Standard Sufficeint Test

ADMIN LAW
III. POWERS OF ADMINISTRATIVE AGANCY

A. Quasi- Legislative Powers (Sufficient standard test)
1.) Republic of the Philippines Executive Order as amended shall be subject to confiscation and forfeiture by the
SUPREME COURT government, to be distributed to charitable institutions and other similar institutions as the
Manila Chairman of the National Meat Inspection Commission may ay see fit, in the case of
EN BANC carabeef, and to deserving farmers through dispersal as the Director of Animal Industry may
G.R. No. 74457 March 20, 1987 see fit, in the case of carabaos.
RESTITUTO YNOT, petitioner,
vs. SECTION 2. This Executive Order shall take effect immediately.
INTERMEDIATE APPELLATE COURT, THE STATION COMMANDER,
Done in the City of Manila, this 25th day of October, in the year of Our Lord, nineteen
INTEGRATED NATIONAL POLICE, BAROTAC NUEVO, ILOILO and THE
hundred and eighty.
REGIONAL DIRECTOR, BUREAU OF ANIMAL INDUSTRY, REGION IV, ILOILO
CITY, respondents. (SGD.) FERDINAND E. MARCOS
Ramon A. Gonzales for petitioner.
President
Republic of the Philippines

CRUZ, J.:
The petitioner had transported six carabaos in a pump boat from Masbate to Iloilo on January
The essence of due process is distilled in the immortal cry of Themistocles to Alcibiades 13, 1984, when they were confiscated by the police station commander of Barotac Nuevo,
"Strike — but hear me first!" It is this cry that the petitioner in effect repeats here as he Iloilo, for violation of the above measure. 1 The petitioner sued for recovery, and the
challenges the constitutionality of Executive Order No. 626-A. Regional Trial Court of Iloilo City issued a writ of replevin upon his filing of
The said executive order reads in full as follows: a supersedeas bond of P12,000.00. After considering the merits of the case, the court
sustained the confiscation of the carabaos and, since they could no longer be produced,
WHEREAS, the President has given orders prohibiting the interprovincial movement of ordered the confiscation of the bond. The court also declined to rule on the constitutionality
carabaos and the slaughtering of carabaos not complying with the requirements of Executive of the executive order, as raise by the petitioner, for lack of authority and also for its
Order No. 626 particularly with respect to age; presumed validity. 2
WHEREAS, it has been observed that despite such orders the violators still manage to The petitioner appealed the decision to the Intermediate Appellate Court,* 3 which upheld the
circumvent the prohibition against inter-provincial movement of carabaos by transporting trial court, ** and he has now come before us in this petition for review on certiorari.
carabeef instead; and
The thrust of his petition is that the executive order is unconstitutional insofar as it authorizes
WHEREAS, in order to achieve the purposes and objectives of Executive Order No. 626 and outright confiscation of the carabao or carabeef being transported across provincial
the prohibition against interprovincial movement of carabaos, it is necessary to strengthen the boundaries. His claim is that the penalty is invalid because it is imposed without according
said Executive Order and provide for the disposition of the carabaos and carabeef subject of the owner a right to be heard before a competent and impartial court as guaranteed by due
the violation; process. He complains that the measure should not have been presumed, and so sustained, as
constitutional. There is also a challenge to the improper exercise of the legislative power by
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue the former President under Amendment No. 6 of the 1973 Constitution. 4
of the powers vested in me by the Constitution, do hereby promulgate the following:
While also involving the same executive order, the case of Pesigan v. Angeles 5 is not
SECTION 1. Executive Order No. 626 is hereby amended such that henceforth, no carabao applicable here. The question raised there was the necessity of the previous publication of the
regardless of age, sex, physical condition or purpose and no carabeef shall be transported measure in the Official Gazette before it could be considered enforceable. We imposed the
from one province to another. The carabao or carabeef transported in violation of this requirement then on the basis of due process of law. In doing so, however, this Court did not,
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as contended by the Solicitor General, impliedly affirm the constitutionality of Executive It is part of the art of constitution-making that the provisions of the charter be cast in precise
Order No. 626-A. That is an entirely different matter. and unmistakable language to avoid controversies that might arise on their correct
interpretation. That is the Ideal. In the case of the due process clause, however, this rule was
This Court has declared that while lower courts should observe a becoming modesty in deliberately not followed and the wording was purposely kept ambiguous. In fact, a proposal
examining constitutional questions, they are nonetheless not prevented from resolving the to delineate it more clearly was submitted in the Constitutional Convention of 1934, but it
same whenever warranted, subject only to review by the highest tribunal. 6 We have was rejected by Delegate Jose P. Laurel, Chairman of the Committee on the Bill of Rights,
jurisdiction under the Constitution to "review, revise, reverse, modify or affirm on appeal who forcefully argued against it. He was sustained by the body. 10
or certiorari, as the law or rules of court may provide," final judgments and orders of lower
courts in, among others, all cases involving the constitutionality of certain measures. 7 This The due process clause was kept intentionally vague so it would remain also conveniently
simply means that the resolution of such cases may be made in the first instance by these resilient. This was felt necessary because due process is not, like some provisions of the
lower courts. fundamental law, an "iron rule" laying down an implacable and immutable command for all
seasons and all persons. Flexibility must be the best virtue of the guaranty. The very elasticity
And while it is true that laws are presumed to be constitutional, that presumption is not by of the due process clause was meant to make it adapt easily to every situation, enlarging or
any means conclusive and in fact may be rebutted. Indeed, if there be a clear showing of their constricting its protection as the changing times and circumstances may require.
invalidity, and of the need to declare them so, then "will be the time to make the hammer fall,
and heavily," 8 to recall Justice Laurel's trenchant warning. Stated otherwise, courts should Aware of this, the courts have also hesitated to adopt their own specific description of due
not follow the path of least resistance by simply presuming the constitutionality of a law process lest they confine themselves in a legal straitjacket that will deprive them of the elbow
when it is questioned. On the contrary, they should probe the issue more deeply, to relieve the room they may need to vary the meaning of the clause whenever indicated. Instead, they have
abscess, paraphrasing another distinguished jurist, 9 and so heal the wound or excise the preferred to leave the import of the protection open-ended, as it were, to be "gradually
affliction. ascertained by the process of inclusion and exclusion in the course of the decision of cases as
they arise." 11 Thus, Justice Felix Frankfurter of the U.S. Supreme Court, for example, would
Judicial power authorizes this; and when the exercise is demanded, there should be no go no farther than to define due process — and in so doing sums it all up — as nothing more
shirking of the task for fear of retaliation, or loss of favor, or popular censure, or any other and nothing less than "the embodiment of the sporting Idea of fair play." 12
similar inhibition unworthy of the bench, especially this Court.
When the barons of England extracted from their sovereign liege the reluctant promise that
The challenged measure is denominated an executive order but it is really presidential decree, that Crown would thenceforth not proceed against the life liberty or property of any of its
promulgating a new rule instead of merely implementing an existing law. It was issued by subjects except by the lawful judgment of his peers or the law of the land, they thereby won
President Marcos not for the purpose of taking care that the laws were faithfully executed but for themselves and their progeny that splendid guaranty of fairness that is now the hallmark
in the exercise of his legislative authority under Amendment No. 6. It was provided of the free society. The solemn vow that King John made at Runnymede in 1215 has since
thereunder that whenever in his judgment there existed a grave emergency or a threat or then resounded through the ages, as a ringing reminder to all rulers, benevolent or base, that
imminence thereof or whenever the legislature failed or was unable to act adequately on any every person, when confronted by the stern visage of the law, is entitled to have his say in a
matter that in his judgment required immediate action, he could, in order to meet the fair and open hearing of his cause.
exigency, issue decrees, orders or letters of instruction that were to have the force and effect
of law. As there is no showing of any exigency to justify the exercise of that extraordinary The closed mind has no place in the open society. It is part of the sporting Idea of fair play to
power then, the petitioner has reason, indeed, to question the validity of the executive order. hear "the other side" before an opinion is formed or a decision is made by those who sit in
Nevertheless, since the determination of the grounds was supposed to have been made by the judgment. Obviously, one side is only one-half of the question; the other half must also be
President "in his judgment, " a phrase that will lead to protracted discussion not really considered if an impartial verdict is to be reached based on an informed appreciation of the
necessary at this time, we reserve resolution of this matter until a more appropriate occasion. issues in contention. It is indispensable that the two sides complement each other, as unto the
For the nonce, we confine ourselves to the more fundamental question of due process. bow the arrow, in leading to the correct ruling after examination of the problem not from one
or the other perspective only but in its totality. A judgment based on less that this full
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appraisal, on the pretext that a hearing is unnecessary or useless, is tainted with the vice of unwelcome intrusion. Even so, as long as the activity or the property has some relevance to
bias or intolerance or ignorance, or worst of all, in repressive regimes, the insolence of power. the public welfare, its regulation under the police power is not only proper but necessary. And
the justification is found in the venerable Latin maxims, Salus populi est suprema lex and Sic
The minimum requirements of due process are notice and hearing 13 which, generally utere tuo ut alienum non laedas, which call for the subordination of individual interests to the
speaking, may not be dispensed with because they are intended as a safeguard against official benefit of the greater number.
arbitrariness. It is a gratifying commentary on our judicial system that the jurisprudence of
this country is rich with applications of this guaranty as proof of our fealty to the rule of law It is this power that is now invoked by the government to justify Executive Order No. 626-A,
and the ancient rudiments of fair play. We have consistently declared that every person, faced amending the basic rule in Executive Order No. 626, prohibiting the slaughter of carabaos
by the awesome power of the State, is entitled to "the law of the land," which Daniel Webster except under certain conditions. The original measure was issued for the reason, as expressed
described almost two hundred years ago in the famous Dartmouth College Case, 14 as "the in one of its Whereases, that "present conditions demand that the carabaos and the buffaloes
law which hears before it condemns, which proceeds upon inquiry and renders judgment only be conserved for the benefit of the small farmers who rely on them for energy needs." We
after trial." It has to be so if the rights of every person are to be secured beyond the reach of affirm at the outset the need for such a measure. In the face of the worsening energy crisis
officials who, out of mistaken zeal or plain arrogance, would degrade the due process clause and the increased dependence of our farms on these traditional beasts of burden, the
into a worn and empty catchword. government would have been remiss, indeed, if it had not taken steps to protect and preserve
them.
This is not to say that notice and hearing are imperative in every case for, to be sure, there are
a number of admitted exceptions. The conclusive presumption, for example, bars the A similar prohibition was challenged in United States v. Toribio, 19 where a law regulating
admission of contrary evidence as long as such presumption is based on human experience or the registration, branding and slaughter of large cattle was claimed to be a deprivation of
there is a rational connection between the fact proved and the fact ultimately presumed property without due process of law. The defendant had been convicted thereunder for having
therefrom. 15 There are instances when the need for expeditions action will justify omission slaughtered his own carabao without the required permit, and he appealed to the Supreme
of these requisites, as in the summary abatement of a nuisance per se, like a mad dog on the Court. The conviction was affirmed. The law was sustained as a valid police measure to
loose, which may be killed on sight because of the immediate danger it poses to the safety prevent the indiscriminate killing of carabaos, which were then badly needed by farmers. An
and lives of the people. Pornographic materials, contaminated meat and narcotic drugs are epidemic had stricken many of these animals and the reduction of their number had resulted
inherently pernicious and may be summarily destroyed. The passport of a person sought for a in an acute decline in agricultural output, which in turn had caused an incipient famine.
criminal offense may be cancelled without hearing, to compel his return to the country he has Furthermore, because of the scarcity of the animals and the consequent increase in their price,
fled. 16 Filthy restaurants may be summarily padlocked in the interest of the public health cattle-rustling had spread alarmingly, necessitating more effective measures for the
and bawdy houses to protect the public morals. 17 In such instances, previous judicial hearing registration and branding of these animals. The Court held that the questioned statute was a
may be omitted without violation of due process in view of the nature of the property valid exercise of the police power and declared in part as follows:
involved or the urgency of the need to protect the general welfare from a clear and present
danger. To justify the State in thus interposing its authority in behalf of the public, it must appear,
first, that the interests of the public generally, as distinguished from those of a particular
The protection of the general welfare is the particular function of the police power which both class, require such interference; and second, that the means are reasonably necessary for the
restraints and is restrained by due process. The police power is simply defined as the power accomplishment of the purpose, and not unduly oppressive upon individuals. ...
inherent in the State to regulate liberty and property for the promotion of the general
welfare. 18 By reason of its function, it extends to all the great public needs and is described From what has been said, we think it is clear that the enactment of the provisions of the
as the most pervasive, the least limitable and the most demanding of the three inherent statute under consideration was required by "the interests of the public generally, as
powers of the State, far outpacing taxation and eminent domain. The individual, as a member distinguished from those of a particular class" and that the prohibition of the slaughter of
of society, is hemmed in by the police power, which affects him even before he is born and carabaos for human consumption, so long as these animals are fit for agricultural work or
follows him still after he is dead — from the womb to beyond the tomb — in practically draft purposes was a "reasonably necessary" limitation on private ownership, to protect the
everything he does or owns. Its reach is virtually limitless. It is a ubiquitous and often community from the loss of the services of such animals by their slaughter by improvident
owners, tempted either by greed of momentary gain, or by a desire to enjoy the luxury of
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animal food, even when by so doing the productive power of the community may be In the instant case, the carabaos were arbitrarily confiscated by the police station commander,
measurably and dangerously affected. were returned to the petitioner only after he had filed a complaint for recovery and given
a supersedeas bond of P12,000.00, which was ordered confiscated upon his failure to produce
In the light of the tests mentioned above, we hold with the Toribio Case that the carabao, as the carabaos when ordered by the trial court. The executive order defined the prohibition,
the poor man's tractor, so to speak, has a direct relevance to the public welfare and so is a convicted the petitioner and immediately imposed punishment, which was carried out
lawful subject of Executive Order No. 626. The method chosen in the basic measure is also forthright. The measure struck at once and pounced upon the petitioner without giving him a
reasonably necessary for the purpose sought to be achieved and not unduly oppressive upon chance to be heard, thus denying him the centuries-old guaranty of elementary fair play.
individuals, again following the above-cited doctrine. There is no doubt that by banning the
slaughter of these animals except where they are at least seven years old if male and eleven It has already been remarked that there are occasions when notice and hearing may be validly
years old if female upon issuance of the necessary permit, the executive order will be dispensed with notwithstanding the usual requirement for these minimum guarantees of due
conserving those still fit for farm work or breeding and preventing their improvident process. It is also conceded that summary action may be validly taken in administrative
depletion. proceedings as procedural due process is not necessarily judicial only. 20 In the exceptional
cases accepted, however. there is a justification for the omission of the right to a previous
But while conceding that the amendatory measure has the same lawful subject as the original hearing, to wit, the immediacy of the problem sought to be corrected and the urgency of the
executive order, we cannot say with equal certainty that it complies with the second need to correct it.
requirement, viz., that there be a lawful method. We note that to strengthen the original
measure, Executive Order No. 626-A imposes an absolute ban not on the slaughter of the In the case before us, there was no such pressure of time or action calling for the petitioner's
carabaos but on their movement, providing that "no carabao regardless of age, sex, physical peremptory treatment. The properties involved were not even inimical per se as to require
condition or purpose (sic) and no carabeef shall be transported from one province to another." their instant destruction. There certainly was no reason why the offense prohibited by the
The object of the prohibition escapes us. The reasonable connection between the means executive order should not have been proved first in a court of justice, with the accused being
employed and the purpose sought to be achieved by the questioned measure is missing accorded all the rights safeguarded to him under the Constitution. Considering that, as we
held in Pesigan v. Angeles, 21 Executive Order No. 626-A is penal in nature, the violation
We do not see how the prohibition of the inter-provincial transport of carabaos can prevent thereof should have been pronounced not by the police only but by a court of justice, which
their indiscriminate slaughter, considering that they can be killed anywhere, with no less alone would have had the authority to impose the prescribed penalty, and only after trial and
difficulty in one province than in another. Obviously, retaining the carabaos in one province conviction of the accused.
will not prevent their slaughter there, any more than moving them to another province will
make it easier to kill them there. As for the carabeef, the prohibition is made to apply to it as We also mark, on top of all this, the questionable manner of the disposition of the confiscated
otherwise, so says executive order, it could be easily circumvented by simply killing the property as prescribed in the questioned executive order. It is there authorized that the seized
animal. Perhaps so. However, if the movement of the live animals for the purpose of property shall "be distributed to charitable institutions and other similar institutions as the
preventing their slaughter cannot be prohibited, it should follow that there is no reason either Chairman of the National Meat Inspection Commission may see fit, in the case of carabeef,
to prohibit their transfer as, not to be flippant dead meat. and to deserving farmers through dispersal as the Director of Animal Industry may see fit, in
the case of carabaos." (Emphasis supplied.) The phrase "may see fit" is an extremely generous
Even if a reasonable relation between the means and the end were to be assumed, we would and dangerous condition, if condition it is. It is laden with perilous opportunities for partiality
still have to reckon with the sanction that the measure applies for violation of the prohibition. and abuse, and even corruption. One searches in vain for the usual standard and the
The penalty is outright confiscation of the carabao or carabeef being transported, to be meted reasonable guidelines, or better still, the limitations that the said officers must observe when
out by the executive authorities, usually the police only. In the Toribio Case, the statute was they make their distribution. There is none. Their options are apparently boundless. Who
sustained because the penalty prescribed was fine and imprisonment, to be imposed by the shall be the fortunate beneficiaries of their generosity and by what criteria shall they be
court after trial and conviction of the accused. Under the challenged measure, significantly, chosen? Only the officers named can supply the answer, they and they alone may choose the
no such trial is prescribed, and the property being transported is immediately impounded by grantee as they see fit, and in their own exclusive discretion. Definitely, there is here a
the police and declared, by the measure itself, as forfeited to the government. "roving commission," a wide and sweeping authority that is not "canalized within banks that
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keep it from overflowing," in short, a clearly profligate and therefore invalid delegation of SO ORDERED.
legislative powers.
To sum up then, we find that the challenged measure is an invalid exercise of the police
power because the method employed to conserve the carabaos is not reasonably necessary to
the purpose of the law and, worse, is unduly oppressive. Due process is violated because the
owner of the property confiscated is denied the right to be heard in his defense and is
immediately condemned and punished. The conferment on the administrative authorities of
the power to adjudge the guilt of the supposed offender is a clear encroachment on judicial
functions and militates against the doctrine of separation of powers. There is, finally, also an
invalid delegation of legislative powers to the officers mentioned therein who are granted
unlimited discretion in the distribution of the properties arbitrarily taken. For these reasons,
we hereby declare Executive Order No. 626-A unconstitutional.
We agree with the respondent court, however, that the police station commander who
confiscated the petitioner's carabaos is not liable in damages for enforcing the executive order
in accordance with its mandate. The law was at that time presumptively valid, and it was his
obligation, as a member of the police, to enforce it. It would have been impertinent of him,
being a mere subordinate of the President, to declare the executive order unconstitutional and,
on his own responsibility alone, refuse to execute it. Even the trial court, in fact, and the
Court of Appeals itself did not feel they had the competence, for all their superior authority,
to question the order we now annul.
The Court notes that if the petitioner had not seen fit to assert and protect his rights as he saw
them, this case would never have reached us and the taking of his property under the
challenged measure would have become a faitaccompli despite its invalidity. We commend
him for his spirit. Without the present challenge, the matter would have ended in that pump
boat in Masbate and another violation of the Constitution, for all its obviousness, would have
been perpetrated, allowed without protest, and soon forgotten in the limbo of relinquished
rights.
The strength of democracy lies not in the rights it guarantees but in the courage of the people
to invoke them whenever they are ignored or violated. Rights are but weapons on the wall if,
like expensive tapestry, all they do is embellish and impress. Rights, as weapons, must be a
promise of protection. They become truly meaningful, and fulfill the role assigned to them in
the free society, if they are kept bright and sharp with use by those who are not afraid to
assert them.
WHEREFORE, Executive Order No. 626-A is hereby declared unconstitutional. Except as

affirmed above, the decision of the Court of Appeals is reversed. The supersedeas bond is
cancelled and the amount thereof is ordered restored to the petitioner. No costs.
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ADMIN LAW
2.) Republic of the Philippines Upon petition of a majority of the voters in the areas affected, a new barrio may be created or
SUPREME COURT the name of an existing one may be changed by the provincial board of the province, upon
Manila recommendation of the council of the municipality or municipalities in which the proposed
EN BANC barrio is stipulated. The recommendation of the municipal council shall be embodied in a
G.R. No. L-23825 December 24, 1965 resolution approved by at least two-thirds of the entire membership of the said council:
EMMANUEL PELAEZ, petitioner, Provided, however, That no new barrio may be created if its population is less than five
vs. hundred persons.
THE AUDITOR GENERAL, respondent.
Hence, since January 1, 1960, when Republic Act No. 2370 became effective, barrios may
"not be created or their boundaries altered nor their names changed" except by Act of
CONCEPCION, J.: 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
During the period from September 4 to October 29, 1964 the President of the Philippines, municipalities in which the proposed barrio is situated." Petitioner argues, accordingly: "If
purporting to act pursuant to Section 68 of the Revised Administrative Code, issued the President, under this new law, cannot even create a barrio, can he create a municipality
Executive Orders Nos. 93 to 121, 124 and 126 to 129; creating thirty-three (33) which is composed of several barrios, since barrios are units of municipalities?"
municipalities enumerated in the margin.1 Soon after the date last mentioned, or on
November 10, 1964 petitioner Emmanuel Pelaez, as Vice President of the Philippines and as Respondent answers in the affirmative, upon the theory that a new municipality can be
taxpayer, instituted the present special civil action, for a writ of prohibition with preliminary created without creating new barrios, such as, by placing old barrios under the jurisdiction of
injunction, against the Auditor General, to restrain him, as well as his representatives and the new municipality. This theory overlooks, however, the main import of the petitioner's
agents, from passing in audit any expenditure of public funds in implementation of said argument, which is that the statutory denial of the presidential authority to create a new barrio
executive orders and/or any disbursement by said municipalities. implies a negation of the bigger power to create municipalities, each of which consists of
several barrios. The cogency and force of this argument is too obvious to be denied or even
Petitioner alleges that said executive orders are null and void, upon the ground that said questioned. Founded upon logic and experience, it cannot be offset except by a clear
Section 68 has been impliedly repealed by Republic Act No. 2370 and constitutes an undue manifestation of the intent of Congress to the contrary, and no such manifestation, subsequent
delegation of legislative power. Respondent maintains the contrary view and avers that the to the passage of Republic Act No. 2379, has been brought to our attention.
present action is premature and that not all proper parties — referring to the officials of the
new political subdivisions in question — have been impleaded. Subsequently, the mayors of Moreover, section 68 of the Revised Administrative Code, upon which the disputed executive
several municipalities adversely affected by the aforementioned executive orders — because orders are based, provides:
the latter have taken away from the former the barrios composing the new political
subdivisions — intervened in the case. Moreover, Attorneys Enrique M. Fernando and Emma The (Governor-General) President of the Philippines may by executive order define the
Quisumbing-Fernando were allowed to and did appear as amici curiae. boundary, or boundaries, of any province, subprovince, municipality, [township] municipal
district, or other political subdivision, and increase or diminish the territory comprised
The third paragraph of Section 3 of Republic Act No. 2370, reads: therein, may divide any province into one or more subprovinces, separate any political
division other than a province, into such portions as may be required, merge any of such
Barrios shall not be created or their boundaries altered nor their names changed except under subdivisions or portions with another, name any new subdivision so created, and may change
the provisions of this Act or by Act of Congress. the seat of government within any subdivision to such place therein as the public welfare may
require: Provided, That the authorization of the (Philippine Legislature) Congress of the
Pursuant to the first two (2) paragraphs of the same Section 3: Philippines shall first be obtained whenever the boundary of any province or subprovince is
All barrios existing at the time of the passage of this Act shall come under the provisions to be defined or any province is to be divided into one or more subprovinces. When action by
hereof. the (Governor-General) President of the Philippines in accordance herewith makes necessary
a change of the territory under the jurisdiction of any administrative officer or any judicial
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officer, the (Governor-General) President of the Philippines, with the recommendation and thereby arrogate upon himself the power, not only to make the law, but, also — and this is
advice of the head of the Department having executive control of such officer, shall redistrict worse — to unmake it, by adopting measures inconsistent with the end sought to be attained
the territory of the several officers affected and assign such officers to the new districts so by the Act of Congress, thus nullifying the principle of separation of powers and the system
formed. of checks and balances, and, consequently, undermining the very foundation of our
Republican system.
Upon the changing of the limits of political divisions in pursuance of the foregoing authority,
an equitable distribution of the funds and obligations of the divisions thereby affected shall be Section 68 of the Revised Administrative Code does not meet these well settled requirements
made in such manner as may be recommended by the (Insular Auditor) Auditor General and for a valid delegation of the power to fix the details in the enforcement of a law. It does not
approved by the (Governor-General) President of the Philippines. 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 this connection, we
Respondent alleges that the power of the President to create municipalities under this section do not overlook the fact that, under the last clause of the first sentence of Section 68, the
does not amount to an undue delegation of legislative power, relying upon Municipality of President:
Cardona vs. Municipality of Binañgonan (36 Phil. 547), which, he claims, has settled it. Such
claim is untenable, for said case involved, not the creation of a new municipality, but a ... may change the seat of the government within any subdivision to such place therein as the
mere transfer of territory — from an already existing municipality (Cardona) to another public welfare may require.
municipality (Binañgonan), likewise, existing at the time of and prior to said transfer (See
Gov't of the P.I. ex rel. Municipality of Cardona vs. Municipality, of Binañgonan [34 Phil. It is apparent, however, from the language of this clause, that the phrase "as the public
518, 519-5201) — in consequence of the fixing and definition, pursuant to Act No. 1748, of welfare may require" qualified, not the clauses preceding the one just quoted,
the common boundaries of two municipalities. but only the place to which the seat of the government may be transferred. This fact becomes
more apparent when we consider that said Section 68 was originally Section 1 of Act No.
It is obvious, however, that, whereas the power to fix such common boundary, in order to 1748,3 which provided that, "whenever in the judgment of the Governor-General the public
avoid or settle conflicts of jurisdiction between adjoining municipalities, may partake of welfare requires, he may, by executive order," effect the changes enumerated therein (as in
an administrative nature — involving, as it does, the adoption of means and ways to carry said section 68), including the change of the seat of the government "to such place ... as
into effect the law creating said municipalities — the authority to create municipal the public interest requires." The opening statement of said Section 1 of Act No. 1748 —
corporations is essentially legislative in nature. In the language of other courts, it is "strictly a which was not included in Section 68 of the Revised Administrative Code — governed the
legislative function" (State ex rel. Higgins vs. Aicklen, 119 S. 425, January 2, 1959) or time at which, or the conditions under which, the powers therein conferred could be
"solely and exclusively the exercise of legislative power" (Udall vs. Severn, May 29, 1938, 79 exercised; whereas the last part of the first sentence of said section referred exclusively to
P. 2d 347-349). As the Supreme Court of Washington has put it (Territory ex rel. Kelly vs. the place to which the seat of the government was to be transferred.
Stewart, February 13, 1890, 23 Pac. 405, 409), "municipal corporations are purely the
creatures of statutes." At any rate, the conclusion would be the same, insofar as the case at bar is concerned, even if
we assumed that the phrase "as the public welfare may require," in said Section 68, qualifies
Although1a Congress may delegate to another branch of the Government the power to fill in all other clauses thereof. It is true that in Calalang vs. Williams (70 Phil. 726) and People vs.
the details in the execution, enforcement or administration of a law, it is essential, to forestall Rosenthal (68 Phil. 328), this Court had upheld "public welfare" and "public interest,"
a violation of the principle of separation of powers, that said law: (a) be complete in itself — respectively, as sufficient standards for a valid delegation of the authority to execute the law.
it must set forth therein the policy to be executed, carried out or implemented by the But, the doctrine laid down in these cases — as all judicial pronouncements — must be
delegate2 — and (b) fix a standard — the limits of which are sufficiently determinate or construed in relation to the specific facts and issues involved therein, outside of which they
determinable — to which the delegate must conform in the performance of his do not constitute precedents and have no binding effect.4 The law construed in the Calalang
functions.2a Indeed, without a statutory declaration of policy, the delegate would in effect, case conferred upon the Director of Public Works, with the approval of the Secretary of
make or formulate such policy, which is the essence of every law; and, without the Public Works and Communications, the power to issue rules and regulations to promote safe
aforementioned standard, there would be no means to determine, with reasonable certainty, transit upon national roads and streets. Upon the other hand, the Rosenthal case referred to
whether the delegate has acted within or beyond the scope of his authority.2b Hence, he could the authority of the Insular Treasurer, under Act No. 2581, to issue and cancel certificates or
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permits for the sale of speculative securities. Both cases involved grants Recovery Act authorizing the President of the United States to approve "codes of fair
to administrative officers of powers related to the exercise of their administrative functions, competition" submitted to him by one or more trade or industrial associations or corporations
calling for the determination of questions of fact. which "impose no inequitable restrictions on admission to membership therein and are truly
representative," provided that such codes are not designed "to promote monopolies or to
Such is not the nature of the powers dealt with in section 68. As above indicated, the creation eliminate or oppress small enterprises and will not operate to discriminate against them, and
of municipalities, is not an administrative function, but one which is essentially and eminently will tend to effectuate the policy" of said Act. The Federal Supreme Court held:
legislative in character. The question of whether or not "public interest" demands the exercise
of such power is not one of fact. it is "purely a legislative question "(Carolina-Virginia To summarize and conclude upon this point: Sec. 3 of the Recovery Act is without precedent.
Coastal Highway vs. Coastal Turnpike Authority, 74 S.E. 2d. 310-313, 315-318), or It supplies no standards for any trade, industry or activity. It does not undertake to prescribe
a political question (Udall vs. Severn, 79 P. 2d. 347-349). As the Supreme Court of rules of conduct to be applied to particular states of fact determined by appropriate
Wisconsin has aptly characterized it, "the question as to whether incorporation is for the best administrative procedure. Instead of prescribing rules of conduct, it authorizes the making of
interest of the community in any case is emphatically a question of public policy and codes to prescribe them. For that legislative undertaking, Sec. 3 sets up no standards, aside
statecraft" (In re Village of North Milwaukee, 67 N.W. 1033, 1035-1037). from the statement of the general aims of rehabilitation, correction and expansion described
in Sec. 1. In view of the scope of that broad declaration, and of the nature of the few
For this reason, courts of justice have annulled, as constituting undue delegation of legislative restrictions that are imposed, the discretion of the President in approving or prescribing
powers, state laws granting the judicial department, the power to determine whether certain codes, and thus enacting laws for the government of trade and industry throughout the
territories should be annexed to a particular municipality (Udall vs. Severn, supra, 258-359); country, is virtually unfettered. We think that the code making authority thus conferred is an
or vesting in a Commission the right to determine the plan and frame of government of unconstitutional delegation of legislative power.
proposed villages and what functions shall be exercised by the same, although the powers and
functions of the village are specifically limited by statute (In re Municipal Charters, 86 Atl. If the term "unfair competition" is so broad as to vest in the President a discretion that is
307-308); or conferring upon courts the authority to declare a given town or village "virtually unfettered." and, consequently, tantamount to a delegation of legislative power, it is
incorporated, and designate its metes and bounds, upon petition of a majority of the taxable obvious that "public welfare," which has even a broader connotation, leads to the same result.
inhabitants thereof, setting forth the area desired to be included in such village (Territory ex In fact, if the validity of the delegation of powers made in Section 68 were upheld, there
rel Kelly vs. Stewart, 23 Pac. 405-409); or authorizing the territory of a town, containing a would no longer be any legal impediment to a statutory grant of authority to the President to
given area and population, to be incorporated as a town, on certain steps being taken by the do anything which, in his opinion, may be required by public welfare or public interest. Such
inhabitants thereof and on certain determination by a court and subsequent vote of the grant of authority would be a virtual abdication of the powers of Congress in favor of the
inhabitants in favor thereof, insofar as the court is allowed to determine whether the lands Executive, and would bring about a total collapse of the democratic system established by our
embraced in the petition "ought justly" to be included in the village, and whether the interest Constitution, which it is the special duty and privilege of this Court to uphold.
of the inhabitants will be promoted by such incorporation, and to enlarge and diminish the
boundaries of the proposed village "as justice may require" (In re Villages of North It may not be amiss to note that the executive orders in question were issued after the
Milwaukee, 67 N.W. 1035-1037); or creating a Municipal Board of Control which shall legislative bills for the creation of the municipalities involved in this case had failed to pass
determine whether or not the laying out, construction or operation of a toll road is in the Congress. A better proof of the fact that the issuance of said executive orders entails the
"public interest" and whether the requirements of the law had been complied with, in which exercise of purely legislative functions can hardly be given.
case the board shall enter an order creating a municipal corporation and fixing the name of
the same (Carolina-Virginia Coastal Highway vs. Coastal Turnpike Authority, 74 S.E. 2d. Again, Section 10 (1) of Article VII of our fundamental law ordains:
310). The President shall have control of all the executive departments, bureaus, or offices, exercise
Insofar as the validity of a delegation of power by Congress to the President is concerned, the general supervision over all local governments as may be provided by law, and take care that
case of Schechter Poultry Corporation vs. U.S. (79 L. Ed. 1570) is quite relevant to the one at the laws be faithfully executed.
bar. The Schechter case involved the constitutionality of Section 3 of the National Industrial
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The power of control under this provision implies the right of the President to interfere in the must be deemed repealed by the subsequent adoption of the Constitution, in 1935, which is
exercise of such discretion as may be vested by law in the officers of the executive utterly incompatible and inconsistent with said statutory enactment.7
departments, bureaus, or offices of the national government, as well as to act in lieu of such
officers. This power is denied by the Constitution to the Executive, insofar as local There are only two (2) other points left for consideration, namely, respondent's claim (a) that
governments are concerned. With respect to the latter, the fundamental law permits him to "not all the proper parties" — referring to the officers of the newly created municipalities —
wield no more authority than that of checking whether said local governments or the officers "have been impleaded in this case," and (b) that "the present petition is premature."
thereof perform their duties as provided by statutory enactments. Hence, the President cannot
interfere with local governments, so long as the same or its officers act Within the scope of As regards the first point, suffice it to say that the records do not show, and the parties do not
their authority. He may not enact an ordinance which the municipal council has failed or claim, that the officers of any of said municipalities have been appointed or elected and
refused to pass, even if it had thereby violated a duty imposed thereto by law, although he assumed office. At any rate, the Solicitor General, who has appeared on behalf of respondent
may see to it that the corresponding provincial officials take appropriate disciplinary action Auditor General, is the officer authorized by law "to act and represent the Government of the
therefor. Neither may he vote, set aside or annul an ordinance passed by said council within Philippines, its offices and agents, in any official investigation, proceeding or matter
the scope of its jurisdiction, no matter how patently unwise it may be. He may not even requiring the services of a lawyer" (Section 1661, Revised Administrative Code), and, in
suspend an elective official of a regular municipality or take any disciplinary action against connection with the creation of the aforementioned municipalities, which involves a political,
him, except on appeal from a decision of the corresponding provincial board.5 not proprietary, function, said local officials, if any, are mere agents or representatives of the
national government. Their interest in the case at bar has, accordingly, been, in effect, duly
Upon the other hand if the President could create a municipality, he could, in effect, remove represented.8
any of its officials, by creating a new municipality and including therein the barrio in which
the official concerned resides, for his office would thereby become vacant.6 Thus, by merely With respect to the second point, respondent alleges that he has not as yet acted on any of the
brandishing the power to create a new municipality (if he had it), without actually creating it, executive order & in question and has not intimated how he would act in connection
he could compel local officials to submit to his dictation, thereby, in effect, exercising over therewith. It is, however, a matter of common, public knowledge, subject to judicial
them the power of control denied to him by the Constitution. cognizance, that the President has, for many years, issued executive orders creating municipal
corporations and that the same have been organized and in actual operation, thus indicating,
Then, also, the power of control of the President over executive departments, bureaus or without peradventure of doubt, that the expenditures incidental thereto have been sanctioned,
offices implies no more than the authority to assume directly the functions thereof or to approved or passed in audit by the General Auditing Office and its officials. There is no
interfere in the exercise of discretion by its officials. Manifestly, such control does not reason to believe, therefore, that respondent would adopt a different policy as regards the new
include the authority either to abolish an executive department or bureau, or to create a new municipalities involved in this case, in the absence of an allegation to such effect, and none
one. As a consequence, the alleged power of the President to create municipal corporations has been made by him.
would necessarily connote the exercise by him of an authority even greater than that of
control which he has over the executive departments, bureaus or offices. In other words, WHEREFORE, the Executive Orders in question are hereby declared null and void ab
Section 68 of the Revised Administrative Code does not merely fail to comply with the initio and the respondent permanently restrained from passing in audit any expenditure of
constitutional mandate above quoted. Instead of giving the President less power over local public funds in implementation of said Executive Orders or any disbursement by the
governments than that vested in him over the executive departments, bureaus or offices, it municipalities above referred to. It is so ordered.
reverses the process and does the exact opposite, by conferring upon him more power over
municipal corporations than that which he has over said executive departments, bureaus or
offices.
In short, even if it did entail an undue delegation of legislative powers, as it certainly does,
said Section 68, as part of the Revised Administrative Code, approved on March 10, 1917,
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4,) [G.R. No. 138810. September 29, 2004] cancel its permit unless it secures the approval of respondent Sangguniang Panlungsod,
pursuant to Resolution No. 210.
BATANGAS CATV, INC., petitioner, vs. THE COURT OF APPEALS, THE
BATANGAS CITY SANGGUNIANG PANLUNGSOD and BATANGAS CITY Petitioner then filed with the RTC, Branch 7, Batangas City, a petition for injunction
MAYOR, respondents. docketed as Civil Case No. 4254. It alleged that respondent Sangguniang Panlungsod has no
authority to regulate the subscriber rates charged by CATV operators because under
DECISION Executive Order No. 205, the National Telecommunications Commission (NTC) has the sole
authority to regulate the CATV operation in the Philippines.
SANDOVAL-GUTIERREZ, J.:
On October 29, 1995, the trial court decided in favor of petitioner, thus:
In the late 1940s, John Walson, an appliance dealer in Pennsylvania, suffered a decline in the
sale of television (tv) sets because of poor reception of signals in his community. Troubled, WHEREFORE, as prayed for, the defendants, their representatives, agents, deputies or
he built an antenna on top of a nearby mountain. Using coaxial cable lines, he distributed the other persons acting on their behalf or under their instructions, are hereby enjoined from
tv signals from the antenna to the homes of his customers. Walsons innovative idea improved canceling plaintiffs permit to operate a Cable Antenna Television (CATV) system in the
his sales and at the same time gave birth to a new telecommunication system -- the City of Batangas or its environs or in any manner, from interfering with the authority
Community Antenna Television (CATV) or Cable Television.[1] and power of the National Telecommunications Commission to grant franchises to
operate CATV systems to qualified applicants, and the right of plaintiff in fixing its
This technological breakthrough found its way in our shores and, like in its country of origin, service rates which needs no prior approval of the Sangguniang Panlungsod of Batangas
it spawned legal controversies, especially in the field of regulation. The case at bar is just
City.
another occasion to clarify a shady area. Here, we are tasked to resolve the inquiry -- may a
local government unit (LGU) regulate the subscriber rates charged by CATV operators within The counterclaim of the plaintiff is hereby dismissed. No pronouncement as to costs.
its territorial jurisdiction?
IT IS SO ORDERED.[10]
This is a petition for review on certiorari filed by Batangas CATV, Inc. (petitioner herein)
against the Sangguniang Panlungsod and the Mayor of Batangas City (respondents herein) The trial court held that the enactment of Resolution No. 210 by respondent violates the
assailing the Court of Appeals (1) Decision[2] dated February 12, 1999 and (2) States deregulation policy as set forth by then NTC Commissioner Jose Luis A. Alcuaz in his
Resolution[3] dated May 26, 1999, in CA-G.R. CV No. 52361.[4] The Appellate Court Memorandum dated August 25, 1989. Also, it pointed out that the sole agency of the
reversed and set aside the Judgment[5] dated October 29, 1995 of the Regional Trial Court government which can regulate CATV operation is the NTC, and that the LGUs cannot
(RTC), Branch 7, Batangas City in Civil Case No. 4254,[6] holding that neither of the exercise regulatory power over it without appropriate legislation.
respondents has the power to fix the subscriber rates of CATV operators, such being outside
the scope of the LGUs power. Unsatisfied, respondents elevated the case to the Court of Appeals, docketed as CA-G.R. CV
No. 52361.
The antecedent facts are as follows:
On February 12, 1999, the Appellate Court reversed and set aside the trial courts Decision,
On July 28, 1986, respondent Sangguniang Panlungsod enacted Resolution No. ratiocinating as follows:
210[7] granting petitioner a permit to construct, install, and operate a CATV system in
Batangas City. Section 8 of the Resolution provides that petitioner is authorized to charge its Although the Certificate of Authority to operate a Cable Antenna Television (CATV)
subscribers the maximum rates specified therein, provided, however, that any increase of System is granted by the National Telecommunications Commission pursuant to
rates shall be subject to the approval of the Sangguniang Panlungsod.[8] Executive Order No. 205, this does not preclude the Sangguniang Panlungsod from
regulating the operation of the CATV in their locality under the powers vested upon it
Sometime in November 1993, petitioner increased its subscriber rates from P88.00 by Batas Pambansa Bilang 337, otherwise known as the Local Government Code of
to P180.00 per month. As a result, respondent Mayor wrote petitioner a letter[9] threatening to 1983. Section 177 (now Section 457 paragraph 3 (ii) of Republic Act 7160) provides:
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Section 177. Powers and Duties The Sangguniang Panlungsod shall: Hence, the instant petition for review on certiorari anchored on the following assignments of
error:
a) Enact such ordinances as may be necessary to carry into effect and discharge the
responsibilities conferred upon it by law, and such as shall be necessary and proper to provide I
for health and safety, comfort and convenience, maintain peace and order, improve the
morals, and promote the prosperity and general welfare of the community and the inhabitants THE COURT OF APPEALS ERRED IN HOLDING THAT THE GENERAL
thereof, and the protection of property therein; WELFARE CLAUSE OF THE LOCAL GOVERNMENT CODE AUTHORIZES
RESPONDENT SANGGUNIANG PANLUNGSOD TO EXERCISE THE
xxx REGULATORY FUNCTION SOLELY LODGED WITH THE NATIONAL
TELECOMMUNICATIONS COMMISSION UNDER EXECUTIVE ORDER NO. 205,
d) Regulate, fix the license fee for, and tax any business or profession being carried on INCLUDING THE AUTHORITY TO FIX AND/OR APPROVE THE SERVICE
and exercised within the territorial jurisdiction of the city, except travel agencies, RATES OF CATV OPERATORS; AND
tourist guides, tourist transports, hotels, resorts, de luxe restaurants, and tourist inns of
international standards which shall remain under the licensing and regulatory power of II
the Ministry of Tourism which shall exercise such authority without infringement on
the taxing and regulatory powers of the city government; THE COURT OF APPEALS ERRED IN REVERSING THE DECISION APPEALED
FROM AND DISMISSING PETITIONERS COMPLAINT.[13]
Under cover of the General Welfare Clause as provided in this section, Local Government
Units can perform just about any power that will benefit their constituencies. Thus, local Petitioner contends that while Republic Act No. 7160, the Local Government Code of 1991,
government units can exercise powers that are: (1) expressly granted; (2) necessarily implied extends to the LGUs the general power to perform any act that will benefit their constituents,
from the power that is expressly granted; (3) necessary, appropriate or incidental for its nonetheless, it does not authorize them to regulate the CATV operation. Pursuant to E.O. No.
efficient and effective governance; and (4) essential to the promotion of the general welfare 205, only the NTC has the authority to regulate the CATV operation, including the fixing of
of their inhabitants. (Pimentel, The Local Government Code of 1991, p. 46) subscriber rates.
Verily, the regulation of businesses in the locality is expressly provided in the Local Respondents counter that the Appellate Court did not commit any reversible error in
Government Code. The fixing of service rates is lawful under the General Welfare rendering the assailed Decision. First, Resolution No. 210 was enacted pursuant to Section
Clause. 177(c) and (d) of Batas Pambansa Bilang 337, the Local Government Code of 1983, which
authorizes LGUs to regulate businesses. The term businesses necessarily includes the CATV
Resolution No. 210 granting appellee a permit to construct, install and operate a community industry. And second, Resolution No. 210 is in the nature of a contract between petitioner and
antenna television (CATV) system in Batangas City as quoted earlier in this decision, respondents, it being a grant to the former of a franchise to operate a CATV system. To hold
authorized the grantee to impose charges which cannot be increased except upon approval of that E.O. No. 205 amended its terms would violate the constitutional prohibition against
the Sangguniang Bayan. It further provided that in case of violation by the grantee of the impairment of contracts.[14]
terms and conditions/requirements specifically provided therein, the City shall have the right
to withdraw the franchise. The petition is impressed with merit.
Appellee increased the service rates from EIGHTY EIGHT PESOS (P88.00) to ONE Earlier, we posed the question -- may a local government unit (LGU) regulate the subscriber
HUNDRED EIGHTY PESOS (P180.00) (Records, p. 25) without the approval of rates charged by CATV operators within its territorial jurisdiction? A review of pertinent
appellant. Such act breached Resolution No. 210 which gives appellant the right to laws and jurisprudence yields a negative answer.
withdraw the permit granted to appellee.[11]
President Ferdinand E. Marcos was the first one to place the CATV industry under the
Petitioner filed a motion for reconsideration but was denied. [12] regulatory power of the national government.[15] On June 11, 1978, he issued Presidential
Decree (P.D.) No. 1512[16]establishing a monopoly of the industry by granting Sining
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Makulay, Inc., an exclusive franchise to operate CATV system in any place within the install, operate and maintain a cable television system or render cable television service
Philippines. Accordingly, it terminated all franchises, permits or certificates for the within a service area.
operation of CATV system previously granted by local governments or by any
instrumentality or agency of the national government.[17] Likewise, it prescribed the Clearly, it has been more than two decades now since our national government, through the
subscriber rates to be charged by Sining Makulay, Inc. to its customers.[18] NTC, assumed regulatory power over the CATV industry. Changes in the political arena did
not alter the trend. Instead, subsequent presidential issuances further reinforced the NTCs
On July 21, 1979, President Marcos issued Letter of Instruction (LOI) No. 894 vesting power. Significantly, President Marcos and President Aquino, in the exercise of their
upon the Chairman of the Board of Communications direct supervision over the operations legislative power, issued P.D. No. 1512, E.O. No. 546 and E.O. No. 205. Hence, they have
of Sining Makulay, Inc. Three days after, he issued E.O. No. 546[19] integrating the Board of the force and effect of statutes or laws passed by Congress.[24] That the regulatory power stays
Communications[20] and the Telecommunications Control Bureau[21] to form a single entity to with the NTC is also clear from President Ramos E.O. No. 436 mandating that the regulation
be known as the National Telecommunications Commission. Two of its assigned functions and supervision of the CATV industry shall remain vested solely in the NTC. Blacks Law
are: Dictionary defines sole as without another or others.[25] The logical conclusion, therefore, is
that in light of the above laws and E.O. No. 436, the NTC exercises regulatory power
a. Issue Certificate of Public Convenience for the operation of communications utilities over CATV operators to the exclusion of other bodies.
and services, radio communications systems, wire or wireless telephone or telegraph
systems, radio and television broadcasting system and other similar public utilities; But, lest we be misunderstood, nothing herein should be interpreted as to strip LGUs of their
general power to prescribe regulations under the general welfare clause of the Local
b. Establish, prescribe and regulate areas of operation of particular operators of public Government Code. It must be emphasized that when E.O. No. 436 decrees that the regulatory
service communications; and determine and prescribe charges or rates pertinent to the power shall be vested solely in the NTC, it pertains to the regulatory power over those
operation of such public utility facilities and services except in cases where charges or matters which are peculiarly within the NTCs competence, such as, the: (1) determination of
rates are established by international bodies or associations of which the Philippines is a rates, (2) issuance of certificates of authority, (3) establishment of areas of
participating member or by bodies recognized by the Philippine Government as the proper operation, (4) examination and assessment of the legal, technical and financial qualifications
arbiter of such charges or rates; of applicant operators, (5) granting of permits for the use of frequencies, (6) regulation of
ownership and operation, (7) adjudication of issues arising from its functions, and (8) other
Although Sining Makulay Inc.s exclusive franchise had a life term of 25 years, it was cut similar matters.[26] Within these areas, the NTC reigns supreme as it possesses the exclusive
short by the advent of the 1986 Revolution. Upon President Corazon C. Aquinos assumption power to regulate -- a power comprising varied acts, such as to fix, establish, or control; to
of power, she issued E.O. No. 205[22] opening the CATV industry to all citizens of the adjust by rule, method or established mode; to direct by rule or restriction; or to subject to
Philippines. It mandated the NTC to grant Certificates of Authority to CATV operators governing principles or laws.[27]
and to issue the necessary implementing rules and regulations.
Coincidentally, respondents justify their exercise of regulatory power over petitioners CATV
On September 9, 1997, President Fidel V. Ramos issued E.O. No. 436[23] prescribing policy operation under the general welfare clause of the Local Government Code of 1983. The Court
guidelines to govern CATV operation in the Philippines. Cast in more definitive terms, it of Appeals sustained their stance.
restated the NTCs regulatory powers over CATV operations, thus:
There is no dispute that respondent Sangguniang Panlungsod, like other local legislative
SECTION 2. The regulation and supervision of the cable television industry in the bodies, has been empowered to enact ordinances and approve resolutions under the general
Philippines shall remain vested solely with the National Telecommunications Commission welfare clause of B.P. Blg. 337, the Local Government Code of 1983. That it continues to
(NTC). posses such power is clear under the new law, R.A. No. 7160 (the Local Government Code of
SECTION 3. Only persons, associations, partnerships, corporations or cooperatives, 1991). Section 16 thereof provides:
granted a Provisional Authority or Certificate of Authority by the Commission may SECTION 16. General Welfare. Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
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appropriate, or incidental for its efficient and effective governance, and those which are Resolution No. 210 is an enactment of an LGU acting only as agent of the national
essential to the promotion of the general welfare. Within their respective territorial legislature. Necessarily, its act must reflect and conform to the will of its principal. To test its
jurisdictions, local government units shall ensure and support, among others, the preservation validity, we must apply the particular requisites of a valid ordinance as laid down by the
and enrichment of culture, promote health and safety, enhance the right of the people to a accepted principles governing municipal corporations. [36]
balanced ecology, encourage and support the development of appropriate and self-reliant,
scientific and technological capabilities, improve public morals, enhance economic prosperity Speaking for the Court in the leading case of United States vs. Abendan,[37] Justice Moreland
and social justice, promote full employment among their residents, maintain peace and order, said: An ordinance enacted by virtue of the general welfare clause is valid, unless it
and preserve the comfort and convenience of their inhabitants. contravenes the fundamental law of the Philippine Islands, or an Act of the Philippine
Legislature, or unless it is against public policy, or is unreasonable, oppressive, partial,
In addition, Section 458 of the same Code specifically mandates: discriminating, or in derogation of common right. In De la Cruz vs. Paraz,[38] we laid the
general rule that ordinances passed by virtue of the implied power found in the general
SECTION 458. Powers, Duties, Functions and Compensation. (a) The Sangguniang welfare clause must be reasonable, consonant with the general powers and purposes of the
Panlungsod, as the legislative body of the city, shall enact ordinances, approve corporation, and not inconsistent with the laws or policy of the State.
resolutions and appropriate funds for the general welfare of the city and its inhabitants
pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of The apparent defect in Resolution No. 210 is that it contravenes E.O. No. 205 and E.O. No.
the city as provided for under Section 22 of this Code, x x x: 436 insofar as it permits respondent Sangguniang Panlungsod to usurp a power exclusively
vested in the NTC, i.e., the power to fix the subscriber rates charged by CATV operators. As
The general welfare clause is the delegation in statutory form of the police power of the earlier discussed, the fixing of subscriber rates is definitely one of the matters within the
State to LGUs.[28] Through this, LGUs may prescribe regulations to protect the lives, health, NTCs exclusive domain.
and property of their constituents and maintain peace and order within their respective
territorial jurisdictions. Accordingly, we have upheld enactments providing, for instance, the In this regard, it is appropriate to stress that where the state legislature has made provision for
regulation of gambling,[29] the occupation of rig drivers,[30] the installation and operation of the regulation of conduct, it has manifested its intention that the subject matter shall be fully
pinball machines,[31] the maintenance and operation of cockpits,[32] the exhumation and covered by the statute, and that a municipality, under its general powers, cannot regulate the
transfer of corpses from public burial grounds,[33] and the operation of hotels, motels, and same conduct.[39] In Keller vs. State,[40] it was held that: Where there is no express power in
lodging houses[34] as valid exercises by local legislatures of the police power under the the charter of a municipality authorizing it to adopt ordinances regulating certain
general welfare clause. matters which are specifically covered by a general statute, a municipal ordinance,
insofar as it attempts to regulate the subject which is completely covered by a general
Like any other enterprise, CATV operation maybe regulated by LGUs under the general statute of the legislature, may be rendered invalid. x x x Where the subject is of
welfare clause. This is primarily because the CATV system commits the indiscretion of statewide concern, and the legislature has appropriated the field and declared the rule,
crossing public properties. (It uses public properties in order to reach subscribers.) The its declaration is binding throughout the State. A reason advanced for this view is that
physical realities of constructing CATV system the use of public streets, rights of ways, such ordinances are in excess of the powers granted to the municipal corporation.[41]
the founding of structures, and the parceling of large regions allow an LGU a certain
degree of regulation over CATV operators.[35] This is the same regulation that it exercises Since E.O. No. 205, a general law, mandates that the regulation of CATV operations shall be
over all private enterprises within its territory. exercised by the NTC, an LGU cannot enact an ordinance or approve a resolution in violation
of the said law.
But, while we recognize the LGUs power under the general welfare clause, we cannot sustain
Resolution No. 210. We are convinced that respondents strayed from the well recognized It is a fundamental principle that municipal ordinances are inferior in status and subordinate
limits of its power. The flaws in Resolution No. 210 are: (1) it violates the mandate of to the laws of the state. An ordinance in conflict with a state law of general character and
existing laws and (2) it violates the States deregulation policy over the CATV industry. statewide application is universally held to be invalid.[42] The principle is frequently
expressed in the declaration that municipal authorities, under a general grant of power, cannot
I. adopt ordinances which infringe the spirit of a state law or repugnant to the general policy of
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the state.[43] In every power to pass ordinances given to a municipality, there is an implied matter. LGUs must recognize that technical matters concerning CATV operation are
restriction that the ordinances shall be consistent with the general law.[44] In the language of within the exclusive regulatory power of the NTC.
Justice Isagani Cruz (ret.), this Court, in Magtajas vs. Pryce Properties Corp., Inc.,[45] ruled
that: At any rate, we find no basis to conclude that R.A. No. 7160 repealed E.O. No. 205, either
expressly or impliedly. It is noteworthy that R.A. No. 7160 repealing clause, which
The rationale of the requirement that the ordinances should not contravene a statute is painstakingly mentions the specific laws or the parts thereof which are repealed, does not
obvious. Municipal governments are only agents of the national government. Local councils include E.O. No. 205, thus:
exercise only delegated legislative powers conferred on them by Congress as the national
lawmaking body. The delegate cannot be superior to the principal or exercise powers higher SECTION 534. Repealing Clause. (a) Batas Pambansa Blg. 337, otherwise known as the
than those of the latter. It is a heresy to suggest that the local government units can undo the Local Government Code." Executive Order No. 112 (1987), and Executive Order No. 319
acts of Congress, from which they have derived their power in the first place, and negate by (1988) are hereby repealed.
mere ordinance the mandate of the statute.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions,
Municipal corporations owe their origin to, and derive their powers and rights wholly from memoranda and issuances related to or concerning the barangay are hereby repealed.
the legislature. It breathes into them the breath of life, without which they cannot exist. As it
creates, so it may destroy. As it may destroy, it may abridge and control. Unless there is some (c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund;
constitutional limitation on the right, the legislature might, by a single act, and if we can Section 3, a (3) and b (2) of Republic Act. No. 5447 regarding the Special Education Fund;
suppose it capable of so great a folly and so great a wrong, sweep from existence all of the Presidential Decree No. 144 as amended by Presidential Decree Nos. 559 and 1741;
municipal corporations in the State, and the corporation could not prevent it. We know of no Presidential Decree No. 231 as amended; Presidential Decree No. 436 as amended by
limitation on the right so far as to the corporation themselves are concerned. They are, so to Presidential Decree No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752,
phrase it, the mere tenants at will of the legislature. and 1136 are hereby repealed and rendered of no force and effect.
This basic relationship between the national legislature and the local government units has (d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded
not been enfeebled by the new provisions in the Constitution strengthening the policy of local projects.
autonomy. Without meaning to detract from that policy, we here confirm that Congress (e) The following provisions are hereby repealed or amended insofar as they are inconsistent
retains control of the local government units although in significantly reduced degree now with the provisions of this Code: Sections 2, 16, and 29 of Presidential Decree No. 704;
than under our previous Constitutions. The power to create still includes the power to destroy. Section 12 of Presidential Decree No. 87, as amended; Sections 52, 53, 66, 67, 68, 69, 70, 71,
The power to grant still includes the power to withhold or recall. True, there are certain 72, 73, and 74 of Presidential Decree No. 463, as amended; and Section 16 of Presidential
notable innovations in the Constitution, like the direct conferment on the local government Decree No. 972, as amended, and
units of the power to tax, which cannot now be withdrawn by mere statute. By and large,
however, the national legislature is still the principal of the local government units, (f) All general and special laws, acts, city charters, decrees, executive orders, proclamations
which cannot defy its will or modify or violate it. and administrative regulations, or part or parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified accordingly.
Respondents have an ingenious retort against the above disquisition. Their theory is that the
regulatory power of the LGUs is granted by R.A. No. 7160 (the Local Government Code of Neither is there an indication that E.O. No. 205 was impliedly repealed by R.A. No. 7160. It
1991), a handiwork of the national lawmaking authority. They contend that R.A. No. 7160 is a settled rule that implied repeals are not lightly presumed in the absence of a clear and
repealed E.O. No. 205 (issued by President Aquino). Respondents argument espouses a bad unmistakable showing of such intentions. In Mecano vs. Commission on Audit,[46] we ruled:
precedent. To say that LGUs exercise the same regulatory power over matters which are
peculiarly within the NTCs competence is to promote a scenario of LGUs and the NTC Repeal by implication proceeds on the premise that where a statute of later date clearly
locked in constant clash over the appropriate regulatory measure on the same subject reveals an intention on the part of the legislature to abrogate a prior act on the subject, that
intention must be given effect. Hence, before there can be a repeal, there must be a clear
14
ADMIN LAW
showing on the part of the lawmaker that the intent in enacting the new law was to abrogate Deregulation is the reduction of government regulation of business to permit freer markets
the old one. The intention to repeal must be clear and manifest; otherwise, at least, as a and competition.[50] Oftentimes, the State, through its regulatory agencies, carries out a policy
general rule, the later act is to be construed as a continuation of, and not a substitute for, the of deregulation to attain certain objectives or to address certain problems. In the field of
first act and will continue so far as the two acts are the same from the time of the first telecommunications, it is recognized that many areas in the Philippines are still unserved or
enactment. underserved. Thus, to encourage private sectors to venture in this field and be partners of the
government in stimulating the growth and development of telecommunications, the State
As previously stated, E.O. No. 436 (issued by President Ramos) vests upon the NTC the promoted the policy of deregulation.
power to regulate the CATV operation in this country. So also Memorandum Circular No. 8-
9-95, the Implementing Rules and Regulations of R.A. No. 7925 (the Public In the United States, the country where CATV originated, the Congress observed, when it
Telecommunications Policy Act of the Philippines). This shows that the NTCs regulatory adopted the Telecommunications Act of 1996, that there was a need to provide a pro-
power over CATV operation is continuously recognized. competitive, deregulatory national policy framework designed to accelerate rapidly private
sector deployment of advanced telecommunications and information technologies and
It is a canon of legal hermeneutics that instead of pitting one statute against another in an services to all Americans by opening all telecommunications markets to competition. The
inevitably destructive confrontation, courts must exert every effort to reconcile them, FCC has adopted regulations to implement the requirements of the 1996 Act and the intent of
remembering that both laws deserve a becoming respect as the handiwork of coordinate the Congress.
branches of the government.[47] On the assumption of a conflict between E.O. No. 205 and
R.A. No. 7160, the proper action is not to uphold one and annul the other but to give effect to Our country follows the same policy. The fifth Whereas Clause of E.O. No. 436 states:
both by harmonizing them if possible. This recourse finds application here. Thus, we hold
that the NTC, under E.O. No. 205, has exclusive jurisdiction over matters affecting CATV WHEREAS, professionalism and self-regulation among existing operators, through a
operation, including specifically the fixing of subscriber rates, but nothing herein precludes nationally recognized cable television operators association, have enhanced the growth of
LGUs from exercising its general power, under R.A. No. 7160, to prescribe regulations to the cable television industry and must therefore be maintained along with minimal
promote the health, morals, peace, education, good order or safety and general welfare of reasonable government regulations;
their constituents. In effect, both laws become equally effective and mutually complementary.
This policy reaffirms the NTCs mandate set forth in the Memorandum dated August 25, 1989
The grant of regulatory power to the NTC is easily understandable. CATV system is not a of Commissioner Jose Luis A. Alcuaz, to wit:
mere local concern. The complexities that characterize this new technology demand that it be
regulated by a specialized agency. This is particularly true in the area of rate-fixing. Rate In line with the purpose and objective of MC 4-08-88, Cable Television System or
fixing involves a series of technical operations.[48] Consequently, on the hands of the Community Antenna Television (CATV) is made part of the broadcast media to promote the
regulatory body lies the ample discretion in the choice of such rational processes as might be orderly growth of the Cable Television Industry it being in its developing stage. Being part
appropriate to the solution of its highly complicated and technical problems. Considering that of the Broadcast Media, the service rates of CATV are likewise considered deregulated
the CATV industry is so technical a field, we believe that the NTC, a specialized agency, is in in accordance with MC 06-2-81 dated 25 February 1981, the implementing guidelines
a better position than the LGU, to regulate it. Notably, in United States vs. Southwestern for the authorization and operation of Radio and Television Broadcasting
Cable Co.,[49] the US Supreme Court affirmed the Federal Communications Commissions stations/systems.
(FCCs) jurisdiction over CATV operation. The Court held that the FCCs authority over cable Further, the Commission will issue Provisional Authority to existing CATV operators to
systems assures the preservation of the local broadcast service and an equitable distribution of authorize their operations for a period of ninety (90) days until such time that the
broadcast services among the various regions of the country. Commission can issue the regular Certificate of Authority.
II. When the State declared a policy of deregulation, the LGUs are bound to follow. To rule
Resolution No. 210 violated the States deregulation policy. otherwise is to render the States policy ineffective. Being mere creatures of the State, LGUs
15
ADMIN LAW
cannot defeat national policies through enactments of contrary measures. Verily, in the case SO ORDERED.
at bar, petitioner may increase its subscriber rates without respondents approval.
At this juncture, it bears emphasizing that municipal corporations are bodies politic and
corporate, created not only as local units of local self-government, but as governmental
agencies of the state.[51] The legislature, by establishing a municipal corporation, does not
divest the State of any of its sovereignty; absolve itself from its right and duty to administer
the public affairs of the entire state; or divest itself of any power over the inhabitants of the
district which it possesses before the charter was granted.[52]
Respondents likewise argue that E.O. No. 205 violates the constitutional prohibition against
impairment of contracts, Resolution No. 210 of Batangas City Sangguniang
Panlungsod being a grant of franchise to petitioner.
We are not convinced.
There is no law specifically authorizing the LGUs to grant franchises to operate CATV
system. Whatever authority the LGUs had before, the same had been withdrawn when
President Marcos issued P.D. No. 1512 terminating all franchises, permits or certificates
for the operation of CATV system previously granted by local governments. Today,
pursuant to Section 3 of E.O. No. 436, only persons, associations, partnerships,
corporations or cooperatives granted a Provisional Authority or Certificate of
Authority by the NTC may install, operate and maintain a cable television system or
render cable television service within a service area. It is clear that in the absence of
constitutional or legislative authorization, municipalities have no power to grant
franchises.[53] Consequently, the protection of the constitutional provision as to impairment of
the obligation of a contract does not extend to privileges, franchises and grants given by a
municipality in excess of its powers, or ultra vires.[54]
One last word. The devolution of powers to the LGUs, pursuant to the Constitutional mandate
of ensuring their autonomy, has bred jurisdictional tension between said LGUs and the State.
LGUs must be reminded that they merely form part of the whole. Thus, when the Drafters of
the 1987 Constitution enunciated the policy of ensuring the autonomy of local
governments,[55] it was never their intention to create an imperium in imperio and install an
intra-sovereign political subdivision independent of a single sovereign state.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals
dated February 12, 1999 as well as its Resolution dated May 26, 1999 in CA-G.R. CV No.
52461, are hereby REVERSED. The RTC Decision in Civil Case No. 4254 is AFFIRMED.
No pronouncement as to costs.
16
ADMIN LAW
5.) [G.R. No. 131082. June 19, 2000] On 31 March 1997, PETITIONER filed a petition for review[9] before the Court of Appeals.
On motion by HDMF, the Court of Appeals dismissed[10] the petition on the ground that the
ROMULO, MABANTA, BUENAVENTURA, SAYOC & DE LOS coverage of employers and employees under the Home Development Mutual Fund is
ANGELES, petitioner, vs. HOME DEVELOPMENT MUTUAL FUND, respondent. mandatory in character as clearly worded in Section 4 of P.D. No. 1752, as amended by R.A.
No. 7742. There is no allegation that petitioner is a distressed employer to warrant its
DECISION exemption from the Fund coverage. As to the amendments to the Rules and Regulations
DAVIDE, JR., C.J.: CODES Implementing R.A. No. 7742, the same are valid. Under P.D. No. 1752 and R.A. No. 7742
the Board of Trustees of the HDMF is authorized to promulgate rules and regulations, as well
Once again, this Court is confronted with the issue of the validity of the Amendments to the as amendments thereto, concerning the extension, waiver or suspension of coverage under the
Rules and Regulations Implementing Republic Act No. 7742, which require the existence of a Pag~IBIG Fund. And the publication requirement was amply met, since the questioned
plan providing for both provident/retirement and housing benefits for exemption from the amendments were published in the 21 October 1995 issue of the Philippine Star, which is a
Pag~IBIG Fund coverage under Presidential Decree No. 1752, as amended. newspaper of general circulation.
Pursuant to Section 19[1] of P.D. No. 1752, as amended by R.A. No. 7742, petitioner Romulo, PETITIONER's motion for reconsideration[11] was denied.[12] Hence, on 6 November 1997,
Mabanta, Buenaventura, Sayoc and De Los Angeles (hereafter PETITIONER), a law firm, PETITIONER filed a petition before this Court assailing the 1995 and the 1996 Amendments
was exempted for the period 1 January to 31 December 1995 from the Pag~IBIG Fund to the Rules and Regulations Implementing Republic Act No. 7742 for being contrary to law.
coverage by respondent Home Development Mutual Fund (hereafter HDMF) because of a In support thereof, PETITIONER contends that the subject 1995 Amendments issued by
superior retirement plan.[2] HDMF are inconsistent with the enabling law, P.D. No. 1752, as amended by R.A. No. 7742,
which merely requires as a pre~condition for exemption from coverage the existence of either
On 1 September 1995, the HDMF Board of Trustees, pursuant to Section 5 of Republic Act a superior provident/ retirement plan or a superior housing plan, and not the concurrence of
No. 7742, issued Board Resolution No. 1011, Series of 1995, amending and modifying the both plans. Hence, considering that PETITIONER has a provident plan superior to that
Rules and Regulations Implementing R.A. No. 7742. As amended, Section 1 of Rule VII offered by the HDMF, it is entitled to exemption from the coverage in accordance with
provides that for a company to be entitled to a waiver or suspension of Fund coverage,[3] it Section 19 of P.D. No. 1752. The 1996 Amendment are also void insofar as they abolished
must have a plan providing for both provident/ retirement and housing benefits superior to the exemption granted by Section 19 of P.D. 1752, as amended. The repeal of such exemption
those provided under the Pag~IBIG Fund. involves the exercise of legislative power, which cannot be delegated to HMDF. Kycalr
On 16 November 1995, PETITIONER filed with the respondent an application for Waiver or PETITIONER also cites Section 9 (1), Chapter 2, Book VII of the Administrative Code of
Suspension of Fund Coverage because of its superior retirement plan.[4] In support of said 1987, which provides:
application, PETITIONER submitted to the HDMF a letter explaining that the 1995
Amendments to the Rules are invalid.[5] Jksm SEC. 9. Public Participation ~~ (1) If not otherwise required by law, an agency shall, as far
as practicable, publish or circulate notices of proposed rules and afford interested parties the
In a letter dated 18 March 1996, the President and Chief Executive Officer of HDMF opportunity to submit their views prior to the adoption of any rule.
disapproved PETITIONER's application on the ground that the requirement that there should
be both a provident retirement fund and a housing plan is clear in the use of the phrase Since the Amendments to the Rules and Regulations Implementing Republic Act No. 7742
"and/or," and that the Rules Implementing R.A. No. 7742 did not amend nor repeal Section involve an imposition of an additional burden, a public hearing should have first been
19 of P.D. No. 1752 but merely implement the law.[6] conducted to give chance to the employers, like PETITIONER, to be heard before the HDMF
adopted the said Amendments. Absent such public hearing, the amendments should be
PETITIONER's appeal[7] with the HDMF Board of Trustees was denied for having been voided.
rendered moot and academic by Board Resolution No. 1208, Series of 1996, removing the
availment of waiver of the mandatory coverage of the Pag~IBIG Fund, except for distressed Finally, PETITIONER contends that HDMF did not comply with Section 3, Chapter 2, Book
employers.[8] VII of the Administrative Code of 1987, which provides that "[e]very agency shall file with
17
ADMIN LAW
the University of the Philippines Law Center three (3) certified copies of every rule adopted The controversy lies in the legal signification of the words "and/or."
by it."
In the instant case, the legal meaning of the words "and/or" should be taken in its ordinary
On the other hand, the HDMF contends that in promulgating the amendments to the rules and signification, i.e., "either and or; e.g. butter and/or eggs means butter and eggs or butter or
regulations which require the existence of a plan providing for both provident and housing eggs.
benefits for exemption from the Fund Coverage, the respondent Board was merely exercising
its rule-making power under Section 13 of P.D. No. 1752. It had the option to use "and" only "The term and/or means that the effect shall be given to both the conjunctive "and" and the
instead of "or" in the rules on waiver in order to effectively implement the Pag-IBIG Fund disjunctive "or"; or that one word or the other may be taken accordingly as one or the other
Law. By choosing "and," the Board has clarified the confusion brought about by the use of will best effectuate the purpose intended by the legislature as gathered from the whole statute.
"and/or" in Section 19 of P.D. No. 1752, as amended. The term is used to avoid a construction which by the use of the disjunctive "or" alone will
exclude the combination of several of the alternatives or by the use of the conjunctive "and"
As to the public hearing, HDMF maintains that as can be clearly deduced from Section 9(1), will exclude the efficacy of any one of the alternatives standing alone."
Chapter 2, book VII of the Revised Administrative Code of 1987, public hearing is required
only when the law so provides, and if not, only if the same is practicable. It follows that It is accordingly ordinarily held that the intention of the legislature in using the term "and/or"
public hearing is only optional or discretionary on the part of the agency concerned, except is that the word "and" and the word "or" are to be used interchangeably.
when the same is required by law. P.D. No. 1752 does not require that pubic hearing be first
conducted before the rules and regulations implementing it would become valid and effective. It ... seems to us clear from the language of the enabling law that Section 19 of P.D. No.
What it requires is the publication of said rules and regulations at least once in a newspaper of 1752 intended that an employer with a provident plan or an employee housing plan superior
general circulation. Having published said 1995 and 1996 Amendments through the to that of the fund may obtain exemption from coverage. If the law had intended that the
Philippine Star on 21 October 1995[13] and 15 November 1996,[14] respectively, HDMF has employee [sic] should have both a superior provident plan and a housing plan in order to
complied with the publication requirement. qualify for exemption, it would have used the words "and" instead of "and/or." Notably,
paragraph (a) of Section 19 requires for annual certification of waiver or suspension, that the
Finally, HDMF claims that as early as 18 October 1996, it had already filed certified true features of the plan or plans are superior to the fund or continue to be so. The law obviously
copies of the Amendments to the Rules and Regulations with the University of the contemplates that the existence of either plan is considered as sufficient basis for the grant of
Philippines Law Center. This fact is evidenced by certified true copies of the Certification an exemption; needless to state, the concurrence of both plans is more than sufficient. To
from the Office of the National Administrative Register of the U.P. Law Center.[15] require the existence of both plans would radically impose a more stringent condition for
waiver which was not clearly envisioned by the basic law. By removing the disjunctive word
We find for the PETITIONER. Calrky "or" in the implementing rules the respondent Board has exceeded its authority. Slx
The issue of the validity of the 1995 Amendments to the Rules and Regulations It is without doubt that the HDMF Board has rule~making power as provided in Section
Implementing R.A. No. 7742, specifically Section I, Rule VII on Waiver and Suspension, has 5[17] of R.A. No. 7742 and Section 13[18] of P.D. No. 1752. However, it is well~settled that
been squarely resolved in the relatively recent case of China Banking Corp. v. The Members rules and regulations, which are the product of a delegated power to create new and
of the Board of Trustees of the HDMF.[16] We held in that case that Section 1 of Rule VII of additional legal provisions that have the effect of law, should be within the scope of the
the Amendments to the Rules and Regulations Implementing R.A. No. 7742, and HDMF statutory authority granted by the legislature to the administrative agency.[19] It is required
Circular No. 124~B prescribing the Revised Guidelines and Procedure for Filing Application that the regulation be germane to the objects and purposes of the law, and be not in
for Waiver or Suspension of Fund Coverage under P.D. No. 1752, as amended by R.A. No. contradiction to, but in conformity with, the standards prescribed by law.[20]
7742, are null and void insofar as they require that an employer should have both a provident/
retirement plan and a housing plan superior to the benefits offered by the Fund in order to In the present case, when the Board of Trustees of the HDMF required in Section 1, Rule VII
qualify for waiver or suspension of the Fund coverage. In arriving at said conclusion, we of the 1995 Amendments to the Rules and Regulations Implementing R.A. No. 7742 that
ruled: employers should have both provident/retirement and housing benefits for all its employees
in order to qualify for exemption from the Fund, it effectively amended Section 19 of P.D.
18
ADMIN LAW
No. 1752. And when the Board subsequently abolished that exemption through the 1996
Amendments, it repealed Section 19 of P.D. No. 1752. Such amendment and subsequent
repeal of Section 19 are both invalid, as they are not within the delegated power of the Board.
The HDMF cannot, in the exercise of its rule~making power, issue a regulation not consistent
with the law it seeks to apply. Indeed, administrative issuances must not override, supplant or
modify the law, but must remain consistent with the law they intend to carry out.[21] Only
Congress can repeal or amend the law. Scslx
While it may be conceded that the requirement of having both plans to qualify for an
exemption, as well as the abolition of the exemption, would enhance the interest of the
working group and further strengthen the Home Development Mutual Fund in its pursuit of
promoting public welfare through ample social services as mandated by the Constitution, we
are of the opinion that the basic law should prevail. A department zeal may not be permitted
to outrun the authority conferred by the statute.[22]
Considering the foregoing conclusions, it is unnecessary to dwell on the other issues raised.
WHEREFORE, the petition is GRANTED. The assailed decision of 31 July 1997 of the
Court of Appeals in CA~G.R. No. SP~43668 and its Resolution of 15 October 1997 are
hereby REVERSED and SET ASIDE. The disapproval by the Home Development Mutual
Fund of the application of the petitioner for waiver or suspension of Fund coverage is SET
ASIDE, and the Home Development Mutual Fund is hereby directed to refund to petitioner
all sums of money it collected from the latter.
SO ORDERED.
19
ADMIN LAW
7.) Republic of the Philippines II

SUPREME COURT
Manila Sections 5(b), 6 and 9(b) of Republic Act No. 8180 do not contravene section 19, Article XII
of the Constitution; and
EN BANC
III
Sections 5(b), 6 and 9(b) of R.A. No. 8180 do not permeate the essence of the said law; hence
G.R. No. 124360 December 3, 1997 their nullity will not vitiate the other parts thereof.
FRANCISCO S. TATAD, petitioner, In their Motion for Reconsideration, the intervenors argue:
vs.
THE SECRETARY OF THE DEPARTMENT OF ENERGY AND THE SECRETARY 2.1.1 The total nullification of Republic Act No. 8180 restores the disproportionate advantage
OF THE DEPARTMENT OF FINANCE, respondents. of the three big oil firms — Caltex, Shell and Petron — over the small oil firms;
G.R. No. 127867 December 3, 1997 2.1.2 The total nullification of Republic Act No. 8180 "disarms" the new entrants and
seriously cripples their capacity to compete and grow; and
EDCEL C. LAGMAN, JOKER P. ARROYO, ENRIQUE GARCIA, WIGBERTO
TAÑADA, FLAG HUMAN RIGHTS FOUNDATION, INC., FREEDOM FROM DEBT 2.1.3 Ultimately the total nullification of Republic Act. No. 8180 removes substantial, albeit
COALITION (FDC), SANLAKAS, petitioners, imperfect, barriers to monopolistic practices and unfair competition and trade practices
vs. harmful not only to movant-intervernors but also to the public in general.
HON. RUBEN TORRES, in his capacity as the Executive Secretary, HON. In his Partial Motion for Reconsideration, 2 petitioner Garcia prays that only the provisions of
FRANCISCO VIRAY, in his capacity as the Secretary of Energy, CALTEX Philippines, R.A. No. 8180 on the 4% tariff differential, predatory pricing and minimum inventory be
Inc., PETRON Corporation, and PILIPINAS SHELL Corporation, respondents. declared unconstitutional. He cites the "pernicious effects" of a total declaration of
EASTERN PETROLEUM CORP., SEAOIL PETROLEUM CORP., SUBIC BAY unconstitutionality of R.A. No. 8180. He avers that "it is very problematic . . . if Congress can
DISTRIBUTION, INC., TWA, INC., and DUBPHIL GAS, Movants-in-Intervention. fastrack an entirely new law."
RESOLUTION We find no merit in the motions for reconsideration and partial motion for reconsideration.
We shall first resolve public respondents' motion for reconsideration. They insist that there
was no misapplication of Republic Act No. 8180 when the Executive considered the
PUNO, J.: depletion of the OPSF in advancing the date of full deregulation of the downstream oil
industry. They urge that the consideration of this factor did not violate the rule that the
For resolution are: (1) the motion for reconsideration filed by the public respondents; and (2) exercise of delegated power must be done strictly in accord with the standard provided in the
the partial motions for reconsideration filed by petitioner Enrique T. Garcia and the law. They contend that the rule prohibits the Executive from subtracting but not from adding
intervenors. 1 to the standard set by Congress. This hair splitting is a sterile attempt to make a distinction
when there is no difference. The choice and crafting of the standard to guide the exercise of
In their Motion for Reconsideration, the public respondents contend: delegated power is part of the lawmaking process and lies within the exclusive jurisdiction of
Congress. The standard cannot be altered in any way by the Executive for the Executive
I
cannot modify the will of the Legislature. To be sure, public respondents do not cite any
Executive Order No. 392 is not a misapplication of Republic Act No. 8180; authority to support its strange thesis for there is none in our jurisprudence.
20
ADMIN LAW
The public respondents next recycle their arguments that sections 5(b), 6 and 9(b) of R.A. No. The public respondents tenaciously defend the validity of the minimum inventory
8180 do not contravene section 19, Article XII of the Constitution. 3 They reiterate that the requirement. They aver that the requirement will not prejudice new players ". . . during their
4% tariff differential would encourage the construction of new refineries which will benefit first year of operation because they do not have yet annual sales from which the required
the country for they Filipino labor and goods. We have rejected this submission for a reality minimum inventory may be determined. Compliance with such requirement on their second
check will reveal that this 4% tariff differential gives a decisive edge to the existing oil and succeeding years of operation will not be difficult because the putting up of storage
companies even as it constitutes a substantial barrier to the entry of prospective players. We facilities in proportion to the volume of their business becomes an ordinary and necessary
do not agree with the public respondents that there is no empirical evidence to support this business undertaking just as the case of importers of finished products in other
ruling. In the recent hearing of the Senate Committee on Energy chaired by Senator Freddie industries." 9 The contention is an old one although it is purveyed with a new lipstick. The
Webb, it was established that the 4% tariff differential on crude oil and refined petroleum contention cannot convince for as well articulated by petitioner Garcia, "the prohibitive cost
importation gives a 20-centavo per liter advantage to the three big oil companies over the new of the required minimum inventory will not be any less burdensome on the second, third,
players. It was also found that said tariff differential serves as a protective shield for the big fourth, etc. years of operations. Unlike most products which can be imported and stored with
oil companies. 4 Nor do we approve public respondents' submission that the entry of new facility, oil imports require ocean receiving, storage facilities. Ocean receiving terminals are
players after deregulation is proof that the 4% tariff differential is not a heavy disincentive. already very expensive, and to require new players to put up more than they need is to
Acting as the mouthpiece of the new players, public respondents even lament that compound and aggravate their costs, and consequently their great dis-advantage vis-a-vis the
"unfortunately, the opportunity to get the answer right from the 'horses' mouth' eluded this Big 3." 10 Again, the argument on whether the minimum inventory requirement seriously
Honorable Court since none of the new players supposedly adversely affected by the assailed hurts the new players is best settled by hearing the new players themselves. In their motion
provisions came forward to voice their position." 5 They need not continue their lamentation. for intervention, they implicitly confirmed that the high cost of meeting the inventory
The new players represented by Eastern Petroleum, Seasoil Petroleum Corporation, Subic requirement has an inhibiting effect in their operation and hence, they support the ruling of
Bay Distribution, Inc., TWA Inc., and DubPhil Gas have intervened in the cases at bar and this Court striking it down as unconstitutional.
have spoken for themselves. In their motion for intervention, they made it crystal clear that it
is not their intention ". . . to seek the reversal of the Court's nullification of the 4% differential Public respondents still maintain that the provision on predatory pricing does not offend the
in section 5(b) nor of the inventory requirement of section 6, nor of the prohibition of Constitution. Again, their argument is not fresh though embellished with citations of cases in
predatory pricing in section 9(b)." 6 They stressed that they only protest the restoration of the the United States sustaining the validity of sales-below-costs statutes. 11 A quick look at these
10% oil tariff differential under the Tariff Code. 7 The horse's mouth therefore authoritatively American cases will show that they are inapplicable. R.A. No. 8180 has a different cast. As
tells us that the new players themselves consider the 4% tariff differential in R.A. No. 8180 as discussed, its provisions on tariff differential and minimum inventory erected high barriers to
oppressive and should be nullified. the entry of prospective players even as they raised their new rivals' costs, thus creating the
clear danger that the deregulated market in the downstream oil industry will not operate under
To give their argument a new spin, public respondents try to justify the 4% tariff differential an atmosphere of free and fair competition. It is certain that lack of real competition will
on the ground that there is a substantial difference between a refiner and an importer just as allow the present oil oligopolists to dictate prices, 12 and can entice them to engage in
there is a difference between raw material and finished product. Obviously, the effort is made predatory pricing to eliminate rivals. The fact that R.A. No. 8180 prohibits predatory pricing
to demonstrate that the unequal tariff does not violate the unequal protection clause of the will not dissolve this clear danger. In truth, its definition of predatory pricing is too loose to
Constitution. The effort only proves that the public respondents are still looking at the issue be real deterrent. Thus, one of the law's principal authors, Congressman Dante O. Tinga filed
of tariff differential from the wrong end of the telescope. Our Decision did not hold that the H.B. No. 10057 where he acknowledged in its explanatory note that "the definition of
4% tariff differential infringed the equal protection clause of the Constitution even as this was predatory pricing . . . needs to be tightened up particularly with respect to the definitive
contended by petitioner Tatad. 8 Rather, we held that said tariff differential substantially benchmark price and the specific anti-competitive intent. The definition in the bill at hand
occluded the entry point of prospective players in the downstream oil industry. We further which was taken from the Areeda-Turner test in the United States on predatory pricing
held that its inevitable result is to exclude fair and effective competition and to enhance the resolves the questions." Following the more effective Areeda-Turner test, Congressman
monopolists' ability to tamper with the mechanism of a free market. This consideration is Tinga has proposed to redefine predatory pricing, viz.: "Predatory pricing means selling or
basic in anti-trust suits and cannot be eroded by belaboring the inapplicable principle in offering to sell any oil product at a price below the average variable cost for the purpose of
taxation that different things can be taxed differently. destroying competition, eliminating a competitor or discouraging a competitor from entering
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the market." 13 In light of its loose characterization in R.A. 8180 and the law's anti- expressed in many quarters that a constitutional democracy, in view of its commitment to the
competitive provisions, we held that the provision on predatory pricing is constitutionally claims of property, would not be able to cope effectively with the problems of poverty and
infirmed for it can be wielded more successfully by the oil oligopolist. Its cumulative effect is misery that unfortunately afflict so many of our people, is not susceptible to the indictment
to add to the arsenal of power of the dominant oil companies. For as structured, it has no that the government therein established is impotent to take the necessary remedial measures.
more than the strength of a spider web — it can catch the weak but cannot catch the strong; it The framers saw to that. The welfare state concept is not alien to the philosophy of our
can stop the small oil players but cannot stop the big oil players from engaging in predatory Constitution. It is implicit in quite a few of its provisions. It suffices to mention two.
pricing.
There is the clause on the promotion of social justice to ensure the well-being and economic
Public respondents insist on their thesis that the cases at bar actually assail the wisdom of security of all the people, as well as the pledge of protection to labor with the specific
R.A. No. 8180 and that this Court should refrain from examining the wisdom of legislations. authority to regulate the relations between landowners and tenants and between labor and
They contend that R.A. No. 8180 involves an economic policy which this Court cannot capital. This particularized reference to the rights of working men whether in industry and
review for lack of power and competence. To start with, no school of scholars can claim any agriculture certainly cannot preclude attention to and concern for the rights of consumers,
infallibility. Historians with undefiled learning have chronicled 14 over the years the disgrace who are the objects of solicitude in the legislation now complained of. The police power as an
of many economists and the fall of one economic dogma after another. Be that as it may, the attribute to promote the common weal would be diluted considerably of its reach and
Court is aware that the principle of separation of powers prohibits the judiciary from effectiveness if on the mere plea that the liberty to contract would be restricted, the statute
interferring with the policy setting function of the legislature. 15 For this reason we italicized complained of may be characterized as a denial of due process. The right to property cannot
in our Decision that the Court did not review the wisdom of R.A. No. 8180 but its be pressed to such an unreasonable extreme.
compatibility with the Constitution; the Court did not annul the economic policy of
deregulation but vitiated its aspects which offended the constitutional mandate on fair It is understandable though why business enterprises, not unnaturally evincing lack of
competition. It is beyond debate that the power of Congress to enact laws does not include the enthusiasm for police power legislation that affect them adversely and restrict their profits
right to pass unconstitutional laws. In fine, the Court did not usurp the power of the Congress could predicate alleged violation of their rights on the due process clause, which as
to enact laws but merely discharged its bounden duty to check the constitutionality of laws interpreted by them is a bar to regulatory measures. Invariably, the response from this Court,
when challenged in appropriate cases. Our Decision annulling R.A No. 8180 is justified by from the time the Constitution was enacted, has been far from sympathetic. Thus, during the
the principle of check and balance. Commonwealth, we sustained legislations providing for collective bargaining, security of
tenure, minimum wages, compulsory arbitration, and tenancy regulation. Neither did the
We hold that the power and obligation of this Court to pass upon the constitutionality of laws objections as to the validity of measures regulating the issuance of securities and public
cannot be defeated by the fact that the challenged law carries serious economic implications. services prevail.
This Court has struck down laws abridging the political and civil rights of our people even if
it has to offend the other more powerful branches of government. There is no reason why the The Constitution gave this Court the authority to strike down all laws that violate the
Court cannot strike down R.A. No. 8180 that violates the economic rights of our people even Constitution. 17 It did not exempt from the reach of this authority laws with economic
if it has to bridle the liberty of big business within reasonable bounds. In Alalayan dimension. A 20-20 vision will show that the grant by the Constitution to this Court of this all
vs. National Power Corporation 16 the Court, speaking thru Mr. Chief Justice Enrique M. important power of review is written without any fine print.
Fernando, held:
The next issue is whether the Court should only declare as unconstitutional the provisions of
2. Nor is petitioner anymore successful in his plea for the nullification of the challenged R.A. No. 8180 on 4% tariff differential, minimum inventory and predatory pricing.
provision on the ground of his being deprived of the liberty to contract without due process of
law. Positing the affirmative view, petitioner Garcia proffered the following arguments:
It is to be admitted of course that property rights find shelter in specific constitutional 5. Begging the kind indulgence and benign patience of the Court, we humbly submit that the
provisions, one of which is the due process clause. It is equally certain that our fundamental unconstitutionality of the aforementioned provisions of R.A. No. 8180 implies that the other
law framed at a time of "surging unrest and dissatisfaction," when there was the fear
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provisions are constitutional. Thus, said constitutional provisions of R.A. No. 8180 may and 7.1 There is already limited time for Congress to pass such a new law before it adjourns for
can very well be spared. the 1998 elections.
5.1 With the striking down of "ultimately full deregulation," we will simply go back to the 7.2 At the very least, whether or not Congress will be able to fasttrack the enactment of a new
transition period under R.A. 8180 which will continue until Congress enacts an amendatory oil deregulation law consistent with the Honorable Court's ruling, would depend on many
law for the start of full oil deregulation in due time, when free market forces are already in unforseeable and uncontrollable factors. Already, several statements from legislators,
place. In turn, the monthly automatic price control mechanism based on Singapore Posted senators and congressmen alike, say that the new law can wait because of other pending
Prices (SPP) will be revived. The energy Regulatory Board (ERB), which still exist, would legislative matters, etc. Given the "realities" of politics, especially with the 1998 presidential
re-acquire jurisdiction and would easily compute the monthly price ceiling, based on SPP, of polls six months away, it is not far-fetched that the general welfare could be sacrificed to gain
each and every petroleum fuel product, effective upon finality of this Court's favorable political mileage, thus further unduly delaying the enactment of a new oil deregulation law.
resolution on this motion for partial reconsideration.
8. Furthermore, if the entire R.A. No. 8180 remains nullified as unconstitutional, the
5.2 Best of all, the oil deregulation can continue uninterrupted without the three other following pernicious effects will happen:
assailed provisions, namely, the 4% tariff differential, predatory pricing and minimum
inventory. 8.1 Until the new oil deregulation law is enacted, we would have to go back to the old law.
This means full regulation, i.e., higher tariff differential of 10%, higher petroleum product
6. We further humbly submit that a favorable resolution on this motion for partial price ceilings based on transfer prices of imported crude oil, and restrictions on the
reconsideration would be consistent with public interest. importation of refined petroleum products that would be allowed only if there are shortages,
etc.
6.1 In consequence, new players that have already come in can uninterruptedly continue their
operations more competitively and bullishly with an even playing field. 8.2 In consequence of the above, the existing new players, would have to totally stop their
operations.
6.2 Further, an even playing field will attract many more new players to come in in a much
shorter time. 8.3 The existing new players would find themselves in a bind on how to fulfill their
contractual obligations, especially on their delivery commitments of petroleum fuel
6.3 Correspondingly, Congress does not anymore have to pass a new deregulation law, thus products. They will be in some sort of "limbo" upon the nullification of the entire
it can immediately concentrate on just amending R.A. No. 8180 to abolish the OPSF, on the R.A. No. 8180.
government's assumption that it is necessary to do so. Parenthetically, it is neither correct nor
fair for high government officials to criticize and blame the Honorable Court on the OPSF, 8.4 The investments that existing new players have already made would become idle and
considering that said OPSF is not inherent in nor necessary to the transition period and may unproductive. All their planned additional investments would be put on hold.
be removed at any time.
8.5 Needless to say, all this would translate into tremendous losses for them.
6.4 In as much as R.A. No. 8180 would continue to be in place (sans its unconstitutional
provisions), only the Comprehensive Tax Reform Package (CTRP) would be needed for the 8.6 And obviously, prospective new players cannot and will not come in.
country to exit from IMF by December 1997.
8.7 On top of everything, public interest will suffer. Firstly, the oil deregulation program will
7. The Court, in declaring the entire R.A. No. 8180 unconstitutional, was evidently expecting be delayed. Secondly, the prices of petroleum products will be higher because of price
that Congress "can fasttrack the writing of a new law on oil deregulation in accord with the ceilings based on transfer prices of imported crude.
Constitution" (Decision p. 38) However, it is very problematic, to say the least, if Congress
can fasttrack an entirely new law. 9. When it passed R.A. No. 8180, Congress provided a safeguard against the possibility that
any of its provisions could be declared unconstitutional, thus the separability clause thereof,
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which the Court noted (Decision, p. 29). We humbly submit that this is another reason to 2.1.3 Ultimately, the total nullification of Republic Act No. 8180 removes substantial, albeit
grant this motion for partial reconsideration. imperfect, barriers to monopolistic practices and unfair competition and trade practices
harmful not only to movant-intervenors but also to the public in general.
In his Supplement to Urgent Motion for Partial Reconsideration, petitioner Garcia amplified
his contentions. The intervenors further aver that under a regime of regulation, (1) the big oil firms can block
oil importation by the small oil firms; (2) the big oil firms can block the expansion and
In a similar refrain, the public respondents contend that the "unmistakable intention of growth of the small oil firms. They likewise submit that the provisions on tariff differential,
Congress" is to make each and every provision of R.A. No. 8180 "independent and separable minimum inventory, and predatory pricing are separable from the body of R.A. No. 8180
from one another." To bolster this proposition, they cite the separability clause of the law and because of its separability clause. They also allege that their separability is further shown by
the pending bills in Congress proposing to repeal said offensive provisions but not the entire the pending bills in Congress which only seek the partial repeal of R.A. No. 8180.
law itself. They also recite the "inevitable consequences of the declaration of
unconstitutionality of R.A. No. 8180" as follows: We shall first resolve petitioner Garcia's linchpin contention that the full deregulation decreed
by R.A. No. 8180 to start at the end of March 1997 is unconstitutional. For prescinding from
1. There will be bigger price adjustments in petroleum products due to (a) the reimposition of this premise, petitioner suggests that "we simply go back to the transition period under R.A.
the higher tariff rates for imported crude oil and imported refined petroleum products [10%- No. 8180. Under the transition period, price control will be revived through the automatic
20%], (b) the uncertainty regarding R.A. 8184, or the "Oil Tariff Law," which simplified tax pricing mechanism based on Singapore Posted Prices. The Energy Regulatory Board . . .
administration by lowering the tax rates for socially-sensitive products such as LPG, diesel, would play a limited and ministerial role of computing the monthly price ceiling of each and
fuel oil and kerosene, and increasing tax rates of gasoline products which are used mostly by every petroleum fuel product, using the automatic pricing formula. While the OPSF would
consumers who belong to the upper income group, and (c) the issue of wiping out the deficit return, this coverage would be limited to monthly price increases in excess of P0.50 per liter."
of P2.6 billion and creating a subsidy fund in the Oil Price Stabilization Fund;
We are not impressed by petitioner Garcia's submission. Petitioner has no basis in
2. Importers, traders, and industrial end-users like the National Power Corporation will be condemning as unconstitutional per se the date fixed by Congress for the beginning of the full
constrained to source their oil requirement only from existing oil companies because of the deregulation of the downstream oil industry. Our Decision merely faulted the Executive for
higher tariff on imported refined petroleum products and restrictions on such importation that factoring the depletion of OPSF in advancing the date of full deregulation to February 1997.
would be allowed only if there are shortages; Nonetheless, the error of the Executive is now a non-issue for the full deregulation set by
Congress itself at the end of March 1997 has already come to pass. March 1997 is not an
3. Government control and regulation of all the activities of the oil industry will discourage arbitrary date. By that date, the transition period has ended and it was expected that the
prospective investors and drive away the existing new players; people would have adjusted to the role of market forces in shaping the prices of petroleum
4. All expansion and investment programs of the oil companies and new players will be and its products. The choice of March 1997 as the date of full deregulation is a judgment of
shelved indefinitely; Congress and its judgment call cannot be impugned by this Court.
5. Petitions for price adjustments should be filed and approved by the ERB. We come to the submission that the provisions on 4% tariff differential, minimum inventory
and predatory pricing are separable from the body of R.A. No. 8180, and hence, should alone
Joining the chorus, the intervenors contend that: be declared as unconstitutional. In taking this position, the movants rely heavily on the
separability provision of R.A. No. 8180. We cannot affirm the movants for the determine
2.1.1 The total nullification of Republic Act No. 8180 restores the disproportionate advantage whether or not a particular provision is separable, the courts should consider the intent of the
of the three big oil firms — Caltex, Shell and Petron — over the small oil firms; legislature. It is true that the most of the time, such intent is expressed in a separability clause
stating that the invalidity or unconstitutionality of any provision or section of the law will not
2.1.2 The total nullification of Republic Act No. 8180 "disarms" the new entrants and affect the validity or constitutionality of the remainder. Nonetheless, the separability clause
seriously cripples their capacity to compete and grow; and only creates a presumption that the act is severable. It is merely an aid in statutory
construction. It is not an inexorable command. 18 A separability clause does not clothe the
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valid parts with immunity from the invalidating effect the law gives to the inseparable 20% on refined petroleum. To decree the partial unconstitutionality of R.A. No. 8180 will
blending of the bad with the good. The separability clause cannot also be applied if it will bring about an absurdity — a fully deregulated downstream oil industry where government is
produce an absurd result. 19 In sum, if the separation of the statute will defeat the intent of the impotent to regulate run away prices, where the oil oligopolists can engage in cartelization
legislature, separation will not take place despite the inclusion of a separability clause in the without competition, where prospective players cannot come in, and where new players will
law. 20 close shop.
In the case of the Republic Act No. 8180, the unconstitutionality of the provisions on tariff We also reject the argument that the bills pending in Congress merely seek to remedy the
differential, minimum inventory and predatory pricing cannot but result in the partial defects of R.A No. 8180, and that this is proof that R.A. No. 8180 can be declared
unconstitutionality of the entire law despite its separability clause. These provisions cannot be unconstitutional minus its offensive provisions. We referred to the pending bills in Congress
struck down alone for they were the ones intended to carry out the policy of the law in our Decision only to show that Congress itself is aware of the various defects of the law
embodied in section 2 thereof which reads: and not to prove the inseparability of the offending provisions from the body of R.A. No.
8180. To be sure, movants even overlooked the fact that resolutions have been filed in both
Sec. 2. Declaration of Policy — It shall be the policy of the State to deregulate the House of Congress calling for a total review of R.A. No. 8180.
downstream oil industry to foster a truly competitive market which can better achieve the
social policy objectives of fair prices and adequate, continuous supply of environmentally- The movants warn that our Decision will throw us back to the undesirable regime of
clean and high-quality petroleum products. regulation. They emphasize its pernicious consequences — the revival of the 10% tariff
differential which will wipe out the new players, the return of the OPSF which is too
They actually set the stage for the regime of deregulation where government will no longer burdensome to government, the unsatisfactory scheme of price regulation by the ERB, etc. To
intervene in fixing the price of oil and the operations of oil companies. It is conceded that the stress again, it is not the will of the Court to return even temporarily to the regime of
success of deregulation lies in a truly competitive market and there can be no competitive regulation. If we return to the regime of regulation, it is because it is the inevitable
market without the easy entry and exit of competitors. No less than President Fidel consequence of the enactment by Congress of an unconstitutional law, R.A. No. 8180. It is
V. Ramos recognized this matrix when he declared the need is to ". . . recast our laws on trust, settled jurisprudence that the declaration of a law as unconstitutional revives the laws that it
monopolies, oligopolies, cartels and combinations injurious to public welfare — to restore has repealed. Stated otherwise, an unconstitutional law returns us to the status quo ante and
competition where it has disappeared and to preserve it where it still exists. In a word, we this return is beyond the power of the Court to stay. Under our scheme of government,
need to perpetuate competition as a system to regulate the economy and achieve global however, the remedy to prevent the revival of an unwanted status quo ante or stop its
product quality." 21 continuation by immediately enacting the necessary remedial legislation. We emphasize that
in the cases at bar, the Court did not condemn the economic policy of deregulation as
We held in our Decision that the provisions on 4% tariff differential, minimum inventory and unconstitutional. It merely held that as crafted, the law runs counter to the constitutional
predatory pricing are anti-competition, and they are the key provisions of R.A. No. 8180. provision calling for fair competition. 23 Thus, there is no impediment in re-enacting R.A. No.
Without these provisions in place, Congress could not have deregulated the downstream oil 8180 minus its provisions which are anti-competition. The Court agrees that our return to the
industry. Consider the 4% tariff differential on crude oil and refined petroleum. Before R.A. regime of regulation has pernicious consequences and it specially symphatizes with the
No. 8180, 22 there was a ten-point difference between the tariff imposed on crude oil and that intervenors. Be that as it may, the Court is powerless to prevent this return just as it is
on refined petroleum. Section 5(b) of R.A. No. 8180 lowered the difference to four by powerless to repeal the 10% tariff differential of the Tariff Code. It is Congress that can give
imposing a 3% tariff on crude oil and a 7% tariff on refined petroleum. We ruled, however, all these remedies. 24
that this reduced tariff differential is unconstitutional for it still posed a substantial barrier to
the entry of new players and enhanced the monopolistic power of the three existing oil Petitioner Garcia, however, injects a non-legal argument in his motion for partial
companies. The ruling that the 4% differential is unconstitutional will unfortunately revive reconsideration. He avers that "given the 'realities' of politics, especially with the 1998
the 10% tariff differential of the Tariff and Customs Code. The high 10% tariff differential presidential polls six months away, it is not far-fetched that the general welfare could be
will certainly give a bigger edge to the three existing oil companies, will form an insuperable sacrificed to gain political mileage, thus further unduly delaying the enactment of a new oil
barrier to prospective players, and will drive out of business the new players. Thus, there can deregulation law." The short answer to petitioner Garcia's argument is that when the Court
be no question that Congress will not allow deregulation if the tariff is 10% on crude oil and
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reviews the constitutionality of a law, it does not deal with the realities of politics nor does it rights of our people, especially the poor. It is the unyielding duty of this Court to uphold the
delve into the mysticism of politics. The Court has no partisan political theology for as an supremacy of the Constitution not with a mere wishbone but with a backbone that should
institution it is at best apolitical, and at worse, politically agnostic. In any event, it should not neither bend nor break.
take a long time for Congress to enact a new oil deregulation law given its interest for the
welfare of our people. Petitioner Garcia himself has been quoted as saying that ". . . with the IN VIEW WHEREOF, the Motions for Reconsideration of the public respondents and of the
Court's decision, it would now be easy for Congress to craft new law, considering that intervenors as well as the Partial Motion for Reconsideration of petitioner Enrique Garcia are
lawmakers will be guided by the Court's points." 25 Even before our Decision, bills amending DENIED for lack of merit.
the offensive provisions of R.A. No. 8180 have already been filed in the Congress and under
consideration by its committees. Speaker Jose de Venecia has assured after a meeting of the SO ORDERED.
Legislative-Executive Advisory Council (LEDAC) that: "I suppose before Christmas, we
should be able to pass a new oil deregulation
law. 26 The Chief Executive himself has urged the immediate passage of a new and better oil
deregulation law. 27
Finally, public respondents raise the scarecrow argument that our Decision will drive away
foreign investors. In response to this official repertoire, suffice to state that our Decision
precisely levels the playing field for foreign investors as against the three dominant oil
oligopolists. No less than the influential Philippine Chamber of Commerce and Industry
whose motive is beyond question, stated thru its Acting President Jaime Ladao that ". . . this
Decision, in fact tells us that we are for honest-to-goodness competition." Our Decision
should be a confidence-booster to foreign investors for its assures them of an effective
judicial remedy against an unconstitutional law. There is need to attract foreign investment
but that policy has never been foreign investment at any cost. We cannot trade-in the
Constitution for foreign investment. It is not economic heresy to hold that trade-in is not a fair
exchange.
To recapitulate, our Decision declared R.A. No. 8180 unconstitutional for three reasons: (1) it
gave more power to an already powerful oil oligopoly; (2) it blocked the entry of effective
competitors; and (3) it will sire an even more powerful oligopoly whose unchecked power
will prejudice the interest of the consumers and compromise the general welfare.
A weak and developing country like the Philippines cannot risk a downstream oil industry
controlled by a foreign oligopoly that can run riot. Oil is our most socially sensitive
commodity and for it to be under the control of a foreign oligopoly without effective
competitors is a clear and present danger. A foreign oil oligopoly can undermine the security
of the nation; it can exploit the economy if greed becomes its creed; it will have the power to
drive the Filipino to a prayerful pose. Under a deregulated regime, the people's only hope to
check the overwhelming power of the foreign oil oligopoly lies on a market where there is
fair competition. With prescience, the Constitution mandates the regulation of monopolies
and interdicts unfair competition. Thus, the Constitution provides a shield to the economic
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8.) Republic of the Philippines The respondent demurred to the petition on the ground that it did not state facts sufficient to
SUPREME COURT constitute a cause of action. The demurrer was based on two reasons, namely, (1) that if Act
Manila No. 3155 were declared unconstitutional and void, the petitioner would not be entitled to the
EN BANC relief demanded because Act No. 3052 would automatically become effective and would
G.R. No. L-34674 October 26, 1931 prohibit the respondent from giving the permit prayed for; and (2) that Act No. 3155 was
MAURICIO CRUZ, petitioner-appellant, constitutional and, therefore, valid.
vs.
STANTON YOUNGBERG, Director of the Bureau of Animal Industry, respondent- The court sustained the demurrer and the complaint was dismissed by reason of the failure of
appellee. the petitioner to file another complaint. From that order of dismissal, the petitioner appealed
Jose Yulo for appellant. to this court.
Office of the Solicitor-General Reyes for appellee.
The appellee contends that even if Act No. 3155 be declared unconstitutional by the fact
alleged by the petitioner in his complaint, still the petitioner can not be allowed to import
OSTRAND, J.: cattle from Australia for the reason that, while Act No. 3155 were declared unconstitutional,
Act No. 3052 would automatically become effective. Act No. 3052 reads as follows:
This is a petition brought originally before the Court of First Instance of Manila for the
issuance of a writ of mandatory injunction against the respondent, Stanton Youngberg, as SECTION 1. Section seventeen hundred and sixty-two of Act Numbered Twenty-seven
Director of the Bureau of Animal Industry, requiring him to issue a permit for the landing of hundred and eleven, known as the Administrative Code, is hereby amended to read as
ten large cattle imported by the petitioner and for the slaughter thereof. The petitioner follows:
attacked the constitutionality of Act No. 3155, which at present prohibits the importation of
cattle from foreign countries into the Philippine Islands. "SEC. 1762. Bringing of animals imported from foreign countries into the Philippine Islands.
— It shall be unlawful for any person or corporation to import, bring or introduce live cattle
Among other things in the allegation of the petition, it is asserted that "Act No. 3155 of the into the Philippine Islands from any foreign country. The Director of Agriculture may, with
Philippine Legislature was enacted for the sole purpose of preventing the introduction of the approval of the head of the department first had, authorize the importation, bringing or
cattle diseases into the Philippine Islands from foreign countries, as shown by an explanatory introduction of various classes of thoroughbred cattle from foreign countries for breeding the
note and text of Senate Bill No. 328 as introduced in the Philippine Legislature, ... ." The Act same to the native cattle of these Islands, and such as may be necessary for the improvement
in question reads as follows: of the breed, not to exceed five hundred head per annum: Provided, however, That the
Director of Agriculture shall in all cases permit the importation, bringing or introduction of
SECTION 1. After March thirty-first, nineteen hundred and twenty-five existing contracts for draft cattle and bovine cattle for the manufacture of serum: Provided, further, That all live
the importation of cattle into this country to the contrary notwithstanding, it shall be strictly cattle from foreign countries the importation, bringing or introduction of which into the
prohibited to import, bring or introduce into the Philippine Islands any cattle from foreign Islands is authorized by this Act, shall be submitted to regulations issued by the Director of
countries: Provided, however, That at any time after said date, the Governor-General, with Agriculture, with the approval of the head of the department, prior to authorizing its transfer
the concurrence of the presiding officers of both Houses, may raise such prohibition entirely to other provinces.
or in part if the conditions of the country make this advisable or if decease among foreign
cattle has ceased to be a menace to the agriculture and live stock of the lands. "At the time of the approval of this Act, the Governor-General shall issue regulations and
others to provide against a raising of the price of both fresh and refrigerated meat. The
SEC. 2. All acts or parts of acts inconsistent with this Act are hereby repealed. Governor-General also may, by executive order, suspend, this prohibition for a fixed period
in case local conditions require it."
SEC. 3. This Act shall take effect on its approval.
SEC. 2. This Act shall take effect six months after approval.
Approved, March 8, 1924.
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Approved, March 14, 1922. his discretion, the prohibition provided in the act constitutes an unlawful delegation of the
legislative powers." We do not think that such is the case; as Judge Ranney of the Ohio
The petitioner does not present any allegations in regard to Act No. 3052 to show its nullity Supreme Court in Cincinnati, Wilmington and Zanesville Railroad Co. vs. Commissioners of
or unconstitutionality though it appears clearly that in the absence of Act No. 3155 the former Clinton County (1 Ohio St., 77, 88) said in such case:
act would make it impossible for the Director of the Bureau of Animal Industry to grant the
petitioner a permit for the importation of the cattle without the approval of the head of the The true distinction, therefore, is between the delegation of power to make the law, which
corresponding department. 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
An unconstitutional statute can have no effect to repeal former laws or parts of laws by cannot be done; to the latter no valid objection can be made.
implication, since, being void, it is not inconsistent with such former laws. (I Lewis
Sutherland, Statutory Construction 2nd ed., p. 458, citing McAllister vs. Hamlin, 83 Cal., Under his fourth assignment of error the appellant argues that Act No. 3155 amends section 3
361; 23 Pac., 357; Orange Country vs. Harris, 97 Cal., 600; 32 Pac., 594; Carr vs. State, 127 of the Tariff Law, but it will be noted that Act No. 3155 is not an absolute prohibition of the
Ind., 204; 11 L.R.A., 370, etc.) importation of cattle and it does not add any provision to section 3 of the Tariff Law. As
stated in the brief of the Attorney-General: "It is a complete statute in itself. It does not make
This court has several times declared that it will not pass upon the constitutionality of statutes any reference to the Tariff Law. It does not permit the importation of articles, whose
unless it is necessary to do so (McGirr vs. Hamilton and Abreu, 30 Phil., 563, 568; Walter E. importation is prohibited by the Tariff Law. It is not a tariff measure but a quarantine
Olsen & Co. vs. Aldanese and Trinidad, 43 Phil., 259) but in this case it is not necessary to measure, a statute adopted under the police power of the Philippine Government. It is at most
pass upon the validity of the statute attacked by the petitioner because even if it were declared a `supplement' or an àddition' to the Tariff Law. (See MacLeary vs. Babcock, 82 N.E., 453,
unconstitutional, the petitioner would not be entitled to relief inasmuch as Act No. 3052 is not 455; 169 Ind., 228 for distinction between `supplemental' and àmendatory' and O'Pry vs.
in issue. U.S., 249 U.S., 323; 63 Law. ed., 626, for distinction between àddition' and àmendment.')"
But aside from the provisions of Act No. 3052, we are of the opinion that Act No. 3155 is The decision appealed from is affirmed with the costs against the appellant. So ordered.
entirely valid. As shown in paragraph 8 of the amended petition, the Legislature passed Act
No. 3155 to protect the cattle industry of the country and to prevent the introduction of cattle
diseases through importation of foreign cattle. It is now generally recognized that the
promotion of industries affecting the public welfare and the development of the resources of
the country are objects within the scope of the police power (12 C.J., 927; 6 R.C.L., 203-206
and decisions cited therein; Reid vs. Colorado, 187 U.S., 137, 147, 152; Yeazel vs.
Alexander, 58 Ill., 254). In this connection it is said in the case of Punzalan vs. Ferriols and
Provincial Board of Batangas (19 Phil., 214), that the provisions of the Act of Congress of
July 1, 1902, did not have the effect of denying to the Government of the Philippine Islands
the right to the exercise of the sovereign police power in the promotion of the general welfare
and the public interest. The facts recited in paragraph 8 of the amended petition shows that at
the time the Act No. 3155 was promulgated there was reasonable necessity therefor and it
cannot be said that the Legislature exceeded its power in passing the Act. That being so, it is
not for this court to avoid or vacate the Act upon constitutional grounds nor will it assume to
determine whether the measures are wise or the best that might have been adopted. (6 R.C.L.,
243 and decisions cited therein.)1awphil.net
In his third assignment of error the petitioner claims that "The lower court erred in not
holding that the power given by Act No. 3155 to the Governor-General to suspend or not, at
28
ADMIN LAW
9.) CMO 27-2003 further provided for the proper procedure for protest or Valuation and
Classification Review Committee (VCRC) cases. Under this procedure, the release of the
Supreme Court articles that were the subject of protest required the importer to post a cash bond to cover the
Manila tariff differential.[6]
SECOND DIVISION A month after the issuance of CMO 27-2003, on 19 December 2003, respondent filed a
Petition for Declaratory Relief[7] with the Regional Trial Court (RTC) of Las Pias City. It
COMMISSIONER OF CUSTOMS and G.R. No. 179579 anticipated the implementation of the regulation on its imported and perishable Chinese
the DISTRICT COLLECTOR OF THE milling wheat in transit from China.[8] Respondent contended that CMO 27-2003 was issued
PORT OF SUBIC, Present: without following the mandate of the Revised Administrative Code on public participation,
Petitioners, prior notice, and publication or registration with the University of the Philippines Law
CARPIO, J., Chairperson, Center.
BRION,
PEREZ, Respondent also alleged that the regulation summarily adjudged it to be a feed grade supplier
- versus - SERENO, and without the benefit of prior assessment and examination; thus, despite having imported food
REYES, JJ. grade wheat, it would be subjected to the 7% tariff upon the arrival of the shipment, forcing
them to pay 133% more than was proper.
Promulgated:
HYPERMIX FEEDS CORPORATION, Furthermore, respondent claimed that the equal protection clause of the Constitution was
Respondent. February 1, 2012 violated when the regulation treated non-flour millers differently from flour millers for no
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x reason at all.
DECISION Lastly, respondent asserted that the retroactive application of the regulation was confiscatory
in nature.
SERENO, J.:
Before us is a Petition for Review under Rule 45,[1] assailing the Decision[2] and the On 19 January 2004, the RTC issued a Temporary Restraining Order (TRO) effective for
Resolution[3] of the Court of Appeals (CA), which nullified the Customs Memorandum Order twenty (20) days from notice.[9]
(CMO) No. 27-2003[4] on the tariff classification of wheat issued by petitioner Commissioner Petitioners thereafter filed a Motion to Dismiss.[10] They alleged that: (1) the RTC did not
of Customs. have jurisdiction over the subject matter of the case, because respondent was asking for a
The antecedent facts are as follows: judicial determination of the classification of wheat; (2) an action for declaratory relief was
improper; (3) CMO 27-2003 was an internal administrative rule and not legislative in nature;
On 7 November 2003, petitioner Commissioner of Customs issued CMO 27-2003. Under the and (4) the claims of respondent were speculative and premature, because the Bureau of
Memorandum, for tariff purposes, wheat was classified according to the following: (1) Customs (BOC) had yet to examine respondents products. They likewise opposed the
importer or consignee; (2) country of origin; and (3) port of discharge.[5] The regulation application for a writ of preliminary injunction on the ground that they had not inflicted any
provided an exclusive list of corporations, ports of discharge, commodity descriptions and injury through the issuance of the regulation; and that the action would be contrary to the rule
countries of origin. Depending on these factors, wheat would be classified either as food that administrative issuances are assumed valid until declared otherwise.
grade or feed grade. The corresponding tariff for food grade wheat was 3%, for feed grade,
7%. On 28 February 2005, the parties agreed that the matters raised in the application for
preliminary injunction and the Motion to Dismiss would just be resolved together in the main
29
ADMIN LAW
case. Thus, on 10 March 2005, the RTC rendered its Decision[11] without having to resolve The Petition has no merit.
the application for preliminary injunction and the Motion to Dismiss.
We shall first discuss the propriety of an action for declaratory relief.
The trial court ruled in favor of respondent, to wit:
Rule 63, Section 1 provides:
WHEREFORE, in view of the foregoing, the Petition is GRANTED and the subject
Customs Memorandum Order 27-2003 is declared INVALID and OF NO FORCE AND Who may file petition. Any person interested under a deed, will, contract or other written
EFFECT. Respondents Commissioner of Customs, the District Collector of Subic or anyone instrument, or whose rights are affected by a statute, executive order or regulation, ordinance,
acting in their behalf are to immediately cease and desist from enforcing the said Customs or any other governmental regulation may, before breach or violation thereof, bring an action
Memorandum Order 27-2003. in the appropriate Regional Trial Court to determine any question of construction or validity
arising, and for a declaration of his rights or duties, thereunder.
SO ORDERED.[12]
The requirements of an action for declaratory relief are as follows: (1) there must be a
The RTC held that it had jurisdiction over the subject matter, given that the issue raised by justiciable controversy; (2) the controversy must be between persons whose interests are
respondent concerned the quasi-legislative powers of petitioners. It likewise stated that a adverse; (3) the party seeking declaratory relief must have a legal interest in the controversy;
petition for declaratory relief was the proper remedy, and that respondent was the proper and (4) the issue involved must be ripe for judicial determination.[15] We find that the Petition
party to file it. The court considered that respondent was a regular importer, and that the latter filed by respondent before the lower court meets these requirements.
would be subjected to the application of the regulation in future transactions.
First, the subject of the controversy is the constitutionality of CMO 27-2003 issued by
With regard to the validity of the regulation, the trial court found that petitioners had not petitioner Commissioner of Customs. In Smart Communications v. NTC,[16] we held:
followed the basic requirements of hearing and publication in the issuance of CMO 27-2003.
It likewise held that petitioners had substituted the quasi-judicial determination of the
commodity by a quasi-legislative predetermination.[13] The lower court pointed out that a
classification based on importers and ports of discharge were violative of the due process The determination of whether a specific rule or set of rules issued by an administrative
rights of respondent. 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
Dissatisfied with the Decision of the lower court, petitioners appealed to the CA, raising the declare a law, treaty, international or executive agreement, presidential decree, order,
same allegations in defense of CMO 27-2003.[14] The appellate court, however, dismissed the instruction, ordinance, or regulation in the courts, including the regional trial courts.
appeal. It held that, since the regulation affected substantial rights of petitioners and other This is within the scope of judicial power, which includes the authority of the courts to
importers, petitioners should have observed the requirements of notice, hearing and determine in an appropriate action the validity of the acts of the political
publication. 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
Hence, this Petition. 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.
Petitioners raise the following issues for the consideration of this Court: (Emphasis supplied)
I. THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE WHICH IS
NOT IN ACCORD WITH THE LAW AND PREVAILING JURISPRUDENCE.
Meanwhile, in Misamis Oriental Association of Coco Traders, Inc. v. Department of Finance
II. THE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT THE Secretary,[17] we said:
TRIAL COURT HAS JURISDICTION OVER THE CASE.
30
ADMIN LAW
xxx [A] legislative rule is in the nature of subordinate legislation, designed to implement a the Collector of Customs and the Commissioner of Customs are bound by their own CMO.
primary legislation by providing the details thereof. xxx Petitioner cannot get its refund with the said agency. We believe and so find that Petitioner
has presented such a stake in the outcome of this controversy as to vest it with standing to file
In addition such rule must be published. On the other hand, interpretative rules are designed this petition.[18] (Emphasis supplied)
to provide guidelines to the law which the administrative agency is in charge of enforcing.
Accordingly, in considering a legislative rule a court is free to make three

inquiries: (i) whether the rule is within the delegated authority of the administrative Finally, the issue raised by respondent is ripe for judicial determination, because litigation is
agency; (ii) whether it is reasonable; and (iii) whether it was issued pursuant to proper inevitable[19] for the simple and uncontroverted reason that respondent is not included in the
procedure. But the court is not free to substitute its judgment as to the desirability or enumeration of flour millers classified as food grade wheat importers. Thus, as the trial court
wisdom of the rule for the legislative body, by its delegation of administrative judgment, has stated, it would have to file a protest case each time it imports food grade wheat and be
committed those questions to administrative judgments and not to judicial judgments. In the subjected to the 7% tariff.
case of an interpretative rule, the inquiry is not into the validity but into the correctness or
propriety of the rule. As a matter of power a court, when confronted with an interpretative It is therefore clear that a petition for declaratory relief is the right remedy given the
rule, is free to (i) give the force of law to the rule; (ii) go to the opposite extreme and circumstances of the case.
substitute its judgment; or (iii) give some intermediate degree of authoritative weight to the
interpretative rule. (Emphasis supplied) Considering that the questioned regulation would affect the substantive rights of respondent
as explained above, it therefore follows that petitioners should have applied the pertinent
provisions of Book VII, Chapter 2 of the Revised Administrative Code, to wit:
Second, the controversy is between two parties that have adverse interests. Petitioners are Section 3. Filing. (1) Every agency shall file with the University of the Philippines Law
summarily imposing a tariff rate that respondent is refusing to pay. 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 from that date shall not
Third, it is clear that respondent has a legal and substantive interest in the implementation of thereafter be the bases of any sanction against any party of persons.
CMO 27-2003. Respondent has adequately shown that, as a regular importer of wheat, on 14
August 2003, it has actually made shipments of wheat from China to Subic. The shipment xxx xxx xxx
was set to arrive in December 2003. Upon its arrival, it would be subjected to the conditions
of CMO 27-2003. The regulation calls for the imposition of different tariff rates, depending Section 9. Public Participation. - (1) If not otherwise required by law, an agency shall, as far
on the factors enumerated therein. Thus, respondent alleged that it would be made to pay the as practicable, publish or circulate notices of proposed rules and afford interested parties the
7% tariff applied to feed grade wheat, instead of the 3% tariff on food grade wheat. In opportunity to submit their views prior to the adoption of any rule.
addition, respondent would have to go through the procedure under CMO 27-2003, which (2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall
would undoubtedly toll its time and resources. The lower court correctly pointed out as have been published in a newspaper of general circulation at least two (2) weeks before the
follows: first hearing thereon.
xxx As noted above, the fact that petitioner is precisely into the business of importing (3) In case of opposition, the rules on contested cases shall be observed.
wheat, each and every importation will be subjected to constant disputes which will
result into (sic) delays in the delivery, setting aside of funds as cash bond required in the
CMO as well as the resulting expenses thereof. It is easy to see that business uncertainty
will be a constant occurrence for petitioner. That the sums involved are not minimal is When an administrative rule is merely interpretative in nature, its applicability needs nothing
shown by the discussions during the hearings conducted as well as in the pleadings filed. further than its bare issuance, for it gives no real consequence more than what the law itself
It may be that the petitioner can later on get a refund but such has been foreclosed because has already prescribed. When, on the other hand, the administrative rule goes beyond merely
31
ADMIN LAW
providing for the means that can facilitate or render least cumbersome the implementation of Unfortunately, CMO 27-2003 does not meet these requirements. We do not see how the
the law but substantially increases the burden of those governed, it behooves the agency to quality of wheat is affected by who imports it, where it is discharged, or which country it
accord at least to those directly affected a chance to be heard, and thereafter to be duly came from.
informed, before that new issuance is given the force and effect of law.[20]
Thus, on the one hand, even if other millers excluded from CMO 27-2003 have imported
Likewise, in Taada v. Tuvera,[21] we held: food grade wheat, the product would still be declared as feed grade wheat, a classification
subjecting them to 7% tariff. On the other hand, even if the importers listed under CMO 27-
The clear object of the above-quoted provision is to give the general public adequate 2003 have imported feed grade wheat, they would only be made to pay 3% tariff, thus
notice of the various laws which are to regulate their actions and conduct as depriving the state of the taxes due. The regulation, therefore, does not become
citizens. Without such notice and publication, there would be no basis for the application of disadvantageous to respondent only, but even to the state.
the maxim ignorantia legis non excusat. It would be the height of injustice to punish or
otherwise burden a citizen for the transgression of a law of which he had no notice It is also not clear how the regulation intends to monitor more closely wheat importations and
whatsoever, not even a constructive one. thus prevent their misclassification. A careful study of CMO 27-2003 shows that it not only
fails to achieve this end, but results in the opposite. The application of the regulation
forecloses the possibility that other corporations that are excluded from the list import food
grade wheat; at the same time, it creates an assumption that those who meet the criteria do not
Perhaps at no time since the establishment of the Philippine Republic has the publication of import feed grade wheat. In the first case, importers are unnecessarily burdened to prove the
laws taken so vital significance that at this time when the people have bestowed upon the classification of their wheat imports; while in the second, the state carries that burden.
President a power heretofore enjoyed solely by the legislature. While the people are kept
abreast by the mass media of the debates and deliberations in the Batasan Pambansa and for Petitioner Commissioner of Customs also went beyond his powers when the regulation
the diligent ones, ready access to the legislative records no such publicity accompanies the limited the customs officers duties mandated by Section 1403 of the Tariff and Customs Law,
law-making process of the President. Thus, without publication, the people have no means as amended. The law provides:
of knowing what presidential decrees have actually been promulgated, much less a
definite way of informing themselves of the specific contents and texts of such decrees. Section 1403. Duties of Customs Officer Tasked to Examine, Classify, and Appraise Imported
(Emphasis supplied) Articles. The customs officer tasked to examine, classify, and appraise imported articles shall
determine whether the packages designated for examination and their contents are in
accordance with the declaration in the entry, invoice and other pertinent documents and
shall make return in such a manner as to indicate whether the articles have been truly
Because petitioners failed to follow the requirements enumerated by the Revised
and correctly declared in the entry as regard their quantity, measurement, weight, and
Administrative Code, the assailed regulation must be struck down. tariff classification and not imported contrary to law. He shall submit samples to the
Going now to the content of CMO 27-3003, we likewise hold that it is unconstitutional for laboratory for analysis when feasible to do so and when such analysis is necessary for the
being violative of the equal protection clause of the Constitution. proper classification, appraisal, and/or admission into the Philippines of imported articles.
The equal protection clause means that no person or class of persons shall be deprived of the Likewise, the customs officer shall determine the unit of quantity in which they are
same protection of laws enjoyed by other persons or other classes in the same place in like usually bought and sold, and appraise the imported articles in accordance with Section
circumstances. Thus, the guarantee of the equal protection of laws is not violated if there is a 201 of this Code.
reasonable classification. For a classification to be reasonable, it must be shown that (1) it Failure on the part of the customs officer to comply with his duties shall subject him to the
rests on substantial distinctions; (2) it is germane to the purpose of the law; (3) it is not penalties prescribed under Section 3604 of this Code.
limited to existing conditions only; and (4) it applies equally to all members of the same
class.[22]
32
ADMIN LAW
The provision mandates that the customs officer must first assess and determine the
classification of the imported article before tariff may be imposed. Unfortunately, CMO 23-
2007 has already classified the article even before the customs officer had the chance to
examine it. In effect, petitioner Commissioner of Customs diminished the powers granted by
the Tariff and Customs Code with regard to wheat importation when it no longer required the
customs officers prior examination and assessment of the proper classification of the wheat.
It is well-settled that rules and regulations, which are the product of a delegated 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 that it be
not in contradiction to, but in conformity with, the standards prescribed by law.[23]
In summary, petitioners violated respondents right to due process in the issuance of CMO 27-
2003 when they failed to observe the requirements under the Revised Administrative Code.
Petitioners likewise violated respondents right to equal protection of laws when they provided
for an unreasonable classification in the application of the regulation. Finally, petitioner
Commissioner of Customs went beyond his powers of delegated authority when the
regulation limited the powers of the customs officer to examine and assess imported articles.
WHEREFORE, in view of the foregoing, the Petition is DENIED.
SO ORDERED.
33

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ADMIN LAW

III. POWERS OF ADMINISTRATIVE AGANCY

Republic of the Philippines

WHEREFORE, Executive Order No. 626-A is hereby declared unconstitutional. Except as

We are not convinced.

7.) Republic of the Philippines II

Accordingly, in considering a legislative rule a court is free to make three

WHEREFORE, in view of the foregoing, the Petition is DENIED.

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