EASTERN SHIPPING LINES, INC. vs. POEA GR No.

76633 October 18, 1988

Facts: Vitaliano Saco was Chief Officer of a vessel owned by Petitioner and was killed
in an accident in Tokyo, Japan. His widow (Kathleen Saco) sued for damages
under Executive Order 797 (this EO created the POEA) and Memorandum
Circular No. 2 (which the POEA issued to prescribe the standard contract to be
adopted by foreign and domestic shipping companies when hiring Filipino
seamen). The POEA ruled in favor of complainant Kathleen Saco.
Petitioner immediately appealed to the Supreme Court, questioning the validity
of Memorandum Circular No. 2, which it argues to be violative of the principle of
non-delegation of power. It also argued that it was denied due process because
the same POEA that issued Memorandum Circular No. 2 is also the one that
sustained and applied it.
Issue: Whether or not there was denial due process when POEA sustained and applied
a memorandum circular it issued when it ruled against the petitioner.
Held: No, there was no such denial of due process. The argument is an informed
criticism of administrative power.
Administrative agencies are vested with two basic powers, the quasi-legislative
and the quasi-judicial. The first enables them to promulgate implementing rules
and regulations, and the second enables them to interpret and apply such
regulations. Examples abound: the Bureau of Internal Revenue adjudicates on its
own revenue regulations, the Central Bank on its own circulars, the Securities
and Exchange Commission on its own rules, as so too do the Philippine Patent
Office and the Videogram Regulatory Board and the Civil Aeronautics
Administration and the Department of Natural Resources and so on ad infinitum
on their respective administrative regulations. Such an arrangement has been
accepted as a fact of life of modern governments and cannot be considered
violative of due process as long as the cardinal rights laid down by Justice Laurel
in the landmark case of Ang Tibay v. Court of Industrial Relations 21 are
observed.1

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) 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.
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Created by Daniel Luis Macalino

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