Poliand Industrial Limited vs.

National Development Corporation

Letters of Instruction (LOI) by President merely administrative in nature; XPN’s

FACTS:

Poliand Industrial Limited is an assignee of the of the rights of Asian Hardwood Limited
over the outstanding obligation of National Development Corporation (GOCC investing
arm of the PH government), the latter having bought the whole shareholdings of
Galleon Shipping Co. pursuant to the issuance of LOI 1155 by President Marcos, wherein
GALLEON previously secured credit accommodations from Asian Hardwood to augment
its depleted working capital.

GALLEON also obtained loans from Japanese lenders to finance acquisition of vessels,
which was guaranteed by Development Bank of the PH, in consideration of 5 GALLEON
vessels as mortgage.

A collection suit was filed after repeated demands of POLIAND for the satisfaction of the
obligation from GALLEON, NDC and DBP went unheeded.

ISSUE: W/N the LOI issued by Marcos have force and effect of law. NO

HELD:

 As a general rule, letters of instructions are simply directives of the President of

the Philippines, issued in the exercise of his administrative power of control, to
heads of departments and/or officers under the executive branch of the
government for observance by the officials and/or employees thereof. Being
administrative in nature, they do not have the force and effect of a law and,
thus, cannot be a valid source of obligation.
 The following conditions must be established before a letter of instruction may
be considered a law: To form part of the law of the land, the decree, order or LOI
must be issued by the President in the exercise of his extraordinary power of
legislation as contemplated in Section 6 of the 1976 amendments to the
Constitution, whenever in his judgment, there exists a grave emergency or threat
or imminence thereof, or whenever the interim Batasan Pambansa or the regular
National Assembly fails or is unable to act adequately on any matter for any
reason that in his judgment requires immediate action. The qualification that
 there exists a grave emergency or threat or imminence thereof must be
interpreted to refer to the prevailing peace and order conditions because the
particular purpose the President was authorized to assume legislative powers
was to address the deteriorating peace and order situation during the martial
law period.
 Although LOI No. 1155 was undoubtedly issued at the time when the President
exercised legislative powers granted under Amendment No. 6 of the 1973
Constitution, the language and purpose of LOI No. 1155 precludes this Court
from declaring that said LOI had the force and effect of law
 The subject matter of LOI No. 1155 is not connected, directly or remotely, to a
grave emergency or threat to the peace and order situation of the nation in
particular or to the public interest in general. Nothing in the language of LOI
No. 1155 suggests that it was issued to address the security of the nation.
Obviously, LOI No. 1155 was in the nature of a mere administrative issuance
directed to NDC, DBP and MARINA to undertake a policy measure, that is, to
rehabilitate a private corporation.