American Tobacco Company vs Director of Patents

FACTS:

The American Tobacco Company (ACT) was a party to a trademark case pending before
the Philippine Patent Office. ATC challenged the validity of Rule 168 of the Revised Rules of
Practice before the Philippine Patent Office in Trademark Cases as amended, authorizing the
Director of Patents to designate any ranking official of said office to hear inter partes
proceedings.

ATC argued that the same set of Rules provides that all judgments determining the merits of
the case shall be personally and directly prepared by the Director and signed by him hence it is
improper for the director to designate a lower ranking official as hearing officers to hear the
case; that it is clear that under the Rules, the Director must personally hear the case otherwise,
there will be a violation of due process.

ISSUE: Whether or not the designation of hearing officers other than the Director of Patents is a
violation of due process.

HELD: No. The Supreme Court ruled that the power to decide resides solely in the
administrative agency vested by law, this does not preclude a delegation of the power to hold a
hearing on the basis of which the decision of the administrative agency will be made. The rule
that requires an administrative officer to exercise his own judgment and discretion does not
preclude him from utilizing, as a matter of practical administrative procedure, the aid of
subordinates to investigate and report to him the facts, on the basis of which the officer makes
his decisions. It is sufficient that the judgment and discretion finally exercised are those of the
officer authorized by law. Neither does due process of law nor the requirements of fair hearing
require that the actual taking of testimony be before the same officer who will make the decision
in the case. As long as a party is not deprived of his right to present his own case and submit
evidence in support thereof, and the decision is supported by the evidence in the record, there
is no question that the requirements of due process and fair trial are fully met. In short, there is
no abnegation of responsibility on the part of the officer concerned as the actual decision
remains with and is made by said officer. It is, however, required that to give the substance of
a hearing, which is for the purpose of making determinations upon evidence the officer who
makes the determinations must consider and appraise the evidence which justifies them.
Philippine Communications Satellite Corporation vs Jose Luis Alcuaz
FACTS:

By virtue of Republic Act No. 5514, the Philippine Communications Satellite Corporation
(PHILCOMSAT) was granted the authority to construct and operate such ground facilities as
needed to deliver telecommunications services from the communications satellite system and
ground terminal or terminals in the Philippines. PHILCOMSAT provides satellite services to
companies like Globe Mackay (now Globe) and PLDT.

Under Section 5 of the same law, PHILCOMSAT was exempt from the jurisdiction, control and
regulation of the Public Service Commission later known as the National Telecommunications
Commission (NTC). However, Executive Order No. 196 was later promulgated and the same
has placed PHILCOMSAT under the jurisdiction of the NTC. Consequently, PHILCOMSAT has
to acquire permit to operate from the NTC in order to continue operating its existing satellites.
NTC gave the necessary permit but it however directed PHILCOMSAT to reduce its current
rates by 15%. NTC based its power to fix the rates on EO 546.

PHILCOMSAT now sues NTC and its commissioner (Jose Luis Alcuaz) assailed the said
directive and holds that the enabling act (EO 546) of the NTC, empowering it to fix rates for
public service communications, does not provide the necessary standards which were
constitutionally required, hence, there is an undue delegation of legislative power, particularly
the adjudicatory powers of NTC. PHILCOMSAT asserts that nowhere in the provisions of EO
546, providing for the creation of NTC and granting its rate-fixing powers, nor of EO 196,
placing PHILCOMSAT under the jurisdiction of NTC, can it be inferred that NTC is guided by
any standard in the exercise of its rate-fixing and adjudicatory powers.
PHILCOMSAT subsequently clarified its said submission to mean that the order mandating a
reduction of certain rates is undue delegation not of legislative but of quasi-judicial power to
NTC, the exercise of which allegedly requires an express conferment by the legislative body.

ISSUE: Whether or not there is an undue delegation of power.

HELD: No. There is no undue delegation. The power of the NTC to fix rates is limited by the
requirements of public safety, public interest, reasonable feasibility and reasonable
rates, which conjointly more than satisfy the requirements of a valid delegation of
legislative power. Fundamental is the rule that delegation of legislative power may be
sustained only upon the ground that some standard for its exercise is provided and that the
legislature in making the delegation has prescribed the manner of the exercise of the delegated
power.

Therefore, when the administrative agency concerned, NTC in this case, establishes a rate, its
act must both be non-confiscatory and must have been established in the manner prescribed by
the legislature; otherwise, in the absence of a fixed standard, the delegation of power becomes
unconstitutional. In case of a delegation of rate-fixing power, the only standard which the
legislature is required to prescribe for the guidance of the administrative authority is that the rate
be reasonable and just. However, it has been held that even in the absence of an express
requirement as to reasonableness, this standard may be implied.

However, in this case, it appears that the manner of fixing the rates was done without due
process since no hearing was made in ascertaining the rate imposed upon PHILCOMSAT.

Makati Stock Exchange, Inc v Securities and Exchange Commission

FACTS:

SEC Case No. 02-94-4678 was instituted on 10 February 1994 by respondent Miguel V.
Campos with the Securities, Investigation and Clearing Department (SICD) of the Securities and
Exchange Commission (SEC), a Petition against herein petitioners Makati Stock Exchange, Inc.
(MKSE).

The Petition, sought: (1) the nullification of the Resolution dated 3 June 1993 of the
MKSE Board of Directors, which allegedly deprived him of his right to participate equally in the
allocation of Initial Public Offerings (IPO) of corporations registered with MKSE; (2) the delivery
of the IPO shares he was allegedly deprived of, for which he would pay IPO prices; and (3) the
payment of P2 million as moral damages, P1 million as exemplary damages, and P500,000.00
as attorneys fees and litigation expenses.

The SICD issued an Order granting respondents prayer for the issuance of a Temporary
Restraining Order to enjoin petitioners from implementing or enforcing the Resolution of the
MKSE Board of Directors. Subsequently issued another Order on 10 March 1994 granting
respondents application for a Writ of Preliminary Injunction, to continuously enjoin, during the
pendency of SEC Case No. 02-94-4678, the implementation or enforcement of the MKSE Board
Resolution in question.

On 11 March 1994, petitioners filed a Motion to Dismiss respondents Petition based on

the following grounds: (1) the Petition became moot due to the cancellation of the license of
MKSE; (2) the SICD had no jurisdiction over the Petition; and (3) the Petition failed to state a
cause of action. The SICD denied petitioners Motion to Dismiss. Petitioners again challenged
Order of SICD before the SEC en banc through another Petition for Certiorari.

The SEC en banc nullified the Order of SICD granting a Writ of Preliminary Injunction in
favour of respondent. SEC en banc annulled the Order of SICD in SEC Case No. 02-94-4678
denying petitioners Motion to Dismiss, and accordingly ordered the dismissal of respondents
Petition before the SICD.

Respondent filed a Petition for Certiorari with the Court of Appeals. Petitioners filed a
Motion for Reconsideration but was denied by the Court of Appeals.

ISSUE: WHETHER OR NOT THE PETITION FAILED TO STATE A CAUSE OF ACTION.

RULING:

The petition filled by the respondent, Miguel Campos should be dismissed for failure to
state a cause of action.
 A cause of action is the act or omission by which a party violates a right of another. A
complaint states a cause of action where it contains three essential elements of a cause of
action, namely: (1) the legal right of the plaintiff, (2) the correlative obligation of the defendant,
and (3) the act or omission of the defendant in violation of said legal right. If these elements are
absent, the complaint becomes vulnerable to dismissal on the ground of failure to state a cause
of action.

However, the terms right and obligation are not magic words that would automatically
lead to the conclusion that such Petition sufficiently states a cause of
action. Right and obligation are legal terms with specific legal meaning. A right is a claim or
title to an interest in anything whatsoever that is enforceable by law while an obligation is
defined in the Civil Code as a juridical necessity to give, to do or not to do. Justice J.B.L. Reyes
offers the definition given by Arias Ramos as a more complete definition:
An obligation is a juridical relation whereby a person (called the creditor)
may demand from another (called the debtor) the observance of a determinative
conduct (the giving, doing or not doing), and in case of breach, may demand
satisfaction from the assets of the latter.

Art. 1157 of the Civil Code provides that Obligations arise from (1) Law; (2)
Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and (5) Quasi-delicts.

The mere assertion of a right and claim of an obligation in an initiatory pleading, whether
a Complaint or Petition, without identifying the basis or source thereof, is merely a conclusion of
fact and law. (In the case at bar, although the Petition in SEC Case No. 02-94-4678 does allege
respondents right to subscribe to the IPOs of corporations listed in the stock market at their
offering prices, and petitioners obligation to continue respecting and observing such right, the
Petition utterly failed to lay down the source or basis of respondents right and/or petitioners
obligation.)

Respondent merely quoted in his Petition the MKSE Board Resolution, passed
sometime in 1989, granting him the position of Chairman Emeritus of MKSE for life. However,
there is nothing in the said Petition from which the Court can deduce that respondent, by virtue
of his position as Chairman Emeritus of MKSE, was granted by law, contract, or any other legal
source, the right to subscribe to the IPOs of corporations listed in the stock market at their
offering prices. (allocation of IPO shares was merely alleged to have been done in accord with
a practice normally observed by the members of the stock exchange) A practice or custom is, as
a general rule, not a source of a legally demandable or enforceable right.

HOLY SPIRIT HOMEOWNERS ASSOCIATION, INC. vs SECRETARY MI

CHAELDEFENSOR
Facts :

A number of presidential issuances prior to the passage of R.A. No. 9207, authorized the

creation and development of what is now known as the National Government Center (NGC).On

March 5, 1972, former President Ferdinand Marcos issued Proclamation No. 1826, reserving a

parcel of land in Constitution Hills, Quezon City, covering a little over 440 hectares as a national

government site to be known as the NGC .On August 11, 1987, then President Corazon Aquino

issued Proclamation No. 137, excluding 150 of the440 hectares of the reserved site from the

coverage of Proclamation No. 1826 and authorizing instead the disposition of the excluded

portion by direct sale to the bona fide residents therein. In view of the rapid increase in

population density in the portion excluded by Proclamation No. 137 from the coverage of

Proclamation No. 1826, former President Fidel Ramos issued Proclamation No. 248 on

September7, 1993, authorizing the vertical development of the excluded portion to maximize the

number of families who can effectively become beneficiaries of the governments socialized

housing program. On May 14, 2003, President Gloria Macapagal-Arroyo signed into law

R.A. No. 9207. Petitioner Holy Spirit Homeowners Association, Inc. (Association) is a

homeowners association from the West Side of the NGC. It is represented by its president,

Nestorio F. Apolinario, Jr., who is a co-petitioner in his own personal capacity and on behalf of

the association. The instant petition for prohibition under Rule 65 of the 1997 Rules of Civil

Procedure, with prayer for the issuance of a temporary restraining order and/or writ of

preliminary injunction, seeks to prevent respondents from enforcing the implementing rules and
regulations (IRR) of Republic Act No. 9207, otherwise known as the "National Government

Center (NGC) Housing and Land Utilization Act of 2003."

Issue: Whether or not in issuing the questioned IRR of R.A. No. 9207, the Committee was not

exercising judicial, quasi-judicial or ministerial function and should be declared null and void for

being arbitrary, capricious and whimsical.

Held: Administrative agencies possess quasi-legislative or rule-making powers and quasi-

judicial or administrative adjudicatory powers. Quasi-legislative or rule-making power is the

power to make rules and regulations which results in delegated legislation that is within the

confines of the granting statute and the doctrine of non-delegability and separability of powers.

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,

however, 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. The assailed IRR was issued pursuant to the quasi-legislative power

of the Committee expressly authorized by R.A. No. 9207. The petition rests mainly on the theory

that the assailed IRR issued by the Committee is invalid on the ground that it is not germane to

the object and purpose of the statute it seeks to implement. 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. Since the regular courts have jurisdiction to pass upon the validity of the

assailed IRR issued by the Committee in the exercise of its quasi-legislative power, the judicial

course to assail its validity must follow the doctrine of hierarchy of courts. Although the Supreme

Court, Court of Appeals and the Regional Trial Courts have concurrent jurisdiction to issue writs

of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such

concurrence does not give the petitioner unrestricted freedom of choice of court forum.
PHIL. ASS. OF SERVICE EXPORTERS, INC. vs. RUBEN D. TORRES

Facts:

Philippine Association of Service Exporters (PASEI, for short), is the largest national
organization of private employment and recruitment agencies duly licensed and authorized by
the POEA, to engaged in the business of obtaining overseas employment for Filipino landbased
workers, including domestic helpers.

On June 1, 1991, as a result of published stories regarding the abuses suffered by Filipino
housemaids employed in Hong Kong, DOLE Secretary Ruben D. Torres issued Department
Order No. 16, Series of 1991, temporarily suspending the recruitment by private employment
agencies of "Filipino domestic helpers going to Hong Kong".

Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30, Series of
1991, dated July 10, 1991, providing GUIDELINES on the Government processing and
deployment of Filipino domestic helpers to Hong Kong and the accreditation of Hong Kong
recruitment agencies intending to hire Filipino domestic helpers.

On August 1, 1991, the POEA Administrator also issued Memorandum Circular No. 37, Series of
1991, on the processing of employment contracts of domestic workers for Hong Kong. All Hong
Kong recruitment agent/s hiring DHs from the Philippines shall recruit under the new scheme
which requires prior accreditation which the POEA.

On September 2, 1991, the petitioner, PASEI, filed this petition for prohibition to annul the
aforementioned DOLE and POEA circulars and to prohibit their implementation

Issue:

WON the respondents acted with grave abuse of discretion and/or in excess of their rule-making
authority in issuing said circulars.

Ruling:

No. Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate
recruitment and placement activities. On the other hand, the scope of the regulatory authority of
the POEA, which was created by Executive Order No. 797 on May 1, 1982 to take over the
functions of the Overseas Employment Development Board, the National Seamen Board, and
the overseas employment functions of the Bureau of Employment Services, is broad and far-
ranging.
The assailed circulars do not prohibit the petitioner from engaging in the recruitment and
deployment of Filipino landbased workers for overseas employment. A careful reading of the
challenged administrative issuances discloses that the same fall within the "administrative and
policing powers expressly or by necessary implication conferred" upon the respondents.

Nevertheless, they are legally invalid, defective and unenforceable for lack of power publication
and filing in the Office of the National Administrative Register as required in Article 2 of the Civil
Code, Article 5 of the Labor Code and Sections 3(1) and 4, Chapter 2, Book VII of the
Administrative Code of 1987. The administrative circulars in question may not be enforced and
implemented.

Eastern Shipping Lines vs POEA

FACTS:
A Chief Officer of a ship was killed in an accident in Japan. The widow filed a complaint for
charges against the Eastern Shipping Lines with POEA, based on a Memorandum Circular No.
2, issued by the POEA which stipulated death benefits and burial for the family of overseas
workers. ESL questioned the validity of the memorandum circular as violative of the principle of
non-delegation of legislative power. It contends that no authority had been given the POEA to
promulgate the said regulation; and even with such authorization, the regulation represents an
exercise of legislative discretion which, under the principle, is not subject to delegation.
Nevertheless, POEA assumed jurisdiction and decided the case.

ISSUE:
Whether or not the Issuance of Memorandum Circular No. 2 is a violation of non-delegation of
powers.

RULING:
No. SC held that there was a valid delegation of powers.
The authority to issue the said regulation is clearly provided in Section 4(a) of Executive Order
No. 797. ... "The governing Board of the Administration (POEA), as hereunder provided shall
promulgate the necessary rules and regulations to govern the exercise of the adjudicatory
functions of the Administration (POEA)."

It is true that legislative discretion as to the substantive contents of the law cannot be delegated.
What can be delegated is the discretion to determine how the law may be enforced, not what
the law shall be. The ascertainment of the latter subject is a prerogative of the legislature. This
prerogative cannot be abdicated or surrendered by the legislature to the delegate.

The reasons given above for the delegation of legislative powers in general are particularly
applicable to administrative bodies. With the proliferation of specialized activities and their
attendant peculiar problems, the national legislature has found it more and more necessary to
entrust to administrative agencies the authority to issue rules to carry out the general provisions
of the statute. This is called the "power of subordinate legislation."

With this power, administrative bodies may implement the broad policies laid down in a statute
by "filling in' the details which the Congress may not have the opportunity or competence to
provide. This is effected by their promulgation of what are known as supplementary regulations,
such as the implementing rules issued by the Department of Labor on the new Labor Code.
These regulations have the force and effect of law.

There are two accepted tests to determine whether or not there is a valid delegation of
legislative power:
1. Completeness test - the law must be complete in all its terms and conditions when it leaves
the legislature such that when it reaches the delegate the only thing he will have to do is enforce
it.
2. Sufficient standard test - there must be adequate guidelines or stations in the law to map out
the boundaries of the delegate's authority and prevent the delegation from running riot.

Both tests are intended to prevent a total transference of legislative authority to the delegate,
who is not allowed to step into the shoes of the legislature and exercise a power essentially
legislative.