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Posted by: Elmer | September 29, 2009

Reviewer in Administrative Law by Atty. Edwin Sandoval

6 Votes

ADMINISTRATIVE LAW
Describe the Administrative Code of 1987.

Held: The Code is a general law and “incorporates in a unified document the major structural,
functional and procedural principles of governance (Third Whereas Clause, Administrative Code
of 1987) and “embodies changes in administrative structures and procedures designed to serve
the people.” (Fourth Whereas Clause, Administrative Code of 1987) The Code is divided into
seven (7) books. These books contain provisions on the organization, powers and general
administration of departments, bureaus and offices under the executive branch, the organization
and functions of the Constitutional Commissions and other constitutional bodies, the rules on the
national government budget, as well as guidelines for the exercise by administrative agencies of
quasi-legislative and quasi-judicial powers. The Code covers both the internal administration,
i.e., internal organization, personnel and recruitment, supervision and discipline, and the effects
of the functions performed by administrative officials on private individuals or parties outside
government. (Ople v. Torres, G.R. No. 127685, July 23, 1998 [Puno])

What is Administrative Power?

Held: Administrative power is concerned with the work of applying policies and enforcing
orders as determined by proper governmental organs. It enables the President to fix a uniform
standard of administrative efficiency and check the official conduct of his agents. To this end, he
can issue administrative orders, rules and regulations. (Ople v. Torres, G.R. No. 127685, July
23, 1998 [Puno])

What is an Administrative Order?

Held: An administrative order is an ordinance issued by the President which relates to specific
aspects in the administrative operation of government. It must be in harmony with the law and
should be for the sole purpose of implementing the law and carrying out the legislative policy.
(Ople v. Torres, G.R. No. 127685, July 23, 1998 [Puno])

What is the Government of the Republic of the Philippines?

Ans.: The Government of the Republic of the Philippines refers to the corporate governmental
entity through which the functions of the government are exercised throughout the Philippines,
including, save as the contrary appears from the context, the various arms through which
political authority is made effective in the Philippines, whether pertaining to the autonomous
regions, the provincial, city, municipal or barangay subdivisions or other forms of local
government. (Sec. 2[1], Introductory Provisions, Executive Order No. 292)

What is an Agency of the Government?

Ans.: Agency of the Government refers to any of the various units of the Government, including
a department, bureau, office, instrumentality, or government-owned or controlled corporation, or
a local government or a distinct unit therein. (Sec. 2[4], Introductory Provisions, Executive
Order No. 292)

What is a Department?

Ans.: Department refers to an executive department created by law. For purposes of Book IV,
this shall include any instrumentality, as herein defined, having or assigned the rank of a
department, regardless of its name or designation. (Sec. 2[7], Introductory Provisions,
Executive Order No. 292)

What is a Bureau?

Ans.: Bureau refers to any principal subdivision or unit of any department. For purposes of
Book IV, this shall include any principal subdivision or unit of any instrumentality given or
assigned the rank of a bureau, regardless of actual name or designation, as in the case of
department-wide regional offices. (Sec. 2[8], Introductory Provisions, Executive Order No.
292)

What is an Office?

Ans.: Office refers, within the framework of governmental organization, to any major functional
unit of a department or bureau including regional offices. It may also refer to any position held
or occupied by individual persons, whose functions are defined by law or regulation. (Sec. 2[9],
Introductory Provisions, Executive Order No. 292)

What is a Government Instrumentality? What are included in the term Government

Instrumentality?

Ans.: A government instrumentality refers to any agency of the national government, not
integrated within the department framework, vested with special functions or jurisdiction by law,
endowed with some if not all corporate powers, administering special funds, enjoying
operational autonomy, usually through a charter. The term includes regulatory agencies,
chartered institutions and government-owned or controlled corporations. (Sec. 2[10],
Introductory Provisions, Executive Order No. 292)

What is a Regulatory Agency?

Ans.: A regulatory agency refers to any agency expressly vested with jurisdiction to regulate,
administer or adjudicate matters affecting substantial rights and interest of private persons, the
principal powers of which are exercised by a collective body, such as a commission, board or
council. (Sec. 2[11], Introductory Provisions, Executive Order No. 292)

What is a Chartered Institution?

Ans.: A chartered institution refers to any agency organized or operating under a special
charter, and vested by law with functions relating to specific constitutional policies or
objectives. This term includes state universities and colleges and the monetary authority of the
State. (Section 2[12], Introductory Provisions, Executive Order No. 292)

What is a Government-Owned or Controlled Corporation?

Ans.: Government-owned or controlled corporation refers to any agency organized as a stock or

non-stock corporation, vested with functions relating to public needs whether governmental or
proprietary in nature, and owned by the Government directly or through its instrumentalities
either wholly, or, where applicable as in the case of stock corporations, to the extent of at least
fifty-one (51) per cent of its capital stock; x x x (Sec. 2[13], Introductory Provisions, Executive
Order No. 292)

When is a Government-Owned or Controlled Corporation deemed to be performing

proprietary function? When is it deemed to be performing governmental function?

Held: Government-owned or controlled corporations may perform governmental or proprietary

functions or both, depending on the purpose for which they have been created. If the purpose is
to obtain special corporate benefits or earn pecuniary profit, the function is proprietary. If it is in
the interest of health, safety and for the advancement of public good and welfare, affecting the
public in general, the function is governmental. Powers classified as “proprietary” are those
intended for private advantage and benefit. (Blaquera v. Alcala, 295 SCRA 366, 425, Sept. 11,
1998, En Banc [Purisima])

The Philippine National Red Cross (PNRC) is a government-owned and controlled

corporation with an original charter under R.A. No. 95, as amended. Its charter, however,
was amended to vest in it the authority to secure loans, be exempted from payment of all
duties, taxes, fees and other charges, etc. With the amendnt of its charter, has it been
“impliedly converted to a private corporation”?
Held: The test to determine whether a corporation is government owned or controlled, or private
in nature is simple. Is it created by its own charter for the exercise of a public function, or by
incorporation under the general corporation law? Those with special charters are government
corporations subject to its provisions, and its employees are under the jurisdiction of the Civil
Service Commission. The PNRC was not “impliedly converted to a private corporation” simply
because its charter was amended to vest in it the authority to secure loans, be exempted from
payment of all duties, taxes, fees and other charges, etc. (Camporedondo v. NLRC, G.R. No.
129049, Aug. 6, 1999, 1st Div. [Pardo])

When may the Government not validly invoke the rule that prescription does not run against
the State? Illustrative Case.

Held: While it is true that prescription does not run against the State, the same may not be
invoked by the government in this case since it is no longer interested in the subject matter.
While Camp Wallace may have belonged to the government at the time Rafael Galvez’s title was
ordered cancelled in Land Registration Case No. N-361, the same no longer holds true today.

Republic Act No. 7227, otherwise known as the Base Conversion and Development Act of 1992,
created the Bases Conversion and Development Authority. X x x

With the transfer of Camp Wallace to the BCDA, the government no longer has a right or
interest to protect. Consequently, the Republic is not a real party in interest and it may not
institute the instant action. Nor may it raise the defense of imprescriptibility, the same being
applicable only in cases where the government is a party in interest. x x x. Being the owner of
the areas covered by Camp Wallace, it is the Bases Conversion and Development Authority, not
the Government, which stands to be benefited if the land covered by TCT No. T-5710 issued in
the name of petitioner is cancelled.

Nonetheless, it has been posited that the transfer of military reservations and their extensions to
the BCDA is basically for the purpose of accelerating the sound and balanced conversion of
these military reservations into alternative productive uses and to enhance the benefits to be
derived from such property as a measure of promoting the economic and social development,
particularly of Central Luzon and, in general, the country’s goal for enhancement (Section 2,
Republic Act No. 7227). It is contended that the transfer of these military reservations to the
Conversion Authority does not amount to an abdication on the part of the Republic of its
interests, but simply a recognition of the need to create a body corporate which will act as its
agent for the realization of its program. It is consequently asserted that the Republic remains to
be the real party in interest and the Conversion Authority merely its agent.

We, however, must not lose sight of the fact that the BCDA is an entity invested with a
personality separate and distinct from the government. X x x

It may not be amiss to state at this point that the functions of government have been classified
into governmental or constituent and proprietary or ministrant. While public benefit and public
welfare, particularly, the promotion of the economic and social development of Central Luzon,
may be attributable to the operation of the BCDA, yet it is certain that the functions performed
by the BCDA are basically proprietary in nature. The promotion of economic and social
development of Central Luzon, in particular, and the country’s goal for enhancement, in general,
do not make the BCDA equivalent to the Government. Other corporations have been created by
government to act as its agents for the realization of its programs, the SSS, GSIS, NAWASA and
the NIA, to count a few, and yet, the Court has ruled that these entities, although performing
functions aimed at promoting public interest and public welfare, are not government-function
corporations invested with governmental attributes. It may thus be said that the BCDA is not a
mere agency of the Government but a corporate body performing proprietary functions.

Having the capacity to sue or be sued, it should thus be the BCDA which may file an action to
cancel petitioner’s title, not the Republic, the former being the real party in interest. One having
no right or interest to protect cannot invoke the jurisdiction of the court as a party plaintiff in an
action. A suit may be dismissed if the plaintiff or the defendant is not a real party in interest. x x
x

However, E.B. Marcha Transport Co., Inc. v. IAC is cited as authority that the Republic is the
proper party to sue for the recovery of possession of property which at the time of the installation
of the suit was no longer held by the national government body but by the Philippine Ports
Authrotiy. In E.B. Marcha, the Court ruled:

It can be said that in suing for the recovery of the rentals, the Republic of the Philippines, acted
as principal of the Philippine Ports Authority, directly exercising the commission it had earlier
conferred on the latter as its agent. We may presume that, by doing so, the Republic of the
Philippines did not intend to retain the said rentals for its own use, considering that by its
voluntary act it had transferred the land in question to the Philippine Ports Authority effective
July 11, 1974. The Republic of the Philippines had simply sought to assist, not supplant, the
Philippine Ports Authority, whose title to the disputed property it continues to recognize. We
may expect the that the said rentals, once collected by the Republic of the Philippines, shall be
turned over by it to the Philippine Ports Authority conformably to the purposes of P.D. No. 857.

E.B. Marcha is, however, not on all fours with the case at bar. In the former, the Court
considered the Republic a proper party to sue since the claims of the Republic and the Philippine
Ports Authority against the petitioner therein were the same. To dismiss the complaint in E.B.
Marcha would have brought needless delay in the settlement of the matter since the PPA would
have to refile the case on the same claim already litigated upon. Such is not the case here since
to allow the government to sue herein enables it to raise the issue of imprescriptibility, a claim
which is not available to the BCDA. The rule that prescription does not run against the State
does not apply to corporations or artificial bodies created by the State for special purposes, it
being said that when the title of the Republic has been divested, its grantees, although artificial
bodies of its own creation, are in the same category as ordinary persons. By raising the claim of
imprescriptibility, a claim which cannot be raised by the BCDA, the Government not only assists
the BCDA, as it did in E.B. Marcha, it even supplants the latter, a course of action proscribed by
said case.

Moreover, to recognize the Government as a proper party to sue in this case would set a bad
precedent as it would allow the Republic to prosecute, on behalf of government-owned or
controlled corporations, causes of action which have already prescribed, on the pretext that the
Government is the real party in interest against whom prescription does not run, said
corporations having been created merely as agents for the realization of government programs.

It should also be noted that petitioner is unquestionably a buyer in good faith and for value,
having acquired the property in 1963, or 5 years after the issuance of the original certificate of
title, as a third transferee. If only not to do violence and to give some measure of respect to the
Torrens System, petitioner must be afforded some measure of protection. (Shipside
Incorporated v. Court of Appeals, 352 SCRA 334, Feb. 20, 2001, 3rd Div. [Melo])

Discuss the nature and functions of the National Telecommunications Commission (NTC),
and analyze its powers and authority as well as the laws, rules and regulations that govern its
existence and operations.

Held: The NTC was created pursuant to Executive Order No. 546 x x x. It assumed
the functions formerly assigned to the Board of Communications and the Communications
Control Bureau, which were both abolished under the said Executive Order. Previously, the
NTC’s function were merely those of the defunct Public Service Commission (PSC), created
under Commonwealth Act No. 146, as amended, otherwise known as the Public Service Act,
considering that the Board of Communications was the successor-in-interest of the PSC. Under
Executive Order No. 125-A, issued in April 1987, the NTC became an attached agency of the
Department of Transportation and Communications.

In the regulatory communications industry, the NTC has the sole authority to issue
Certificates of Public Convenience and Necessity (CPCN) for the installation, operation, and
maintenance of communications facilities and services, radio communications systems,
telephone and telegraph systems. Such power includes the authority to determine the areas of
operations of applicants for telecommunications services. Specifically, Section 16 of the Public
Service Act authorizes the then PSC, upon notice and hearing, to issue Certificates of Public
Convenience for the operation of public services within the Philippines “whenever the
Commission finds that the operation of the public service proposed and the authorization to do
business will promote the public interests in a proper and suitable manner.” (Commonwealth Act
No. 146, Section 16[a]) The procedure governing the issuance of such authorizations is set forth
in Section 29 of the said Act x x x. (Republic v. Express Telecommunication Co., Inc., 373
SCRA 316, Jan. 15, 2002, 1st Div. [Ynares-Santiago])

Is the filing of the administrative rules and regulations with the UP Law Center the operative
act that gives the rules force and effect?

Held: In granting Bayantel the provisional authority to operate a CMTS, the NTC
applied Rule 15, Section 3 of its 1978 Rules of Practice and Procedure, which provides:

Sec. 3. Provisional Relief. – Upon the filing of an application, complaint or petition or at any
stage thereafter, the Board may grant on motion of the pleader or on its own initiative, the relief
prayed for, based on the pleading, together with the affidavits and supporting documents
attached thereto, without prejudice to a final decision after completion of the hearing which shall
be called within thirty (30) days from grant of authority asked for.

Respondent Extelcom, however, contends that the NTC should have applied the
Revised Rules which were filed with the Office of the National Administrative Register on
February 3, 1993. These Revised Rules deleted the phrase “on its own initiative”; accordingly, a
provisional authority may be issued only upon filing of the proper motion before the
Commission.

In answer to this argument, the NTC, through the Secretary of the Commission, issued
a certification to the effect that inasmuch as the 1993 Revised Rules have not been published in a
newspaper of general circulation, the NTC has been applying the 1978 Rules.

The absence of publication, coupled with the certification by the Commissioner of the
NTC stating that the NTC was still governed by the 1987 Rules, clearly indicate that the 1993
Revised Rules have not taken effect at the time of the grant of the provisional authority to
Bayantel. The fact that the 1993 Revised Rules were filed with the UP Law Center on February
3, 1993 is of no moment. There is nothing in the Administrative Code of 1987 which implies
that the filing of the rules with the UP Law Center is the operative act that gives the rules force
and effect. Book VII, Chapter 2, Section 3 thereof merely states:

Filing. – (1) Every agency shall file with the University of the Philippines Law Center three (3)
certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code
which are not filed within three (3) months from the date shall not thereafter be the basis of any
sanction against any party or persons.

(2) The records officer of the agency, or his equivalent functionary, shall carry out the
requirements of this section under pain of disciplinary action.

(3) A permanent register of all rules shall be kept by the issuing agency and shall be open to
public inspection.

The National Administrative Register is merely a bulletin of codified rules and it is

furnished only to the Office of the President, Congress, all appellate courts, the National Library,
other public offices or agencies as the Congress may select, and to other persons at a price
sufficient to cover publication and mailing or distribution costs (Administrative Code of 1987,
Book VII, Chapter 2, Section 7). In a similar case, we held:

This does not imply, however, that the subject Administrative Order is a valid exercise of such
quasi-legislative power. The original Administrative Order issued on August 30, 1989, under
which the respondents filed their applications for importations, was not published in the Official
Gazette or in a newspaper of general circulation. The questioned Administrative Order, legally,
until it is published, is invalid within the context of Article 2 of Civil Code, which reads:
“Article 2. Laws shall take effect after fifteen days following the completion of their publication
in the Official Gazette (or in a newspaper of general circulation in the Philippines), unless it is
otherwise provided. X x x”

The fact that the amendments to Administrative Order No. SOCPEC 89-08-01 were filed with,
and published by the UP Law Center in the National Administrative Register, does not cure the
defect related to the effectivity of the Administrative Order.

This Court, in Tanada v. Tuvera stated, thus:

“We hold therefore that all statutes, including those of local application and private laws, shall be
published as a condition for their effectivity, which shall begin fifteen days after publication
unless a different effectivity is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders promulgated by the President
in the exercise of legislative power or, at present, directly conferred by the Constitution.
Administrative Rules and Regulations must also be published if their purpose is to enforce or
implement existing law pursuant also to a valid delegation.

Interpretative regulations and those merely internal in nature, that is, regulating only the
personnel of the administrative agency and not the public, need not be published. Neither is
publication required of the so-called letters of instructions issued by administrative superiors
concerning the rules or guidelines to be followed by their subordinates in the performance of
their duties.

We agree that the publication must be in full or it is no publication at all since its purpose is to
inform the public of the contents of the laws.”

The Administrative Order under consideration is one of those issuances which should be
published for its effectivity, since its purpose is to enforce and implement an existing law
pursuant to a valid delegation, i.e., P.D. 1071, in relation to LOI 444 and EO 133.

Thus, publication in the Official Gazette or a newspaper of general circulation is a

condition sine qua non before statutes, rules or regulations can take effect. This is explicit from
Executive Order No. 200, which repealed Article 2 of the Civil Code, and which states that:

Laws shall take effect after fifteen days following the completion of their publication either in
the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is
otherwise provided (E.O. 200, Section 1).

The Rules of Practice and Procedure of the NTC, which implements Section 29 of the
Public Service Act, fall squarely within the scope of these laws, as explicitly mentioned in the
case of Tanada v. Tuvera.

Our pronouncement in Tanada v. Tuvera is clear and categorical. Administrative rules and
regulations must be published if their purpose is to enforce or implement existing law pursuant to
a valid delegation. The only exception are interpretative regulations, those merely internal in
nature, or those so-called letters of instructions issued by administrative superiors concerning the
rules and guidelines to be followed by their subordinates in the performance of their duties
(PHILSA International Placement & Services Corp. v. Secretary of Labor, G.R. No. 103144,
April 4, 2001, 356 SCRA 174).

Hence, the 1993 Revised Rules should be published in the Official Gazette or in a
newspaper of general circulation before it can take effect. Even the 1993 Revised Rules itself
mandates that said Rules shall take effect only after their publication in a newspaper of general
circulation (Section 20 thereof). In the absence of such publication, therefore, it is the 1978
Rules that govern. (Republic v. Express Telecommunication Co., Inc., 373 SCRA 316, Jan.
15, 2002, 1st Div. [Ynares-Santiago])

May a person be held liable for violation of an administrative regulation which was not
published?

Held: Petitioner insists, however, that it cannot be held liable for illegal exaction as
POEA Memorandum Circular No. II, Series of 1983, which enumerated the allowable fees which
may be collected from applicants, is void for lack of publication.

There is merit in the argument.

In Tanada v. Tuvera, the Court held, as follows:

“We hold therefore that all statutes, including those of local application and private laws, shall be
published as a condition for their effectivity, which shall begin fifteen days after publication
unless a different effectivity date is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders promulgated by the President
in the exercise of legislative powers whenever the same are validly delegated by the legislature
or, at present, directly conferred by the Constitution. Administrative rules and regulations must
also be published if their purpose is to enforce or implement existing law pursuant to a valid
delegation.

Interpretative regulations and those merely internal in nature, that is, regulating only the
personnel of the administrative agency and the public, need not be published. Neither is
publication required of the so-called letter of instructions issued by the administrative superiors
concerning the rules or guidelines to be followed by their subordinates in the performance of
their duties.”

Applying this doctrine, we have previously declared as having no force and effect the
following administrative issuances: a) Rules and Regulations issued by the Joint Ministry of
Health-Ministry of Labor and Employment Accreditation Committee regarding the accreditation
of hospitals, medical clinics and laboratories; b) Letter of Instruction No. 416 ordering the
suspension of payments due and payable by distressed copper mining companies to the national
government; c) Memorandum Circulars issued by the POEA regulating the recruitment of
domestic helpers to Hong Kong; d) Administrative Order No. SOCPEC 89-08-01 issued by the
Philippine International Trading Corporation regulating applications for importation from the
People’s Republic of China; and e) Corporate Compensation Circular No. 10 issued by the
Department of Budget and Management discontinuing the payment of other allowances and
fringe benefits to government officials and employees. In all these cited cases, the administrative
issuances questioned therein were uniformly struck down as they were not published or filed
with the National Administrative Register as required by the Administrative Code of 1987.

POEA Memorandum Circular No. 2, Series of 1983 must likewise be declared

ineffective as the same was never published or filed with the National Administrative Register.

POEA Memorandum Circular No. 2, Series of 1983 provides for the applicable
schedule of placement and documentation fees for private employment agencies or authority
holders. Under the said Order, the maximum amount which may be collected from prospective
Filipino overseas workers is P2,500.00. The said circular was apparently issued in compliance
with the provisions of Article 32 of the Labor Code x x x.

It is thus clear that the administrative circular under consideration is one of those
issuances which should be published for its effectivity, since its purpose is to enforce and
implement an existing law pursuant to a valid delegation. Considering that POEA
Administrative Circular No. 2, Series of 1983 has not as yet been published or filed with the
National Administrative Register, the same is ineffective and may not be enforced. (Philsa
International Placement and Services Corporation v. Secretary of Labor and Employment,
356 SCRA 174, April 4, 2001, 3rd Div., [Gonzaga-Reyes])

Does the publication requirement apply as well to administrative regulations addressed only to
a specific group and not to the general public?

Held: The Office of the Solicitor General likewise argues that the questioned
administrative circular is not among those requiring publication contemplated by Tanada v.
Tuvera as it is addressed only to a specific group of persons and not to the general public.

Again, there is no merit in this argument.

The fact that the said circular is addressed only to a specified group, namely private
employment agencies or authority holders, does not take it away from the ambit of our ruling in
Tanada v. Tuvera. In the case of Phil. Association of Service Exporters v. Torres, the
administrative circulars questioned therein were addressed to an even smaller group, namely
Philippine and Hong Kong agencies engaged in the recruitment of workers for Hong Kong, and
still the Court ruled therein that, for lack of proper publication, the said circulars may not be
enforced or implemented.

Our pronouncement in Tanada v. Tuvera is clear and categorical. Administrative rules

and regulations must be published if their purpose is to enforce or implement existing law
pursuant to a valid delegation. The only exceptions are interpretative regulations, those merely
internal in nature, or those so-called letters of instructions issued by administrative superiors
concerning the rules and guidelines to be followed by their subordinates in the performance of
their duties. Administrative Circular No. 2, Series of 1983 has not been shown to fall under any
of these exceptions.

In this regard, the Solicitor General’s reliance on the case of Yaokasin v. Commissioner of
Customs is misplaced. In the said case, the validity of certain Customs Memorandum Orders
were upheld despite their lack of publication as they were addressed to a particular class of
persons, the customs collectors, who were also the subordinates of the Commissioner of the
Bureau of Customs. As such, the said Memorandum Orders clearly fall under one of the
exceptions to the publication requirement, namely those dealing with instructions from an
administrative superior to a subordinate regarding the performance of their duties, a
circumstance which does not obtain in the case at bench. X x x

To summarize, petitioner should be absolved from the three (3) counts of exaction as POEA
Administrative Circular No. 2, Series of 1983 could not be the basis of administrative sanctions
against petitioner for lack of publication. (Philsa International Placement and Services
Corporation v. Secretary of Labor and Employment, 356 SCRA 174, April 4, 2001, 3rd Div.,
[Gonzaga-Reyes])

May a successful bidder compel a government agency to formalize a contract with it

notwithstanding that its bid exceeds the amount appropriated by Congress for the project?

Held: Enshrined in the 1987 Philippine Constitution is the mandate that “no money shall be paid
out of the Treasury except in pursuance of an appropriation made by law.” (Sec. 29[1], Article
VI of the 1987 Constitution) Thus, in the execution of government contracts, the precise import
of this constitutional restriction is to require the various agencies to limit their expenditures
within the appropriations made by law for each fiscal year.

It is quite evident from the tenor of the language of the law that the existence of appropriations
and the availability of funds are indispensable pre-requisites to or conditions sine qua non for the
execution of government contracts. The obvious intent is to impose such conditions as a priori
requisites to the validity of the proposed contract. Using this as our premise, we cannot accede
to PHOTOKINA’s contention that there is already a perfected contract. While we held in
Metropolitan Manila Development Authority v. Jancom Environmental Corporation that “the
effect of an unqualified acceptance of the offer or proposal of the bidder is to perfect a contract,
upon notice of the award to the bidder,” however, such statement would be inconsequential in a
government where the acceptance referred to is yet to meet certain conditions. To hold
otherwise is to allow a public officer to execute a binding contract that would obligate the
government in an amount in excess of the appropriations for the purpose for which the contract
was attempted to be made. This is a dangerous precedent.

In the case at bar, there seems to be an oversight of the legal requirements as early as
the bidding stage. The first step of a Bids and Awards Committee (BAC) is to determine
whether the bids comply with the requirements. The BAC shall rate a bid “passed” only if it
complies with all the requirements and the submitted price does not exceed the approved budget
for the contract.” (Implementing Rules and Regulations [IRR] for Executive Order No. 262,
supra.)

Extant on the record is the fact that the VRIS Project was awarded to PHOTOKINA on
account of its bid in the amount of P6.588 Billion Pesos. However, under Republic Act No.
8760 (General Appropriations Act, FY 2000, p. 1018, supra.), the only fund appropriated for the
project was P1 Billion Pesos and under the Certification of Available Funds (CAF) only P1.2
Billion Pesos was available. Clearly, the amount appropriated is insufficient to cover the cost of
the entire VRIS Project. There is no way that the COMELEC could enter into a contract with
PHOTOKINA whose accepted bid was way beyond the amount appropriated by law for the
project. This being the case, the BAC should have rejected the bid for being excessive or should
have withdrawn the Notice of Award on the ground that in the eyes of the law, the same is null
and void.

Even the draft contract submitted by Commissioner Sadain that provides for a contract
price in the amount of P1.2 Billion Pesos is unacceptable. x x x While the contract price under
the draft contract is only P1.2 Billion and, thus, within the certified available funds, the same
covers only Phase I of the VRIS Project, i.e., the issuance of identification cards for only
1,000,000 voters in specified areas. In effect, the implementation of the VRIS Project will be
“segmented” or “chopped” into several phases. Not only is such arrangement disallowed by our
budgetary laws and practices, it is also disadvantageous to the COMELEC because of the
uncertainty that will loom over its modernization project for an indefinite period of time. Should
Congress fail to appropriate the amount necessary for the completion of the entire project, what
good will the accomplished Phase I serve? As expected, the project failed “to sell” with the
Department of Budget and Management. Thus, Secretary Benjamin Diokno, per his letter of
December 1, 2000, declined the COMELEC’s request for the issuance of the Notice of Cash
Availability (NCA) and a multi-year obligatory authority to assume payment of the total VRIS
Project for lack of legal basis. Corollarily, under Section 33 of R.A. No. 8760, no agency shall
enter into a multi-year contract without a multi-year obligational authority, thus:

“SECTION 33. Contracting Multi-Year Projects. - In the implementation of multi-year

projects, no agency shall enter into a multi-year contract without a multi-year Obligational
Authority issued by the Department of Budget and Management for the purpose.
Notwithstanding the issuance of the multi-year Obligational Authority, the obligation to be
incurred in any given calendar year, shall in no case exceed the amount programmed for
implementation during said calendar year.”

Petitioners are justified in refusing to formalize the contract with PHOTOKINA. Prudence
dictated them not to enter into a contract not backed up by sufficient appropriation and available
funds. Definitely, to act otherwise would be a futile exercise for the contract would inevitably
suffer the vice of nullity. x x x

Verily, the contract, as expressly declared by law, is inexistent and void ab initio
(Article 1409 of the Civil Code of the Philippines). This is to say that the proposed contract is
without force and effect from the very beginning or from its incipiency, as if it had never been
entered into, and hence, cannot be validated either by lapse of time or ratification.
In fine, we rule that PHOTOKINA, though the winning bidder, cannot compel the COMELEC to
formalize the contract. Since PHOTOKINA’s bid is beyond the amount appropriated by
Congress for the VRIS Project, the proposed contract is not binding upon the COMELEC and is
considered void x x x. (Commission on Elections v. Judge Ma. Luisa Quijano-Padilla, G.R.
No. 151992, Sept. 18, 2002, En Banc [Sandoval-Gutierrez])

What is the remedy available to a party who contracts with the government contrary to the
requirements of the law and, therefore, void ab initio?

Held: Of course, we are not saying that the party who contracts with the government has no
other recourse in law. The law itself affords him the remedy. Section 48 of E.O. No. 292
explicitly provides that any contract entered into contrary to the above-mentioned requirements
shall be void, and “the officers entering into the contract shall be liable to the Government or
other contracting party for any consequent damage to the same as if the transaction had been
wholly between private parties.” So when the contracting officer transcends his lawful and
legitimate powers by acting in excess of or beyond the limits of his contracting authority, the
Government is not bound under the contract. It would be as if the contract in such case were a
private one, whereupon, he binds himself, and thus, assumes personal liability thereunder.
Otherwise stated, the proposed contract is unenforceable as to the Government.

While this is not the proceeding to determine where the culpability lies, however, the
constitutional mandate cited above constrains us to remind all public officers that public office is
a public trust and all public officers must at all times be accountable to the people. The authority
of public officers to enter into government contracts is circumscribed with a heavy burden of
responsibility. In the exercise of their contracting prerogative, they should be the first judges of
the legality, propriety and wisdom of the contract they entered into. They must exercise a high
degree of caution so that the Government may not be the victim of ill-advised or improvident
action. (Commission on Elections v. Judge Ma. Luisa Quijano-Padilla, G.R. No. 151992,
Sept. 18, 2002, En Banc [Sandoval-Gutierrez])

Does the Commission on Human Rights have the power to adjudicate?

Held: In its Order x x x denying petitioners’ motion to dismiss, the CHR theorizes
that the intention of the members of the Constitutional Commission is to make CHR a quasi-
judicial body. This view, however, has not heretofore been shared by this Court. In Carino v.
Commission on Human Rights, the Court x x x has observed that it is “only the first of the
enumerated powers and functions that bears any resemblance to adjudication of adjudgment,”
but that resemblance can in no way be synonymous to the adjudicatory power itself. The Court
explained:

“x x x [T]he Commission on Human Rights x x x was not meant by the fundamental law to be
another court or quasi-judicial agency in this country, or duplicate much less take over the
functions of the latter.

“The most that may be conceded to the Commission in the way of adjudicative power is that it
may investigate, i.e., receive evidence and make findings of fact as regards claimed human rights
violations involving civil and political rights. But fact finding is not adjudication, and cannot be
likened to the judicial function of a court of justice, or even a quasi-judicial agency or official.
The function of receiving evidence and ascertaining therefrom the facts of a controversy is not a
judicial function, properly speaking. To be considered such, the faculty of receiving evidence
and making factual conclusions in a controversy must be accompanied by the authority of
applying the law to those factual conclusions to the end that the controversy may be decided or
determined authoritatively, finally and definitively, subject to such appeals or modes of review
as may be provided by law. This function, to repeat, the Commission does not have. (Simon, Jr.
v. Commission on Human Rights, 229 SCRA 117, 125, Jan. 5, 1994, En Banc [Vitug, J.])

Does the Commission on Human Rights have jurisdiction to issue TRO or writ of preliminary
injunction?

Held: In Export Processing Zone Authority v. Commission on Human Rights, the

Court x x x explained:

“The constitutional provision directing the CHR to ‘provide for preventive measures and legal
aid services to the underprivileged whose human rights have been violated or need protection’
may not be construed to confer jurisdiction on the Commission to issue a restraining order or
writ of injunction for, if that were the intention, the Constitution would have expressly said so.
‘Jurisdiction is conferred only by the Constitution or by law.’ It is never derived by
implication.”

“Evidently, the ‘preventive measures and legal aid services’ mentioned in the Constitution refer
to extrajudicial and judicial remedies (including a writ of preliminary injunction) which the CHR
may seek from the proper courts on behalf of the victims of human rights violations. Not being a
court of justice, the CHR itself has no jurisdiction to issue the writ, for a writ of preliminary
injunction may only be issued ‘by the judge of any court in which the action is pending [within
his district], or by a Justice of the Court of Appeals, or of the Supreme Court. x x x. A writ of
preliminary injunction is an ancillary remedy. It is available only in a pending principal action,
for the preservation or protection of the rights and interest of a party thereto, and for no other
purpose.”

The Commission does have legal standing to indorse, for appropriate action, its findings and
recommendations to any appropriate agency of government. (Simon, Jr. v. Commission on
Human Rights, 229 SCRA 117, 134-135, Jan. 5, 1994, En Banc [Vitug, J.])

Does the petition for annulment of proclamation of a candidate merely involve the exercise by
the COMELEC of its administrative power to review, revise and reverse the actions of the
board of canvassers and, therefore, justifies non-observance of procedural due process, or
does it involve the exercise of the COMELEC’s quasi-judicial function?

Held: Taking cognizance of private respondent’s petitions for annulment of petitioner’s

proclamation, COMELEC was not merely performing an administrative function. The
administrative powers of the COMELEC include the power to determine the number and
location of polling places, appoint election officials and inspectors, conduct registration of
voters, deputize law enforcement agencies and governmental instrumentalities to ensure free,
orderly, honest, peaceful and credible elections, register political parties, organizations or
coalition, accredit citizen’s arms of the Commission, prosecute election offenses, and
recommend to the President the removal of or imposition of any other disciplinary action upon
any officer or employee it has deputized for violation or disregard of its directive, order or
decision. In addition, the Commission also has direct control and supervision over all personnel
involved in the conduct of election. However, the resolution of the adverse claims of private
respondent and petitioner as regards the existence of a manifest error in the questioned certificate
of canvass requires the COMELEC to act as an arbiter. It behooves the Commission to hear both
parties to determine the veracity of their allegations and to decide whether the alleged error is a
manifest error. Hence, the resolution of this issue calls for the exercise by the COMELEC of its
quasi-judicial power. It has been said that where a power rests in judgment or discretion, so that
it is of judicial nature or character, but does not involve the exercise of functions of a judge, or is
conferred upon an officer other than a judicial officer, it is deemed quasi-judicial. The
COMELEC therefore, acting as quasi-judicial tribunal, cannot ignore the requirements of
procedural due process in resolving the petitions filed by private respondent. (Federico S.
Sandoval v. COMELEC, G.R. No. 133842, Jan. 26, 2000 [Puno])

Discuss the contempt power of the Commission on Human Rights (CHR). When may it be
validly exercised.

Held: On its contempt powers, the CHR is constitutionally authorized to “adopt its
operational guidelines and rules of procedure, and cite for contempt for violations thereof in
accordance with the Rules of Court.” Accordingly, the CHR acted within its authority in
providing in its revised rules, its power “to cite or hold any person in direct or indirect contempt,
and to impose the appropriate penalties in accordance with the procedure and sanctions provided
for in the Rules of Court.” That power to cite for contempt, however, should be understood to
apply only to violations of its adopted operational guidelines and rules of procedure essential to
carry out its investigatorial powers. To exemplify, the power to cite for contempt could be
exercised against persons who refuse to cooperate with the said body, or who unduly withhold
relevant information, or who decline to honor summons, and the like, in pursuing its
investigative work. The “order to desist” (a semantic interplay for a restraining order) in the
instance before us, however, is not investigatorial in character but prescinds from an adjudicative
power that it does not possess. x x x (Simon, Jr. v. Commission on Human Rights, 229 SCRA
117, 134, Jan. 5, 1994, En Banc [Vitug, J.])

Discuss the Doctrine of Primary Jurisdiction (or Prior Resort).

Held: Courts cannot and will not resolve a controversy involving a question which is within the
jurisdiction of an administrative tribunal, especially where the question demands the exercise of
sound administrative discretion requiring the special knowledge, experience and services of the
administrative tribunal to determine technical and intricate matters of fact.

In recent years, it has been the jurisprudential trend to apply this doctrine to cases involving
matters that demand the special competence of administrative agencies even if the question
involved is also judicial in character. It applies “where a claim is originally cognizable in the
courts, and comes into play whenever enforcement of the claim requires the resolution of issues
which, under a regulatory scheme, have been placed within the special competence of an
administrative body; in such case, the judicial process is suspended pending referral of such
issues to the administrative body for its view.”

In cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot arrogate
unto itself the authority to resolve a controversy, the jurisdiction over which is lodged with an
administrative body of special competence. (Villaflor v. CA, 280 SCRA 297, Oct. 9, 1992, 3rd
Div. [Panganiban])

Discuss the Doctrine of Exhaustion of Administrative Remedies. What are the exceptions
thereto?

Held: 1. Before a party is allowed to seek the intervention of the court, it is a pre-condition that
he should have availed of all the means of administrative processes afforded him. Hence, if a
remedy within the administrative machinery can still be resorted to by giving the administrative
officer concerned every opportunity to decide on a matter that comes within his jurisdiction then
such remedy should be exhausted first before the court’s judicial power can be sought. The
premature invocation of court’s jurisdiction is fatal to one’s cause of action. Accordingly, absent
any finding of waiver or estoppel the case is susceptible of dismissal for lack of cause of action.
This doctrine of exhaustion of administrative remedies was not without its practical and legal
reasons, for one thing, availment of administrative remedy entails lesser expenses and provides
for a speedier disposition of controversies. It is no less true to state that the courts of justice for
reasons of comity and convenience will shy away from a dispute until the system of
administrative redress has been completed and complied with so as to give the administrative
agency concerned every opportunity to correct its error and to dispose of the case.

This doctrine is disregarded:

when there is a violation of due process;

when the issue involved is purely a legal question;

when the administrative action is patently illegal amounting to lack or excess of jurisdiction;

when there is estoppel on the part of the administrative agency concerned;

when there is irreparable injury;

when the respondent is a department secretary whose acts as an alter ego of the President bears
the implied and assumed approval of the latter;

when to require exhaustion of administrative remedies would be unreasonable;

when it would amount to a nullification of a claim;

when the subject matter is a private land in land case proceeding;

when the rule does not provide a plain, speedy and adequate remedy, and

when there are circumstances indicating the urgency of judicial intervention.

(Paat v. CA, 266 SCRA 167 [1997])

2. Non-exhaustion of administrative remedies is not jurisdictional. It only renders the action

premature, i.e., claimed cause of action is not ripe for judicial determination and for that reason a
party has no cause of action to ventilate in court. (Carale v. Abarintos, 269 SCRA 132, March
3, 1997, 3rd Div. [Davide])