CASE DIGEST: CHAPTER III ADMINISTRATIVE LAW, LAW ON LOCAL GOVERNMENT & ELECTION LAW Power of Rule-Making

CASE DIGEST: CHAPTER III

ADMINISTRATIVE LAW, LAW ON LOCAL GOVERNMENT & ELECTION LAW

Power of Rule-Making

1) LAGUNA LAKE DEVT AUTHORITY vs. CA 231 SCRA 292, G.R. No. 110120, March 16, 1994 2) RIZAL EMPIRE INSURANCE GROUP vs. NLRC 150 SCRA 565, G.R. No. 73140, May 29, 1987 3) TIO vs. VIDEOGRAM REGULATORY BOARD 151 SCRA 208, G.R. No. L-75697, June 18, 1987 4) PEOPLE vs. MACEREN 79 SCRA 450, G.R. No. L-32166, October 18, 1977 5) BOIE-TAKEDA CHEMICALS INC vs. DELA SERNA 228 SCRA 329, G.R. No. 92174, December 10, 1993 6) CIR vs. CA 261 SCRA 262, G.R. No. 119761, August 29, 1996 7) PERALTA vs. CIVIL SERVICE COMMISSION 212 SCRA 425, G.R. No. 95832, August 10, 1992 8) PHIL. AIRLINES INC. vs. CIVIL AERONAUTICS BOARD 270 SCRA 538, G.R. No. 119528, March 26, 1997 9) PHIL. ASSOC. SERVICE EXPORTERS INC. vs TORRES 212 SCRA 298, G.R. No. 101279, August 6, 1992 10) PHIL. CONSUMERS FOUNDATION INC. SECRETARY OF EDUCATION, CULTURE & SPORTS 153 SCRA 622, G.R. No. 78385, August 31, 1987

vs.

11) CIR vs. BICOLANDIA DRUG CORP. Gr. No. 148083, July 21, 2006 12) HOLY SPIRIT HOMEOWNERS ASSOC. vs. MICHAEL DEFENSOR ET AL Gr. No. 163980, August 3, 2006

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LAGUNA LAKE DEVT AUTHORITY vs. CA 231 SCRA 292, G.R. No. 110120, March 16, 1994 Facts: The residents of Tala Estate, Barangay Camarin, Caloocan City raised a complaint with the Laguna Lake Development Authority (LLDA), seeking to stop the operation of the City Government of Caloocan of an 8.6 hectare open garbage dumpsite in Tala Estate, due to its harmful effects on the health of the residents and the pollution of the surrounding water. LLDA discovered that the City Government of Caloocan has been maintaining the open dumpsite at the Camarin Area without a requisite Environmental Compliance Certificate from the Environmental Management Bureau of the DENR. They also found the water to have been directly contaminated by the operation of the dumpsite. LLDA issued a Cease and Desist Order against the City Government and other entities to completely halt, stop and desist from dumping any form or kind of garbage and other waste matter on the Camarin dumpsite. The City Government went to the Regional Trial Court of Caloocan City to file an action for the declaration of nullity of the cease and desist order and sought to be declared as the sole authority empowered to promote the health and safety and enhance the right of the people in Caloocan City to a balanced ecology within its territorial jurisdiction. LLDA sought to dismiss the complaint, invoking the Pollution Control Law that the review of cease and desist orders of that nature falls under the Court of Appeals and not the RTC. RTC denied LLDA’s motion to dismiss, and issued a writ of preliminary injunction enjoining LLDA from enforcing the cease and desist order during the pendency of the case. The Court of Appeals promulgated a decision that ruled that the LLDA has no power and authority to issue a cease and desist order enjoining the dumping of garbage. The residents seek a review of the decision.

While pollution cases are generally under the Pollution Adjudication Board under the Department of Environment and Natural Resources, it does not preclude mandate from special laws that provide another forum. In this case, RA No. 4850 provides that mandate to the LLDA. It is mandated to pass upon or approve or disapprove plans and programs of local government offices and agencies within the region and their underlying environmental/ecological repercussions. The DENR even recognized the primary jurisdiction of the LLDA over the case when the DENR acted as intermediary at a meeting among the representatives of the city government, LLDA and the residents. LLDA has the authority to issue the cease and desist order. Explicit in the law. §4, par. (3) explicitly authorizes the LLDA to make whatever order may be necessary in the exercise of its jurisdiction. While LLDA was not expressly conferred the power “to issue an ex-parte cease and desist order” in that language, the provision granting authority to “make (…) orders requiring the discontinuance of pollution”, has the same effect. Necessarily implied powers. Assuming arguendo that the cease and desist order” was not expressly conferred by law, there is jurisprudence enough to the effect. While it is a fundamental rule that an administrative agency has only such power as expressly granted to it by law, it is likewise a settled rule that an administrative agency has also such powers as are necessarily implied in the exercise of its express powers. Otherwise, it will be reduced to a “toothless” paper agency. In Pollution Adjudication Board vs Court of Appeals, the Court ruled that the PAB has the power to issue an ex-parte cease and desist order on prima facie evidence of an establishment exceeding the allowable standards set by the anti-pollution laws of the country. LLDA has been vested with sufficiently broad powers in the regulation of the projects within the Laguna Lake region, and this includes the implementation of relevant anti-pollution laws in the area.

Issue: Whether or not the LLDA has authority and power to issue an order which, in its nature and effect was injunctive. Held: Yes. City Government of Caloocan: As a local government unit, pursuant to the general welfare provision of the Local Government Code, they have the mandate to operate a dumpsite and determine the effects to the ecological balance over its territorial jurisdiction. LLDA: As an administrative agency which was granted regulatory and adjudicatory powers and functions by RA No. 4850, it is invested with the power and authority to issue a cease and desist order pursuant to various provisions in EO No. 927.. LLDA is mandated by law to manage the environment, preserve the quality of human life and ecological systems and prevent undue ecological disturbances, deterioration and pollution in the Laguna Lake area and surrounding provinces and cities, including Caloocan.

RIZAL EMPIRE INSURANCE GROUP vs. NLRC 150 SCRA 565, G.R. No. 73140, May 29, 1987 Facts: In August, 1977, herein private respondent Rogelio R. Coria was hired by herein petitioner Rizal Empire Insurance Group as a casual employee with a salary of P10.00 a day. On January 1, 1978, he was made a regular employee, having been appointed as clerktypist. Being a permanent employee, he was furnished a copy of petitioner company's "General Information, Office Behavior and Other Rules and Regulations." In the same year, without change in his position-designation, he was transferred to the Claims Department and his salary was increased. meikimouse



In 1980, he was transferred to the Underwriting Department and his salary was increased to P580.00 a month plus cost of living allowance, until he was transferred to the Fire Department as filing clerk. In July, 1983, he was made an inspector of the Fire Division with a monthly salary of P685.00 plus allowances and other benefits. On October 15, 1983, private respondent Rogelio R. Coria was dismissed from work, allegedly, on the grounds of tardiness and unexcused absences. Accordingly, he filed a complaint with the Ministry of Labor and Employment (MOLE), and in a Decision dated March 14, 1985 (Record, pp. 80-87), Labor Arbiter Teodorico L. Ruiz reinstated him to his position with back wages. Petitioner filed an appeal with the National labor Relations Commission (NLRC) but, in a Resolution dated November 15, 1985, the appeal was dismissed on the ground that the same had been filed out of time. Hence, the instant petition Issue: Whether or not NLRC committed a grave abuse of discretion amounting to lack of jurisdiction in dismissing petitioner’s appeal on a technicality. Held: No. Rule VIII of the Revised Rules of the National Labor Relations Commission on appeal, provides: SECTION 1. (a) Appeal. — Decision or orders of a labor Arbiter shall be final and executory unless appealed to the Commission by any or both of the parties within ten (10) calendar days from receipt of notice thereof. SECTION 6. No extension of period. — No motion or request for extension of the period within which to perfect an appeal shall be entertained. The record shows that the employer (petitioner herein) received a copy of the decision of the Labor Arbiter on April 1, 1985. It filed a Motion for Extension of Time to File Memorandum of Appeal on April 11, 1985 and filed the Memorandum of Appeal on April 22, 1985. Pursuant to the "no extension policy" of the National Labor Relations Commission, aforesaid motion for extension of time was denied in its resolution dated November 15, 1985 and the appeal was dismissed for having been filed out of time. The Revised Rules of the National Labor Relations Commission are clear and explicit and leave no room for interpretation. Moreover, it is an elementary rule in administrative law that administrative regulations and policies enacted by administrative bodies to interpret the law which they are entrusted to enforce, have the force of law, and are entitled to great respect Under the above-quoted provisions of the Revised NLRC Rules, the decision appealed from in this case has become final and executory and can no longer be subject to appeal. Even on the merits, the ruling of the Labor Arbiter appears to be correct; the consistent promotions in rank and salary of the private respondent indicate he must have been a highly efficient worker, who should be retained despite occasional lapses in punctuality and attendance. Perfection cannot after all be demanded.

TIO vs. VIDEOGRAM REGULATORY BOARD 151 SCRA 208, G.R. No. L-75697, June 18, 1987 Facts: Tio is a videogram operator who assailed the constitutionality of PD 1987 entitled “An Act Creating the Videogram Regulatory Board” with broad powers to regulate and supervise the videogram industry. The PD was also reinforced by PD 1994 which amended the National Internal Revenue Code. The amendment provides that “there shall be collected on each processed video-tape cassette, ready for playback, regardless of length, an annual tax of five pesos; Provided, that locally manufactured or imported blank video tapes shall be subject to sales tax.” The said law was brought about by the need to regulate the sale of videograms as it has adverse effects to the movie industry. The proliferation of videograms has significantly lessened the revenue being acquired from the movie industry, and that such loss may be recovered if videograms are to be taxed. Sec 10 of the PD imposes a 30% tax on the gross receipts payable to the LGUs. Tio countered, among others, that the tax imposition provision is a rider and is not germane to the subject matter of the PD.PD 1994 issued a month thereafter reinforced PD 1987 and in effect amended the National Internal Revenue Code (NIRC). Petitioner's attack on the constitutionality of the DECREE on the ground that there is undue delegation of power and authority. Issue: Whether or not the PD 1987 is unconstitutional due to the tax provision included. Held: No. The title of the decree, which calls for the creation of the VRB is comprehensive enough to include the purposes expressed in its Preamble and reasonably covered in all its provisions. It is unnecessary to express all those objectives in the title or that the latter be an index to the body of the decree. The foregoing provision is allied and germane to, and is reasonably necessary for the accomplishment of the general object of the decree, which is the regulation of the video industry through the VRB as expressed in its title. The tax provision is not inconsistent with nor foreign to the general subject and title. As a tool for regulation it is simply one of the regulatory and control mechanisms scattered throughout the decree. The express purpose of PD 1987 to include taxation of the video industry in order to regulate and rationalize the heretofore uncontrolled distribution of videos is evident from Preambles 2 and 5. Those preambles explain the motives of the lawmaker in presenting the measure. Neither can it be successfully argued that the DECREE contains an undue delegation of legislative power. The grant in Section 11 of the DECREE of authority to the BOARD to "solicit the direct assistance of other agencies and units of the government and deputize, for a fixed and limited period, the heads or personnel of such agencies and units to perform enforcement functions for the meikimouse



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

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

to anticipate and provide for the multifarious and complex situations that may be encountered in enforcing the law. All that is required is that the regulation should be germane to the defects and purposes of the law and that it should conform to the standards that the law prescribes. Administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself cannot be extended. The rule-making power must be confined to details for regulating the mode or proceeding to carry into effect the law as it his been enacted. The power cannot be extended to amending or expanding the statutory requirements or to embrace matters not covered by the statute. Rules that subvert the statute cannot be sanctioned.

Facts: The respondents were charged with violating Fisheries Administrative Order No. 84-1 which penalizes electro fishing in fresh water fisheries. This was promulgated by the Secretary of Agriculture and Natural Resources and the Commissioner of Fisheries under the old Fisheries Law and the law creating the Fisheries Commission. The municipal court quashed the complaint and held that the law does not clearly prohibit electro fishing, hence the executive and judicial departments cannot consider the same. On appeal, the CFI affirmed the dismissal. Hence, this appeal to the SC. Issue: Whether or not electro fishing is valid.

the administrative order penalizing

Held: NO. The Secretary of Agriculture and Natural Resources and the Commissioner of Fisheries exceeded their authority in issuing the administrative order. The old Fisheries Law does not expressly prohibit electro fishing. As electro fishing is not banned under that law, the Secretary of Agriculture and Natural Resources and the Commissioner of Fisheries are powerless to penalize it. 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. The lawmaking body cannot delegate to an executive official the power to declare what acts should constitute an offense. It can authorize the issuance of regulations and the imposition of the penalty provided for in the law itself. Where the legislature has delegated to executive or administrative officers and boards authority to promulgate rules to carry out an express legislative purpose, the rules of administrative officers and boards, which have the effect of extending, or which conflict with the authority granting statute, do not represent a valid precise of the rule-making power but constitute an attempt by an administrative body to legislate Administrative agent are clothed with rule-making powers because the lawmaking body finds it impracticable, if not impossible,

BOIE-TAKEDA CHEMICALS INC vs. DELA SERNA 228 SCRA 329, G.R. No. 92174, December 10, 1993 Facts: P.D. No. 851 provides for the Thirteen-Month Pay Law. Under Sec. 1 of said law, “all employers are required to pay all their employees receiving basic salary of not more than P 1,000.00 a month, regardless of the nature of the employment, and such should be paid on December 24 of every year.” The Rules and Regulations Implementing P.D. 851 contained provisions defining “13-month pay” and “basic salary” and the employers exempted from giving it and to whom it is made applicable. Supplementary Rules and Regulations Implementing P.D. 851 were subsequently issued by Minister Ople which inter alia set items of compensation not included in the computation of 13-month pay. (overtime pay, earnings and other remunerations which are not part of basic salary shall not be included in the computation of 13month pay). Pres. Corazon Aquino promulgated on August 13, 1985 M.O. No. 28, containing a single provision that modifies P.D. 851 by removing the salary ceiling of P 1,000.00 a month. More than a year later, Revised Guidelines on the Implementation of the 13-month pay law was promulgated by the then Labor Secretary Franklin Drilon, among other things, defined particularly what remunerative items were and were not included in the concept of 13-month pay, and specifically dealt with employees who are paid a fixed or guaranteed wage plus commission or commissions were included in the computation of 13th month pay) A routine inspection was conducted in the premises of petitioner. Finding that petitioner had not been including the commissions earned by its medical representatives in the computation of their 1-month pay, a Notice of Inspection Result was served on petitioner to effect restitution or correction of “the

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underpayment of 13-month pay for the years, 1986 to 1988 of Medical representatives. Petitioner wrote the Labor Department contesting the Notice of Inspection Results, and expressing the view that the commission paid to its medical representatives are not to be included in the computation of the 13-moth pay since the law and its implementing rules speak of REGULAR or BASIC salary and therefore exclude all remunerations which are not part of the REGULAR salary. Regional Dir. Luna Piezas issued an order for the payment of underpaid 13-month pay for the years 1986, 1987 and 1988. A motion for reconsideration was filed and the then Acting labor Secretary Dionisio de la Serna affirmed the order with modification that the sales commission earned of medical representatives before August 13, 1989 (effectivity date of MO 28 and its implementing guidelines) shall be excluded in the computation of the 13-month pay. Similar routine inspection was conducted in the premises of Phil. Fuji Xerox where it was found there was underpayment of 13th month pay since commissions were not included. In their almost identically-worded petitioner, petitioners, through common counsel, attribute grave abuse of discretion to respondent labor officials Hon. Dionisio dela Serna and Undersecretary Cresenciano B. Trajano. Issue: Whether or not commissions are included in the computation of 13-month pay. Held: NO. Contrary to respondent’s contention, M.O No. 28 did not repeal, supersede or abrogate P.D. 851. As may be gleaned from the language of MO No. 28, it merely “modified” Section 1 of the decree by removing the P 1,000.00 salary ceiling. The concept of 13th Month pay as envisioned, defined and implemented under P.D. 851 remained unaltered, and while entitlement to said benefit was no longer limited to employees receiving a monthly basic salary of not more than P 1,000.00 said benefit was, and still is, to be computed on the basic salary of the employee-recipient as provided under P.D. 851. Thus, the interpretation given to the term “basic salary” was defined in PD 851 applies equally to “basic salary” under M.O. No. 28. The term “basic salary” is to be understood in its common, generally accepted meaning, i.e., as a rate of pay for a standard work period exclusive of such additional payments as bonuses and overtime. In remunerative schemes consists of a fixed or guaranteed wage plus commission, the fixed or guaranteed wage is patently the “basic salary” for this is what the employee receives for a standard work period. Commissions are given for extra efforts exerted in consummating sales of other related transactions. They are, as such, additional pay, which the SC has made clear do not from part of the “basic salary.” Moreover, the Supreme Court said that, including commissions in the computation of the 13th month pay, the second paragraph of Section 5(a) of the Revised Guidelines on the

Implementation of the 13th Month Pay Law unduly expanded the concept of "basic salary" as defined in P.D. 851. It is a fundamental rule that implementing rules cannot add to or detract from the provisions of the law it is designed to implement. Administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law they are intended to carry into effect. They cannot widen its scope. An administrative agency cannot amend an act of Congress.

CIR vs. CA 261 SCRA 262, G.R. No. 119761, August 29, 1996 Facts: RA 7654 was enacted by Congress on June 10, 1993 and took effect July 3, 1993. It amended partly Sec. 142 (c) of the NIRC1. Fortune Tobacco manufactured the following cigaretter brands: Hope, More and Champion. Prior to RA 7654, these 3 brands were considered local brands subjected to an ad valorem tax of 20 to 45%. Applying the amendment and nothing else, the 3 brands should fall under Sec 142 (c) (2) NIRC and be taxed at 20 to 45%. However, on July 1, 1993, petitioner Commissioner of Internal Revenue issued Revenue Memorandum Circular37-93 which reclassified the 3 brands as locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax. The reclassification was before RA 7654 took effect. In effect, the memo circular subjected the 3 brands to the provisions of Sec 142 (c) (1) NIRC imposing upon these brands a rate of 55% instead of just 20 to 45% under Sec 142 (c) (2) NIRC. There was no notice and hearing. CIR argued that the memo circular was merely an interpretative ruling of the BIR which did not require notice and hearing. Issue: Whether or not RMC 37-93 was valid and enforceable. Held: No; lack of notice and hearing violated due process required for promulgated rules. Moreover, it infringed on uniformity of taxation / equal protection since other local cigarettes bearing foreign brands had not been included within the scope of the memo circular. Contrary to petitioner’s contention, the memo was not a mere interpretative rule but a legislative rule in the nature of subordinate legislation, designed to implement a primary legislation by providing the details thereof. Promulgated legislative rules must be published. On the other hand, interpretative rules only provide guidelines to the law which the administrative agency is in charge of enforcing.

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BIR, in reclassifying the 3 brands and raising their applicable tax rate, did not simply interpret RA 7654 but legislated under its quasi-legislative authority. BELLOSILLO separate opinion: the administrative issuance was not quasi-legislative but quasijudicial. Due process should still be observed of course but use Ang Tibay v. CIR. One of the powers of administrative agencies like the Bureau of Internal Revenue, is the power to make rules. The necessity for vesting administrative agencies with this power stems from the impracticability of the lawmakers providing general regulations for various and varying details pertinent to a particular legislation. The rules that administrative agencies may promulgate may either be legislative or interpretative. The former is a form of subordinate legislation whereby the administrative agency is acting in a legislative capacity, supplementing the statute, filling in the details, pursuant to a specific delegation of legislative power. It should be understandable that when an administrative rule is merely interpretative in nature, its applicability needs nothing further than its bare issuance for it gives no real consequence more than what the law itself has already prescribed. When, upon the other hand, the administrative rule goes beyond merely providing for the means that can facilitate or render least cumbersome the implementation of the law but substantially adds to or increases the burden of those governed, it behooves the agency to accord at least to those directly affected a chance to be heard, and thereafter to be duly informed, before that new issuance is given the force and effect of law.

PERALTA vs. CIVIL SERVICE COMMISSION 212 SCRA 425, G.R. No. 95832, August 10, 1992 Facts: Petitioner was appointed Trade-Specialist II on 25 September 1989 in the Department of Trade and Industry (DTI). His appointment was classified as "Reinstatement/Permanent". 120889 petitioner received his initial salary, covering the period from September to October 1989. Since he had no accumulated leave credits, DTI deducted from his salary the amount corresponding to his absences during the covered period, inclusive of Saturdays and Sundays. Petitioner sent a memorandum to Amando T. Alvis (Chief, General Administrative Service) inquiring as to the law on salary deductions, if the employee has no leave credits. Amando T. Alvis answered petitioner's query in a memorandumciting Chapter 5.49 of the Handbook of Information on the Philippine Civil Service which states that "when an employee is on leave without pay on a day before or on a day immediately preceding a Saturday, Sunday or Holiday, such Saturday, Sunday, or Holiday shall also be without pay.

Petitioner sent a letter addressed to CSC Chairman Patricia Sto. Tomas raising the question: 'Is an employee who was on leave of absence without pay on a day before or on a day time immediately preceding a Saturday, Sunday or Holiday, also considered on leave of absence without pay on such Saturday, Sunday or Holiday? Petitioner: he cannot be deprived of his pay or salary corresponding to the intervening Saturdays, Sundays or Holidays (in the factual situation posed), and that the withholding (or deduction) of the same is tantamount to a deprivation of property without due process of law. Respondent Commission promulgated Resolution No. 90497, ruling that the action of the DTI in deducting from the salary of petitioner, a part thereof corresponding to six (6) days is in order. Issue: Whether or not the CSC resolution is valid. Held: No. The court ruled that the construction by the respondent Commission of R.A. 2625 is not in accordance with the legislative intent. R.A. 2625 specifically provides that government employees are entitled to fifteen (15) days vacation leave of absence with full pay and fifteen (15) days sick leave with full pay, exclusive of Saturdays, Sundays and Holidays in both cases. Thus, the law speaks of the granting of a right and the law does not provide for a distinction between those who have accumulated leave credits and those who have exhausted their leave credits in order to enjoy such right. The fact remains that government employees, whether or not they have accumulated leave credits, are not required by law to work on Saturdays, Sundays and Holidays and thus they can not be declared absent on such non-working days. They cannot be or are not considered absent on non-working days; they cannot and should not be deprived of their salary corresponding to said non-working days just because they were absent without pay on the day immediately prior to, or after said non-working days. A different rule would constitute a deprivation of property without due process. Furthermore, before their amendment by R.A. 2625, Sections 284 and 285-A of the Revised Administrative Code applied to all government employee without any distinction. It follows that the effect of the amendment similarly applies to all employees enumerated in Sections 284 and 285-A, whether or not they have accumulated leave credits. The general rule vis-a-vis legislation is that an unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is in legal contemplation as inoperative as though it had never been passed. “When an administrative or executive agency renders an opinion or issues a statement of policy, it merely interprets a preexisting law; and the administrative interpretation of the law is at best advisory, for it is the courts that finally determine what the law means.”

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PHIL. AIRLINES INC. vs. CIVIL AERONAUTICS BOARD 270 SCRA 538, G.R. No. 119528, March 26, 1997 Facts: On November 24, 1994, GrandAir applied for a Certificate of Public Convenience and Necessity with the Board. Accordingly, the Chief Hearing Officer of the CAB issued a Notice of Hearing setting the application for initial hearing and directing GrandAir to serve a copy of the application and corresponding notice to all scheduled Philippine Domestic operators. GrandAir filed its Compliance, and requested for the issuance of a Temporary Operating Permit. PAL, a holder of a legislative franchise to operate air transport services, filed an Opposition to the application for a Certificate of Public Convenience and Necessity on December 16, 1995 on the following grounds: The CAB has no jurisdiction to hear the petitioner's application until the latter has first obtained a franchise to operate from Congress. At the initial hearing for the application, petitioner raised the issue of lack of jurisdiction of the Board to hear the application because GrandAir did not possess a legislative franchise. Chief Hearing Officer of CAB issued an Order denying petitioner's Opposition. PAL alleges that the CAB has no jurisdiction to hear the petitioner's application until the latter has first obtained a franchise to operate from Congress. The Civil Aeronautics Board has jurisdiction to hear and resolve the application. In Avia Filipina vs. CAB, CA G.R. No. 23365, it has been ruled that under Section 10 (c) (I) of R.A. 776, the Board possesses this specific power and duty. In view thereof, the opposition of PAL on this ground is hereby denied. Issue: Whether or not the Congress , in enacting Republic Act 776, has delegated the authority to authorize the operation of domestic air transport services to the respondent Board, such that Congressional mandate for the approval of such authority is no longer necessary. Held: Congress has granted certain administrative agencies the power to grant licenses for, or to authorize the operation of certain public utilities. With the growing complexity of modern life, the multiplication of the subjects of governmental regulation, and the increased difficulty of administering the laws, there is a constantly growing tendency towards the delegation of greater powers by the legislature, and towards the approval of the practice by the courts. It is generally recognized that a franchise may be derived indirectly from the state through a duly designated agency, and to this extent, the power to grant franchises has frequently been delegated, even to agencies other than those of a legislative nature. In pursuance of this, it has been held that privileges conferred by grant by local authorities as agents for the state constitute as much a legislative franchise as though the grant had been made by an act of the Legislature.

"The franchise is a legislative grant, whether made directly by the legislature itself, or by any one of its properly constituted instrumentalities. The grant, when made, binds the public, and is, directly or indirectly, the act of the state." Congress, by giving the respondent Board the power to issue permits for the operation of domestic transport services, has delegated to the said body the authority to determine the capability and competence of a prospective domestic air transport operator to engage in such venture. This is not an instance of transforming the respondent Board into a mini-legislative body, with unbridled authority to choose who should be given authority to operate domestic air transport services. "To be valid, the delegation itself must be circumscribed by legislative restrictions, not a "roving commission" that will give the delegate unlimited legislative authority. It must not be a delegation "running riot" and "not canalized with banks that keep it from overflowing." Otherwise, the delegation is in legal effect an abdication of legislative authority, a total surrender by the legislature of its prerogatives in favor of the delegate."

PHIL. ASSOC. SERVICE EXPORTERS INC. vs TORRES 212 SCRA 298, G.R. No. 101279, August 6, 1992 Facts: As a result of published stories regarding the abuses suffered by Filipino housemaids employed in Hong Kong, then DOLE Secretary Ruben Torres issued Department Order No. 16, Series of 1991, temporarily suspending the recruitment by private employment agencies of Filipino domestic helpers going to Hong Kong. The DOLE itself, through the POEA took over the business of deploying such Hong Kong-bound workers. The POEA Administrator also issued Memorandum Circular No. 37, Series of 1991, on the processing of employment contracts of domestic workers for Hong Kong. PASEI filed a petition for prohibition to annul the aforementioned DOLE and POEA circulars and to prohibit their implementation on the grounds that DOLE and POEA acted with grave abuse of discretion and/or in excess of their rule-making authority in issuing said circulars; that the assailed DOLE and POEA circulars are contrary to the Constitution, are unreasonable, unfair and oppressive; and that the requirements of publication and filing with the Office of the National Administrative Register were not complied with. Issue: Whether or not the questioned circulars are a valid exercise of the police power as delegated to the executive branch of Government.

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Held: Yes. It is noteworthy that the assailed circulars do not prohibit the petitioner from engaging in the recruitment and deployment of Filipino landbased workers for overseas employment. A careful reading of the challenged administrative issuances discloses that the same fall within the "administrative and policing powers expressly or by necessary implication conferred" upon the respondents (People vs. Maceren, 79 SCRA 450). The power to "restrict and regulate conferred by Article 36 of the Labor Code involves a grant of police power (City of Naga vs. Court of Appeals, 24 SCRA 898). To "restrict" means "to confine, limit or stop" and whereas the power to "regulate" means "the power to protect, foster, promote, preserve, and control with due regard for the interests, first and foremost, of the public, then of the utility and of its patrons" (Philippine Communications Satellite Corporation vs. Alcuaz, 180 SCRA 218). The questioned circulars are therefore a valid exercise of the police power as delegated to the executive branch of Government. Nevertheless, they are legally invalid, defective and unenforceable for lack of power publication and filing in the Office of the National Administrative Register as required in Article 2 of the Civil Code, Article 5 of the Labor Code and Sections 3(1) and 4, Chapter 2, Book VII of the Administrative Code of 1987 which provide: Art. 2. Laws shall take effect after fifteen (15) days following the completion of their publication in the Official Gazatte, unless it is otherwise provided. . . . (Civil Code.) Art. 5. Rules and Regulations. — The Department of Labor and other government agencies charged with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations. Such rules and regulations shall become effective fifteen (15) days after announcement of their adoption in newspapers of general circulation. (Emphasis supplied, Labor Code, as amended.) Sec. 3. Filing. — (1) Every agency shall file with the University of the Philippines Law Center, three (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months shall not thereafter be the basis of any sanction against any party or persons. (Emphasis supplied, Chapter 2, Book VII of the Administrative Code of 1987.) Sec. 4. Effectivity. — In addition to other rule-making requirements provided by law not inconsistent with this Book, each rule shall become effective fifteen (15) days from the date of filing as above provided unless a different date is fixed by law, or specified in the rule in cases of imminent danger to public health, safety and welfare, the existence of which must be expressed in a statement accompanying the rule. The agency shall take appropriate measures to make emergency rules known to persons who may be affected by them. (Emphasis supplied, Chapter 2, Book VII of the Administrative Code of 1987).

PHIL. CONSUMERS FOUNDATION INC. vs. EDUCATION, CULTURE & SPORTS 153 SCRA 622, G.R. No. 78385, August 31, 1987

SECRETARY

OF

Facts: Herein petitioner Philippine Consumers Foundation, Inc. is a non-stock, nonprofit corporate entity duly organized and existing under the laws of the Philippines. The herein respondent Secretary of Education, Culture and Sports is a ranking cabinet member who heads the Department of Education, Culture and Sports of the Office of the President of the Philippines. On February 21, 1987, the Task Force on Private Higher Education created by the DECS submitted a report entitled "Report and Recommendations on a Policy for Tuition and Other School Fees." The DECS through the respondent Secretary of Education, Culture and Sports (hereinafter referred to as the respondent Secretary), issued an Order authorizing, inter alia, the 15% to 20% increase in school fees as recommended by the Task Force. The petitioner sought a reconsideration of the said Order, apparently on the ground that the increases were too high. Thereafter, the DECS issued Department Order No. 37 dated April 10, 1987 modifying its previous Order and reducing the increases to a lower ceiling of 10% to 15%, accordingly. Despite this reduction, the petitioner still opposed the increases. Thus, the petitioner went to the Court and filed the instant Petition for prohibition, seeking that judgment be rendered declaring the questioned Department Order unconstitutional. The thrust of the Petition is that the said Department Order was issued without any legal basis. In support of the first argument, the petitioner argues that while the DECS is authorized by law to regulate school fees in educational institutions, the power to regulate does not always include the power to increase school fees. Issue: Whether or not the act of DECS in authorizing the increase of school fees is valid. Held: Yes. The Court is not convinced by the argument that the power to regulate school fees "does not always include the power to increase" such fees. Section 57 (3) of Batas Pambansa Blg. 232, otherwise known as The Education Act of 1982, vests the DECS with the power to regulate the educational system in the country, to wit: 'SEC. 57. Educations and powers of the Ministry.—The Ministry shall: "x x x. "(3) Promulgate rules and regulations necessary for the administration, supervision and regulation of the educational system in accordance with declared policy. "x x x" Section 70 of the same Act grants the DECS the power to issue rules which are likewise necessary to discharge its functions and duties under the law. In the absence of a statute stating otherwise, this power includes the power to prescribe school fees. No other government agency has been vested with the authority to fix school fees and as such, the power should be considered lodged with the DECS if it is to

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properly and effectively discharge its functions and duties under the law. The function of prescribing rates by an administrative agency may be either a legislative or an adjudicative function. If it were a legislative function, the grant of prior notice and hearing to the affected parties is not a requirement of due process. As regards rates prescribed by an administrative agency in the exercise of its quasi-judicial function, prior notice and hearing are essential to the validity of such rates. When the rules and/or rates laid down by an administrative agency are meant to apply to all enterprises of a given kind throughout the country, they may partake of a legislative character. Where the rules and the rates imposed apply exc usively to a particular party, based upon a finding of fact, then its function is quasijudicial in character. Is Department Order No. 37 issued by the DECS in the exercise of its legislative function? We believe so. The assailed Department Order prescribes the maximum school fees that may be charged by all private schools in the country for schoolyear 1987 to 1988. This being so, prior notice and hearing are not essential to the validity of its issuance.

Respondent treated this discount as a deduction from its gross income in compliance with RR No. 2-94, which implemented R.A. No. 7432. 1996, respondent filed its 1995 Corporate Annual ITR declaring a net loss position with nil income tax liability. On December 27, 1996, respondent filed a claim for tax refund or credit in the amount of PhP 259,659.00 Resp alleged that CIR erred in treating the 20 percent sales discount given to senior citizens as a deduction from its gross income for income tax purposes or other percentage tax purposes rather than as a tax credit. 1998 – resp appealed to CTA in order to toll the running of 2-year prescriptive period to file a claim for refund pursuant to Section 230 of the Tax Code then. Petitioner maintained that Revenue Regulations No. 2-94 is valid since the law tasked the Department of Finance, among other government offices, with the issuance of the necessary rules and regulations to carry out the objectives of the law. CTA DECISION: R.A. No. 7432 would prevail over Section 2(i) of RR No. 2-94, whose definition of "tax credit" deviated from the intendment of the law; and as a result, partially granted the respondent's claim for a refund. CA modified CTA decision; law provided for tax credit not a tax refund. Issue:

CIR vs. BICOLANDIA DRUG CORP. Gr. No. 148083, July 21, 2006

Whether or not the RR 2-94 is void. Yes. Whether or not the 20 percent sales discount granted to qualified senior citizens by the respondent pursuant to R.A. No. 7432 may be claimed as a tax credit, instead of a deduction from gross income or gross sales. No. Held:

Facts: RA 7432, otherwise known as "An Act to Maximize the Contribution of Senior Citizens to Nation Building, Grant Benefits and Special Privileges and For Other Purposes," granted senior citizens several privileges, one of which was obtaining a 20 percent discount from all establishments relative to the use of transportation services, hotels and similar lodging establishments, restaurants and recreation centers and purchase of medicines anywhere in the country. The law also provided that the private establishments giving the discount to senior citizens may claim the cost as tax credit. BIR issued Revenue Regulations No. 2-94, which defined "tax credit" as follows: Tax Credit – refers to the amount representing the 20% discount granted to a qualified senior citizen by all establishments relative to their utilization of transportation services, hotels and similar lodging establishments, restaurants, halls, circuses, carnivals and other similar places of culture, leisure and amusement, which discount shall be deducted by the said establishments from their gross income for income tax purposes and from their gross sales for value-added tax or other percentage tax purposes. 1995, respondent Bicolandia Drug Corporation, a corporation engaged in the business of retailing pharmaceutical products under the business style of "Mercury Drug," granted the 20 percent sales discount to qualified senior citizens purchasing their medicines in compliance with R.A. No. 7432.

Petition denied. Law grants a tax credit not a tax deduction. RR 2-94 VOID. Resp entitled to tax credit The problem stems from the issuance of RR. 2-94, which was supposed to implement R.A. No. 7432, and the radical departure it made when it defined the "tax credit" that would be granted to establishments that give 20 percent discount to senior citizens. It equated "tax credit" with "tax deduction," contrary to the definition in Black's Law Dictionary, which defined tax credit as: An amount subtracted from an individual's or entity's tax liability to arrive at the total tax liability. A tax credit reduces the taxpayer's liability x x x, compared to a deduction which reduces taxable income upon which the tax liability is calculated. A credit differs from deduction to the extent that the former is subtracted from the tax while the latter is subtracted from income before the tax is computed. Petitioner argues that the tax credit is in the nature of a tax refund and should be treated as a return for tax payments erroneously or excessively assessed against a taxpayer, in line with Section 204(c) of RA 8424, or the NIRC 1997. Payment first before tax credit can be claimed. SC: NIRC speaks of a tax credit for tax due, so payment of the tax has not yet been made in that particular example. CA correctly expressly recognized the differences between a "tax credit" and a "tax refund," and stated that the same are not synonymous with each other.

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RR No. 2-94 is still subordinate to R.A. No. 7432, and in cases of conflict, the implementing rule will not prevail over the law it seeks to implement. While seemingly conflicting laws must be harmonized as far as practicable, in this particular case, the conflict cannot be resolved in the manner the petitioner wishes. Petitioner argues that should private establishments, which count respondent in their number, be allowed to claim tax credits for discounts given to senior citizens, they would be earning and not just be reimbursed for the discounts given. It cannot be denied that R.A. No. 7432 has a laudable goal. The concerns of the affected private establishments were also considered by the lawmakers. If the private establishments appear to benefit more from the tax credit than originally intended, it is not for petitioner to say that they shouldn't. The tax credit may actually have provided greater incentive for the private establishments to comply with R.A. No. 7432, or quicker relief from the cut into profits of these businesses. From the above discussion, it must be concluded that Revenue Regulations No. 2-94 is null and void for failing to conform to the law it sought to implement. In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law prevails because said rule or regulation cannot go beyond the terms and provisions of the basic law. R.A. No. 7432 has been amended by Republic Act No. 9257, the "Expanded Senior Citizens Act of 2003." In this, the term "tax credit" is no longer used. This time around, there is no conflict between the law and the implementing Revenue Regulations. Under Revenue Regulations No. 4-2006, "(o)nly the actual amount of the discount granted or a sales discount not exceeding 20% of the gross selling price can be deducted from the gross income, net of value added tax, if applicable, for income tax purposes, and from gross sales or gross receipts of the business enterprise concerned, for VAT or other percentage tax purposes. Under the new law, there is no tax credit to speak of, only deductions. But RA 7432 was the law in force then. “In cases of conflict between the law and the rules and regulations implementing the law, the law shall always prevail. Should Revenue Regulations deviate from the law they seek to implement, they will be struck down.”

HOLY SPIRIT HOMEOWNERS ASSOC. vs. MICHAEL DEFENSOR ET AL Gr. No. 163980, August 3, 2006 Facts: The instant petition for prohibition under Rule 65 of the 1997 Rules of Civil Procedure, with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction, seeks to prevent respondents from enforcing the implementing rules and regulations (IRR) of Republic Act No. 9207, otherwise known as the "National Government Center (NGC) Housing and Land Utilization Act of 2003." Petitioner Holy Spirit Homeowners Association, Inc. (Association) is a homeowners association from the West Side of the NGC.

Named respondents are the ex-officio members of the National Government Center Administration Committee (Committee). At the filing of the instant petition, the Committee was composed of Secretary Michael Defensor, Chairman of the Housing and Urban Development Coordinating Council (HUDCC), Atty. Edgardo Pamintuan, General Manager of the National Housing Authority (NHA), Mr. Percival Chavez, Chairman of the Presidential Commission for Urban Poor (PCUP), Mayor Feliciano Belmonte of Quezon City, Secretary Elisea Gozun of the Department of Environment and Natural Resources (DENR), and Secretary Florante Soriquez of the Department of Public Works and Highways (DPWH). President Gloria Macapagal-Arroyo signed into law R.A. No. 9207. In accordance with Section 5 of R.A. No. 9207, the Committee formulated the Implementing Rules and Regulations (IRR) of R.A. No. 9207 on June 29, 2004. Petitioners subsequently filed the instant petition questioning its validity. The OSG claims that the instant petition for prohibition is an improper remedy because the writ of prohibition does not lie against the exercise of a quasi-legislative function. Since in issuing the questioned IRR of R.A. No. 9207, the Committee was not exercising judicial, quasi-judicial or ministerial function, which is the scope of a petition for prohibition under Section 2, Rule 65 of the 1997 Rules of Civil Procedure, the instant prohibition should be dismissed outright, the OSG contends. For their part, respondent Mayor of Quezon City and respondent NHA contend that petitioners violated the doctrine of hierarchy of courts in filing the instant petition with this Court and not with the Court of Appeals, which has concurrent jurisdiction over a petition for prohibition. Issue: Whether or not a petition for prohibition is not the proper remedy to assail an IRR issued in the exercise of a quasi-legislative function. Held: Yes.The court ruled that a petition for prohibition is also not the proper remedy to assail an IRR issued in the exercise of a quasi-legislative function. Prohibition is an extraordinary writ directed against any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial functions, ordering said entity or person to desist from further proceedings when said proceedings are without or in excess of said entity’s or person’s jurisdiction, or are accompanied with grave abuse of discretion, and there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law. Prohibition lies against judicial or ministerial functions, but not against legislative or quasi-legislative functions. Generally, the purpose of a writ of prohibition is to keep a lower court within the limits of its jurisdiction in order to maintain the administration of justice in orderly channels. Prohibition is the proper remedy to afford relief against usurpation of jurisdiction or power by an inferior court, or when, in the exercise of jurisdiction in handling matters clearly within its cognizance the inferior court transgresses the bounds prescribed to it by the law, or where there is no adequate remedy available in the ordinary course of law by which such relief can be obtained. Where the principal relief sought is to invalidate an IRR, meikimouse



petitioners’ remedy is an ordinary action for its nullification, an action which properly falls under the jurisdiction of the Regional Trial Court. In any case, petitioners’ allegation that "respondents are performing or threatening to perform functions without or in excess of their jurisdiction" may appropriately be enjoined by the trial court through a writ of injunction or a temporary restraining order. Administrative agencies possess quasi-legislative or rulemaking 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 nondelegability and separability of powers. In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a party need not exhaust administrative remedies before going to court. This principle, however, applies only where the act of the administrative agency concerned was performed pursuant to its quasi-judicial function, and not when the assailed act pertained to its rule-making or quasi-legislative power. The assailed IRR was issued pursuant to the quasilegislative power of the Committee expressly authorized by R.A. No. 9207. The petition rests mainly on the theory that the assailed IRR issued by the Committee is invalid on the ground that it is not germane to the object and purpose of the statute it seeks to implement. Where what is assailed is the validity or constitutionality of a rule or regulation issued by the administrative agency in the performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. Since the regular courts have jurisdiction to pass upon the validity of the assailed IRR issued by the Committee in the exercise of its quasi-legislative power, the judicial course to assail its validity must follow the doctrine of hierarchy of courts. Although the Supreme Court, Court of Appeals and the Regional Trial Courts have concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court forum. True, this Court has the full discretionary power to take cognizance of the petition filed directly with it if compelling reasons, or the nature and importance of the issues raised, so warrant. A direct invocation of the Court’s original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. In Heirs of Bertuldo Hinog v. Melicor, the Court said that it will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts, and exceptional and compelling circumstances, such as cases of national interest and of serious implications, justify the availment of the extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction. A perusal, however, of the petition for prohibition shows no compelling, special or important reasons to warrant the Court’s taking cognizance of the petition in the first instance. Petitioner also failed to state any reason that precludes the lower courts from passing upon the validity of the questioned IRR. Moreover, as provided in Section 5, Article VIII of the Constitution, the Court’s power to evaluate the validity of an

implementing rule or regulation is generally appellate in nature. Thus, following the doctrine of hierarchy of courts, the instant petition should have been initially filed with the Regional Trial Court.

*Cases are also found in the book, “Administrative Law, Law on Local Government and Election Law,” by Atty. Benedicto Gonzales, Jr.*

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CASE DIGEST: CHAPTER III ADMINISTRATIVE LAW, LAW ON LOCAL GOVERNMENT & ELECTION LAW Power of Rule-Making

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