PANGASINAN TRANSPORTATION CO.

,
INC. vs. THE PUBLIC SERVICE
COMMISSION
G.R. No. 47065 June 26, 1940
FACTS: Pangasinan Transportation Company
Inc. (PTI) has been engaged for 20 years in
the business of transporting passengers in
Pangasinan, Tarlac and Nueva Ecija through
TPU buses in accordance with the terms and
conditions of the certificates of public
convenience issued by the Public Utility
Commission (later called Public Service
Commission). The company applied for an
authorization to operate ten additional
Brockway trucks on the ground that they
were needed to comply with the terms and
conditions of its existing certificates and as a
result of the application of the Eight Hour
Labor Law. PSC agreed to grant the
authorization, but with two conditions as
provided for by section 1 of Commonwealth
Act No. 454: First, that the certificates of
authorization issued to it would be valid only
for a period of 25 years counted from the
date of promulgation; and second, that the
company may be acquired by the Philippine
Commonwealth with proper payment of the
cost price of its equipment, taking into
account reasonable depreciation to be fixed
by the Commission at the time of it
acquisition. PTI did not agree with the
conditions, and instead asked the Supreme
Court to declare Commonwealth Act No. 454.
ISSUE: Whether or not Commonwealth Act
No. 454 is unconstitutional for being undue
delegation of legislative power on the ground
that without limitation, guide or rule except
the unfettered discretion and judgment of
the Commission, constitute a complete and
total abdication by the Legislature of its
functions in the premises, and for that
reason, the Act, in so far as those powers are
concerned.
HELD: No, the law is not unconstitutional.
The law is made subject to a sufficient
standard that the PSC must strictly follow.
Inasmuch as the period to be fixed by the
Commission under section 15 is inseparable
from the certificate itself, said period cannot
be disregarded by the Commission in
determining the question whether the
issuance of the certificate will promote the
public interests in
a proper and suitable manner. Conversely, in
determining "a definite period of time," the

Commission will be guided by "public

interests," the only limitation to its power
being that said period shall not exceed fifty
years (sec. 16 (a), Commonwealth Act No.
146; Constitution, Art. XIII, sec. 8.) The
Supreme Court had earlier ruled that "public
interest" furnishes a sufficient standard.
Pangasinan Transport Co. vs. Public
Service Commission GR NO. 47065, June
26, 1940
FACTS: This is a case on the certificate of
public convenience of petitioner Pangasinan
Transportation Co. Inc (Pantranco). The
petitioner has been engaged for the past
twentyyears in the business of transporting
passengers in the province of Pangasinan
and Tarlac,Nueva Ecija and Zambales. On
August 26, 1939, Pantranco filed with the
Public Service Commission (PSC) an
application to operate 10 additional buses.
PSC granted the application with 2 additional
conditions which was made to apply also on
their existing business. Pantranco filed a
motion for reconsideration with the Public
Service Commission. Since it was denied,
Pantranco then filed a petition/ writ of
certiorari.
ISSUES:
Whether the legislative power granted to
Public Service Commission: (1) is
unconstitutional and void because it is
without limitation (2) constitutes undue
delegation of powers
HELD: The challenged provisions of
Commonwealth Act No. 454 are valid and
constitutional because it is a proper
delegation of legislative power, so called
Subordinate Legislation. It is a valid
delegation because of the growing
complexities of modern government, the
complexities or multiplication of the subjects
of governmental regulation and the
increased difficulty of administering the laws.
All that has been delegated to the
Commission is the administrative function,
involving the use of discretion to carry out
the will of the National Assembly having in
view, in addition, the promotion of public
interests in a proper and suitable manner.
The Certificate of Public Convenience is
neither a franchise nor contract, confers no
property rights and is a mere license or
privilege, subject to governmental control for
the good of the public. PSC has the power,
upon notice and hearing, to amend, modify,

or revoked at any time any certificate issued,

whenever the facts and circumstances so
warranted. The limitation of 25 years was
never heard, so the case was remanded to
PSC for further proceedings. In addition, the
Court ruled that, the liberty and property of
the citizens should be protected by the
rudimentary requirements of fair play. Not
only must the party be given an opportunity
to present his case and to adduce evidence
tending to establish the rights that he
asserts but the tribunal must consider the
evidence presented. When private property
is affected with a public interest, it ceased to
be juris privati or private use only.
Eastern Shipping Lines v. POEA
166 SCRA 533 (1988)
GENERAL RULE: Non-delegation of Legislative
Power
EXCEPTION: Subordinate Legislation
Tests for Valid Delegation of Legislative
Power
FACTS:
Vitaliano Saco, the Chief Officer of a ship,
was killed in an accident in Tokyo, Japan. The
widow filed a complaint for damages against
the Eastern Shipping Lines with the POEA,
based on Memorandum Circular No. 2 issued
by the latter which stipulated death benefits
and burial expenses for the family of an
overseas worker. Eastern Shipping Lines
questioned the validity of the memorandum
circular. Nevertheless, the POEA assumed
jurisdiction and decided the case.
ISSUE:
W/N the issuance of Memorandum Circular
No. 2 is a violation of non-delegation of
powers
HELD:
SC held that there was valid delegation of
powers. In questioning the validity of the
memorandum circular, Eastern Shipping
Lines contended that POEA was given no
authority to promulgate the regulation, and
even with such authorization, the regulation
represents an exercise of legislative
discretion which, under the principle, is not
subject to delegation.
GENERAL RULE: Non-delegation of powers;
exception
It is true that legislative discretion as to the
substantive contents of the law cannot be
delegated. What can be delegated is the
discretion to determine how the law may be

enforced, not what the law shall be. The

ascertainment of the latter subject is a
prerogative of the legislature. This
prerogative cannot be abdicated or
surrendered by the legislature to the
delegate.
Two Tests of Valid Delegation of Legislative
Power
There are two accepted tests to determine
whether or not there is a valid delegation of
legislative power, viz, the completeness test
and the sufficient standard test. Under the
first test, the law must be complete in all its
terms and conditions when it leaves the
legislature such that when it reaches the
delegate the only thing he will have to do is
to enforce it. Under the sufficient standard
test, there must be adequate guidelines or
stations in the law to map out the boundaries
of the delegates authority and prevent the
delegation from running riot.
Both tests are intended to prevent a total
transference of legislative authority to the
delegate, who is not allowed to step into the
shoes of the legislature and exercise a power
essentially legislative.
Xxx The delegation of legislative power has
become the rule and its non-delegation the
exception.
Rationale for Delegation of Legislative Power
The reason is the increasing complexity of
the task of government and the growing
inability of the legislature to cope directly
with the myriad problems demanding its
attention. The growth of society has ramified
its activities and created peculiar and
sophisticated problems that the legislature
cannot be expected to reasonably
comprehend. Specialization even in
legislation has become necessary. Too many
of the problems attendant upon present-day
undertakings, the legislature may not have
the competence to provide the required
direct and efficacious, not to say, specific
solutions. These solutions may, however, be
expected from its delegates, who are
supposed to be experts in the particular
fields.
Power of Subordinate Legislation
The reasons given above for the delegation
of legislative powers in general are

particularly applicable to administrative

bodies. With the proliferation of specialized
activities and their attendant peculiar
problems, the national legislature has found
it more and more necessary to entrust to
administrative agencies the authority to
issue rules to carry out the general
provisions of the statute. This is called the
power of subordinate legislation.
With this power, administrative bodies may
implement the broad policies laid down in
statute by filling in the details which the
Congress may not have the opportunity or
competence to provide. Memorandum
Circular No. 2 is one such administrative
regulation.
Eastern Shipping Lines v. POEA
Facts: Vitaliano Saco, husband of the
respondent was Chief Officer of the M/V
Eastern Polaris when he was killed in an
accident in Tokyo Japan, March 15, 1985. His
widow sued for damages under Executive
Order No. 797 and Memorandum Circular No.
2 of the POEA. Thus she was awarded the
sum of P192,000 by the POEA.
Issues:
1) Whether or not the POEA has jurisdiction
over the case, as the husband was not an
overseas worker as contended by the
petitioner?
2) Is Memorandum Circular No.2 of the POEA
which prescribed a standard contract to be
adopted by both foreign and domestic
shipping companies in hiring of Filipino
seamen for overseas employment violative
of the principle of non-delegation of powers?
3) Has the petitioner been denied due
process because the same POEA that issued
Memorandum Circular No. 2 has also
sustained and applied it?
Rulings: 1) Yes. Saco was an overseas
employee of the petitioner at the time he
met with the fatal accident in Japan, for he
died while under a contract of employment
with the petitioner and alongside petitioners
vessel while in a foreign country. Overseas
employment as defined under the 1985
Rules and Regulations on Overseas
Employment is employment of a worker
outside the Philippines, including
employment in board vessels plying
international water, covered by a valid
contract.

2) Memorandum Circular No. 2 is an

administrative regulation, which has the
force and effect of law. The power of the
POEA in requiring the model contract is not
unlimited as there is a sufficient standard
guiding the delegated in the exercise of the
said authority. It is discoverable in the
executive order itself which in creating the
POEA mandated it to protect the rights of
overseas Filipino workers to fair and
equitable employment practices.
3) No. Administrative agencies are vested
with two basic powers, the quasi-legislative
and the quasi-judicial. The first enables them
to promulgate implementing rules and
regulations, and the second enables them to
interpret and apply such regulations. Such an
arrangement has been accepted as a fact of
life of modern governments and cannot be
considered violative of due process as long
as the cardinal rights laid down by Justice
Laurel in the landmark case of Ang Tibay v.
Court of Industrial Relations are observed.
KILUSANG MAYO UNO LABOR CENTER
vs.HON. JESUS B. GARCIA, JR., the LAND
TRANSPORTATION FRANCHISING AND
REGULATORY BOARD, and the
PROVINCIAL BUS OPERATORS
ASSOCIATION OF THE PHILIPPINES
G.R. No. 115381 December 23, 1994
FACTS :
Then Secretary of DOTC, Oscar M. Orbos,
issued Memorandum Circular No. 90-395 to
then LTFRB Chairman, Remedios A.S.
Fernando allowing provincial bus operators to
charge passengers rates within a range of
15% above and 15% below the LTFRB official
rate for a period of one (1) year.
This range was later increased by LTFRB thru
a Memorandum Circular No. 92-009
providing, among others, that The existing
authorized fare range system of plus or
minus 15 per cent for provincial buses and
jeepneys shall be widened to 20% and -25%
limit in 1994 with the authorized fare to be
replaced by an indicative or reference rate as
the basis for the expanded fare range.
Sometime in March, 1994, private
respondent PBOAP, availing itself of the
deregulation policy of the DOTC allowing
provincial bus operators to collect plus 20%
and minus 25% of the prescribed fare
without first having filed a petition for the
purpose and without the benefit of a public

hearing, announced a fare increase of twenty

(20%) percent of the existing fares.
On March 16, 1994, petitioner KMU filed a
petition before the LTFRB opposing the
upward adjustment of bus fares, which the
LTFRB dismissed for lack of merit.
ISSUE:
Whether or not the authority given by
respondent LTFRB to provincial bus operators
to set a fare range of plus or minus fifteen
(15%) percent, later increased to plus twenty
(20%) and minus twenty-five (-25%) percent,
over and above the existing authorized fare
without having to file a petition for the
purpose, is unconstitutional, invalid and
illegal.

the delegate through the instrumentality of

his own judgment and not through the
intervening mind of another. A further
delegation of such power would indeed
constitute a negation of the duty in violation
of the trust reposed in the delegate
mandated to discharge it directly. The policy
of allowing the provincial bus operators to
change and increase their fares at will would
result not only to a chaotic situation but to
an anarchic state of affairs. This would leave
the riding public at the mercy of transport
operators who may increase fares every
hour, every day, every month or every year,
whenever it pleases them or whenever they
deem it necessary to do so.
CERVANTES VS. AUDITOR-GENERAL

HELD: Yes.

G.R. No. L-4043 May 26, 1952

Under section 16(c) of the Public Service Act,

the Legislature delegated to the defunct
Public Service Commission the power of
fixing the rates of public services.
Respondent LTFRB, the existing regulatory
body today, is likewise vested with the same
under Executive Order No. 202 dated June
19, 1987. x x x However, nowhere under the
aforesaid provisions of law are the regulatory
bodies, the PSC and LTFRB alike, authorized
to delegate that power to a common carrier,
a transport operator, or other public service.

FACTS: Cenon Cervantes, Manager of the

National Abaca and Other Fibers Corporation
(NAFCO) receiving P15,000 salary a year,
assailed the decision of the Auditor General
denying his claim for quarters allowance. By
a resolution of the Board of Directors of
NAFCO, Cervantes was granted quarters
allowance of not exceeding P400 a month
effective the first of August, 1949. The
resolution was disapproved by the Control
Committee of the Government Enterprises on
strength of the recommendation of the
NAFCO auditor, concurred in by the Auditor
General, because of the following reasons:
(1) that quarters allowance constituted
additional compensation prohibited by the
charter of the NAFCO, which fixes the salary
of the general manager thereof at the sum
not to exceed P15,000 a year, and (2) that
the precarious financial condition of the
corporation did not warrant the granting of
such allowance. The President promulgated
Executive Order No. 93 creating the
Government Enterprises Council creating the
Control Committee of the Government
Enterprises pursuant to Republic Act No. 51
approved by Congress authorizing the
President of the Philippines, among other
things, to effect such reforms and changes in
government owned and controlled
corporations for the purpose of promoting
simplicity, economy and efficiency in their
operation.

Doctrine of Potestas delegata non

delegari potest; Exception
Kilusang Mayo Uno Labor Center vs. Garcia,
Jr., 239 SCRA 386 (1994)
An administrative body may implement
broad policies laid down in a statute by
filling in the details which the Legislature
may neither have time nor competence to
provide. However, nowhere under the
aforesaid provisions of law are the regulatory
bodies authorized to delegate that power to
a common carrier, a transport operator or
other public service.
EXCEPTION TO THE EXCEPTION:
The authority given by the LTFRB to the
provincial bus operators to set a fare range
over and above the authorized existing fare
is illegal and invalid as it is tantamount to an
undue delegation of legislative authority.
Potestas delegate non delegari potest. What
has been delegated cannot be delegated.
This doctrine is based on the ethical principle
that such a delegated power constitutes not
only a right but a duty to be performed by

ISSUE: Whether or not RA 51 is

unconstitutional on the ground that it is an
undue delegation of legislative power.

HELD: No. The rule is that so long as the

Legislature "lays down a policy and a
standard is established by the statute" there
is no undue delegation. (11 Am. Jur. 957).
Republic Act No. 51 in authorizing the
President of the Philippines, among others, to
make reforms and changes in governmentcontrolled corporations, lays down a
standard and policy that the purpose shall be
to meet the exigencies attendant upon the
establishment of the free and independent
government of the Philippines and to
promote simplicity, economy and efficiency
in their operations. The standard was set and
the policy fixed. The President had to carry
the mandate. This he did by promulgating
the executive order in question which, tested
by the rule above cited, does not constitute
an undue delegation of legislative power.

CERVANTES v. AUDITOR GENERAL

(G.R. No. L-4043, May 26, 1942)
FACTS

This is a petition to review a decision

of Auditor General denying petitioners
claim for quarters allowance as
manager of the National Abaca and
other Fibers Corp. (NAFCO).

Petitioner was general manager in

1949 of NAFCO with annual salary of
P15,000.00

NAFCO Board of Directors granted

P400/mo. Quarters allowance to
petitioner amounting to P1,650 for
1949.

This allowance was disapproved by the

Central Committee of the government
enterprise council under Executive
Order No. 93 upon recommendation by
NAFCO auditor and concurred in by
the Auditor general on two grounds:
o

a) It violates the charter of

NAFCO limiting managers
salary to P15,000/year.

b) NAFCO is in precarious
financial condition.

ISSUES: Whether or not Executive Order No.

93 exercising control over Government
Owned and Controlled Corporations (GOCC)
implemented under R.A. No. 51 is valid or
null and void.

Whether or not R.A. No. 51 authorizing

presidential control over GOCCs is
Constitutional.
DECISION: R.A. No. 51 is constitutional. It is
not illegal delegation of legislative power to
the executive as argued by petitioner but a
mandate for the President to streamline
GOCCs operation. Executive Order 93 is
valid because it was promulgated within the
1 year period given. Petition for review
DISMISSED with costs.
PELAEZ VS. AUDITOR-GENERAL
G.R. No. L-23825 December 24, 1965
FACTS: President Diosdado Macapagal,
purporting to act pursuant to Section 68 of
the Revised Administrative Code, issued
Executive Orders Nos. 93 to 121, 124 and
126 to 129; creating thirtythree (33)
municipalities. petitioner Emmanuel Pelaez,
as Vice President of the Philippines and as
taxpayer, questioned the said EOs and
petitioned the court to restrain the Auditor
General and his representatives and agents,
from passing in audit any expenditure of
public funds in implementation of said
executive orders and/or any disbursement by
said municipalities. Petitioner alleges that
said executive orders are null and void, upon
the ground that said Section 68 has been
impliedly repealed by Republic Act No. 2370
and constitutes an undue delegation of
legislative power.
ISSUE: Whether or not the creation of the 33
municipalities is null and void on the ground
that the President has no power to create
municipalities.
HELD: Yes, the creation of the 33
municipalities is null and void as the power
to create municipal corporations is solely
legislative in nature. Although Congress may
delegate to another branch of the
Government the power to fill in the details in
the execution, enforcement or administration
of a law, it is essential, to forestall a violation
of the principle of separation of powers, that
said law: (a) be complete in itself it must
set forth therein the policy to be executed,
carried out or implemented by the delegate
and (b) fix a standard the limits of
which are sufficiently determinate or
determinable to which the delegate must
conform in the performance of his functions.
Indeed, without a statutory declaration of
policy, the delegate would in effect, make or

formulate such policy, which is the essence

of every law; and, without the
aforementioned standard, there would be no
means to determine, with reasonable
certainty, whether the delegate has acted
within or beyond the scope of his authority.
Hence, he could thereby arrogate upon
himself the power, not only to make the law,
but, also and this is worse to unmake it,
by adopting measures inconsistent with the
end sought to be attained by the Act of
Congress, thus nullifying the principle of
separation of powers and the system of
checks and balances, and, consequently,
undermining the very foundation of our
Republican system.
Section 68 of the Revised Administrative
Code does not meet these well settled
requirements for a valid delegation of the
power to fix the details in the enforcement of
a law. It does not enunciate any policy to be
carried out or implemented by the President.
Neither does it give a standard sufficiently
precise to avoid the evil effects above
referred to.
Emmanuel Pelaez vs. The Auditor
General
FACTS: From September 4, 1964 to October
29, 1964 the President of the Philippines
issued executive orders to create thirty-three
municipalities pursuant to Section 69 of the
Revised Administrative Code. Public funds
thereby stood to be disbursed in the
implementation of said executive orders.
Suing as a private citizen and taxpayer, Vice
President Emmanuel Pelaez filed a petition
for prohibition with preliminary injunction
against the Auditor General. It seeks to
restrain from the respondent or any person
acting in his behalf, from passing in audit any
expenditure of public funds in
implementation of the executive orders
aforementioned.
ISSUE:
Whether the executive orders are null and
void, upon the ground that the President
does not have the authority to create
municipalities as this power has been vested
in the legislative department.
RULING:
Section 10(1) of Article VII of the
fundamental law ordains:

The President shall have control of all the

executive departments, bureaus or offices,
exercise general supervision over all local
governments as may be provided by law,
and take care that the laws be faithfully
executed.
The power of control under this provision
implies the right of the President to interfere
in the exercise of such discretion as may be
vested by law in the officers of the executive
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
governments are concerned. Such control
does not include the authority to either
abolish an executive department or bureau,
or to create a new one. Section 68 of the
Revised Administrative Code does not merely
fail to comply with the constitutional
mandate above quoted, it also gives the
President more power than what was vested
in him by the Constitution.
The Executive Orders in question are hereby
declared null and void ab initio and the
respondent permanently restrained from
passing in audit any expenditure of public
funds in implementation of said Executive
Orders or any disbursement by the
municipalities referred to.
BALBUNA, ET AL. vs. THE HON. SEC.
OF EDUCATION
Note: Please read GERONA, ET AL. vs. THE
HON. SEC. OF EDUCATION first before
reading this case.
G.R. No. L-14283
November 29, 1960
REYES, J.B.L., J.
EN BANC
FACTS:
1. Members of the Jehovas Witnesses filed a
petition for prohibition and mandamus before
the CFI of Capiz against the Sec. of
Education, et al. It was to prevent the
enforcement of Dept. Order No. 8 issued
pursuant to RA 1265 promulgating rules and
regulations for the conduct of the
compulsory flag ceremony in all schools.
2. The facts are the same with the Gerona
case. It allegedly denies them freedom of
worship and of speech, however, new issues
have been raised this time such as:

a. the department order has no binding force

and effect, not having been published in the
Official Gazette; and
b. it is an undue delegation of legislative
power
3. The petition was dismissed. Hence, appeal
to the SC.
ISSUE/S:
1. Does it violate freedom of worship and
speech?
2. Is it in accordance with the requirements
of publication?
3. Is it unconstitutional for being an undue
delegation of legislative power?
RULING:
1. Issue on freedom of worship and speech.
No.
a. the court maintains that the Filipino flag is
not an image that requires religious
veneration; rather, it is a symbol of the
Republic of the Philippines, of sovereignty, an
emblem of freedom, liberty and national
unity;
b. that the flag salute is not a religious
ceremony but an act and profession of love
and allegiance and pledge of loyalty to the
fatherland which the flag stands for;
c. that compliance with the nondiscriminatory and reasonable rules and
regulations is a prerequisite to attendance in
public schools; and that for failure and
refusal to participate in the flag ceremony,
petitioners were properly excluded and
dismissed from the public school they were
attending.
2. Issue on publication. Yes.
a. Commonwealth Act 638 and Act 2930 do
not require the publication of the circulars,
regulations or notices therein mentioned in
order to become binding and effective;
b. said two acts merely enumerate and make
a list of what should be published in the
Official Gazette, presumably, for the
guidance of the different branches of the
government issuing the same, and of the
Bureau of Printing.
c. while it is true that statutes or laws shall
take effect fifteen days after publication in
the Official Gazette and it is also true that
administrative rules and regulations have the

force of law, the primary factor for this

rationale is that such statutes provided for
penalties for violations thereof.
d. in the case at bar, Department Order No. 8
does not provide any penalty against those
pupils or students refusing to participate in
the flag ceremony or otherwise violating the
provisions of said order; their expulsion was
merely the consequence of their failure to
observe school discipline which the school
authorities are bound to maintain.
e. for their failure or refusal to obey school
regulations about the flag salute, they were
not being prosecuted under threat of penal
sanction; if they choose not to obey the flag
salute regulation, they merely lost the
benefits of public education being
maintained at the expense of their fellow
citizens, nothing more and having elected
not to comply, they forfeited their right to
attend public schools.
3. Issue on undue delegation of legislative
power. No.
a. the requirements in Sections 1 and 2 of
the department order constitute an adequate
standard, to wit, simplicity and dignity of the
flag ceremony and the singing of the
National Anthem.
b. that the Legislature did not specify the
details of the flag ceremony is no objection
to the validity of the statute, for all that is
required of it is the laying down of standards
and policy that will limit the discretion of the
regulatory agency;
c. to require the statute to establish in detail
the manner of exercise of the delegated
power would be to destroy the administrative
flexibility that the delegation is intended to
achieve.
Case Digest: Bureau of Customs
Employees Association v. Teves, et al.
G.R. No. 181704 : December 6, 2011
FACTS:
Former President Gloria Macapagal-Arroyo
signed into law R.A. No. 9335. RA [No.] 9335
was enacted to optimize the revenuegeneration capability and collection of the
Bureau of Internal Revenue (BIR) and the
Bureau of Customs (BOC). The law intends to
encourage BIR and BOC officials and
employees to exceed their revenue targets
by providing a system of rewards and

sanctions through the creation of a Rewards

and Incentives Fund (Fund) and a Revenue
Performance Evaluation Board (Board). It
covers all officials and employees of the BIR
and the BOC with at least six months of
service, regardless of employment status.
Contending that the enactment and
implementation of R.A. No. 9335 are tainted
with constitutional infirmities in violation of
the fundamental rights of its members,
petitioners directly filed the present petition
before this Court against respondents.
BOCEA asserted that in view of the
unconstitutionality of R.A. No. 9335 and its
IRR, and their adverse effects on the
constitutional rights of BOC officials and
employees, direct resort to this Court is
justified. BOCEA argued, among others, that
its members and other BOC employees are in
great danger of losing their jobs should they
fail to meet the required quota provided
under the law, in clear violation of their
constitutional right to security of tenure, and
at their and their respective families
prejudice.
Respondents countered that R.A. No. 9335
and its IRR do not violate the right to due
process and right to security of tenure of BIR
and BOC employees. The OSG stressed that
the guarantee of security of tenure under the
1987 Constitution is not a guarantee of
perpetual employment. R.A. No. 9335 and its
IRR provided a reasonable and valid ground
for the dismissal of an employee which is
germane to the purpose of the law. Likewise,
R.A. No. 9335 and its IRR provided that an
employee may only be separated from the
service upon compliance with substantive
and procedural due process. The OSG added
that R.A. No. 9335 and its IRR must enjoy the
presumption of constitutionality.
In Abakada, the Court declared Section 12of
R.A. No. 9335 creating a Joint Congressional
Oversight Committee to approve the IRR as
unconstitutional and violative of the principle
of separation of powers. However, the
constitutionality of the remaining provisions
of R.A. No. 9335 was upheld pursuant to
Section 13of R.A. No. 9335. The Court also
held that until the contrary is shown, the IRR
of R.A. No. 9335 is presumed valid and
effective even without the approval of the
Joint Congressional Oversight Committee.

ISSUE: Whether or not R.A. No. 9335 and its

IRR violate the rights of BOCEAs members
to: (a) equal protection of laws, (b) security
of tenure and (c) due process?
HELD: Ruling in Abakada is adopted.
REMEDIAL LAW: actions; parties
Prefatorily, we note that it is clear, and in
fact uncontroverted, that BOCEA has locus
standi. BOCEA impugns the constitutionality
of R.A. No. 9335 and its IRR because its
members, who are rank-and-file employees
of the BOC, are actually covered by the law
and its IRR. BOCEAs members have a
personal and substantial interest in the case,
such that they have sustained or will sustain,
direct injury as a result of the enforcement of
R.A. No. 9335 and its IRR.
CONSTITUTIONAL LAW: administrative
agencies
The principle of separation of powers ordains
that each of the three great branches of
government has exclusive cognizance of and
is supreme in matters falling within its own
constitutionally allocated sphere. Necessarily
imbedded in this doctrine is the principle of
non-delegation of powers, as expressed in
the Latin maxim potestas delegata non
delegari potest, which means "what has
been delegated, cannot be delegated." This
doctrine is based on the ethical principle that
such delegated power constitutes not only a
right but a duty to be performed by the
delegate through the instrumentality of his
own judgment and not through the
intervening mind of another. However, this
principle of non-delegation of powers admits
of numerous exceptions, one of which is the
delegation of legislative power to various
specialized administrative agencies like the
Board in this case.
CONSTITUTIONAL LAW: equal protection
clause
Equal protection simply provides that all
persons or things similarly situated should be
treated in a similar manner, both as to rights
conferred and responsibilities imposed. The
purpose of the equal protection clause is to
secure every person within a states
jurisdiction against intentional and arbitrary
discrimination, whether occasioned by the
express terms of a statute or by its improper
execution through the states duly constituted
authorities. In other words, the concept of
equal justice under the law requires the state

to govern impartially, and it may not draw

distinctions between individuals solely on
differences that are irrelevant to a legitimate
governmental objective.
CONSTITUTIONAL LAW: due process
The essence of due process is simply an
opportunity to be heard, or as applied to
administrative proceedings, a fair and
reasonable opportunity to explain ones side.
BOCEAs apprehension of deprivation of due
process finds its answer in Section 7 (b) and
(c) of R.A. No. 9335. The concerned BIR or
BOC official or employee is not simply given
a target revenue collection and capriciously
left without any quarter. R.A. No. 9335 and
its IRR clearly give due consideration to all
relevant factors that may affect the level of
collection.
As the Court is not a trier of facts, the
investigation on the veracity of, and the
proper action on these anomalies are in the
hands of the Executive branch. Correlatively,
the wisdom for the enactment of this law
remains within the domain of the Legislative
branch. We merely interpret the law as it is.
The Court has no discretion to give statutes a
meaning detached from the manifest
intendment and language thereof. Just like
any other law, R.A. No. 9335 has in its favor
the presumption of constitutionality, and to
justify its nullification, there must be a clear
and unequivocal breach of the Constitution
and not one that is doubtful, speculative, or
argumentative. We have so declared in
Abakada, and we now reiterate that R.A. No.
9335 and its IRR are constitutional.
DISMISSED.
G.R. No. 190837

March 5, 2014

REPUBLIC OF THE PHILIPPINES,

represented by the BUREAU OF FOOD
AND DRUGS (now FOOD AND DRUG
ADMINISTRATION), Petitioner,
vs.
DRUGMAKER'S LABORATORIES, INC. and
TERRAMEDIC, INC., Respondents.
DECISION
PERLAS-BERNABE, J.:
This is a direct recourse to the Court from the
Regional Trial Court of Muntinlupa City,
Branch 256 (RTC), through a petition for
review on certiorari,1 raising a pure question
of law. In particular, petitioner Republic of

the Philippines, represented by the Bureau.of

Food and Drugs (BFAD), now Food and Drug
Administration (FDA), assails the
Order2 dated December 18, 2009 of the RTC
in Civil Case No. 08-124 which: (a) declared
BF AD Circular Nos. 1 and 8, series of 1997
(Circular Nos. 1 and 8, s. 1997) null and void;
(b) ordered the issuance of writs of
permanent injunction and prohibition against
the FDA in implementing the aforesaid
circulars; and ( c) directed the FDA to issue
Certificates of Product Registration (CPR) in
favor of respondents Drugmaker's
Laboratories, Inc. and Terrarriedic, Inc.
(respondents).
The Facts
The FDA3 was created pursuant to Republic
Act No. (RA) 3720,4 otherwise known as the
"Food, Drug, and Cosmetic Act," primarily in
order "to establish safety or efficacy
standards and quality measures for foods,
drugs and devices, and cosmetic
product[s]."5 On March 15, 1989, the
Department of Health (DOH), thru thenSecretary Alfredo R.A. Bengzon, issued
Administrative Order No. (AO) 67, s. 1989,
entitled "Revised Rules and Regulations on
Registration of Pharmaceutical Products."
Among others, it required drug
manufacturers to register certain drug and
medicine products with the FDA before they
may release the same to the market for sale.
In this relation, a satisfactory
bioavailability6/bioequivalence7 (BA/BE) test
is needed for a manufacturer to secure a CPR
for these products. However, the
implementation of the BA/BE testing
requirement was put on hold because there
was no local facility capable of conducting
the same. The issuance of Circular No. 1, s.
19978 resumed the FDAs implementation of
the BA/BE testing requirement with the
establishment of BA/BE testing facilities in
the country. Thereafter, the FDA issued
Circular No. 8, s. 19979 which provided
additional implementation details concerning
the BA/BE testing requirement on drug
products.10
Respondents manufacture and trade a
"multisource pharmaceutical product"11 with
the generic name of rifampicin12 branded
as "Refam 200mg/5mL Suspension" (Refam)
for the treatment of adults and children
suffering from pulmonary and extrapulmonary tuberculosis.13 On November 15,
1996, respondents applied for and were

issued a CPR for such drug, valid for five (5)

years, or until November 15, 2001.14 At the
time of the CPRs issuance, Refam did not
undergo BA/BE testing since there was still
no facility capable of conducting BA/BE
testing. Sometime in 2001, respondents
applied for and were granted numerous
yearly renewals of their CPR for Refam,
which lasted until November 15, 2006, albeit
with the condition that they submit
satisfactory BA/BE test results for said drug.15

The RTC held that there is nothing in RA 3720

which granted either the FDA the authority to
issue and implement the subject circulars, or
the Secretary of Health the authority to
delegate his powers to the FDA. For these
reasons, it concluded that the issuance of
Circular Nos. 1 and 8, s.

Accordingly, respondents engaged the

services of the University of the Philippines
(Manila) Department of Pharmacology and
Toxicology, College of Medicine to conduct
BA/BE testing on Refam, the results of which
were submitted to the FDA.16 In turn, the FDA
sent a letter dated July 31, 2006 to
respondents, stating that Refam is "not
bioequivalent with the reference drug." 17 This
notwithstanding, the FDA still revalidated
respondents CPR for Refam two (2) more
times, effective until November 15, 2008, the
second of which came with a warning that no
more further revalidations shall be granted
until respondents submit satisfactory BA/BE
test results for Refam.18

Accordingly, the RTC issued a Writ of

Permanent Injunction24 dated January 19,
2010, enjoining the FDA and all persons
acting for and under it from enforcing
Circular Nos. 1 and 8, s. 1997 and directing
them to approve the renewal and
revalidation of respondents products without
submitting satisfactory BA/BE test results.

Instead of submitting satisfactory BA/BE test

results for Refam, respondents filed a
petition for prohibition and annulment of
Circular Nos. 1 and 8, s. 1997 before the RTC,
alleging that it is the DOH, and not the FDA,
which was granted the authority to issue and
implement rules concerning RA 3720. As
such, the issuance of the aforesaid circulars
and the manner of their promulgation
contravened the law and the
Constitution.19 They further averred that that
the non-renewal of the CPR due to failure to
submit satisfactory BA/BE test results would
not only affect Refam, but their other
products as well.20
During the pendency of the case, RA
9711,21 otherwise known as the "Food and
Drug Administration [FDA] Act of 2009," was
enacted into law.
The RTC Ruling
In an Order22 dated December 18, 2009, the
RTC ruled in favor of respondents, and
thereby declared Circular Nos. 1 and 8, s.
1997 null and void, ordered the issuance of
writs of permanent injunction and prohibition
against the FDA in implementing the
aforesaid circulars, and directed the FDA to
issue CPRs in favor of respondents products.

1997 constituted an illegal exercise of

legislative and administrative powers and,
hence, must be struck down.23

Aggrieved, the FDA sought direct recourse to

the Court through the instant petition with an
urgent prayer for the immediate issuance of
a temporary restraining order and/or a writ of
preliminary injunction against the
implementation of the RTCs Order dated
December 18, 2009 and Writ of Permanent
Injunction dated January 19, 2010.25 The
Court granted FDAs application and issued a
Temporary Restraining Order26 dated
February 24, 2010, effective immediately
and continuing until further orders.
The Issue Before the Court
The primordial issue in this case is whether
or not the FDA may validly issue and
implement Circular Nos. 1 and 8, s. 1997. In
resolving this issue, there is a need to
determine whether or not the aforesaid
circulars partake of administrative rules and
regulations and, as such, must comply with
the requirements of the law for its issuance.
The FDA contends that it has the authority to
issue Circular Nos. 1 and 8, s. 1997 as it is
the agency mandated by law to administer
and enforce laws, including rules and
regulations issued by the DOH, that pertain
to the registration of pharmaceutical
products.27
For their part, respondents maintain that
under RA 3720, the power to make rules to
implement the law is lodged with the
Secretary of Health, not with the FDA. 28 They
also argue that the assailed circulars are void
for lack of prior hearing, consultation, and
publication.29

The Courts Ruling

The petition is meritorious.
Administrative agencies may exercise quasilegislative or rule-making powers only if
there exists a law which delegates these
powers to them. Accordingly, the rules so
promulgated must be within the confines of
the granting statute and must involve no
discretion as to what the law shall be, but
merely the authority to fix the details in the
execution or enforcement of the policy set
out in the law itself, so as to conform with
the doctrine of separation of powers and, as
an adjunct, the doctrine of non-delegability
of legislative power.30
An administrative regulation may be
classified as a legislative rule, an
interpretative rule, or a contingent rule.
Legislative rules are in the nature of
subordinate legislation and designed to
implement a primary legislation by providing
the details thereof.31 They usually implement
existing law, imposing general, extrastatutory obligations pursuant to authority
properly delegated by Congress32 and effect
a change in existing law or policy which
affects individual rights and
obligations.33 Meanwhile, interpretative rules
are intended to interpret, clarify or explain
existing statutory regulations under which
the administrative body operates. Their
purpose or objective is merely to construe
the statute being administered and purport
to do no more than interpret the statute.
Simply, they try to say what the statute
means and refer to no single person or party
in particular but concern all those belonging
to the same class which may be covered by
the said rules.34 Finally, contingent rules are
those issued by an administrative authority
based on the existence of certain facts or
things upon which the enforcement of the
law depends.35
In general, an administrative regulation
needs to comply with the requirements laid
down by Executive Order No. 292, s. 1987,
otherwise known as the "Administrative Code
of 1987," on prior notice, hearing, and
publication in order to be valid and binding,
except when the same is merely an
interpretative rule. This is because "[w]hen
an administrative rule is merely
interpretative in nature, its applicability
needs nothing further than its bare issuance,
for it gives no real consequence more than
what the law itself has already prescribed.

When, on the other hand, the administrative

rule goes beyond merely providing for the
means that can facilitate or render least
cumbersome the implementation of the law
but substantially increases the burden of
those governed, it behooves the agency to
accord at least to those directly affected a
chance to be heard, and thereafter to be duly
informed, before that new issuance is given
the force and effect of law."36
In the case at bar, it is undisputed that RA
3720, as amended by Executive Order No.
175, s. 198737 prohibits, inter alia, the
manufacture and sale of pharmaceutical
products without obtaining the proper CPR
from the FDA.38In this regard, the FDA has
been deputized by the same law to accept
applications for registration of
pharmaceuticals and, after due course, grant
or reject such applications.39 To this end, the
said law expressly authorized the Secretary
of Health, upon the recommendation of the
FDA Director, to issue rules and regulations
that pertain to the registration of
pharmaceutical products.40
In accordance with his rule-making power
under RA 3720, the Secretary of Health
issued AO 67, s. 1989 in order to provide a
comprehensive set of guidelines covering the
registration of pharmaceutical products. AO
67, s. 1989, required, among others, that
certain pharmaceutical products undergo
BA/BE testing prior to the issuance of CPR,
contrary to respondents assertion that it was
Circular Nos. 1 and 8, s. 1997 that required
such tests.41
Despite the fact that the BA/BE testing
requirement was already in place as early as
the date of effectivity of AO 67, s. 1989, its
implementation was indefinitely shelved due
to lack of facilities capable of conducting the
same. It was only sometime in 1997 when
technological advances in the country paved
the way for the establishment of BA/BE
testing facilities, thus allowing the rules
enforcement. Owing to these developments,
the FDA (then, the BFAD) issued Circular No.
1, s. 1997, the full text of which reads:
In Annex 1 of A.O. 67 s. 1989 which is
entitled Requirement for Registration
provides that "Bioavailability/Bioequivalence
study for certain drugs as determined by
BFAD" is required for [(i)] Tried and Tested
Drug, (ii) Established Drug, and (iii)
Pharmaceutical Innovation of Tried and
Tested or Established Drug.

Drugs requiring strict precaution in

prescribing and dispensing contained in the
List-B (Prime) were the drugs identified by
BFAD in the process of registration that will
be required "Bioavailability/Bioequivalence"
studies. However, due to the supervening
factor that there had yet been no
bioavailability testing unit in the country
when the A.O. 67 s. 1989 became effective,
the Bureau did not strictly enforce the said
requirement.
The supervening factor no longer exist [sic]
as of date. As a matter of fact, one of the
registered products tested by the
Bioavailability Testing Unit at the University
of Sto. Tomas under the NDP Cooperation
Project of the Philippines and Australia failed
to meet the standard of bioavailability. This
finding brings forth the fact that there may
be registered products which do not or may
no longer meet bioavailability standard.
Wherefore, all drugs manufacturers, traders,
distributor-importers of products contained
or identified in the list b (prime) provided for
by BFAD, a copy of which is made part of this
circular, are advised that all pending initial
and renewal registration of the products
aforementioned, as well as all applications
for initial and renewal registration of the
same, shall henceforth be required to submit
bioavailability test with satisfactory results
on the products sought to be registered or
renewed conducted by any bioavailability
testing units here or abroad, duly recognized
by the BFAD under the Dept. of
Health.1wphi1 (Emphases and underscoring
supplied)
The FDA then issued Circular No. 8, s. 1997
to supplement Circular No. 1, s. 1997 in that
it reiterates the importance of the BA/BE
testing requirement originally provided for by
AO 67, s. 1989.1wphi1
A careful scrutiny of the foregoing issuances
would reveal that AO 67, s. 1989 is actually
the rule that originally introduced the BA/BE
testing requirement as a component of
applications for the issuance of CPRs
covering certain pharmaceutical products. As
such, it is considered an administrative
regulation a legislative rule to be exact
issued by the Secretary of Health in
consonance with the express authority
granted to him by RA 3720 to implement the
statutory mandate that all drugs and devices
should first be registered with the FDA prior
to their manufacture and sale. Considering

that neither party contested the validity of its

issuance, the Court deems that AO 67, s.
1989 complied with the requirements of prior
hearing, notice, and publication pursuant to
the presumption of regularity accorded to
the government in the exercise of its official
duties.42
On the other hand, Circular Nos. 1 and 8, s.
1997 cannot be considered as administrative
regulations because they do not: (a)
implement a primary legislation by providing
the details thereof; (b) interpret, clarify, or
explain existing statutory regulations under
which the FDA operates; and/or (c) ascertain
the existence of certain facts or things upon
which the enforcement of RA 3720 depends.
In fact, the only purpose of these circulars is
for the FDA to administer and supervise the
implementation of the provisions of AO 67, s.
1989, including those covering the BA/BE
testing requirement, consistent with and
pursuant to RA 3720.43 Therefore, the FDA
has sufficient authority to issue the said
circulars and since they would not affect the
substantive rights of the parties that they
seek to govern as they are not, strictly
speaking, administrative regulations in the
first place no prior hearing, consultation,
and publication are needed for their validity.
In sum, the Court holds that Circular Nos. 1
and 8, s. 1997 are valid issuances and
binding to all concerned parties, including
the respondents in this case.
As a final note, while the proliferation of
generic drugs and medicines is indeed a
welcome development as it effectively
ensures access to affordable quality drugs
and medicines for all through their lower
prices, the State, through the FDA, which is
the government instrumentality tasked on
this matter, must nevertheless be vigilant in
ensuring that the generic drugs and
medicines released to the market are safe
and effective for use.
WHEREFORE, the petition is GRANTED. The
Order dated December 18, 2009 and the Writ
of Permanent Injunction dated January 19,
2010 of the Regional Trial Court of
Muntinlupa City, Branch 256 in Civil Case No.
08-124 are hereby SET ASIDE. BFAD Circular
Nos. 1 and 8, series of 1997 are declared
VALID. Accordingly, the Court's Temporary
Restraining Order dated February 24, 2010 is
hereby made PERMANENT.
SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice
G.R. No. 103533 December 15, 1998
MANILA JOCKEY CLUB, INC. AND
PHILIPPINE RACING CLUB,
INC., petitioners,
vs.
THE COURT OF APPEALS AND
PHILIPPINE RACING
COMMISSION, respondents.
QUISUMBING, J.:

. . . Saturday, Sundays, and

official holiday of the year,
except on those official holidays
where the law expressly
provides that no horse races are
to be held. The grantee may
also conduct races on the eve of
any public holiday to start not
earlier than five-thirty (5:30)
o'clock in the afternoon but not
to exceed five days a year)
Said laws carried provisions on the allocation
of "breakages" to beneficiaries as follows:

This is a Petition for Review

on Certiorari seeking the reversal of the
decision 1 of the Court of Appeals in CA-G.R.
SP No. 25251 dated September 17, 1991 and
the resolution 2 dated January 8, 1992, which
denied the motion for reconsideration. At
issue here is the control and disposition of
"breakages" 3 in connection with the conduct
of horse-racing.

Provincial or city hospitals 25%

The pertinent facts on record are as follows:

Charitable institutions 25%

On June 18, 1948, Congress approved

Republic Act No. 309, entitled "An Act to
Regulate Horse-Racing in the Philippines."
This Act consolidated all existing laws and
amended inconsistent provisions relative to
horse racing. It provided for the distribution
of gross receipts from the sale of betting
tickets, but is silent on the allocation of socalled "breakages." Thus the practice,
according to the petitioners, was to use the
"breakages" for the anti-bookies drive and
other sales promotions activities of the horse
racing clubs.
On October 23, 1992, petitioners, Manila
Jockey Club, Inc. (MJCI) and Philippine Racing
Club, Inc. (PRCI), were granted franchises to
operate and maintain race tracks for horse
racing in the City of Manila and the Province
of Rizal by virtue of Republic Act Nos. 6631
and 6632, respectively, and allowed to hold
horse races, with bets, on the following
dates:
. . . Saturdays, Sundays and
official holidays of the year,
excluding Thursday and Fridays
of the Holy Week, June twelfth,
commonly known as
Independence Day, Election Day
and December thirtieth,
commonly known as Rizal Day.

Rehabilitation of drug addicts

25% 50%
For the benefit of Philippine
Amateur Athletes Federation
50% 25%

On March 20, 1974, Presidential Decree No.

420 was issued creating the Philippine
Racing Commission (PHILRACOM), giving it
exclusive jurisdiction and control over every
aspect of the conduct of horse racing,
including the framing and scheduling of
races. 6 By virtue of this power, the
PHILRACOM authorized the holding of races
on Wednesdays starting on December 22,
1976. 7
In connection with the new schedule of
races, petitioners made a joint query
regarding the ownership of breakages
accumulated during Wednesday races. In
response to the query, PHILRACOM rendered
its opinion in a letter dated September 20,
1978. It declared that the breakages
belonged to the racing clubs concerned, to
wit:
We find no further need to
dissect the provisions of P.D.
420 to come to a legal
conclusion. As can be clearly
seen from the foregoing
discussion and based on the
established precedents, there
can be no doubt that the
breakage of Wednesday races
shall belong to the racing club
concerned. 8

Consequently, the petitioners

allocated the proceeds of breakages
for their own business purpose:

the "breakages" derived from the Tuesday,

Wednesday and Thursday races in this wise:
xxx xxx xxx

Thereafter, PHILRACOM authorized the

holding of races on Thursdays from
November 15, 1984 to December 31, 1984
and on Tuesdays since January 15, 1985 up
to the present. These mid-week races are in
addition to those days specifically mentioned
in R.A. 6631 and R.A. 6632. Likewise, petition
allocated the breakages from these races for
their own uses.
On December 16, 1986 President Corazon
Aquino amended certain provisions Sec. 4 of
R.A. 8631 and Sec. 6 of R.A. 6632 through
Executive Orders No. 88 and 89. Under these
Executive Orders, breakages were allocated
to beneficiaries, as follows:
Provincial or city hospitals 25%
Rehabilitation of drug addicts
25% 50%
For the benefit of Philippine
Racing Commission 50% 25%
Charitable institutions 25%
On April 23, 1987, PHILRACOM itself
addressed a query to the Office of the
President asking which agency is entitled to
dispose of the proceeds of the "breakages"
derived from the Tuesday and Wednesday
races.
In a letter dated May 21, 1987, the Office of
the President, through then Deputy
Executive Secretary Catalino Macaraig, Jr.,
replied that "the disposition of the breakages
rightfully belongs to PHILRACOM, not only
those derived from the Saturday, Sunday and
holiday races, but also from the Tuesday and
Wednesday races in accordance with the
distribution scheme prescribed in said
Executive Orders". 11
Controversy arose when herein respondent
PHILRACOM, sent a series of demand letters
to petitioners MJCI and PRCI, requesting its
share in the "breakages" of mid-week-races
and proof of remittances to other legal
beneficiaries as provided under the franchise
laws. On June 8, 1987, PHILRACOM sent a
letter of demand to petitioners MJCI and PRCI
asking them to remit PHILRACOM's share in

Pursuant to Board Resolution

dated December 21, 1986, and
Executive Order Nos. 88 and 89
series of 1986, and the
authority given by the Office of
the President dated May 21,
1987, please remit to the
Commission the following:
1) PHILRACOM's
share in the
breakages derived
from Wednesday
racing for the
period starting
December 22,
1976 up to the
December 31,
1986.
2) PHILRACOM's
share in the
breakages derived
from Thursday
racing for the
period starting
November 15,
1984 up to
December 31,
1984; and
3) PHILRACOM's
share in the
breakages derived
from Tuesday
racing for the
period starting
January 15, 1985
up to December,
1986.
4) Kindly furnish
the Commission
with the
breakdown
of all breakages
derived from
Tuesday,
Thursdays and
Wednesdays racing
that you have
remitted to the
legal
beneficiaries. 12

On June 16, 1987, petitioners MJCI and PRCI

sought reconsideration 13 of the May 21,
1987 opinion of then Deputy Executive
Secretary Macaraig, but the same was
denied by the Office of the President in its
letter dated April 11, 1988. 14
On April 25, 1988, PHILRACOM wrote another
letter 15 to the petitioners MJCI and PRCI
seeking the remittance of its share in the
breakages. Again, on June 13, 1990,
PHILRACOM reiterated its previous demand
embodied in its letter of April 25, 1 988. 16

derive from midweek races shall

not be disturbed,
with the reminder
that the breakages
should be strictly
and wholly utilized
for the purpose for
which ownership
thereof has been
vested upon said
racing entities.
SO ORDERED.

Petitioners ignored said demand. Instead,

they filed a Petition for Declaratory Relief
before the Regional Trial Court, Branch 150
of Makati, on the ground that there is a
conflict between the previous opinion of
PHILRACOM dated September 20, 1978 and
the present position of PHILRACOM, as
declared and affirmed by the Office of the
President in its letters dated May 21, 1987
and April 11, 1988. Petitioners averred that
there was an "actual controversy" between
the parties, which should be resolved.

17

Dissatisfied, respondent PHILRACOM filed a

Petition for Certiorari with prayer for the
issuance of a writ of preliminary injunction
before this Court, raising the lone question of
whether or not E.O. Nos. 88 and 89 cover
breakages derived from the mid-week races.
However, we referred the case to the Court
of Appeals, which eventually reversed the
decision of the trial court, and ruled as
follows:
xxx xxx xxx

On March 11, 1991, the trial court rendered

judgment, disposing as follows:
WHEREFORE, and in view of all
the foregoing considerations,
the Court hereby declares and
decides as follows:
a) Executive
Orders Nos. 88 and
89 do not and
cannot cover the
disposition and
allocation of midweek races,
particularly those
authorized to be
held during
Tuesdays,
Wednesdays and
those which are
not authorized
under Republic
Acts 6631 and
6632; and
b) The ownership
by the Manila
Jockey Club, Inc.
and the Philippine
Racing Club, Inc. of
the breakages they

The decision on the part of

PHILRACOM to authorize
additional racing days had the
effect of widening the scope of
Section 5 of RA 6631 and
Section 7 of RA 6632.
Consequently, private
respondents derive their
privilege to hold races on the
designated days not only their
franchise acts but also from the
order issued by the PHILRACOM.
No provision of law became
inconsistent with the passage of
the Order granting additional
racing days. Neither was there a
special provision set to govern
those mid-week races. The
reason is simple. There was no
need for any new provisions
because there are enough
general provisions to cover
them. The provisions on the
disposition and allocation of
breakages being general in
character apply to breakages
derived on any racing day. 18
xxx xxx xxx

WHEREFORE, based on the

foregoing analysis and
interpretation of the laws in
question, the judgment of the
trial court is hereby SET ASIDE.
Decision is hereby rendered:
1. declaring Section 4 of RA
6631 as amended by E.O. 89
and Section 6 of RA 6632 as
amended by E.O. 88 to cover
the disposition and allocation of
breakages derived on all races
conducted by private
respondents on any racing day,
whether as provided for under
Section 4 of RA 6631 or Section
6 of RA 6632 or as ordered by
PHILRACOM in the exercise of its
powers under P.D. 420;
2. ordering private respondent
to remit to PHILRACOM its share
under E.O. 88 and E.O. 89
derived from races held on
Tuesday, Wednesdays, Thursday
as authorized by PHILRACOM.
SO ORDERED.

19

Petitioners filed a motion for reconsideration,

but it was denied for lack of merit, with
respondent Court of Appeals further
declaring that:

beneficiaries among which was

the PAAF, a government agency.
Since respondents admit that
PHILRACOM (Petitioner) was
merely placed in lieu of PAAF as
beneficiary/recipient of
breakages, then whatever
breakages was due to PAAF as
one of the beneficiaries under
R.A. Nos. 6631 and 6632
accrued to or should belong to
PHILRACOM as successor to the
defunct PAAF.
Finding the Motion for
Reconsideration without merit,
and for reasons indicated, the
Motion is denied.
SO ORDERED.

20

Consequent to the aforequoted adverse

decision, petitioners MJCI and PRCI filed this
petition for review under Rule 45.
The main issue brought by the parties for the
Court's resolution is: Who are the rightful
beneficiaries of the breakages derived from
mid-week races? This issue also carries an
ancillary question: assuming PHILRACOM is
entitled to the mid-week breakages under
the law, should the petitioners remit the
money from the time the mid-week races
started, or only upon the promulgation of
E.O. Nos. 88 and 89?

xxx xxx xxx

In so far as the prospective
application of Executive Orders
Nos. 88 and 89 is concerned.
We have no disagreement with
the respondents. Since
PHILRACOM became the
beneficiary of the breakages
only upon effectivity of
Executive Order Nos. 88 and 89,
it is therefore entitled to such
breakages from December 16,
1986 when said Executive
Orders were issued. However,
we do not concede that
respondents are entitled to
breakages prior to December
16, 1986 because it is clear that
the applicable laws from 1976
to December 16, 1986 were R.A.
6631 and R.A. 6632, which
specifically apportion the
breakages to specified

Petitioners assert that franchise laws should

be construed to apply the distribution
scheme specifically and exclusively to the
racing days enumerated in Sec. 5 of R.A.
6631, and Sec. 7 of R.A. 6632. They claim
that disposition of breakages under these
laws should be limited to races conducted on
"all Saturdays, Sundays, and official holidays
of the year, except, on those official holidays
where the law expressly provides that no
horse races are to be held", hence, there is
no doubt that the breakages of Wednesday
races shall belong to the racing clubs
concerned. 21 They even advance the view
that "where a statute by its terms is
expressly limited to certain matters, it may
not by interpretation or construction be
extended to other matters" 22
However, respondent PHILRACOM contends
that R.A. Nos. 6631 and 6632 are laws
intended primarily to grant petitioners their
respective franchises to construct, operate,

and maintain a race track for horse

racing. 23 When PHILRACOM added mid-week
races, the franchises given to the petitioners
remained the same. Logically, what applies
to races authorized under Republic Act Nos.
6631 and 6632 should also apply to races
additionally authorized by PHILRACOM,
namely mid-week races, because these are
general provisions which apply general rues
and procedures governing the operation of
the races. Consequently, if the authorized
racing days are extended, these races must
therefore be governed by the same rules and
provisions generally provided therein.
We find petitioners' position on the main
issue lacking in merit and far from
persuasive.
Franchise laws are privileges 24 conferred by
the government on corporations to do that
"which does not belong to the citizens of the
country generally by common right". 25 As a
rule, a franchise springs from contracts
between the sovereign power and the
private corporation for purposes of individual
advantage as well as public benefit. 26 Thus,
a franchise partakes of a double nature and
character. 27 In so far as it affects or concerns
the public, it is public juris and subject to
governmental control. 28 The legislature may
prescribe the conditions and terms upon
which it may be held, and the duty of
grantee to the public exercising it. 29
As grantees of a franchise, petitioners derive
their existence from the same. Petitioners'
operations are governed by all existing rules
relative to horse racing provided they are not
inconsistent with each other and could be
reasonably harmonized. Therefore, the
applicable laws are R.A. 309, as amended,
R.A. 6631 and 6632, as amended by E.O. 88
and 89, P.D. 420 and the orders issued
PHILRACOM. Consequently, every statute
should be construed in such a way that will
harmonize it with existing laws. This principle
is expressed in the legal maxim "interpretare
et concordare leges legibus est optimus
interpretandi", that is, to interpret and to do
it in such a way as to harmonize laws with
laws is the best method of interpretation. 30
A reasonable reading of the horse racing
laws favors the determination that the
entities enumerated in the distribution
scheme provided under R.A. Nos. 6631 and
6632, as amended by Executive Orders 88
and 89, are the rightful beneficiaries of

breakages from mid-week races. Petitioners

should therefore remit the proceeds of
breakages to those benefactors designated
by the aforesaid laws.
The holding of horse races on Wednesdays is
in addition to the existing schedule of races
authorized by law. Since this new schedule
became part of R.A. 6631 and 6632 the set
of procedures in the franchise laws
applicable to the conduct of horse racing
business must likewise be applicable to
Wednesday or other mid-week races. A
fortiori, the granting of the mid-week races
does not require another legislative act to
reiterate the manner of allocating the
proceeds of betting tickets. Neither does the
allocation of breakages under the same
provision need to be isolated to construe
another distribution scheme. No law can be
viewed in a condition of isolation or as the
beginning of a new legal system. 31 A
supplemental law becomes an addition to
the existing statutes, or a section thereof;
and its effect is not to change in any way the
provisions of the latter but merely to extend
the operation thereof, or give additional
power to enforce its provisions, as the case
may be. In enacting a particular statute,
legislators are presumed to have full
knowledge and to taken full cognizance of
the existing laws on the same subject or
those relating thereto.
Proceeding to the subsidiary issue, the
period for the remittance of breakages to the
beneficiaries should have commenced from
the time PHILRACOM authorized the holding
of mid-week races because R.A. Nos. 6631
and 6632 were ready in effect then. The
petitioners contend that they cannot be held
retroactively liable to respondent PHILRACOM
for breakages prior to the effectivity of E.O.
Nos. 88 and 89. They assert that the real
intent behind E.O. Nos. 88 and 89 was to
favor the respondent PHILRACOM anew with
the benefits which formerly had accrued in
favor of Philippine Amateur Athletic
Federation (PAAF). They opine that since
laws operate prospectively unless the
legislator intends to give them retroactive
effect, the accrual of these breakages should
start on December 16, 1986, the date of
effectivity of E.O. Nos. 88 and 89. 32 Now,
even if one of the benefactors of breakages,
the PAAF, as provided by R.A. 6631 and 6632
had ceased operation, it is still not proper for
the petitioners to presume that they were
entitled to PAAF's share. When the

petitioners mistakenly appropriated the

breakages for themselves, they became the
implied trustees for those legally entitled to
the proceeds. This is in consonance with
Article 1456 of the Civil Code, which provides
that:
Art. 1456 If property is
acquired through mistake or
fraud, the person obtaining it is,
by force of law, considered a
trustee of an implied trust for
the benefit of the person from
whom the property comes.
The petitioners should have properly set
aside amount for the defunct PAAF, until an
alternative beneficiary was designated,
which as subsequently provided for by
Executive Order Nos. 88 and 89, is
PHILRACOM:
xxx xxx xxx
Secs. 2 All the cash balances
and accumulated amounts
corresponding to the share of
the Philippine Amateur Athletic
Federation/Ministry of Youth and
Sports Development, pursuant
to Section 6 of Republic Act No.
6632, not remitted by the
Philippine Racing Club,
Inc./Manila Jockey Club Inc., are
hereby transferred to the
Philippine Racing Commission to
be constituted into a TRUST
FUND to be used exclusively for
the payment of additional prizes
for races sponsored by the
Commission and for necessary
outlays and other expenses
relative to horse-breeding
activities of the National Stud
Farm. . . . . . . [E.O. No. 88]
xxx xxx xxx
Sec. 2. Any provision of law to
the contrary notwithstanding,
all cash balances and
accumulated amounts
corresponding to the share of
the Philippine Amateur Athletic
Federation/Ministry of Youth and
Sports Development, pursuant
to Republic Act No. 6631, not
remitted by the Manila Jockey
Club, Inc., are hereby

constituted into a TRUST FUND

to be used exclusively for the
payment of additional prizes for
races sponsored by the
Philippine Racing Commission
and for the necessary capital
outlays and other expenses
relative to horse-breeding
activities of the National Stud
Farm. . . . . . . . [E.O. No. 89]
While herein petitioners might have relied on
a prior opinion issued by an administrative
body, the well-entrenched principle is that
the State could not be estopped by a mistake
committed by its officials or agents. 33 Wellsettled also is the rule that the erroneous
application of the law by public officers does
not prevent a subsequent correct application
of the law. 34 Although there was an initial
interpretation of the law by PHILRACOM, a
court of law could not be precluded from
setting that interpretation aside if later on it
is shown to be inappropriate.
Moreover, the detrimental consequences of
depriving the city hospitals and other
institutions of the funds needed for
rehabilitation of drug dependents and other
patients are all too obvious. It goes without
saying that the allocation of breakages in
favor of said institutions is a policy decision
in pursuance of social development goals
worthy of judicial approbation.
Nor could we be oblivious to the reality that
horse racing although authorized by law is
still a form of gambling. Gambling is
essentially antagonistic to the aims of
enhancing national productivity and selfreliance. 35 For this reason, legislative
franchises impose limitations on horse racing
and betting. Petitioner's contention that a
gambling franchise is a public contract
protected by the Constitutional provision on
non-impairment of contract could not be left
unqualified. For as well said in Lim vs.
Pacquing: 36
. . . it should be remembered
that a franchise is not in the
strict sense a simple contract
but rather it is, more
importantly, a mere privilege
specially in matters which are
within the government's power
to regulate and even prohibit
through the exercise of the
police power. Thus, a gambling

franchise is always subject to

the exercise of police power for
the public welfare. 37
That is why we need to stress anew that a
statute which authorizes a gambling activity
or business should be strictly construed, and
every reasonable doubt be resolved so as to
limit rather than expand the powers and
rights claimed by franchise holders under its
authority. 38
WHEREFORE, there being no reversible error,
the appealed decision and the resolution of
the respondent Court of Appeals in CA-G.R.
SP No. 25251, are hereby AFFIRMED, and the
instant petition is hereby DENIED for lack of
merit.
Costs against petitioners.
SO ORDERED.
Davide, Jr., C.J., Melo, Vitug and Panganiban,
JJ., concur.

ABAKADA Guro Party List vs. Ermita

G.R. No. 168056 September 1, 2005
FACTS:
Before R.A. No. 9337 took effect, petitioners
ABAKADA GURO Party List, et al., filed a
petition for prohibition on May 27, 2005
questioning the constitutionality of Sections
4, 5 and 6 of R.A. No. 9337, amending
Sections 106, 107 and 108, respectively, of
the National Internal Revenue Code (NIRC).
Section 4 imposes a 10% VAT on sale of
goods and properties, Section 5 imposes a
10% VAT on importation of goods, and
Section 6 imposes a 10% VAT on sale of
services and use or lease of properties.
These questioned provisions contain a
uniformp ro v is o authorizing the President,
upon recommendation of the Secretary of
Finance, to raise the VAT rate to 12%,
effective January 1, 2006, after specified
conditions have been satisfied. Petitioners
argue that the law is unconstitutional.
ISSUES:
1. Whether or not there is a violation of
Article VI, Section 24 of the Constitution.

2. Whether or not there is undue delegation

of legislative power in violation of Article VI
Sec 28(2) of the Constitution.
3. Whether or not there is a violation of the
due process and equal protection under
Article III Sec. 1 of the Constitution.
RULING:
1. Since there is no question that the
revenue bill exclusively originated in the
House of Representatives, the Senate was
acting within its constitutional power to
introduce amendments to the House bill
when it included provisions in Senate Bill No.
1950 amending corporate income taxes,
percentage, and excise and franchise taxes.
2. 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 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.
3. The power of the State to make
reasonable and natural classifications for the
purposes of taxation has long been
established. Whether it relates to the subject
of taxation, the kind of property, the rates to
be levied, or the amounts to be raised, the
methods of assessment, valuation and
collection, the States power is entitled to
presumption of validity. As a rule, the
judiciary will not interfere with such power
absent a clear showing of unreasonableness,
discrimination, or arbitrariness.
CASE: International Service for the
Acquisition of Agri-Biotech Applications,
Inc., et.al. v. Greenpeace Southeast Asia
(Philippines), et.al.
(G.R. Nos. 209271, 209276, 209301 and
209430)
DATE: 8 December 2015
PONENTE: J. Villarama, Jr.
BACKGROUND

In 1990, President Corazon Aquino

signed Executive Order (EO) No. 430
creating the National Committee on
Biosafety of the Philippines (NCBP)
which was tasked to identify and
evaluate potential hazards involved in

initiating
genetic
engineering
experiments and introducing new
species and genetically engineered
organisms and recommend measures
to minimize risks.
In 1991, NCBP formulated the
Philippine Biosafety Guidelines which
governs
the
regulation
of
the
importation or introduction, movement
and field release of potentially
hazardous biological materials in the
Philippines. The same was followed by
the Guidelines on Planned Release of
Genetically Manipulated Organisms
(GMOs) and Potentially Harmful Exotic
Species (PHES).
On
29
December
1993,
the
Convention on Biological Diversity
(CBD) came into force. This is a
multilateral treaty recognizing the
great
potential
of
modern
biotechnology for human well-being if
developed and used with adequate
safety measures for the environment
and human health.
In January 2000, an agreement was
reached on the Cartagena Protocol on
Biosafety (Cartagena Protocol), a
supplement to the CBD, which aims to
ensure an adequate level of safe
transfer, handling and use of living
modified organisms resulting from
modern biotechnology. The Philippines
signed the same on May 24 of the
same year.
In April 2002, the Department of
Agriculture
(DA)
issued
DA
Administrative Order No. 08 which
provides rules and regulations for the
importation and release into the
environment of plants and plant
products derived from the use of
modern biotechnology.
On 17 March 2006, EO No. 514 (EO
514)
entitled,
Establishing
the
National Biosafety Framework (NBF),
Prescribing
Guidelines
for
its
Implementation, and Strengthening
the NCBP was issued. It expressly
provides that DAO 2002-08, NCBP
Guidelines on the Contained Use of
GMOs, except for provisions on
potentially harmful exotic species
which were repealed, and all issuances
of the Bureau of Food and Drugs
Authority (FDA) on products of modern
biotechnology, shall continue to be in
force and effect unless amended by
the issuing departments or agencies.

FACTS

On
24
September
2010,
a
Memorandum of Undertaking was
executed
between
International
Service for the Acquisition of Agri-

Biotech Applications, Inc. (ISAAA),

University of the Philippines Los Baos
Foundation, Inc. (UPLBFI) and UP
Mindanao Foundation, Inc. (UPMFI), in
pursuance of a collaborative research
and development project on eggplants
that are resistant to the fruit and shoot
borer. Other partner agencies involved
were UPLB through its Institute of
Plant Breeding, Maharastra Hybrid
Seed Company (MAHYCO) of India,
Cornell University and the Agricultural
Biotechnology
Support
Project
II
(ABSPII) of USAID.
The UPLB Field Trial Proposal states
that the pest-resistant crop subject of
the field trial was described as a bioengineered eggplant. The crystal
toxin genes from the soil bacterium
Bacillus
thuringiensis
(Bt)
were
incorporated
into
the
eggplant
genome to produce the protein CrylAc
which is toxic to target insect pests.
The latter is said to be highly specific
to lepidopteran larvae such as fruit
and shoot borer (FSB), the most
destructive insect pest of eggplant.
NCBP
issued
a
Certificate
of
Completion of Contained Experiment
which was conducted from 2007 to 3
March 2009 stating that during the
conduct of experiment, all the
biosafety
measures
have
been
complied with and no untoward
incident has occurred.
On 16 March 2010 and 28 June 2010,
the Bureau of Plant Industry (BPI)
issued biosafety permits to UPLB.
Field testing commenced on various
dates in the following approved trial
sites: Kabacan, North Cotabato; Sta.
Maria, Pangasinan; Pili, Camarines Sur;
Bago Oshiro, Davao City; and Bay,
Laguna.
On 26 April 2012, Greenpeace,
MASIPAG and individual respondents
(Greenpeace, et.al.) filed a petition for
writ of kalikasan and writ of continuing
mandamus with prayer for the
issuance of Temporary Environmental
Protection Order (TEPO) alleging that
the Bt talong field trials violate their
constitutional right to health and a
balanced ecology considering that:
- The
required
Environmental
Compliance Certificate (ECC)
under PD 1151 was not secured
prior
to
the
project
implementation
- There is no independent, peerreviewed study on the safety of
Bt
talong
for
human
consumption
and
the
environment
- There was a study conducted
showing adverse effects on rats

who were fed Bt corn, local

scientists likewise attested to
the harmful effects of GMOs to
human and animal health
- Bt crops can be directly toxic to
non-target species
- There is a failure to comply with
the required public consultation
under Sections 26 and 27 of the
Local Government Code
- The
case
calls
for
the
application of the precautionary
principle, it being a classic
environmental
case
where
scientific evidence as to the
health,
environmental
and
socio-economic
safety
is
insufficient or uncertain and
preliminary scientific evaluation
indicates reasonable grounds
for concern that there are
potentially dangerous effects on
human
health
and
the
environment
The following reliefs are prayed for by
Greenpeace, et.al., to wit:
- Issuance of a TEPO enjoining
BPI and Fertilizer and Pesticide
Authority
(FPA)
of
the
Department of Agriculture (DA)
from processing for field testing
and registering as herbicidal
product Bt talong in the
Philippines, stopping all pending
field testing, and ordering the
uprooting of planted Bt talong;
and
- Issuance of a writ of continuing
mandamus commanding the
ISAAAI, et.al.: (1) to submit to
an
environmental
impact
statement system under the
Environmental
Management
Bureau of the Department of
Environment
and
Natural
Resources (DENR-EMB); (2) to
submit
an
independent,
comprehensive, and rigid risk
assessment, field tests report,
and
regulatory
compliance
reports; (3) to submit all issued
certifications
on
public
information, public consultation,
public participation and consent
from the LGUs affected by the
field testing; (4) to submit an
acceptable
draft
of
an
amendment of the NBF and
DAO 2002-08; and (5) for BPI of
DA
to
conduct
balanced
nationwide public information
on the nature of Bt talong and
Bt talong field trial, and a
survey of its social acceptability.
On 2 May 2012, the SC issued the writ
of kalikasan against ISAAA, EMB, BPI,

FPA and UPLB, ordering them to file a

verified return.
The contentions of the respondents
are as follows:
- All environmental laws were
complied with, including public
consultations in the affected
communities
- The Bt talong project is not
covered
by
the
Philippine
Environmental
Impact
Statement Law
- There is a plethora of scientific
works and literature, peerreviewed, on the safety of Bt
talong for human consumption
- Allegations regarding the safety
of Bt talong are irrelevant in the
field trial stage as none of the
eggplants will be consumed by
humans or animals
- There is a non-observance of
the rule on hierarchy of courts
- Greenpeace, et.al. have no legal
standing as they do not stand to
suffer any direct injury as a
result of the Bt talong field tests
- The
precautionary
principle
does not apply since the field
testing is only a part of a
continuing study to ensure that
the
field
trials
have
no
significant and negative impact
on the environment
SC, in a Resolution dated 10 July 2012,
referred the case to the Court of
Appeals.
On 12 September 2012, the parties
submitted the following procedural
issues before the CA: (1) whether
Greenpeace, et.al. has legal standing
to file the petition for writ of kalikasan;
(2) whether the petition has been
rendered moot and academic by the
alleged termination of the Bt talong
field testing; and (3) whether the case
presented a justiciable controversy
CA, in a Resolution dated 12 October
2012,
resolved
that:
(1)
the
Greenpeace, et.al. possess legal
standing; (2) the case is not yet moot
since it is capable of repetition yet
evading review; and (3) the alleged
non-compliance with environmental
and local government laws present
justiciable controversies for resolution
by the court.
On 17 May 2013, CA rendered a
decision in favor of the Greenpeace,
et.al. finding that the precautionary
principle set forth in Section 1, Rule 20
of the Rules of Procedure for
Environmental Cases (the Rules) finds
relevance in the case.
CA
rejected
the
Motions
for
Reconsideration
filed
by
ISAAA,

EMB/BPI/FPA,
UPLB
and
UPLBFI
rejecting the argument that CA
violated UPLBs right to academic
freedom. The writ stops the field trials
of Bt talong as a procedure, it does not
stop Bt talong research. Thus, there is
no assault on academic freedom.
CA further justified its ruling by
expounding on the theory that
introducing a genetically modified
plant into our ecosystem is an
ecologically imbalancing act.
Before the SC is a consolidated
petition of ISAAAI, EMB/BPI/FPA, UPLB
and UPLBFI to reverse the CA decision
permanently enjoining the conduct of
field trials for Genetically Modified
eggplants.

ISSUES
1
2
3
4

WON Greenpeace, et.al. has a legal

standing
WON the case is moot and academic
WON there is a violation of the
doctrines of primary jurisdiction and
exhaustion of administrative remedies
WON the law on environmental impact
statement/assessment
applies
on
projects involving the introduction and
propagation of GMOs in the country
WON there is neglect or unlawful
omission committed by the public
respondents in the processing and
evaluation of the applications for Bt
talong field testing
WON the Precautionary Principle
applies

RULING
1

Yes. The liberalized rule on standing is

now enshrined in the Rules of Procedure
for Environmental Cases which allows the
filing of a citizen suit in environmental
cases. The provision on citizen suits in the
Rules collapses the tradional rule on
personal and direct interest, on the
principle that humans are stewards of
nature, and aims to further encourage
the protection of the environment.
No. The case falls under the capable of
repetition yet evading review exception
to the mootness principle, the human and
environmental health hazards posed by
the introduction of a genetically modified
plant which is a very popular staple
vegetable among Filipinos is an issue of
paramount public interest.
No. The provisions of DAO 2002-08 do not
provide a speedy or adequate remedy for
the respondents to determine the
questions of unique national and local
importance raised in this case that

pertain
to
laws
and
rules
for
environmental
protection,
thus
Greenpeace, et.al. is justified in coming to
the Supreme Court.
4

Yes. EO 514 mandates that concerned

departments
and
agencies,
most
particularly petitioners DENR-EMB, BPI
and FPA, to make a determination
whether the EIS system should apply to
the release of GMOs into the environment
and issue joint guidelines on the matter.
The Philippine EIS System (PEISS) is
concerned primarily with assessing the
direct and indirect impacts of a project on
the biophysical and human environment
and ensuring that these impacts are
addressed by appropriate environmental
protection and enhancement measures. It
aids
proponents
in
incorporating
environmental considerations in planning
their projects as well as in determining
the environments impact on their
project. There are six stages in the
regular EIA process. The proponent
initiates the first three stages while EMB
takes the lead in the last three stages.
Public participation is enlisted in most
stages.
Even without the issuance of EO 514,
GMO field testing should have at least
been considered for EIA under existing
regulations of EMB on new and emerging
technologies, to wit:
g) Group V (Unclassified
Projects): These are the
projects not listed in any of
the groups, e.g. projects
using
new
processes/technologies
with uncertain impacts.
This is an interim category
unclassified
projects
will
eventually be classified into
their
appropriate
groups
after
EMB
evaluation.
(Emphasis supplied)
All government agencies as well as
private corporations, firms and entities
who intend to undertake activities or
projects which will affect the quality of
environment are required to prepare a
detailed Environmental Impact Statement
(EIS)
prior
to
undertaking
such
development activity.
An environmentally critical project
(ECP) is considered by the EMB as likely
to have significant adverse impact that
may be sensitive, irreversible and
diverse and which include activities that
have
significant
environmental
consequences.

In this context, and given the

overwhelming
scientific
attention
worldwide on the potential hazards of
GMOs to human health and the
environment, their release into the
environment through field testing would
definitely fall under the category of ECP.
5

The Supreme Court found that ISAAAI,

et.al. simply adhered to the procedures
laid down by DAO 2002-08 and no real
effort was made to operationalize the
principles of NBF in the conduct of field
testing of Bt talong. Said failure means
that the DA lacks mechanisms to
mandate applicants to comply with
international biosafety protocols. For
these reasons, the DAO 2002-08 should
be declared invalid.

Yes. It must be stressed that DAO 200208 and related DA order are not the only
legal bases for regulating field trials of
GM plants and plant products. EO 514
clearly provides that the NBF applies to
the
development,
adoption
and
implementation of all biosafety policies,
measures and guidelines and in making
biosafety
decisions
concerning
the
research, development, handling and use,
transboundary movement, release into
the environment and management of
regulated articles.

Parenthetically, during the hearing at

the CA, Atty. Segui of the EMB was
evasive in answering the questions on
whether
his
office
undertook
the
necessary evaluation on the possible
environmental impact of Bt talong field
trials and the release of GMOs into the
environment in general. While he initially
cited lack of budget and competence as
reasons for their inaction, he later said
that an amendment of the law should be
made since projects involving GMOS are
not covered by Proclamation No. 2146,
entitled Proclaiming Certain Areas and
Types of Projects as Environmentally
Critical and Within the Scope of the
Environmental Impact Statement System
Established Under Presidential Decree No.
1586.

The NBF requires the use of

precaution, as provided in Section 2.6
which reads:
2.6. Using Precaution. In
accordance with Principle 15
of the Rio Declaration of
1992
and
the
relevant
provisions of the Cartagena
Protocol on Biosafety, in
particular Article 1, 10 (par.
6) and 11 (par. 8), the
precautionary approach shall
guide biosafety decisions.
The principles and elements
of this approach are hereby
implemented through the
decision-making system in
the NBF.
It likewise contains general principles
and minimum guidelines that the
concerned agencies are expected to
follow and which their respective rules
and regulations must conform with. In
cases of conflict in applying the
principles, the principle of protecting the
public interest and welfare shall always
prevail, and no provision of the NBF shall
be construed as to limit the legal
authority and mandate of heads of
departments and agencies to consider
the national interest and public welfare in
making biosafety decisions.
Notably, Section 7 of NBF mandates a
more
transparent,
meaningful
and
participatory public consultation on the
conduct of field trials beyond the posting
and publication of notices and information
sheets, consultations with some residents
and government officials, and submission
of written comments, provided in DAO
2002-08.

The Supreme Court took the above as

an indication of the DENR-EMBs lack of
serious attention to their mandate under
EO 514 to ensure that environmental
assessments are done and impacts
identified in biosafety decisions.
Section 6 of EO 514 likewise directed
the DOST, DENR, DA and DOH to ensure
the
allocation
of
funds
for
the
implementation of the NBF as it was
intended to be a multi-disciplinary effort
involving
the
different
government
departments and agencies.
The petitioners government agencies
clearly failed to fulfil their mandates in
the implementation of the NBF.
6

Yes.
The
precautionary
principle
originated in Germany in the 1960s,
expressing the normative idea that
governments are obliged to foresee and
forestall harm to the environment. The
Rules incorporated the principle in Part V,
Rule 20, which states:
SEC.1. Applicability. When
there is a lack of full
scientific
certainty
in
establishing a causal link
between human activity and
environmental effect, the
court
shall
apply
the

precautionary principle in
resolving the case before it.

are compelling reasons for the application

of the precautionary principle.

The constitutional right of

the people to a balanced and
healthful ecology shall be
given the benefit of the
doubt.

There exists a preponderance of

evidence that the release of the GMOs
into the environment threatens to
damage our ecosystems and not just the
field trial sites, and eventually the health
of our people once the Bt eggplants are
consumed as food.

SEC
2.
Standards
for
application. In applying the
precautionary principle, the
following
factors, among
others, may be considered:
(1) threats to human life or
health;
(2)
inequity
to
present
or
future
generations; or (3) prejudice
to the environment without
legal consideration of the
environmental
rights
of
those affected.
When the features of uncertainty,
possibility of irreversible harm, and
possibility of serious harm coincide, the
case for the precautionary principle is
strongest. The Supreme Court found all
three (3) conditions present.

Adopting the precautionary approach,

the Supreme Court ruled that the
principles of the NBF need to be
operationalized first by the coordinated
actions of the concerned departments
and agencies before allowing the release
into the environment of genetically
modified eggplant.
Further, the precautionary approach
entailed
inputs
from
stakeholders,
including marginalized famers, not just
the scientific community. This proceeds
from the realization that acceptance of
uncertainty is not only a scientific issue,
but is related to public policy and involves
an ethical dimension.
DISPOSITIVE PORTION

While the goal of increasing crop

yields to raise farm incomes is laudable,
independent scientific studies revealed
uncertainties due to unfulfilled economic
benefits from Bt crops and plants,
adverse effects on the environment
associated with the use of GE technology
in agriculture, and serious health hazards
from consumption of GM foods. For a
biodiversity-rich
country
like
the
Philippines, the natural and unforeseen
consequences of contamination and
genetic pollution would be disastrous and
irreversible.
Alongside the aforesaid uncertainties,
the non-implementation of the NBF in the
crucial stages of risk assessment and
public
consultation,
including
the
determination of the applicability of the
EIS requirements to the GMO field testing,

1
2
3

The conduct of Bt talong field

testing is permanently enjoined.
DAO 2002-08 is declared null and
void.
Any application for contained use,
field testing, propagation and
commercialization, and importation
of GMOs is temporarily enjoined
until a new administrative order is
promulgated in accordance with
law.