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DEPARTMENT OF HEALTH vs. PRISCILLA G. CAMPOSANO, ENRIQUE L. PEREZ,

and IMELDA Q. AGUSTIN

G.R. No. 157684 April 27, 2005

PANGANIBAN, J.:

This is a Petition for Review under Rule 45 of the Rules of Court, assailing Decision of

the Court of Appeals setting aside the Resolutions of the CSC.

FACTS

Respondents Camposano, Perez, and Agustin are former employees of the Department

Of HealthNational Capital Region (DOH-NCR).

Some concerned DOH-NCR employees filed a complaint before the DOH Resident

Ombudsman Ringpis against Dir. Majarais, Acting Administrative Officer III Horacio Cabrera,

and respondents, arising out of an alleged anomalous purchase by DOH-NCR of 1,500 bottles of

Ferrous Sulfate 250 mg. with Vitamin B Complex and Folic Acid capsules worth P330,000.00

from Lumar Pharmaceutical Laboratory.

Thereafter, the Resident Ombudsman submitted an investigation report to the Secretary

of Health recommending the filing of a formal administrative charge of Dishonesty and Grave

Misconduct against respondents and their co-respondents. Subsequently, , the Secretary of

Health filed a formal charge against the respondents and their co-respondents for Grave

Misconduct, Dishonesty, and Violation of RA 3019.

Afterwards, then Executive Secretary Torres issued A.O No. 298 creating an ad-hoc

committee to investigate the administrative case filed against the DOH-NCR employees. The

said AO was indorsed to the Presidential Commission Against Graft and Corruption (PCAGC).

Consequently, the PCAGC took over the investigation from the DOH. After the investigation, it

issued a resolution finding respondents guilty as charged. Then President Ramos issued AO No.

390 dismissing the respondents from service as recommended by the PCAGC in their resolution.

Subsequently, the Secretary of Health issued an Order disposing of the case against respondents

and Cabrera dismissing them from service.

Respondents and Cabrera filed their separate appeal with the CSC which was both denied.

Respondents motion for reconsideration was denied on September 30, 1999. While Cabreras motion for reconsideration was denied on January 27, 2000. Respondents, however, received the

resolution denying their motion for reconsideration on November 2001 which was promulgated

on . Thus, Horacio Cabrera was able to appeal to the CA the CSCs resolutions ahead of respondents. The petition of Cabrera was granted by the CA setting aside the resolutions of the

CSC and exonerated Cabrera of the administrative charged against him.

Not satisfied with the denial by the CSC of their appeal, respondents brought the matter to

the CA which nonetheless used the same legal bases for annulling the CSCs Resolution against

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respondents and held that the PCAGCs jurisdiction over administrative complaints pertained only to presidential appointees. Thus, the Commission had no power to investigate the charges

against respondents. Moreover, in simply and completely relying on the PCAGCs findings, the secretary of health failed to comply with administrative due process. Hence, the Petition.

ISSUES:

a) Whether or not the PCAGC have jurisdiction to investigate the anomalous transaction involving respondents

b) Whether or not the health secretary had disciplinary authority over respondents

c) Whether or not a Department Secretary may utilize other officials and report facts from which a decision may be based

d) Whether or not the Health Secretary has the competence and authority to decide what action should be taken against officials and employees who have been administratively

charged and investigated

e) Whether or not the Order of Health Secretary is valid

RULING

a) YES. PCAGC have jurisdiction to investigate the anomalous transaction

involving respondents. Executive Order No. 151 granted the PCAGC the jurisdiction to

investigate administrative complaints against presidential appointees allegedly involved in graft

and corruption. From a cursory reading of its provisions, it is evident that EO 151 authorizes the

PCAGC to investigate charges against presidential, not non-presidential, appointees. In its

Preamble, specifically in its Whereas clauses, the EO specifically tasked the PCAGC to investigate presidential appointees charged with graft and corruption More pointedly, Section 3 states that the Commission shall have jurisdiction over all administrative complaints involving graft and corruption filed in any form or manner against presidential appointees.

The Court notes, however, that respondents were not investigated pursuant to EO

151. The investigation was authorized under AO No. 298, which had created an Ad Hoc

Committee to look into the administrative charges filed against respondents.The Investigating

Committee was composed of all the members of the PCAGC. The Chief Executives power to create the Ad Hoc Investigating Committee cannot be doubted. Having been constitutionally

granted full control of the Executive Department, to which respondents belong, the President has

the obligation to ensure that all executive officials and employees faithfully comply with

the law. With AO 298 as mandate, the legality of the investigation is sustained. Such validity is not

affected by the fact that the investigating team and the PCAGC had the same composition, or that the

former used the offices and facilities of the latter in conducting the inquiry.

Parenthetically, the perceived vacuum in EO 151 with regard to cases involving non-

presidential appointees was rectified in Executive Order No. 12. which created the PAGC. Non-

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presidential appointees who may have acted in conspiracy, or who may have been involved with

a presidential appointee, may now be investigated by the PAGC.

b) YES. The Administrative Code of 1987 vests department secretaries with the

authority to investigate and decide matters involving disciplinary actions for officers and

employees under the formers jurisdiction. Thus, the health secretary had disciplinary authority over respondents. Note that being a presidential appointee, Dr. Rosalinda Majarais was under the

jurisdiction of the President, in line with the principle that the power to remove is inherent in the power to appoint.

While the Chief Executive directly dismissed her from the service, he

nonetheless recognized the health secretarys disciplinary authority over respondents when he remanded the PCAGCs findings against them for the secretarys appropriate action.

c) YES. As a matter of administrative procedure, a department secretary may utilize

other officials to investigate and report the facts from which a decision may be based. In the

present case, the secretary effectively delegated the power to investigate to the PCAGC.

Neither the PCAGC under EO 151 nor the Ad Hoc Investigating Committee created under

AO 298 had the power to impose any administrative sanctions directly. Their authority was

limited to conducting investigations and preparing their findings and recommendations. The

power to impose sanctions belonged to the disciplining authority, who had to observe due

process prior to imposing penalties.

d) YES. The health secretary has the competence and the authority to decide what

action should be taken against officials and employees who have been administratively charged

and investigated. However, the actual exercise of the disciplining authoritys prerogative requires a prior independent consideration of the law and the facts. Failure to comply with this

requirement results in an invalid decision. The disciplining authority should not merely and

solely rely on an investigators recommendation, but must personally weigh and assess the evidence gathered. There can be no shortcuts, because at stake are the honor, the reputation, and

the livelihood of the person administratively charged.

In the present case, the health secretarys two-page Order dismissing respondents pales in comparison with the presidential action with regard to Dr. Majarais. Prior to the issuance of his

seven-page decision, President Fidel V. Ramos conducted a restudy of the doctors case. He even noted a violation that had not been considered by the PCAGC. On the other hand, Health

Secretary Reodica simply and blindly relied on the dispositive portion of the Commissions Resolution. She even misquoted it by inadvertently omitting the recommendation with regard to

Respondents Enrique L. Perez and Imelda Q. Agustin.

e) NO. While the Health Secretary has the power as mentioned above, Due process

in administrative proceedings requires compliance with the following cardinal principles: (1) the

respondents right to a hearing, which includes the right to present ones case and submit supporting evidence, must be observed; (2) the tribunal must consider the evidence presented; (3)

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the decision must have some basis to support itself; (4) there must be substantial evidence; (5)

the decision must be rendered on the evidence presented at the hearing, or at least contained in

the record and disclosed to the parties affected; (6) in arriving at a decision, the tribunal must

have acted on its own consideration of the law and the facts of the controversy and must not have

simply accepted the views of a subordinate; and (7) the decision must be rendered in such

manner that respondents would know the reasons for it and the various issues involved.

The CA correctly ruled that administrative due process had not been observed in the present

factual milieu

Furthermore, The Order of Secretary Reodica denying respondents Motion for Reconsideration also failed to correct the deficiency in the initial Order. She improperly relied on

the Presidents findings in AO 390 which, however, pertained only to the administrative charge against Dr. Majarais, not against respondents. To repeat, the Chief Executive recognized that the

disciplinary jurisdiction over respondents belonged to the health secretary who should have

followed the manner in which the President had rendered his action on the recommendation.

The Presidents endorsement of the records of the case for the appropriate action of the health secretary did not constitute a directive for the immediate dismissal of respondents. Like

that of President Ramos, the decision of Secretary Reodica should have contained a factual

finding and a legal assessment of the controversy to enable respondents to know the bases for

their dismissal and thereafter prepare their appeal intelligently, if they so desired. Inasmuch as

the health secretarys twin Orders were patently void for want of due process, the CA did not err in refusing to discuss the merit of the PCAGCs or the Ad Hoc Committees recommendations. Such a discussion should have been made by the health secretary before it

could be passed upon by the CA.

In representation of petitioner, the Office of the Solicitor General insists that respondents are

guilty of the charges and, like Dr. Majarais, deserve dismissal from the service. Suffice it to

stress that the issue in this case is not the guilt of respondents, but solely due process.

ADJUDICATION

WHEREFORE, the petition is partly granted. the assailed decision of the court of appeals

is modified in the sense that the authority of the ad hoc investigating committee created under

administrative order 298 is sustained. Being violative of administrative due process, the orders

of the health secretary are annulled and set aside.

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RAMON P. BINAMIRA, petitioner, vs. PETER D. GARRUCHO, JR., respondent.

G.R. No. 92008. July 30, 1990. En Banc

FACTS:

A memorandum designating Ramon Binamira as General Manager of Philippine Tourism

Authority (PTA) was addressed and signed by the then Minister of Tourism and the Ex-officio

Chairman of PTA. The Minister sought the approval of the delegation to the president and the

same was granted. Concomitantly, Binamira assumed office as general manager on the same date

that the memorandum was sent.

Allegedly, Binamira discharged duties as the PTA general manager and ex-officio vice

chairman. Said discharged is even purported to have been acknowledge by the president.

However, after sometime, Peter Garrucho, as the newly appointed secretary of tourism

demanded for Binamira's resignation which was pursuant to a memorandum that then Pres.

Aquino sent to the former advising him of the invalidity of the delegation of the position to

Binamira as he was not appointed by the president which was what was required under PD 564.

PD 564 is the law that created the Ministry of Tourism. Under section 23-A of the decree, the

General Manager shall be appointed by the President of the Philippines and shall serve for a term

of six (6) years unless sooner removed for cause.

When Binamira was ousted, Garrucho took over his place as general manager, still in

pursuance with the memorandum sent by Pres. Aquino.

On account of the foregoing events, Binamira filed a petition for quo warranto question

Garrucho's post and prayed for reinstatement claiming unjust dismissal. Pending said case, he

filed a supplemental petition impleading Jose Capistrano who was the appointed general

manager.

ISSUE: Whether or not the appointment of Binamira is proper and thus does not warrant his

recall.

HELD:

Distinction between appointment and designation should be outlined; such that:

Appointment is the selection, by the authority vested with the power, of an individual who is to

exercise the functions of a given office. When completed, usually with its confirmation, the

appointment results in security of tenure for the person chosen unless he is replaceable at

pleasure because of the nature of his office. Designation, on the other hand, connotes merely the

imposition by law of additional duties on an incumbent official - as where, in the case before us,

the Secretary of Tourism is designated Chairman of the Board of Directors of the Philippine

Tourism Authority, or where, under the Constitution, three Justices of the Supreme Court are

designated by the Chief Justice to sit in the Electoral Tribunal of the Senate or the House of

Representatives. It is said that appointment is essentially executive while designation is

legislative in nature.

Also, where the person is merely designated and not appointed, the implication is that he

shall hold the office only in a temporary capacity and may be replaced at will by the appointing

authority. In this sense, the designation is considered only an acting or temporary appointment,

which does not confer security of tenure on the person named.

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Even if so understood, that is, as an appointment, the designation of the petitioner cannot

sustain his claim that he has been illegally removed. The reason is that the decree clearly

provides that the appointment of the General Manager of the Philippine Tourism Authority shall

be made by the President of the Philippines, not by any other officer. Appointment involves the

exercise of discretion, which because of its nature cannot be delegated. Legally speaking, it was

not possible for Minister Gonzales to assume the exercise of that discretion as an alter ego of the

President. The appointment (or designation) of the petitioner was not a merely mechanical or

ministerial act that could be validly performed by a subordinate even if he happened as in this

case to be a member of the Cabinet.

Moreover, the argument that the designation made by Minister Gonzales was approved

by President Aquino through her approval of the composition of the Board of Directors of the

PTA is not persuasive. It must be remembered that Binamira was included therein as Vice-

Chairman only because of his designation as PTA General Manager by Minister Gonzales. Such

designation being merely provisional, it could be recalled at will, as in fact it was recalled by the

President herself, through the memorandum she addressed to Secretary Garrucho on January 4,

1990.

Furthermore, designation being an unlawful encroachment on a presidential prerogative,

he did not acquire valid title thereunder to the position in question. Even if it be assumed that it

could be and was authorized, the designation signified merely a temporary or acting appointment

that could be legally withdrawn at pleasure, as in fact it was (albeit for a different reason). In

either case, the petitioner's claim of security of tenure must be rejected.

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SOUTHERN CROSS CEMENT CORPORATION, petitioner, vs. CEMENT

MANUFACTURERS ASSOCIATION OF THE PHILIPPINES, THE SECRETARY OF

THE DEPARTMENT OF TRADE AND INDUSTRY, THE SECRETARY OF THE

DEPARTMENT OF FINANCE and THE COMMISSIONER OF THE BUREAU OF

CUSTOMS, respondents.

G.R. No. 158540, (2005) En Banc, Tinga, J.,

FACTS:

This is a petition filed by public respondents Department of Trade and Industry (DTI) and

private respondent Philippine Cement Manufacturers Corporation (Philcemcor) seeking

reconsideration of the Courts decision, which granted the petition of petitioner Southern Cross Cement Corporation (Southern Cross).

The case centers on the interpretation of the provisions of Republic Act No. 8800, the

Safeguard Measures Act (SMA). The SMA provides for the structure and mechanics for the

imposition of emergency measures, including tariffs, to protect domestic industries and

producers from increased imports which inflict or could inflict serious injury on them.

Philcemcor filed with the Department of Trade and Industry a petition seeking for the

imposition of safeguard measures on Gray Portland cement, in accordance with the SMA. After

the DTI issued a provisional safeguard measure, the application was referred to the Tariff

Commission for a formal investigation pursuant to Section 9 of the SMA and its Implementing

Rules and Regulations, in order to determine whether or not to impose a definitive safeguard

measure on imports of Gay Portland cement. After public hearings and conducting its own

investigation, the Tariff Commission came out with a negative finding.

The DTI sought the opinion of the Secretary of Justice whether it could still impose a

definitive safeguard measure. The Secretary of Justice opined that the DTI could not do so under

the SMA, and so the DTI Secretary then promulgated a Decision wherein he expressed the DTIs disagreement with the conclusions of the Tariff Commission, but at the same time, ultimately

denying Philcemcors application for safeguard measures on the ground that the he was bound to do so in light of the Tariff Commissions negative findings.

Philcemcor then filed with the Court of Appeals a Petition for Certiorari, Prohibition and

Mandamus seeking to set aside the DTI decision, as well as the Tariff Commissions Report. It argued that the DTI Secretary, vested as he is under the law with the power of review, is not

bound to adopt the recommendations of the Tariff Commission; and, that the Report is void, as it

is predicated on a flawed framework, inconsistent inferences and erroneous methodology.

Though the appellate court refused to annul the findings of the Tariff Commission, it held

that the DTI Secretary was not bound by the factual findings of the Tariff Commission since

such findings are merely recommendatory and they fall within the ambit of the Secretarys discretionary review. It determined that the legislative intent is to grant the DTI Secretary the

power to make a final decision on the Tariff Commissions recommendation. Southern Cross filed the present petition, arguing that the factual findings of the Tariff

Commission on the existence or non-existence of conditions warranting the imposition of general

safeguard measures are binding upon the DTI Secretary.

Despite the fact that the Court of Appeals decision had not yet become final, the DTI Secretary issued a new decision citing that there was no longer any legal impediment to his

deciding Philcemcors application for definitive safeguard measures. He made a determination that, contrary to the findings of the Tariff Commission, the local cement industry had suffered

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serious injury as a result of the import surges and accordingly imposed a definitive safeguard

measure on the importation of Gray Portland cement.

The Southern Cross filed with the Court a Very Urgent Application for a Temporary Restraining Order and/or A Writ of Preliminary Injunction, seeking to enjoin the DTI Secretary from enforcing his decision in view of the pending petition before this Court.

After giving due course to Southern Crosss petition, the Court called the case for oral argument and thereafter granted Southern Crosss petition. The Court ruled that the Court of Appeals erred in ruling that the DTI Secretary was not bound by the negative determination of

the Tariff Commission and could therefore impose the general safeguard measures, since Section

5 of the SMA precisely required that the Tariff Commission make a positive final determination

before the DTI Secretary could impose these measures. Accordingly, the decision of the Court of

Appeals was declared null and void.

The Court likewise nullified the new decision of the DTI Secretary, which had cited the

obligatory force of the null and void Court of Appeals decision, notwithstanding the fact that the decision of the appellate court was not yet final and executory. Considering that the decision of

the Court of Appeals was a nullity to begin with, the inescapable conclusion was that the new

decision of the DTI Secretary, prescinding as it did from the imprimatur of the decision of the

Court of Appeals, was a nullity as well. Both respondents promptly filed their respective motions

for reconsideration.

The Court En Banc resolved, upon motion of respondents, to accept the petition and resolve

the Motions for Reconsideration. The case was then reheard on oral argument.

Subsequent to the rendition of the Courts Decision, Philcemcor filed a Petition for Extension of the Safeguard Measure with the DTI, which has been referred to the Tariff

Commission. In an Urgent Motion, Southern Cross prayed that Philcemcor, the DTI, the Bureau

of Customs, and the Tariff Commission be directed to cease and desist from taking any and all actions pursuant to or under the null and void CA Decision and DTI Decision, including

proceedings to extend the safeguard measure. In a Manifestation and Motion, the Tariff

Commission informed the Court that since no prohibitory injunction or order of such nature had

been issued by any court against the Tariff Commission, the Commission proceeded to complete

its investigation on the petition for extension, pursuant to Section 9 of the SMA, but opted to

defer transmittal of its report to the DTI Secretary pending guidance from this Court on the propriety of such a step considering this pending Motion for Reconsideration. In a resolution, the

Court directed the parties to maintain the status quo effective of even date, and until further

orders from the Court.

ISSUES:

1. Whether or not the DTI Secretary is bound by the Tariff Commissions factual findings on the existence or nonexistence of conditions warranting the imposition of

safeguard measures

2. Whether or not the DTI Secretary has power of review over final determination of the Tariff Commission

RULING:

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1. Yes. The DTI Secretary is barred from imposing a general safeguard measure absent a

positive final determination rendered by the Tariff Commission. The required positive final

determination of the Tariff Commission exists as a properly enacted constitutional limitation

imposed on the delegation of the legislative power to impose tariffs and imposts to the President

under Section 28(2), Article VI of the Constitution. The provision states: The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and

restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues,

and other duties or imposts within the framework of the national development program of the

Government. The Court acknowledges the basic postulates ingrained in the provision, and, hence,

governing in this case, to wit:

(1) It is Congress which authorizes the President to impose tariff rates, import and export

quotas, tonnage and wharfage dues, and other duties or imposts.

(2) The authorization granted to the President must be embodied in a law.

(3) The authorization to the President can be exercised only within the specified limits set in

the law and is further subject to limitations and restrictions which Congress may impose.

These impositions under Section 28(2), Article VI fall within the realm of the power of

taxation, a power which is within the sole province of the legislature. But this provision is also

an exceptional grant of legislative power to the President which is why the qualifiers mandated

by the Constitution on this presidential authority attains primordial consideration. First, there

must be a law, such as the SMA. Second, there must be specified limits, a detail which would be

filled in by the law. And Third, Congress is further empowered to impose limitations and

restrictions on this presidential authority.

The authority delegated to the President may be exercised by his/her alter egos, such as

department secretaries. For purposes of the Presidents exercise of power to impose tariffs under the above provision, it is generally the Secretary of Finance who acts as the alter ego of the

President. The SMA provides an exceptional instance wherein it is the DTI or Agriculture

Secretary who is tasked by Congress, in their capacities as alter egos of the President, to impose

such measures.

Both the Tariff Commission and the DTI Secretary may be regarded as agents of Congress

in the implementation of the said law. Indeed, even the President may be considered as an agent

of Congress for the purpose of imposing safeguard measures since it is Congress, not the

President, which possesses inherent powers to impose tariffs and imposts.

The entire SMA provides for a limited framework under which the President, through the

DTI and Agriculture Secretaries, may impose safeguard measures in the form of tariffs and

similar imposts. The limitation most relevant to this case is contained in Section 5 of the SMA,

captioned Conditions for the Application of General Safeguard Measures, and stating: The Secretary shall apply a general safeguard measure upon a positive final determination of the

Tariff Commission that a product is being imported into the country in increased quantities,

whether absolute or relative to the domestic production, as to be a substantial cause of serious

injury or threat thereof to the domestic industry; however, in the case of non-agricultural

products, the Secretary shall first establish that the application of such safeguard measures will

be in the public interest.

Section 5 of the SMA operates as a limitation validly imposed by Congress on the

presidential authority under the SMA to impose tariffs and imposts. The positive final

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determination by the Tariff Commission is plainly required by the law and so it must be strictly

complied with.

Philcemcor raised a question as to whether such requirement run counter to the courts legal order since under the said provision, a body of relative junior competence as a Tariff

Commission can bind an administrative superior and cabinet officer such as the DTI Secretary.

No provision in the SMA expressly authorizes the DTI Secretary to impose a general safeguard

measure despite the absence of a positive final recommendation of the Tariff Commission. On

the other hand, Section 5 expressly states that the DTI Secretary shall apply a general safeguard measure upon a positive final determination of the Tariff Commission. Under the SMA, it is the Tariff Commission that conducts an investigation as to whether

the conditions exist to warrant the imposition of the safeguard measures. These conditions are

enumerated in Section 5, namely; that a product is being imported into the country in increased

quantities, whether absolute or relative to the domestic production, as to be a substantial cause of

serious injury or threat thereof to the domestic industry. After the investigation of the Tariff

Commission, it submits a report to the DTI Secretary, which states whether the above-stated

conditions for the imposition of the general safeguard measures exist. Upon a positive final

determination that these conditions are present, the Tariff Commission then is mandated to

recommend what appropriate safeguard measures should be undertaken by the DTI Secretary.

Section 13 of the SMA gives five specific options on the type of safeguard measures the Tariff

Commission recommends to the DTI Secretary.

At the same time, nothing in the SMA obliges the DTI Secretary to adopt the

recommendations made by the Tariff Commission. In fact, the SMA requires that the DTI

Secretary establish that the application of such safeguard measures is in the public interest,

notwithstanding the Tariff Commissions recommendation on the appropriate safeguard measure upon its positive final determination. Thus, even if the Tariff Commission makes a positive final

determination, the DTI Secretary may opt not to impose a general safeguard measure, or choose

a different type of safeguard measure other than that recommended by the Tariff Commission.

It is evident from the text of Section 5 that there must be a positive final determination by

the Tariff Commission that a product is being imported into the country in increased quantities

(whether absolute or relative to domestic production), as to be a substantial cause of serious

injury or threat to the domestic industry.

The Tariff Commissions finding is not merely recommendatory. Section 5 bluntly does require a positive final determination by the Tariff Commission before the DTI Secretary may

impose a general safeguard measure. This is a duty imposed on a public officer by the law itself

which must be given a controlling effect. In fact, the Department of Justice Secretary himself

rendered an Opinion with the same conclusion.

2. No, the DTI Secretary, acting as alter ego of the President or in his capacity as head of an

executive department, may not review, modify or otherwise alter the final determination of the

Tariff Commission under the SMA. Congress in enacting the SMA and prescribing the roles to

be played therein by the Tariff Commission and the DTI Secretary did not envision that the

President, or his/her alter ego, could exercise supervisory powers over the Tariff Commission. If

Congress intended to allow the traditional alter ego principle to be established by the SMA, it would have assigned the role now played by the DTI Secretary under the law instead to the

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National Economic and Development Authority (NEDA). The Tariff Commission is an attached

agency of the NEDA, which in turn is the independent planning agency of the government.

The Tariff Commission does not fall under the administrative supervision of the DTI. On

the other hand, the administrative relationship between the NEDA and the Tariff Commission is

established not only by the Administrative Code, but similarly affirmed by the Tariff and

Customs Code.

At the same time, under the Tariff and Customs Code, no similar role or influence is

allocated to the DTI in the matter of imposing tariff duties. In fact, the long-standing tradition

has been for the Tariff Commission and the DTI to proceed independently in the exercise of their

respective functions. Only very recently have our statutes directed any significant interplay

between the Tariff Commission and the DTI, with the enactment in 1999 of Republic Act No.

8751 on the imposition of countervailing duties and Republic Act No. 8752 on the imposition of

anti-dumping duties, and of course the promulgation a year later of the SMA. In all these three

laws, the Tariff Commission is tasked, upon referral of the matter by the DTI, to determine

whether the factual conditions exist to warrant the imposition by the DTI of a countervailing

duty, an anti-dumping duty, or a general safeguard measure, respectively. In all three laws, the

determination by the Tariff Commission that these required factual conditions exist is necessary

before the DTI Secretary may impose the corresponding duty or safeguard measure. And in all

three laws, there is no express provision authorizing the DTI Secretary to reverse the factual

determination of the Tariff Commission.

The SMA indubitably establishes that the Tariff Commission is no mere flunky of the

DTI Secretary when it mandates that the positive final recommendation of the former be

indispensable to the latters imposition of a general safeguard measure. What the law indicates instead is a relationship of interdependence between two bodies independent of each other under

the Administrative Code and the SMA alike. Indeed, even the ability of the DTI Secretary to

disregard the Tariff Commissions recommendations as to the particular safeguard measures to be imposed evinces the independence from each other of these two bodies. This is properly so

for two reasons the DTI and the Tariff Commission are independent of each other under the Administrative Code; and impropriety is avoided in cases wherein the DTI itself is the one

seeking the imposition of the general safeguard measures, pursuant to Section 6 of the SMA.

Considering that the power to impose tariffs in the first place is not inherent in the

President but arises only from congressional grant, the court should affirm the congressional

prerogative to impose limitations and restrictions on such powers which do not normally belong

to the executive in the first place. Nowhere in the SMA does it state that the DTI Secretary may

impose general safeguard measures without a positive final determination by the Tariff

Commission, or that the DTI Secretary may reverse or even review the factual determination

made by the Tariff Commission.

Congress can enact additional tasks or responsibilities on either the Tariff Commission or

the DTI Secretary, such as their respective roles on the imposition of general safeguard measures

under the SMA. In doing so, the same Congress, which has the putative authority to abolish the

Tariff Commission or the DTI, is similarly empowered to alter or expand its functions through

modalities which do not align with established norms in the bureaucratic structure. The Court is

bound to recognize the legislative prerogative to prescribe such modalities, no matter how

atypical they may be, in affirmation of the legislative power to restructure the executive branch

of government.

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Assuming administrative review were available, it is the NEDA that may conduct such

review following the principles of administrative law, and the NEDAs decision in turn is reviewable by the Office of the President. The decision of the Office of the President then

effectively substitutes as the determination of the Tariff Commission, which now forms the basis

of the DTI Secretarys decision, which now would be ripe for judicial review by the CTA under Section 29 of the SMA. This is the only way that administrative review of the Tariff

Commissions determination may be sustained without violating the SMA and its constitutional restrictions and limitations, as well as administrative law.

In any event, even if the Court concedes the possibility of administrative review of the

Tariff Commissions final determination by the NEDA, such would not deny merit to the present petition. It does not change the fact that the Court of Appeals erred in ruling that the DTI

Secretary was not bound by the negative final determination of the Tariff Commission, or that

the DTI Secretary acted without jurisdiction when he imposed general safeguard measures

despite the absence of the statutory positive final determination of the Commission.

BUKLOD NG KAWANING EIIB v. ZAMORA

Buklod ng Kawaning EIIB, et al., Petitioners, vs. Hon. Executive Secretary Ronaldo B.

Zamora, et al., Respondents.

G.R. No. 142801-802 July 10, 2001 En Banc

Sandoval-Gutierrez, J.:

This is a petition for certiorari, prohibition and mandamus filed by the petitioners seeking

the nullification of Executive Order No. 191 and Executive Order No. 223 on the ground that

they were issued by the Office of the President with grave abuse of discretion and in violation of

their constitutional right to security of tenure.

FACTS:

The Economic Intelligence and Investigation Bureau (EIIB) was created as part of the

structural organization of the Ministry of Finance through the issuance of Executive Order No.

127 by former President Corazon Aquino. The EIIB was tasked to: evaluate intelligence reports,

gather evidence on illegal activities affecting the national economy and aid in the prosecution of

cases; coordinate with external agencies in monitoring financial and economic activities of

persons or entities which may adversely affect national financial interest; provide for the

guidelines in the conduct of intelligence and investigation operations; and perform such other

appropriate functions. The EIIB was assigned to primarily conduct anti-smuggling operations in

areas outside the jurisdiction of the Bureau of Customs by virtue of Memorandum Order No. 225

issued by former president Aquino.

Subsequently, former President Joseph Estrada issued Executive Order No. 191 ordering

the deactivation of the EIIB and the transfer of its functions to the Bureau of Customs and the

National Bureau of Investigation on the ground that: the designated functions of the EIIB are

also being performed by the other existing agencies of the government; and that there is a need to

constantly monitor the overlapping of functions among these agencies. Executive Order No. 196

was issued creating the Presidential Anti-Smuggling Task Force Aduana. He also issued

Executive Order No. 223 whereby all EIIB personnel occupying positions specified therein were

separated from the service pursuant to a bona fide reorganization resulting to abolition,

redundancy, merger, division, or consolidation of positions.

Aggrieved, petitioners filed the present case invoking the courts power of judicial review of Executive Order Nos. 191 and 223. Petitioners contend that the issuance of the said executive

orders is: (a) a violation of their right to security of tenure; (b) tainted with bad faith as they were

not actually intended to make the bureaucracy more efficient but to give way to Task Force

Aduana the functions of which are essentially and substantially the same as that of EIIB;

and (c) a usurpation of the power of Congress to decide whether or not to abolish the EIIB.

On the other hand, the Solicitor General maintains that: (a) the President enjoys the totality

of the executive power provided under Sections 1 and 7, Article VII of the Constitution, thus, he

has the authority to issue Executive Order Nos. 191 and 223; (b) the said executive orders were

issued in the interest of national economy, to avoid duplicity of work and to streamline the

functions of the bureaucracy; and (c) the EIIB was only deactivated and not abolished.

ISSUES:

1. Whether or not the President has the authority to carry out reorganization in any branch or agency of the executive department.

2. Whether or not the reorganization in this case is valid.

RULING:

1. Yes. The President is empowered by the Administrative Code to validly reorganize his office even without congressional authority in order to achieve economy and efficiency.

The general rule has always been that the power to abolish a public office is lodged with the

legislature. This proceeds from the legal precept that the power to create includes the power to

destroy. A public office is either created by the Constitution, by statute, or by authority of

law. Thus, except where the office was created by the Constitution itself, it may be abolished by

the same legislature that brought it into existence. The exception is that, as far as bureaus,

agencies or offices in the executive department are concerned, the Presidents power of control may justify him to inactivate the functions of a particular office, or certain laws may grant him

the broad authority to carry out reorganization measures.

In the whereas clause of Executive Order No. 191, former President Estrada anchored his

authority to deactivate EIIB on Section 77 of Republic Act 8745, the General Appropriations Act

for fiscal year 1999. It provides:

Sec. 77. Organized Changes. Unless otherwise provided by law or directed by the President

of the Philippines, no changes in key positions or organizational units in any department or

agency shall be authorized in their respective organizational structures and funded from

appropriations provided by this Act.

The Supreme Court said that the above provision recognizes the authority of the President to

effect organizational changes in the department or agency under the executive structure. Such a

ruling further finds support in Section 78 of Republic Act No. 8760. Under this law, the heads of

departments, bureaus, offices and agencies and other entities in the Executive Branch are

mandated to conduct actual streamlining and productivity improvement in agency organization

and operation shall be effected pursuant to Circulars or Orders issued for the purpose by the

Office of the President.

Under Section 31, Book III of Executive Order No. 292, the Administrative Code of 1987,

the President, subject to the policy in the Executive Office and in order to

achieve simplicity, economy and efficiency, shall have the continuing authority to reorganize the

administrative structure of the Office of the President. For this purpose, he may transfer the

functions of other Departments or Agencies to the Office of the President. The EIIB is a bureau

attached to the Department of Finance. It falls under the Office of the President. Hence, it is

subject to the Presidents continuing authority to reorganize.

2. Yes. The reorganization is valid.

The Solicitor General invoked the distinction between deactivation and abolition. To

deactivate means to render inactive or ineffective or to break up by discharging or reassigning

personnel, while to abolish means to do away with, to annul, abrogate or destroy completely.

Abolition denotes an intention to do away with the office wholly and permanently. While

in abolition, the office ceases to exist, the same is not true in deactivation where the office

continues to exist, albeit remaining dormant or inoperative. Deactivation and abolition are both

reorganization measures. As far as bureaus, agencies or offices in the executive department is

concerned, the Presidents power of control may justify him to inactivate the function of a particular office or certain law may grant him the broad authority to carry out reorganization

measure.

An examination of the pertinent Executive Orders shows that the deactivation of EIIB and

the creation of Task Force Aduana were done in good faith. It was not for the purpose of

removing the EIIB employees, but to achieve the ultimate purpose of E.O. No. 191, which is

economy. While Task Force Aduana was created to take the place of EIIB, its creation does not

entail expense to the government.

Firstly, there is no employment of new personnel to man the Task Force. E.O. No. 196

provides that the technical, administrative and special staffs of EIIB are to be composed of

people who are already in the public service, they being employees of other existing

agencies. Secondly, the thrust of E.O. No. 196 is to have a small group of military men under

the direct control and supervision of the President as base of the governments anti-smuggling campaign. The idea is to encourage the utilization of personnel, facilities and resources of the

already existing departments instead of maintaining an independent office with a whole set of

personnel and facilities. And thirdly, it is evident from the yearly budget appropriation of the

government that the creation of the Task Force Aduana was especially intended to lessen EIIBs expenses.

Reorganizations in this jurisdiction have been regarded as valid provided they are pursued in

good faith. As a general rule, a reorganization is carried out in good faith if it is for the purpose

of economy or to make bureaucracy more efficient. In that event, no dismissal or separation

actually occurs because the position itself ceases to exist. If the abolition, which is nothing else

but a separation or removal, is done for political reasons or purposely to defeat security of tenure,

otherwise not in good faith, no valid abolition takes and whatever abolitio is done, is void ab

initio. There is an invalid abolition as where there is merely a change of nomenclature of

positions, or where claims of economy are belied by the existence of ample funds.

In the present case, petitioners right to security of tenure is not violate because the abolition of EIIB within the competence of a legitimate body is done in good faith and suffers from no

infirmity. Valid abolition of offices is neither removal nor separation of the incumbents.

Hence, the petition was denied for lack of merit.

Francisco Abellar Jr., v. Civil Service Commission [Case Digest] G.R. No. 152574. November 17, 2004

Page 1 of 4

Francisco Abellar Jr., v. Civil Service Commission

G.R. No. 152574. November 17, 2004

Facts:

Petitioner is a retired lawyer retired from the Philippine Economic Zone Authority

(PEZA) formerly known as Export Processing Zone Authority (EPZA) as a Department Manager

of the Legal Services Department. He held civil service eligibility for the position of Department

Manager, having completed the training program for Executive Leadership and Management in

1982 under the Civil Service Academy, pursuant to CSC Resolution No. 850 dated April 16,

1979, which was then the required eligibility for said position.

On May 31, 1994, the Civil Service Commission issued Memorandum Circular No. 21,

series of 1994, the pertinent provisions of which read:

1. Positions Covered by the Career Executive Service

x x x x x x x x x

b. In addition to the above identified positions and other positions of the same category which had

been previously classified and included in the CES, all other third level positions of equivalent category in all branches and instrumentalities of the national government, including government owned and controlled corporations with original charters are embraced within the Career Executive Service provided that they meet the following criteria:

1. the position is a career position; 2. the position is above division chief level; and 3. the duties and responsibilities of the position require the performance of executive or

managerial functions.

4. Status of Appointment of Incumbents of Positions Included Under the Coverage of the CES. Incumbents of positions which are declared to be Career Executive Service positions for the first time pursuant to this Resolution who hold permanent appointments thereto shall remain under permanent status in their respective positions. However, upon promotion or transfer to other Career Executive Service (CES) positions, these incumbents shall be under temporary status in said other CES positions until they qualify.

Two years after his retirement, petitioner was hired by the Subic Bay Metropolitan

Authority (SBMA) on a contractual basis. On January 1, 1999, petitioner was issued by SBMA a

permanent employment as Department Manager III, Labor and Employment Center. However,

when said appointment was submitted to respondent Civil Service Commission Regional Office

No. III, it was disapproved on the ground that petitioners eligibility was not appropriate. Petitioner was advised by SBMA of the disapproval of his appointment. In view thereof,

petitioner was issued a temporary appointment as Department Manager III, Labor and

Employment Center, SBMA on July 9, 1999.

Petitioner appealed the disapproval of his permanent appointment by respondent to the

Civil Service Commission, which issued Resolution No. 000059, dated January 10, 2000,

Francisco Abellar Jr., v. Civil Service Commission [Case Digest] G.R. No. 152574. November 17, 2004

Page 2 of 4

affirming the action taken by respondent. Petitioners motion for reconsideration thereof was denied by the CSC in Resolution No. 001143 dated May 11, 2000.

Petitioner then went to the Court of Appeals and filed a petition for review assailing the

constitutionality of the CSC Memorandum Circular No. 21 which was the basis of the

resolutions of the CSC dated January 10, 2000 and May 11, 2000 respectively.

The Court of appeals avoided the issue of the constitutionality of CSC Resolution No. 21

because as cited in CSC Memorandum Circular 40, s. 1998 and Mathay v. Civil Service

Commission, the appellate court ruled that only the appointing officer may request

reconsideration of the action taken by the CSC on appointments. Thus, it held that petitioner did

not have legal standing to question the disapproval of his appointment.

On reconsideration, the CA added that petitioner was not the real party in interest, as his

appointment was dependent on the CSCs approval. Accordingly, he had no vested right in the office, since his appointment was disapproved.

Issues:

1. Whether or not petitioner has the legal personality to question the disapproval of the CSC of his appointment.

2. Whether or not CSC has the power to affirm or deny an appointment of a government employee.

3. Whether or not petitioners right to due process was violated.

Held:

1. The Court held that there is justification to allow the appointing authority to challenge the

CSC disapproval1, there is none to preclude the appointee from taking the same course of

action. Aggrieved parties including the CSC should be given the right to file motions for

appeal or motions for reconsiderations. Hence the concepts of legal standing2 and real

party in interest3 become relevant.

Although petitioner had no vested right to the position, it was his eligibility that was being

questioned. Corollary to this point, he should be granted the opportunity to prove his

1 The appointing authority must have the right to contest the disapproval since said disapproval is a challenge to the exercise of the appointing

authoritys discretion. Section 2 of Rule VI of CSC Memorandum Circular 40, s. 1998 allows the appointing authority to request reconsideration or appeal. Furthermore, in Central Bank v CSC (171 SCRA 733, April 10, 1989), the appointing authority that stands to be adversely affected by the disapproval of the CSC, the former may defend the appointment. 2 Legal standing is granted to challenge the constitutionality or validity of a law or governmental act despite the lack of personal injury on the

challengers part. 3 A real party in interest is one who would be benefited or injured by the judgment, or one entitled to the avails of the suit. Interest within

the meaning of the rule means material interest or an interest in issue and to be affected by the decree, as distinguished from mere interest in the question involved or a mere incidental interest. Otherwise stated, the rule refers to a real or present substantial interest as distinguished from a mere expectancy; or from a future, contingent, subordinate, or consequential interest. As a general rule, one who has no right or interest to protect cannot invoke the jurisdiction of the court as a party-plaintiff in an action.

Francisco Abellar Jr., v. Civil Service Commission [Case Digest] G.R. No. 152574. November 17, 2004

Page 3 of 4

eligibility. He had a personal stake in the outcome of the case, which justifies his challenge

to the CSC act that denied his permanent appointment.

Based from the aforementioned, the appointing authority is adversely affected by the CSCs

Order and is a real party in interest, hitting on the same vein, the appointee is rightly a real

party in interest too because he is also injured by the CSC disapproval--he is prevented from

assuming the office in a permanent capacity. Moreover, he would necessarily benefit if a

favourable judgment is obtained, as an approved appointment would confer on him all the

rights and privileges of a permanent appointee. Hence, petitioner has legal personality to

challenge the disapproval of his permanent appointment by the CSC.

2. The Constitution mandates that, as the central personnel agency of the government, the

CSC should establish a career service and adopt measures to promote the morale, efficiency,

integrity, responsiveness, progressiveness, and courtesy in the Civil Service. It further

requires that appointments in the civil service be made only through merit and fitness to be

determined by competitive examination. Civil Service laws have expressly empowered the

CSC to issue and enforce rules and regulations to carry out its mandate.

In the exercise of its authority, the CSC deemed it appropriate to clearly define and identify

positions covered by the Career Executive Service. Logically, the CSC had to issue

guidelines to meet this objective, specifically through the issuance of the challenged Circular.

The appointing officer and the CSC acting together consecutively, make an appointment

complete. In acting on the appointment, the CSC determines whether the appointee

possesses the appropriate civil service eligibility or the required qualifications. If the

appointee does, the appointment must be approved; if not, it should be disapproved.

The challenged Circular protects the rights of incumbents as long as they remain in the

positions to which they were previously appointed. They are allowed to retain their

positions in a permanent capacity, notwithstanding the lack of Career Service Executive

Eligibility (CSEE). Clearly, the Circular recognizes the rule of prospective application of

regulations.

The government service of petitioner ended when he retired in 1996; thus, his right to remain

in a Career Executive Service (CES) position, notwithstanding his lack of eligibility, also

ceased. Upon his reemployment years later as department manager III which is a CES

position at SBMA in 2001, it was necessary for him to comply with the eligibility prescribed

at the time for that position. Thus petitioner must comply with the requirement as provided

for by the regulations namely, CSEE4.

4 The challenged Circular did not revoke petitioners ELM eligibility. Petitioner however needed to have a CSEE in order to qualify for a CES

position.

Francisco Abellar Jr., v. Civil Service Commission [Case Digest] G.R. No. 152574. November 17, 2004

Page 4 of 4

Thus, given that petitioner lacked the eligibility as required by the regulations promulgated

by the CSC, the latter was correct in denying the permanent appointment of the former.

3. In exercising its quasi-judicial function, an administrative body adjudicates the rights of

persons before it, in accordance with the standards laid down by the law. The determination

of facts and the applicable law, as basis for official action and the exercise of judicial

discretion, are essential for the performance of this function. On these considerations, it is

elementary that due process requirements. These requirements include prior notice and

hearing.

On the other hand, quasi-legislative power is exercised by administrative agencies through

the promulgation of rules and regulations within the confines of the granting statute and the

doctrine of non-delegation of certain powers flowing from the separation of the great

branches of the government. Prior notice to and hearing of every affected party, as elements

of due process, are not required since there is no determination of past events or facts that

have to be established or ascertained. As a general rule, prior notice and hearing are not

essential to the validity of rules or regulations promulgated to govern future conduct.

Significantly, the challenged Circular was an internal matter addressed to heads of

departments, bureaus and agencies. It needed no prior publication, since it had been issued

as an incident of the administrative bodys power to issue guidelines for government

officials to follow in performing their duties.

WHEREFORE, the Petition is GRANTED insofar as it seeks legal standing for petitioner,

but DENIED insofar as it prays for the reversal of the CSC Resolutions disapproving his

appointment as department manager III of the Labor and Employment Center, Subic Bay

Metropolitan Authority.

YAZAKI TORRES MANUFACTURING, INC. v CA

G.R. No. 130584 June 27, 2006 2nd Division SANDOVAL-GUTIERREZ, J.:

Facts:

The Home Development Mutual Fund (HDMF) is the government agency tasked with the administration of the PAG-IBIG Fund (Fund) P.D. No. 1530. The Fund has been intended for housing purposes to be sourced from voluntary contributions from its members.

On December 14, 1980, it was amended by P.D. No. 1752 providing that membership in the Fund is mandatory for all gainfully-employed Filipinos. And on June 17, 1994, P.D. No. 1752 was amended by RA No. 7742. Here, the coverage of the Fund extends to all members of the SSS and GSIS, as well as their employers.

The HDMF Board of Trustees promulgated Rules and Regulations implementing R.A. No. 7742. Rule VII provides for the waiver or suspension of coverage by an employer and/or employee group who has an existing provident retirement plan or housing plan.

Petitioner Yazaki Torres Manufacturing, Inc. applied for and was granted by the HDMF a waiver from the Fund coverage for the period from January 1 to December 31, 1995. The HDMF found that petitioners retirement plan for its employees is superior to that offered by the Fund.

On September 1, 1995, the HDMF Board of Trustees amended Rule VII of the Rules and Regulations enjoining the retirement plan and housing plan as one requirement for the application

After its waiver from the Fund coverage lapsed, petitioner applied for a renewal. The ground relied upon was once again its "superior retirement plan" to that of the Fund. This time, HDMF disapproved petitioners application on the ground that its retirement plan is not superior to that provided by the Fund.

Under the original Implementing Rules and Regulations of the HDMF, superior retirement plan and superior housing plan were separate and alternative grounds for the waiver of the Fund coverage. However, under the Amended Rules and Regulations, superior retirement plan and superior housing plan are joint requirements. Since petitioner does not have a housing plan, this is the reason why its retirement plan was not considered superior to that of the Fund. Hence, its application for renewal of waiver was denied. Consequently, it insists that the HDMF exceeded its authority when it amended its original Rules and Regulations.

Petitioner appealed to the HDMF Board of Trustees, but the Board denied the appeal. Petitioner filed with the Court of Appeals a petition for review, which denied the same. Petitioner filed its Motion for Reconsideration, but it was denied. Hence, the instant petition for certiorari.

Issue: Whether or not HDMF has the power to amend the implementing Rules and Regulations, thus resulting to the rule that "the power to make laws include the power to alter or repeal the same."

Held: Yes.

The grant of waiver or exemption from the coverage of the Fund is but a mere privilege granted by the State. A privilege is a particular and peculiar benefit or advantage enjoyed by a person, company, or class beyond the common advantages of other citizens. Like any other privilege or

exemption, it may be withdrawn by the State on a finding that the recipient is no longer entitled to it. There is no provision whatsoever in R.A. No. 7742 or its Implementing Rules and Regulations that the HDMF shall automatically renew a waiver from the Fund coverage upon an application for renewal. The task of determining whether such application should be granted is best discharged by the HDMF, not by the courts.

Nature of Legislative Power

The legislative power has been described generally as the power to make, alter, and repeal laws. The authority to amend, change, or modify a law is thus part of such legislative power. It is the peculiar province of the legislature to prescribe general rules for the government of society. However, the legislature cannot foresee every contingency involved in a particular problem that it seeks to address. Thus, it has become customary for it to delegate to instrumentalities of the executive department, known as administrative agencies, the power to make rules and regulations. This is because statutes are generally couched in general terms which express the policies, purposes, objectives, remedies and sanctions intended by the legislature. The details and manner of carrying out the law are left to the administrative agency charged with its implementation. In this sense, rules and regulations promulgated by an administrative agency are the product of a delegated power to create new or additional legal provisions that have the effect of law.9 Hence, in general, rules and regulations issued by an administrative agency, pursuant to the authority conferred upon it by law, have the force and effect, or partake of the nature, of a statute.10

The law delegated to the HDMF the rule-making power since this is necessary for the proper exercise of its authority to administer the Fund. Following the doctrine of necessary implication, this grant of express power to formulate implementing rules and regulations must necessarily include the power to amend, revise, alter, or repeal the same.

WHEREFORE, the petition is DISMISSED. The decision of CA is AFFIRMED IN TOTO..

BLAS F. OPLE, petitioner, vs. RUBEN D. TORRES, ALEXANDER AGUIRRE, HECTOR VILLANUEVA, CIELITO HABITO, ROBERT

BARBERS, CARMENCITA REODICA, CESAR SARINO, RENATO VALENCIA, TOMAS P. AFRICA, HEAD OF THE NATIONAL COMPUTER

CENTER and CHAIRMAN OF THE COMMISSION ON AUDIT, respondents.

[G.R. No. 127685. July 23, 1998]

PUNO, J.:

FACTS:

The petition at bar is a commendable effort on the part of Senator Blas F. Ople to prevent the

shrinking of the right to privacy, which the revered Mr. Justice Brandeis considered as "the most

comprehensive of rights and the right most valued by civilized men."

Petitioner Ople prays that we invalidate Administrative Order No. 308 entitled "Adoption of a

National Computerized Identification Reference System" on two important constitutional grounds, viz:

one, it is a usurpation of the power of Congress to legislate, and two, it impermissibly intrudes on our

citizenry's protected zone of privacy. Administrative Order No. 308 was issued by President Fidel

Ramos On December 12, 1996 and was published in four newspapers of general circulation on January

22, 1997 and January 23, 1997. On January 24, 1997, petitioner filed the instant petition against

respondents, then Executive Secretary Ruben Torres and the heads of the government agencies, who as

members of the Inter-Agency Coordinating Committee, are charged with the implementation of A.O.

No. 308. Senator Blas F. Ople filed a petition seeking to invalidate A.O. No. 308 on several grounds.

The issuance of A.O. No.308 by the President is an unconstitutional usurpation of the legislative

powers of congress. Petitioner claims that A.O. No. 308 is not a mere administrative order but a law and

hence, beyond the power of the President to issue. He alleges that A.O. No.308 establishes a system of

identification that is all-encompassing in scope, affects the life and liberty of every Filipino citizen and

foreign resident, and more particularly, violates their right to privacy. On this point, respondents

counter-argue that: A.O. No. 308 was issued within the executive and administrative powers of the

president without encroaching on the legislative powers of congress.

ISSUE: Whether the issuance of A.O. No. 308 is an unconstitutional usurpation of the power of Congress

to legislate.

RULING:

Petitioner Ople is a distinguished member of our Senate. As a Senator, petitioner is possessed of

the requisite standing to bring suit raising the issue that the issuance of A.O. No. 308 is a usurpation of

legislative power. As taxpayer and member of the Government Service Insurance System (GSIS),

petitioner can also impugn the legality of the misalignment of public funds and the misuse of GSIS funds

to implement A.O. No. 308.Legislative power is the authority to make laws, and to alter and repeal

them. The Constitution has vested this power in the Congress. The grant of legislative power to Congress

is broad, general, and comprehensive. Any power deemed to be legislative by usage and tradition, is

necessarily possessed by Congress, unless the Constitution has lodged it elsewhere. The

executive power, on the other hand, is vested in the President. It is generally defined as the power to

enforce and administer the laws. It is the power of carrying the laws into practical operation

and enforcing their due observance. As head of the Executive Department, the President is the Chief

Executive. He represents the government as a whole and sees to it that all laws are enforced by the

officials and employees of his department. He has control over the executive department, bureaus and

offices. Corollary to the power of control, the President also has the duty of supervising the

enforcement of laws for the maintenance of general peace and public order. Thus, he is

granted administrative power over bureaus and offices under his control to enable him to discharge his

duties effectively.

Administrative power is concerned with the work of applying policies and enforcingorders as

determined by proper governmental organs. It enables the President to fix a uniform standard of

administrative efficiency and check the official conduct of his agents. To this end, he can issue

administrative orders, rules and regulations. From these precepts, the Court holds that A.O. No. 308

involves a subject that is not appropriate to be covered by an administrative order.

IN VIEW WHEREOF, the petition is granted and Administrative Order No. 308 entitled "Adoption

of a National Computerized Identification Reference System" declared null and void for being

unconstitutional.

SO ORDERED.

G.R. No. 173034 October 9, 2007

PHARMACEUTICAL AND HEALTH CARE ASSOCIATION OF THE PHILIPPINES, petitioner, vs. HEALTH SECRETARY FRANCISCO T. DUQUE III; HEALTH UNDER SECRETARIES DR. ETHELYN P. NIETO, DR. MARGARITA M. GALON, ATTY. ALEXANDER A. PADILLA, & DR. JADE F. DEL MUNDO; and ASSISTANT SECRETARIES DR. MARIO C. VILLAVERDE, DR. DAVID J. LOZADA, AND DR. NEMESIO T. GAKO,respondents.

AUSTRIA-MARTINEZ, J.:

Facts:

Before the Court is a petition for certiorari under Rule 65 of the Rules of Court, seeking to nullify

Administrative Order (A.O.) No. 2006-0012 entitled, Revised Implementing Rules and Regulations of

Executive Order No. 51, Otherwise Known as The "Milk Code," Relevant International Agreements,

Penalizing Violations Thereof, and for Other Purposes (RIRR). Petitioner posits that the RIRR is not

valid as it contains provisions that are not constitutional and go beyond the law it is supposed to

implement.

Named as respondents are the Health Secretary, Undersecretaries, and Assistant Secretaries of the

Department of Health (DOH). For purposes of herein petition, the DOH is deemed impleaded as a

co-respondent since respondents issued the questioned RIRR in their capacity as officials of said

executive agency. Executive Order No. 51 (Milk Code) was issued by President Corazon Aquino on

October 28, 1986 by virtue of the legislative powers granted to the president under the Freedom

Constitution. One of the preambular clauses of the Milk Code states that the law seeks to give effect

to Article 11 of the International Code of Marketing of Breastmilk Substitutes (ICMBS), a code

adopted by the World Health Assembly (WHA) in 1981. From 1982 to 2006, the WHA adopted

several Resolutions to the effect that breastfeeding should be supported, promoted and protected,

hence, it should be ensured that nutrition and health claims are not permitted for breastmilk

substitutes.

In 1990, the Philippines ratified the International Convention on the Rights of the Child. The said

instrument provides that State Parties should take appropriate measures to diminish infant and child

mortality, and ensure that all segments of society, specially parents and children, are informed of the

advantages of breastfeeding.

On May 15, 2006, the DOH issued herein assailed RIRR which was to take effect on July 7, 2006.

However, on June 28, 2006, petitioner, representing its members that are manufacturers of breastmilk substitutes, filed the present Petition for Certiorari and Prohibition with Prayer for the Issuance of a Temporary Restraining Order (TRO) or Writ of Preliminary Injunction.

The main issue raised in the petition is whether respondents officers of the DOH acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and in violation of the provisions of the Constitution in promulgating the RIRR.

On August 15, 2006, the Court issued a Resolution granting a TRO enjoining respondents from implementing the questioned RIRR.

After the Comment and Reply had been filed, the Court set the case for oral arguments on June 19, 2007. The Court issued an Advisory (Guidance for Oral Arguments) dated June 5, 2007. The parties filed their respective memoranda.

Issues:

1. Whether or not the petitioners are real party-in-interest. 2. Whether or not the administrative agency possesses the power to amend, revise, alter, or

repeal the rules and regulations that it made in the exercise of its rule making power.

Ruling:

1. Yes. An association has standing to file suit for its workers despite its lack of direct interest if its members are affected by the action. An organization has standing to assert the concerns of its constituents. The association is the appropriate party to assert the rights of its members, because it and its members are in every practical sense identical. The association is but the medium through which its individual members seek to make more effective the expression of their voices and the redress of their grievances. It represents directly or through approved representatives the pharmaceutical and health care industry before the Philippine Government and any of its agencies, the medical professions and the general public. Hence, petitioner, whose legal identity is deemed fused with its members, should be considered as a real party-in-interest which stands to be benefited or injured by any judgment in the present action.

2. Yes. An administrative agency like respondent possesses quasi-legislative or rule-making power or the power to make rules and regulations which results in delegated legislation that is within the confines of the granting statute and the Constitution, and subject to the doctrine of non-delegability and separability of powers. Such express grant of rule-making power necessarily includes the power to amend, revise, alter, or repeal the same. This is to allow administrative agencies flexibility in formulating and adjusting the details and manner by which they are to implement the provisions of a law, in order to make it more responsive to the times. Hence, it is a standard provision in administrative rules that prior issuances of administrative agencies that are inconsistent therewith are declared repealed or modified.

Chanell

PANGASINAN TRANSPORTATION CO., INC., petitioner, vs. THE PUBLIC SERVICE COMMISSION, respondent.

G.R. No. 47065. June 26, 1940. LAUREL, J.

FACTS Petitioner Pangasinan Transportation Co., Inc. has been engaged for the past twenty years

in the business of transporting passengers in the Province of Pangasinan and Tarlac and, to a certain extent, in the Province of Nueva Ecija and Zambales, by means of motor vehicles commonly known as TPU buses, in accordance with the terms and conditions of the certificates of public convenience issued in its favor by the former Public Utility Commission now public service commission. Petitioner filed with the Public Service Commission an application for authorization to operate ten additional new Brockway trucks, on the ground that they were needed to comply with the terms and conditions of its existing certificates and as a result of the application of the Eight Hour Labor Law. The public respondent granted the application with the following conditions;

a. Certificates of public convenience and AUTHORIZATION above shall be valid and subsisting only during twenty-five (25) years, counted from the date of the enactment of this decision.

b. That the applicant company may be acquired by the Commonwealth of the Philippines or any agency thereof at any time it so desires payment of the price d cost of useful equipment, less a reasonable depreciation that has been set by the commission while of their acquisition.

Not being agreeable to the two new conditions thus incorporated in its existing certificates, the petitioner filed on October 9, 1939 a motion for reconsideration which was denied by the Public Service Commission. On November 20, 1939, the petitioner filed before the SC a petition for a writ of certiorari praying for the declaration of nullity of section 1 of Commonwealth Act No. 454 or should the SC declared the same to be constitutional, that it will not be applicable to valid and subsisting certificates issued prior to June 8, 1939. Thus, petitioner contends;

a. That the legislative powers granted to Commission by the said law is without limitation, guide or rule except the unfettered discretion and judgment of the Commission, constitute a complete and total abdication by the Legislature of its functions in the premises.

b. That even if it be assumed that section 1 of Commonwealth Act No. 454, is valid delegation of legislative powers, the Commission has exceeded its authority because the Act applies only to future certificates and not to valid and subsisting certificates issued prior to June 8, 1939, when said Act took effect and the Act, as applied by the Commission, violates constitutional guarantees.

ISSUES

a. WON Section 1 of Commonwealth Act No. 454 is unconstitutional being a total abdication by the legislature of its functions which constitutes an invalid delegation.

b. WON the said Act is applicable to valid and subsisting certificates. RULING

A. Section 1 of Commonwealth Act No. 454 is constitutional. All that has been delegated to the Commission is the administrative function, involving the use discretion, to carry out the will of the National Assembly (legislative) having in view, in addition, the promotion of "public interests in a proper and suitable manner." This is clearly shown in the requisite before the issuance of the certificate which states that the Commission must necessarily be satisfied that the operation of the service under said certificate during a definite period fixed therein "will promote the public interests in a proper and suitable manner." The fact that the National Assembly may itself exercise the function and authority thus conferred upon the Public Service Commission does not make the provision in question constitutionally objectionable.

The Act neither violates the principle of separation of powers which is designed by its originators to secure action and at the same time to forestall overaction which necessarily results from undue concentration of powers, and thereby obtain efficiency and prevent deposition. Accordingly, with the growing complexity of modern life, the multiplication of the subjects of governmental regulation and the increased difficulty of administering the laws, there is a constantly growing tendency toward the delegation of greater powers by the legislature, and toward the approval of the practice by the court. B. Yes. Statutes for the regulation of public utilities are a proper exercise by the state of its police power. As soon as the power is exercised, all phases of operation of established utilities become at once subject to the police power thus called into operation. The statute is applicable not only to those public utilities coming into existence after its passage, but likewise to those already established and in operation.

The state has the ultimate right to regulate public utilities which is founded upon the exercise of police power for the protection of the public as well as of the utilities themselves. Such statutes are, therefore, not unconstitutional, either impairing the obligation of contracts, taking property without due process, or denying the equal protection of the laws, especially inasmuch as the question whether or not private property shall be devoted to a public and the consequent burdens assumed is ordinarily for the owner to decide; and if he voluntarily places his property in public service he cannot complain that it becomes subject to the regulatory powers of the state. (the case was remanded to PSC for further hearing concerning the period of the certificate to let the petitioner present evidence on its behalf) Section 15 of Commonwealth Act No. 146, as amended by section 1 of Commonwealth Act No. 454, invoked by the respondent Public Service Commission in the decision complained of in the present proceedings, reads as follows: With the exception to those enumerated in the preceding section, no public service shall operate in the Philippines without possessing a valid and subsisting certificate from the Public Service Commission, known as "certificate of public convenience," or "certificate of convenience and

public necessity," as the case may be, to the effect that the operation of said service and the authorization to do business will promote the public interests in a proper and suitable manner. The Commission may prescribed as a condition for the issuance of the certificate provided in the preceding paragraph that the service can be acquired by the Commonwealth of the Philippines or by any instrumentality thereof upon payment of the cost price of its useful equipment, less reasonable depreciation; and likewise, that the certificate shall valid only for a definite period of time; and that the violation of any of these conditions shall produce the immediate cancellation of the certificate without the necessity of any express action on the part of the Commission. In estimating the depreciation, the effect of the use of the equipment, its actual condition, the age of the model, or other circumstances affecting its value in the market shall be taken into consideration. The foregoing is likewise applicable to any extension or amendment of certificates actually force and to those which may hereafter be issued, to permits to modify itineraries and time schedules of public services and to authorization to renew and increase equipment and properties.

[ G.R. NO. 148083, July 21, 2006 ]

COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. BICOLANDIA DRUG CORPORATION (FORMERLY KNOWN AS ELMAS DRUG CO.), RESPONDENT.

In cases of conflict between the law and the rules and regulations implementing the law, the law shall always prevail. Should Revenue Regulations deviate from the law they seek to implement, they will be struck down.

Facts: In 1992, Republic Act No. 7432, granted senior citizens several privileges, one of which was obtaining a 20 percent discount from all establishments relative to the use of transportation services, hotels and similar lodging establishments, restaurants and recreation centers and purchase of medicines anywhere in the country. The law also provided that the private establishments giving the discount to senior citizens may claim the cost as tax credit. In compliance with the law, the Bureau of Internal Revenue issued Revenue Regulations No. 2-94, which defined "tax credit". In 1995, respondent Bicolandia Drug Corporation, granted the 20 percent sales discount to qualified senior citizens purchasing their medicines. Respondent treated this discount as a deduction from its gross income in compliance with Revenue Regulations No. 2-94, which implemented R.A. No. 7432. On April 15, 1996, respondent filed its 1995 Corporate Annual Income Tax Return declaring a net loss position with nil income tax liability.

On December 27, 1996, respondent filed a claim for tax refund or credit in the amount of PhP 259,659.00 with the Appellate Division of the Bureau of Internal Revenue. It alleged that the petitioner Commissioner of Internal Revenue erred in treating the 20 percent sales discount given to senior citizens as a deduction from its gross income for income tax purposes or other percentage tax purposes rather than as a tax credit.

The Court of Tax Appeals ruled that "Respondent is hereby ORDERED to REFUND in favor of Petitioner the amount of P236,321.52, representing overpaid income tax for the year 1995."

On appeal, the Court of Appeals modified the decision of the Court of Tax Appeals as the law provided for a tax credit, not a tax refund. The award of tax refund is ANNULLED and SET ASIDE. Instead, the petitioner is hereby ORDERED to issue a tax credit certificate in favor of the respondent in the amount of P 236,321.52. Issues: 1. WON the 20 percent sales discount granted to qualified senior citizens by the respondent pursuant to R.A. No. 7432 may be claimed as a tax credit, instead of a deduction from gross income or gross sales.

2. WON Revenue Regulations No. 2-94 prevails over R.A. No. 7432.

3. WON Revenue Regulations No. 2-94 is valid.

Ruling: 1. NO. Under Revenue Regulations No. 2-94, the tax credit is "the amount representing the 20 percent discount granted to a qualified senior citizen by all establishments relative to their utilization of transportation services, hotels and similar lodging establishments, restaurants, drugstores, recreation centers, theaters, cinema houses, concert halls, circuses, carnivals and

other similar places of culture, leisure and amusement, which discount shall be deducted by the said establishments from their gross income for income tax purposes and from their gross sales for value-added tax or other percentage tax purposes." It equated "tax credit" with "tax deduction," contrary to the definition in Black's Law Dictionary, which defined tax credit as: An amount subtracted from an individual's or entity's tax liability to arrive at the total tax liability. A tax credit reduces the taxpayer's liability x x x, compared to a deduction which reduces taxable income upon which the tax liability is calculated. A credit differs from deduction to the extent that the former is subtracted from the tax while the latter is subtracted from income before the tax is computed. The Court of Appeals expressly recognized the differences between a "tax credit" and a "tax refund," and stated that the same are not synonymous with each other, which is why it modified the ruling of the Court of Tax Appeals. 2. NO. Revenue Regulations No. 2-94 is still subordinate to R.A. No. 7432, and in cases of conflict, the implementing rule will not prevail over the law it seeks to implement. While seemingly conflicting laws must be harmonized as far as practicable, in this particular case, the conflict cannot be resolved in the manner the petitioner wishes. There is a great divide separating the idea of "tax credit" and "tax deduction," as seen in the definition in Black's Law Dictionary. It is clear that the lawmakers intended the grant of a tax credit to complying private establishments like the respondent. 3. NO. Revenue Regulations No. 2-94 is null and void for failing to conform to the law it sought to implement. In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law prevails because said rule or regulation cannot go beyond the terms and provisions of the basic law. Revenue Regulations No. 2-94 being null and void, it must be ruled then that under R.A. No. 7432, which was effective at the time, respondent is entitled to its claim of a tax credit, and the ruling of the Court of Appeals must be affirmed.