by Republic Act No. 2056, section 2. The mere fact that an officer is required by law to inquire the existence of certain facts and to apply the law thereto in order to determine what his official conduct shall be and the fact that these acts may affect private, rights do not constitute an exercise of judicial powers. Accordingly, a statute may give to non-judicial officers the power to declare the existence of facts which call into operation its provisions, and similarly may grant to commissioners and other

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subordinate officer, power to ascertain and determine appropriate facts as a basis for procedure in the enforcement of particular laws. It is noteworthy that Republic Act 2605 authorizes removal of the unauthorized dikes either as "public nuisances or as prohibited constructions" on public navigable streams, and those of appellees clearly are in the latter class. In fine, it is held that Republic Act No. 2056 does not constitute an unlawful delegation of judicial power to the Secretary of Public Works; that the findings of fact of the Secretary of Public Works under Republic Act No. 2056 should be respected in the absence of illegality, error of law, fraud, or imposition, so long as the said, findings are supported by substantial evidence submitted to him. The decision appealed from is reversed, and the writs of injunction issued therein are annulled and set aside.

Vigan Electric Light Company, Inc. vs. Public Service Commission, January 30, 1964 FACTS:

This is an original action for certiorari to annul an order of respondent Public Service Commission ordering the reduction of rates of Vigan Electric Light Co. PSC averred that Vigan Electric making a net operating profit in excess of the allowable return of 12% on its invested capital, and that it is in the public interest and in consonance with Section 3of Republic Act No. 3043 that reduction of its rates to the extent of its excess revenue be put into effect immediately. Vigan Electric contended that the reduction of rate is unconstitutional because it has been ordered without notice and hearing, thus issued without due process of law. In defense, PSC maintains that rate-fixing is a legislative function; that legislative or rule-making powers may constitutionally be exercised without previous notice of hearing; and that the decision in Ang Tibay vs. Court of Industrial Relations(69 Phil., 635) — in which we held that such notice and hearing are essential to the validity of a decision of the Public Service Commission — is not in point because, unlike the order complained of — which respondent claims to be legislative in nature — the Ang Tibay case referred to a proceeding involving the exercise of judicial functions.

ISSUE:Whether or not the Congress validly delegated legislative power to the PSC?

HELD: No. Congress has not delegated, and cannot delegate legislative powers to the Public

Service Commission. Consistently with the principle of separation of powers, which underlies our constitutional system, legislative powers may not be delegated except to local governments, and only tomatters purely of local concern. However, Congress may delegate toadministrative agencies of the government the power to supply the details in the execution or enforcement of a policy laid down by it which is complete in itself. Such law is not deemed complete unless it lays down a standard or pattern sufficiently fixed or determinate, or, at least, determinable without requiring another legislation, to guide the administrative body concerned in the performance of its duty to implement or enforce said Policy. Otherwise, there would be no reasonable means to ascertain whether or not said body has acted within the scope of its authority, and, as a consequence, the power of legislation would eventually be exercised by a branch of the Government other than that in which it is lodged by the Constitution, in violation, not only of the allocation of powers therein made, but, also, of the principle of separation of powers. Although the rule-making power and even the power to fix rates— when such rules and/or rates are meant to apply to all enterprises of agiven kind throughout the Philippines — may partake of a legislativecharacter, such is not the nature of the order complained of. Indeed, the same applies exclusively to petitioner herein. What is more, it is predicated upon the finding of fact — based upon a report submitted by the General Auditing Office — that petitioner is making a profit of more than 12% of its invested capital, which is denied by petitioner. Obviously, the latter is entitled to

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cross-examine the maker of said report, and to introduce evidence to disprove the contents thereof and/or explain or complement the same, as well as to refute the conclusion drawn therefrom by the respondent. In other words, in making said finding of fact, respondent performed afunctionpartaking of a quasi-judicial character the valid exercise of which demands previous notice and hearing.

PhilComSat Corporation vs. Alcuaz, December 18, 1989

Facts: The petition before us seeks to annul and set aside an Order 1 issued by respondent Commissioner Jose Luis Alcuaz of the National Telecommunications Commission.

Herein petitioner is engaged in providing for services involving telecommunications. Charging rates for certain specified lines that were reduced by order of herein respondent Jose AlcuazCommissioner of the National Telecommunications Commission. The rates were ordered to be reduced by fifteen percent (15%) due to Executive Order No. 546 which granted the NTC the power to fix rates. Said order was issued without prior notice and hearing.

Under Section 5 of Republic Act No. 5514, petitioner was exempt from the jurisdiction of the then Public Service Commission, now respondent NTC. However, pursuant to Executive Order No. 196 issued on June 17, 1987, petitioner was placed under the jurisdiction, control and regulation of respondent NTC

Issue: Whether or Not E.O. 546 is unconstitutional.

Held: In Vigan Electric Light Co., Inc. vs. Public Service Commission the Supreme Court said that although the rule-making power and even the power to fix rates- when such rules and/or rates are meant to apply to all enterprises of a given kind throughout the Philippines-may partake of a legislative character. Respondent Alcuaz no doubt contains all the attributes of a quasi-judicial adjudication. Foremost is the fact that said order pertains exclusively to petitioner and to no other

The respondent admits that the questioned order was issued pursuant to its quasi-judicial functions. It, however, insists that notice and hearing are not necessary since the assailed order is merely incidental to the entire proceedings and, therefore, temporary in nature but the supreme court said that While respondents may fix a temporary rate pending final determination of the application of petitioner, such rate-fixing order, temporary though it may be, is not exempt from the statutory procedural requirements of notice and hearing

The Supreme Court Said that it is clear that with regard to rate-fixing, respondent has no authority to make such order without first giving petitioner a hearing, whether the order be temporary or permanent. In the Case at bar the NTC didn’t scheduled hearing nor it did give any notice to the petitioner.

Philippine Interisland Shipping Association vs. CA, January 22, 1997 FACTS

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On February 3, 1986, shortly before the presidential elections, President Ferdinand E. Marcos, responding to the clamor of harbor pilots for an increase in pilotage rates, issued Executive Order No. 1088, PROVIDING FOR UNIFORM AND MODIFIED RATES FOR PILOTAGE SERVICES RENDERED TO FOREIGN AND COASTWISE VESSELS IN ALL PRIVATE AND PUBLIC PORTS. The executive order increased substantially the rates of the existing pilotage fees previously fixed by the PPA.

However, the PPA refused to enforce the executive order on the ground that it had been drawn hastily and without prior consultation; that its enforcement would create disorder in the ports as the operators and owners of the maritime vessels had expressed opposition to its implementation; and that the increase in pilotage, as mandated by it, was exorbitant and detrimental to port operations.

The United Harbor Pilots' Association of the Philippines, Inc. (UHPAP) then announced its intention to implement E.O. No. 1088 effective November 16, 1986. UHPAP is the umbrella organization of various groups rendering pilotage service in different ports of the Philippines.  The service consists of navigating a vessel from a specific point, usually about two (2) miles off shore, to an assigned area at the pier and vice versa.  When a vessel arrives, a harbor pilot takes over the ship from its captain to maneuver it to a berth in the port, and when it departs, the harbor pilot also maneuvers it up to a specific point off shore.  The setup is required by the fact that each port has peculiar topography with which a harbor pilot is presumed to be more familiar than a ship captain. This in turn drew a warning from the PPA that disciplinary sanctions would be applied to those who would charge rates under E.O. No. 1088. The PPA instead issued Memorandum Circular No. 43-86, fixing pilotage fees at rates lower than those provided in E.O. No. 1088.

Consequently, the UHPAP filed on January 7, 1987 a complaint for injunction with the Regional Trial Court of Manila, against the then Minister of Transportation and Communications, Hernando Perez, and PPA General Manager, Primitivo S. Solis, Jr. It sought a writ of preliminary mandatory injunction for the immediate implementation of E.O. No. 1088, as well as a temporary restraining order to stop PPA officials from imposing disciplinary sanctions against UHPAP members charging rates in accordance with E.O. No. 1088. The RTC of Manila issued a temporary restraining order, enjoining the PPA from threatening the UHPAP, its officers and its members with suspension and other disciplinary action for collecting pilotage fees pursuant to E.O. No. 1088.

On February 26, 1988, while the case was pending, the PPA issued Administrative Order No. 02-88, entitled IMPLEMENTING GUIDELINES ON OPEN PILOTAGE SERVICE. The PPA announced in its order that it was leaving to the contracting parties, i.e., the shipping lines and the pilots, the fixing of mutually acceptable rates for pilotage services, thus abandoning the rates fixed by it (PPA) under Memorandum Circular No. 43-86, as well as those provided in E.O. No. 1088. 

The UHPAP and Manila Pilots’ Association filed a petition for certiorari filed before RTC-Manila, Branch 2 seeking for the annulment of A.O. No. 02-88.

The UHPAP and MPA, as petitioners below, contended (1) that A.O. No. 02-88 was issued without the benefit of a public hearing; (2) that E.O. No. 1088 had not been repealed by any other Executive Order or Presidential Decree and, therefore, should be given effect; and (3) that A.O. No. 02-88 contravened P.D. No. 857.

On September 8, 1989, a writ of preliminary injunction was issued by the court, enjoining the PPA from implementing A.O. No. 02-88 and, on October 26, 1989, judgment was rendered in favor of the petitioners therein.

Respondents and the intervenors below filed a joint petition for certiorari in the Court of Appeals (CA G.R. SP No. 19570), assailing the decision of the trial court. But their petition was dismissed for lack of jurisdiction on the ground that the issue raised was purely legal.

The parties separately filed petitions for review before this Court. The first one, by the PPA and its officers, was docketed as G.R. No. 100109, while the second one, by the intervenors, was docketed as G.R. No. 100481.

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The petition filed by the government in G.R. No. 100109 was dismissed for failure of petitioners to show that the Court of Appeals committed a reversible error. On the other hand, the petition of the intervenors in G.R. No. 100481 was given due course.

Following the denial of its petition in G.R. No. 100109, the PPA issued on July 31, 1992, Administrative Order No. 05-92, placing harbor pilots under the control of the PPA with respect to the scheduling and assignment of service of vessels. The PPA cited as justification "pilotage delays . . . under the set-up where private respondents (UHPAP & MPA) assign the pilots. Intentionally or otherwise, several vessels do not receive the pilotage service promptly, causing them operational disruptions and additional expenses/costs."

Petitioners contend that E.O. No. 1088 was merely an administrative issuance of then President Ferdinand E. Marcos and, as such, it could be superseded by an order of the PPA. They argue that to consider E.O. No. 1088 a statute would be to deprive the PPA of its power under its charter to fix pilotage rates.

ISSUE Whether or not the President Ferdinand Marcos, in the exercise of his legislative

power, is authorized to fix pilotage rates

RULING Yes. President Marcos is authorized to fix pilotage rates The contention of the petitioners has no merit. The fixing of rates is essentially a

legislative power. Indeed, the great battle over the validity of the exercise of this power by administrative agencies was fought in the 1920s on the issue of undue delegation precisely because the power delegated was legislative. The growing complexity of modern society, the multiplication of the subjects of governmental regulations and the increased difficulty of administering the laws made the creation of administrative agencies and the delegation to them of legislative power necessary.

There is no basis for petitioners' argument that rate fixing is merely an exercise of administrative power; that if President Marcos had power to revise the rates previously fixed by the PPA through the issuance of E.O. No. 1088, the PPA could in turn revise those fixed by the President, as the PPA actually did in A.O. No. 43-86, which fixed lower rates of pilotage fees, and even entirely left the fees to be paid for pilotage to the agreement of the parties to a contract. The orders previously issued by the PPA were in the nature of subordinate legislation, promulgated by it in the exercise of delegated power. As such these could only be amended or revised by law, as the President did by E.O. No. 1088.

It is not an answer to say that E.O. No. 1088 should not be considered a statute because that would imply the withdrawal of power from the PPA. What determines whether an act is a law or an administrative issuance is not its form but its nature. Here, as we have already said, the power to fix the rates of charges for services, including pilotage service, has always been regarded as legislative in character.

Nor is there any doubt of the power of the then President to fix rates. On February 3, 1986, when he issued E.O. No. 1088, President Marcos was authorized under Amendment No. 6 of the 1973 Constitution to exercise legislative power, just as he was under the original 1973 Constitution, when he issued P.D. NO. 857 which created the PPA, endowing it with the power to regulate pilotage service in Philippine ports. Although the power to fix rates for pilotage had been delegated to the PPA, it became necessary to rationalize the rates of charges fixed by it through the imposition of uniform rates. That is what the President did in promulgating E.O. No. 1088. As the President could delegate the ratemaking power to the PPA, so could he exercise it in specific instances without thereby withdrawing the power vested by P.D. No. 857, Section 20(a) in the PPA "to impose, fix, prescribe, increase or decrease such rates, charges or fees... for the services rendered by the Authority or by any private organization within a Port District."

It is worthy to note that E.O. No. 1088 provides for adjusted pilotage service rates without withdrawing the power of the PPA to impose, prescribe, increase or decrease rates, charges or fees. The reason is because E.O. NO. 1088 is not meant simply to fix new

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pilotage rates. Its legislative purpose is the "rationalization of pilotage service charges, through the imposition of uniform and adjusted rates for foreign and coastwise vessels in all Philippine ports."

We conclude that E.O. No. 1088 is a valid statute and that the PPA is duty bound to comply with its provisions. The PPA may increase the rates but it may not decrease them below those mandated by E.O. No. 1088. Finally, the PPA cannot refuse to implement E.O. No. 1088 or alter it as it did in promulgating Memorandum Circular No. 43-86. Much less could the PPA abrogate the rates fixed and leave the fixing of rates for pilotage service to the contracting parties as it did through A. O. No. 02-88, Section 3. Theretofore the policy was one of governmental regulation of the pilotage business. By leaving the matter to the determination of the parties, the PPA jettisoned this policy and changed it to laissez-faire, something which only the legislature, or whoever is vested with lawmaking authority, could do.

1. Philippine Consumers Foundation, Inc. vs. Secretary of DECS, August 31, 1987

C. Construction and Administrative InterpretationVictorias Milling Company, Inc. vs. Social Security Commission, March 07, 1962 Facts: On October 15, 1958, the Social Security Commission issued its Circular No. 22 of the following tenor: "Effective November 1, 1958, all Employers in computing the premiums due the System, will take in...to consideration and include in the Employee's remuneration all bonuses and overtime pay, as well as the cash value of other media of remuneration. All these will comprise the Employee's remuneration or earnings, upon which the 3-1/2% and 2-1/2% contributions will be based, up to a maximum of P500 for any one month." Petitioner Victorias Milling Company, Inc. wrote the Social Security Commission in effect protesting against the circular as contradictory to a previous Circular No. 7, dated October 7, 1957 expressly excluding overtime pay and bonus in the computation of the employers' and employees' respective monthly premium contributions. Moreover, it contended that due notice via publication was not complied with.

Issue: (1) Whether or not Circular No. 22 is a rule or regulation, as contemplated in Section 4(a)

of Republic Act 1161 empowering the Social Security Commission "to adopt, amend and repeal subject to the approval of the President such rules and regulations as may be necessary to carry out the provisions and purposes of this Act."

Held: It will thus be seen that whereas prior to the amendment, bonuses, allowances, and overtime pay given in addition to the regular or base pay were expressly excluded, or exempted from the definition of the term "compensation", such exemption or exclusion was deleted by the amendatory law. It thus became necessary for the Social Security Commission to interpret the effect of such deletion or elimination. Circular No. 22 was, therefore, issued to apprise those concerned of the interpretation or understanding of the Commission, of the law as amended, which it was its duty to enforce. It did not add any duty or detail that was not already in the law as amended. It merely stated and circularized the opinion of the Commission as to how the law should be

Tayug Rural Bank vs. Central Bank, November 28, 1986

FACTS:

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Plaintiff-appellee is a banking corporation in Tayug, Pangasinan. During the period from December 28, 1962 to July 30, 1963, it obtained thirteen (13) loans from defendant-appellant Central Bank totaling P813,000. On December 23, 1964, Central Bank issued Memorandum Circular No. DLC-8, imposing an additional penalty interest rate of ten percent (10%) p.a. on all past due loans of rural banks, beginning January 4, 1965. Said Circular was enforced on all rural banks effective July 4, 1965.

On June 27, 1969, Tayug sued Central Bank in CFI-Manila to recover the 10% imposed penalty amounting to P16,874.07, and to restrain the same from further imposing the penalty. Central Bank filed a counterclaim for the outstanding balance and overdue accounts of the plaintiff-appellee, including accrued interest and the 10% penalty. Defendant-appellant justified that the penalty was legally imposed under the Rules and Regulations Governing Rural Banks promulgated by the Monetary Board on September 5, 1958, under Republic Act No. 720. Tayug prayed for the dismissal of the counterclaim, saying that their unpaid obligation was due to Central Bank’s flexible and double standard policy of its rediscounting privileges, and its subsequent arbitrary and illegal imposition of the 10% penalty. The lower court ruled that only a legal question has been raised in the pleadings, and decided the case in favor of Tayug Rural Bank.

Central Bank appealed the decision of the trial court to the Court of Appeals, for determination of questions of fact and of law. The Court of Appeals ruled that the resolution of the appeal will solely depend on the legal issue of whether or not the Monetary Board had authority to authorize Defendant-appellant-appellant Central Bank to impose a penalty rate of 10% per annum on past due loans of rural banks, and ordered the certification of the case to the Supreme Court for proper determination.

ISSUE:

Whether or not the Central Bank can validly impose the 10% penalty on Tayug’s past overdue loans beginning July 4, 1965, by virtue of Memorandum Circular No. DLC-8 dated December 23, 1964.

RULING:

The answer is in the negative.

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Nowhere in any of the above-quoted pertinent provisions of R.A. 720 nor in any other provision of R.A. 720 for that matter, is the monetary Board authorized to mete out on rural banks an additional penalty rate on their past due accounts with Appellant. As correctly stated by the trial court, while the Monetary Board possesses broad supervisory powers, nonetheless, the retroactive imposition of administrative penalties cannot be taken as a measure supervisory in character.

Administrative rules and regulations have the force and effect of law. There are, however, limitations to the rule-making power of administrative agencies. A rule shaped out by jurisprudence is that when Congress authorizes promulgation of administrative rules and regulations to implement given legislation, all that is required is that the regulation be not in contradiction with it, but conform to the standards that the law prescribes. The rule delineating the extent of the binding force to be given to administrative rules and regulations was explained by the Court in Teoxon v. Member of the Board of Administrators (33 SCRA 588), thus: "The recognition of the power of administrative officials to promulgate rules in the implementation of the statute is necessarily limited to what is provided for in the legislative enactment. The Court held in the same case that "A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope is within the statute granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom ...." On the other hand, "administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means." Indeed, it cannot be otherwise as the Constitution limits the authority of the President, in whom all executive power resides, to take care that the laws be faithfully executed. No lesser administrative, executive office, or agency then can, contrary to the express language of the Constitution, assert for itself a more extensive prerogative. Necessarily, it is bound to observe the constitutional mandate. There must be strict compliance with the legislative enactment.

1. Pharmaceutical and Health Care Association of the Philippines vs. Duque, October 09, 2007

2. Hilado vs. Collector of Customs, August 31, 19563. ABS-CBN Broadcasting Corporation vs. CTA, October 12, 1981

D. Penal Regulations

US vs. Panlilio, December 08, 1914

FACTS:

On or about the 22nd day of February, 1913, all of the carabaos belonging to the above-named accused having been exposed to the dangerous and contagious disease known as rinderpest, were, in accordance with an order of duly-authorized agent of the Director of Agriculture, quarantined in a corral in the barrio of Masamat, municipality of Mexico, Province of Pampanga. That, on said place, Adriano Panlilio illegally and voluntarily and in violation of Act No. 1760, and while the quarantine against said carabaos was still in force, permitted and ordered said carabaos to be taken from the corral in which they were then quarantined and his servants and agents took the said carabaos from the said corral and

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drove them from place to place within his hacienda to use them the said caracaos as work animals.

The contention of the accused is that the facts alleged in the information and proved on the trial do not constitute a violation of Act No. 1760 or any portion thereof.

Furthermore, the government contended that if the offense stated in the information and proved upon the trial does not constitute a violation of any of the provisions of Act No. 1760, it does constitute a violation of article 581, paragraph 2, of the Penal Code. It provides:

A fine of not less than fifteen and not more than seventy pesetas and censure shall be imposed upon: . . .

2. Any person who shall violate the regulations, ordinances, or proclamations issued with reference to any epedemic disease among animals, the extermination of locusts, or any other similar plague.1awphil.net

ISSUE: WON act of defendant is in violation of said act.

HELD:

The only sections of Act No. 1760, which prohibit acts and pronounce them unlawful are 3, 4 and 5. This case does not fall within any of them.

Section 3 provides, in effect, that it shall be unlawful for any person, firm, or corporation knowingly to ship or otherwise bring into the Philippine Islands any animal suffering from, infected with, or dead of any dangerous communicable disease, or any of the effects pertaining to such animal which are liable to introduce such disease into the Philippine Islands.

Section 4 declares, substantially, that it shall be unlawful for any reason, firm, or corporation knowingly to ship, drive or otherwise take or transport from one island, province, municipality, township, or settlement to another any domestic animal suffering from any dangerous communicable diseases or to expose such animal either alive or dead on any public road or highway where it may come in contact with other domestic animals.

Section 5 provides that whenever the Secretary of the Interior shall declare that a dangerous communicable animal disease prevails in any island, province, municipality, township, or settlement and that there is danger of spreading such disease by shipping, driving or otherwise transporting or taking out of such island, province, municipality, township, or settlement any class of domestic animal, it shall be unlawful for any person, firm or corporation to ship, drive or otherwise remove the kind of animals so specified from such locality except when accompanied by a certificate issued by authority of the Director of Agriculture stating the number and the kind of animals to be shipped, driven, taken or transported, their destination, manner in which they are authorized to be shipped, driven, taken, or transported, and their brands and distinguishing marks.

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The Solicitor-General suggests, but does not argue, that section 6 is applicable to the case at bar. Section 6 simply authorizes the Director of Agriculture to do certain things, among them, paragraph (c) "to require that animals which are suffering from dangerous communicable diseases or have been exposed thereto be placed in quarantine at such place and for such time as may be deemed by him necessary to prevent the spread of the disease."

Nowhere in the law, however, is the violation of the orders of the Bureau of Agriculture neither prohibited or made unlawful, nor is there provided any punishment for a violation of such orders.

Section 8 provides that "any person violating any of the provisions of this Act shall, upon conviction, be punished by a fine of not more than one thousand pesos, or by imprisonment for not more than six months, or by both such fine and imprisonment, in the discretion of the court, for each offense."

A violation of the orders of the Bureau of Agriculture, as authorized by Section 6 paragraph (c), is not a violation of the provision of the Act.

The orders of the Bureau of Agriculture, while they may possibly be said to have the force of law, are statutes and particularly not penal statutes, and a violation of such orders is not a penal offense unless the statute itself somewhere makes a violation thereof unlawful and penalizes it. Nowhere in Act No. 1760 is a violation of the orders of the Bureau of Agriculture made a penal offense, nor is such violation punished in any way therein.

However, we consider these acts as plain violation of the article of the Penal Code as above quoted. The fact that the information in its preamble charged a violation of act No. 1760 does not prevent us from finding the accused guilty of a violation of an article of the Penal Code.

The accused is accordingly convicted of a violation of article 581, paragraph 2, of the Penal Code, and is sentenced to pay a fine of seventy pesetas (P14) and censure, with subsidiary imprisonment in case of insolvency, and the costs of this appeal. So ordered.

People vs. Santos, August 15, 1936

On June 18, 1930, the provincial fiscal of Cavite filed an information against the accused -appellee Augusta A. Santos for violation of section 28 of Fish and Game Administrative Order No. 2 and penalized by section 29 thereof. That on or about April 29, 1935, within 1,500 yards north of Cavalry Point, Corregidor Island, Province of Cavite, P.I., the said accused Augusta A. Santos, the registered owner of two fishing motor boats Malabon II and Malabon III, manned and operated by his fishermen, fish, loiter and anchor without permission from the Secretary of Agriculture and Commerce within three (3) kilometers from the shore line of the Island of Corregidor over which the naval and military authorities of the United States exercise jurisdiction.

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Section 28 of Administrative Order No. 2 relative to fish and game, issued by the Secretary of Agriculture and Commerce, provides as follows:

28. Prohibited fishing areas. — No boats licensed in accordance with the provisions of Act No. 4003 and this order to catch, collect, gather, take, or remove fish and other sea products from Philippine waters shall be allowed to fish, loiter, or anchor within 3 kilometers of the shore line of islands and reservations over which jurisdiction is exercised by naval or military authorities of the United States, particularly Corregidor, Pulo Caballo, La Monja, El Fraile, and Carabao, and all other islands and detached rocks lying between Mariveles Reservation on the north side of the entrance to Manila Bay and Calumpan Point Reservation on the south side of said entrance: Provided, That boats not subject to license under Act No. 4003 and this order may fish within the areas mentioned above only upon receiving written permission therefor, which permission may be granted by the Secretary of Agriculture and Commerce upon recommendation of the military or naval authorities concerned.

The above quoted provisions of Administrative, Order No. 2 were issued by the then Secretary of Agriculture and Natural Resources, now Secretary of Agriculture and Commerce, by virtue of the authority vested in him by section 4 of Act No. 4003 which reads as follows:

SEC. 4. Instructions, orders, rules and regulations. — The Secretary of Agriculture and Natural Resources shall from time to time issue such instructions, orders, rules and regulations consistent with this Act, as may be necessary and proper to carry into effect the provisions thereof and for the conduct of proceedings arising under such provisions.

The CFI (now RTC) of Cavite dismissed the case on the ground that it does not fall within its jurisdiction. The prosecuting attorney appealed and requested that the case be remanded to the CFI contending that because the applicable penalty is under section 83 of Act No. 4003, it falls within the original jurisdiction of the court.

ISSUE:

Whether or not accused Santos be criminally liable under Section 28 of AO No. 2 issued by the Secretary of Agriculture and Commerce by virtue of the authority given by Act No. 4003.

RULING:

Act No. 4003 contains no similar provision prohibiting boats not subject to license from fishing within three kilometers of the shore line of islands and reservations over which jurisdiction is exercised by naval and military authorities of the United States, without permission from the Secretary of Agriculture and Commerce upon recommendation of the military and naval authorities concerned. Inasmuch as the only authority granted to the Secretary of Agriculture and Commerce, by section 4 of Act No. 4003, is to issue from time to time such instructions, orders, rules, and regulations consistent with said Act, as may be necessary and proper to carry into effect the provisions thereof and for the conduct of proceedings arising under such provisions; and inasmuch as said Act No. 4003, as stated, contains no provisions similar to those contained in the above quoted conditional clause of section 28 of AO No. 2, the conditional clause in question supplies a defect of the law, extending it. This is equivalent to legislating on the matter, a power which has not been and cannot be delegated to him, it being exclusively reserved to the then Philippine Legislature

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by the Jones Law, and now to the National Assembly by the Constitution of the Philippines. Such act constitutes not only an excess of the regulatory power conferred upon the Secretary of Agriculture and Commerce, but also an exercise of a legislative power which he does not have, and therefore said conditional clause is null and void and without effect (12 Corpus Juris, 845; Rubi vs. Provincial Board of Mindoro, 39 Phil., 660; U.S. vs. Ang Tang Ho, 43 Phil., 1; U.S. vs. Barrias, 11 Phil., 327).

For the foregoing considerations, we are of the opinion and so hold that the conditional clause of section 28 of AO No. 2. issued by the Secretary of Agriculture and Commerce, is null and void and without effect, as constituting an excess of the regulatory power conferred upon him by section 4 of Act No. 4003 and an exercise of a legislative power which has not been and cannot be delegated to him.

Wherefore, inasmuch as the facts with the commission of which Augusto A. Santos is charged do not constitute a crime or a violation of some criminal law within the jurisdiction of the civil courts, the information filed against him is dismissed, with the costs de oficio. So ordered.

1. Pesigan vs. Angeles, April 30, 1984

E. Effectivity of Rules1. Tañada vs. Tuvera, December 29, 1986

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