Admin Law 2

VICTORIA C. GUTIERREZ, G.R. No.
153266
JOEL R. PEREZ, ARACELI L. YAMBOT, CORAZON F. SORIANO, LORNA P.
TAMOR, ROMEO S. CONSIGNADO, DIVINA R. SULIT, ESTRELITA F.
IRESARE, ROSALINDA L. ALPAY, AUREA L. ILAGAN AND ALL THE OTHER
CONCERNED EMPLOYEES OF THE OFFICE OF THE SOLICITOR GENERAL,
Petitioners, Present:
- versus - Leonardo-De Castro,
DEPARTMENT OF BUDGET AND MANAGEMENT, HONORABLE SECRETARY
EMILIA T. BONCODIN AND DIRECTOR LUZ M. CANTOR,
Respondents,
UNIVERSITY OF THE PHILIPPINES,
AMADO EUROPA, MERCEDITA REYES, CONCHITA ABARCAR, LUCIO
ABERIN, BIENVENIDO BIONG, SOLOMON CELIZ, WILFREDO CORNEL,
TOMAS FORIO, ROGELIO JUNTERIAL, JAIME PERALTA, PILAR RILLAS,
WILFREDO SAGUN, JESUS SUGUITAN, LUIS TORRES, JOSE VERSOZA
AND ALL THE OTHER CONCERNED INCUMBENT AND RETIRED
EMPLOYEES OF THE SOCIAL SECURITY SYSTEM v. SOCIAL SECURITY
SYSTEM***
CONSUELO A. TAGARO, REYNALDO S. CALLANO, AIDA A. MARTINEZ,
PRISCILLA P. COSTES, RICELI C. MENDOZA, ARISTON CALVO, SAMSON L.
MOLAO, MANUEL SABUTAN, VILMA GONZALES, RUTH C. MAPANAO,
NELSON M. BELGIRA, JESUS ANTONIO G. DERIJE v. UNIVERSITY OF
SOUTHERN MINDANAO***
CONFEDERATION OF INDEPENDENT UNIONS IN THE PUBLIC SECTOR
(CIU)
ESTHER I. ABADIANO AND OTHER FORTY ONE THOUSAND INDIVIDUAL
TEACHERS INTERVENORS
ELPIDIO F. FERRER, MARIKINA CITY FEDERATION OF PUBLIC SCHOOL
TEACHERS, INC., REPRESENTED BY ITS PRESIDENT ELPIDIO F. FERRER,
AND ALL OTHER INDIVIDUAL PUBLIC SCHOOL TEACHERS IN CENTRAL
LUZON, NORTHERN LUZON, SOUTHERN TAGALOG, NATIONAL CENTRAL
Elsa M. Caete CPA, MBA, DBA
REGION, CARR AND MINDANAO REPRESENTED BY THEIR RESPECTIVE

ATTORNEYS-IN-FACT, ATTORNEYS DANTE ILAYA AND VIRGINIA SUAREZPINLAC AND ACTION AND SOLIDARITY FOR THE EMPOWERMENT OF
TEACHERS (ASSERT), REPRESENTED BY ITS PRESIDENT AMABLE
TUIBEIO, ET AL.
HARRIS M. SINOLINDING, KALANTONGAN P. AKIL, DAUNDI B. BAKONG,

TERESITA C. DE GUZMAN, QUEENIE A. HABIBUN, JOSE T. MAUN,
VIVIENLE P. MARAGGUN, SAAVEDRA M. MANTIKAYAN, GIJIT C. PARON,
IRWIN R. QUINAIN, DATUMANONG O. TAGITICAN AND HYDIE P. WONG,
AND ALL OTHER CONCERNED EMPLOYEES OF THE COTABATO
FOUNDATION COLLEGE OF SCIENCE AND TECHNOLOGY (CFCST) v.
COTABATO FOUNDATION COLLEGE OF SCIENCE AND TECHNOLOGY AND
DEPARTMENT OF BUDGET AND MANAGEMENT***
FRANCISCA C. CASTRO, DARIO C. VARGAS, MA. DEBBIE M. RESMA,

RAMON P. CASIL, TERESITA C. BUSADRE, CRISTINA V. MANALO, SAUL
SAN RAMON, ALEXIS R. REBURIANO, ROSALITO D. ROSA, DR.
FERNANDO C. JAVIER, DR. ROSEMARIE M. YAGUIE, DR. GIL T.
MAGBANUA, AND ALL OTHER CONCERNED PUBLIC SCHOOL TEACHERS
OF QUEZON CITY v. DEPARTMENT OF BUDGET AND MANAGEMENT***
WILMA Q. NOBLEZA, ELEANOR M. CASTRO, JOSE B. BUSTILLO, JR.,

ABELARDO E. DE GUZMAN, EDWIN F. FABRIQUIER, ET AL. v. DBM
SECRETARY ROMULO NERI AND DEPARTMENT OF BUDGET AND
MANAGEMENT***
EVA VALDEZ FERIA, WILHELMINA BALDO, ROSE MARIE L. YCASA,

GLORIA G. IGNACIO AND HJI. AKMAD A. ALSAD AND OTHER TWELVE
THOUSAND FIVE HUNDRED INDIVIDUAL TEACHERS
BUREAU OF PLANT INDUSTRY EMPLOYEES ASSOCIATION, MARY ANN

GUERRERO, ET AL.
Intervenors.
x ------------------------------------------------------------ x
ESTRELLITA C. AMPONIN, JUDITH G.R. No. 159007

A. CUDAL, ROMEO A. PAGALAN, MARISSA F. PARIAS, AND RAYMOND F.
FLORES, ET AL.,
Petitioners,
- versus -
COMMISSION ON AUDIT, GUILERMO N. CARAGUE, IN HIS CAPACITY AS

CHAIRMAN, RAUL C. FLORES, IN HIS CAPACITY AS COMMISSIONER,
COMMISSION ON AUDIT, AND EMMANUEL M. DALMAN, IN HIS CAPACITY
AS COMMISSIONER, COMMISSION ON AUDIT,
Respondents.
x -------------------------------------------------- x
AUGUSTO R. NIEVES, BONIFACIO G.R. No. 159029

H. ATIVO, TARCELA P. DETERA, NILDA G. CIELO, ANTHONY M. BRAVO,
MARIA LOURDES G. BARROZO, ANTONIO E. FUENTES, ALFREDO D.
DONOR, RICO B. NAVA, SR., DOLORES C. HUIDEM AND ALL THE OTHER
CONCERNED EMPLOYEES OF THE SORSOGON STATE COLLEGE,
Petitioners,
- versus -
DEPARTMENT OF BUDGET AND MANAGEMENT AND HONORABLE

SECRETARY EMILIA T. BONCODIN,
Respondents.
x ------------------------------------------------- x
KAPISANAN NG MGA MANGGAGAWA G.R. No. 170084

SA BUREAU OF AGRICULTURAL STATISTICS (KMB), EVELYN C. TIDON,
RIPOL O. ABALOS, BEATRIZ L. HUBILLA, MA. CHERYL J. TAJONERA,
LOLITA DE HERNANDEZ, FLORA M. MABAMBA, DELILAH G. BASSIG AND
ALL CONCERNED INCUMBENT AND RETIRED EMPLOYEES OF THE
BUREAU OF AGRICULTURAL STATISTICS, DEPARTMENT OF
AGRICULTURE,
Petitioners,
- versus -
DEPARTMENT OF BUDGET AND MANAGEMENT AND HONORABLE

SECRETARY ROMULO NERI***,
Respondents.
x ------------------------------------------------- x
NATIONAL HOUSING AUTHORITY, G.R. No. 172713

Petitioner,
- versus EPIFANIO P. RECANA, MERCEDES AMURAO, ERASMO APOSTOL,

FLORENDO ASUNCION, FIORELLO JOSEFINA BALTAZAR, ET AL.,
Respondents.
x ------------------------------------------------- x
INSURANCE COMMISSION OFFICERS G.R. No. 173119

AND EMPLOYEES, REPRESENTED BY INSURANCE COMMISSION
EMPLOYEES WELFARE ASSOCIATION (ICEWA), ET AL.,
Petitioners,
- versus -
DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HONORABLE

SECRETARY ROLANDO G. ANDAYA, JR.,
Respondents.
x ------------------------------------------------- x
FIBER INDUSTRY DEVELOPMENT G.R. No. 176477
AUTHORITY EMPLOYEES ASSOCIATION (FIDAEA), REMEDIOS V.J.

ABGONA, CELERINA T. HILARIO, QUIRINO U. SANTOS, GRACE AURORA F.
PASTORES, RHISA V. PEGENIA, ET AL.,
Petitioners,
- versus -

SECRETARY ROLANDO G. ANDAYA, JR.***,
Respondents.
x ------------------------------------------------- x
BUREAU OF ANIMAL INDUSTRY G.R. No. 177990

EMPLOYEES ASSOCIATION (BAIEA), LORY C. BANGALISAN, EDGARDO
VINCULADO, LORENZO J. ABARCA, ROLANDO M. VASQUEZ, ALFREDO B.
DUCUSIN, ET AL.,
Petitioners,
- versus -

SECRETARY ROLANDO G. ANDAYA, JR.***,
Respondents.
x ------------------------------------------------- x
RE: REQUEST OF SANDIGANBAYAN A.M. No. 06-4-02-SB

FOR AUTHORITY TO USE THEIR SAVINGS TO PAY THEIR COLA
DIFFERENTIAL FROM JULY 1, 1989 TO MARCH 16, 1999,
Promulgated:
March 18, 2010
x ---------------------------------------------------------------------------------------- x
DECISION
ABAD, J.:
These consolidated cases question the inclusion of certain allowances

and fringe benefits into the standardized salary rates for offices in the
national government, state universities and colleges, and local
government units as required by the Compensation and Position
Classification Act of 1989 and implemented through the challenged
National Compensation Circular 59 (NCC 59).
The Facts and the Case
Congress enacted in 1989 Republic Act (R.A.) 6758, called the

Compensation and Position Classification Act of 1989 to rationalize the
compensation of government employees. Its Section 12 directed the
consolidation of allowances and additional compensation already being
enjoyed by employees into their standardized salary rates. But it

exempted certain additional compensations that the employees may
be receiving from such consolidation. Thus:
Section 12. Consolidation of Allowances and Compensation. -- All

allowances, except for representation and transportation allowances;
clothing and laundry allowances; subsistence allowance of marine
officers and crew on board government vessels and hospital personnel;
hazard pay; allowances of foreign service personnel stationed abroad;
and such other additional compensation not otherwise specified herein
as may be determined by the DBM, shall be deemed included in the
standardized salary rates herein prescribed. Such other additional
compensation, whether in cash or in kind, being received by
incumbents only as of July 1, 1989 not integrated into the standardized
salary rates shall continue to be authorized.
Pursuant to the above, the Department of Budget and Management

(DBM) issued NCC 59 dated September 30, 1989,[1] covering the
offices of the national government, state universities and colleges, and
local government units. NCC 59 enumerated the specific allowances
and additional compensations which were deemed integrated in the
basic salaries and these included the Cost of Living Allowance (COLA)
and Inflation Connected Allowance (ICA). The DBM re-issued and
published NCC 59 on May 3, 2004.[2]
The DBM also issued Corporate Compensation Circular (CCC) 10 dated

October 2, 1989,[3] covering all government-owned or controlled
corporations and government financial institutions. The DBM re-issued
this circular on February 15, 1999[4] and published it on March 16,
1999. Accordingly, the Commission on Audit (COA) disallowed the
payments of honoraria and other allowances which were deemed
integrated into the standardized salary rates. Employees of
government-owned or controlled corporations questioned the validity
of CCC 10 due to its non-publication. In De Jesus v. Commission on

Audit,[5] this Court declared CCC 10 ineffective because of such nonpublication.Until then, it ordered the COA to pass on audit the
employees honoraria which they were receiving prior to
the effectivity of R.A. 6758.
Meanwhile, the DBM also issued Budget Circular 2001-03 dated

November 12, 2001,[6] clarifying that only the exempt allowances
under Section 12 of R.A. 6758 may continue to be granted the
employees; all others were deemed integrated in the standardized
salary rates. Thus, the payment of allowances and compensation such
as COLA, amelioration allowance, and ICA, among others, which were
already deemed integrated in the basic salary were unauthorized. The
Courts ruling in subsequent cases involving government-owned or
controlled corporations followed the De Jesus ruling.
On May 16, 2002 employees of the Office of the Solicitor General filed
a petition for certiorari and mandamus in G.R. 153266, questioning the
propriety of integrating their COLA into their standardized salary rates.
Employees of other offices of the national government followed suit. In
addition, petitioners in G.R. 159007 questioned the disallowance of the
allowances and fringe benefits that the COA auditing personnel
assigned to the Government Service Insurance System (GSIS) used to
get. Petitioners in G.R. 173119 questioned the disallowance of
the ICA that used to be paid to the officials and employees of the
Insurance Commission.
The Court caused the consolidation of the petitions and treated them
as a class suit for all government employees, excluding the employees
of government-owned or controlled corporations and government
financial institutions.[7]
On October 26, 2005 the DBM issued National Budget Circular 2005502[8] which provided that all Supreme Court rulings on the
integration of allowances, including COLA, of government employees
under R.A. 6758 applied only to specific government-owned or
controlled corporations since the consolidated cases covering the
national government employees are still pending with this
Court. Consequently, the payment of allowances and other benefits to
them, such as COLA and ICA, remained prohibited until otherwise
provided by law or ruled by this Court. The circular further said that all
agency heads and other responsible officials and employees found to
have authorized the grant of COLA and other allowances and benefits
already integrated in the basic salary shall be personally held liable for
such payment.
The Issues Presented
The common issues presented in these consolidated cases are:
1. Whether or not the COLA should be deemed integrated into the

standardized salary rates of the concerned government employees by
virtue of Section 12 of R.A. 6758;
2. Whether or not the ICA may still be paid to officials and employees
of the Insurance Commission;
3. Whether or not the GSIS may still pay the allowances and fringe
benefits to COA auditing personnel assigned to it;
10
4. Whether or not the non-publication of NCC 59 dated September 30,

1989 in the Official Gazette or newspaper of general circulation
nullifies the integration of the COLA into the standardized salary rates;
and
5. Whether or not the grant of COLA to military and police personnel to

the exclusion of other government employees violates the equal
protection clause.
The Courts Ruling
One. Petitioners espouse the common theory that the DBM needs to
promulgate rules and regulations before the COLA that they were
getting prior to the passage of R.A. 6758 can be deemed integrated in
their standardized salary rates. Respondent DBM counters that R.A.
6758 already specified the allowances and benefits that were not to be
integrated in the new salary rates. All other allowances, DBM adds,
such as COLA, are deemed integrated into those salary rates.
At the heart of the present controversy is Section 12 of R.A. 6758 which

is quoted anew for clarity:
Section 12. Consolidation of Allowances and Compensation. -- All

allowances, except for representation and transportation allowances;
clothing and laundry allowances; subsistence allowance of marine
officers and crew on board government vessels and hospital personnel;
hazard pay; allowances of foreign service personnel stationed abroad;
and such other additional compensation not otherwise specified herein
as may be determined by the DBM, shall be deemed included in the
standardized salary rates herein prescribed. Such other additional
compensation, whether in cash or in kind, being received by
11
incumbents only as of July 1, 1989 not integrated into the standardized

salary rates shall continue to be authorized.
As will be noted from the first sentence above, all allowances were
deemed integrated into the standardized salary rates except the
following:
(1) representation and transportation allowances;

(2) clothing and laundry allowances;
(3) subsistence allowances of marine officers and crew on board
government vessels;
(4) subsistence allowances of hospital personnel;
(5) hazard pay;
(6) allowances of foreign service personnel stationed abroad; and
(7) such other additional compensation not otherwise specified in
Section 12 as may be determined by the DBM.
But, while the provision enumerated certain exclusions, it also

authorized the DBM to identify such other additional compensation that
may be granted over and above the standardized salary
rates. In Philippine Ports Authority Employees Hired After July 1, 1989 v.
Commission on Audit,[9] the Court has ruled that while Section 12
could be considered self-executing in regard to items (1) to (6), it was
not so in regard to item (7). The DBM still needed to amplify item (7)
since one cannot simply assume what other allowances were excluded
from the standardized salary rates. It was only upon the issuance
and effectivity of the corresponding implementing rules and
regulations that item (7) could be deemed legally completed.
12
Delegated rule-making is a practical necessity in modern governance

because of the increasing complexity and variety of public functions.
Congress has endowed administrative agencies like respondent DBM
with the power to make rules and regulations to implement a given
legislation and effectuate its policies.[10] Such power is, however,
necessarily limited to what the law provides. Implementing rules and
regulations cannot extend the law or expand its coverage, as the
power to amend or repeal a statute belongs to the
legislature. Administrative agencies implement the broad policies laid
down in a law by filling in only its details. The regulations must be
germane to the objectives and purposes of the law and must conform
to the standards prescribed by law.[11]
In this case, the DBM promulgated NCC 59 [and CCC 10]. But, instead
of identifying some of the additional exclusions that Section 12 of R.A.
6758 permits it to make, the DBM made a list of what allowances and
benefits are deemed integrated into the standardized salary
rates. More specifically, NCC 59 identified the following
allowances/additional compensation that are deemed integrated:
(1)
Cost of Living Allowance (COLA);
(2)
Inflation connected allowance;
(3)
Living Allowance;
(4)
Emergency Allowance;
(5)
Additional Compensation of Public Health Nurses assigned
to public health nursing;
(6)
Additional Compensation of Rural Health Physicians;
(7)
Additional Compensation of Nurses in Malacaang Clinic;
(8)
Nurses Allowance in the Air Transportation Office;
(9)
Assignment Allowance of School Superintendents;

13
(10)
Post allowance of Postal Service Office employees;
(11)
Honoraria/allowances which are regularly given except the
following:
a.
those for teaching overload;
b.
in lieu of overtime pay;
c.
for employees on detail with task forces/special projects;
d.
researchers, experts and specialists who are
acknowledged authorities in their field of specialization;
e.
lecturers and resource persons;
f.
Municipal Treasurers deputized by the Bureau of Internal
Revenue to collect and remit internal revenue collections; and
g.
Executive positions in State Universities and Colleges
filled by designation from among their faculty members.
(12)
Subsistence Allowance of employees except those
authorized under EO [Executive Order] 346 and uniformed personnel of
the Armed Forces of the Philippines and Integrated National Police;
(13)
Laundry Allowance of employees except those
hospital/sanitaria personnel who attend directly to patients and who by
the nature of their duties are required to wear uniforms, prison guards
and uniformed personnel of the Armed Forces of the Philippines and
Integrated National Police; and
(14)
Incentive allowance/fee/pay except those authorized under
the General Appropriations Act and Section 33 of P.D. 807.
The drawing up of the above list is consistent with Section 12

above. R.A. 6758 did not prohibit the DBM from identifying for the
purpose of implementation what fell into the class of all
allowances. With respect to what employees benefits fell outside the
term apart from those that the law specified, the DBM, said this Court
14
in a case,[12]needed to promulgate rules and regulations identifying

those excluded benefits. This leads to the inevitable conclusion that
until and unless the DBM issues such rules and regulations, the
enumerated exclusions in items (1) to (6) remain exclusive. Thus so,
not being an enumerated exclusion, COLA is deemed already
incorporated in the standardized salary rates of government
employees under the general rule of integration.
In any event, the Court finds the inclusion of COLA in the standardized
salary rates proper. In National Tobacco Administration v. Commission
on Audit,[13] the Court ruled that the enumerated fringe benefits in
items (1) to (6) have one thing in commonthey belong to one category
of privilege called allowances which are usually granted to officials and
employees of the government to defray or reimburse the expenses
incurred in the performance of their official functions. Consequently, if
these allowances are consolidated with the standardized salary rates,
then the government official or employee will be compelled to spend
his personal funds in attending to his duties. On the other hand, item
(7) is a catch-all proviso for benefits in the nature of allowances similar
to those enumerated.[14]
Clearly, COLA is not in the nature of an allowance intended to

reimburse expenses incurred by officials and employees of the
government in the performance of their official functions. It is not
payment in consideration of the fulfillment of official duty.[15] As
defined, cost of living refers to the level of prices relating to a range of
everyday items[16]or the cost of purchasing those goods and services
which are included in an accepted standard level of consumption.
[17] Based on this premise, COLA is a benefit intended to cover
increases in the cost of living. Thus, it is and should be integrated into
the standardized salary rates.
15
Two. Petitioning officials and employees of the Insurance

Commission question the disallowance of their ICA on the ground that
it is a benefit similar to the educational assistance granted by the
Court in National Tobacco Administration[18] based on the
second sentence of Section 12 of R.A. 6758 that reads:
Such other additional compensation, whether in cash or in kind, being

received by incumbents only as of July 1, 1989 not integrated into the
standardized salary rates shall continue to be authorized.
In National Tobacco Administration, the Court interpreted this provision

as referring to benefits in the nature of financial assistance, or a bonus
or other payment made to employees in addition to guaranteed hourly
wages, as contradistinguished from the allowance in the first sentence,
which cannot, strictly speaking, be treated as a bonus or additional
income. In financial assistance, reimbursement is not necessary, while
in the case of allowance, reimbursement is required.[19]
To be entitled to the financial assistance under this provision, the

following requisites must concur: (1) the recipients were incumbents
when R.A. 6758 took effect on July 1, 1989; (2) they were in fact,
receiving the same, at the time; and (3) such additional compensation
is distinct and separate from the excepted allowances under CCC 10,
as it is not integrated into the standardized salary rates.[20]
In this case, ICA, like COLA, falls under the general rule of
integration. The DBM specifically identified it as an allowance or
additional compensation integrated into the standardized salary
rates. By its very nature, ICA is granted due to inflation and upon
determination that the current salary of officials and employees of the
Insurance Commission is insufficient to address the problem. The DBM
determines whether a need for ICA exists and the fund from which it
16
will be taken. The Insurance Commission cannot, on its own, determine

what allowances are necessary and then grant them to its officials and
employees without the approval of the DBM.
Moreover, ICA does not qualify under the second sentence of Section
12 of R.A. 6758 since the employees failed to show that they were
actually receiving it as of June 30, 1989 or immediately prior to the
implementation of R.A. 6758. The Commissioner of the Insurance
Commission requested for authority to grant ICA from the DBM for the
years 1981[21] and 1984[22] only. There is no evidence that
the ICA were paid in subsequent years. In the absence of a subsequent
authorization granting or restoring ICA to the officials and employees of
the Insurance Commission, there can be no valid legal basis for its
continued grant from July 1, 1986.
Three. Petitioners COA auditing personnel assigned to the GSIS

question the disallowance of their allowances and fringe benefits based
on the allowances given to GSIS personnel, namely:
5.6. Payment of other allowances/fringe benefits and all other forms of

compensation granted on top of basic salary, whether in cash or in
kind, x x x shall be discontinued effective November 1, 1989. Payment
made for such allowances/fringe benefits after said date shall be
considered as illegal disbursement of public funds.
They alleged that since CCC 10 was declared ineffective, the

disallowance should be lifted until the issuance was published on
March 16, 1999.
But, although petitioners alleged that the subject benefits were

withheld from them on the basis of CCC 10, it is clear that the benefits
17
were actually withheld from them on the basis of Section 18 of R.A.

6758, which reads:
Section 18. Additional Compensation of Commission on Audit Personnel

and of Other Agencies. - In order to preserve the independence and
integrity of the Commission on Audit (COA), its officials and employees
are prohibited from receiving salaries, honoraria, bonuses, allowances
or other emoluments from any government entity, local government
unit, and government-owned and controlled corporations, and
government financial institution, except those compensation paid
directly by the COA out of its appropriations and contributions.
Government entities, including government-owned or controlled

corporations including financial institutions and local government units
are hereby prohibited from assessing or billing other government
entities, government-owned or controlled corporations including
financial institutions or local government units for services rendered by
its officials and employees as part of their regular functions for
purposes of paying additional compensation to said officials and
employees.
As aptly pointed out by the COA, Section 18 of R.A. 6758 was complete
in itself and was operative without the aid of any supplementary or
enabling legislation.[23] Theimplementing rules and regulations were
necessary only for those provisions, such as item (7) of Section 12,
which requires further clarification and interpretation. Thus,
notwithstanding the initial non-publication of CCC 10, the disallowance
of petitioners allowances and fringe benefits as COA auditing personnel
assigned to the GSIS was valid upon the effectivity of R.A. 6758.
In Tejada v. Domingo,[24] this Court explained that COA personnel

assigned to auditing units of government-owned or controlled
18
corporations or government financial institutions can receive only such

salaries, allowances or fringe benefits paid directly by the COA out of
its appropriations and contributions. The contributions referred to are
the cost of audit services which did not include the extra emoluments
or benefits, such as bank equity pay, longevity pay, amelioration
allowance, and meal allowance, which petitioners claim. The COA is
further barred from assessing or billing government-owned or
controlled corporations and government financial institutions for
services rendered by its personnel as part of their regular audit
functions for purposes of paying additional compensation to such
personnel.
In upholding the disallowance, the Court ruled in Villarea v.

Commission on Audit[25] that valid reasons exist to treat COA officials
differently from other national government officials. The primary
function of an auditor is to prevent irregular, unnecessary, excessive or
extravagant expenditures of government funds. To be able to properly
perform their constitutional mandate, COA officials need to be
insulated from unwarranted influences, so that they can act with
independence and integrity.
Rightly so, the disallowance in this case is valid.
Four. Petitioners argue that since CCC 10 dated October 2, 1989

covering all government-owned or controlled corporations and
government financial institutions was ineffective until its re-issuance
and publication on March 16, 1999, its counterpart, NCC 59 dated
September 30, 1989 covering the offices of the national government,
state universities and colleges, and local government units should also
be regarded as ineffective until its re-issuance and publication on May
3, 2004. Thus, the COLA should not be deemed integrated into the
standardized salary rates from 1989 to 2004. Respondents counter
that the fact that NCC 59 was not published should not be considered
19
as an obstacle to the integration of COLA into the standardized salary

rates. Accordingly, Budget Circular 2001-03, insofar as it reiterates
NCC 59, should not be treated as ineffective since it merely reaffirms
the fact of consolidation of COLA into the employees salary as
mandated by Section 12 of R.A. 6758.
It is a settled rule that publication is required as a condition

precedent to the effectivity of a law to inform the public of its contents
before their rights and interests are affected by the same.
[26] Administrative rules and regulations must also be published if
their purpose is to enforce or implement existing law pursuant also to a
valid delegation.[27]
Nonetheless, as previously discussed, the integration of COLA into the

standardized salary rates is not dependent on the publication of CCC
10 and NCC 59. This benefit is deemed included in the standardized
salary rates of government employees since it falls under the general
rule of integrationall allowances.
More importantly, the integration was not by mere legal fiction since it
was factually integrated into the employees salaries. Records show
that the government employees were informed by their respective
offices of their new position titles and their corresponding salary
grades when they were furnished with the Notices of Position Allocation
and Salary Adjustment (NPASA). The NPASA provided the breakdown of
the employees gross monthly salary as of June 30, 1989 and the
composition of his standardized pay under R.A. 6758.[28] Notably, the
COLA was considered part of the employees monthly income.
In truth, petitioners never really suffered any diminution in pay as a

consequence of the consolidation of COLA into their standardized
salary rates. There is thus nothing in these cases which can be the
20
subject of a back pay since the amount corresponding to COLA was

never withheld from petitioners in the first place.[29]
Consequently, the non-publication of CCC 10 and NCC 59 in the Official

Gazette or newspaper of general circulation does not nullify the
integration of COLA into the standardized salary rates upon
the effectivity of R.A. 6758. As the Court has said in Philippine
International Trading Corporation v. Commission on Audit,[30] the
validity of R.A. 6758 should not be made to depend on the validity of
its implementing rules.
Five. Petitioners contend that the continued grant of COLA to military

and police personnel under CCC 10 and NCC 59 to the exclusion of
other government employees violates the equal protection clause of
the Constitution.
But as respondents pointed out, while it may appear that petitioners

are questioning the constitutionality of these issuances, they are in fact
attacking the very constitutionality of Section 11 of R.A. 6758. It is
actually this provision which allows the uniformed personnel to
continue receiving their COLA over and above their basic pay, thus:
Section 11. Military and Police Personnel. - The base pay of uniformed
personnel of the Armed Forces of the Philippines and the Integrated
National Police shall be as prescribed in the salary schedule for these
personnel in R.A. 6638 and R.A. 6648. The longevity pay of these
personnel shall be as prescribed under R.A. 6638, and R.A. 1134 as
amended by R.A. 3725 and R.A. 6648: Provided, however, That the
longevity pay of uniformed personnel of the Integrated National Police
shall include those services rendered as uniformed members of the
police, jail and fire departments of the local government units prior to
the police integration.
21
All existing types of allowances authorized for uniformed personnel of

the Armed Forces of the Philippines and Integrated National Police such
as cost of living allowance, longevity pay, quarters allowance,
subsistence allowance, clothing allowance, hazard pay and other
allowances shall continue to be authorized.
Nothing is more settled than that the constitutionality of a statute

cannot be attacked collaterally because constitutionality issues must
be pleaded directly and not collaterally.[31]
In any event, the Court is not persuaded that the continued grant of
COLA to the uniformed personnel to the exclusion of other national
government officials run afoul the equal protection clause of the
Constitution. The fundamental right of equal protection of the laws is
not absolute, but is subject to reasonable classification. If the
groupings are characterized by substantial distinctions that make real
differences, one class may be treated and regulated differently from
another. The classification must also be germane to the purpose of the
law and must apply to all those belonging to the same class.[32]
To be valid and reasonable, the classification must satisfy the following

requirements: (1) it must rest on substantial distinctions; (2) it must be
germane to the purpose of the law; (3) it must not be limited to
existing conditions only; and (4) it must apply equally to all members
of the same class.[33]
It is clear from the first paragraph of Section 11 that Congress intended

the uniformed personnel to be continually governed by their respective
compensation laws. Thus, the military is governed by R.A. 6638,[34] as
amended by R.A. 9166[35] while the police is governed by R.A. 6648,
[36] as amended by R.A. 6975.[37]
22
Certainly, there are valid reasons to treat the

uniformed personnel differently from other national government
officials. Being in charged of the actual defense of the State and the
maintenance of internal peace and order, they are expected to be
stationed virtually anywhere in the country. They are likely to be
assigned to a variety of low, moderate, and high-cost areas. Since their
basic pay does not vary based on location, the continued grant of
COLA is intended to help them offset the effects of living in higher cost
areas.[38]
WHEREFORE, the Court GRANTS the petition in G.R. No. 172713

and DENIES the petitions in G.R. 153266, 159007, 159029, 170084,
173119, 176477, 177990 and A.M. 06-4-02-SB.
SO ORDERED.
Digest
No case digest available
FIRST DIVISION
[G.R. No. 127624. November 18, 2003]
BPI LEASING CORPORATION, petitioner, vs. THE HONORABLE COURT OF
APPEALS, COURT OF TAX APPEAL AND COMMISSIONER OF INTERNAL
REVENUE, respondents.
DECISION
AZCUNA, J.:
23
The present petition for review on certiorari assails the decision[1] of

the Court of Appeals in CA-G.R. SP No. 38223 and its subsequent
resolution[2] denying the motion for reconsideration. The assailed
decision and resolution affirmed the decision of the Court of Tax
Appeals (CTA) which denied petitioner BPI Leasing Corporations (BLC)
claim for tax refund in CTA Case No. 4252.
The facts are not disputed.
BLC is a corporation engaged in the business of leasing properties.
[3] For the calendar year 1986, BLC paid the Commissioner of Internal
Revenue (CIR) a total of P1,139,041.49 representing 4% contractors
percentage tax then imposed by Section 205 of the National Internal
Revenue Code (NIRC), based on its gross rentals from equipment
leasing for the said year amounting to P27,783,725.42.[4]
On November 10, 1986, the CIR issued Revenue Regulation 19-86.
Section 6.2 thereof provided that finance and leasing companies
registered under Republic Act 5980 shall be subject to gross receipt tax
of 5%-3%-1% on actual income earned. This means that companies
registered under Republic Act 5980, such as BLC, are not liable for
contractors percentage tax under Section 205 but are, instead, subject
to gross receipts tax under Section 260 (now Section 122) of the NIRC.
Since BLC had earlier paid the aforementioned contractors percentage
tax, it re-computed its tax liabilities under the gross receipts tax and
arrived at the amount of P361,924.44.
On April 11, 1988, BLC filed a claim for a refund with the CIR for the
amount of P777,117.05, representing the difference between
the P1,139,041.49 it had paid as contractors percentage tax
and P361,924.44 it should have paid for gross receipts tax.[5] Four
days later, to stop the running of the prescriptive period for refunds,
petitioner filed a petition for review with the CTA.[6]
In a decision dated May 13, 1994,[7] the CTA dismissed the petition
and denied BLCs claim of refund. The CTA held that Revenue
Regulation 19-86, as amended, may only be applied prospectively such
that it only covers all leases written on or after January 1, 1987, as
stated under Section 7 of said revenue regulation:
24
Section 7. Effectivity These regulations shall take effect on January 1,

1987 and shall be applicable to all leases written on or after the said
date.
The CTA ruled that, since BLCs rental income was all received prior to
1986, it follows that this was derived from lease transactions prior
to January 1, 1987, and hence, not covered by the revenue regulation.
A motion for reconsideration of the CTAs decision was filed, but was
denied in a resolution dated July 26, 1995.[8] BLC then appealed the
case to the Court of Appeals, which issued the aforementioned assailed
decision and resolution.[9] Hence, the present petition.
In seeking to reverse the denial of its claim for tax refund, BLC submits
that the Court of Appeals and the CTA erred in not ruling that Revenue
Regulation 19-86 may be applied retroactively so as to allow BLCs
claim for a refund of P777,117.05.
Respondents, on the other hand, maintain that the provision on the
date of effectivity of Revenue Regulation 19-86 is clear and
unequivocal, leaving no room for interpretation on its prospective
application. In addition, respondents argue that the petition should be
dismissed on the ground that the Verification/Certification of NonForum Shopping was signed by the counsel of record and not by BLC,
through a duly authorized representative, in violation of Supreme Court
Circular 28-91.
In a resolution dated March 29, 2000,[10] the petition was given due
course and the Court required the parties to file their respective
Memoranda. Upon submission of the Memoranda, the issues in this
case were delineated, as follows:[11]
WHETHER THE INSTANT PETITION FOR REVIEW ON CERTIORARI
SUBSTANTIALLY COMPLIES WITH SUPREME COURT CIRCULAR 28-91.
WHETHER REVENUE REGULATION 19-86, AS AMENDED, IS LEGISLATIVE
OR INTERPRETATIVE IN NATURE.
WHETHER REVENUE REGULATION 19-86, AS AMENDED, IS
PROSPECTIVE OR RETROACTIVE IN ITS APPLICATION.
25
WHETHER PETITIONER, AS FOUND BY THE COURT OF APPEALS, FAILED

TO MEET THE QUANTUM OF EVIDENCE REQUIRED IN REFUND CASES.
WHETHER PETITIONER, AS FOUND BY THE COURT OF APPEALS, IS
ESTOPPED FROM CLAIMING ITS PRESENT REFUND.
As to the first issue, the Court agrees with respondents contention that
the petition should be dismissed outright for failure to comply with
Supreme Court Circular 28-91, now incorporated as Section 2 of Rule
42 of the Rules of Court. The records plainly show, and this has not
been denied by BLC, that the certification was executed by counsel
who has not been shown to have specific authority to sign the same for
BLC.
In BA Savings Bank v. Sia,[12] it was held that the certificate of nonforum shopping may be signed, for and on behalf of a corporation, by a
specifically authorized lawyer who has personal knowledge of the facts
required to be disclosed in such document. This ruling, however, does
not mean that any lawyer, acting on behalf of the corporation he is
representing, may routinely sign a certification of non-forum
shopping. The Court emphasizes that the lawyer must be specifically
authorized in order validly to sign the certification.
Corporations have no powers except those expressly conferred upon
them by the Corporation Code and those that are implied by or are
incidental to its existence. These powers are exercised through their
board of directors and/or duly authorized officers and agents. Hence,
physical acts, like the signing of documents, can be performed only by
natural persons duly authorized for the purpose by corporate bylaws or
by specific act of the board of directors.[13]
The records are bereft of the authority of BLCs counsel to institute the
present petition and to sign the certification of non-forum
shopping. While said counsel may be the counsel of record for BLC, the
representation does not vest upon him the authority to execute the
certification on behalf of his client. There must be a resolution issued
by the board of directors that specifically authorizes him to institute
the petition and execute the certification, for it is only then that his
actions can be legally binding upon BLC.
26
BLC however insists that there was substantial compliance with SC

Circular No. 28-91 because the verification/certification was issued by a
counsel who had full personal knowledge that no other petition or
action has been filed or is pending before any other tribunal. According
to BLC, said counsels law firm has handled this case from the very
beginning and could very well attest and/or certify to the absence of an
instituted or pending case involving the same or similar issues.
The argument of substantial compliance deserves no merit, given the
Courts ruling in Mendigorin v. Cabantog:[14]
The CA held that there was substantial compliance with the Rules of
Court, citing Dimagiba vs. Montalvo, Jr. [202 SCRA 641] to the effect
that a lawyer who assumes responsibility for a client's cause has the
duty to know the entire history of the case, especially if any litigation is
commenced. This view, however, no longer holds authoritative value in
the light of Digital Microwave Corporation vs. CA [328 SCRA 286],
where it was held that the reason the certification against forum
shopping is required to be accomplished by petitioner himself is that
only the petitioner himself has actual knowledge of whether or not he
has initiated similar actions or proceedings in other courts or tribunals.
Even counsel of record may be unaware of such fact. To our mind, this
view is more in accord with the intent and purpose of Revised Circular
No. 28-91.
Clearly, therefore, the present petition lacks the proper certification as
strictly required by jurisprudence and the Rules of Court.
Even if the Court were to ignore the aforesaid procedural infirmity, a
perusal of the arguments raised in the petition indicates that a
resolution on the merits would nevertheless yield the same outcome.
BLC attempts to convince the Court that Revenue Regulation 19-86 is
legislative rather than interpretative in character and hence, should
retroact to the date of effectivity of the law it seeks to interpret.
Administrative issuances may be distinguished according to their
nature and substance: legislative and interpretative. A legislative rule
is in the matter of subordinate legislation, designed to implement a
27
primary legislation by providing the details thereof. An interpretative

rule, on the other hand, is designed to provide guidelines to the law
which the administrative agency is in charge of enforcing.[15]
The Court finds the questioned revenue regulation to be legislative in
nature. Section 1 of Revenue Regulation 19-86 plainly states that it
was promulgated pursuant to Section 277 of the NIRC. Section 277
(now Section 244) is an express grant of authority to the Secretary of
Finance to promulgate all needful rules and regulations for the
effective enforcement of the provisions of the NIRC. In Paper Industries
Corporation of the Philippines v. Court of Appeals,[16] the Court
recognized that the application of Section 277 calls for none other than
the exercise of quasi-legislative or rule-making authority. Verily, it
cannot be disputed that Revenue Regulation 19-86 was issued
pursuant to the rule-making power of the Secretary of Finance, thus
making it legislative, and not interpretative as alleged by BLC.
BLC further posits that, assuming the revenue regulation is legislative
in nature, it is invalid for want of due process as no prior notice,
publication and public hearing attended the issuance thereof. To
support its view, BLC cited CIR v. Fortune Tobacco, et al.,[17] wherein
the Court nullified a revenue memorandum circular which reclassified
certain cigarettes and subjected them to a higher tax rate, holding it
invalid for lack of notice, publication and public hearing.
The doctrine enunciated in Fortune Tobacco, and reiterated in CIR v.
Michel J. Lhuillier Pawnshop, Inc.,[18] is that when an administrative
rule goes beyond merely providing for the means that can facilitate or
render less cumbersome the implementation of the law and
substantially increases the burden of those governed, it behooves the
agency to accord at least to those directly affected a chance to be
heard and, thereafter, to be duly informed, before the issuance is given
the force and effect of law. In Lhuillier and Fortune Tobacco, the Court
invalidated the revenue memoranda concerned because the same
increased the tax liabilities of the affected taxpayers without affording
them due process. In this case, Revenue Regulation 19-86 would be
beneficial to the taxpayers as they are subjected to lesser
taxes. Petitioner, in fact, is invoking Revenue Regulation 19-86 as the
28
very basis of its claim for refund. If it were invalid, then petitioner all
the more has no right to a refund.
After upholding the validity of Revenue Regulation 19-86, the Court
now resolves whether its application should be prospective or
retroactive.
The principle is well entrenched that statutes, including administrative
rules and regulations, operate prospectively only, unless the legislative
intent to the contrary is manifest by express terms or by necessary
implication.[19] In the present case, there is no indication that the
revenue regulation may operate retroactively. Furthermore, there is an
express provision stating that it shall take effect on January 1, 1987,
and that it shall be applicable to all leases written on or after the said
date. Being clear on its prospective application, it must be given its
literal meaning and applied without further interpretation.[20] Thus,
BLC is not in a position to invoke the provisions of Revenue Regulation
19-86 for lease rentals it received prior to January 1, 1987.
It is also apt to add that tax refunds are in the nature of tax
exemptions. As such, these are regarded as in derogation of sovereign
authority and are to be strictly construed against the person or entity
claiming the exemption. The burden of proof is upon him who claims
the exemption and he must be able to justify his claim by the clearest
grant under Constitutional or statutory law, and he cannot be
permitted to rely upon vague implications.[21] Nothing that BLC has
raised justifies a tax refund.
It is not necessary to rule on the remaining issues.
WHEREFORE, the petition for review is hereby DENIED, and the
assailed decision and resolution of the Court of Appeals
are AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Digest
NO CASE DIGEST AVAilable
29
SECOND DIVISION
THE BOARD OF
TRUSTEES
OF THE GOVERNMENT
SERVICE INSURANCE
SYSTEM and
G.R. No. 170463
Present:
WINSTON F. GARCIA, in
his capacity
CARPIO, J., Chairperson,
as GSIS President and

General Manager,
PERALTA,
Petitioners,
NACHURA,
ABAD, and
MENDOZA, JJ.
- versus -
Promulgated:
ALBERT M. VELASCO and
MARIO I. MOLINA,
February 2, 2011
Respondents.
x--------------------------------------------------x
30
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the 24 September 2004 Decision2 and

the 7 October 2005 Order3 of the Regional Trial Court of Manila, Branch
19 (trial court), in Civil Case No. 03-108389. In its 24 September 2004
Decision, the trial court granted respondents Albert M. Velasco4 and
Mario I. Molinas5 (respondents) petition for prohibition. In its 7 October
2005 Order, the trial court denied petitioners Board of Trustees of the
Government Service Insurance System (GSIS) and Winston F. Garcias
(petitioners) motion for reconsideration.
The Facts
On 23 May 2002, petitioners charged respondents administratively

with grave misconduct and placed them under preventive suspension
for 90 days.6 Respondents were charged for their alleged participation
in the demonstration held by some GSIS employees denouncing the
alleged corruption in the GSIS and calling for the ouster of its president
and general manager, petitioner Winston F. Garcia.7
In a letter dated 4 April 2003, respondent Mario I. Molina (respondent

Molina) requested GSIS Senior Vice President Concepcion
L. Madarang (SVP Madarang) for the implementation of his step
increment.8 On 22 April 2003, SVP Madarang denied the request citing
31
GSIS Board Resolution No. 372 (Resolution No. 372)9 issued by

petitioner Board of Trustees of the GSIS (petitioner GSIS Board) which
approved the new GSIS salary structure, its implementing rules and
regulations, and the adoption of the supplemental guidelines on step
increment and promotion.10 The pertinent provision of Resolution No.
372 provides:
A. Step Increment
xxxx
III. Specific Rules:
x x xx
3. The step increment adjustment of an employee who is on preventive
suspension shall be withheld until such time that a decision on the
case has been rendered. x x x x
Respondents also asked that they be allowed to avail of the employee

privileges under GSIS Board Resolution No. 306 (Resolution No. 306)
approving Christmas raffle benefits for all GSIS officials and employees
effective year 2002.11 Respondents request was again denied because
of their pending administrative case.
On 27 August 2003, petitioner GSIS Board issued Board Resolution No.

197 (Resolution No. 197) approving the following policy
recommendations:
B. On the disqualification from promotion of an employee with a

pending administrative case
32
To adopt the policy that an employee with pending administrative case

shall be disqualified from the following during the pendency of the
case:
a) Promotion;
b) Step Increment;
c) Performance-Based Bonus; and
d) Other benefits and privileges.
On 14 November 2003, respondents filed before the trial court a

petition for prohibition with prayer for a writ of preliminary
injunction.12 Respondents claimed that they were denied the benefits
which GSIS employees were entitled under Resolution No. 306.
Respondents also sought to restrain and prohibit petitioners from
implementing Resolution Nos. 197 and 372. Respondents claimed that
the denial of the employee benefits due them on the ground of their
pending administrative cases violates their right to be presumed
innocent and that they are being punished without hearing.
Respondent Molina also added that he had already earned his right to
the step increment before Resolution No. 372 was enacted.
Respondents also argued that the three resolutions were ineffective
because they were not registered with the University of the Philippines
(UP) Law Center pursuant to the Revised Administrative Code of
1987.13
On 24 November 2003, petitioners filed their comment with motion to
dismiss and opposition.14 On 2 December 2003, respondents filed
their opposition to the motion to dismiss.15On 5 December 2003,
petitioners filed their reply.16
On 16 January 2004, the trial court denied petitioners motion to

dismiss and granted respondents prayer for a writ of preliminary
injunction.17
33
Petitioners filed a motion for reconsideration.18 In its 26 February 2004

Order, the trial court denied petitioners motion.19
In its 24 September 2004 Decision, the trial court granted respondents

petition for prohibition. The dispositive portion of the 24 September
2004 Decision provides:
WHEREFORE, the petition is GRANTED and respondents Board

Resolution No. 197 of August 27, 2003 and No. 372 of November 21,
2000 are hereby declared null and void. The writ of preliminary
injunction issued by this Court is hereby made permanent.
SO ORDERED.20
Petitioners filed a motion for reconsideration. In its 7 October 2005

Order, the trial court denied petitioners motion.
Hence, this petition.
The Ruling of the Trial Court
On the issue of jurisdiction, the trial court said it can take cognizance
of the petition because the territorial area referred to in Section 4, Rule
65 of the Rules of Court does not necessarily delimit to a particular
34
locality but rather to the judicial region where the office or agency is
situated so that the prohibitive writ can be enforced.
On the merits of the case, the trial court ruled that respondents were
entitled to all employee benefits as provided under the law by reason
of their employment. According to the trial court, to deny respondents
these employee benefits for the reason alone that they have pending
administrative cases is unjustified since it would deprive them of what
is legally due them without due process of law, inflict punishment on
them without hearing, and violate their right to be presumed innocent.
The trial court also found that the assailed resolutions were not
registered with the UP Law Center, per certification of the Office of the
National Administrative Register (ONAR).21Since they were not
registered, the trial court declared that the assailed resolutions have
not become effective citing Sections 3 and 4, Chapter 2, Book 7 of the
Revised Administrative Code of 1987.22
The Issues
Petitioners raise the following issues:
I
Whether the jurisdiction over the subject matter of Civil Case No. 03108389 (Velasco, et al. vs. The Board of Trustees of GSIS, et al., RTCManila, Branch 19) lies with the Civil Service Commission (CSC) and not
with the Regional Trial Court of Manila, Branch 19.
II
35
Whether a Special Civil Action for Prohibition against the GSIS Board or
its President and General Manager exercising quasi-legislative and
administrative functions in Pasay City is outside the territorial
jurisdiction of RTC-Manila, Branch 19.
III
Whether internal rules and regulations need not require publication
with the Office of the National [Administrative] Register for
their effectivity, contrary to the conclusion of the RTC-Manila, Branch
19.
IV
Whether a regulation, which disqualifies government employees who
have pending administrative cases from the grant of step increment
and Christmas raffle benefits is unconstitutional.
V
Whether the nullification of GSIS Board Resolutions is beyond an action
for prohibition, and a writ of preliminary injunction cannot be made
permanent without a decision ordering the issuance of a writ of
prohibition.23
The Ruling of the Court
The petition is partly meritorious.
36
Petitioners argue that the Civil Service Commission (CSC), not the trial
court, has jurisdiction over Civil Case No. 03-108389 because it
involves claims of employee benefits. Petitioners point out that the trial
court should have dismissed the case for lack of jurisdiction.
Sections 2 and 4, Rule 65 of the Rules of Court provide:
Sec. 2. Petition for Prohibition. - When the proceedings of any tribunal,

corporation, board, officer or person, whether exercising judicial, quasijudicial or ministerial functions, are without or in excess of its
jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction, and there is no appeal or any other plain,
speedy, and adequate remedy in the ordinary course of law, a person
aggrieved thereby may file a verified petition in the proper court,
alleging the facts with certainty and praying that judgment be
rendered commanding the respondent to desist from further
proceedings in the action or matter specified therein, or otherwise
granting such incidental reliefs as law and justice may require.
Sec. 4. Where petition filed. - The petition may be filed not later than
sixty (60) days from notice of the judgment, order or resolution sought
to be assailed in the Supreme Court or, if it related to acts or omissions
of a lower court or of a corporation, board, officer or person in the
Regional Trial Court exercising jurisdiction over the territorial area as
defined by the Supreme Court. It may also be filed in the Court of
Appeals whether or not the same is in aid of its
appellate jurisdiction, or in the Sandiganbayan if it is in aid of its
jurisdiction. If it involves the acts or omissions of a quasi-judicial
agency, and unless otherwise provided by law or these Rules, the
petition shall be filed in and cognizable only by the Court of Appeals.
(Emphasis supplied)
37
Civil Case No. 03-108389 is a petition for prohibition with prayer for the
issuance of a writ of preliminary injunction. Respondents prayed that
the trial court declare all acts emanating from Resolution Nos. 372,
197, and 306 void and to prohibit petitioners from further enforcing the
said resolutions.24 Therefore, the trial court, not the CSC, has
jurisdiction over respondents petition for prohibition.
Petitioners also claim that the petition for prohibition was filed in the
wrong territorial jurisdiction because the acts sought to be prohibited
are the acts of petitioners who hold their principal office in Pasay City,
while the petition for prohibition was filed in Manila.
Section 18 of Batas Pambansa Blg. 129 (BP 129)25 provides:
SEC. 18. Authority to define territory appurtenant to each branch. - The

Supreme Court shall define the territory over which a branch of the
Regional Trial Court shall exercise its authority. The territory thus
defined shall be deemed to be the territorial area of the branch
concerned for purposes of determining the venue of all suits,
proceedings or actions, whether civil or criminal, as well as
determining the Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts over which the said branch may exercise
appellate jurisdiction. The power herein granted shall be exercised with
a view to making the courts readily accessible to the people of the
different parts of the region and making attendance of litigants and
witnesses as inexpensive as possible. (Emphasis supplied)
38
In line with this, the Supreme Court issued Administrative Order No.
326 defining the territorial jurisdiction of the regional trial courts in the
National Capital Judicial Region, as follows:
a. Branches I to LXXXII, inclusive, with seats at Manila over the City of

Manila only.
b. Branches LXXXIII to CVII, inclusive, with seats at Quezon City over

Quezon City only.
c. Branches CVIII to CXIX, inclusive, with seats at Pasay City over Pasay
City only.
xxxx
The petition for prohibition filed by respondents is a special civil action

which may be filed in the Supreme Court, the Court of Appeals,
the Sandiganbayan or the regional trial court, as the case may be.27 It
is also a personal action because it does not affect the title to, or
possession of real property, or interest therein. Thus, it may be
commenced and tried where the plaintiff or any of the principal
plaintiffs resides, or where the defendant or any of the principal
defendants resides, at the election of the plaintiff.28 Since respondent
Velasco, plaintiff before the trial court, is a resident of the City of
Manila,29 the petition could properly be filed in the City of
Manila.30 The choice of venue is sanctioned by Section 2, Rule 4 of the
Rules of Court.
Moreover, Section 21(1) of BP 129 provides:
39
Sec. 21. Original jurisdiction in other cases. - Regional Trial Courts shall
exercise original jurisdiction:
(1) In the issuance of writs
of certiorari, prohibition, mandamus, quo warranto, habeas
corpus and injunction, which may be enforced in any part of their
respective regions; x x x (Emphasis supplied)
Since the National Capital Judicial Region is comprised of the cities of

Manila, Quezon, Pasay, Caloocan, Malabon, Mandaluyong, Makati,
Pasig, Marikina, Paraaque, Las Pias,Muntinlupa, and Valenzuela and the
municipalities of Navotas, San Juan, Pateros, and Taguig, a writ of
prohibition issued by the regional trial court sitting in the City of
Manila, is enforceable in Pasay City. Clearly, the RTC did not err when it
took cognizance of respondents petition for prohibition because it had
jurisdiction over the action and the venue was properly laid before it.
Petitioners also argue that Resolution Nos. 372, 197, and 306 need not
be filed with the UP Law Center ONAR since they are, at most,
regulations which are merely internal in nature regulating only the
personnel of the GSIS and not the public.
Not all rules and regulations adopted by every government agency are
to be filed with the UP Law Center. Only those of general or of
permanent character are to be filed. According to the UP Law Centers
guidelines for receiving and publication of rules and regulations,
interpretative regulations and those merely internal in nature, that is,
regulating only the personnel of the Administrative agency and not the
public, need not be filed with the UP Law Center.
40
Resolution No. 372 was about the new GSIS salary structure, Resolution
No. 306 was about the authority to pay the 2002 Christmas Package,
and Resolution No. 197 was about the GSIS merit selection and
promotion plan. Clearly, the assailed resolutions pertained only to
internal rules meant to regulate the personnel of the GSIS. There was
no need for the publication or filing of these resolutions with the UP
Law Center.
Petitioners insist that petitioner GSIS Board has the power to issue the
assailed resolutions. According to petitioners, it was within the power
of petitioner GSIS Board to disqualify respondents for step increment
and from receiving GSIS benefits from the time formal administrative
charges were filed against them until the cases are resolved.
The Court notes that the trial court only declared Resolution Nos. 197
and 372 void. The trial court made no ruling on Resolution No. 306 and
respondents did not appeal this matter. Therefore, we will limit our
discussion to Resolution Nos. 197 and 372, particularly to the effects of
preventive suspension on the grant of step increment because this was
what respondents raised before the trial court.
First, entitlement to step increment depends on the rules relative to

the grant of such benefit. In point are Section 1(b), Rule II and Section
2, Rule III of Joint Circular No. 1, series of 1990, which provide:
Rule II. Selection Criteria

Section 1. Step increments shall be granted to all deserving officials
and employees x x x
(b) Length of Service For those who have rendered continuous
satisfactory service in a particular position for at least three (3) years.
41
Rule III. Step Increments

xxxx
Section 2. Length of Service A one (1) step increment shall be granted

officials and employees for every three (3) years of continuous
satisfactory service in the position. Years of service in the position shall
include the following:
(a) Those rendered before the position was reclassified to a position
title with a lower or the same salary grade allocation; and
(b) Those rendered before the incumbent was transferred to another
position within the same agency or to another agency without a
change in position title and salary grade allocation.
In the initial implementation of step increments in 1990, an incumbent

shall be granted step increments equivalent to one (1) step for every
three (3) years of continuous satisfactory service in a given position
occupied as of January 1, 1990.
A grant of step increment on the basis of length of service requires that

an employee must have rendered at least three years of continuous
and satisfactory service in the same position to which he is an
incumbent.31 To determine whether service is continuous, it is
necessary to define what actual service is.32 Actual service refers to
the period of continuous service since the appointment of the official or
employee concerned, including the period or periods covered by any
previously approved leave with pay.33
Second, while there are no specific rules on the effects of preventive

suspension on step increment, we can refer to the CSC rules and
42
rulings on the effects of the penalty of suspension and approved

vacation leaves without pay on the grant of step increment for
guidance.
Section 56(d), Rule IV of the Uniform Rules on Administrative Cases in

the Civil Service provides:
Section 56. Duration and effect of administrative penalties. - The

following rules shall govern in the imposition of administrative
penalties: x x x
(d) The penalty of suspension shall result in the temporary cessation of
work for a period not exceeding one (1) year.
Suspension of one day or more shall be considered a gap in the

continuity of service. During the period of suspension, respondent shall
not be entitled to all money benefits including leave credits.
If an employee is suspended as a penalty, it effectively interrupts the

continuity of his government service at the commencement of the
service of the said suspension. This is because a person under penalty
of suspension is not rendering actual service. The suspension will
undoubtedly be considered a gap in the continuity of the service for
purposes of the computation of the three year period in the grant of
step increment.34 However, this does not mean that the employee will
only be entitled to the step increment after completing another three
years of continuous satisfactory service reckoned from the time the
employee has fully served the penalty of suspension.35 The CSC has
taken this to mean that the computation of the three year period
requirement will only be extended by the number of days that the
employee was under suspension.36 In other words, the grant of step
increment will only be delayed by the same number of days that the
employee was under suspension.
43
This is akin to the status of an employee who incurred vacation leave

without pay for purposes of the grant of step increment.37 Employees
who were on approved vacation leave without pay enjoy the liberal
application of the rule on the grant of step increment under Section 60
of CSC Memorandum Circular No. 41, series of 1998, which provides:
Section 60. Effect of vacation leave without pay on the grant of length
of service step increment. - For purposes of computing the length of
service for the grant of step increment, approved vacation leave
without pay for an aggregate of fifteen (15) days shall not interrupt the
continuity of the three-year service requirement for the grant of step
increment. However, if the total number of authorized vacation leave
without pay included within the three-year period exceeds fifteen (15)
days, the grant of one-step increment will only be delayed for the same
number of days that an official or employee was absent without pay.
(Emphasis supplied)
Third, on preventive suspension, Sections 51 and 52, Chapter 7,

Subtitle A, Title I, Book V of the Revised Administrative Code of 1987
provide:
SEC. 51. Preventive Suspension. - The proper disciplining authority may

preventively suspend any subordinate officer or employee under his
authority pending an investigation, if the charge against such officer or
employee involves dishonesty, oppression or grave misconduct, or
neglect in the performance of duty, or if there are reasons to believe
that the respondent is guilty of charges which would warrant his
removal from the service.
SEC. 52. Lifting of Preventive Suspension. Pending Administrative
Investigation. - When the administrative case against the officer or
employee under preventive suspension is not finally decided by the
44
disciplining authority within the period of ninety (90) days after the
date of suspension of the respondent who is not a presidential
appointee, the respondent shall be automatically reinstated in the
service: Provided, That when the delay in the disposition of the case is
due to the fault, negligence or petition of the respondent, the period of
delay shall not be counted in computing the period of suspension
herein provided. (Emphasis supplied)
Preventive suspension pending investigation is not a penalty.38 It is a

measure intended to enable the disciplining authority to investigate
charges against respondent by preventing the latter from intimidating
or in any way influencing witnesses against him.39 If the investigation
is not finished and a decision is not rendered within that period, the
suspension will be lifted and the respondent will automatically be
reinstated.
Therefore, on the matter of step increment, if an employee who was

suspended as a penalty will be treated like an employee on approved
vacation leave without pay,40 then it is only fair and reasonable to
apply the same rules to an employee who was preventively suspended,
more so considering that preventive suspension is not a penalty. If an
employee is preventively suspended, the employee is not rendering
actual service and this will also effectively interrupt the continuity of
his government service. Consequently, an employee who was
preventively suspended will still be entitled to step increment after
serving the time of his preventive suspension even if the pending
administrative case against him has not yet been resolved or
dismissed. The grant of step increment will only be delayed for the
same number of days, which must not exceed 90 days, that an official
or employee was serving the preventive suspension.
Fourth, the trial court was correct in declaring that respondents had
the right to be presumed innocent until proven guilty. This means that
45
an employee who has a pending administrative case filed against him

is given the benefit of the doubt and is considered innocent until the
contrary is proven.41
In this case, respondents were placed under preventive suspension for

90 days beginning on 23 May 2002. Their preventive suspension ended
on 21 August 2002. Therefore, after serving the period of their
preventive suspension and without the administrative case being
finally resolved, respondents should have been reinstated and, after
serving the same number of days of their suspension, entitled to the
grant of step increment.
On a final note, social legislation like the circular on the grant of step
increment, being remedial in character, should be liberally construed
and administered in favor of the persons to be benefited. The liberal
approach aims to achieve humanitarian purposes of the law in order
that the efficiency, security and well-being of government employees
may be enhanced.42
WHEREFORE, we DENY the petition. We AFFIRM with MODIFICATION the

24 September 2004 Decision and the 7 October 2005 Order of the
Regional Trial Court of Manila, Branch 19 in Civil Case No. 03-108389.
We DECLARE the assailed provisions on step increment in GSIS Board
Resolution Nos. 197 and 372 VOID. We MODIFY the 24 September 2004
Decision of the Regional Trial Court of Manila, Branch 19 and rule that
GSIS Board Resolution Nos. 197, 306 and 372 need not be filed with
the University of the Philippines Law Center.
SO ORDERED.
Digest
46
GSIS vs. Velasco and Molina

GR. No. 170463
Feb. 2, 2011
FACTS: Petitioners charged respondents administratively with grave
misconduct and placed them under preventive suspension for 90 days,
for their alleged participation in a demonstration held by GSIS
employees. In a letter, respondent Molina requested the GSIS Senior
Vice President for the implementation of his step increment. The SVP
denied the request citing GSIS Board Resolution No. 372 issued by
petitioner GSIS Board which approved the new GSIS salary structure,
its implementing rules and regulations, and the adoption of the
supplemental guidelines on step increment and promotion.
Respondents also asked that they be allowed to avail of the employee
privileges under GSIS Board Resolution No. 306 approving Christmas
raffle benefits for all GSIS officials and employees. Respondents
request was again denied because of their pending administrative
case.
Later, petitioner GSIS Board issued Resolution No. 197 approving the
following policy recommendations:
B. On the disqualification from promotion of an employee with a
pending administrative case
To adopt the policy that an employee with pending administrative case
shall be disqualified from the following during the pendency of the
case:
a) Promotion;
b) Step Increment;
xx
Respondents filed before the trial court a petition for prohibition with
prayer for a writ of preliminary injunction (Civil Case No. 03-108389).
Respondents claimed that they were denied the benefits which GSIS
employees were entitled under Resolution No. 306. Respondents also
47
sought to restrain and prohibit petitioners from implementing

Resolution Nos. 197 and 372.
The trial court granted respondents petition for prohibition. Petitioners
filed an MR. The trial court denied petitioners motion, hence, this
petition.
ISSUE:
1.
Whether the jurisdiction over the subject matter of Civil Case
No. 03-108389 (lies with the CSC and not with the RTC of Manila,
Branch 19.
2.
Whether a Special Civil Action for Prohibition against the GSIS
Board or its President and General Manager exercising quasi-legislative
and administrative functions in Pasay City is outside the territorial
jurisdiction of RTC-Manila, Branch 19.
HELD: WHEREFORE, we DENY the petition
Petitioners argue that the CSC, not the trial court, has jurisdiction over
Civil Case No. 03-108389 because it involves claims of employee
benefits. Petitioners point out that the trial court should have
dismissed the case for lack of jurisdiction.
Sections 2 and 4, Rule 65 of the Rules of Court provide:
Sec. 2. Petition for Prohibition. When the proceedings of any tribunal,
corporation, board, officer or person, whether exercising judicial, quasijudicial or ministerial functions, are without or in excess of its
jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction, and there is no appeal or any other plain,
speedy, and adequate remedy in the ordinary course of law, a person
aggrieved thereby may file a verified petition in the proper court,
alleging the facts with certainty and praying that judgment be
rendered commanding the respondent to desist from further
proceedings in the action or matter specified therein, or otherwise
granting such incidental reliefs as law and justice may require.
Sec. 4. Where petition filed. The petition may be filed not later than
sixty (60) days from notice of the judgment, order or resolution sought
48
to be assailed in the SC or, if it related to acts or omissions of a lower

court or of a corporation, board, officer or person in the RTC exercising
jurisdiction over the territorial area as defined by the SC. It may also be
filed in the CA whether or not the same is in aid of its appellate
jurisdiction, or in the Sandiganbayan if it is in aid of its jurisdiction. If it
involves the acts or omissions of a quasi-judicial agency, and unless
otherwise provided by law or these Rules, the petition shall be filed in
and cognizable only by the CA. (Emphasis supplied)
Civil Case No. 03-108389 is a petition for prohibition with prayer for the
issuance of a writ of preliminary injunction. Respondents prayed that
the trial court declare all acts emanating from Resolution Nos. 372,
197, and 306 void and to prohibit petitioners from further enforcing the
said resolutions. Therefore, the trial court, not the CSC, has jurisdiction
over respondents petition for prohibition.
Petitioners also claim that the petition for prohibition was filed in the
wrong territorial jurisdiction because the acts sought to be prohibited
are the acts of petitioners who hold their principal office in Pasay City,
while the petition for prohibition was filed in Manila.
Section 18 of BP 129 provides:
SEC. 18. Authority to define territory appurtenant to each
branch. The Supreme Court shall define the territory over which a
branch of the RTC shall exercise its authority. The territory thus defined
shall be deemed to be the territorial area of the branch concerned for
purposes of determining the venue of all suits, proceedings or actions,
whether civil or criminal, as well as determining the MeTCs, MTCs, and
MCTCs over which the said branch may exercise appellate jurisdiction.
The power herein granted shall be exercised with a view to making the
courts readily accessible to the people of the different parts of the
region and making attendance of litigants and witnesses as
inexpensive as possible. (Emphasis supplied)
In line with this, the SC issued Administrative Order No. 3 defining the
territorial jurisdiction of the RTCs in the National Capital Judicial Region,
as follows:
49
a. Branches I to LXXXII, inclusive, with seats at Manila over the City of

Manila only.
b. Branches LXXXIII to CVII, inclusive, with seats at Quezon City over
Quezon City only.
c. Branches CVIII to CXIX, inclusive, with seats at Pasay City over
Pasay City only.
xx
The petition for prohibition filed by respondents is a special civil action
which may be filed in the SC, the CA, the Sandiganbayan or the RTC, as
the case may be. It is also a personal action because it does not affect
the title to, or possession of real property, or interest therein. Thus, it
may be commenced and tried where the plaintiff or any of the principal
plaintiffs resides, or where the defendant or any of the principal
defendants resides, at the election of the plaintiff. Since respondent
Velasco, plaintiff before the trial court, is a resident of the City of
Manila, the petition could properly be filed in the City of Manila. The
choice of venue is sanctioned by Section 2, Rule 4 of the Rules of
Court.
Moreover, Section 21(1) of BP 129 provides:
Sec. 21. Original jurisdiction in other cases. RTCs shall exercise
original jurisdiction:
(1) In the issuance of writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction, which may be enforced in any
part of their respective regions; x x x (Emphasis supplied)
Since the National Capital Judicial Region is comprised of the cities of
Manila, Quezon, Pasay, Caloocan, Malabon, Mandaluyong, Makati,
Pasig, Marikina, Paraaque, Las Pias, Muntinlupa, and Valenzuela and
the municipalities of Navotas, San Juan, Pateros, and Taguig, a writ of
prohibition issued by the RTC sitting in the City of Manila, is
enforceable in Pasay City. Clearly, the RTC did not err when it took
cognizance of respondents petition for prohibition because it had
jurisdiction over the action and the venue was properly laid before it.
50
EN BANC
WILLIAM C. DAGAN, CARLOS G.R. No. 175220

H. REYES, NARCISO MORALES,
BONIFACIO MANTILLA, Present:
CESAR AZURIN, WEITONG LIM,
MA. TERESA TRINIDAD, MA. PUNO, C.J.,
CARMELITA FLORENTINO, QUISUMBING,
Petitioners, YNARES-SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
- versus - CARPIO MORALES,
AZCUNA,
TINGA,
CHICO-NAZARIO,
VELASCO, JR.,
PHILIPPINE RACING COMMISSION, NACHURA,
MANILA JOCKEY CLUB, INC., and LEONARDO DE CASTRO,
PHILIPPINE RACING CLUB, INC., BRION, and
51
Respondents PERALTA, JJ.
Promulgated:
February 12, 2009

x ----------------------------------------------------------------------------------- x
DECISION
TINGA, J.:
The subject of this petition for certiorari is the decision[1] of the Court
of Appeals in CA-G.R. SP No. 95212, affirming in toto the
judgment[2] of the Regional Trial Court of Makati in Civil Case No. 041228.
The controversy stemmed from the 11 August 2004 directive[3] issued

by the Philippine Racing Commission (Philracom) directing the Manila
Jockey Club, Inc. (MJCI) and Philippine Racing Club, Inc. (PRCI) to
immediately come up with their respective Clubs House Rule to
address Equine Infectious Anemia (EIA)[4] problem and to rid their
facilities of horses infected with EIA. Said directive was issued pursuant
to Administrative Order No. 5[5] dated 28 March 1994 by the
Department of Agriculture declaring it unlawful for any person, firm or
corporation to ship, drive, or transport horses from any locality or place
52
except when accompanied by a certificate issued by the authority of

the Director of the Bureau of Animal Industry (BAI).[6]
In compliance with the directive, MJCI and PRCI ordered the owners of
racehorses stable in their establishments to submit the horses to blood
sampling and administration of the Coggins Test to determine whether
they are afflicted with the EIA virus. Subsequently, on 17 September
2004, Philracom issued copies of the guidelines for the monitoring and
eradication of EIA.[7]
Petitioners and racehorse owners William Dagan (Dagan), Carlos

Reyes, Narciso Morales, Bonifacio Montilla, Cezar Azurin, Weitong Lim,
Ma. Teresa Trinidad and Ma. Carmelita Florentino refused to comply
with the directive. First, they alleged that there had been no prior
consultation with horse owners. Second, they claimed that neither
official guidelines nor regulations had been issued relative to the taking
of blood samples. And third, they asserted that no documented case of
EIA had been presented to justify the undertaking.[8]
Despite resistance from petitioners, the blood testing proceeded. The

horses, whose owners refused to comply were banned from the races,
were removed from the actual day of race, prohibited from renewing
their licenses or evicted from their stables.
When their complaint went unheeded, the racehorse owners lodged a

complaint before the Office of the President (OP) which in turn issued a
directive instructing Philracom to investigate the matter.
53
For failure of Philracom to act upon the directive of the OP, petitioners
filed a petition for injunction with application for the issuance of a
temporary restraining order (TRO). In an order[9] dated 11 November
2004, the trial court issued a TRO.
Dagan refused to comply with the directives because, according to

him, the same are unfair as there are no implementing rules on the
banning of sick horses from races.Consequently, his horses were
evicted from the stables and transferred to an isolation area. He also
admitted that three of his horses had been found positive for EIA.[10]
Confronted with two issues, namely: whether there were valid grounds
for the issuance of a writ of injunction and whether respondents had
acted with whim and caprice in the implementation of the contested
guideline, the trial court resolved both queries in the negative.
The trial court found that most racehorse owners, except for Dagan,
had already subjected their racehorses to EIA testing. Their act
constituted demonstrated compliance with the contested guidelines,
according to the trial court. Hence, the acts sought to be enjoined had
been rendered moot and academic.
With respect to the subject guidelines, the trial court upheld their
validity as an exercise of police power, thus:
The Petitioners submission that the subject guidelines are oppressive
and hence confiscatory of proprietary rights is likewise viewed by this
Court to be barren of factual and legal support. The horseracing
54
industry, needless to state, is imbued with public interest deserving of

utmost concern if not constant vigilance. The Petitioners do not dispute
this. It is because of this basic fact that respondents are expected to
police the concerned individuals and adopt measures that will promote
and protect the interests of all the stakeholders starting from the
moneyed horse-owners, gawking bettors down to the lowly maintainers
of the stables. This is a clear and valid exercise of police power with
the respondents acting for the State. Participation in the business of
horseracing is but a privilege; it is not a right. And no clear
acquiescence to this postulation can there be than the Petitioners' own
undertaking to abide by the rules and conditions issued and imposed
by the respondents as specifically shown by their contracts of lease
with MCJI.[11]
Petitioners appealed to the Court of Appeals. In its Decision dated 27

October 2006, the appellate court affirmed in toto the decision of the
trial court.
The appellate court upheld the authority of Philracom to formulate

guidelines since it is vested with exclusive jurisdiction over and control
of the horse-racing industry per Section 8 of Presidential Decree (P.D.)
No. 8. The appellate court further pointed out that P.D. No. 420 also
endows Philracom with the power to prescribe additional rules and
regulations not otherwise inconsistent with the said presidential
decree[12] and to perform such duties and exercise all powers
incidental or necessary to the accomplishment of its aims and
objectives.[13] It similarly concluded that the petition for prohibition
should be dismissed on the ground of mootness in light of evidence
indicating that petitioners had already reconsidered their refusal to
have their horses tested and had, in fact, subsequently requested the
administration of the test to the horses.[14]
55
Aggrieved by the appellate courts decision, petitioners filed the instant

certiorari petition[15] imputing grave abuse of discretion on the part of
respondents in compelling petitioners to subject their racehorses to
blood testing.
In their amended petition,[16] petitioners allege that Philracoms
unsigned and undated implementing guidelines suffer from several
infirmities. They maintain that the assailed guidelines do not comply
with due process requirements. Petitioners insist that racehorses
already in the MJCI stables were allowed to be so quartered because
the individual horse owners had already complied with the Philracom
regulation that horses should not bear any disease. There was neither
a directive nor a rule that racehorses already lodged in the stables of
the racing clubs should again be subjected to the collection of blood
samples preparatory to the conduct of the EIA tests,[17] petitioners
note.Thus, it came as a surprise to horse owners when told about the
administration of a new Coggins Tests on old horses since the matter
had not been taken up with them.[18] No investigation or at least a
summary proceeding was conducted affording petitioners an
opportunity to be heard.[19] Petitioners also aver that the assailed
guidelines are ultra viresin that the sanctions imposed for refusing to
submit to medical examination are summary eviction from the stables
or arbitrary banning of participation in the races, notwithstanding the
penalties prescribed in the contract of lease.[20]
In its Comment,[21] the PRCI emphasizes that it merely obeyed the

terms of its franchise and abided by the rules enacted by Philracom.
[22] For its part, Philracom, through the Office of the Solicitor-General
(OSG), stresses that the case has become moot and academic since
most of petitioners had complied with the guidelines by subjecting
their race horses to EIA testing. The horses found unafflicted with the
disease were eventually allowed to join the races.[23] Philracom also
56
justified its right under the law toregulate horse racing.[24] MJCI adds
that Philracom need
not delegate its rule-making power to the former since MJCIs right to
formulate its internal rules is subsumed under the franchise granted to
it by Congress.[25]
In their Reply,[26] petitioners raise for the first time the issue that
Philracom had unconstitutionally delegated its rule-making power to
PRCI and MJCI in issuing the directive for them to come up with club
rules. In response to the claim that respondents had merely complied
with their duties under their franchises, petitioners counter that the
power granted to PRCI and MJCI under their respective franchises is
limited to: (1) the construction, operation and maintenance of
racetracks; (2) the establishment of branches for booking purposes;
and (3) the conduct of horse races.
It appears on record that only Dagan had refused to comply with the
orders of respondents. Therefore, the case subsists as regards Dagan.
Petitioners essentially assail two issuances of Philracom; namely: the

Philracom directive[27] and the subsequent guidelines addressed to
MJCI and PRCI.
The validity of an administrative issuance, such as the assailed

guidelines, hinges on compliance with the following requisites:
1.
Its promulgation must be authorized by the legislature;
2.
It must be promulgated in accordance with the prescribed
procedure;
57
3.
It must be within the scope of the authority given by the
legislature;
4.
It must be reasonable.[28]
All the prescribed requisites are met as regards the questioned

issuances. Philracoms authority is drawn from P.D. No. 420. The
delegation made in the presidential decree is valid. Philracom did not
exceed its authority. And the issuances are fair and reasonable.
The rule is that what has been delegated cannot be delegated, or as

expressed in the Latin maxim: potestas delegate non delegare
potest. This rule is based upon the ethical principle that such
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.[29] This rule however admits of
recognized exceptions[30] such as the grant of rule-making power to
administrative agencies. They have been granted by Congress with the
authority to issue rules to regulate the implementation of a law
entrusted to them. Delegated rule-making has become a practical
necessity in modern governance due to the increasing complexity and
variety of public functions.[31]
However, in every case of permissible delegation, there must be a

showing that the delegation itself is valid. It is valid only if the law (a) is
complete in itself, setting forth therein the policy to be executed,
carried out, or implemented by the delegate; and (b) fixes a
standardthe limits of which are sufficiently determinate and
58
determinableto which the delegate must conform in the performance

of his functions. A sufficient standard is one which defines legislative
policy, marks its limits, maps out its boundaries and specifies the
public agency to apply it. It indicates the circumstances under which
the legislative command is to be effected.[32]
P.D. No. 420 hurdles the tests of completeness and standards

sufficiency.
Philracom was created for the purpose of carrying out the declared
policy in Section 1 which is to promote and direct the accelerated
development and continued growth of horse racing not only in
pursuance of the sports development program but also in order to
insure the full exploitation of the sport as a source of revenue and
employment. Furthermore, Philracom was granted exclusive
jurisdiction and control over every aspect of the conduct of horse
racing, including the framing and scheduling of races, the construction
and safety of race tracks, and the security of racing. P.D. No. 420 is
already complete in itself.
Section 9 of the law fixes the standards and limitations to which

Philracom must conform in the performance of its functions, to wit:
Section 9. Specific Powers. Specifically, the Commission shall have the

power:
a.
To enforce all laws, decrees and executive orders relating to
horse-racing that are not expressly or implied repealed or modified by
this Decree, including all such existing rules and regulations until
otherwise modified or amended by the Commission;
59
b.
To prescribe additional rules and regulations not otherwise
inconsistent with this Decree;
c.
To register race horses, horse owners or associations or
federations thereof, and to regulate the construction of race tracks
and to grant permit for the holding of races;
d.
To issue, suspend or revoke permits and licenses and to impose
or collect fees for the issuance of such licenses and permits to persons
required to obtain the same;
e.
To review, modify, approve or disapprove the rules and
regulations issued by any person or entity concerning the conduct of
horse races held by them;
f.
To supervise all such race meeting to assure integrity at all
times. It can order the suspension of any racing event in case of
violation of any law, ordinance or rules and regulations;
g.
To prohibit the use of improper devices, drugs, stimulants or
other means to enhance or diminish the speed of horse or materially
harm their condition;
h.
To approve the annual budget of the omission and such
supplemental budgets as may be necessary;
i.
To appoint all personnel, including an Executive Director of the
Commission, as it may be deem necessary in the exercise and
performance of its powers and duties; and
j.
To enter into contracts involving obligations chargeable to or
against the funds of the Commission. (Emphasis supplied)
Clearly, there is a proper legislative delegation of rule-making power to

Philracom. Clearly too, for its part Philracom has exercised its rulemaking power in a proper and reasonable manner. More specifically, its
discretion to rid the facilities of MJCI and PRCI of horses afflicted with
EIA is aimed at preserving the security and integrity of horse races.
60
Petitioners also question the supposed delegation by Philracom of its

rule-making powers to MJCI and PRCI.
There is no delegation of power to speak of between Philracom, as the

delegator and MJCI and PRCI as delegates. The Philracom directive is
merely instructive in character. Philracom had instructed PRCI and MJCI
to immediately come up with Clubs House Rule to address the problem
and rid their facilities of horses infected with EIA.PRCI and MJCI
followed-up when they ordered the racehorse owners to submit blood
samples and subject their race horses to blood testing. Compliance
with the Philracoms directive is part of the mandate of PRCI and MJCI
under Sections 1[33] of R.A. No. 7953[34] and Sections 1[35] and
2[36] of 8407.[37]
As correctly proferred by MJCI, its duty is not derived from the

delegated authority of Philracom but arises from the franchise granted
to them by Congress allowing MJCI to do and carry out all such acts,
deeds and things as may be necessary to give effect to the foregoing.
[38] As justified by PRCI, obeying the terms of the franchise and
abiding by whatever rules enacted by Philracom is its duty.[39]
More on the second, third and fourth requisites.
As to the second requisite, petitioners raise some infirmities relating to

Philracoms guidelines. They question the supposed belated issuance of
the guidelines, that is, only after the collection of blood samples for
the Coggins Test was ordered. While it is conceded that the guidelines
were issued a month after Philracoms directive, this circumstance does
61
not render the directive nor the guidelines void. The directives validity
and effectivity are not dependent on any supplemental
guidelines. Philracom has every right to issue directives to MJCI and
PRCI with respect to the conduct of horse racing, with or without
implementing guidelines.
Petitioners also argue that Philracoms guidelines have no force and

effect for lack of publication and failure to file copies with the
University of the Philippines (UP) LawCenter as required by law.
As a rule, the issuance of rules and regulations in the exercise of an

administrative agency of its quasi-legislative power does not require
notice 7and hearing.[40] InAbella, Jr. v. Civil Service Commission,
[41] this Court had the occasion to rule that prior notice and hearing
are not essential to the validity of rules or regulations issued in the
exercise of quasi-legislative powers since there is no determination of
past events or facts that have to be established or ascertained.[42]
The third requisite for the validity of an administrative issuance is that

it must be within the limits of the powers granted to it. The
administrative body may not make rules and regulations which are
inconsistent with the provisions of the Constitution or a statute,
particularly the statute it is administering or which created it, or which
are in derogation of, or defeat, the purpose of a statute.[43]
The assailed guidelines prescribe the procedure for monitoring and

eradicating EIA. These guidelines are in accord with Philracoms
mandate under the law to regulate the conduct of horse racing in the
country.
62
Anent the fourth requisite, the assailed guidelines do not appear to be

unreasonable or discriminatory. In fact, all horses stabled at the MJCI
and PRCIs premises underwent the same procedure. The guidelines
implemented were undoubtedly reasonable as they bear a reasonable
relation to the purpose sought to be accomplished, i.e., the complete
riddance of horses infected with EIA.
It also appears from the records that MJCI properly notified the
racehorse owners before the test was conducted.[44] Those who failed
to comply were repeatedly warned of certain consequences and
sanctions.
Furthermore, extant from the records are circumstances which allow

respondents to determine from time to time the eligibility of horses as
race entries. The lease contract executed between petitioner and MJC
contains a proviso reserving the right of the lessor, MJCI in this case,
the right to determine whether a particular horse is a qualified horse.In
addition, Philracoms rules and regulations on horse racing provide that
horses must be free from any contagious disease or illness in order to
be eligible as race entries.
All told, we find no grave abuse of discretion on the part of Philracom

in issuing the contested guidelines and on the part MJCI and PRCI in
complying with Philracoms directive.
WHEREFORE, the petition is DISMISSED. Costs against petitioner

William Dagan.
SO ORDERED.
63
No case digest available
FIRST DIVISION
[G.R. No. 151908. August 12, 2003]
64
SMART COMMUNICATIONS, INC. (SMART) and PILIPINO TELEPHONE

CORPORATION (PILTEL), petitioners, vs. NATIONAL
TELECOMMUNICATIONS COMMISSION (NTC), respondent.
[G.R. No. 152063. August 12, 2003]
GLOBE TELECOM, INC. (GLOBE) and ISLA COMMUNICATIONS CO., INC.
(ISLACOM), petitioners, vs. COURT OF APPEALS (The Former
6th Division) and the NATIONAL TELECOMMUNICATIONS
COMMISSION, respondents.
DECISION
YNARES-SANTIAGO, J.:
Pursuant to its rule-making and regulatory powers, the National
Telecommunications Commission (NTC) issued on June 16, 2000
Memorandum Circular No. 13-6-2000, promulgating rules and
regulations on the billing of telecommunications services. Among its
pertinent provisions are the following:
(1) The billing statements shall be received by the subscriber of the
telephone service not later than 30 days from the end of each billing
cycle. In case the statement is received beyond this period, the
subscriber shall have a specified grace period within which to pay the
bill and the public telecommunications entity (PTEs) shall not be
allowed to disconnect the service within the grace period.
(2) There shall be no charge for calls that are diverted to a voice
mailbox, voice prompt, recorded message or similar facility excluding
the customers own equipment.
(3) PTEs shall verify the identification and address of each purchaser of
prepaid SIM cards. Prepaid call cards and SIM cards shall be valid for at
least 2 years from the date of first use. Holders of prepaid SIM cards
shall be given 45 days from the date the prepaid SIM card is fully
consumed but not beyond 2 years and 45 days from date of first use to
replenish the SIM card, otherwise the SIM card shall be rendered
invalid. The validity of an invalid SIM card, however, shall be installed
65
upon request of the customer at no additional charge except the

presentation of a valid prepaid call card.
(4) Subscribers shall be updated of the remaining value of their cards
before the start of every call using the cards.
(5) The unit of billing for the cellular mobile telephone service whether
postpaid or prepaid shall be reduced from 1 minute per pulse to 6
seconds per pulse. The authorized rates per minute shall thus be
divided by 10.[1]
The Memorandum Circular provided that it shall take effect 15 days
after its publication in a newspaper of general circulation and three
certified true copies thereof furnished the UP Law Center. It was
published in the newspaper, The Philippine Star, on June 22, 2000.
[2] Meanwhile, the provisions of the Memorandum Circular pertaining
to the sale and use of prepaid cards and the unit of billing for cellular
mobile telephone service took effect 90 days from the effectivity of the
Memorandum Circular.
On August 30, 2000, the NTC issued a Memorandum to all cellular
mobile telephone service (CMTS) operators which contained measures
to minimize if not totally eliminate the incidence of stealing of cellular
phone units. The Memorandum directed CMTS operators to:
a. strictly comply with Section B(1) of MC 13-6-2000 requiring the
presentation and verification of the identity and addresses of prepaid
SIM card customers;
b. require all your respective prepaid SIM cards dealers to comply with
Section B(1) of MC 13-6-2000;
c. deny acceptance to your respective networks prepaid and/or
postpaid customers using stolen cellphone units or cellphone units
registered to somebody other than the applicant when properly
informed of all information relative to the stolen cellphone units;
d. share all necessary information of stolen cellphone units to all other
CMTS operators in order to prevent the use of stolen cellphone units;
and
66
e. require all your existing prepaid SIM card customers to register and
present valid identification cards.[3]
This was followed by another Memorandum dated October 6, 2000
addressed to all public telecommunications entities, which reads:
This is to remind you that the validity of all prepaid cards sold on 07
October 2000 and beyond shall be valid for at least two (2) years from
date of first use pursuant to MC 13-6-2000.
In addition, all CMTS operators are reminded that all SIM packs used by
subscribers of prepaid cards sold on 07 October 2000 and beyond shall
be valid for at least two (2) years from date of first use.Also, the billing
unit shall be on a six (6) seconds pulse effective 07 October 2000.
For strict compliance.[4]
On October 20, 2000, petitioners Isla Communications Co., Inc. and
Pilipino Telephone Corporation filed against the National
Telecommunications Commission, Commissioner Joseph A. Santiago,
Deputy Commissioner Aurelio M. Umali and Deputy Commissioner
Nestor C. Dacanay, an action for declaration of nullity of NTC
Memorandum Circular No. 13-6-2000 (the Billing Circular) and the NTC
Memorandum dated October 6, 2000, with prayer for the issuance of a
writ of preliminary injunction and temporary restraining order. The
complaint was docketed as Civil Case No. Q-00-42221 at the Regional
Trial Court of Quezon City, Branch 77.[5]
Petitioners Islacom and Piltel alleged, inter alia, that the NTC has no
jurisdiction to regulate the sale of consumer goods such as the prepaid
call cards since such jurisdiction belongs to the Department of Trade
and Industry under the Consumer Act of the Philippines; that the Billing
Circular is oppressive, confiscatory and violative of the constitutional
prohibition against deprivation of property without due process of law;
that the Circular will result in the impairment of the viability of the
prepaid cellular service by unduly prolonging the validity and
expiration of the prepaid SIM and call cards; and that the requirements
of identification of prepaid card buyers and call balance announcement
67
are unreasonable. Hence, they prayed that the Billing Circular be

declared null and void ab initio.
Soon thereafter, petitioners Globe Telecom, Inc and Smart
Communications, Inc. filed a joint Motion for Leave to Intervene and to
Admit Complaint-in-Intervention.[6] This was granted by the trial court.
On October 27, 2000, the trial court issued a temporary restraining
order enjoining the NTC from implementing Memorandum Circular No.
13-6-2000 and the Memorandum dated October 6, 2000.[7]
In the meantime, respondent NTC and its co-defendants filed a motion
to dismiss the case on the ground of petitioners failure to exhaust
administrative remedies.
Subsequently, after hearing petitioners application for preliminary
injunction as well as respondents motion to dismiss, the trial court
issued on November 20, 2000 an Order, the dispositive portion of
which reads:
WHEREFORE, premises considered, the defendants motion to dismiss is
hereby denied for lack of merit. The plaintiffs application for the
issuance of a writ of preliminary injunction is hereby
granted.Accordingly, the defendants are hereby enjoined from
implementing NTC Memorandum Circular 13-6-2000 and the NTC
Memorandum, dated October 6, 2000, pending the issuance and
finality of the decision in this case. The plaintiffs and intervenors are,
however, required to file a bond in the sum of FIVE HUNDRED
THOUSAND PESOS (P500,000.00), Philippine currency.
SO ORDERED.[8]
Defendants filed a motion for reconsideration, which was denied in an
Order dated February 1, 2001.[9]
Respondent NTC thus filed a special civil action for certiorari and
prohibition with the Court of Appeals, which was docketed as CA-G.R.
SP. No. 64274. On October 9, 2001, a decision was rendered, the
decretal portion of which reads:
68
WHEREFORE, premises considered, the instant petition for certiorari

and prohibition is GRANTED, in that, the order of the court a
quo denying the petitioners motion to dismiss as well as the order of
the court a quo granting the private respondents prayer for a writ of
preliminary injunction, and the writ of preliminary injunction issued
thereby, are hereby ANNULLED and SET ASIDE. The private
respondents complaint and complaint-in-intervention below are hereby
DISMISSED, without prejudice to the referral of the private respondents
grievances and disputes on the assailed issuances of the NTC with the
said agency.
SO ORDERED.[10]
Petitioners motions for reconsideration were denied in a Resolution
dated January 10, 2002 for lack of merit.[11]
Hence, the instant petition for review filed by Smart and Piltel, which
was docketed as G.R. No. 151908, anchored on the following grounds:
A.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT THE NATIONAL TELECOMMUNICATIONS COMMISSION (NTC) AND
NOT THE REGULAR COURTS HAS JURISDICTION OVER THE CASE.
B.
THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN
HOLDING THAT THE PRIVATE RESPONDENTS FAILED TO EXHAUST AN
AVAILABLE ADMINISTRATIVE REMEDY.
C.
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT
THE BILLING CIRCULAR ISSUED BY THE RESPONDENT NTC IS
UNCONSTITUTIONAL AND CONTRARY TO LAW AND PUBLIC POLICY.
D.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
PRIVATE RESPONDENTS FAILED TO SHOW THEIR CLEAR POSITIVE
69
RIGHT TO WARRANT THE ISSUANCE OF A WRIT OF PRELIMINARY

INJUNCTION.[12]
Likewise, Globe and Islacom filed a petition for review, docketed as
G.R. No. 152063, assigning the following errors:
1. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED BECAUSE
THE DOCTRINES OF PRIMARY JURISDICTION AND EXHAUSTION OF
ADMINISTRATIVE REMEDIES DO NOT APPLY SINCE THE INSTANT CASE IS
FOR LEGAL NULLIFICATION (BECAUSE OF LEGAL INFIRMITIES AND
VIOLATIONS OF LAW) OF A PURELY ADMINISTRATIVE REGULATION
PROMULGATED BY AN AGENCY IN THE EXERCISE OF ITS RULE MAKING
POWERS AND INVOLVES ONLY QUESTIONS OF LAW.
THE DOCTRINE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES
NOT APPLY WHEN THE QUESTIONS RAISED ARE PURELY LEGAL
QUESTIONS.
THE DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES DOES
NOT APPLY WHERE THE ADMINISTRATIVE ACTION IS COMPLETE AND
EFFECTIVE, WHEN THERE IS NO OTHER REMEDY, AND THE PETITIONER
STANDS TO SUFFER GRAVE AND IRREPARABLE INJURY.
PETITIONERS IN FACT EXHAUSTED ALL ADMINISTRATIVE REMEDIES
AVAILABLE TO THEM.
5. THE HONORABLE COURT OF APPEALS SO GRAVELY ERRED IN
ISSUING ITS QUESTIONED RULINGS IN THIS CASE BECAUSE GLOBE AND
ISLA HAVE A CLEAR RIGHT TO AN INJUNCTION.[13]
The two petitions were consolidated in a Resolution dated February 17,
2003.[14]
On March 24, 2003, the petitions were given due course and the
parties were required to submit their respective memoranda.[15]
We find merit in the petitions.
70
Administrative agencies possess quasi-legislative or rule-making

powers and quasi-judicial or administrative adjudicatory powers. Quasilegislative 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.[16]
The rules and regulations that administrative agencies promulgate,
which are the product of a delegated legislative power to create new
and additional legal provisions that have the effect of law, should be
within the scope of the statutory authority granted by the legislature to
the administrative agency. It is required that the regulation be
germane to the objects and purposes of the law, and be not in
contradiction to, but in conformity with, the standards prescribed by
law.[17] They must conform to and be consistent with the provisions of
the enabling statute in order for such rule or regulation to be
valid. Constitutional and statutory provisions control with respect to
what rules and regulations may be promulgated by an administrative
body, as well as with respect to what fields are subject to regulation by
it. It may not make rules and regulations which are inconsistent with
the provisions of the Constitution or a statute, particularly the statute it
is administering or which created it, or which are in derogation of, or
defeat, the purpose of a statute. In case of conflict between a statute
and an administrative order, the former must prevail.[18]
Not to be confused with the quasi-legislative or rule-making power of
an administrative agency is its quasi-judicial or administrative
adjudicatory power. This 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 the law itself in enforcing
and administering the same law.The administrative body exercises its
quasi-judicial power when it performs in a judicial manner an act which
is essentially of an executive or administrative nature, where the
power to act in such manner is incidental to or reasonably necessary
for the performance of the executive or administrative duty entrusted
to it. 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
71
conclusions from them as basis for their official action and exercise of
discretion in a judicial nature.[19]
In questioning the validity or constitutionality of a rule or regulation
issued by an administrative agency, a party need not exhaust
administrative remedies before going to court. This principle applies
only where the act of the administrative agency concerned was
performed pursuant to its quasi-judicial function, and not when the
assailed act pertained to its rule-making or quasi-legislative
power. In Association of Philippine Coconut Dessicators v. Philippine
Coconut Authority,[20] it was held:
The rule of requiring exhaustion of administrative remedies before a
party may seek judicial review, so strenuously urged by the Solicitor
General on behalf of respondent, has obviously no application here.The
resolution in question was issued by the PCA in the exercise of its rulemaking or legislative power. However, only judicial review of decisions
of administrative agencies made in the exercise of their quasi-judicial
function is subject to the exhaustion doctrine.
Even assuming arguendo that the principle of exhaustion of
administrative remedies apply in this case, the records reveal that
petitioners sufficiently complied with this requirement.Even during the
drafting and deliberation stages leading to the issuance of
Memorandum Circular No. 13-6-2000, petitioners were able to register
their protests to the proposed billing guidelines. They submitted their
respective position papers setting forth their objections and submitting
proposed schemes for the billing circular.[21] After the same was
issued, petitioners wrote successive letters dated July 3, 2000[22] and
July 5, 2000,[23] asking for the suspension and reconsideration of the
so-called Billing Circular. These letters were not acted upon until
October 6, 2000, when respondent NTC issued the second assailed
Memorandum implementing certain provisions of the Billing
Circular. This was taken by petitioners as a clear denial of the requests
contained in their previous letters, thus prompting them to seek
judicial relief.
In like manner, the doctrine of primary jurisdiction applies only where
the administrative agency exercises its quasi-judicial or adjudicatory
72
function. Thus, in cases involving specialized disputes, the practice has

been to refer the same to an administrative agency of special
competence pursuant to the doctrine of primary jurisdiction. The courts
will not determine a controversy involving a question which is within
the jurisdiction of the administrative tribunal prior to the resolution of
that question by the administrative tribunal, where the question
demands the exercise of sound administrative discretion requiring the
special knowledge, experience and services of the administrative
tribunal to determine technical and intricate matters of fact, and a
uniformity of ruling is essential to comply with the premises of the
regulatory statute administered. The objective of the doctrine of
primary jurisdiction is to guide a court in determining whether it should
refrain from exercising its jurisdiction until after an administrative
agency has determined some question or some aspect of some
question arising in the proceeding before the court. It applies where
the claim is originally cognizable in the courts and comes into play
whenever enforcement of the claim requires the resolution of issues
which, under a regulatory scheme, 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.[24]
However, where what is assailed is the validity or constitutionality of a
rule or regulation issued by the administrative agency in the
performance of its quasi-legislative function, the regular courts have
jurisdiction to pass upon the same. The determination of whether a
specific rule or set of rules issued by an administrative agency
contravenes the law or the constitution is within the jurisdiction of the
regular courts. Indeed, the Constitution vests the power of judicial
review or the power to declare a law, treaty, international or executive
agreement, presidential decree, order, instruction, ordinance, or
regulation in the courts, including the regional trial courts.[25] This is
within the scope of judicial power, which includes the authority of the
courts to determine in an appropriate action the validity of the acts of
the political departments.[26] Judicial power includes the duty of the
courts of justice to settle actual controversies involving rights which
are legally demandable and enforceable, and to determine whether or
73
not there has been a grave abuse of discretion amounting to lack or

excess of jurisdiction on the part of any branch or instrumentality of
the Government.[27]
In the case at bar, the issuance by the NTC of Memorandum Circular
No. 13-6-2000 and its Memorandum dated October 6, 2000 was
pursuant to its quasi-legislative or rule-making power. As such,
petitioners were justified in invoking the judicial power of the Regional
Trial Court to assail the constitutionality and validity of the said
issuances. In Drilon v. Lim,[28] it was held:
We stress at the outset that the lower court had jurisdiction to consider
the constitutionality of Section 187, this authority being embraced in
the general definition of the judicial power to determine what are the
valid and binding laws by the criterion of their conformity to the
fundamental law. Specifically, B.P. 129 vests in the regional trial courts
jurisdiction over all civil cases in which the subject of the litigation is
incapable of pecuniary estimation, even as the accused in a criminal
action has the right to question in his defense the constitutionality of a
law he is charged with violating and of the proceedings taken against
him, particularly as they contravene the Bill of Rights. Moreover, Article
X, Section 5(2), of the Constitution vests in the Supreme Court
appellate jurisdiction over final judgments and orders of lower courts in
all cases in which the constitutionality or validity of any treaty,
international or executive agreement, law, presidential decree,
proclamation, order, instruction, ordinance, or regulation is in question.
[29]
In their complaint before the Regional Trial Court, petitioners averred
that the Circular contravened Civil Code provisions on sales and
violated the constitutional prohibition against the deprivation of
property without due process of law. These are within the competence
of the trial judge. Contrary to the finding of the Court of Appeals, the
issues raised in the complaint do not entail highly technical
matters. Rather, what is required of the judge who will resolve this
issue is a basic familiarity with the workings of the cellular telephone
service, including prepaid SIM and call cards and this is judicially
known to be within the knowledge of a good percentage of our
74
population and expertise in fundamental principles of civil law and the

Constitution.
Hence, the Regional Trial Court has jurisdiction to hear and decide Civil
Case No. Q-00-42221. The Court of Appeals erred in setting aside the
orders of the trial court and in dismissing the case.
WHEREFORE, in view of the foregoing, the consolidated petitions
are GRANTED. The decision of the Court of Appeals in CA-G.R. SP No.
64274 dated October 9, 2001 and its Resolution dated January 10,
2002 are REVERSED and SET ASIDE. The Order dated November 20,
2000 of the Regional Trial Court of Quezon City, Branch 77, in Civil
Case No. Q-00-42221 is REINSTATED. This case is REMANDED to the
court a quo for continuation of the proceedings.
SO ORDERED.
Digest
Smart Communications vs. NTC GR 151908, 12 August 2003; First
Division, Ynares-Santiago (J) Facts: On 16 June 2000, the NTC issued
Memorandum Circular 13-6-2000, promulgating rules and regulations
on the billing of telecommunications services; which includes
provisions pertaining to the use and sale of pre-paid cards and unit of
billing for cellular mobile telephone service (CMTS). On 30 August
2000, the NTC issued a memorandum to all CMTS operators which
contained measures to minimize if not totally eliminate the incidence
of stealing of cellular phone units. Another memorandum dated 6
October 2000 addressed to all telecommunications entities reminding
them that the validity of all prepaid cards and SIM packs sold and used
on 7 October 2000 and beyond shall be valid for at least 2 years from
the date of first use. Telecommunications Law, 2004 ( 3 ) Digests
(Berne Guerrero) On 20 October 2000, Islacom and Piltel questioned
the validity of the memoranda, and prayed for the issuance of a writ of
preliminary injunction. The lower court granted the issuance of the
injunction. NTC moved for reconsideration, but was denied. NTC
thereafter filed a special civil action for certiorari and probation before
the Court of Appeals. The appellate court granted the petition and
dismissed the companies complaint without prejudice to the referral of
75
their grievances with the NTC. Hence, the petition for review with the
Supreme Court. Issue: Whether a party should have exhausted
administrative remedies before it filed the case in court. Held: A party
need not exhaust administrative remedies before going to Court, when
questioning the validity or constitutionality of a rule or regulation
issued by an administrative agency. The principle only applies when
the act of the agency was performed pursuant to its quasi-judicial
function, and not when the assailed and pertained to its rule-making or
quasi-legislative power. Issue: Whether the court or NTC has
jurisdiction over the issues pertaining to the memoranda. Held: The
issues raised in the complaint do not entail highly technical matters,
and thus are within the competence of a judge in the lower court. What
is required of the judge who will resolve the issue is a basic familiarity
with the workings of the cellular telephone service, including pre-paid
SIM and call cards (which is within the knowledge of a good percentage
of the Philippine population) and expertise in fundamental principles of
civil law and the Constitution.
76
EN BANC
[G.R. No. 116422. November 4, 1996]
AVELINA B. CONTE and LETICIA BOISER-PALMA, petitioners, vs.
COMMISSION ON AUDIT (COA), respondent.
DECISION
PANGANIBAN, J.:
Are the benefits provided for under Social Security System Resolution
No. 56 to be considered simply as financial assistance for retiring
employees, or does such scheme constitute a supplementary
retirement plan proscribed by Republic Act No. 4968?
The foregoing question is addressed by this Court in resolving the
instant petition for certiorari which seeks to reverse and set aside
Decision No. 94-126[1]dated March 15, 1994 of respondent
Commission on Audit, which denied petitioners request for
reconsideration of its adverse ruling disapproving claims for financial
assistance under SSS Resolution No. 56.
The Facts
Petitioners Avelina B. Conte and Leticia Boiser-Palma were former
employees of the Social Security System (SSS) who retired from
government service on May 9, 1990 andSeptember 13, 1992,
respectively. They availed of compulsory retirement benefits under
Republic Act No. 660.[2]
77
In addition to retirement benefits provided under R.A. 660, petitioners

also claimed SSS financial assistance benefits granted under SSS
Resolution No. 56, series of 1971.
A brief historical backgrounder is in order. SSS Resolution No. 56,
[3] approved on January 21, 1971, provides financial incentive and
inducement to SSS employees qualified to retire to avail of retirement
benefits under RA 660 as amended, rather than the retirement benefits
under RA 1616 as amended, by giving them financial assistance
equivalent in amount to the difference between what a retiree would
have received under RA 1616, less what he was entitled to under RA
660. The said SSS Resolution No. 56 states:
RESOLUTION NO. 56
WHEREAS, the retirement benefits of SSS employees are provided for
under Republic Acts 660 and 1616 as amended;
WHEREAS, SSS employees who are qualified for compulsory retirement
at age 65 or for optional retirement at a lower age are entitled to either
the life annuity under R.A. 660, as amended, or the gratuity under R.A.
1616, as amended;
WHEREAS, a retirement benefit to be effective must be a periodic
income as close as possible to the monthly income that would have
been due to the retiree during the remaining years of his life were he
still employed;
WHEREAS, the life annuity under R.A. 660, as amended, being closer to
the monthly income that was lost on account of old age than the
gratuity under R.A. 1616, as amended, would best serve the interest of
the retiree;
WHEREAS, it is the policy of the Social Security Commission to promote
and to protect the interest of all SSS employees, with a view to
providing for their well-being during both their working and retirement
years;
78
WHEREAS, the availment of life annuities built up by premiums paid on

behalf of SSS employees during their working years would mean more
savings to the SSS;
WHEREAS, it is a duty of the Social Security Commission to effect
savings in every possible way for economical and efficient operations;
WHEREAS, it is the right of every SSS employee to choose freely and
voluntarily the benefit he is entitled to solely for his own benefit and
for the benefit of his family;
NOW, THEREFORE, BE IT RESOLVED, That all the SSS employees who
are simultaneously qualified for compulsory retirement at age 65 or for
optional retirement at a lower age be encouraged to avail for
themselves the life annuity under R.A. 660, as amended;
RESOLVED, FURTHER, That SSS employees who availed themselves of
the said life annuity, in appreciation and recognition of their long and
faithful service, be granted financial assistance equivalent to the
gratuity plus return of contributions under R.A. 1616, as amended, less
the five year guaranteed annuity under R.A. 660, as amended;
RESOLVED, FINALLY, That the Administrator be authorized to act on all
applications for retirement submitted by SSS employees and subject to
availability of funds, pay the corresponding benefits in addition to the
money value of all accumulated leaves. (underscoring supplied)
Long after the promulgation of SSS Resolution No. 56, respondent
Commission on Audit (COA) issued a ruling, captioned as 3rd
Indorsement dated July 10, 1989,[4] disallowing in audit all such claims
for financial assistance under SSS Resolution No. 56, for the reason
that: -x x x the scheme of financial assistance authorized by the SSS is
similar to those separate retirement plan or incentive/separation pay
plans adopted by other government corporate agencies which results
in the increase of benefits beyond what is allowed under existing
retirement laws. In this regard, attention x x x is invited to the view
expressed by the Secretary of Budget and Management dated
February 17, 1988 to the COA General Counsel against the proliferation
79
of retirement plans which, in COA Decision No. 591 dated August 31,
1988, was concurred in by this Commission. x x x.
Accordingly, all such claims for financial assistance under SSS
Resolution No. 56 dated January 21, 1971 should be disallowed in
audit. (underscoring supplied)
Despite the aforequoted ruling of respondent COA, then SSS
Administrator Jose L. Cuisia, Jr. nevertheless wrote[5] on February 12,
1990 then Executive Secretary Catalino Macaraig, Jr., seeking
presidential authority for SSS to continue implementing its Resolution
No. 56 dated January 21, 1971 granting financial assistance to its
qualified retiring employees.
However, in a letter-reply dated May 28, 1990,[6] then Executive
Secretary Macaraig advised Administrator Cuisia that the Office of the
President is not inclined to favorably act on the herein request, let
alone overrule the disallowance by COA of such claims, because, aside
from the fact that decisions, order or actions of the COA in the exercise
of its audit functions are appealable to the Supreme Court[7] pursuant
to Sec. 50 of PD 1445, the benefits under said Res. 56, though referred
to as financial assistance, constituted additional retirement benefits,
and the scheme partook of the nature of a supplementary
pension/retirement plan proscribed by law.
The law referred to above is RA 4968 (The Teves Retirement Law),
which took effect June 17, 1967 and amended CA 186 (otherwise
known as the Government Service Insurance Act, or the GSIS Charter),
making Sec. 28 (b) of the latter act read as follows:
(b) Hereafter, no insurance or retirement plan for officers or employees
shall be created by employer. All supplementary retirement or pension
plans heretofore in force in any government office, agency or
instrumentality or corporation owned or controlled by the government,
are hereby declared inoperative or abolished; Provided, That the rights
of those who are already eligible to retire thereunder shall not be
affected. (underscoring supplied)
80
On January 12, 1993, herein petitioners filed with respondent COA their
letter-appeal/protest[8] seeking reconsideration of COAs ruling of July
10, 1989 disallowing claims for financial assistance under Res. 56.
On November 15, 1993, petitioner Conte sought payment from SSS of
the benefits under Res. 56. On December 9, 1993, SSS Administrator
Renato C. Valencia denied[9] the request in consonance with the
previous disallowance by respondent COA, but assured petitioner that
should the COA change its position, the SSS will resume the grant of
benefits under said Res. 56.
On March 15, 1994, respondent COA rendered its COA Decision No. 94126 denying petitioners request for reconsideration.
Thus this petition for certiorari under Rule 65 of the Rules of Court.
The Issues
The issues[10] submitted by petitioners may be simplified and restated thus: Did public respondent abuse its discretion when it
disallowed in audit petitioners claims for benefits under SSS Res. 56?
Petitioners argue that the financial assistance under Res. 56 is not a
retirement plan prohibited by RA 4968, and that Res. 56 provides
benefits different from and aside from what a retiring SSS employee
would be entitled to under RA 660. Petitioners contend that it is a
social amelioration and economic upliftment measure undertaken not
only for the benefit of the SSS but more so for the welfare of its
qualified retiring employees. As such, it should be interpreted in a
manner that would give the x x x most advantage to the recipient -the retiring employees whose dedicated, loyal, lengthy and faithful
service to the agency of government is recognized and amply
rewarded -- the rationale for the financial assistance plan. Petitioners
reiterate the argument in their letter dated January 12, 1993 to COA
that:
Motivation can be in the form of financial assistance, during their stay
in the service or upon retirement, as in the SSS Financial Assistance
Plan. This is so, because Government has to have some attractive
remuneration programs to encourage well-qualified personnel to
81
pursue a career in the government service, rather than in the private

sector or in foreign countries ...
A more developmental view of the financial institutions grant of certain
forms of financial assistance to its personnel, we believe, would enable
government administrators to see these financial forms of
remuneration as contributory to the national developmental efforts for
effective and efficient administration of the personnel programs in
different institutions.[11]
The Courts Ruling
Petitioners contentions are not supported by law. We hold that Res. 56
constitutes a supplementary retirement plan.
A cursory examination of the preambular clauses and provisions of Res.
56 provides a number of clear indications that its financial assistance
plan constitutes a supplemental retirement/pension benefits plan. In
particular, the fifth preambular clause which provides that it is the
policy of the Social Security Commission to promote and to protect the
interest of all SSS employees, with a view to providing for their wellbeing during both their working and retirement years, and the wording
of the resolution itself which states Resolved, further, that SSS
employees who availed themselves of the said life annuity (under RA
660), in appreciation and recognition of their long and faithful service,
be granted financial assistance x x x can only be interpreted to mean
that the benefit being granted is none other than a kind of amelioration
to enable the retiring employee to enjoy (or survive) his retirement
years and a reward for his loyalty and service. Moreover, it is plain to
see that the grant of said financial assistance is inextricably linked with
and inseparable from the application for and approval of retirement
benefits under RA 660, i.e., that availment of said financial assistance
under Res. 56 may not be done independently of but only in
conjunction with the availment of retirement benefits under RA 660,
and that the former is in augmentation or supplementation of the latter
benefits.
82
Likewise, then SSS Administrator Cuisias historical overview of the

origins and purpose of Res. 56 is very instructive and sheds much light
on the controversy:[12]
Resolution No. 56, x x x, applies where a retiring SSS employee is
qualified to claim under either RA 660 (pension benefit, that is, 5 year
lump sum pension and after 5 years, life time pension), or RA 1616
(gratuity benefit plus return of contribution), at his option. The benefits
under RA 660 are entirely payable by GSIS while those under RA 1616
are entirely shouldered by SSS except the return of contribution by
GSIS.
Resolution No. 56 came about upon observation that qualified SSS
employees have invariably opted to retire under RA 1616 instead of RA
660 because the total benefit under the former is much greater than
the 5-year lump sum under the latter. As a consequence, the SSS
usually ended up virtually paying the entire retirement benefit, instead
of GSIS which is the main insurance carrier for government employees.
Hence, the situation has become so expensive for SSS that a study of
the problem became inevitable.
As a result of the study and upon the recommendation of its Actuary,
the SSS Management recommended to the Social Security Commission
that retiring employees who are qualified to claim under either RA 660
or 1616 should be encouraged to avail for themselves the life annuity
under RA 660, as amended, with the SSS providing a financial
assistance equivalent to the difference between the benefit under RA
1616 (gratuity plus return of contribution) and the 5-year lump sum
pension under RA 660.
The Social Security Commission, as the policy-making body of the SSS
approved the recommendation in line with its mandate to insure
the efficient, honest and economical administration of the provisions
and purposes of this Act. (Section 3 (c) of the Social Security Law).
Necessarily, the situation was reversed with qualified SSS employees
opting to retire under RA No. 660 or RA 1146 instead of RA 1616,
resulting in substantial savings for the SSS despite its having to pay
financial assistance.
83
Until Resolution No. 56 was questioned by COA. (underscoring part of

original text; italics ours)
Although such financial assistance package may have been instituted
for noble, altruistic purposes as well as from self-interest and a desire
to cut costs on the part of the SSS, nevertheless, it is beyond any
dispute that such package effectively constitutes a supplementary
retirement plan. The fact that it was designed to equalize the benefits
receivable from RA 1616 with those payable under RA 660 and make
the latter program more attractive, merely confirms the foregoing
finding.
That the Res. 56 package is labelled financial assistance does not
change its essential nature. Retirement benefits are, after all, a form of
reward for an employees loyalty and service to the employer, and are
intended to help the employee enjoy the remaining years of his life,
lessening the burden of worrying about his financial support or upkeep.
[13] On the other hand, a pension partakes of the nature of retained
wages of the retiree for a dual purpose: to entice competent people to
enter the government service, and to permit them to retire from the
service with relative security, not only for those who have retained
their vigor, but more so for those who have been incapacitated by
illness or accident.[14]
Is SSS Resolution No. 56 then within the ambit of and thus proscribed
by Sec. 28 (b) of CA 186 as amended by RA 4968?
We answer in the affirmative. Said Sec. 28 (b) as amended by RA 4968
in no uncertain terms bars the creation of any insurance or retirement
plan -- other than the GSIS -- for government officers and employees,
in order to prevent the undue and inequitous proliferation of such
plans. It is beyond cavil that Res. 56 contravenes the said provision of
law and is therefore invalid, void and of no effect. To ignore this and
rule otherwise would be tantamount to permitting every other
government office or agency to put up its own supplementary
retirement benefit plan under the guise of such financial assistance.
We are not unmindful of the laudable purposes for promulgating Res.
56, and the positive results it must have had, not only in reducing costs
84
and expenses on the part of the SSS in connection with the pay-out of
retirement benefits and gratuities, but also in improving the quality of
life for scores of retirees. But it is simply beyond dispute that the SSS
had no authority to maintain and implement such retirement plan,
particularly in the face of the statutory prohibition. The SSS cannot, in
the guise of rule-making, legislate or amend laws or worse, render
them nugatory.
It is doctrinal that in case of conflict between a statute and an
administrative order, the former must prevail.[15] A rule or regulation
must conform to and be consistent with the provisions of the enabling
statute in order for such rule or regulation to be valid.[16] The rulemaking power of a public administrative body is a delegated legislative
power, which it may not use either to abridge the authority given it by
the Congress or the Constitution or to enlarge its power beyond the
scope intended. Constitutional and statutory provisions control with
respect to what rules and regulations may be promulgated by such a
body, as well as with respect to what fields are subject to regulation by
it. It may not make rules and regulations which are inconsistent with
the provisions of the Constitution or a statute, particularly the statute it
is administering or which created it, or which are in derogation of, or
defeat, the purpose of a statute.[17] Though well-settled is the rule
that retirement laws are liberally interpreted in favor of the retiree,
[18] nevertheless, there is really nothing to interpret in either RA 4968
or Res. 56, and correspondingly, the absence of any doubt as to
the ultra-vires nature and illegality of the disputed resolution
constrains us to rule against petitioners.
As a necessary consequence of the invalidity of Res. 56, we can hardly
impute abuse of discretion of any sort to respondent Commission for
denying petitioners request for reconsideration of the 3rd Indorsement
of July 10, 1989. On the contrary, we hold that public respondent in its
assailed Decision acted with circumspection in denying petitioners
claim. It reasoned thus:
After a careful evaluation of the facts herein obtaining, this
Commission finds the instant request to be devoid of merit. It bears
stress that the financial assistance contemplated under SSS Resolution
85
No. 56 is granted to SSS employees who opt to retire under R.A. No.
660. In fact, by the aggrieved parties own admission (page 2 of the
request for reconsideration dated January 12, 1993), it is a financial
assistance granted by the SSS management to its employees, in
addition to the retirement benefits under Republic Act No.
660. (underscoring supplied for emphasis) There is therefore no
question, that the said financial assistance partakes of the nature of a
retirement benefit that has the effect of modifying existing retirement
laws particularly R.A. No. 660.
Petitioners also asseverate that the scheme of financial assistance
under Res. 56 may be likened to the monetary benefits of government
officials and employees who are paid, over and above their salaries
and allowances as provided by statute, an additional honorarium in
varying amounts. We find this comparison baseless and misplaced. As
clarified by the Solicitor General:[19]
Petitioners comparison of SSS Resolution No. 56 with the honoraria
given to government officials and employees of the National
Prosecution Service of the Department of Justice, Office of the
Government Corporate Counsel and even in the Office of the Solicitor
General is devoid of any basis. The monetary benefits or honoraria
given to these officials or employees are categorized as travelling
and/or representation expenses which are incurred by them in the
course of handling cases, attending court/administrative hearings, or
performing other field work. These monetary benefits are given upon
rendition of service while the financial benefits under SSS Resolution
No. 56 are given upon retirement from service.
In a last-ditch attempt to convince this Court that their position is
tenable, petitioners invoke equity. They believe that they are deserving
of justice and equity in their quest for financial assistance under SSS
Resolution No. 56, not so much because the SSS is one of the very few
stable agencies of government where no doubt this recognition and
reputation is earned x x x but more so due to the miserable scale of
compensation granted to employees in various agencies to include
those obtaining in the SSS.[20]
86
We must admit we sympathize with petitioners in their financial

predicament as a result of their misplaced decision to avail of
retirement benefits under RA 660, with the false expectation that
financial assistance under the disputed Res. 56 will also
materialize. Nevertheless, this Court has always held that equity, which
has been aptly described as justice outside legality, is applied only in
the absence of, and never against, statutory law or judicial rules of
procedure.[21] In this case, equity cannot be applied to give validity
and effect to Res. 56, which directly contravenes the clear mandate of
the provisions of RA 4968.
Likewise, we cannot but be aware that the clear imbalance between
the benefits available under RA 660 and those under RA 1616 has
created an unfair situation for it has shifted the burden of paying such
benefits from the GSIS (the main insurance carrier of government
employees) to the SSS. Without the corrective effects of Res. 56, all
retiring SSS employees without exception will be impelled to avail of
benefits under RA 1616. The cumulative effect of such availments on
the financial standing and stability of the SSS is better left to
actuarians.But the solution or remedy for such situation can be
provided only by Congress. Judicial hands cannot, on the pretext of
showing concern for the welfare of government employees, bestow
equity contrary to the clear provisions of law.
Nevertheless, insofar as herein petitioners are concerned, this Court
cannot just sit back and watch as these two erstwhile government
employees, who after spending the best parts of their lives in public
service have retired hoping to enjoy their remaining years, face a
financially dismal if not distressed future, deprived of what should have
been due them by way of additional retirement benefits, on account of
a bureaucratic boo-boo improvidently hatched by their higher-ups. It is
clear to our mind that petitioners applied for benefits under RA 660
only because of the incentives offered by Res. 56, and that absent such
incentives, they would have without fail availed of RA 1616 instead. We
likewise have no doubt that petitioners are simply innocent bystanders
in this whole bureaucratic rule-making/financial scheme-making
drama, and that therefore, to the extent possible, petitioners ought not
be penalized or made to suffer as a result of the subsequently
87
determined invalidity of Res. 56, the promulgation and implementation

of which they had nothing to do with.
And here is where equity may properly be invoked: since SSS
employees who are qualified for compulsory retirement at age 65 or for
optional retirement at a lower age are entitled to either the life annuity
under R.A. 660, as amended, or the gratuity under R.A. 1616, as
amended,[22] it appears that petitioners, being qualified to avail of
benefits under RA 660, may also readily qualify under RA 1616. It
would therefore not be misplaced to enjoin the SSS to render all
possible assistance to petitioners for the prompt processing and
approval of their applications under RA 1616, and in the meantime,
unless barred by existing regulations, to advance to petitioners the
difference between the amounts due under RA 1616, and the amounts
they already obtained, if any, under RA 660.
WHEREFORE, the petition is hereby DISMISSED for lack of merit, there
having been no grave abuse of discretion on the part of respondent
Commission. The assailed Decision of public respondent is AFFIRMED,
and SSS Resolution No. 56 is hereby declared ILLEGAL, VOID AND OF
NO EFFECT. The SSS is hereby urged to assist petitioners and facilitate
their applications under RA 1616, and to advance to them, unless
barred by existing regulations, the corresponding amounts
representing the difference between the two benefits programs. No
costs.
SO ORDERED.
DiGEst
AVELINA B. CONTE and LETICIA BOISER-PALMA, petitioners,vs.
COMMISSION ON AUDIT (COA), respondent.(264 SCRA 19, L - 116422
04 NOVEMBER 1996)
FACTS:
Avelina Conte and Leticia Boiser were both former employees of SSS
who availed of compulsory retirement benefits provided
forunder RA No. 660. Both also claimed with the
SSS financialassistance benefits as provided for under SSS Resolution
88
No. 56,Series of 1971. The subject SSS resolution was disallowed by

COA in its
rulingissued on July 10, 1989 stating that the scheme of financialassist
ance authorized by SSS is similar to separate
retirementplan or incentives/separation pay plans adopted by othergov
ernment agencies which in turn results in the increase of benefits
beyond what is allowed under existing retirement
laws. The SSS thereafter sought presidential authority to continueimple
menting Res. 56 to which the Office of the ExecutiveSecretary replied
that the Office of the President is not inclinedto favorably act on the
request or let alone overrule COAs
earlierruling.Petitioners Conte and Boiser sought reconsideration of CO
Asruling disallowing their claim and also sought payment from
SSSof benefits as prescribed under Res. 56, both of which weredenied
by COA and SSS.
ISSUE:
Whether or not the benefits provided for under SSS ResolutionNo. 56
be considered simply as financial assistance for retiringemployees, or
does such a scheme constitute a supplementaryretirement plan
prescribed by RA 4968.
HELD:The Supreme Court ruled that SSS Resolution No. 56 constitute
asupplementary retirement plan, thus, within the ambit of Sec. 28(b) of
CA 186 as amended by RA 4968 which bars the creation of any
insurance or retirement plan other than the GSIS
forgovernment officers and employees, in order to prevent theundue
and iniquitous proliferation of such plans. Resolution No.56 is therefore
invalid, void and of no
effect.Petition was dismissed for lack of merit, the assailed COAdecisio
n is upheld, and SSS Resolution No. 56 is declared illegal,void and of no
effect.
89
Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-44291
August 15, 1936
THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellant,

vs.
AUGUSTO A. SANTOS, defendant-appellee.
Office of the Solicitor-General Hilado for appellant.
Arsenio Santos for appellee.
VILLA-REAL, J.:
This case is before us by virtue of an appeal taken by the prosecuting
attorney from the order of the Court of First Instance of Cavite which
reads as follows:
ORDER
When this case was called for trial for the arraignment, counsel for the
accused appeared stating that in view of the ruling laid down by this
court in criminal case No. 6785 of this court, holding that the penalty
applicable is under section 83 of Act No. 4003 which falls within the
original jurisdiction of the justice of the peace court he requests that
the case be remanded to the justice of the peace court of Cavite which
conducted the preliminary investigation, so that the latter may try it,
being within its original jurisdiction.
We agree that it falls within the jurisdiction of the corresponding justice
of the peace court, but it being alleged in the information that the
infraction was committed within the waters of the Island of Corregidor,
the competent justice of the peace court is that of Corregidor, not
Cavite.
Wherefore, we decree the dismissal of this case, cancelling the bond
filed by the accused, with costs de oficio, without prejudice to the filing
90
by the prosecuting attorney of a new information in the justice of the

peace court of Corregidor, if he so deems convenient. It is so ordered.
In support of his appeal the appellant assigns as the sole alleged error
committed by the court a quo its having dismissed the case on the
ground that it does not fall within its original jurisdiction.
On June 18, 1930, the provincial fiscal of Cavite filed against the
accused -appellee Augusta A. Santos an information which reads as
follows:
The undersigned Provincial Fiscal accuses Augusta A. Santos of
violation of section 28 of Fish and Game Administrative Order No. 2 and
penalized by section 29 thereof committed as follows:
That on or about April 29, 1935, within 1,500 yards north of Cavalry
Point, Corregidor Island, Province of Cavite, P.I., the said accused
Augusta A. Santos, the registered owner of two fishing motor
boats Malabon II and Malabon III, did then and there willfully, unlawfully
and criminally have his said boats, manned and operated by his
fishermen, fish, loiter and anchor without permission from the
Secretary of Agriculture and Commerce within three (3) kilometers
from the shore line of the Island of Corregidor over which the naval and
military authorities of the United States exercise jurisdiction.
Contrary to law.
Cavite, Cavite, June 18, 1935.
Section 28 of Administrative Order No. 2 relative to fish and game,
issued by the Secretary of Agriculture and Commerce, provides as
follows:
28. Prohibited fishing areas. No boats licensed in accordance with
the provisions of Act No. 4003 and this order to catch, collect, gather,
take, or remove fish and other sea products from Philippine waters
shall be allowed to fish, loiter, or anchor within 3 kilometers of the
shore line of islands and reservations over which jurisdiction is
exercised by naval or military authorities of the United States,
particularly Corregidor, Pulo Caballo, La Monja, El Fraile, and Carabao,
91
and all other islands and detached rocks lying between Mariveles
Reservation on the north side of the entrance to Manila Bay and
Calumpan Point Reservation on the south side of said
entrance: Provided, That boats not subject to license under Act No.
4003 and this order may fish within the areas mentioned above only
upon receiving written permission therefor, which permission may be
granted by the Secretary of Agriculture and Commerce upon
recommendation of the military or naval authorities concerned.
A violation of this paragraph may be proceeded against under section
45 of the Federal Penal Code.
The above quoted provisions of Administrative, Order No. 2 were
issued by the then Secretary of Agriculture and Natural Resources, now
Secretary of Agriculture and Commerce, by virtue of the authority
vested in him by section 4 of Act No. 4003 which reads as follows:
SEC. 4. Instructions, orders, rules and regulations. The Secretary of
Agriculture and Natural Resources shall from time to time issue such
instructions, orders, rules and regulations consistent with this Act, as
may be necessary and proper to carry into effect the provisions thereof
and for the conduct of proceedings arising under such provisions.
The herein accused and appellee Augusto A. Santos is charged with
having ordered his fishermen to manage and operate the motor
launches Malabon II and Malabon Ill registered in his name and to fish,
loiter and anchor within three kilometers of the shore line of the Island
of Corregidor over which jurisdiction is exercised by naval and military
authorities of the United States, without permission from the Secretary
of Agriculture and Commerce.
These acts constitute a violation of the conditional clause of section 28
above quoted, which reads as follows:
Provided, That boats not subject to license under Act No. 4003 and this
order may fish within the areas mentioned above (within 3 kilometers
of the shore line of islands and reservations over which jurisdiction is
exercised by naval and military authorities of the United States,
particularly Corregidor) only upon receiving written permission
92
therefor, which permission may be granted by the Secretary of

Agriculture and Commerce upon recommendation of the military and
naval authorities of concerned. (Emphasis supplied.)
Act No. 4003 contains no similar provision prohibiting boats not subject
to license from fishing within three kilometers of the shore line of
islands and reservations over which jurisdiction is exercised by naval
and military authorities of the United States, without permission from
the Secretary of Agriculture and Commerce upon recommendation of
the military and naval authorities concerned. Inasmuch as the only
authority granted to the Secretary of Agriculture and Commerce, by
section 4 of Act No. 4003, is to issue from time to time such
instructions, orders, rules, and regulations consistent with said Act, as
may be necessary and proper to carry into effect the provisions thereof
and for the conduct of proceedings arising under such provisions; and
inasmuch as said Act No. 4003, as stated, contains no provisions
similar to those contained in the above quoted conditional clause of
section 28 of Administrative Order No. 2, the conditional clause in
question supplies a defect of the law, extending it. This is equivalent to
legislating on the matter, a power which has not been and cannot be
delegated to him, it being exclusively reserved to the then Philippine
Legislature by the Jones Law, and now to the National Assembly by the
Constitution of the Philippines. Such act constitutes not only an excess
of the regulatory power conferred upon the Secretary of Agriculture
and Commerce, but also an exercise of a legislative power which he
does not have, and therefore said conditional clause is null and void
and without effect (12 Corpus Juris, 845; Rubi vs. Provincial Board of
Mindoro, 39 Phil., 660; U.S. vs. Ang Tang Ho, 43 Phil., 1; U.S. vs.
Barrias, 11 Phil., 327).
For the foregoing considerations, we are of the opinion and so hold that
the conditional clause of section 28 of Administrative Order No. 2.
issued by the Secretary of Agriculture and Commerce, is null and void
and without effect, as constituting an excess of the regulatory power
conferred upon him by section 4 of Act No. 4003 and an exercise of a
legislative power which has not been and cannot be delegated to him.
93
Wherefore, inasmuch as the facts with the commission of which

Augusto A. Santos is charged do not constitute a crime or a violation of
some criminal law within the jurisdiction of the civil courts, the
information filed against him is dismissed, with the costs de oficio. So
ordered.
Avancea, C. J., Abad Santos, Imperial, Diaz, Recto, and Laurel, JJ.,
concur.
DIGEST
NO CASE DIGEST

SUPREME COURT
Manila
EN BANC
G.R. No. L-6791
March 29, 1954
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
QUE PO LAY, defendant-appellant.
Prudencio de Guzman for appellant.
First Assistant Solicitor General Ruperto Kapunan, Jr., and Solicitor
Lauro G. Marquez for appellee.
MONTEMAYOR, J.:
Que Po Lay is appealing from the decision of the Court of First Instance
of Manila, finding him guilty of violating Central Bank Circular No. 20 in
94
connection with section 34 of Republic Act No. 265, and sentencing

him to suffer six months imprisonment, to pay a fine of P1,000 with
subsidiary imprisonment in case of insolvency, and to pay the costs.
The charge was that the appellant who was in possession of foreign
exchange consisting of U.S. dollars, U.S. checks and U.S. money orders
amounting to about $7,000 failed to sell the same to the Central Bank
through its agents within one day following the receipt of such foreign
exchange as required by Circular No. 20. the appeal is based on the
claim that said circular No. 20 was not published in the Official Gazette
prior to the act or omission imputed to the appellant, and that
consequently, said circular had no force and effect. It is contended that
Commonwealth Act. No., 638 and Act 2930 both require said circular to
be published in the Official Gazette, it being an order or notice of
general applicability. The Solicitor General answering this contention
says that Commonwealth Act. No. 638 and 2930 do not require the
publication in the Official Gazette of said circular issued for the
implementation of a law in order to have force and effect.
We agree with the Solicitor General that the laws in question do not
require the publication of the circulars, regulations and notices therein
mentioned in order to become binding and effective. All that said two
laws provide is that laws, resolutions, decisions of the Supreme Court
and Court of Appeals, notices and documents required by law to be of
no force and effect. In other words, said two Acts merely enumerate
and make a list of what should be published in the Official Gazette,
presumably, for the guidance of the different branches of the
Government issuing same, and of the Bureau of Printing.
However, section 11 of the Revised Administrative Code provides that
statutes passed by Congress shall, in the absence of special provision,
take effect at the beginning of the fifteenth day after the completion of
the publication of the statute in the Official Gazette. Article 2 of the
new Civil Code (Republic Act No. 386) equally provides that laws shall
take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided. It is
true that Circular No. 20 of the Central Bank is not a statute or law but
being issued for the implementation of the law authorizing its issuance,
95
it has the force and effect of law according to settled jurisprudence.

(See U.S. vs. Tupasi Molina, 29 Phil., 119 and authorities cited therein.)
Moreover, as a rule, circulars and regulations especially like the
Circular No. 20 of the Central Bank in question which prescribes a
penalty for its violation should be published before becoming effective,
this, on the general principle and theory that before the public is bound
by its contents, especially its penal provisions, a law, regulation or
circular must first be published and the people officially and specifically
informed of said contents and its penalties.
Our Old Civil code, ( Spanish Civil Code of 1889) has a similar provision
about the effectivity of laws, (Article 1 thereof), namely, that laws shall
be binding twenty days after their promulgation, and that their
promulgation shall be understood as made on the day of the
termination of the publication of the laws in the Gazette. Manresa,
commenting on this article is of the opinion that the word "laws"
include regulations and circulars issued in accordance with the same.
He says:
El Tribunal Supremo, ha interpretado el articulo 1. del codigo Civil en
Sentencia de 22 de Junio de 1910, en el sentido de que bajo la
denominacion generica de leyes, se comprenden tambien
los Reglamentos, Reales decretos, Instrucciones, Circulares y Reales
ordenes dictadas de conformidad con las mismas por el Gobierno en
uso de su potestad. Tambien el poder ejecutivo lo ha venido
entendiendo asi, como lo prueba el hecho de que muchas de sus
disposiciones contienen la advertencia de que empiezan a regir el
mismo dia de su publicacion en la Gaceta, advertencia que seria
perfectamente inutil si no fuera de aplicacion al caso el articulo 1.o del
Codigo Civil. (Manresa, Codigo Civil Espaol, Vol. I. p. 52).
In the present case, although circular No. 20 of the Central Bank was
issued in the year 1949, it was not published until November 1951,
that is, about 3 months after appellant's conviction of its violation. It is
clear that said circular, particularly its penal provision, did not have
any legal effect and bound no one until its publication in the Official
Gazzette or after November 1951. In other words, appellant could not
be held liable for its violation, for it was not binding at the time he was
96
found to have failed to sell the foreign exchange in his possession

thereof.
But the Solicitor General also contends that this question of nonpublication of the Circular is being raised for the first time on appeal in
this Court, which cannot be done by appellant. Ordinarily, one may
raise on appeal any question of law or fact that has been raised in the
court below and which is within the issues made by the parties in their
pleadings. (Section 19, Rule 48 of the Rules of Court). But the question
of non-publication is fundamental and decisive. If as a matter of fact
Circular No. 20 had not been published as required by law before its
violation, then in the eyes of the law there was no such circular to be
violated and consequently appellant committed no violation of the
circular or committed any offense, and the trial court may be said to
have had no jurisdiction. This question may be raised at any stage of
the proceeding whether or not raised in the court below.
In view of the foregoing, we reverse the decision appealed from and
acquit the appellant, with costs de oficio.
Paras, C.J., Bengzon, Padilla, Reyes, Bautista Angelo, Labrador,
Concepcion and Diokno, JJ., concur.
DIGEST
PEOPLE VS. QUE PO LAY, digested
Posted by Pius Morados on November 9, 2011
94 SCRA 641, March 29, 1954 (Constitutional Law Publication of Bank
Circulars and Regulations)
FACTS: Appellant who was in possession of foreign exchange consisting
of U.S. dollars, U.S. checks and U.S. money orders failed to sell the
same to the Central Bank through its agents within one day following
the receipt of such foreign exchange as required by Central Bank
Circular No. 20. Appellant appeals on the claim that the said circular
had no force or effect because the same was not published in the
official Gazette prior to the act or omission imputed to said appellant.
The Solicitor General counters that Commonwealth Act. No. 638 and
97
2930 do not require the publication in the Official Gazette of said

circular issued for the implementation of a law in order to have force
and effect.
ISSUE: Whether or not circulars and regulations should be published in
order to have force and effect.
HELD: Yes, circulars and regulations especially like Circular No. 20 of
the Central Bank which prescribes a penalty for its violation should be
published before becoming effective. Before the public is bound by its
contents, especially its penal provisions, a law, regulation or circular
must first be published and the people officially and specifically
informed of said contents and its penalties.
People vs Que Po Lay
TITLE: People of the Phils v Que Po Lay
CITATION: 94 Phil 640 | GR No. 6791, March 29, 1954
FACTS:
The appellant was in possession of foreign exchange consisting of US
dollars, US checks and US money orders amounting to about $7000 but
failed to sell the same to the Central Bank as required under Circular
No. 20.
Circular No. 20 was issued in the year 1949 but was published in the
Official Gazette only on Nov. 1951 after the act or omission imputed to
Que Po Lay.
Que Po Lay appealed from the decision of the lower court finding him
guilty of violating Central Bank Circular No. 20 in connection with Sec
34 of RA 265 sentencing him to suffer 6 months imprisonment, pay fine
of P1,000 with subsidiary imprisonment in case of insolvency, and to
pay the costs.
ISSUE: Whether or not publication of Circular 20 in the Official Gazette
is needed for it to become effective and subject violators to
corresponding penalties.
HELD:
98
It was held by the Supreme Court, in an en banc decision, that as a

rule, circular and regulations of the Central Bank in question
prescribing a penalty for its violation should be published before
becoming effective. This is based on the theory that before the public
is bound by its contents especially its penal provisions, a law,
regulation or circular must first be published for the people to be
officially and specifically informed of such contents including its
penalties.
Thus, the Supreme Court reversed the decision appealed from and
acquit the appellant, with costs de oficio.

SUPREME COURT
Manila
SECOND DIVISION
99
G.R. No. L-32166 October 18, 1977

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,
vs.
HON. MAXIMO A. MACEREN CFI, Sta. Cruz, Laguna, JOSE
BUENAVENTURA, GODOFREDO REYES, BENJAMIN REYES, NAZARIO
AQUINO and CARLO DEL ROSARIO, accused-appellees.
Office of the Solicitor General for appellant.
Rustics F. de los Reyes, Jr. for appellees.
AQUINO, J.:t.hqw
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.
On March 7, 1969 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.
It was alleged in the complaint that the five accused in the morning of
March 1, 1969 resorted to electro fishing in the waters of Barrio San
Pablo Norte, Sta. Cruz by "using their own motor banca, equipped with
motor; with a generator colored green with attached dynamo colored
gray or somewhat white; and electrocuting device locally known as
sensored with a somewhat webbed copper wire on the tip or other end
of a bamboo pole with electric wire attachment which was attached to
the dynamo direct and with the use of these devices or equipments
catches fish thru electric current, which destroy any aquatic animals
within its cuffed reach, to the detriment and prejudice of the populace"
(Criminal Case No. 5429).
Upon motion of the accused, the municipal court quashed the
complaint. The prosecution appealed. The Court of First Instance of
100
Laguna affirmed the order of dismissal (Civil Case No. SC-36). The case
is now before this Court on appeal by the prosecution under Republic
Act No. 5440.
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." Notwithstanding the silence of the law, the Secretary
of Agriculture and Natural Resources, upon the recommendation of the
Commissioner of Fisheries, promulgated Fisheries Administrative Order
No. 84 (62 O.G. 1224), prohibiting electro fishing in all Philippine
waters. The order is quoted below: +.wph!1
SUBJECT: PROHIBITING ELECTRO FISHING IN ALL WATERS +.wph!1
OF THE PHILIPPINES.
Pursuant to Section 4 of Act No. 4003, as amended, and Section 4 of
R.A. No. 3512, the following rules and regulations regarding the
prohibition of electro fishing in all waters of the Philippines are
promulgated for the information and guidance of all concerned.+.
wph!1
SECTION 1. Definition. Words and terms used in this Order 11
construed as follows:
101
(a) Philippine waters or territorial waters of the Philippines' includes all

waters of the Philippine Archipelago, as defined in the t between the
United States and Spain, dated respectively the tenth of December,
eighteen hundred ninety eight and the seventh of November, nineteen
hundred. For the purpose of this order, rivers, lakes and other bodies of
fresh waters are included.
(b) Electro Fishing. Electro fishing is the catching of fish with the use
of electric current. The equipment used are of many electrical devices
which may be battery or generator-operated and from and available
source of electric current.
(c) 'Persons' includes firm, corporation, association, agent or employee.
(d) 'Fish' includes other aquatic products.
SEC. 2. Prohibition. It shall be unlawful for any person to engage
in electro fishing or to catch fish by the use of electric current in any
portion of the Philippine waters except for research, educational and
scientific purposes which must be covered by a permit issued by the
Secretary of Agriculture and Natural Resources which shall be carried
at all times.
SEC. 3. Penalty. Any violation of the provisions of this
Administrative Order shall subject the offender to a fine of not
exceeding five hundred pesos (P500.00) or imprisonment of not
extending six (6) months or both at the discretion of the Court.
SEC. 4. Repealing Provisions. All administrative orders or parts
thereof inconsistent with the provisions of this Administrative Order are
hereby revoked.
SEC. 5. Effectivity. This Administrative Order shall take effect six
(60) days after its publication in the Office Gazette.
On June 28, 1967 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).
102
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."
The Court of First Instance and the prosecution (p. 11 of brief) assumed
that electro fishing is punishable under section 83 of the Fisheries Law
(not under section 76 thereof), which provides that any other violation
of that law "or of any rules and regulations promulgated thereunder
shall subject the offender to a fine of not more than two hundred pesos
(P200), or in t for not more than six months, or both, in the discretion
of the court."
That assumption is incorrect because 3 of the aforequoted
Administrative Order No. 84 imposes a fm of not exceeding P500 on a
person engaged in electro fishing, which amount the 83. It seems that
the Department of Fisheries prescribed their own penalty for swift
fishing which penalty is less than the severe penalty imposed in
section 76 and which is not Identified to the at penalty imposed in
section 83.
Had Administrative Order No. 84 adopted the fighter penalty
prescribed in on 83, then the crime of electro fishing would be within
the exclusive original jurisdiction of the inferior court (Sec. 44 [f],
Judiciary Law; People vs. Ragasi, L-28663, September 22,
We have discussed this pre point, not raised in the briefs, because it is
obvious that the crime of electro fishing which is punishable with a sum
up to P500, falls within the concurrent original jurisdiction of the
inferior courts and the Court of First instance (People vs. Nazareno, L40037, April 30, 1976, 70 SCRA 531 and the cases cited therein).
And since the instant case was filed in the municipal court of Sta. Cruz,
Laguna, a provincial capital, the order of d rendered by that municipal
court was directly appealable to the Court, not to the Court of First
Instance of Laguna (Sec. 45 and last par. of section 87 of the Judiciary
Law; Esperat vs. Avila, L-25992, June 30, 1967, 20 SCRA 596).
103
It results that the Court of First Instance of Laguna had no appellate

jurisdiction over the case. Its order affirming the municipal court's
order of dismissal is void for lack of motion. This appeal shall be
treated as a direct appeal from the municipal court to this Court. (See
People vs. Del Rosario, 97 Phil. 67).
In this appeal, the prosecution argues that Administrative Orders Nos.
84 and 84-1 were not issued under section 11 of the Fisheries Law
which, as indicated above, punishes fishing by means of an obnoxious
or poisonous substance. This contention is not well-taken because, as
already stated, the Penal provision of Administrative Order No. 84
implies that electro fishing is penalized as a form of fishing by means
of an obnoxious or poisonous substance under section 11.
The prosecution cites as the legal sanctions for the prohibition against
electro fishing in fresh water fisheries (1) the rule-making power of the
Department Secretary under section 4 of the Fisheries Law; (2) the
function of the Commissioner of Fisheries to enforce the provisions of
the Fisheries Law and the regulations Promulgated thereunder and to
execute the rules and regulations consistent with the purpose for the
creation of the Fisheries Commission and for the development of
fisheries (Sec. 4[c] and [h] Republic Act No. 3512; (3) the declared
national policy to encourage, Promote and conserve our fishing
resources (Sec. 1, Republic Act No. 3512), and (4) section 83 of the
Fisheries Law which provides that "any other violation of" the Fisheries
Law or of any rules and regulations promulgated thereunder "shall
subject the offender to a fine of not more than two hundred pesos, or
imprisonment for not more than six months, or both, in the discretion
of the court."
As already pointed out above, the prosecution's reference to section 83
is out of place because the penalty for electro fishing under
Administrative order No. 84 is not the same as the penalty fixed in
section 83.
We are 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
104
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).
Originally, Administrative Order No. 84 punished electro fishing in all
waters. Later, the ban against electro fishing was confined to fresh
water fisheries. The amendment created the impression that electro
fishing is not condemnable per se. It could be tolerated in marine
105
waters. That circumstances strengthens the view that the old law does
not eschew all forms of electro fishing.
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.
That decree provides: +.wph!1
SEC. 33. Illegal fishing, dealing in illegally caught fish or
fishery/aquatic products. It shall he unlawful for any person to catch,
take or gather or cause to be caught, taken or gathered fish or
fishery/aquatic products in Philippine waters with the use of explosives,
obnoxious or poisonous substance, or by the use of electricity as
defined in paragraphs (1), (m) and (d), respectively, of Section 3
hereof: ...
The decree Act No. 4003, as amended, Republic Acts Nos. 428, 3048,
3512 and 3586, Presidential Decrees Nos. 43, 534 and 553, and all ,
Acts, Executive Orders, rules and regulations or parts thereof
inconsistent with it (Sec. 49, P. D. No. 704).
The inclusion in that decree of provisions defining and penalizing
electro fishing is a clear recognition of the deficiency or silence on that
point of the old Fisheries Law. It is an admission that a mere executive
regulation is not legally adequate to penalize electro fishing.
Note that the definition of electro fishing, which is found in section 1
(c) of Fisheries Administrative Order No. 84 and which is not provided
for the old Fisheries Law, is now found in section 3(d) of the decree.
Note further that the decree penalty electro fishing by "imprisonment
from two (2) to four (4) years", a punishment which is more severe
than the penalty of a time of not excluding P500 or imprisonment of
not more than six months or both fixed in section 3 of Fisheries
Administrative Order No. 84.
106
An 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. Mu;oz, L24796, 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 Osme;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,
107
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).
There is no question that the Secretary of Agriculture and Natural
Resources has rule-making powers. Section 4 of the Fisheries law
provides that the Secretary "shall from time to time issue instructions,
orders, and regulations consistent" with that law, "as may be and
proper to carry into effect the provisions thereof." That power is now
vested in the Secretary of Natural Resources by on 7 of the Revised
Fisheries law, Presidential December No. 704.
Section 4(h) of Republic Act No. 3512 empower the Co of Fisheries "to
prepare and execute upon the approval of the Secretary of Agriculture
and Natural Resources, forms instructions, rules and regulations
consistent with the purpose" of that enactment "and for the
development of fisheries."
Section 79(B) of the Revised Administrative Code provides that "the
Department Head shall have the power to promulgate, whenever he
may see fit do so, all rules, regulates, orders, memorandums, and
other instructions,not contrary to law, to regulate the proper working
and harmonious and efficient administration of each and all of the
offices and dependencies of his Department, and for the strict
enforcement and proper execution of the laws relative to matters
under the jurisdiction of said Department; but none of said rules or
orders shall prescribe penalties for the violation thereof, except as
expressly authorized by law."
108
Administrative regulations issued by a Department Head in conformity

with law have the force of law (Valerie vs. Secretary of culture and
Natural Resources, 117 Phil. 729, 733; Antique Sawmills, Inc. vs. Zayco,
L- 20051, May 30, 1966, 17 SCRA 316). As he exercises the rulemaking power by delegation of the lawmaking body, it is a requisite
that he should not transcend the bound demarcated by the statute for
the exercise of that power; otherwise, he would be improperly
exercising legislative power in his own right and not as a surrogate of
the lawmaking body.
Article 7 of the Civil Code embodies the basic principle that
administrative or executive acts, orders and regulations shall be valid
only when they are not contrary to the laws or the Constitution."
As noted by Justice Fernando, "except for constitutional officials who
can trace their competence to act to the fundamental law itself, a
public office must be in the statute relied upon a grant of power before
he can exercise it." "department zeal may not be permitted to outrun
the authority conferred by statute." (Radio Communications of the
Philippines, Inc. vs. Santiago, L-29236, August 21, 1974, 58 SCRA 493,
496-8).
"Rules and regulations when promulgated in pursuance of the
procedure or authority conferred upon the administrative agency by
law, partake of the nature of a statute, and compliance therewith may
be enforced by a penal sanction provided in the law. This is so because
statutes are usually couched in general terms, after expressing the
policy, purposes, objectives, remedies and sanctions intended by the
legislature. The details and the manner of carrying out the law are
oftentimes left to the administrative agency entrusted with its
enforcement. In this sense, it has been said that rules and regulations
are the product of a delegated power to create new or additional legal
provisions that have the effect of law." The rule or regulation should be
within the scope of the statutory authority granted by the legislature to
the administrative agency. (Davis, Administrative Law, p. 194, 197,
cited in Victories Milling Co., Inc. vs. Social Security Commission, 114
Phil. 555, 558).
109
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 (People vs. Lim, 108 Phil. 1091).
This Court in its decision in the Lim case, supra, promulgated on July
26, 1960, called the attention of technical men in the executive
departments, who draft rules and regulations, to the importance and
necessity of closely following the legal provisions which they intend to
implement so as to avoid any possible misunderstanding or confusion.
The rule is that the violation of a regulation prescribed by an executive
officer of the government in conformity with and based upon a statute
authorizing such regulation constitutes an offense and renders the
offender liable to punishment in accordance with the provisions of the
law (U.S. vs. Tupasi Molina, 29 Phil. 119, 124).
In other words, a violation or infringement of a rule or regulation validly
issued can constitute a crime punishable as provided in the authorizing
statute and by virtue of the latter (People vs. Exconde 101 Phil. 1125,
1132).
It has been held that "to declare what shall constitute a crime and how
it shall be punished is a power vested exclusively in the legislature,
and it may not be delegated to any other body or agency" (1 Am. Jur.
2nd, sec. 127, p. 938; Texas Co. vs. Montgomery, 73 F. Supp. 527).
In the instant case the regulation penalizing electro fishing is not
strictly in accordance with the Fisheries Law, under which the
regulation was issued, because the law itself does not expressly punish
electro fishing.
The instant case is similar to People vs. Santos, 63 Phil. 300.
The Santos case involves section 28 of Fish and Game Administrative
Order No. 2 issued by the Secretary of Agriculture and Natural
Resources pursuant to the aforementioned section 4 of the Fisheries
Law.
Section 28 contains the proviso that a fishing boat not licensed under
the Fisheries Law and under the said administrative order may fish
110
within three kilometers of the shoreline of islands and reservations

over which jurisdiction is exercised by naval and military reservations
authorities of the United States only upon receiving written permission
therefor, which permission may be granted by the Secretary upon
recommendation of the military or naval authorities concerned. A
violation of the proviso may be proceeded against under section 45 of
the Federal Penal Code.
Augusto A. Santos was prosecuted under that provision in the Court of
First Instance of Cavite for having caused his two fishing boats to fish,
loiter and anchor without permission from the Secretary within three
kilometers from the shoreline of Corrigidor Island.
This Court held that the Fisheries Law does not prohibit boats not
subject to license from fishing within three kilometers of the shoreline
of islands and reservations over which jurisdiction is exercised by naval
and military authorities of the United States, without permission from
the Secretary of Agriculture and Natural Resources upon
recommendation of the military and naval authorities concerned.
As the said law does not penalize the act mentioned in section 28 of
the administrative order, the promulgation of that provision by the
Secretary "is equivalent to legislating on the matter, a power which has
not been and cannot be delegated to him, it being expressly reserved"
to the lawmaking body. "Such an act constitutes not only an excess of
the regulatory power conferred upon the Secretary but also an exercise
of a legislative power which he does not have, and therefore" the said
provision "is null and void and without effect". Hence, the charge
against Santos was dismiss.
A penal statute is strictly construed. While an administrative agency
has the right to make ranks and regulations to carry into effect a law
already enacted, that power should not be confused with the power to
enact a criminal statute. An administrative agency can have only the
administrative or policing powers expressly or by necessary implication
conferred upon it. (Glustrom vs. State, 206 Ga. 734, 58 Second 2d 534;
See 2 Am. Jr. 2nd 129-130).
111
Where the legislature has delegated to executive or administrative

officers and boards authority to promulgate rules to carry out an
express legislative purpose, the rules of administrative officers and
boards, which have the effect of extending, or which conflict with the
authority granting statute, do not represent a valid precise of the rulemaking power but constitute an attempt by an administrative body to
legislate (State vs. Miles, Wash. 2nd 322, 105 Pac. 2nd 51).
In a prosecution for a violation of an administrative order, it must
clearly appear that the order is one which falls within the scope of the
authority conferred upon the administrative body, and the order will be
scrutinized with special care. (State vs. Miles supra).
The Miles case involved a statute which authorized the State Game
Commission "to adopt, promulgate, amend and/or repeal, and enforce
reasonable rules and regulations governing and/or prohibiting
the taking of the various classes of game.
Under that statute, the Game Commission promulgated a rule that "it
shall be unlawful to offer, pay or receive any reward, prize or
compensation for the hunting, pursuing, taking, killing or displaying of
any game animal, game bird or game fish or any part thereof."
Beryl S. Miles, the owner of a sporting goods store, regularly offered a
ten-down cash prize to the person displaying the largest deer in his
store during the open for hunting such game animals. For that act, he
was charged with a violation of the rule Promulgated by the State
Game Commission.
It was held that there was no statute penalizing the display of game.
What the statute penalized was the taking of game. If the lawmaking
body desired to prohibit the display of game, it could have readily said
so. It was not lawful for the administrative board to extend or modify
the statute. Hence, the indictment against Miles was quashed. The
Miles case is similar to this case.
WHEREFORE, the lower court's decision of June 9, 1970 is set aside for
lack of appellate jurisdiction and the order of dismissal rendered by the
112
municipal court of Sta. Cruz, Laguna in Criminal Case No. 5429 is

affirmed. Costs de oficio.
SO ORDERED.
DIGEST
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant, vs. HON. MAXIMO
A. MACEREN CFI, Sta. Cruz, Laguna, JOSE BUENAVENTURA,
GODOFREDO REYES, BENJAMIN R
G.R. No. L-32166 October 18, 1977
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,
vs.
HON. MAXIMO A. MACEREN CFI, Sta. Cruz, Laguna, JOSE
BUENAVENTURA, GODOFREDO REYES, BENJAMIN REYES, NAZARIO
AQUINO and CARLO DEL ROSARIO, accused-appellees.
AQUINO, J.:
Facts:
Jose Buenaventura, Godofredo Reyes, Benjamin Reyes, Nazario Aquino
and Carlito del Rosario were charged with having violated Fisheries
Administrative Order No. 84-1.
It alleged that the five accused resorted to electro fishing in the waters
of Barrio San Pablo Norte, Sta. Cruz by using their own motor banca,
equipped with motor and electrocuting device locally known as
sensored with a somewhat webbed copper wire on the tip or other end
of a bamboo pole with electric wire attachment which was attached to
the dynamo direct and with the use of these devices or equipments
catches fish thru electric current, which destroy any aquatic animals
within its cuffed reach, to the detriment and prejudice of the populace.
Sec. 11 of the Fisheries Law prohibits "the use of any obnoxious or
poisonous substance" in fishing.
113
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 or more than five years.
It is noteworthy that the Fisheries Law does not expressly punish
electro fishing. Notwithstanding the silence of the law, the Secretary of
Agriculture and Natural Resources, upon the recommendation of the
Commissioner of Fisheries, promulgated Fisheries Administrative Order
No. 84 (62 O.G. 1224), prohibiting electro fishing in all Philippine waters
On June 28, 1967 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 Secretary of Agriculture and Natural Resources and the
Commissioner of Fisheries exceeded their authority in issuing Fisheries
Administrative Orders Nos. 84 and 84-1
Held:
Yes. They exceeded their authority.
The rule-making power confined to details for regulating the mode or
proceeding to carry into effect the law as it has been enacted. The
power cannot be extended to amending or expanding the statutory
requirements or to embrace matters not covered by the statute
The Fisheries Law does not expressly prohibit electro fishing .As electro
fishing is not banned under that law. Hence, the Secretary of
114
Agriculture and Natural Resources and the Commissioner of Fisheries

are powerless to penalize it. 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. Nowhere in the said law is
electro fishing specifically punished. Administrative agents 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.

SUPREME COURT
Manila
EN BANC
G.R. No. 95832 August 10, 1992

MAYNARD R. PERALTA, petitioner,
vs.
CIVIL SERVICE COMMISSION, respondent.
Tranquilino F. Meris Law Office for petitioner.
PADILLA, J.:
115
Petitioner was appointed Trade-Specialist II on 25 September 1989 in

the Department of Trade and Industry (DTI). His appointment was
classified as "Reinstatement/Permanent". Before said appointment, he
was working at the Philippine Cotton Corporation, a government-owned
and controlled corporation under the Department of Agriculture.
On 8 December 1989, petitioner received his initial salary, covering the
period from 25 September to 31 October 1989. Since he had no
accumulated leave credits, DTI deducted from his salary the amount
corresponding to his absences during the covered period, namely, 29
September 1989 and 20 October 1989, inclusive of Saturdays and
Sundays. More specifically, the dates of said absences for which salary
deductions were made, are as follows:
1. 29 September 1989 Friday
2. 30 September 1989 Saturday
3. 01 October 1989 Sunday
4. 20 October 1989 Friday
5. 21 October 1989 Saturday
6. 22 October 1989 Sunday
Petitioner sent a memorandum to Amando T. Alvis (Chief, General
Administrative Service) on 15 December 1989 inquiring as to the law
on salary deductions, if the employee has no leave credits.
Amando T. Alvis answered petitioner's query in a memorandum dated
30 January 1990 citing Chapter 5.49 of the Handbook of Information on
the Philippine Civil Service which states that "when an employee is on
leave without pay on a day before or on a day immediately preceding a
Saturday, Sunday or Holiday, such Saturday, Sunday, or Holiday shall
also be without pay (CSC, 2nd Ind., February 12, 1965)."
Petitioner then sent a latter dated 20 February 1990 addressed to Civil
Service Commission (CSC) Chairman Patricia A. Sto. Tomas raising the
following question:
116
Is an employee who was on leave of absence without pay on a day

before or on a day time immediately preceding a Saturday, Sunday or
Holiday, also considered on leave of absence without pay on such
Saturday, Sunday or Holiday? 1
Petitioner in his said letter to the CSC Chairman argued that a reading
of the General Leave Law as contained in the Revised Administrative
Code, as well as the old Civil Service Law (Republic Act No. 2260), the
Civil Service Decree (Presidential Decree No. 807), and the Civil Service
Rules and Regulation fails to disclose a specific provision which
supports the CSC rule at issue. That being the case, the petitioner
contented that he cannot be deprived of his pay or salary
corresponding to the intervening Saturdays, Sundays or Holidays (in
the factual situation posed), and that the withholding (or deduction) of
the same is tantamount to a deprivation of property without due
process of law.
On 25 May 1990, respondent Commission promulgated Resolution No.
90-497, ruling that the action of the DTI in deducting from the salary of
petitioner, a part thereof corresponding to six (6) days (September 29,
30, October 1, 20, 21, 22, 1989) is in order. 2 The CSC stated that:
In a 2nd Indorsement dated February 12, 1965 of this Commission,
which embodies the policy on leave of absence without pay incurred on
a Friday and Monday, reads:
Mrs. Rosalinda Gonzales is not entitled to payment of salary
corresponding to January 23 and 24, 1965, Saturday and Sunday,
respectively, it appearing that she was present on Friday, January 22,
1965 but was on leave without pay beginning January 25, the
succeeding Monday. It is the view of this Office that an employee who
has no more leave credit in his favor is not entitled to the payment of
salary on Saturdays, Sundays or holidays unless such non-working
days occur within the period of service actually rendered. (Emphasis
supplied)
The rationale for the above ruling which applies only to those
employees who are being paid on monthly basis, rests on the
assumption that having been absent on either Monday or Friday, one
117
who has no leave credits, could not be favorably credited with

intervening days had the same been working days. Hence, the above
policy that for an employee on leave without pay to be entitled to
salary on Saturdays, Sundays or holidays, the same must occur
between the dates where the said employee actually renders service.
To rule otherwise would allow an employee who is on leave of absent
(sic) without pay for a long period of time to be entitled to payment of
his salary corresponding to Saturdays, Sundays or holidays. It also
discourages the employees who have exhausted their leave credits
from absenting themselves on a Friday or Monday in order to have a
prolonged weekend, resulting in the prejudice of the government and
the public in general. 3
Petitioner filed a motion for reconsideration and in Resolution No. 90797, the respondent Commission denied said motion for lack of merit.
The respondent Commission in explaining its action held:
The Primer on the Civil Service dated February 21, 1978, embodies the
Civil Service Commission rulings to be observed whenever an
employee of the government who has no more leave credits, is absent
on a Friday and/or a Monday is enough basis for the deduction of his
salaries corresponding to the intervening Saturdays and Sundays.
What the Commission perceived to be without basis is the demand of
Peralta for the payment of his salaries corresponding to Saturdays and
Sundays when he was in fact on leave of absence without pay on a
Friday prior to the said days. A reading of Republic Act No. 2260 (sic)
does not show that a government employee who is on leave of
absence without pay on a day before or immediately preceding
Saturdays, Sunday or legal holiday is entitled to payment of his salary
for said days. Further, a reading of Senate Journal No. 67 dated May 4,
1960 of House Bill No. 41 (Republic Act No. 2625) reveals that while
the law excludes Saturdays, Sundays and holidays in the computation
of leave credits, it does not, however, include a case where the leave
of absence is without pay. Hence, applying the principle of inclusio
unius est exclusio alterius, the claim of Peralta has no merit. Moreover,
to take a different posture would be in effect giving more premium to
employees who are frequently on leave of absence without pay,
118
instead of discouraging them from incurring further absence without

pay. 4
Petitioner's motion for reconsideration having been denied, petitioner
filed the present petition.
What is primarily questioned by the petitioner is the validity of the
respondent Commission's policy mandating salary deductions
corresponding to the intervening Saturdays, Sundays or Holidays
where an employee without leave credits was absent on the
immediately preceding working day.
During the pendency of this petition, the respondent Commission
promulgated Resolution No. 91-540 dated 23 April 1991 amending the
questioned policy, considering that employees paid on a monthly basis
are not required to work on Saturdays, Sunday or Holidays. In said
amendatory Resolution, the respondent Commission resolved "to adopt
the policy that when an employee, regardless of whether he has leave
credits or not, is absent without pay on day immediately preceding or
succeeding Saturday, Sunday or holiday, he shall not be considered
absent on those days." Memorandum Circular No. 16 Series of 1991
dated 26 April 1991, was also issued by CSC Chairman Sto. Tomas
adopting and promulgating the new policy and directing the Heads of
Departments, Bureaus and Agencies in the national and local
governments, including government-owned or controlled corporations
with original charters, to oversee the strict implementation of the
circular.
Because of these developments, it would seem at first blush that this
petition has become moot and academic since the very CSC policy
being questioned has already been amended and, in effect, Resolutions
No. 90-497 and 90-797, subject of this petition for certiorari, have
already been set aside and superseded. But the issue of whether or not
the policy that had been adopted and in force since 1965 is valid or
not, remains unresolved. Thus, for reasons of public interest and public
policy, it is the duty of the Court to make a formal ruling on the validity
or invalidity of such questioned policy.
119
The Civil Service Act of 1959 (R.A. No. 2260) conferred upon the
Commissioner of Civil Service the following powers and duties:
Sec. 16 (e) with the approval by the President to prescribe, amend and
enforce suitable rules and regulations for carrying into effect the
provisions of this Civil Service Law, and the rules prescribed pursuant
to the provisions of this law shall become effective thirty days after
publication in the Official Gazette;
xxx xxx xxx
(k) To perform other functions that properly belong to a central
personnel agency. 5
Pursuant to the foregoing provisions, the Commission promulgated the
herein challenged policy. Said policy was embodied in a 2nd
Indorsement dated 12 February 1965 of the respondent Commission
involving the case of a Mrs. Rosalinda Gonzales. The respondent
Commission ruled that an employee who has no leave credits in his
favor is not entitled to the payment of salary on Saturdays, Sundays or
Holidays unless such non-working days occur within the period of
service actually rendered. The same policy is reiterated in the
Handbook of Information on the Philippine Civil Service. 6 Chapter Five
on leave of absence provides that:
5.51. When intervening Saturday, Sunday or holiday considered as
leave without pay when an employee is on leave without pay on a
day before or on a day immediately preceding a Saturday, Sunday or
holiday, such Saturday, Sunday or holiday shall also be without pay.
(CSC, 2nd Ind., Feb. 12, 1965).
It is likewise illustrated in the Primer on the Civil Service 7 in the
section referring to Questions and Answers on Leave of Absences,
which states the following:
27. How is leave of an employee who has no more leave credits
computed if:
(1) he is absent on a Friday and the following Monday?
(2) if he is absent on Friday but reports to work the following Monday?
120
(3) if he is absent on a Monday but present the preceding Friday?

- (1) He is considered on leave without pay for 4 days covering Friday
to Monday;
- (2) He is considered on leave without pay for 3 days from Friday to
Sunday;
- (3) He is considered on leave without pay for 3 days from Saturday to
Monday.
When an administrative or executive agency renders an opinion or
issues a statement of policy, it merely interprets a pre-existing law;
and the administrative interpretation of the law is at best advisory, for
it is the courts that finally determine what the law means. 8 It has also
been held that interpretative regulations need not be published. 9
In promulgating as early as 12 February 1965 the questioned policy,
the Civil Service Commission interpreted the provisions of Republic Act
No. 2625 (which took effect on 17 June 1960) amending the Revised
Administrative Code, and which stated as follows:
Sec. 1. Sections two hundred eighty-four and two hundred eighty-five-A
of the Administrative Code, as amended, are further amended to read
as follows:
Sec. 284. After at least six months' continues (sic) faithful, and
satisfactory service, the President or proper head of department, or the
chief of office in the case of municipal employees may, in his
discretion, grant to an employee or laborer, whether permanent or
temporary, of the national government, the provincial government, the
government of a chartered city, of a municipality, of a municipal
district or of government-owned or controlled corporations other than
those mentioned in Section two hundred sixty-eight, two hundred
seventy-one and two hundred seventy-four hereof, fifteen days
vacation leave of absence with full pay, exclusive of Saturdays,
Sundays and holidays, for each calendar year of service.
Sec. 285-A. In addition to the vacation leave provided in the two
preceding sections each employee or laborer, whether permanent or
121
temporary, of the national government, the provincial government, the

government of a chartered city, of a municipality or municipal district
in any regularly and specially organized province, other than those
mentioned in Section two hundred sixty-eight, two hundred seventyone and two hundred seventy-four hereof, shall be entitled to fifteen
days of sick leave for each year of service with full pay, exclusive of
Saturdays, Sundays and holidays: Provided, That such sick leave will be
granted by the President, Head of Department or independent office
concerned, or the chief of office in case of municipal employees, only
on account of sickness on the part of the employee or laborer
concerned or of any member of his immediate family.
The Civil Service Commission in its here questioned Resolution No. 90797 construed R.A. 2625 as referring only to government employees
who have earned leave credits against which their absences may be
charged with pay, as its letters speak only of leaves of absence with
full pay. The respondent Commission ruled that a reading of R.A. 2625
does not show that a government employee who is on leave of
absence without pay on a day before or immediately preceding a
Saturday, Sunday or legal holiday is entitled to payment of his salary
for said days.
Administrative construction, if we may repeat, is not necessarily
binding upon the courts. Action of an administrative agency may be
disturbed or set aside by the judicial department if there is an error of
law, or abuse of power or lack of jurisdiction or grave abuse of
discretion clearly conflicting with either the letter or the spirit of a
legislative enactment. 10
We find this petition to be impressed with merit.
As held in Hidalgo vs. Hidalgo: 11
. . . . where the true intent of the law is clear that calls for the
application of the cardinal rule of statutory construction that such
intent or spirit must prevail over the letter thereof, for whatever is
within the spirit of a statute is within the statute, since adherence to
the letter would result in absurdity, injustice and contradictions and
would defeat the plain and vital purpose of the statute.
122
The intention of the legislature in the enactment of R.A. 2625 may be

gleaned from, among others, the sponsorship speech of Senator Arturo
M. Tolentino during the second reading of House Bill No. 41 (which
became R.A. 2625). He said:
The law actually provides for sick leave and vacation leave of 15 days
each year of service to be with full pay. But under the present law, in
computing these periods of leaves, Saturday, Sunday and holidays are
included in the computation so that if an employee should become sick
and absent himself on a Friday and then he reports for work on a
Tuesday, in the computation of the leave the Saturday and Sunday will
be included, so that he will be considered as having had a leave of
Friday, Saturday, Sunday and Monday, or four days.
The purpose of the present bill is to exclude from the computation of
the leave those days, Saturdays and Sundays, as well as holidays,
because actually the employee is entitled not to go to office during
those days. And it is unfair and unjust to him that those days should be
counted in the computation of leaves. 12
With this in mind, the construction by the respondent Commission of
R.A. 2625 is not in accordance with the legislative intent. R.A. 2625
specifically provides that government employees are entitled to fifteen
(15) days vacation leave of absence with full pay and fifteen (15) days
sick leave with full pay, exclusive of Saturdays, Sundays and Holidays
in both cases. Thus, the law speaks of the granting of a right and the
law does not provide for a distinction between those who have
accumulated leave credits and those who have exhausted their leave
credits in order to enjoy such right. Ubi lex non distinguit nec nos
distinguere debemus. The fact remains that government employees,
whether or not they have accumulated leave credits, are not required
by law to work on Saturdays, Sundays and Holidays and thus they can
not be declared absent on such non-working days. They cannot be or
are not considered absent on non-working days; they cannot and
should not be deprived of their salary corresponding to said nonworking days just because they were absent without pay on the day
immediately prior to, or after said non-working days. A different rule
would constitute a deprivation of property without due process.
123
Furthermore, before their amendment by R.A. 2625, Sections 284 and

285-A of the Revised Administrative Code applied to all government
employee without any distinction. It follows that the effect of the
amendment similarly applies to all employees enumerated in Sections
284 and 285-A, whether or not they have accumulated leave credits.
As the questioned CSC policy is here declared invalid, we are next
confronted with the question of what effect such invalidity will have.
Will all government employees on a monthly salary basis, deprived of
their salaries corresponding to Saturdays, Sundays or legal holidays (as
herein petitioner was so deprived) since 12 February 1965, be entitled
to recover the amounts corresponding to such non-working days?
The general rule vis-a-vis legislation is that an unconstitutional act is
not a law; it confers no rights; it imposes no duties; it affords no
protection; it creates no office; it is in legal contemplation as
inoperative as though it had never been passed. 13
But, as held in Chicot County Drainage District vs. Baxter State
Bank: 14
. . . . It is quite clear, however, that such broad statements as to the
effect of a determination of unconstitutionality must be taken with
qualifications. The actual existence of a statute, prior to such
determination is an operative fact and may have consequences which
cannot always be ignored. The past cannot always be erased by a new
judicial declaration. The effect of the subsequent ruling as to invalidity
may have to be considered in various aspects with respect to
particular relations, individual and corporate; and particular conduct,
private and official.
To allow all the affected government employees, similarly situated as
petitioner herein, to claim their deducted salaries resulting from the
past enforcement of the herein invalidated CSC policy, would cause
quite a heavy financial burden on the national and local governments
considering the length of time that such policy has been effective.
Also, administrative and practical considerations must be taken into
account if this ruling will have a strict restrospective application. The
Court, in this connection, calls upon the respondent Commission and
124
the Congress of the Philippines, if necessary, to handle this problem

with justice and equity to all affected government employees.
It must be pointed out, however, that after CSC Memorandum Circular
No. 16 Series of 1991 amending the herein invalidated policy was
promulgated on 26 April 1991, deductions from salaries made after
said date in contravention of the new CSC policy must be restored to
the government employees concerned.
WHEREFORE, the petition is GRANTED, CSC Resolutions No. 90-497 and
90-797 are declared NULL and VOID. The respondent Commission is
directed to take the appropriate action so that petitioner shall be paid
the amounts previously but unlawfully deducted from his monthly
salary as above indicated. No costs.
SO ORDERED.
DIGEST
Peralta v. Civil Service Commission [G.R. No. 95832. August 10, 1992]
28AUG
FACTS
Pursuant to Civil Service Act of 1959 (R.A. No. 2260) which conferred
upon the Commissioner of Civil Service to prescribe, amend and
enforce suitable rules and regulations for carrying into effect the
provisions of this Civil Service Law, the Commission interpreted
provisions of Republic Act No. 2625 amending the Revised
Administrative Code and adopted a policy that when an employee who
was on leave of absence without pay on a day before or on a day time
immediately preceding a Saturday, Sunday or Holiday, he is also
considered on leave of absence without pay on such Saturday, Sunday
or Holiday. Petitioner Peralta, affected by the said policy, questioned
the said administrative interpretation.
ISSUES
Whether or not the Civil Service Commissions interpretative
construction is:
125
(1) valid and constitutional.

(2) binding upon the courts.
RULING
(1) NO. The construction by the respondent Commission of R.A. 2625 is
not in accordance with the legislative intent. R.A. 2625 specifically
provides that government employees are entitled to leaves of absence
with full pay exclusive of Saturdays, Sundays and Holidays. The law
speaks of the granting of a right and the law does not provide for a
distinction between those who have accumulated leave credits and
those who have exhausted their leave credits in order to enjoy such
right. Ubi lex non distinguit nec nos distinguere debemus.The fact
remains that government employees, whether or not they have
accumulated leave credits, are not required by law to work on
Saturdays, Sundays and Holidays and thus they can not be declared
absent on such non-working days. They cannot be or are not
considered absent on non-working days; they cannot and should not be
deprived of their salary corresponding to said non-working days just
because they were absent without pay on the day immediately prior to,
or after said non-working days. A different rule would constitute a
deprivation of property without due process.
(2) NO. Administrative construction, is not necessarily binding upon the
courts. Action of an administrative agency may be disturbed or set
aside by the judicial department if there is an error of law, or abuse of
power or lack of jurisdiction or grave abuse of discretion clearly
conflicting with either the letter or the spirit of a legislative
enactment. When an administrative or executive agency renders an
opinion or issues a statement of policy, it merely interprets a preexisting law; and the administrative interpretation of the law is at best
advisory, for it is the courts that finally determine what the law means.
The general rule vis-a-vis legislation is that an unconstitutional act is
not a law; it confers no rights; it imposes no duties; it affords no
protection; it creates no office; it is in legal contemplation as
inoperative as though it had never been passed.
126
But, as held in Chicot County Drainage District vs. Baxter State Bank:
. . . . It is quite clear, however, that such broad statements as to the
effect of a determination of unconstitutionality must be taken with
qualifications. The actual existence of a statute, prior to such
determination is an operative fact and may have consequences which
cannot always be ignored. The past cannot always be erased by a new
judicial declaration. The effect of the subsequent ruling as to invalidity
may have to be considered in various aspects with respect to
particular relations, individual and corporate; and particular conduct,
private and official.
To allow all the affected government employees, similarly situated as
petitioner herein, to claim their deducted salaries resulting from the
past enforcement of the herein invalidated CSC policy, would cause
quite a heavy financial burden on the national and local governments
considering the length of time that such policy has been effective.
Also, administrative and practical considerations must be taken into
account if this ruling will have a strict restrospective application. The
Court, in this connection, calls upon the respondent Commission and
the Congress of the Philippines, if necessary, to handle this problem
with justice and equity to all affected government employees.

SUPREME COURT
Manila
127
EN BANC
G.R. No. 102549 August 10, 1992

EDWIN B. JAVELLANA, petitioner,
vs.
DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT AND LUIS T.
SANTOS, SECRETARY, respondents.
Reyes, Lozada and Sabado for petitioner.
GRIO-AQUINO, J.:
This petition for review on certiorari involves the right of a public official to
engage in the practice of his profession while employed in the Government.
Attorney Erwin B. Javellana was an elected City Councilor of Bago City, Negros
Occidental. On October 5, 1989, City Engineer Ernesto C. Divinagracia filed
Administrative Case No. C-10-90 against Javellana for: (1) violation of
Department of Local Government (DLG) Memorandum Circular No. 80-38 dated
June 10, 1980 in relation to DLG Memorandum Circular No. 74-58 and of Section
7, paragraph b, No. 2 of Republic Act No. 6713, otherwise known as the "Code of
Conduct and Ethical Standards for Public Officials and Employees," and (2) for
oppression, misconduct and abuse of authority.
Divinagracia's complaint alleged that Javellana, an incumbent member of the City
Council or Sanggunian Panglungsod of Bago City, and a lawyer by profession,
has continuously engaged in the practice of law without securing authority for
that purpose from the Regional Director, Department of Local Government, as
required by DLG Memorandum Circular No. 80-38 in relation to DLG
Memorandum Circular No. 74-58 of the same department; that on July 8, 1989,
Javellana, as counsel for Antonio Javiero and Rolando Catapang, filed a case
against City Engineer Ernesto C. Divinagracia of Bago City for "Illegal Dismissal
and Reinstatement with Damages" putting him in public ridicule; that Javellana
also appeared as counsel in several criminal and civil cases in the city, without
prior authority of the DLG Regional Director, in violation of DLG Memorandum
Circular No. 80-38 which provides:
MEMORANDUM CIRCULAR NO. 80-38
128
TO ALL: PROVINCIAL GOVERNORS, CITY AND

MUNICIPALITY MAYORS, KLGCD REGIONAL DIRECTORS
AND ALL CONCERNED
SUBJECT: AMENDING MEMORANDUM CIRCULAR NO. 8018 ON SANGGUNIAN SESSIONS,PER DIEMS,
ALLOWANCES, STAFFING AND OTHER RELATED
MATTERS
In view of the issuance or Circular No. 5-A by the Joint Commission
on Local Government Personnel Administration which affects certain
provisions of MC 80-18, there is a need to amend said
Memorandum Circular to substantially conform to the pertinent
provisions of Circular No. 9-A.
xxx xxx xxx
C. Practice of Profession
The Secretary (now Minister) of Justice in an Opinion No. 46 Series
of 1973 stated inter alia that "members of local legislative
bodies, other than the provincial governors or the mayors, do not
keep regular office hours." "They merely attend meetings or
sessions of the provincial board or the city or municipal council" and
that provincial board members are not even required "to have an
office in the provincial building." Consequently, they are not therefore
to required to report daily as other regular government employees
do, except when they are delegated to perform certain administrative
functions in the interest of public service by the Governor or Mayor
as the case may be. For this reason, they may, therefore, be allowed
to practice their professions provided that in so doing an
authority . . . first be secured from the Regional Directors pursuant to
Memorandum Circular No. 74-58, provided, however, that no
government personnel, property, equipment or supplies shall be
utilized in the practice of their professions. While being authorized to
practice their professions, they should as much as possible attend
regularly any and all sessions, which are not very often, of their
Sanggunians for which they were elected as members by their
constituents except in very extreme cases, e.g., doctors who are
called upon to save a life. For this purpose it is desired that they
always keep a calendar of the dates of the sessions, regular or
special of their Sanggunians so that conflicts of attending court
129
cases in the case of lawyers and Sanggunian sessions can be

avoided.
As to members of the bar the authority given for them to practice
their profession shall always be subject to the restrictions provided
for in Section 6 of Republic Act 5185. In all cases, the practice of
any profession should be favorably recommended by the
Sanggunian concerned as a body and by the provincial governors,
city or municipal mayors, as the case may be. (Emphasis ours, pp.
28-30,Rollo.)
On August 13, 1990, a formal hearing of the complaint was held in Iloilo City in
which the complainant, Engineer Divinagracia, and the respondent, Councilor
Javellana, presented their respective evidence.
Meanwhile, on September 10, 1990, Javellana requested the DLG for a permit to
continue his practice of law for the reasons stated in his letter-request. On the
same date, Secretary Santos replied as follows:
1st Indorsement
September 10, 1990
Respectfully returned to Councilor Erwin B. Javellana, Bago City, his
within letter dated September 10, 1990, requesting for a permit to
continue his practice of law for reasons therein stated, with this
information that, as represented and consistent with law, we
interpose no objection thereto, provided that such practice will not
conflict or tend to conflict with his official functions.
LUIS
T.
SANT
OS
Secret
ary.
(p. 60, Rollo.)
On September 21, 1991, Secretary Luis T. Santos issued Memorandum Circular
No. 90-81 setting forth guidelines for the practice of professions by local elective
officials as follows:
130
TO: All Provincial Governors, City and Municipal

Mayors, Regional Directors and All Concerned.
SUBJECT: Practice of Profession and Private
Employment of Local Elective Officials
Section 7 of Republic Act No. 6713 (Code of Conduct and Ethical
Standards for Public Officials and Employees), states, in part, that
"In addition to acts and omission of public officials . . . now
prescribed in the Constitution and existing laws, the following shall
constitute prohibited acts and transactions of any public officials . . .
and are hereby declared to be unlawful: . . . (b) Public
Officials. . . during their incumbency shall not: (1) . . . accept
employment as officer, employee, consultant, counsel, broker, agent,
trustee or nominee in any private enterprise regulated, supervised or
licensed by their office unless expressly allowed by law; (2) Engage
in the private practice of their profession unless authorized by the
Constitution or law, provided that such practice will not conflict or
tend to conflict with their official functions: . . .
xxx xxx xxx
Under Memorandum Circular No. 17 of the Office of the President
dated September 4, 1986, the authority to grant any permission, to
accept private employment in any capacity and to exercise
profession, to any government official shall be granted by the head
of the Ministry (Department) or agency in accordance with Section
12, Rule XVIII of the Revised Civil Service Rules, which provides,in
part, that:
No officer shall engage directly in any . . . vocation or
profession . . . without a written permission from the
head of the Department: Provided, that this prohibition
will be absolute in the case of those officers . . . whose
duties and responsibilities require that their entire time
be at the disposal of the Government: Provided, further,
That if an employee is granted permission to engage in
outside activities, the time so devoted outside of office
should be fixed by the Chief of the agency to the end
that it will not impair in anyway the efficiency of the
officer or employee . . . subject to any additional
conditions which the head of the office deems
necessary in each particular case in the interest of the
131
service, as expressed in the various issuances of the

Civil Service Commission.
Conformably with the foregoing, the following guidelines are to be
observed in the grant of permission to the practice of profession and
to the acceptance of private employment of local elective officials, to
wit:
1) The permission shall be granted by the Secretary of
Local Government;
2) Provincial Governors, City and Municipal Mayors
whose duties and responsibilities require that their
entire time be at the disposal of the government in
conformity with Sections 141, 171 and 203 of the Local
Government Code (BP 337), are prohibited to engage in
the practice of their profession and to accept private
employment during their incumbency:
3) Other local elective officials may be allowed to
practice their profession or engage in private
employment on a limited basis at the discretion of the
Secretary of Local Government, subject to existing laws
and to the following conditions:
a) That the time so devoted outside of
office hours should be fixed by the local
chief executive concerned to the end that it
will not impair in any way the efficiency of
the officials concerned;
b) That no government time, personnel,
funds or supplies shall be utilized in the
pursuit of one's profession or private
employment;
c) That no conflict of interests between the
practice of profession or engagement in
private employment and the official duties
of the concerned official shall arise thereby;
d) Such other conditions that the Secretary
deems necessary to impose on each
132
particular case, in the interest of public

service. (Emphasis supplied, pp. 3132, Rollo.)
On March 25, 1991, Javellana filed a Motion to Dismiss the administrative case
against him on the ground mainly that DLG Memorandum Circulars Nos. 80-38
and 90-81 are unconstitutional because the Supreme Court has the sole and
exclusive authority to regulate the practice of law.
In an order dated May 2, 1991, Javellana's motion to dismiss was denied by the
public respondents. His motion for reconsideration was likewise denied on June
20, 1991.
Five months later or on October 10, 1991, the Local Government Code of 1991
(RA 7160) was signed into law, Section 90 of which provides:
Sec. 90. Practice of Profession. (a) All governors, city and
municipal mayors are prohibited from practicing their profession or
engaging in any occupation other than the exercise of their functions
as local chief executives.
(b) Sanggunian members may practice their professions, engage in
any occupation, or teach in schools except during session
hours: Provided, That sanggunian members who are members of
the Bar shall not:
(1) Appear as counsel before any court in any civil case
wherein a local government unit or any office, agency,
or instrumentality of the government is the adverse
party;
(2) Appear as counsel in any criminal case wherein an
officer or employee of the national or local government
is accused of an offense committed in relation to his
office;
(3) Collect any fee for their appearance in administrative
proceedings involving the local government unit of
which he is an official; and
(4) Use property and personnel of the Government
except when the sanggunian member concerned is
defending the interest of the Government.
133
(c) Doctors of medicine may practice their profession even during

official hours of work only on occasions of emergency: Provided,
That the officials concerned do not derive monetary compensation
therefrom. (Emphasis ours.)
Administrative Case No. C-10-90 was again set for hearing on November 26,
1991. Javellana thereupon filed this petition for certiorari praying that DLG
Memorandum Circulars Nos. 80-38 and 90-81 and Section 90 of the new Local
Government Code (RA 7160) be declared unconstitutional and null void because:
(1) they violate Article VIII, Section 5 of the 1987 Constitution, which provides:
Sec. 5. The Supreme Court shall have the following powers:
xxx xxx xxx
(5) Promulgate rules concerning the protection and enforcement of
constitutional rights, pleading, practice, and procedure in all courts,
the admission to the practice of law, the Integrated Bar, and legal
assistance to the underprivileged. Such rules shall provide a
simplified and inexpensive procedure for the speedy disposition of
cases, shall be uniform for all courts of the same grade, and shall
not diminish, increase, or modify substantive rights. Rules of
procedure of special courts andquasi-judicial bodies shall remain
effective unless disapproved by the Supreme Court.
(2) They constitute class legislation, being discriminatory against the legal and
medical professions for only sanggunian members who are lawyers and doctors
are restricted in the exercise of their profession while dentists, engineers,
architects, teachers, opticians, morticians and others are not so restricted (RA
7160, Sec. 90 [b-1]).
In due time, the Solicitor General filed his Comment on the petition and the
petitioner submitted a Reply. After deliberating on the pleadings of the parties,
the Court resolved to dismiss the petition for lack of merit.
As a matter of policy, this Court accords great respect to the decisions and/or
actions of administrative authorities not only because of the doctrine of
separation of powers but also for their presumed knowledgeability and expertise
in the enforcement of laws and regulations entrusted to their jurisdiction
(Santiago vs. Deputy Executive Secretary, 192 SCRA 199, citing Cuerdo vs.
COA, 166 SCRA 657). With respect to the present case, we find no grave abuse
of discretion on the part of the respondent, Department of Interior and Local
134
Government (DILG), in issuing the questioned DLG Circulars Nos. 80-30 and 9081 and in denying petitioner's motion to dismiss the administrative charge against
him.
In the first place, complaints against public officers and employees relating or
incidental to the performance of their duties are necessarily impressed with
public interest for by express constitutional mandate, a public office is a public
trust. The complaint for illegal dismissal filed by Javiero and Catapang against
City Engineer Divinagracia is in effect a complaint against the City Government
of Bago City, their real employer, of which petitioner Javellana is a councilman.
Hence, judgment against City Engineer Divinagracia would actually be a
judgment against the City Government. By serving as counsel for the
complaining employees and assisting them to prosecute their claims against City
Engineer Divinagracia, the petitioner violated Memorandum Circular No. 74-58
(in relation to Section 7[b-2] of RA 6713) prohibiting a government official from
engaging in the private practice of his profession, if such practice would
represent interests adverse to the government.
Petitioner's contention that Section 90 of the Local Government Code of 1991
and DLG Memorandum Circular No. 90-81 violate Article VIII, Section 5 of the
Constitution is completely off tangent. Neither the statute nor the circular
trenches upon the Supreme Court's power and authority to prescribe rules on the
practice of law. The Local Government Code and DLG Memorandum Circular
No. 90-81 simply prescribe rules of conduct for public officials to avoid conflicts of
interest between the discharge of their public duties and the private practice of
their profession, in those instances where the law allows it.
Section 90 of the Local Government Code does not discriminate against lawyers
and doctors. It applies to all provincial and municipal officials in the professions
or engaged in any occupation. Section 90 explicitly provides that sanggunian
members "may practice their professions, engage in any occupation, or teach in
schools expect during session hours." If there are some prohibitions that apply
particularly to lawyers, it is because of all the professions, the practice of law is
more likely than others to relate to, or affect, the area of public service.
WHEREFORE, the petition is DENIED for lack of merit. Costs against the
petitioner.
SO ORDERED.
Digest
Javellana v. v. DILG
135
Javellana v. v. DILG
G.R. No. 102549 August 10, 1992
Grio-Aquino, J.
Facts:
Attorney Erwin B. Javellana was an elected City Councilor of Bago City,

Negros Occidental. On October 5, 1989, City Engineer Ernesto C. Divinagracia
filed Administrative Case No. C-10-90 against Javellana for: (1) violation of
Department of Local Government (DLG) Memorandum Circular No. 80-38 dated
June 10, 1980 in relation to DLG Memorandum Circular No. 74-58 and of Section
7, paragraph b, No. 2 of Republic Act No. 6713, otherwise known as the Code of
Conduct and Ethical Standards for Public Officials and Employees, and (2) for
oppression, misconduct and abuse of authority.
Divinagracias complaint alleged that Javellana, an incumbent member of

the City Council or Sanggunian Panglungsod of Bago City, and a lawyer by
profession, has continuously engaged in the practice of law without securing
authority for that purpose from the Regional Director, Department of Local
Government, as required by DLG Memorandum Circular No. 80-38 in relation to
DLG Memorandum Circular No. 74-58 of the same department; that on July 8,
1989, Javellana, as counsel for Antonio Javiero and Rolando Catapang, filed a
case against City Engineer Ernesto C. Divinagracia of Bago City for Illegal
Dismissal and Reinstatement with Damages putting him in public ridicule; that
Javellana also appeared as counsel in several criminal and civil cases in the city,
without prior authority of the DLG Regional Director, in violation of DLG
Memorandum Circular No. 80-38.
On August 13, 1990, a formal hearing of the complaint was held in

Iloilo City in which the complainant, Engineer Divinagracia, and the respondent,
Councilor Javellana, presented their respective evidence.
136
Meanwhile, on September 10, 1990, Javellana requested the DLG for a

permit to continue his practice of law for the reasons stated in his letter-request.
On September 21, 1991, Secretary Luis T. Santos issued

Memorandum Circular No. 90-81 setting forth guidelines for the practice of
professions by local elective officials.
In an order dated May 2, 1991, Javellanas motion to dismiss was

denied by the public respondents. His motion for reconsideration was likewise
denied on June 20, 1991.
Five months later or on October 10, 1991, the Local Government Code of
1991 (RA 7160) was signed into law, Section 90 of which provides:
Sec. 90. Practice of Profession. (a) All governors, city and municipal mayors
are prohibited from practicing their profession or engaging in any occupation
other than the exercise of their functions as local chief executives.
(b) Sanggunian members may practice their professions, engage in any
occupation, or teach in schools except during session hours: Provided, That
sanggunian members who are members of the Bar shall not:
(1)
Appear as counsel before any court in any civil case wherein a local
government unit or any office, agency, or instrumentality of the government is the
adverse party;
(2)
Appear as counsel in any criminal case wherein an officer or employee of the

national or local government is accused of an offense committed in relation to his
office;
(3)
Collect any fee for their appearance in administrative proceedingsinvolving the

local government unit of which he is an official; and
137
(4)
Use property and personnel of the Government except when the sanggunian
member concerned is defending the interest of the Government.
(c) Doctors of medicine may practice their profession even during official hours of
work only on occasions of emergency: Provided, That the officials concerned do
not derive monetary compensation therefrom.
Issue:
whether or not DLG Memorandum Circulars Nos. 80-38 and 90-81 are
unconstitutional because the Supreme Court has the sole and exclusive authority
to regulate the practice of law
Held:
No. Petitioners contention that Section 90 of the Local Government

Code of 1991 and DLG Memorandum Circular No. 90-81 violate Article VIII,
Section 5 of the Constitution is completely off tangent. Neither the statute nor the
circular trenches upon the Supreme Courts power and authority to prescribe
rules on the practice of law. The Local Government Code and DLG Memorandum
Circular No. 90-81 simply prescribe rules of conduct for public officials to avoid
conflicts of interest between the discharge of their public duties and the private
practice of their profession, in those instances where the law allows it.
138
139

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VICTORIA C. GUTIERREZ, G.R. No.

REGION, CARR AND MINDANAO REPRESENTED BY THEIR RESPECTIVE

HARRIS M. SINOLINDING, KALANTONGAN P. AKIL, DAUNDI B. BAKONG,

FRANCISCA C. CASTRO, DARIO C. VARGAS, MA. DEBBIE M. RESMA,

WILMA Q. NOBLEZA, ELEANOR M. CASTRO, JOSE B. BUSTILLO, JR.,

EVA VALDEZ FERIA, WILHELMINA BALDO, ROSE MARIE L. YCASA,

Elsa M. Caete CPA, MBA, DBA

BUREAU OF PLANT INDUSTRY EMPLOYEES ASSOCIATION, MARY ANN

ESTRELLITA C. AMPONIN, JUDITH G.R. No. 159007

COMMISSION ON AUDIT, GUILERMO N. CARAGUE, IN HIS CAPACITY AS

AUGUSTO R. NIEVES, BONIFACIO G.R. No. 159029

DEPARTMENT OF BUDGET AND MANAGEMENT AND HONORABLE

KAPISANAN NG MGA MANGGAGAWA G.R. No. 170084

DEPARTMENT OF BUDGET AND MANAGEMENT AND HONORABLE

Elsa M. Caete CPA, MBA, DBA

NATIONAL HOUSING AUTHORITY, G.R. No. 172713

- versus EPIFANIO P. RECANA, MERCEDES AMURAO, ERASMO APOSTOL,

INSURANCE COMMISSION OFFICERS G.R. No. 173119

DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HONORABLE

FIBER INDUSTRY DEVELOPMENT G.R. No. 176477

Elsa M. Caete CPA, MBA, DBA

AUTHORITY EMPLOYEES ASSOCIATION (FIDAEA), REMEDIOS V.J.

DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HONORABLE

BUREAU OF ANIMAL INDUSTRY G.R. No. 177990

DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HONORABLE

Elsa M. Caete CPA, MBA, DBA

RE: REQUEST OF SANDIGANBAYAN A.M. No. 06-4-02-SB

March 18, 2010

These consolidated cases question the inclusion of certain allowances

The Facts and the Case

Congress enacted in 1989 Republic Act (R.A.) 6758, called the

enjoyed by employees into their standardized salary rates. But it

Section 12. Consolidation of Allowances and Compensation. -- All

Pursuant to the above, the Department of Budget and Management

The DBM also issued Corporate Compensation Circular (CCC) 10 dated

of CCC 10 due to its non-publication. In De Jesus v. Commission on

Meanwhile, the DBM also issued Budget Circular 2001-03 dated

Elsa M. Caete CPA, MBA, DBA

The Issues Presented

The common issues presented in these consolidated cases are:

1. Whether or not the COLA should be deemed integrated into the

Elsa M. Caete CPA, MBA, DBA

4. Whether or not the non-publication of NCC 59 dated September 30,

5. Whether or not the grant of COLA to military and police personnel to

The Courts Ruling

At the heart of the present controversy is Section 12 of R.A. 6758 which

Section 12. Consolidation of Allowances and Compensation. -- All

incumbents only as of July 1, 1989 not integrated into the standardized

(1) representation and transportation allowances;

But, while the provision enumerated certain exclusions, it also

Elsa M. Caete CPA, MBA, DBA

Delegated rule-making is a practical necessity in modern governance

Cost of Living Allowance (COLA);

Inflation connected allowance;

Additional Compensation of Rural Health Physicians;

Additional Compensation of Nurses in Malacaang Clinic;

Nurses Allowance in the Air Transportation Office;

Assignment Allowance of School Superintendents;

Post allowance of Postal Service Office employees;

those for teaching overload;

in lieu of overtime pay;

for employees on detail with task forces/special projects;

lecturers and resource persons;