ADMIN 27-29

27. PANAMA REFINING VS RYAN

Facts:
Congress enacted a provision of the National Industrial Act (NIRA) that gave the President the power to prohibit the
transportation of petroleum products in excess of the amount permitted by state law. Based on this provision, the President
made an Executive Order enacting such a prohibition. The Plaintiff, Panama Refining Co. (Plaintiff) brought suit to enjoin the
Defendants, certain government officials (Defendant), from enforcing the Executive Order. The District Court granted a
permanent injunction against enforcement, but the Court of Appeals reversed.

Issue:
May Congress delegate unrestricted law-making authority to the President?

Held:
No, congressional delegation of power to the executive branch must be specific and limited. The NIRA did not include any
policy guidelines for prohibiting or not prohibiting the transportation of petroleum production in excess of state allowances.
The President was granted unfettered discretion. Congress let the matter to him to be dealt with as he pleased. Under the
United States Constitution (Constitution) Congress is not allowed to abdicate or transfer its essential legislative powers.
Congress simply left the matter to the President (in deciding the circumstances and conditions under which the transportation
of petroleum products should be prohibited) without setting standards or rules to be followed. Congress cannot delegate to
others the essential legislative functions with which it was vested. If the Supreme Court of the United States (Supreme Court)
were to hold the legislation valid, Congress would be free to delegate authority at will to the President, another officer, or an
administrative body. The delegation of authority was unlawful and invalid.












28. ABAKADA vs ERMITA
Facts: On May 24, 2005, the President signed into law Republic Act 9337 or the VAT Reform Act. Before the law took effect on
July 1, 2005, the Court issued a TRO enjoining government from implementing the law in response to a slew of petitions for
certiorari and prohibition questioning the constitutionality of the new law. The challenged section of R.A. No. 9337 is the
common proviso in Sections 4, 5 and 6: That the President, upon the recommendation of the Secretary of Finance, shall,
effective January 1, 2006, raise the rate of value-added tax to 12%, after any of the following conditions has been satisfied:

(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two and four-fifth
percent (2 4/5%); or (ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half
percent (1%)

Petitioners allege that the grant of stand-by authority to the President to increase the VAT rate is an abdication by Congress of
its exclusive power to tax because such delegation is not covered by Section 28 (2), Article VI Consti. They argue that VAT is a
tax levied on the sale or exchange of goods and services which cant be included within the purview of tariffs under the
exemption delegation since this refers to customs duties, tolls or tribute payable upon merchandise to the government and
usually imposed on imported/exported goods. They also said that the President has powers to cause, influence or create the
conditions provided by law to bring about the conditions precedent. Moreover, they allege that no guiding standards are made
by law as to how the Secretary of Finance will make the recommendation.

Issue: Whether or not the RA 9337's stand-by authority to the Executive to increase the VAT rate, especially on account of the
recommendatory power granted to the Secretary of Finance, constitutes undue delegation of legislative power? NO

Held: The powers which Congress is prohibited from delegating are those which are strictly, or inherently and exclusively,
legislative. Purely legislative power which can never be delegated is the authority to make a complete law- complete as to the
time when it shall take effect and as to whom it shall be applicable, and to determine the expediency of its enactment. It is the
nature of the power and not the liability of its use or the manner of its exercise which determines the validity of its delegation.

The exceptions are:
(a) delegation of tariff powers to President under Constitution
(b) delegation of emergency powers to President under Constitution
(c) delegation to the people at large
(d) delegation to local governments
(e) delegation to administrative bodies

For the delegation to be valid, it must be complete and it must fix a standard. A sufficient standard is one which defines
legislative policy, marks its limits, maps out its boundaries and specifies the public agency to apply it.

In this case, it is not a delegation of legislative power BUT a delegation of ascertainment of facts upon which enforcement and
administration of the increased rate under the law is contingent. The legislature has made the operation of the 12% rate
effective January 1, 2006, contingent upon a specified fact or condition. It leaves the entire operation or non-operation of the
12% rate upon factual matters outside of the control of the executive. No discretion would be exercised by the President.
Highlighting the absence of discretion is the fact that the word SHALL is used in the common proviso. The use of the word
SHALL connotes a mandatory order. Its use in a statute denotes an imperative obligation and is inconsistent with the idea of
discretion.


Congress does not abdicate its functions or unduly delegate power when it describes what job must be done, who must do it,
and what is the scope of his authority; in our complex economy that is frequently the only way in which the legislative process
can go forward.

There is no undue delegation of legislative power but only of the discretion as to the execution of a law. This is constitutionally
permissible. Congress did not delegate the power to tax but the mere implementation of the law.



REVIEW CENTER ASSOCIATION OF THE PHIL VS ERMITA
Facts: There was a report that handwritten copies of two sets of 2006 Nursing Board examination were circulated during the
examination period among examinees reviewing at the R.A. Gapuz Review Center and Inress Review Center. The examinees
were provided with a list of 500 questions and answers in two of the examinations five subjects, particularly Tests III
(Psychiatric Nursing) and V (Medical-Surgical Nursing). The PRC later admitted the leakage and traced it to two Board of Nursing
members. Exam results came out but Court of Appeals restrained the PRC from proceeding with the oath-taking of the
successful examinees.
President GMA ordered for a re-examination and issued EO 566 which authorized the CHED to supervise the establishment
and operation of all review centers and similar entities in the Philippines. CHED Chairman Puno approved CHED Memorandum
Order No. 49 series of 2006 (Implementing Rules and Regulations). Review Center Association of the Philippines (petitioner), an
organization of independent review centers, asked the CHED to "amend, if not withdraw" the IRR arguing, among other things,
that giving permits to operate a review center to Higher Education Institutions (HEIs) or consortia of HEIs and professional
organizations will effectively abolish independent review centers. CHED Chairman Puno however believed that suspending the
implementation of the IRR would be inconsistent with the mandate of EO 566.

Issues: 1. Whether EO 566 is an unconstitutional exercise by the Executive of legislative power as it expands the CHEDs
jurisdiction *Yes, it expands CHEDs jurisdiction, hence unconsititutional+; and Whether the RIRR is an invalid exercise of the
Executives rule-making power. [Yes, it is invalid.]

Held: 1. The scopes of EO 566 and the RIRR clearly expand the CHEDs coverage under RA 7722. The CHEDs coverage under RA
7722 is limited to public and private institutions of higher education and degree-granting programs in all public and private
post-secondary educational institutions. EO 566 directed the CHED to formulate a framework for the regulation of review
centers and similar entities.
The definition of a review center under EO 566 shows that it refers to one which offers "a program or course of study that is
intended to refresh and enhance the knowledge or competencies and skills of reviewees obtained in the formal school setting
in preparation for the licensure examinations" given by the PRC. It does not offer a degree-granting program that would put it
under the jurisdiction of the CHED. A review course is only intended to "refresh and enhance the knowledge or competencies
and skills of reviewees." Thus, programs given by review centers could not be considered "programs x x x of higher learning"
that would put them under the jurisdiction of the CHED. "Higher education," is defined as "education beyond the secondary
level or "education provided by a college or university."
Further, the "similar entities" in EO 566 cover centers providing "review or tutorial services" in areas not covered by licensure
examinations given by the PRC, which include, although not limited to, college entrance examinations, Civil Services
examinations, and tutorial services. These review and tutorial services hardly qualify as programs of higher learning.

2. ) The exercise of the Presidents residual powers under Section 20, Title I of Book III of EO (invoked by the OSG to justify
GMAs action) requires legislation; as the provision clearly states that the exercise of the Presidents other powers and
functions has to be "provided for under the law." There is no law granting the President the power to amend the functions of
the CHED. The President has no inherent or delegated legislative power to amend the functions of the CHED under RA 7722.
The line that delineates Legislative and Executive power is not indistinct. Legislative power is "the authority, under the
Constitution, to make laws, and to alter and repeal them." The Constitution, as the will of the people in their original,
sovereign and unlimited capacity, has vested this power in the Congress of the Philippines. Any power, deemed to be legislative
by usage and tradition, is necessarily possessed by Congress, unless the Constitution has lodged it elsewhere.
The President has control over the executive department, bureaus and offices. Meaning, he has the authority to assume
directly the functions of the executive department, bureau and office, or interfere with the discretion of its officials. Corollary
to the power of control, he is granted administrative power. Administrative power is concerned with the work of applying
policies and enforcing orders as determined by proper governmental organs. It enables the President to fix a uniform standard
of administrative efficiency and check the official conduct of his agents. To this end, he can issue administrative orders, rules
and regulations. An administrative order is an ordinance issued by the President which relates to specific aspects in the
administrative operation of government. It must be in harmony with the law and should be for the sole purpose of
implementing the law and carrying out the legislative policy.

Since EO 566 is an invalid exercise of legislative power, the RIRR is also an invalid exercise of the CHEDs quasi-legislative
power. Administrative agencies exercise their quasi-legislative or rule-making power through the promulgation of rules and
regulations. The CHED may only exercise its rule-making power within the confines of its jurisdiction under RA 7722. But The
RIRR covers review centers and similar entities.