Dagan v. Phil.

Racing Commission (Philracom)

G.R. No. 175220
February 12, 2009
Tinga

FACTS:
Aug. 11, 2004- Philracom issued a directive directing the Manila Jockey Club, Inc. (MJCI) and Philippine Racing
Club, Inc. (PRCI) to immediately come up with their respective Clubs’ House Rule to address Equine Infectious
Anemia (EIA) problem and to rid their facilities of horses infected with EIA.
Said directive was issued pursuant to Administrative Order No. 5 dated 28 March 1994 by the Department of
Agriculture declaring it unlawful for any person, firm or corporation to ship, drive, or transport horses from any
locality or place except when accompanied by a certificate issued by the authority of the Director of the Bureau
of Animal Industry (BAI).
In compliance with the directive, MJCI and PRCI ordered the owners of racehorses stable in their establishments
to submit the horses to blood sampling and administration of the Coggins Test to determine whether they are
afflicted with the EIA virus. Subsequently, on 17 September 2004, Philracom issued copies of the guidelines for
the monitoring and eradication of EIA.(2nd directive)
Petitioners refused to comply with the directives. Despite resistance from petitioners, the blood testing
proceeded. The horses, whose owners refused to comply were banned from the races, were removed from the
actual day of race, prohibited from renewing their licenses or evicted from their stables.
Racehorse owners complained before the Office of the President (OP) which in turn issued a directive instructing
Philracom to investigate the matter.
Petitioners filed for a TRO with the RTC- granted. RTC however dismissed their petition for injunction because: 1.
The issue is already moot since almost all racehorse owners complied with the directives; and 2. It is a valid
exercise of police power.
Upon appeal, CA affirmed the RTC decision in toto.

SC level:
Petitioner's arguments: 1. They maintain that the assailed guidelines do not comply with due process
requirements; 2. No investigation or at least a summary proceeding was conducted affording petitioners an
opportunity to be heard. 3. assailed guidelines are ultra vires in that the sanctions imposed for refusing to submit
to medical examination are summary eviction from the stables or arbitrary banning of participation in the races,
notwithstanding the penalties prescribed in the contract of lease.

Philracom's arguments:Philracom also justified its right under the law to regulate horse raciing MJCI adds that
Philracom need not delegate its rule-making power to the former since MJCI’s right to formulate its internal rules
is subsumed under the franchise granted to it by Congress.

That is why petitioners raise for the first time the issue that Philracom had unconstitutionally delegated its rule-
making power to PRCI and MJCI in issuing the directive for them to come up with club rules. They said that power
granted to PRCI and MJCI under their respective franchises is limited to: (1) the construction, operation and
maintenance of racetracks; (2) the establishment of branches for booking purposes; and (3) the conduct of horse
races.

ISSUE: WON there is a valid delegation of legislative power to Philracom

RULING: YES
The validity of an administrative issuance, such as the assailed guidelines, hinges on compliance with the following
requisites:

1. Its promulgation must be authorized by the legislature;

2. It must be promulgated in accordance with the prescribed procedure;
3. It must be within the scope of the authority given by the legislature;
4. It must be reasonable.[

All the prescribed requisites are met as regards the questioned issuances. Philracom’s authority is drawn from
P.D. No. 420. The delegation made in the presidential decree is valid. Philracom did not exceed its authority. And
the issuances are fair and reasonable.

FIRST REQUISITE:

The rule is that what has been delegated cannot be delegated, or as expressed in the Latin maxim: potestas
delegate non delegare potest. This rule is based upon the ethical principle that such delegated power constitutes
not only a right but a duty to be performed by the delegate by the instrumentality of his own judgment acting
immediately upon the matter of legislation and not through the intervening mind of another.[29] This rule
however admits of recognized exceptions[30] such as the grant of rule-making power to administrative agencies.
They have been granted by Congress with the authority to issue rules to regulate the implementation of a law
entrusted to them. However, in every case of permissible delegation, there must be a showing that the delegation
itself is valid. It is valid only if the law (a) is complete in itself, setting forth therein the policy to be executed,
carried out, or implemented by the delegate; and (b) fixes a standard—the limits of which are sufficiently
determinate and determinable—to which the delegate must conform in the performance of his functions.
P.D. No. 420 hurdles the tests of completeness and standards sufficiency.
Complete: Philracom was created for the purpose of carrying out the declared policy in Section 1 which is “to
promote and direct the accelerated development and continued growth of horse racing not only in pursuance of
the sports development program but also in order to insure the full exploitation of the sport as a source of revenue
and employment.” Philracom was granted exclusive jurisdiction and control over every aspect of the conduct of
horse racing, including the framing and scheduling of races, the construction and safety of race tracks, and the
security of racing.

Sufficient Standards: Section 9 provides for Specific Powers: To register race horses, horse owners or associations
or federations thereof, and to regulate the construction of race tracks and to grant permit for the holding of races;
To issue, suspend or revoke permits and licenses;order the suspension of any racing event in case of violation of
any law, ordinance or rules and regulations;
g. To prohibit the use of improper devices, drugs, stimulants or other means to enhance or diminish the speed
of horse or materially harm their condition;

No delegation of rule-making power to MJCI and PRCI

The Philracom directive is merely instructive in character. Compliance with the Philracom’s directive is part of the
mandate of PRCI and MJCI under Sections 1[33] of R.A. No. 7953[34] and Sections 1[35] and 2[36] of 8407.[As
correctly proferred by MJCI, its duty is not derived from the delegated authority of Philracom but arises from the
franchise granted to them by Congress

SECOND REQUISITE:
While it is conceded that the guidelines were issued a month after Philracom’s directive, this circumstance does
not render the directive nor the guidelines void. Philracom has every right to issue directives to MJCI and PRCI
with respect to the conduct of horse racing, with or without implementing guidelines.

Lack of publication:As a rule, the issuance of rules and regulations in the exercise of an administrative agency of
its quasi-legislative power does not require notice and hearing.[40] InAbella, Jr. v. Civil Service Commission,[41]
this Court had the occasion to rule that prior notice and hearing are not essential to the validity of rules or
regulations issued in the exercise of quasi-legislative powers since there is no determination of past events or
facts that have to be established or ascertained.[

Third requisite:
The administrative body may not make rules and regulations which are inconsistent with the provisions of the
Constitution or a statute, particularly the statute it is administering or which created it, or which are in derogation
of, or defeat, the purpose of a statute. The assailed guidelines prescribe the procedure for monitoring and
eradicating EIA. These guidelines are in accord with Philracom’s mandate under the law to regulate the conduct
of horse racing in the country.

Fourth requisite:

The assailed guidelines do not appear to be unreasonable or discriminatory. In fact, all horses stabled at the MJCI
and PRCI’s premises underwent the same procedure. The guidelines implemented were undoubtedly reasonable
as they bear a reasonable relation to the purpose sought to be accomplished, i.e., the complete riddance of horses
infected with EIA.

Horse-owners were also informed beforehand. The lease contract executed between petitioner and MJC contains
a proviso reserving the right of the lessor, MJCI in this case, the right to determine whether a particular horse is a
qualified horse. In addition, Philracom’s rules and regulations on horse racing provide that horses must be free
from any contagious disease or illness in order to be eligible as race entries.

SMART VS. NTC; G.R. No. 151908

PARTIES:
SMART & PILTEL – petitioners,
GLOBE & ISLACOM – petitioners,
NATIONAL TELECOMMUNICATIONS COMMISSION (NTC) – respondent.

PONENTE: YNARES-SANTIAGO, J.:

FACTS:
Pursuant to its rule-making and regulatory powers, the National Telecommunications Commission (NTC) issued
Memorandum Circular No. 13-6-2000, promulgating rules and regulations on the billing of telecommunications
services. On August 30, 2000, the NTC issued a Memorandum to all cellular mobile telephone service (CMTS)
operators which contained measures to minimize if not totally eliminate the incidence of stealing of cellular phone
units. This was followed by another Memorandum dated October 6, 2000 addressed to all public
telecommunications entities, which reads:

This is to remind you that the validity of all prepaid cards sold on 07 October 2000 and beyond shall be valid for
at least two (2) years from date of first use pursuant to MC 13-6-2000.
In addition, all CMTS operators are reminded that all SIM packs used by subscribers of prepaid cards sold on 07
October 2000 and beyond shall be valid for at least two (2) years from date of first use. Also, the billing unit shall
be on a six (6) seconds pulse effective 07 October 2000. For strict compliance.

On October 20, 2000, petitioners ISLACOM and PILTEL filed against the NTC, Commissioner Joseph A. Santiago,
Deputy Commissioner Aurelio M. Umali and Deputy Commissioner Nestor C. Dacanay, an action for declaration
of nullity of NTC Memorandum Circular No. 13-6-2000 (the Billing Circular) and the NTC Memorandum dated
October 6, 2000, with prayer for the issuance of a writ of preliminary injunction and temporary restraining order
at the Regional Trial Court of Quezon City, Branch 77.

Petitioners Islacom and Piltel alleged, that the NTC has no jurisdiction to regulate the sale of consumer goods such
as the prepaid call cards since such jurisdiction belongs to the Department of Trade and Industry under the
Consumer Act of the Philippines; that the Billing Circular is oppressive, confiscatory and violative of the
constitutional prohibition against deprivation of property without due process of law; that the Circular will result
in the impairment of the viability of the prepaid cellular service by unduly prolonging the validity and expiration
of the prepaid SIM and call cards; and that the requirements of identification of prepaid card buyers and call
balance announcement are unreasonable. Hence, they prayed that the Billing Circular be declared null and void
ab initio. Globe Telecom and Smart filed a joint Motion for Leave to Intervene which was granted by the trial court.
On October 27, 2000, the trial court issued a temporary restraining order enjoining the NTC from implementing
Memorandum Circular No. 13-6-2000 and the Memorandum dated October 6, 2000.

In the meantime, respondent NTC and its co-defendants filed a motion to dismiss the case on the ground of
petitioners' failure to exhaust administrative remedies. Subsequently, the trial court denied the defendant’s
motion to dismiss. Defendants filed a motion for reconsideration, which was denied in an Order dated February
1, 2001.

Respondent NTC thus filed a special civil action for certiorari and prohibition with the Court of Appeals, which was
granted and annulled the injunction issued by the lower court.

Petitioners' motions for reconsideration were denied in a Resolution dated January 10, 2002 for lack of merit.
Hence, the instant petition for review filed by Smart and Piltel.

ISSUES:
WON Respondent court erred in holding respondents failed to exhaust administrative remedy.
WON NTC has Jurisdiction over the case.
WON the Billing Circular issued by NTC is unconstitutional.

RULE:
1ST ISSSUE – Administrative agencies possess quasi-legislative or rule-making powers and quasi-judicial or
administrative adjudicatory powers. Quasi-legislative or rule-making power is the power to make rules and
regulations which results in delegated legislation that is within the confines of the granting statute and the
doctrine of non-delegability and separability of powers.

The rules and regulations should be within the scope of the statutory authority granted by the legislature to the
administrative agency. It is required that the regulation be germane to the objects and purposes of the law, and
be not in contradiction to, but in conformity with, the standards prescribed by law.17 They must conform to and
be consistent with the provisions of the enabling statute in order for such rule or regulation to be valid. The
administrative body exercises its quasi-judicial power when it performs in a judicial manner an act which is
essentially of an executive or administrative nature, where the power to act in such manner is incidental to or
reasonably necessary for the performance of the executive or administrative duty entrusted to it.

In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a party
need not exhaust administrative remedies before going to court. This principle applies only where the act of the
administrative agency concerned was performed pursuant to its quasi-judicial function, and not when the assailed
act pertained to its rule-making or quasi-legislative power.

Even assuming that the principle of exhaustion of administrative remedies apply in this case, the records reveal
that petitioners sufficiently complied with this requirement. Petitioners were able to register their protests to the
proposed billing guidelines. They submitted their respective position papers setting forth their objections and
submitting proposed schemes for the billing circular. After the same was issued, petitioners wrote successive
letters dated July 3, 2000 and July 5, 2000, asking for the suspension and reconsideration of the so-called Billing
Circular. This was taken by petitioners as a clear denial of the requests contained in their previous letters, thus
prompting them to seek judicial relief.

2ND ISSSUE – In like manner, the doctrine of primary jurisdiction applies only where the administrative agency
exercises its quasi-judicial or adjudicatory function. The objective of the doctrine of primary jurisdiction is to guide
a court in determining whether it should refrain from exercising its jurisdiction until after an administrative agency
has determined some question or some aspect of some question arising in the proceeding before the court.

However, where what is assailed is the validity or constitutionality of a rule or regulation issued by the
administrative agency in the performance of its quasi-legislative function, the regular courts have jurisdiction to
pass upon the same. The determination of whether a specific rule or set of rules issued by an administrative agency
contravenes the law or the constitution is within the jurisdiction of the regular courts.

3RD ISSSUE – In the case at bar, the issuance by the NTC of Memorandum Circular No. 13-6-2000 and its
Memorandum dated October 6, 2000 was pursuant to its quasi-legislative or rule-making power. As such,
petitioners were justified in invoking the judicial power of the Regional Trial Court to assail the constitutionality
and validity of the said issuances. Hence, the Regional Trial Court has jurisdiction to hear and decide the case. The
Court of Appeals erred in setting aside the orders of the trial court and in dismissing the case.

WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The decision of the Court of
Appeals are REVERSED and SET ASIDE.

Davide, Jr., C.J., Vitug, and Carpio, JJ., concur.

Azcuna, J., took no part

PRINCIPLE INVOLVED: Doctrine of Administrative Exhaustion.

TITLE:AVELINA B. CONTE and LETICIA BOISER-PALMA, petitioners,vs. COMMISSION ON AUDIT (COA),

respondent.(264 SCRA 19, L - 116422 04 NOVEMBER 1996)

FACTS:
Avelina Conte and Leticia Boiser were both former employees of SSS who availed ofcompulsory retirement
benefits provided for under RA No. 660. Both also claimed withthe SSS ´financial assistanceµ benefits as provided
for under SSS Resolution No. 56,Series of 1971.The subject SSS resolution was disallowed by COA in its ruling
issued on July 10, 1989stating that the scheme of financial assistance authorized by SSS is similar to
separateretirement plan or incentives/separation pay plans adopted by other governmentagencies which in turn
results in the increase of benefits beyond what is allowedunder existing retirement laws.The SSS thereafter sought
presidential authority to continue implementing Res. 56 towhich the Office of the Executive Secretary replied that
the Office of the President isnot inclined to favorably act on the request or let alone overrule COA·s earlier
ruling.Petitioners Conte and Boiser sought reconsideration of COA·s ruling disallowing theirclaim and also sought
payment from SSS of benefits as prescribed under Res. 56, bothof which were denied by COA and SSS.

ISSUE:
Whether or not the benefits provided for under SSS Resolution No. 56 be considered simply as financial assistance
for retiring employees, or does such a scheme constitutea supplementary retirement plan prescribed by RA 4968.

HELD:
The Supreme Court ruled that SSS Resolution No. 56 constitute a supplementaryretirement plan, thus, within the
ambit of Sec. 28 (b) of CA 186 as amended by RA4968 which bars the creation of any insurance or retirement plan
² other than the GSIS² for government officers and employees, in order to prevent the undue and
iniquitousproliferation of such plans. Resolution No. 56 is therefore invalid, void and of noeffect.Petition was
dismissed for lack of merit, the assailed COA decision is upheld, and SSSResolution No. 56 is declared illegal, void
and of no effect.

People vs. Santos

62 Phil. 300

Facts: The Secretary of Agriculture and Commerce, by virtue of the authority vested in him by section 4
of Act No.4003 issued Administrative Order No. 2 Section 28 relative to fish and game provides as
follows:

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

"A violation of this paragraph may be proceeded against under section 45 of the Federal Penal Code."

The herein accused and appellee Augusto A. Santos is charged with having ordered his fishermen to
manage and operate the motor launches Malabon II and Malabon III registered in his name and to fish,
loiter and anchor within three kilometers of the shore line of the Island of Corregidor over which jurisdiction
is exercised by naval and military authorities of the United States, without permission from the Secretary
of Agriculture and Commerce.

Issues: Whether or not violation of section 28 of administrative order No. 2 can give rise to criminal
prosecution.
Held: Act No. 4003 does not contain a provision prohibiting boats not subject to license to fish within the
stipulated areas without the written permission of the Secretary. Since the act itself does not contain
such prohibition, the rules and regulations promulgated by the Secretary of Agriculture to carry into effect
the provisions of the law cannot incorporate such prohibition. For the foregoing considerations, we are of
the opinion and so hold that the conditional clause of section 28 of Administrative Order No. 2, issued by
the Secretary of Agriculture and Commerce, is null and void and without effect, as constituting an excess
of the regulatory power conferred upon him by section 4 of Act No. 4003 and an exercise of a legislative
power which has not been and cannot be delegated to him.

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

People of the Phil. vs. Que Po Lay

94 Phil. 640

FACTS: The appellant was in possession of foreign exchange consisting of US dollars, US checks and
US money orders amounting to about $7000 but failed to sell the same to the Central Bank as required
under Circular No. 20. Circular No. 20 was issued in the year 1949 but was published in the Official
Gazette only on Nov. 1951 after the act or omission imputed to Que Po Lay. Que Po Lay appealed from
the decision of the lower court finding him guilty of violating Central Bank Circular No. 20 in connection
with Sec 34 of RA 265 sentencing him to suffer 6 months imprisonment, pay fine of P1, 000 with
subsidiary imprisonment in case of insolvency, and to pay the costs.

ISSUE: Whether or not publication of Circular 20 in the Official Gazette is needed for it to become
effective and subject violators to corresponding penalties.

HELD: It was held by the Supreme Court, in an en banc decision, that as a rule, circular and
regulations of the Central Bank in question prescribing a penalty for its violation should be published
before becoming effective. This is based on the theory that before the public is bound by its contents
especially its penal provisions, a law, regulation or circular must first be published for the people to be
officially and specifically informed of such contents including its penalties. Thus, the Supreme Court
reversed the decision appealed from and acquits the appellant, with costs de oficio.

People vs. Maceren

79 SCRA 450

FACTS: This is a case involving the validity of a 1967 regulation, penalizing electro fishing in fresh water
fisheries, promulgated by the Secretary of Agriculture and Natural Resources and the Commissioner of
Fisheries under the old Fisheries Law. On March 7, 1969 Jose Buenaventura, Godofredo Reyes,
Benjamin Reyes, Nazario Aquino and Carlito del Rosario were charged by a Constabulary investigator
in the municipal court of Sta. Cruz, Laguna with having violated Fisheries Administrative Order No. 84-
1.It was alleged in the complaint that the five accused in the morning of March 1, 1969 resorted to electro
fishing in the waters of Barrio San Pablo Norte, Sta. Cruz. Upon motion of the accused, the municipal
court quashed the complaint. The prosecution appealed. The Court of First Instance of Laguna affirmed
the order of dismissal. The lower court held that electro fishing cannot be penalize because electric
current is not an obnoxious or poisonous substance as contemplated in Section 11 of the Fisheries Law
and that it is not a substance at all but a form of energy conducted or transmitted by substances. The
lower court further held that, since the law does not clearly prohibit electro fishing, the executive and
judicial departments cannot consider it unlawful. It is noteworthy that the Fisheries Law does not
expressly punish .electro fishing. Notwithstanding the silence of the law, the Secretary of Agriculture and
Natural Resources, upon the recommendation of the Commissioner of Fisheries, promulgated Fisheries
Administrative Order No. 84, prohibiting electro fishing in all Philippine waters. On June 28, 1967 the
Secretary of Agriculture and Natural Resources, upon the recommendation of the Fisheries Commission,
issued Fisheries Administrative Order No. 84-1, amending section 2 of Administrative Order No. 84, by
restricting the ban against electro fishing to fresh water fisheries.

ISSUE:
Whether or not the Secretary of Agriculture and Natural Resources and the Commissioner of Fisheries
exceeded their authority in issuing the Fisheries Administrative Orders Nos. 84 and 84-1.

HELD:
The Court ruled in the affirmative. The Secretary of Agriculture and Natural Resources and the
Commissioner of Fisheries exceeded their authority in issuing Fisheries Administrative Orders Nos. 84
and 84-1 and that those orders are not warranted under the Fisheries Commission, Republic Act No.
3512. The reason is that the Fisheries Law does not expressly prohibit electro fishing. As electro fishing
is not banned under that law, the Secretary of Agriculture and Natural Resources and the Commissioner
of Fisheries are powerless to penalize it. In other words, Administrative Orders Nos. 84 and 84-1, in
penalizing electro fishing, are devoid of any legal basis. That law punishes (1) the use of obnoxious or
poisonous substance, or explosive in fishing; (2) unlawful fishing in deep-sea fisheries; (3) unlawful taking
of marine molusca, (4) illegal taking of sponges; (5) failure of licensed fishermen to report the kind and
quantity of fish caught, and (6) other violations. Nowhere in that law is electro fishing specifically
punished. Administrative regulations adopted under legislative authority by a particular department must
be in harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its
general provisions. The rule-making power must be confined to details for regulating the mode or
proceeding to carry into effect the law as it has been enacted. The power cannot be extended to
amending or expanding the statutory requirements or to embrace matters not covered by the statute.
Rules that subvert the statute cannot be sanctioned. Thus, the lawmaking body cannot delegate to an
executive official the power to declare what acts should constitute an offense. It can authorize the
issuance of regulations and the imposition of the penalty provided for in the law itself.

Peralta v. Civil Service Commission [G.R. No. 95832. August 10, 1992]

When an administrative or executive agency renders an opinion or issues a statement of policy, it merely
interprets a pre-existing law; and the administrative interpretation of the law is at best advisory, for it is the
courts that finally determine what the law means. It has also been held that interpretative regulations need not be
published.

What is primarily questioned by the petitioner is the validity of the respondent Commission's policy
mandating salary deductions corresponding to the intervening Saturdays, Sundays or Holidays where an
employee without leave credits was absent on the immediately preceding working day.

When an administrative or executive agency renders an opinion or issues a statement of policy, it merely
interprets a pre-existing law; and the administrative interpretation of the law is at best advisory, for it is the
courts that finally determine what the law means. 8 It has also been held that interpretative regulations need not be published. 9

Administrative construction, if we may repeat, is not necessarily binding upon the courts. Action of an
administrative agency may be disturbed or set aside by the judicial department if there is an error of law, or
abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting with either the letter or
the spirit of a legislative enactment. 10
FACTS

Pursuant to Civil Service Act of 1959 (R.A. No. 2260) which conferred upon the Commissioner of Civil Service
to prescribe, amend and enforce suitable rules and regulations for carrying into effect the provisions of this Civil
Service Law, the Commission interpreted provisions of Republic Act No. 2625 amending the Revised
Administrative Code and adopted a policy that when an employee who was on leave of absence without pay on
a day before or on a day time immediately preceding a Saturday, Sunday or Holiday, he is also considered on
leave of absence without pay on such Saturday, Sunday or Holiday. Petitioner Peralta, affected by the said policy,
questioned the said administrative interpretation.

ISSUES

Whether or not the Civil Service Commission’s interpretative construction is:

 (1) valid and constitutional.

 (2) binding upon the courts.

RULING

 (1) NO. The construction by the respondent Commission of R.A. 2625 is not in accordance with the
legislative intent. R.A. 2625 specifically provides that government employees are entitled to leaves of
absence with full pay exclusive of Saturdays, Sundays and Holidays. The law speaks of the granting of a
right and the law does not provide for a distinction between those who have accumulated leave credits
and those who have exhausted their leave credits in order to enjoy such right. Ubi lex non distinguit nec
nos distinguere debemus.The fact remains that government employees, whether or not they have
accumulated leave credits, are not required by law to work on Saturdays, Sundays and Holidays and thus
they can not be declared absent on such non-working days. They cannot be or are not considered
absent on non-working days; they cannot and should not be deprived of their salary corresponding to
said non-working days just because they were absent without pay on the day immediately prior to, or
after said non-working days. A different rule would constitute a deprivation of property without due
process.

 (2) NO. Administrative construction, is not necessarily binding upon the courts. Action of an
administrative agency may be disturbed or set aside by the judicial department if there is an error of
law, or abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting with either
the letter or the spirit of a legislative enactment. When an administrative or executive agency renders
an opinion or issues a statement of policy, it merely interprets a pre-existing law; and the administrative
interpretation of the law is at best advisory, for it is the courts that finally determine what the law
means.
The general rule vis-a-vis legislation is that an unconstitutional act is not a law; it confers no rights; it imposes no
duties; it affords no protection; it creates no office; it is in legal contemplation as inoperative as though it had
never been passed.

But, as held in Chicot County Drainage District vs. Baxter State Bank:

. . . . It is quite clear, however, that such broad statements as to the effect of a determination of
unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to such
determination is an operative fact and may have consequences which cannot always be ignored. The past cannot
always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to
be considered in various aspects — with respect to particular relations, individual and corporate; and particular
conduct, private and official.

To allow all the affected government employees, similarly situated as petitioner herein, to claim their deducted
salaries resulting from the past enforcement of the herein invalidated CSC policy, would cause quite a heavy
financial burden on the national and local governments considering the length of time that such policy has been
effective. Also, administrative and practical considerations must be taken into account if this ruling will have a
strict restrospective application. The Court, in this connection, calls upon the respondent Commission and the
Congress of the Philippines, if necessary, to handle this problem with justice and equity to all affected government
employees.

Javellana v. v. DILG
G.R. No. 102549 August 10, 1992
Griño-Aquino, J.

Facts:

Attorney Erwin B. Javellana was an elected City Councilor of Bago City, Negros Occidental. On October 5,
1989, City Engineer Ernesto C. Divinagracia filed Administrative Case No. C-10-90 against Javellana for: (1) violation
of Department of Local Government (DLG) Memorandum Circular No. 80-38 dated June 10, 1980 in relation to
DLG Memorandum Circular No. 74-58 and of Section 7, paragraph b, No. 2 of Republic Act No. 6713, otherwise
known as the “Code of Conduct and Ethical Standards for Public Officials and Employees,” and (2) for oppression,
misconduct and abuse of authority.

On August 13, 1990, a formal hearing of the complaint was held in Iloilo City in which the complainant,
Engineer Divinagracia, and the respondent, Councilor Javellana, presented their respective evidence.

Meanwhile, on September 10, 1990, Javellana requested the DLG for a permit to continue his practice of law for
the reasons stated in his letter-request.

On September 21, 1991, Secretary Luis T. Santos issued Memorandum Circular No. 90-81 setting forth
guidelines for the practice of professions by local elective officials.

In an order dated May 2, 1991, Javellana’s motion to dismiss was denied by the public respondents. His
motion for reconsideration was likewise denied on June 20, 1991.
Five months later or on October 10, 1991, the Local Government Code of 1991 (RA 7160) was signed into law,
Section 90 of which provides:

Sec. 90. Practice of Profession. — (a) All governors, city and municipal mayors are prohibited from practicing their
profession or engaging in any occupation other than the exercise of their functions as local chief executives.
(b) Sanggunian members may practice their professions, engage in any occupation, or teach in schools except
during session hours: Provided, That sanggunian members who are members of the Bar shall not:

(1) Appear as counsel before any court in any civil case wherein a local government unit or any office, agency,
or instrumentality of the government is the adverse party;

(2) Appear as counsel in any criminal case wherein an officer or employee of the national or local government is
accused of an offense committed in relation to his office;

(3) Collect any fee for their appearance in administrative proceedingsinvolving the local government unit of
which he is an official; and

(4) Use property and personnel of the Government except when the sanggunian member concerned is
defending the interest of the Government.

(c) Doctors of medicine may practice their profession even during official hours of work only on occasions of
emergency: Provided, That the officials concerned do not derive monetary compensation therefrom.

Issue:

whether or not DLG Memorandum Circulars Nos. 80-38 and 90-81 are unconstitutional because the
Supreme Court has the sole and exclusive authority to regulate the practice of law

Held:

No. Petitioner’s contention that Section 90 of the Local Government Code of 1991 and DLG Memorandum
Circular No. 90-81 violate Article VIII, Section 5 of the Constitution is completely off tangent. Neither the statute
nor the circular trenches upon the Supreme Court’s power and authority to prescribe rules on the practice of law.
The Local Government Code and DLG Memorandum Circular No. 90-81 simply prescribe rules of conduct for public
officials to avoid conflicts of interest between the discharge of their public duties and the private practice of their
profession, in those instances where the law allows it.

Commissioner of Internal Revenue vs. Court of Appeals

GR No. 119761, August 29, 1996

FACTS: Fortune Tobacco Corporation ("Fortune Tobacco") is engaged in the manufacture of different
brands of cigarettes. The Philippine Patent Office issued to the corporation separate certificates of
trademark registration over "Champion," "Hope," and "More" cigarettes. The initial position of the CIR
was to classify 'Champion,' 'Hope,' and 'More' as foreign brands since they were listed in the World
Tobacco Directory as belonging to foreign companies. However, Fortune Tobacco changed the names
of 'Hope' to 'Hope Luxury ' and 'More' to 'Premium More,' thereby removing the said brands from the
foreign brand category. RA No. 7654 was enacted and became effective on 03 July 1993. It amended
Section 142(c)(1) of the NIRC. About a month after the enactment and two (2) days before the effectively
of RA 7654, Revenue Memorandum Circular No. 37-93 ("RMC 37-93") Reclassification of Cigarettes
Subject to Excise Tax, was issued by the BIR. Fortune Tobacco requested for a review, reconsideration
and recall of RMC 37-93. The request was denied on 29 July 1993. The following day, or on 30 July
1993, the CIR assessed Fortune Tobacco for ad valorem tax deficiency amounting to P9, 598, 334. 00.
On 03 August 1993, Fortune Tobacco filed a petition for review with the CTA. The CTA upheld the position
of Fortune Tobacco and adjudged RMC No. 37-93 as defective.

ISSUE: Whether or not there is a violation of the due process of law.

HELD: A reading of RMC 37-93, particularly considering the circumstances under which it has been
issued, convinces us that the circular cannot be viewed simply as a corrective measure or merely as
construing Section 142(c)(1) of the NIRC, as amended, but has, in fact and most importantly, been made
in order to place "Hope Luxury," "Premium More" and "Champion" within the classification of locally
manufactured cigarettes bearing foreign brands and to thereby have them covered by RA 7654. In so
doing, the BIR not simply interpreted the law; verily, it legislated under its quasi-legislative authority. The
due observance of the requirements of notice, of hearing, and of publication should not have been then
ignored. The Court is convinced that the hastily promulgated RMC 37-93 has fallen short of a valid and
effective administrative issuance.

Commissioner of Customs vs Hypermix Feeds Corporation, G.R. No. 179579

Facts:
- On November 7, 2003, petitioner COC issued CMO 27-2003, which for tariff purposes, classifies wheat
according to the (1) importer or consignee; (2) country of origin; and (3) port of discharge. Depending on these
factors, wheat would then be classified either as food grade or feed grade with a corresponding tariff of 3% and
7% respectively.
- On December 19, 2003, the respondent, a wheat importer, filed a Petition for Declaratory Relief with the
RTC of Las Pinas contending that CMO 27-2003 was issued without following the mandate of the Revised
Administrative Code on public participation, prior notice, and publication or registration with the University of the
Philippines Law Center.
- On 19 January 2004, the RTC issued a Temporary Restraining Order (TRO) effective for twenty (20) days
from notice.
- Petitioners thereafter filed a Motion to Dismiss alleging that, among others, was an internal administrative
rule and not legislative in nature.
- On 28 February 2005, the RTC ruled in favor of respondent, declaring CMO 27-2003 as INVALID and OF
NO FORCE AND EFFECT, citing the petitioner’s failure to follow the basic requirements of hearing and publication
in the issuance of the CMO.
- Petitioners appealed to the CA, raising the same allegations in defense of CMO 27-2003.
- CA dismissed the appeal, holding that the regulation affected substantial rights of petitioners and other
importers and that the petitioners should have observed the requirements of notice, hearing and publication.

Issue:
W/N CMO 27-2003 is valid

Ruling
Since the questioned regulation will affect the substantive rights of respondent as an importer of wheat, it
therefore follows that petitioners should have applied the pertinent provisions of Book VII, Chapter 2 of the
Revised Administrative Code in the issuance of the CMO.
 Sec 3. Filing. (1) Every agency shall file with the University of the Philippines Law Center three (3)
certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which
are not filed within three (3) months from that date shall not thereafter be the bases of any sanction
against any party of persons. Section

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 opportunity to submit
their views prior to the adoption of any rule.

(2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published
in a newspaper of general circulation at least two (2) weeks before the first hearing thereon. (3) In case of
opposition, the rules on contested cases shall be observed. SC denied the petition, affirming the previous
declaration that the CMO is invalid

Victoria’s Milling Company, Inc v. Social Security Commission

FACTS:

On October 15, 1958, the Social Security Commission issued Circular No. 22 requiring all employers to include in
the Employee's remuneration (salary) all bonuses and overtime pay, as well as the cash value of other media of
remuneration (service).

Upon receipt of a copy thereof, petitioner Victorias Milling Company, Inc., through counsel, wrote the Social
Security Commission in effect protesting against the circular as contradictory to a previous Circular No. 7 dated
October 7, 1957 expressly excluding overtime pay and bonus in the computation of the employers' and employees'
respective monthly premium contributions.

Counsel further questioned the validity of the circular for lack of authority on the part of the Social Security
Commission to promulgate it without the approval of the President and for lack of publication in the Official
Gazette.

ISSUE:

Whether or not Circular No. 22 is a rule or regulation, as contemplated in Section 4(a) of Republic Act 1161
empowering the Social Security Commission "to adopt, amend and repeal subject to the approval of the President
such rules and regulations as may be necessary to carry out the provisions and purposes of this Act.”

RULING:

There can be no doubt that there is a distinction between an administrative rule or regulation and an
administrative interpretation of a law whose enforcement is entrusted to an administrative body.

When an administrative agency promulgates rules and regulations, it "makes" a new law with the force and effect
of a valid law, while when it renders an opinion or gives a statement of policy, it merely interprets a pre-existing
law. Rules and regulations when promulgated may be enforced by a penal sanction provided therein.
In this sense, it has been said that rules and regulations are the product of a delegated power to create new or
additional legal provisions that have the effect of law.

Therefore, Circular No. 22 purports merely to advise employers-members of the System of what, in the light of
the amendment of the law, they should include in determining the monthly compensation of their employees
upon which the social security contributions should be based, and that such circular did not require presidential
approval and publication in the Official Gazette for its effectivity.

The Resolution appealed from is hereby affirmed, with costs against appellant. So ordered.

In favor with Social Security Commission. Costs against Victoria’s Milling Company.

National Food Authority (NFA) v. Masada Security Agency, Inc.

453 SCRA 70 (March 8, 2005)

Facts:
Masada entered into a 1 year contract to provide security services to NFA-REGION 1. Upon the expiration of the
said contract, the parties extended the effectivity thereof on a monthly basis under same terms and condition.

The Regional Tripartite Wages and Productivity Board (RTWPB) issued wage orders mandating increases in the
daily wage rate. Masada requested NFA to increase the of the monthly contract rate . NFA only granted the
request only with respect to the increase in daily wage

Respondent filed a case for recovery of sum of money against NFA with the RTC.

NFA CONTENTION: Respondent cannot demand an adjustment on the said salary benefits because it is bound by
their contract expressly limiting NFA’s obligation to pay only the increment in the daily wage.

Pre-trial Issue: WON respondent is entitled to recover from NFA wage related benefits of the security guards.

RTC Ruling: NFA is liable to pay the security guards’ wage related benefits pursuant to RA 6727, because the basis
of the computation of said benefits, like overtime pay, holiday pay, SSS and Pag-ibig premium, is the increased
minimum wage. It also found NFA liable for the consequential adjustments in administrative costs and margin.

NFA appealed to the Court of Appeals but was dismissed

ISSUE(Supreme Court): WON the liability of principals in service contracts under Section 6 of RA 6727 and the
wage orders issued by the RTWPB is limited only to the increment in the minimum wage.

HELD/ RULING:

Payment of the increases in the wage rate of workers is ordinarily shouldered by the employer. Section 6 of RA
6727, however, expressly lodged said obligation to the principals or indirect employers in construction projects
and establishments providing security, janitorial and similar services.
The court found merit in NFA’s contention that its additional liability under the aforcited provision is only limited
to the payment of the increment in the statutory minimum wage rate i.e. the rate for a regular eight (8) hour work
day.

Expresio unius est exclusio alterius. Where a statute, by its terms, is expressly limited to certain matters, it may
not, by interpretation or construction, be extended to others. Since the increase in wage referred to in Section 6
pertains to the “statutory minimum wage” as defined herein, principals in service contracts cannot be made to
pay the corresponding wage increase in the overtime pay, night shift differential, holiday and rest day pay,
premium pay and other benefits granted to workers. While basis of said remuneration and benefits is the
statutory minimum wage, the law cannot be unduly expanded as to include those not stated in the subject
provision.

Moreover, the law secures the welfare of the workers by imposing a solidary liability on principals and the service
contractors. Under the second sentence of Section 6 of RA 6727, in the event that the principal or client fails to
pay the prescribed wage rates, the service contractor shall be held solidarily liable with the former.

The parties therefore acknowledged the application to their contract of the wage orders issued by the RTWPB
pursuant to RA 6727. There being no assumption by NFA of a greater liability than that mandated by Section 6 of
the Act, its obligation is limited to the payment of the increased statutory minimum wage rates which, as admitted
by respondent, had already been satisfied by NFA.

SGMC Realty Corporation

[G.R. No. 126999. August 30, 2000]

FACTS: Petitioner appealed from a decision of the Housing and Land Use Regulatory Board (HLURB) dismissing its
action against private respondents for breach of contract, violation of property rights and damages. It received a
copy of the decision on October 23, 1995 and appealed on November 20, 1995 or 28 days from receipt of the
appealed decision to the Office of the President. The same was dismissed for having been filed out of time. Its
motion for reconsideration having been denied, hence, this petition claiming that the Office of the President
committed grave abuse of discretion in dismissing its appeal. Petitioner alleged that its appeal was filed within the
30-day period provided for by Section 27 of the 1994 Rules of Procedure of HLURB.
Section 27 of the 1994 HLURB Rules of Procedure provides as follows: “Section 27.Appeal to the Office of the
President. — Any party may, upon notice to the Board and the other party, appeal the decision of the Board of
Commissioners or its division to the Office of the President within thirty (30) days from receipt thereof pursuant
to and in accordance with Administrative Order No. 18, of the Office of the President dated February 12, 1987.
Decision of the President shall be final subject only to review by the Supreme Court on certiorari or on questions
of law.”
ISSUE: WON the reglementary period within which to appeal the decision of HLURB to public respondent (OP) is
fifteen days.
HELD: Petitioner’s contention is bereft of merit, because of its reliance on a literal reading of cited rules without
correlating them to current laws as well as presidential decrees on the matter.
Administrative Order No. 18, series of 1987, issued by public respondent reads: “Section 1. Unless otherwise
governed by special laws, an appeal to the Office of the President shall be taken within thirty (30) days from receipt
by the aggrieved party of the decision/resolution/order complained of or appealed from.”
ADMINISTRATIVE LAW; OFFICE OF THE PRESIDENT; HOUSING AND LAND USE REGULATORY BOARD (HLURB); 30-
DAY PERIOD OF APPEAL UNDER HLURB RULES OF PROCEDURE SHORTENED TO 15 DAYS BY ADMINISTRATIVE
ORDER NO. 18. — As pointed out by public respondent, the aforecited administrative order allows aggrieved party
to file its appeal with the Office of the President within thirty (30) days from receipt of the decision complained
of. Nonetheless, such thirty-day period is subject to the qualification that there are no other statutory periods
of appeal applicable. If there are special laws governing particular cases which provide for a shorter or longer
reglementary period, the same shall prevail over the thirty-day period provided for in the administrative order.
This is in line with the rule in statutory construction that an administrative rule or regulation, in order to be
valid, must not contradict but conform to the provisions of the enabling law. We note that indeed there are
special laws that mandate a shorter period of fifteen (15) days within which to appeal a case to public
respondent.
We note that indeed there are special laws that mandate a shorter period of fifteen (15) days within which to
appeal a case to public respondent. First, Section 15 of Presidential Decree No. 957 provides that the decisions of
the National Housing Authority (NHA) shall become final and executory after the lapse of fifteen (15) days from
the date of receipt of the decision. Second, Section 2 of Presidential Decree No. 1344 states that decisions of the
National Housing Authority shall become final and executory after the lapse of fifteen (15) days from the date of
its receipt. The latter decree provides that the decisions of NHA are appealable only to the Office of the President.
Further, we note that the regulatory functions of NHA relating to housing and land development has been
transferred to Human Settlements Regulatory Commission, now known as HLURB. Thus, said presidential
issuances providing for a reglementary period of appeal of fifteen days apply in this case. Accordingly, the period
of appeal of thirty (30) days set forth in Section 27 of HLURB 1994 Rules of Procedure no longer holds true for
being in conflict with the provisions of aforesaid presidential decrees. For it is axiomatic that administrative rules
derive their validity from the statute that they are intended to implement. Any rule which is not consistent with
statute itself is null and void.