[G.R. No. 127249.

February 27, 1998]

CAMARINES NORTE ELECTRIC COOPERATIVE, INC. (CANORE-CO); RUBEN N.

BARRAMEDA; ELVIS L. ESPIRITU; MERARDO G. ENERO, JR.; MARCELITO B. ABAS; and
REYNALDO V. ABUNDO, petitioners, vs. HON. RUBEN D. TORRES, in his capacity as
Executive Secretary; REX TANTIONGCO; HONESTO DE JESUS; ANDRES IBASCO;
TEODULO M. MEA; and VICENTE LUKBAN, respondent.

DECISION

DAVIDE, JR., J.:

May the Office of the President validly constitute an ad hoc committee to take over and
manage the affairs of an electric cooperative?

This is the key issue in this original action for certiorari and prohibition under Rule 65 of
the Rules of Court wherein the petitioners seek to (a) annul and set aside Memorandum
Order No. 409 of the Office of the President dated 3 December 1996 constituting an Ad
Hoc Committee to take over and manage the affairs of the Camarines Norte Electric
Cooperative, Inc., (hereafter CANORECO) until such time as a general membership meeting
can be called to decide the serious issues affecting the said cooperative and normalcy in
operations is restored"; and (b) prohibit the respondents from performing acts or
continuing proceedings pursuant to the Memorandum Order.

The factual backdrop of this case is not complicated.

Petitioner CANORECO is an electric cooperative organized under the provisions of P.D. No.
269, otherwise known as the National Electrification Administration Decree, as amended
by P.D. No. 1645.

On 10 March 1990, then President Corazon C. Aquino signed into law R.A. No. 6938 and
R.A. No. 6939. The former is the Cooperative Code of the Philippines, while the latter
created the Cooperative Development Authority (CDA) and vested solely upon the CDA the
power to register cooperatives.

Article 122 of the Cooperative Code expressly provides that electric cooperatives shall be
covered by the Code. Article 128 of the said Code and Section 17 of R.A. No. 6939 similarly
provide that cooperatives created under P.D. No. 269, as amended by P.D. No. 1645, shall
have three years within which to qualify and register with the CDA and that after they shall
have so qualified and registered, the provisions of Sections 3 and 5 of P.D. No. 1645 shall no
longer be applicable to them. These Sections 3 and 5 read as follows:

SEC. 3. Section 5(a), Chapter II of Presidential Decree No. 269 is hereby amended by adding
sub-paragraph (6) to read as follows:
(6) To authorize the NEA Administrator to designate, subject to the confirmation of the
Board Administrators, an Acting General Manager and/or Project Supervisor for a
Cooperative where vacancies in the said positions occur and/or when the interest of the
Cooperative and the program so requires, and to prescribe the functions of said Acting
General Manager and/or Project Supervisor, which powers shall not be nullified, altered or
diminished by any policy or resolution of the Board of Directors of the Cooperative
concerned.

...

SEC. 5. Section 10, Chapter II of Presidential Decree No. 269 is hereby amended to read as
follows:

Section 10. Enforcement Powers and Remedies. -- In the exercise of its power of
supervision and control over electric cooperatives and other borrower, supervised or
controlled entities, the NEA is empowered to issue orders, rules and regulations and motu
proprio or upon petition of third parties, to conduct investigations, referenda and other
similar actions in all matters affecting said electric cooperatives and other borrower, or
supervised or controlled entities.

...

Finally, the repealing clause (Article 127) of the Cooperative Code provides:

Provided, however, That nothing in this Code shall be interpreted to mean the amendment
or repeal of any provision of Presidential Decree No. 269: Provided, further, That the
electric cooperatives which qualify as such under this Code shall fall under the coverage
thereof.

CANORECO registered with the CDA pursuant to R.A. No. 6938 and R.A. No. 6939. On 8
March 1993, the CDA issued a Certificate of Provisional Registration (T-003-93) to
CANORECO effective for two years.[1] On 1 March 1995, the CDA extended this provisional
registration until 4 May 1997.[2] However, on 10 July 1996, CANORECO filed with the CDA
its approved amendments to its Articles of Cooperation converting itself from a non-stock
to a stock cooperative pursuant to the provisions of R.A. No. 6938 and the Omnibus
Implementing Rules and Regulations on Electric Cooperatives. On the same date the CDA
issued a Certificate of Registration[3] of the amendments to CANORECO Articles of
Cooperation certifying that CANORECO is registered as a full-[f]ledged cooperative under
and by virtue of R.A. 6938.

Previously, on 11 March 1995, the Board of Directors of CANORECO[4] approved

Resolution No. 22 appointing petitioner Reynaldo V. Abundo as permanent General
Manager. The Board was composed of
Ruben N. Barrameda -- President

Elvis L. Espiritu -- Vice president

Merardo G. Enero, Jr. -- Secretary

Marcelito B. Abas -- Treasurer

Antonio R. Obias -- Director

Luis A. Pascua -- Director

Norberto Z. Ochoa -- Director

Leonida Z. Manalo -- OIC GM/Ex-Officio

On 28 May 1995, Antonio Obias, Norberto Ochoa, Luis Pascua, and Felicito Ilan held a
special meeting of the Board of Directors of CANORECO. The minutes of the
meeting[5] showed that President Ruben Barrameda, Vice-President Elvis Espiritu, and
Treasurer Marcelito Abas were absent; that Obias acted as temporary chairman; that the
latter informed those present that it was the responsibility of the Board after the annual
meeting to meet and elect the new set of officers, but that despite the fact that he had called
the attention of President Barrameda and Directors Abas and Espiritu for the holding
thereof, the three chose not to appear; and that those present in the special meeting
declared all positions in the board vacant and thereafter proceeded to hold elections by
secret balloting with all the directors present considered candidates for the positions. The
following won and were declared as the newly elected officers of the CANORECO:

President . . . . . . . . Norberto Ochoa

Vice President . . . . Antonio Obias

Secretary . . . . . . . . Felicito Ilan

Treasurer. . . . . . . . Luis Pascua

Thereupon, these newly elected officers approved the following resolutions:

1) Resolution No. 27, c.s. -- confirming the election of the new set of officers of the Board of
Directors of CANORECO

2) Resolution No. 28, c.s. -- recalling Resolution No. 22, c.s. appointing Mr. Reynaldo V.
Abundo as permanent General Manager in view of the fact that such appointment was in
violation of the provisions of R.A. 6713; declaring the position of General Manager as
vacant; and designating Mr. Oscar Acobera as Officer-in-Charge
3) Resolution No. 29, c.s. -- authorizing the Board President, or in his absence, the Vice-
President, countersigned by the Treasurer, or in his absence, the Secretary, to be the only
officers who can transfer funds from savings to current accounts; and authorizing the
Officer-in-Charge, Mr. Acobera, to issue checks without countersignature in an amount not
to exceed P3,000.00 and in excess thereof, to be countersigned by the President and/or the
Treasurer

4) Resolution No. 30, c.s. -- hiring the services of Atty. Juanito Subia as retainer-lawyer for
CANORECO.[6]

The petitioners challenged the above resolutions and the election of officers by filing with
the CDA a Petition for Declaration of Nullity of Board Resolutions and Election of Officers
with Prayer for Issuance of Injunction/Temporary Restraining Order, which the CDA
docketed as CDA-CO Case No. 95-010.

In its Resolution of 15 February 1996,[7] the CDA resolved the petition in favor of the
petitioners and decreed as follows:

WHEREFORE, premises considered, the Board Meeting of May 28, 1995, participated by the
respondents, and all the Resolutions issued on such occasion, are hereby declared NULL
AND VOID AB INITIO.

Likewise, the election of respondents Norberto Ochoa, Antonio Obias, Felicito Ilan, and Luis
Pascua, as President, Vice-President, Secretary, and Treasurer, respectively, of CANORECO
is hereby declared NULL AND VOID AB INITIO.

Hence, respondents Norberto Ochoa, Antonio Obias, Felicito Ilan, and Luis Pascua are
hereby ordered to refrain from representing themselves as President, Vice-President,
Secretary, and Treasurer, respectively, of CANORECO. The same respondents are further
ordered to refrain from acting as authorized signatories to the bank accounts of
CANORECO.

Further respondent Felicito Ilan is hereby ordered to refrain from exercising the duties and
functions of a member of the Board of CANORECO until the election protest is resolved with
finality by the proper forum. In the meantime, the incumbency of petitioner Merardo
Enero, Jr. as Director of the CANORECO Board is hereby recognized.

A status quo is hereby ordered as regards the position of General Manager, being held by
Mr. Reynaldo Abundo, considering that the recall of his appointment was done under a void
Resolution, and that the designation of Mr. Oscar Acodera as Officer-in-Charge, under the
same void Resolution, has no force and effect.
Finally, respondents Antonio Obias, Norberto Ochoa, Luisito Pascua, and petitioners Ruben
Barrameda, Elvis Espiritu, Marcelito Abas and Merardo Enero, Jr. are hereby ordered to
work together, as Board of Directors, for the common good of CANORECO and its
consumer-members, and to maintain an atmosphere of sincere cooperation among the
officers and members of CANORECO.

On 28 June 1996, in defiance of the abovementioned Resolution of the CDA and with the
active participation of some officials of the National Electrification Administration (NEA),
the group of Norberto Ochoa, Antonio Obias, Felicito Ilan, and Luis Pascua forcibly took
possession of the offices of CANORECO and assumed the duties as officers thereof.[8]

On 26 September 1996, pursuant to the writ of execution and order to vacate issued by the
CDA, the petitioners were able to reassume control of the CANORECO and to perform their
respective functions.[9]

On 3 December 1996, the President of the Philippines issued Memorandum Order No.
409[10] onstituting an Ad Hoc Committee to temporarily take over and manage the affairs
of CANORECO. It reads as follows:

To efficiently and effectively address the worsening problem of the Camarines Norte
Electric Cooperative, Inc. (CANORECO) and in order not to prejudice and endanger the
interest of the people who rely on the said cooperative for their supply of electricity, an AD
HOC Committee is hereby constituted to take over and manage the affairs of CANORECO
until such time as a general membership meeting can be called to decide the serious issues
affecting the said cooperative and normalcy in operations is restored.Further, if and when
warranted, the present Board of Directors may be called upon by the Committee for
advisory services without prejudice to the receipt of their per diems as may be authorized
by existing rules and regulations.

The AD HOC Committee shall be composed of the following:

REX TANTIONGCO -- Chairman

Presidential Assistant on Energy Affairs

HONESTO DE JESUS -- Member

Cooperative Development Authority Nominee

ANDRES IBASCO -- Member

Cooperative Development Authority Nominee

TEODULO M. MEA -- Member

National Electrification Administration Nominee

VICENTE LUKBAN -- Member

National Electrification Administration Nominee

The said Committee shall have the following functions:

1. Designate the following upon the recommendation of the Chairman:

1.1 an Acting General Manager who shall handle the day-to-day operations of the
Cooperative. In the meantime, the General Manager shall be deemed to be on leave without
prejudice to the payment of his salaries legally due him; and

1.2 a Comptroller who shall handle the financial affairs of the Cooperative.

2. Ensure that:

The AD HOC Committee shall submit a written report to the President, through the Office of
the Executive Secretary, every two (2) weeks from the effectivity of this Order.

A General Membership Meeting shall be called by the AD HOC Committee to determine

whether or not there is a need to change the composition of the membership of the
Cooperatives Board of Directors. If the need exists, the AD HOC Committee shall call for
elections. Once the composition of the Board of Directors is finally settled, it shall decide on
the appointment of a General Manager in accordance with prescribed laws, rules and
regulations. Upon the appointment of a General Manager, the Committee shall
become functus officio.

This Memorandum Order shall take effect immediately.

On 11 December 1996, the petitioners filed this petition wherein they claim that

I. THE PRESIDENT HAS NO POWER TO TAKE OVER AND MANAGE OR TO ORDER THE
TAKE-OVER OR MANAGEMENT OF CANORECO.

II. [THE] TAKE-OVER OF CANORECO BY THE AD HOC COMMITTEE IS UNLAWFUL DESPITE

DESIGNATION OF CANORECO CONSUMERS AS MEMBERS OF AD HOC COMMITTEE.

III. [THE] RELEGATION OF PETITIONERS AS MERE ADVISERS TO THE AD HOC

COMMITTEE AMOUNTS TO REMOVAL FROM OFFICE WHICH THE PRESIDENT HAS NO
POWER TO DO. MOREOVER, PETITIONERS REMOVAL VIOLATES PETITIONERS RIGHT TO
DUE PROCESS OF LAW.
IV. THE PRESIDENT IS LIKEWISE WITHOUT POWER TO DESIGNATE OR ORDER THE
DESIGNATION OF AN ACTING GENERAL MANAGER FOR CANORECO AND TO CONSIDER
THE INCUMBENT REYNALDO V. ABUNDO TO BE ON LEAVE.

The petitioners assert that there is no provision in the Constitution or in a statute

expressly, or even impliedly, authorizing the President or his representatives to take over
or order the take-over of electric cooperatives. Although conceding that while the State,
through its police power, has the right to interfere with private business or commerce, they
maintain that the exercise thereof is generally limited to the regulation of the business or
commerce and that the power to regulate does not include the power to take over, control,
manage, or direct the operation of the business. Accordingly, the creation of the Ad
Hoc Committee for the purpose of take-over was illegal and void.

The petitioners further claim that Memorandum Order No. 409 removed them from their
positions as members of the Board of Directors of CANORECO. The President does not have
the authority to appoint, much less to remove, members of the board of directors of a
private enterprise including electric cooperatives. He cannot rely on his power of
supervision over the NEA to justify the designation of an acting general manager for
CANORECO under P.D. No. 269 as amended by P.D. No. 1645, for CANORECO had already
registered with the CDA pursuant to R.A. No. 6938 and R.A. No. 6939; hence, the latter laws
now govern the internal affairs of CANORECO.

On 3 January 1997, the petitioners filed an Urgent Motion for Issuance of a Temporary
Restraining Order.

On 9 January 1997, the petitioners filed a Manifestation and Motion informing the Court
that on 8 January 1997 respondent Rex Tantiongco notified the petitioners that the Ad
Hoc Committee was taking over the affairs and management of CANORECO effective as of
that date.[11] They reiterated their plea for the issuance of a temporary restraining order
because the Ad Hoc Committee has taken control of CANORECO and usurped the functions
of the individual petitioners.

In the Resolution dated 13 January 1997, we required respondents to comment on the

petition.

Despite four extensions granted it, the Office of the Solicitor General (OSG) failed to file its
Comment. Hence, in the resolution of 16 July 1997 we deemed the OSG to have waived the
filing of its Comment and declared this case submitted for decision. The OSGs motion to
admit its Comment, as well as the attached Comment, belatedly filed on 24 July 1997 was
merely noted without action in the resolution of 13 August 1997. We also subsequently
denied for lack of merit its motion for reconsideration.
We find the instant petition impressed with merit.

Having registered itself with the CDA pursuant to Section 128 of R.A. No. 6938 and Section
17 of R.A. No. 6939, CANORECO was brought under the coverage of said laws. Article 38 of
R.A. No. 6938 vests upon the board of directors the conduct and management of the affairs
of cooperatives, and Article 39 provides for the powers of the board of directors. These
sections read:

Article 38. Composition of the Board of Directors. -- The conduct and management of the
affairs of a cooperative shall be vested in a board of directors which shall be composed of
not less than five (5) nor more than fifteen (15) members elected by the general assembly
for a term fixed in the by-laws but not exceeding a term of two (2) years and shall hold
office until their successors are duly elected and qualified, or until duly removed. However,
no director shall serve for more than three (3) consecutive terms.

Article 39. Powers of the Board of Directors. -- The board of directors shall direct and
supervise the business, manage the property of the cooperative and may, by resolution,
exercise all such powers of the cooperative as are not reserved for the general assembly
under this Code and the by-laws.

As to the officers of cooperatives, Article 43 of the Code provides:

ART. 43. Officers of the Cooperatives. The board of directors shall elect from among
themselves only the chairman and vice-chairman, and elect or appoint other officers of the
cooperative from outside of the board in accordance with their by-laws. All officers shall
serve during good behavior and shall not be removed except for cause and after due
hearing. Loss of confidence shall not be a valid ground for removal unless evidenced by acts
or omissions causing loss of confidence in the honesty and integrity of such officer.No two
(2) or more persons with relationship up to the third degree of consanguinity or affinity
shall serve as elective or appointive officers in the same board.[12]

Under Article 34 of the Code, the general assembly of cooperatives has the exclusive power,
which cannot be delegated, to elect or appoint the members of the board of directors and to
remove them for cause. Article 51 thereof provides for removal of directors and officers as
follows:

ART. 51. Removal. -- An elective officer, director, or committee member may be removed by
a vote of two-thirds (2/3) of the voting members present and constituting a quorum, in a
regular or special general assembly meeting called for the purpose. The person involved
shall be given an opportunity to be heard at said assembly.

Memorandum Order No. 409 clearly removed from the Board of Directors of CANORECO
the power to manage the affairs of CANORECO and transferred such power to the Ad
Hoc Committee, albeit temporarily. Considering that (1) the take-over will be until such
time that a general membership meeting can be called to decide the serious issues affecting
the said cooperative and normalcy in operations is restored, and (2) the date such meeting
shall be called and the determination of whether there is a need to change the composition
of the membership of CANORECOs Board of Directors are exclusively left to the Ad
Hoc Committee, it necessarily follows that the incumbent directors were, for all intents and
purposes, suspended at the least, and removed, at the most, from their office. The said
Memorandum did no less to the lawfully appointed General Manager by directing that upon
the settlement of the issue concerning the composition of the board of directors the
Committee shall decide on the appointment of a general manager. In the meantime, it
authorized the Committee to designate upon the recommendation of the Chairman an
Acting Manager, with the lawfully appointed Manager considered on leave, but who is,
however, entitled to the payment of his salaries.

Nothing in law supported the take-over of the management of the affairs of CANORECO,
and the suspension, if not removal, of the Board of Directors and the officers thereof.

It must be pointed out that the controversy which resulted in the issuance of the
Memorandum Order stemmed from a struggle between two groups vying for control of the
management of CANORECO. One faction was led by the group of Norberto Ochoa, while the
other was petitioners group whose members were, at that time, the incumbent directors
and officers. It was the action of Ochoa and his cohorts in holding a special meeting on 28
May 1995 and then declaring vacant the positions of cooperative officers and thereafter
electing themselves to the positions of president, vice-president, treasurer, and secretary of
CANORECO which compelled the petitioners to file a petition with the CDA. The CDA
thereafter came out with a decision favorable to the petitioners.

Obviously there was a clear case of intra-cooperative dispute. Article 121 of the
Cooperative Code is explicit on how the dispute should be resolved; thus:

ART. 121. Settlement of Disputes. -- Disputes among members, officers, directors, and
committee members, and intra-cooperative disputes shall, as far as practicable, be settled
amicably in accordance with the conciliation or mediation mechanisms embodied in the by-
laws of the cooperative, and in applicable laws.

Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court
of competent jurisdiction.

Complementing this Article is Section 8 of R.A. No. 6939, which provides:

SEC. 8. Mediation and Conciliation. Upon request of either or both or both parties, the
[CDA] shall mediate and conciliate disputes with the cooperative or between
cooperatives: Provided, That if no mediation or conciliation succeeds within three (3)
months from request thereof, a certificate of non-resolution shall be issued by the
commission prior to the filing of appropriate action before the proper courts.

Even granting for the sake of argument that the party aggrieved by a decision of the CDA
could pursue an administrative appeal to the Office of the President on the theory that the
CDA is an agency under its direct supervision and control, still the Office of the President
could not in this case, motu proprio or upon request of a party, supplant or overturn the
decision of the CDA. The record does not disclose that the group of Norberto Ochoa
appealed from the decision of the CDA in CDA-CO Case No. 95-010 to the Office of the
President as the head of the Executive Department exercising supervision and control over
said agency. In fact the CDA had already issued a Cease and Desist Order dated 14 August
1996 ordering Antonio Obias, Norberto Ochoa, Luis Pascua, Felicito Ilan and their followers
to cease and desist from acting as the Board of Directors and Officers of Camarines Norte
Electric Cooperative (CANORECO) and to refrain from implementing their Resolution
calling for the District V Election on August 17 and 24, 1996.[13] Consequently, the said
decision of the CDA had long become final and executory when Memorandum Order No.
409 was issued on 3 December 1996. That Memorandum cannot then be considered as one
reversing the decision of the CDA which had attained finality.

Under Section 15, Chapter III of Book VII of the Administrative Code of 1987 (Executive
Order No. 292), decisions of administrative agencies become final and executory fifteen
days after receipt of a copy thereof by the party adversely affected unless within that
period an administrative appeal or judicial review, if proper, has been perfected. One
motion for reconsideration is allowed. A final resolution or decision of an administrative
agency also binds the Office of the President even if such agency is under the
administrative supervision and control of the latter.

We have stated before, and reiterate it now, that administrative decisions must end
sometime, as fully as public policy demands that finality be written on judicial
controversies. Public interest requires that proceedings already terminated should not be
altered at every step, for the rule of non quieta movere prescribes that what had already
been terminated should not be disturbed. A disregard of this principle does not commend
itself to sound public policy.[14]

Neither can police power be invoked to clothe with validity the assailed Memorandum
Order No. 409. Police power is the power inherent in a government to enact laws, within
constitutional limits, to promote the order, safety, health, morals, and general welfare of
society.[15] It is lodged primarily in the legislature. By virtue of a valid delegation of
legislative power, it may also be exercised by the President and administrative boards, as
well as the lawmaking bodies on all municipal levels, including
the barangay.[16]Delegation of legislative powers to the President is permitted in Sections
23(2) and 28(2) of Article VI of the Constitution.[17] The pertinent laws on cooperatives,
namely, R.A. No. 6938, R.A. No. 6939, and P.D. No. 269 as amended by P.D. No. 1645 do not
provide for the President or any other administrative body to take over the internal
management of a cooperative. Article 98 of R.A. 6938 instead provides:

ART. 98. Regulation of Public Service Cooperatives. -- (1) The internal affairs of public
service cooperatives such as the rights and privileges of members, the rules and
procedures for meetings of the general assembly, board of directors and committees; for
the election and qualification of officers, directors, and committee members; allocation and
distribution of surpluses, and all other matters relating to their internal affairs shall be
governed by this Code.

We do not then hesitate to rule that Memorandum Order No. 409 has no constitutional and
statutory basis. It violates the basic underlying principle enshrined in Article 4(2) of R.A.
No. 6938 that cooperatives are democratic organizations and that their affairs shall be
administered by persons elected or appointed in a manner agreed upon by the
members. Likewise, it runs counter to the policy set forth in Section 1 of R.A. No. 6939 that
the State shall, except as provided in said Act, maintain a policy of non-interference in the
management and operation of cooperatives.

WHEREFORE, the instant petition is GRANTED and Memorandum Order No. 409 of the
President is hereby declared INVALID.

SO ORDERED.

G.R. No. 124360 November 5, 1997

FRANCISCO S. TATAD, petitioner,
vs.
THE SECRETARY OF THE DEPARTMENT OF ENERGY AND THE SECRETARY OF THE
DEPARTMENT OF FINANCE

Facts:

The petitioner question the constitutionality of RA No. 8180 “An Act Deregulating the
Downstream Oil Industry and For Other Purposes.” The deregulation process has two
phases: (a) the transition phase and the (b) full deregulation phase through EO No. 372.

The petitioner claims that Sec. 15 of RA No. 8180 constitutes an undue delegation of
legislative power to the President and the Sec. of Energy because it does not provide a
determinate or determinable standard to guide the Executive Branch in determining when
to implement the full deregulation of the downstream oil industry, and the law does not
provide any specific standard to determine when the prices of crude oil in the world
market are considered to be declining nor when the exchange rate of the peso to the US
dollar is considered stable.

Issues:

Whether or not Sec 5(b) of R.A. 8180 violates the one title one subject requirement of the
Constitution.

Whether or not Sec 15 of R.A. 8180 violates the constitutional prohibition on undue
delegation of power.

Whether or not R.A. No. 8180 violates the constitutional prohibition against monopolies,
combinations in restraint of trade and unfair competition

Discussions:

The Court consistently ruled that the title need not mirror, fully index or catalogue all
contents and minute details of a law. A law having a single general subject indicated in the
title may contain any number of provisions, no matter how diverse they may be, so long as
they are not inconsistent with or foreign to the general subject, and may be considered in
furtherance of such subject by providing for the method and means of carrying out the
general subject.

Adopting the ruling from Eastern Shipping Lines, Inc. vs. POEA, the Court states that:

“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 legislative
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 limitations in the
law to map out the boundaries of the delegate’s 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.

A monopoly is a privilege or peculiar advantage vested in one or more persons or

companies, consisting in the exclusive right or power to carry on a particular business or
trade, manufacture a particular article, or control the sale or the whole supply of a
particular commodity. It is a form of market structure in which one or only a few firms
dominate the total sales of a product or service. On the other hand, a combination in
restraint of trade is an agreement or understanding between two or more persons, in the
form of a contract, trust, pool, holding company, or other form of association, for the
purpose of unduly restricting competition, monopolizing trade and commerce in a certain
commodity, controlling its production, distribution and price, or otherwise interfering with
freedom of trade without statutory authority. Combination in restraint of trade refers to
the means while monopoly refers to the end.

Rulings:

The Court does not concur with this contention. The Court has adopted a liberal
construction of the one title – one subject rule. The Court hold that section 5(b) providing
for tariff differential is germane to the subject of R.A. No. 8180 which is the deregulation of
the downstream oil industry. The section is supposed to sway prospective investors to put
up refineries in our country and make them rely less on imported petroleum.[i][20] We
shall, however, return to the validity of this provision when we examine its blocking effect
on new entrants to the oil market.

Sec 15 of R.A. 8180 can hurdle both the completeness test and the sufficient standard test.
It will be noted that Congress expressly provided in R.A. No. 8180 that full deregulation will
start at the end of March 1997, regardless of the occurrence of any event. Full deregulation
at the end of March 1997 is mandatory and the Executive has no discretion to postpone it
for any purported reason. Thus, the law is complete on the question of the final date of full
deregulation. The discretion given to the President is to advance the date of full
deregulation before the end of March 1997. Section 15 lays down the standard to guide the
judgment of the President. He is to time it as far as practicable when the prices of crude oil
and petroleum products in the world market are declining and when the exchange rate of
the peso in relation to the US dollar is stable.

Section 19 of Article XII of the Constitution allegedly violated by the aforestated provisions
of R.A. No. 8180 mandates: “The State shall regulate or prohibit monopolies when the
public interest so requires. No combinations in restraint of trade or unfair competition
shall be allowed.”
G.R. No. 4349 September 24, 1908
THE UNITED STATES, plaintiff-appellee,
vs.
ANICETO BARRIAS, defendant-appellant.
Ortigas & Fisher for appellant.
Attorney-General Araneta for appellee.
TRACEY, J.:

In the Court of First Instance of the city of Manila the defendant was charged within a
violation of paragraphs 70 and 83 of Circular No. 397 of the Insular Collector of Customs,
duly published in the Official Gazette and approved by the Secretary of Finance and
Justice.1 After a demurrer to the complaint of the lighter Maude, he was moving her and
directing her movement, when heavily laden, in the Pasig River, by bamboo poles in the
hands of the crew, and without steam, sail, or any other external power. Paragraph 70 of
Circular No. 397 reads as follows:

No heavily loaded casco, lighter, or other similar craft shall be permitted to move in the
Pasig River without being towed by steam or moved by other adequate power.

Paragraph 83 reads, in part, as follows:

For the violation of any part of the foregoing regulations, the persons offending shall be
liable to a fine of not less than P5 and not more than P500, in the discretion of the court.

In this court, counsel for the appellant attacked the validity of paragraph 70 on two
grounds: First that it is unauthorized by section 19 of Act No. 355; and, second, that if the
acts of the Philippine Commission bear the interpretation of authorizing the Collector to
promulgate such a law, they are void, as constituting an illegal delegation of legislative
power.

The Attorney-General does not seek to sustain the conviction but joins with the counsel for
the defense in asking for the discharge of the prisoner on the first ground stated by the
defense, that the rule of the Collector cited was unauthorized and illegal, expressly passing
over the other question of the delegation of legislative power.

By sections 1, 2, and 3 of Act No. 1136, passed April 29, 1904, the Collector of Customs is
authorized to license craft engaged in the lighterage or other exclusively harbor business of
the ports of the Islands, and, with certain exceptions, all vessels engaged in lightering are
required to be so licensed. Sections 5 and 8 read as follows:

SEC. 5. The Collector of Customs for the Philippine Islands is hereby authorized,
empowered, and directed to promptly make and publish suitable rules and regulations to
carry this law into effect and to regulate the business herein licensed.
SEC. 8. Any person who shall violate the provisions of this Act, or of any rule or regulation
made and issued by the Collector of Customs for the Philippine Islands, under and by
authority of this Act, shall be deemed guilty of a misdemeanor, and upon conviction shall be
punished by imprisonment for not more than six months, or by a fine of not more than one
hundred dollars, United States currency, or by both such fine and imprisonment, at the
discretion of the court; Provided, That violations of law may be punished either by the
method prescribed in section seven hereof, or by that prescribed in this section or by both.

Under this statute, which was not referred to on the argument, or in the original briefs,
there is no difficulty in sustaining the regulation of the Collector as coming within the
terms of section 5. Lighterage, mentioned in the Act, is the very business in which this
vessel was engaged, and when heavily laden with hemp she was navigating the Pasig River
below the Bridge of Spain, in the city of Manila. This spot is near the mouth of the river, the
docks whereof are used for the purpose of taking on and discharging freight, and we
entertain no doubt that it was in right sense a part of the harbor, without having recourse
to the definition of paragraph 8 of Customs Administrative Circular No. 136, which reads as
follows:

The limits of a harbor for the purpose of licensing vessels as herein prescribed (for the
lighterage and harbor business) shall be considered to include its confluent navigable
rivers and lakes, which are navigable during any season of the year.

The necessity confiding to some local authority the framing, changing, and enforcing of
harbor regulations is recognized throughout the world, as each region and each a harbor
requires peculiar use more minute than could be enacted by the central lawmaking power,
and which, when kept within the proper scope, are in their nature police regulations not
involving an undue grant of legislative power.

The complaint in this instance was framed with reference, as its authority, to sections 311
and 319 [19 and 311] at No. 355 of the Philippine Customs Administrative Acts, as
amended by Act Nos. 1235 and 1480. Under Act No. 1235, the Collector is not only
empowered to make suitable regulations, but also to "fix penalties for violation thereof,"
not exceeding a fine of P500.

This provision of the statute does, indeed, present a serious question.

One of the settled maxims in constitutional law is, that the power conferred upon the
legislature to make laws can not be delegated by that department to any body or authority.
Where the sovereign power of the State has located the authority, there it must remain;
only by the constitutional agency alone the laws must be made until the constitution itself
is changed. The power to whose judgment, wisdom, and patriotism this high prerogative
has been intrusted can not relieve itself of the responsibility by choosing other agencies
upon which the power shall be developed, nor can its substitutes the judgment, wisdom,
and patriotism and of any other body for those to which alone the people have seen fit to
confide this sovereign trust. (Cooley's Constitutional limitations, 6th ed., p. 137.)

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 the delegate by the instrumentality of his own
judgment acting immediately upon the matter of legislation and not through the
intervening mind of another. In the case of the United States vs. Breen (40 Fed. Phil. Rep.
402), an Act of Congress allowing the Secretary of War to make such rules and regulations
as might be necessary to protect improvements of the Mississipi River, and providing that a
violation thereof should constitute a misdemeanor, was sustained on the ground that the
misdemeanor was declared not under the delegated power of the Secretary of War, but in
the Act of Congress, itself. So also was a grant to him of power to prescribe rules for the use
of canals. (U.S. vs. Ormsbee, 74 Fed. Rep. 207.) but a law authorizing him to require
alteration of any bridge and to impose penalties for violations of his rules was held invalid,
as vesting in him upon a power exclusively lodged in Congress (U.S. vs. Rider, 50 Fed. Rep.,
406.) The subject is considered and some cases reviewed by the Supreme Court of the
United States, in re Kollock (165 U.S. 526), which upheld the law authorizing a
commissioner of internal revenue to designate and stamps on oleomargarine packages, an
improper use of which should thereafter constitute a crime or misdemeanor, the court
saying (p. 533):

The criminal offense is fully and completely defined by the Act and the designation by the
Commissioner of the particular marks and brands to be used was a mere matter of detail.
The regulation was in execution of, or supplementary to, but not in conflict with the law
itself. . . .

In Massachusetts it has been decided that the legislature may delegate to the governor and
counsel the power to make pilot regulations. (Martin vs. Witherspoon et al., 135 Mass. 175).

In the case of The Board of Harbor Commissioners of the Port of Eureka vs. Excelsior
Redwood Company (88 Cal. 491), it was ruled that harbor commissioners can not impose a
penalty under statues authorizing them to do so, the court saying:

Conceding that the legislature could delegate to the plaintiff the authority to make rules
and regulation with reference to the navigation of Humboldt Bay, the penalty for the
violation of such rules and regulations is a matter purely in the hands of the legislature.

Having reached the conclusion that Act No. 1136 is valid, so far as sections 5 and 8 are
concerned, and is sufficient to sustain this prosecution, it is unnecessary that we should
pass on the questions discussed in the briefs as to the extend and validity of the other acts.
The reference to them in the complaint is not material, as we have frequently held that
where an offense is correctly described in the complaint an additional reference to a wrong
statute is immaterial.

We are also of the opinion that none of the subsequent statutes cited operate to repeal the
aforesaid section Act No. 1136.

So much of the judgment of the Court of First Instance as convicts the defendant of a
violation of Acts Nos. 355 and 1235 is hereby revoked and is hereby convicted of a
misdemeanor and punished by a fine of 25 dollars, with costs of both instances. So ordered.

Arellano, C.J., Torres, Mapa and Willard, JJ., concur.

Carson, J., reserve his opinion.

Smart Communications, Inc. Et Al. vs. National Telecommunications Commission

(Ntc) G.R. 151908, August 12, 2003

QUASI-LEGISLATIVE & QUASI-JUDICIAL POWERS; RULE ON EXHAUSTION OF

ADMINISTRATIVE REMEDIES; DOCTRINE OF PRIMARY JURISDICTION;WHEN APPLICABLE

SMART COMMUNICATIONS, INC. ET AL. V. NATIONAL TELECOMMUNICATIONS

COMMISSION (NTC)
G.R. 151908, August 12, 2003

Facts: The NTC issued Billing Circular 13-6-2000 which promulgated rules and regulations
on the billing of telecommunications services. Petitioners filed with the RTC a petition to
declare the circular as unconstitutional. A motion to dismiss was filed by the NTC on the
ground of petitioner’s to exhaust administrative remedies. The RTC denied the motion to
dismiss but on certiorari, the CA reversed RTC.

Held: 1. Administrative bodies had (a) quasi-legislative or rule-making powers and (b)
quasi-judicial or administrative adjudicatory powers. Quasi-legislative or rule-making
power is the power to make rules and regulations which results in delegated legislation
that is within the confines of the granting statute and the doctrine of non-delegability and
separability of powers. To be valid, such rules and regulations must conform to, and be
consistent with, the provisions of enabling statute.
Quasi-judicial or administrative adjudicatory power is the power to hear and determine
questions of fact to which the legislative policy is to apply and to decide in accordance with
the standards laid down by law itself in enforcing and administering the same law. In
carrying out their quasi-judicial functions, the administrative officers or bodies are
required to investigate facts or ascertain the existence of facts, hold hearings, weigh
evidence, and draw conclusions from them for their official action and exercise of
discretion in a judicial.
2. The determination of whether a specific rule or set of rules issued by an administrative
body contravenes the law or the constitution is within the judicial power as defined by the
Constitution which is “ the duty of the Courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether
or not there haw been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government.” The NTC
circular was issued pursuant to its quasi-legislative or rule-making power. Hence, the
action must be filed directly with the regular courts without requiring exhaustion of
administrative remedies.
3. Where the act of administrative agency was performed pursuant to its quasi-judicial
function, exhaustion of administrative remedy is required, before going to court.
4. The doctrine of primary jurisdiction applies only where the administrative agency
exercises its quasi-judicial or adjudicatory function. Thus, in cases involving specialized
disputes, the same must be referred to an administrative agency of special competence
pursuant to the doctrine of primary jurisdiction. This doctrine of primary jurisdiction
applies where the claim requires the resolution of issues which, under a regulatory scheme,
has 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.

VICENTE VILLAFLOR, substituted by his heirs, petitioner,

vs.
COURT OF APPEALS and NASIPIT LUMBER CO., INC., respondents.
G.R. No. 95694 October 9, 1997

Facts:

The Petitioner bought a large tract of land containing one hundred forty (140) hectares to
four (4) different owners in 1940. The land was part of the public domain, but the
petitioners predecessor in interest over which he acquired the property, have been in open,
exclusive and notorious possession of the same for sometime. After acquisition, petitioner
asserts exclusive rights thereof for more than fifty (50) years.

In 1946, petitioner entered into a lease agreement with respondent Nasipit Lumber Co.Inc.
However, an “Agreement for the Relinquishment of Rights” was entered into by both
parties in 1950. The respondent having complied all the requirements agreed upon,
assumed ownership and possession of the property since then. Respondent corporation
likewise filed a sales application in 1950 over the property to bolster his claim which the
Bureau of Land otherwise granted on the same year as proof of an “Order of Award” issued.

In 1974 or twenty four (24) years had passed, when petitioner, questioned and made
several collateral and extraneous claims against the respondent. However, the Bureau of
Lands dismissed the claim, arguing that petitioner no longer has any substantial rights to
question the validity of acquisition of the respondent and the subsequent issuance of free
patent by the Bureau of Lands. Unperturbed, petitioner filed a motion for reconsideration
at the Ministry of Natural Resources which likewise dismissed the petition.

On July 6, 1978, petitioner filed a complaint in the trial court for “Declaration of Nullity of
Contract ( Deed of Relinquishment of Rights), Recovery of Possession (of two parcels of
land subject of the contract), and Damages” at about the same time that he appealed the
decision of the Minister of Natural Resources to the Office of the President. On January 28,
1983, petitioner died. Petitioner’s heir substituted in his behalf to pursue the claim. The
trial court in Butuan City who initially take cognizance of the case ordered the case
dismissed, on the grounds that: (1) petitioner admitted the due execution and genuineness
of the contract and was estopped from proving its nullity, (2) the verbal lease agreements
were unenforceable under Article 1403 (2) (e) of the Civil Code, and (3) his causes of action
were barred by extinctive prescription and/or laches.

The heirs appealed to the CA which likewise rendered judgment of dismissal by upholding
the lower court’s ruling.

ISSUE:

Whether or not the sale is valid.

HELD:

No. The provision of the law is specific that public lands can only be acquired in the manner
provided for therein and not otherwise(Sec. 11, CA. No. 141, as amended). In his sales
application, petitioner expressly admitted that said property was public land. This is
formidable evidence as it amounts to an admission against interest. The records show that
Villaflor had applied for the purchase of lands in question with this Office (Sales
Application V-807) on 2 December 1948. There is a condition in the sales application to the
effect that he recognizes that the land covered by the same is of public domain and any and
all rights he may have with respect thereto by virtue of continuous occupation and
cultivation are relinquished to the Government of which Villaflor is very much aware. It
also appears that Villaflor had paid for the publication fees appurtenant to the sale of the
land. He participated in the public auction where he was declared the successful bidder. He
had fully paid the purchase price thereof. It would be a height of absurdity for Villaflor to
be buying that which is owned by him if his claim of private ownership thereof is to be
believed. The area in dispute is not the private property of the petitioner.

It is a basic assumption of public policy that lands of whatever classification belong to the
state. Unless alienated in accordance with law, it retains its rights over the same as
dominus. No public land can be acquired by private persons without any grant, express or
implied from the government. It is indispensable then that there be showing of title from
the state or any other mode of acquisition recognized by law. Such sales applicant
manifestly acknowledged that he does not own the land and that the same is a public land
under the administration of the Bureau of Lands, to which the application was submitted,
all of its acts prior thereof, including its real estate tax declarations, characterized its
possessions of the land as that of a “sales applicant”. And consequently, as one who expects
to buy it, but has not as yet done so, and is not, therefore, its owner.

The rule on the interpretation of contracts (Article 1371) is used in affirming, not negating,
their validity. Article 1373,which is a conjunct of Article 1371, provides that, if the
instrument is susceptible of two or more interpretations, the interpretation which will
make it valid and effectual should be adopted. In this light, it is not difficult to understand
that the legal basis urged by petitioner does not support his allegation that the contracts to
sell and the deed of relinquishment are simulated and fictitious. Simulation occurs when an
apparent contract is a declaration of a fictitious will, deliberately made by agreement of the
parties, in order to produce, for the purpose of deception, the appearance of a juridical act
which does not exist or is different from that which was really executed. Such an intention
is not apparent in the agreements. The intent to sell, on the other hand, is as clear as
daylight. The fact, that the agreement to sell (7 December 1948) did not absolutely transfer
ownership of the land to private respondent, does not how that the agreement was
simulated. Petitioner‟s delivery of the Certificate of Ownership and execution of the deed of
absolute sale were suspensive conditions, which gave rise to a corresponding obligation on
the part of the private respondent, i.e., the payment of the last installment of the
consideration mentioned in the Agreement. Such conditions did not affect the perfection of
the contract or prove simulation Nonpayment, at most, gives the vendor only the right to
sue for collection. Generally, in a contract of sale, payment of the price is a resolutory
condition and the remedy of the seller is to exact fulfillment or, in case of a substantial
breach, to rescind the contract under Article 1191 of the Civil Code. However, failure to pay
is not even a breach, but merely an event which prevents the vendor‟s obligation to convey
title from acquiring binding force.

The requirements for a sales application under the Public Land Act are: (1) the possession
of the qualifications required by said Act (under Section 29) and (2) the lack of the
disqualifications mentioned therein (under Sections 121, 122,and 123). Section 121 of the
Act pertains to acquisitions of public land by a corporation from a grantee: The private
respondent, not the petitioner, was the direct grantee of the disputed land. Sections 122
and 123 disqualify corporations, which are not authorized by their charter, from acquiring
public land; the records do not show that private respondent was not so authorized under
its charter.

LAND BANK OF THE PHILIPPINES, petitioner vs. COURT OF APPEALS and JOSE
PASCUAL, respondents.

DECISION

BELLOSILLO, J.:

The lofty effort of the Government to implement an effective agrarian reform program has
resulted in the massive distribution of huge tracks of land to tenant farmers. But it divested
many landowners of their property, and although the Constitution assures them of just
compensation its determination may involve a tedious litigation in the end. More often,
land appraisal becomes a prolonged legal battle among the contending parties - the
landowner, the tenant and the Government. At times the confrontation is confounded by
the numerous laws on agrarian reform which although intended to ensure the effective
implementation of the program have only given rise to needless confusion which we are
called upon to resolve, as the case before us.

Private respondent Jose Pascual owned three (3) parcels of land located in Guttaran,
Cagayan. Parcel 1 covered by TCT No. 16655 contains an area of 149,852 square meters as
surveyed by the DAR but the actual land area transferred is estimated at 102,229 square
meters and classified as unirrigated lowland rice; Parcel 2 covered by TCT No. 16654
contains an area of 123,043 square meters as surveyed by the DAR but the actual land area
transferred is estimated at 85,381 square meters and classified as cornland; and, Parcel 3
covered by TCT No. 16653 contains an area of 192,590 square meters but the actual land
area transferred is estimated at 161,338 square meters and classified as irrigated lowland
rice.[1] Pursuant to the Land Reform Program of the Government under PD 27[2] and EO
228,[3] the Department of Agrarian Reform (DAR) placed these lands under its Operation
Land Transfer (OLT).[4]

Under EO 228 the value of rice and corn lands is determined thus -

Sec. 2. Henceforth, the valuation of rice and corn lands covered by P.D. 27 shall be based on
the average gross production determined by the Barangay Committee on Land Production in
accordance with Department Memorandum Circular No. 26, series of 1973 and related
issuances and regulations of the Department of Agrarian Reform. The average gross
production shall be multiplied by two and a half (2.5), the product of which shall be
multiplied by Thirty-Five Pesos (P35), the government support price for one cavan of 50
kilos of palay on October 21, 1972, or Thirty-One Pesos (P31), the government support
price for one cavan of 50 kilos of corn on October 21, 1972, and the amount arrived at
shall be the value of the rice and corn land, as the case may be, for the purpose of determining
its cost to the farmer and compensation to the landowner (emphasis supplied).

Hence, the formula for computing the Land Value (LV) or Price Per Hectare (PPH) of rice
and corn lands is 2.5 x AGP x GSP = LV or PPH.

In compliance with EO 228, the Provincial Agrarian Reform Officer (PARO) of the DAR in an
"Accomplished OLT Valuation Form No. 1" dated 2 December 1989 recommended that the
"Average Gross Productivity" (AGP) based on "[3] Normal Crop Year" for Parcels 1 and 2
should be 25 cavans per hectare for unirrigated lowland rice and 10 cavans per hectare for
corn land.[5]

Meanwhile, the Office of the Secretary of Agrarian Reform (SAR) also conducted its own
valuation proceedings apart from the PARO. On 10 October 1990 Secretary Benjamin T.
Leong of the DAR using the AGP of 25.66 cavans for unirrigated rice lands[6] issued an order
valuing Parcel 1 at P22,952.97[7] and requiring herein petitioner Land Bank of the
Philippines (LBP) to pay the amount. On 1 February 1991 petitioner LBP approved the
valuation.

In 1991 private respondent Jose Pascual, opposing the recommended AGP of the PARO,
filed a petition for the annulment of the recommendation on the productivity and valuation
of the land covered by OLT, subject matter hereof, with the Department of Agrarian Reform
Adjudication Board (DARAB). Oscar Dimacali, Provincial Agrarian Reform Adjudicator
(PARAD) of Cagayan heard the case. Despite due notice however Francisco Baculi, the
PARO who issued the assailed recommendation, failed to appear at the trial. Only private
respondent Jose Pascual and Atty. Eduard Javier of petitioner LBP were
present.[8] Thereafter private respondent was allowed to present evidence ex-parte.

At the hearings conducted by the PARAD private respondent presented as evidence

another "Accomplished OLT Valuation Form No. 1," for Parcel 3 dated 22 June 1976 to
support his claim that the "OLT Valuation Form" issued by PARO Francisco Baculi
extremely undervalued the AGP of his lands. In the "1976 OLT Valuation Form" the AGP
based on "(3) Normal Crop Year" was 80 cavans per hectare for lowland rice unirrigated,
28 cavans per hectare for corn lands and 100 cavans per hectare for lowland rice
irrigated.[9]

Private respondent also presented Tax Declarations for Parcels 1 and 2 stating that the AGP
was 80 cavans for unirrigated rice lands and 28 cavans for corn lands.
On 11 June 1992 the PARAD ruled in favor of private respondent nullifying the 2 December
1989 AGP recommended by the PARO.[10] Instead, the PARAD applied the 22 June 1976
AGP and the AGP stated in private respondents Tax Declarations to determine the correct
compensation. The PARAD also used the "Government Support Price" (GSP) of P300 for
each cavan of palay and P250 for each cavan of corn.[11] He then ordered petitioner LBP to
pay private respondent P613,200.00 for Parcel 1, P148,750.00 for Parcel 2,
and P1,200,000.00 for Parcel 3, or a total amount of P1,961,950.00.[12]

After receiving notice of the decision of the PARAD, private respondent accepted the
valuation. However, when the judgment became final and executory, petitioner LBP as the
financing arm in the operation of PD 27 and EO 228 refused to pay thus forcing private
respondent to apply for a Writ of Execution with the PARAD which the latter issued on 24
December 1992.[13] Still, petitioner LBP declined to comply with the order.

On 29 June 1994 Secretary Ernesto Garilao Jr. of the DAR wrote a letter to petitioner LBP
requiring the latter to pay the amount stated in the judgment of the PARAD.[14] Again,
petitioner LBP rejected the directive of Secretary Garilao. Petitioners Executive Vice
President, Jesus Diaz, then sent a letter to Secretary Garilao arguing that (a) the valuation of
just compensation should be determined by the courts; (b) PARAD could not reverse a
previous order of the Secretary of the DAR;[15] and, (c) the valuation of lands under EO 228
falls within the exclusive jurisdiction of the Secretary of the DAR and not of the DARAB.[16]

On 23 January 1995 the Secretary of Agrarian Reform replied to petitioner -

We agree with your contention that the matter of valuation of lands covered by P.D. 27 is a
matter within the administrative implementation of agrarian reform, hence, cognizable
exclusively by the Secretary.

However, in this particular case, there is another operative principle which is the finality of
decisions of the Adjudication Board. Since the matter has been properly threshed out in the
quasi-judicial proceeding and the decision has already become final and executory, we cannot
make an exception in this case and allow the non-payment of the valuation unless we are
enjoined by a higher authority like the courts.

Therefore at the risk of occasional error, we maintain that payment should be made in this
case. However we believe situations like this would be lessened tremendously through the
issuance of the attached memorandum circular[17]to the Field Offices.[18]

Despite the letter of Secretary G. Garilao, petitioner LBP remained adamant in its refusal to
pay private respondent. It reiterated its stand that the PARAD had no jurisdiction to value
lands covered by PD 27.[19]
On 17 June 1995 counsel for private respondent also wrote petitioner LBP demanding
payment. On 20 June 1995 petitioner replied -

x x x x Although we disagree with the foregoing view that the PARAD decision on the land
valuation of a PD 27 landholding has become final for numerous legal reasons, in deference
to the DAR Secretary, we informed him that we will pay the amount decided by the
PARAD of Cagayan provided the tenant beneficiaries of Mr. Pascual be consulted first
and the land transfer claim be redocumented to the effect that said beneficiaries re-
execute the Landowner Tenant Production Agreement-Farmers Undertaking to show
their willingness to the PARAD valuation and to amortize the same to this bank. This is
in consonance with the legal mandate of this bank as the financing arm of PD 27/EO 228
landholdings. In other words, the beneficiaries must agree to the amount being
financed, otherwise, financing may not be possible pursuant to this banks legal
mandate (emphasis supplied).[20]

Petitioner LBP having consistently refused to comply with its obligation despite the
directive of the Secretary of the DAR and the various demand letters of private respondent
Jose Pascual, the latter finally filed an action for Mandamus in the Court of Appeals to
compel petitioner to pay the valuation determined by the PARAD. On 15 July 1996 the
appellate court granted the Writ now being assailed. The appellate court also required
petitioner LBP to pay a compounded interest of 6% per annum in compliance with DAR
Administrative Order No. 13, series of 1994.[21] On 11 March 1997 petitioner's Motion for
Reconsideration was denied;[22] hence, this petition.

Petitioner LBP avers that the Court of Appeals erred in issuing the Writ of Mandamus in
favor of private respondent and argues that the appellate court cannot impose a 6%
compounded interest on the value of Jose Pascual's land since Administrative Order No. 13
does not apply to his case. Three (3) reasons are given by petitioner why the Court of
Appeals cannot issue the writ:

First, it cannot enforce PARADs valuation since it cannot make such determination for want
of jurisdiction hence void. Section 12, par. (b), of PD 946[23] provides that the valuation of
lands covered by PD 27 is under the exclusive jurisdiction of the Secretary of Agrarian
Reform. Petitioner asserts that Sec. 17 of EO 229[24] and Sec. 50 of RA No. 6657,[25] which
granted DAR the exclusive jurisdiction over all agrarian reform matters thereby divesting
the Court of Agrarian Relations of such power, did not repeal Sec. 12, par. (b), of PD
946. Petitioner now attempts to reconcile the pertinent laws by saying that only the
Secretary of Agrarian Reform can determine the value of rice and corn lands under
Operation Land Transfer of PD 27, while on the other hand, all other lands covered by RA
6657 (CARL) shall be valued by the DARAB, hence, the DARAB of the DAR has no
jurisdiction to determine the value of the lands covered by OLT under PD 27.
To bolster its contention that Sec. 12, par. (b), of PD 946 was not repealed, petitioner LBP
cites Sec. 76 of RA 6657.[26] It argues that since Sec. 76 of RA 6657 only repealed the last
two (2) paragraphs of Sec. 12 of PD 946, it is obvious that Congress had no intention of
repealing par. (b). Thus, it remains valid and effective. As a matter of fact, even the
Secretary of Agrarian Reform agreed that Sec. 12, par. (b), of PD 946 still holds. Based on
this assumption, the Secretary of the DAR has opined that the valuation of rice and corn
lands is under his exclusive jurisdiction and has directed all DARAB officials to refrain from
valuing lands covered by PD 27.[27] Petitioner maintains that the Secretary of the DAR
should conduct his own proceedings to determine the value of Parcels 2 and 3 and that his
valuation of Parcel 1[28]should be upheld.

We do not agree. In Machete v. Court of Appeals[29] this Court discussed the effects on PD
946 of Sec. 17 of EO 229 and Sec. 50 of RA 6657 when it held -

The above quoted provision (Sec. 17) should be deemed to have repealed Sec. 12 (a) and
(b) of Presidential Decree No. 946 which invested the then courts of agrarian relations with
original exclusive jurisdiction over cases and questions involving rights granted and
obligations imposed by presidential issuances promulgated in relation to the agrarian reform
program (emphasis supplied).

Thus, petitioners contention that Sec. 12, par. (b), of PD 946 is still in effect cannot be
sustained. It seems that the Secretary of Agrarian Reform erred in issuing Memorandum
Circular No. I, Series of 1995, directing the DARAB to refrain from hearing valuation cases
involving PD 27 lands. For on the contrary, it is the DARAB which has the authority to
determine the initial valuation of lands involving agrarian reform[30] although such
valuation may only be considered preliminary as the final determination of just
compensation is vested in the courts.[31]

Second, petitioner LBP contends that the Court of Appeals cannot issue the Writ of
Mandamus because it cannot be compelled to perform an act which is beyond its legal
duty.[32] Petitioner cites Sec. 2 of PD 251,[33] which amended Sec. 75 of RA 3844,[34] which
provides that it is the duty of petitioner bank "(t)o finance and/or guarantee the
acquisition, under Presidential Decree No. 85 dated December 25, 1972, of farm lands
transferred to the tenant farmers pursuant to Presidential Decree No. 27 (P.D. 27) dated
October 21, 1972." Section 7 of PD 251 also provides that "(w)henever the Bank pays the
whole or a portion of the total costs of farm lots, the Bank shall be subrogated by reason
thereof, to the right of the landowner to collect and receive the yearly amortizations
on farm lots or the amount paid including interest thereon, from tenant-farmers in
whose favor said farm lot has been transferred pursuant to Presidential Decree No. 27,
dated October 21, 1972" (emphasis supplied).
Petitioner further argues that for a financing or guarantee agreement to exist there must be
at least three (3) parties: the creditor, the debtor and the financier or the guarantor. Since
petitioner merely guarantees or finances the payment of the value of the land, the farmer-
beneficiarys consent, being the principal debtor, is indispensable and that the only time
petitioner becomes legally bound to finance the transaction is when the farmer-beneficiary
approves the appraised land value. Petitioner fears that if it is forced to pay the value as
determined by the DARAB, the government will suffer losses as the farmer-beneficiary,
who does not agree to the appraised land value, will surely refuse to reimburse the
amounts that petitioner had disbursed. Thus, it asserts, that the landowner, the DAR, the
Land Bank and the farmer-beneficiary must all agree to the value of the land as determined
by them.

A perusal of the law however shows that the consent of the farmer-beneficiary is not
required in establishing the vinculum juris for the proper compensation of the
landowner. Section 18 of RA 6657 states -

Sec. 18. Valuation and Mode of Compensation. - The LBP shall compensate the landowner in
such amount as may be agreed upon by the landowner and the DAR and the LBP in
accordance with the criteria provided for in Sections 16 and 17 and other pertinent provisions
hereof, or as may be finally determined by the court as the just compensation for the
land (emphasis supplied).

As may be gleaned from the aforementioned section, the landowner, the DAR and the Land
Bank are the only parties involved. The law does not mention the participation of the
farmer-beneficiary. However, petitioner insists that Sec. 18 of RA 6657[35] does not apply in
this case as it involves lands covered by PD 27. It argues that in appraising PD 27 lands the
consent of the farmer-beneficiary is necessary to arrive at a final valuation. Without such
concurrence, the financing scheme under PD 251 cannot be satisfied.[36]

We cannot see why Sec. 18 of RA 6657 should not apply to rice and corn lands under PD
27. Section 75 of RA 6657[37] clearly states that the provisions of PD 27 and EO 228 shall
only have a suppletory effect. Section 7 of the Act also provides -

Sec. 7. Priorities.- The DAR, in coordination with the PARC shall plan and program the
acquisition and distribution of all agricultural lands through a period of (10) years from the
effectivity of this Act. Lands shall be acquired and distributed as follows:

Phase One: Rice and Corn lands under P.D. 27; all idle or abandoned lands; all private lands
voluntarily offered by the owners for agrarian reform;xxx and all other lands owned by the
government devoted to or suitable for agriculture, which shall be acquired and distributed
immediately upon the effectivity of this Act, with the implementation to be completed within a
period of not more than four (4) years (emphasis supplied).
This eloquently demonstrates that RA 6657 includes PD 27 lands among the properties
which the DAR shall acquire and distribute to the landless. And to facilitate the acquisition
and distribution thereof, Secs. 16, 17 and 18 of the Act should be adhered to. In Association
of Small Landowners of the Philippines v. Secretary of Agrarian Reform [38] this Court of
Appeals applied the provisions RA 6657 to rice and corn lands when it upheld the
constitutionality of the payment of just compensation for PD 27 lands through the different
modes stated in Sec. 18.

Having established that under Sec. 18 of RA 6657 the consent of the farmer-beneficiary is
unnecessary in the appraisal of land value, it must now be determined if petitioner had
agreed to the amount of compensation declared by the PARAD. If it did, then we can now
apply the doctrine in Sharp International Marketing v. Court of Appeals. [39] In that case, the
Land Bank refused to comply with the Writ of Mandamus issued by the Court of Appeals on
the ground that it was not obliged to follow the order of the Secretary of Agrarian Reform
to pay the landowner. This Court concurred with the Land Bank saying that the latter could
not be compelled to obey the Secretary of Agrarian Reform since the bank did not merely
exercise a ministerial function. Instead, it had an independent discretionary role in land
valuation and that the only time a writ of mandamus could be issued against the Land Bank
was when it agreed to the amount of compensation determined by the DAR -

It needs no exceptional intelligence to understand the implication of this transmittal. It simply

means that if LBP agrees on the amount stated in the DAS, [40] after its review and
evaluation, it becomes its duty to sign the deed. But not until then. For, it is only in that
event that the amount to be compensated shall have been established according to law.

Although the case at bar pertains to an involuntary sale of land, the same principle should
apply. Once the Land Bank agrees with the appraisal of the DAR, which bears the approval
of the landowner, it becomes its legal duty to finance the transaction. In the instant case,
petitioner participated in the valuation proceedings held in the office of the PARAD through
its counsel, Atty. Eduard Javier.[41] It did not appeal the decision of PARAD which became
final and executory.[42] As a matter of fact, petitioner even stated in its Petition that "it is
willing to pay the value determined by the PARAD PROVIDED that the farmer
beneficiaries concur thereto."[43] These facts sufficiently prove that petitioner LBP agreed
with the valuation of the land. The only thing that hindered it from paying the amount was
the non-concurrence of the farmer-beneficiary. But as we have already stated, there is no
need for such concurrence. Without such obstacle, petitioner can now be compelled to
perform its legal duty through the issuance of a writ of mandamus.

Anent petitioners argument that the government will lose money should the farmer-
beneficiary be unwilling to pay, we believe such apprehension is baseless. In the event that
the farmer-beneficiary refuses to pay the amount disbursed by petitioner, the latter can
foreclose on the land as provided for in Secs. 8 to 11 of EO 228. Petitioner LBP would then
be reimbursed of the amount it paid to the landowner.

Third, petitioner LBP asserts that a writ of mandamus cannot be issued where there is
another plain, adequate and complete remedy in the ordinary course of law. Petitioner
claims that private respondent had three (3) remedies. The first remedy was to ask the
sheriff of the DARAB to execute the ruling of PARAD by levying against the Agrarian Reform
Fund for so much of the amount as would satisfy the judgment. Another remedy was to file
a motion with the DAR asking for a final resolution with regard to the financing of the
land valuation. Lastly, private respondent could have filed a case in the Special Agrarian
Court for the final determination of just compensation.[44]

We hold that as to private respondent the suggested remedies are far from plain, adequate
and complete. After the judgment of PARAD became final and executory, private
respondent applied for a writ of execution which was eventually granted. However, the
sheriff was unable to implement it since petitioner LBP was unwilling to pay. The PARAD
even issued an order requiring petitioners manager to explain why he should not be held in
contempt.[45] Two (2) years elapsed from the time of the PARAD ruling but private
respondents claim has remained unsatisfied. This shows that petitioner has no intention to
comply with the judgment of PARAD. How then can petitioner still expect private
respondent to ask the DARABs sheriff to levy on the Agrarian Reform Fund when petitioner
bank which had control of the fund[46]firmly reiterated its stand that the DARAB had no
jurisdiction?

Petitioners contention that private respondent should have asked for a final resolution
from the DAR as an alternative remedy does not impress us either. When private
respondent sensed that petitioner would not satisfy the writ of execution issued by the
PARAD, he sought the assistance of the Secretary of Agrarian Reform who then wrote to
petitioner to pay the amount in accordance with the decision of PARAD.[47] Still, petitioner
refused. The Secretary then sent another letter to petitioner telling the latter to pay private
respondent.[48] Obviously, the stand of the Secretary was that petitioner should pay private
respondent in accordance with the PARAD valuation which had already become final. It
would have been redundant for private respondent to still ask for a final resolution from
the DAR.

The allegation of petitioner that private respondent should have filed a case with the
Special Agrarian Court is also without merit. Although it is true that Sec. 57 of RA 6657
provides that the Special Agrarian Courts shall have jurisdiction over the final
determination of just compensation cases, it must be noted that petitioner never contested
the valuation of the PARAD.[49] Thus, the land valuation stated in its decision became final
and executory.[50] There was therefore no need for private respondent Pascual to file a case
in the Special Agrarian Court.

With regard to the decision of the Court of Appeals imposing an interest based on
Administrative Order No. 13, Series of 1994, the Order should be examined to ascertain if
private respondent can avail of the 6% compounded interest prescribed for unpaid
landowners. As to its coverage, the Order states: These rules and regulations shall apply to
landowners: (1) whose lands are actually tenanted as of 21 October 1972 or thereafter and
covered by OLT; (2) who opted for government financing through Land Bank of the
Philippines as mode of compensation; and, (3) who have not yet been paid for the value of
their land.

At first glance it would seem that private respondents lands are indeed covered by AO No.
13. However, Part IV shows that AO No. 13 provides a fixed formula for determining the
Land Value (LV) and the additional interests it would have earned. The formula utilizes the
Government Support Price (GSP) of 1972, which is P35.00/cavan of palay
and P31.00/cavan of corn. For its Increment Formula AO No. 13 states: The following
formula shall apply -

For palay: LV= (2.5 x AGP x P35) x (1.06)n

For corn: LV= (2.5 x AGP x P31) x (1.06)n.[51]

In the decision of PARAD, however, the Land Value (LV) of private respondents property
was computed by using the GSP for 1992, which is P300.00 per cavan of palay and P250.00
per cavan of corn.[52] PARAD Dimacali used the following equations:

For palay: LV = (2.5 x AGP x 300 )

For corn: LV = (2.5 x AGP x 250)

Hence, the formula in AO No. 13 could no longer be applied since the PARAD already used a
higher GSP.

The purpose of AO No. 13 is to compensate the landowners for unearned interests. [53] Had
they been paid in 1972 when the GSP for rice and corn was valued at P35.00 and P31.00,
respectively, and such amounts were deposited in a bank, they would have earned a
compounded interest of 6% per annum. Thus, if the PARAD used the 1972 GSP, then the
product of (2.5 x AGP x P35 or P31) could be multiplied by (1.06)n to determine the value
of the land plus the additional 6% compounded interest it would have earned from
1972. However, since the PARAD already increased the GSP from P35.00 to P300.00/cavan
of palay and from P31.00 to P250.00/cavan of corn, there is no more need to add any
interest thereon, muchless compound it. To the extent that it granted 6% compounded
interest to private respondent Jose Pascual, the Court of Appeals erred.

WHEREFORE, the assailed Decision of the Court of Appeals granting the Writ
of Mandamus directing petitioner Land Bank of the Philippines to pay private respondent
Jose Pascual the total amount of P1,961,950.00 stated in the Decision dated 11 June 1992 of
the Provincial Agrarian Reform Adjudicator (PARAD) of Cagayan is AFFIRMED, with the
modification that the 6% compounded interest per annum provided under DAR
Administrative Order No. 13, Series of 1994 is DELETED, the same being no longer
applicable.

SO ORDERED.

People v. MACEREN Case Digest

People v. MACEREN
G.R. No. L-32166 October 18, 1977

FACTS: This is a case involving the validity of a 1967 regulation, penalizing electro fishing
in fresh water fisheries, promulgated by the Secretary of Agriculture and Natural Resources
and the Commissioner of Fisheries under the old Fisheries Law and the law creating the
Fisheries Commission.

Jose Buenaventura, Godofredo Reyes, Benjamin Reyes, Nazario Aquino and Carlito del
Rosario were charged by a Constabulary investigator in the municipal court of Sta. Cruz,
Laguna with having violated Fisheries Administrative Order No. 84-1.

The lower court held that electro fishing cannot be penalize because electric current is not
an obnoxious or poisonous substance as contemplated in section I I of the Fisheries Law
and that it is not a substance at all but a form of energy conducted or transmitted by
substances. The lower court further held that, since the law does not clearly prohibit
electro fishing, the executive and judicial departments cannot consider it unlawful.

As legal background, it should be stated that section 11 of the Fisheries Law prohibits "the
use of any obnoxious or poisonous substance" in fishing.

Section 76 of the same law punishes any person who uses an obnoxious or poisonous
substance in fishing with a fine of not more than five hundred pesos nor more than five
thousand, and by imprisonment for not less than six months nor more than five years.
It is noteworthy that the Fisheries Law does not expressly punish .electro fishing."

The Secretary of Agriculture and Natural Resources, upon the recommendation of the
Fisheries Commission, issued Fisheries Administrative Order No. 84-1, amending section 2
of Administrative Order No. 84, by restricting the ban against electro fishing to fresh water
fisheries (63 O.G. 9963).

Thus, the phrase "in any portion of the Philippine waters" found in section 2, was changed
by the amendatory order to read as follows: "in fresh water fisheries in the Philippines,
such as rivers, lakes, swamps, dams, irrigation canals and other bodies of fresh water."

ISSUE: WHETHER OR NOT THE SECRETARY OF AGRICULTURE EXCEEDED ITS

AUTHORITY IN ISSUING ADMINISTARTIVE ORDERS.

HELD: The Court is of the opinion that the Secretary of Agriculture and Natural Resources
and the Commissioner of Fisheries exceeded their authority in issuing Fisheries
Administrative Orders Nos. 84 and 84-1 and that those orders are not warranted under the
Fisheries Commission, Republic Act No. 3512.

The reason is that the Fisheries Law does not expressly prohibit electro fishing. As electro
fishing is not banned under that law, the Secretary of Agriculture and Natural Resources
and the Commissioner of Fisheries are powerless to penalize it. In other words,
Administrative Orders Nos. 84 and 84-1, in penalizing electro fishing, are devoid of any
legal basis.

Had the lawmaking body intended to punish electro fishing, a penal provision to that effect
could have been easily embodied in the old Fisheries Law.

That law punishes (1) the use of obnoxious or poisonous substance, or explosive in fishing;
(2) unlawful fishing in deepsea fisheries; (3) unlawful taking of marine molusca, (4) illegal
taking of sponges; (5) failure of licensed fishermen to report the kind and quantity of fish
caught, and (6) other violations.

Nowhere in that law is electro fishing specifically punished. Administrative Order No. 84, in
punishing electro fishing, does not contemplate that such an offense fails within the
category of "other violations" because, as already shown, the penalty for electro fishing is
the penalty next lower to the penalty for fishing with the use of obnoxious or poisonous
substances, fixed in section 76, and is not the same as the penalty for "other violations" of
the law and regulations fixed in section 83 of the Fisheries Law.
The lawmaking body cannot delegate to an executive official the power to declare what acts
should constitute an offense. It can authorize the issuance of regulations and the imposition
of the penalty provided for in the law itself. (People vs. Exconde 101 Phil. 11 25, citing 11
Am. Jur. 965 on p. 11 32).

However, at present, there is no more doubt that electro fishing is punishable under the
Fisheries Law and that it cannot be penalized merely by executive revolution because
Presidential Decree No. 704, which is a revision and consolidation of all laws and decrees
affecting fishing and fisheries and which was promulgated on May 16, 1975 (71 O.G. 4269),
expressly punishes electro fishing in fresh water and salt water areas.

n examination of the rule-making power of executive officials and administrative agencies

and, in particular, of the Secretary of Agriculture and Natural Resources (now Secretary of
Natural Resources) under the Fisheries Law sustains the view that he ex his authority in
penalizing electro fishing by means of an administrative order.

Administrative agent are clothed with rule-making powers because the lawmaking body
finds it impracticable, if not impossible, to anticipate and provide for the multifarious and
complex situations that may be encountered in enforcing the law. All that is required is that
the regulation should be germane to the defects and purposes of the law and that it should
conform to the standards that the law prescribes (People vs. Exconde 101 Phil. 1125;
Director of Forestry vs. Muñ;oz, L-24796, June 28, 1968, 23 SCRA 1183, 1198; Geukeko vs.
Araneta, 102 Phil. 706, 712).

The lawmaking body cannot possibly provide for all the details in the enforcement of a
particular statute (U.S. vs. Tupasi Molina, 29 Phil. 119, 125, citing U.S. vs. Grimaud 220 U.S.
506; Interprovincial Autobus Co., Inc. vs. Coll. of Internal Revenue, 98 Phil. 290, 295-6).

The grant of the rule-making power to administrative agencies is a relaxation of the

principle of separation of powers and is an exception to the nondeleption of legislative,
powers. Administrative regulations or "subordinate legislation calculated to promote the
public interest are necessary because of "the growing complexity of modem life, the
multiplication of the subjects of governmental regulations, and the increased difficulty of
administering the law" Calalang vs. Williams, 70 Phil. 726; People vs. Rosenthal and
Osmeñ;a, 68 Phil. 328).

Administrative regulations adopted under legislative authority by a particular department

must be in harmony with the provisions of the law, and should be for the sole purpose of
carrying into effect its general provisions. By such regulations, of course, the law itself
cannot be extended. (U.S. vs. Tupasi Molina, supra). An administrative agency cannot
amend an act of Congress (Santos vs. Estenzo, 109 Phil. 419, 422; Teoxon vs. Members of
the d of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel vs. General Auditing
Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao vs. Casteel, L-21906, August 29,
1969, 29 SCRA 350).

The rule-making power must be confined to details for regulating the mode or proceeding
to carry into effect the law as it his been enacted. The power cannot be extended to
amending or expanding the statutory requirements or to embrace matters not covered by
the statute. Rules that subvert the statute cannot be sanctioned. (University of Santo Tomas
vs. Board of Tax A 93 Phil. 376, 382, citing 12 C.J. 845-46. As to invalid regulations, see of
Internal Revenue vs. Villaflor 69 Phil. 319, Wise & Co. vs. Meer, 78 Phil. 655, 676; Del March
vs. Phil. Veterans Administrative, L-27299, June 27, 1973, 51 SCRA 340, 349).

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G.R. No. L-15138 July 31, 1961

BILL MILLER, petitioner-appellee,
vs.
ATANACIO A. MARDO, and MANUEL GONZALES, respondents-appellants.

FACTS:

This is a consolidation of cases, which originated from different CFIs posing question about
the validity of Reorganization Plan No. 20-A by Government Survey and Reorganization
Commission under RA997 as amended by RA 1241 in so far as it confers jurisdiction to RO
of DOLE created in said Plan to decide claims of laborers for wages, overtime and
separation pay, et al.

Manuel Gonzales filed before Regional Office (RO) of DOLE against his employer Bill Miller
of Miller Motors, claiming that he was his dirver from 1956 to 1956, on which he was
arbitrarily dismissed without separation pay. The Chief Hearing Office required Miller to
file for an answer. Miller filed before CFI of Baguio a petition to prohibit CHO from
proceeding with the case for he does not have jurisdiction to hear and decide the subject
matter. CFI issued writ of preliminary injunction.

ISSUE:

Whether the new conferment to DOLE of jurisdiction to take cognizance of cases affecting
money claims not before exercised by it is valid under Constitution and applicable statutes
as accorded under RO Plan 20-A.
HELD:

No. RO Plan 20-A in so far it confers quasi-judicial function to RO of DOLE is invalid and
without effect.

RA 997, which was later amended by RA 1241 created Government Survey and
Reorganization Commission (GSRC). GSRC was empowered to: 1) abolish department
offices which may not be necessary and 2. Create those which may be necessary for
efficient conduct of the government service, activities and functions.

GSRC, an administrative body, was merely granted power to create functions in connection
with reorganization and should not validly confer quasi-judicial power. GSRC argued that
this defect was cured when Congress did not disapprove of the same under the provisions
of Section 691 of RA997.

The Supreme Court held that procedure of enactment of law by legislative inaction is not
countenanced in this jurisdiction. Under our Constitution, to pass a bill or law, there must
be a requisite for and separate action by each House of Congress to pass a law. Mere non-
disapproval will not suffice as source for conferment of quasi-judicial function.

Legislature may confer on administrative bodies quasi-judicial powers involving exercise of

discretion and judgement as incident to performance of administrative functions. But in so
doing must be stated in express terms that leave no doubt.

G.R. No. L-16704 March 17, 1962

VICTORIAS MILLING COMPANY, INC., petitioner-appellant,
vs.
SOCIAL SECURITY COMMISSION, respondent-appellee.

Facts

The Social Security Commission issued Circular No. 22 on October 15, 1958 requiring all
employers in computing premiums to include employee’s remuneration all bonuses and
overtime time pay, as well as the cash value of other media remuneration.

The petitioner(Victorias Milling Company, Inc.) protest against the circular as it is contrary
to a previous Circular No. 7 dated October 7, 1957.

Circular No. 7 excludes overtime pay and bonus in the computation of the employers’ and
the employees’ respective monthly premium contributions.
The counsel questioned the validity of the circular Social Security Commission overruled
the objections Victorias Miller Company Inc. comes to court on appeal

Issue

Whether or not Circular No. 22 is a rule or regulation as contemplated in Section 4(a) of

Republic Act 1161 empowering the Social Security Commission “to adopt, amend and
repeal subject to the approval of the President such rules and regulations as may be
necessary to carry out the provisions and purposes of this Act”

Held

Republic Act No. 1161 before its amendment defines compensation as: All remuneration
for employment include the cash value of any remuneration paid in any medium other than
cash. Except:

 that part of the remuneration in excess of P500 received during the month;
 bonuses, allowances or overtime pay; and
 dismissal and all other payments which the employer may make, although not
legally required to do so.

Republic Act No. 1792 changed the definition of “compensation” to: (f) Compensation — All
remuneration for employment include the cash value of any remuneration paid in any
medium other than cash except that part of the remuneration in excess of P500.00 received
during the month.

Circular No. 22 was issued to advise the employers and employees concerned with the
interpretation of the law as amended which was Social Security Commission’s duty to
enforce. The Commission simply stated their opinion as to how the law should be
construed and that such circular did not require presidential approval and publication in
the Official Gazette for its effectivity. Whereas if it renders an opinion or a statement of
policy, it merely interprets a pre-existing law. Administrative interpretation of law is at
best merely advisory for it is the courts that finally determine what the law means.

IN VIEW OF THE FOREGOING, the Resolution appealed from is hereby affirmed, with costs
against appellant. So ordered.
G.R. No. L-9553 May 13, 1959
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
WILLIAM ERNEST JOLLIFFE, defendant-appellant.

FACTS:
On Dec. 7, 1953, when appellant was about to board a plane of the Pan American World
Airways, four pieces of gold bullion were found in his body. There was also found in his
possession a $100 traveler’s check. He was charged with and convicted of violation of RA
265 and sentenced to imprisonment, to pay fine and costs, as well as decreeing the
forfeiture in favor of the Gov’t of the gold bullion and the traveler’s check. He appealed and
among others challenged the validity of Circular No. 21 of the Central Bank on the ground
that it is an undue delegation of powers. That granting, without admitting, that the power
to promulgate it was granted to the Monetary Board by Republic Act 265, and granting
without admitting, that the power to so promulgate was validly exercised, still it is invalid
because it constitutes an invalid delegation of legislative power and, therefore,
unconstitutional and void

ISSUE:
Whether or not the Circular no. 21 is valid and if there is undue delegation.

HELD:
The grant of authority to the Monetary Board to issue Circular No. 21 does not constitute
an undue delegation of legislative power because Sec. 74 of Rep. Act No, 265 conferring
upon the Monetary Board and the President the power to subject to licensing all
transaction in gold and foreign exchange furnishes concrete and definite standards which
sufficiently mark the field within which the Monetary Board is to act in the enforcement of
the law.

Distinction should be made between the delegation of the power to determine what the law
shall be and the delegation of authority to fix the details in the execution or enforcement of
a policy set out in the law itself. The delegated authority falls under the second category for
which a reasonable standard has been set. Sec 74 of RA 265 conferred upon the Monetary
Board and the President the power to subject to licensing all transactions in gold and
foreign exchange in order to protect the international reserve of the Central bank during an
exchange crisis and to give the Board and the Gov’t time in which to take constructive
measures to combat such crisis which “sufficiently marks the field within which the
Administrator is to act so that it may be known whether he has kept within it in compliance
with the legislative will’ (Yakus vs. United States, 88 L. ed. 848.) The Board is likewise
authorized “to take such appropriate remedial measures as are appropriate” to protect the
international stability of the peso whenever the international reserve is falling, as a result
of the payment or remittance abroad which, in the opinion of the Board, are contrary to the
national welfare. Furthermore, these powers must be construed and exercised in relation
to the objectives of the law to maintain monetary stability in the Philippines and to
promote a rising level of production employment and real income in the Philippines. These
standards are sufficiently concrete and definite to vest in the delegated authority the
character of administrative details in the enforcement of the law and to place the grant of
said authority beyond the category of a delegation of legislative power.