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Eastern Shipping Lines, Inc.

POEA (166 SCRA 433)




Smart and PILTEL v. NTC

FACTS: On October 20, 2000, petitioners ISLACOM and PILTEL filed against the NTC an action for declaration of
nullity of the Billing Circular, with prayer for the issuance of a writ of preliminary injunction and temporary restraining
order. 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 DTI 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 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. 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(the Billing Circular).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.

ISSUES:1.) Whether NTC has a jurisdiction and not the regular courts over the case; and 2.) Whether Billing Circular
issued by NTC is unconstitutional and contrary to law and public policy.

Jurisdiction: NTC vs. RTC
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.
The doctrine of primary jurisdiction applies only where the administrative agency exercises its quasi-judicial or
adjudicatory function. Thus, in cases involving specialized disputes, the 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.

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.

Constitutionality of the Circular

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.

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. 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

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 population – and expertise in fundamental principles of civil law and the

Hence, the consolidated petitions are granted but the decision of the Court of Appeals on the civil cases are reversed
and set aside. Thus, it is remanded to the court a quo for continuation of the proceedings.

II.1 Municipal Council of Lemery Batangas v Provincial Board of Batangas

FACTS: The Municipal Council of Lemery, Batangas filed an action against the Provincial Board of Batangas praying for
the declaration of Resolution No. 289 (a resolution disapproving Resolution No. 18) of the respondent as null and void and
contrary to law, so as to leave Resolution No. 18 (abolishing the position of janitor in the Office of the Justice of the Peace
of that municipality, for reasons of economy, and designating the messenger in the offices of the municipal president and
the municipal secretary to assume the duties thereof) of the plaintiff in full force and effect.
In answer, the respondents denied each and every one of the allegations of the petition, and by way of special defense
contended that they did not exercise judicial functions, and even if they did so, they were within their rights for which
reason they prayed that the petition be denied. The respondents allege and maintain that the proceedings of the provincial
board of Batangas in disapproving resolution No. 18, series of 1931, of the municipal council of Lemery, by means of its
own resolution No. 289, are neither judicial nor quasi judicial, inasmuch as the petition does not allege that the board then
acted in the exercise of judicial or quasi-judicial functions.

ISSUE: (1) Whether the power exercised by the provincial board in approving or disapproving municipal resolutions is
quasi-judicial in nature and (2) whether the disapproval of Resolution No. 18 is within the scope of their quasi-judicial

RULING: (1) Yes, the power exercised by the provincial board in approving or disapproving a municipal resolution or
ordinances is in the nature of a quasi-judicial function.
This court interpreted section 2233 of the Administrative Code just quoted, in the case of Gabriel vs. Provincial Board of
Pampanga (50 Phil., 686), cited in Cariño vs. Jamoralne (p. 188, ante), as follows:
"The only ground upon which a provincial board may declare any municipal resolution, ordinance, or order invalid
is when such resolution, ordinance, or order is "beyond the powers conferred upon the council or president making
the same" (Administrative Code, sec. 2233). Absolutely no other ground is recognized by the law. A strictly legal
question is before the provincial board in its consideration of any municipal resolution, ordinance, or order. The
provincial disapproval of any resolution, ordinance, or order must be premised specifically upon the fact that such
resolution, ordinance, or order is outside the scope of the legal powers conferred by law."
In vesting provincial boards with power to annul resolutions, and ordinances, passed by municipal councils in excess of
their powers, the law granted such provincial boards quasi-judicial powers, for the determination of whether an act is legal
or not, is an essentially judicial function.
It follows from the foregoing that the function exercised by the provincial board of Batangas in disapproving resolution
No. 18, series of 1931, of the municipal council of Lemery, through resolution No. 289, is a quasi-judicial function.
(2) No, in disapproving resolution No. 18, series of 1931, of the municipal council of Lemery, the provincial board of
Batangas exceeded its quasi-judicial powers
The said board in disapproving resolution No. 18, series of 1931, of the municipal council of Lemery, relies not upon the
basis that the municipal council acted in excess of its legislative powers in consolidating the three positions of porter for
the office of the municipal president, of the municipal secretary, and of the justice of the peace, but upon the contention
that the justice of the peace would not receive adequate porter service, in violation of section 212 of the aforementioned
Administrative Code.
In the exercise of their legislative power and in compliance with their legislative duty to provide the justice of the peace
court with the necessary janitor service, the municipal council of Lemery has the power to determine a priori what janitor
service is necessary to the justice court, and the justice of the peace has the power to determine a posteriori the sufficiency
of the janitor service supplied by the municipal council. While the janitor appointed in accordance with the resolution
passed by the municipal council does not assume the duties and perform the services of janitor in the justice court, the
justice of the peace is not in a position to know if such services are adequate or not. If the janitor service supplied by the
municipal council is inadequate to the needs of the justice court, the justice of the peace may demand the said council to
provide him with proper janitor service, and may compel the council to do so, in accordance with section 212 of the
Administrative Code. (Province of Tarlac vs. Gale, 26 Phil., 338.)
Notes: Judicial function is an act performed by virtue of judicial powers. The exercise of a judicial function is the doing
of something in the nature of the action of the court. While it is true that, where there is exercise of neither judgment nor
discretion, there is not the exercise of a judicial function, it is not true that every function wherein judgment and discretion
are exercised is a judicial function. Judicial function presupposes the use of mental processes in the determination of law
or fact, and at times involves discretion as to how the power should be used. What is a judicial function does not depend
solely upon the mental operation by which it is performed or the importance of the act. Due regard must be had to the
organic law of the state and the division of powers of government.
Judicial v Quasi-judicial acts: It is clear, however, that it is the nature of the act to be performed, rather than of the office,
board, or body which performs it, that determines whether or not it is the discharge of a judicial or a quasi judicial
function. It is not essential that the proceedings should be strictly and technically judicial, in the sense in which that word
is used when applied to courts of justice, but it is sufficient if they are quasi judicial. It is enough if the officers act judicially
in making their decision, whatever may be their public character.