POWER OF ADMINISTRATIVE AGENCIES G.R. No.

L-23004 June 30, 1965

MAKATI STOCK EXCHANGE, INC., petitioner, vs. SECURITIES AND EXCHANGE COMMISSION and MANILA STOCK EXCHANGE, respondents. Hermenegildo B. Reyes for petitioner. Office of the Solicitor General for respondent Securities and Exchange Commission. Norberto J. Quisumbing and Emma Quisumbing-Fernando for respondent Manila Stock Exchange. BENGZON, C.J.: This is a review of the resolution of the Securities and Exchange Commission which would deny the Makati Stock Exchange, Inc., permission to operate a stock exchange unless it agreed not to list for trading on its board, securities already listed in the Manila Stock Exchange. Objecting to the requirement, Makati Stock Exchange, Inc. contends that the Commission has no power to impose it and that, anyway, it is illegal, discriminatory and unjust. Under the law, no stock exchange may do business in the Philippines unless it is previously registered with the Commission by filing a statement containing the information described in Sec. 17 of the Securities Act (Commonwealth Act 83, as amended). It is assumed that the Commission may permit registration if the section is complied with; if not, it may refuse. And there is now no question that the section has been complied with, or would be complied with, except that the Makati Stock Exchange, upon challenging this particular requirement of the Commission (rule against double listing) may be deemed to have shown inability or refusal to abide by its rules, and thereby to have given ground for denying registration. [Sec. 17 (a) (1) and (d)]. Such rule provides: "... nor shall a security already listed in any securities exchange be listed anew in any other securities exchange ... ." The objection of Makati Stock Exchange, Inc., to this rule is understandable. There is actually only one securities exchange The Manila Stock Exchange that has been operating alone for the past 25 years; and all or presumably all available or worthwhile securities for trading in the market are now listed there. In effect, the Commission permits the Makati Stock Exchange, Inc., to deal only with other securities. Which is tantamount to permitting a store to open provided it sells only those goods not sold in other stores. And if there's only one existing store, 1 the result is a monopoly. It is not farfetched to assert as petitioner does 2 that for all practical purposes, the Commission's order or resolution would make it impossible for the Makati Stock Exchange to operate. So, its "permission" amounted to a "prohibition." Apparently, the Commission acted "in the public interest." 3 Hence, it is pertinent to inquire whether the Commission may "in the public interest" prohibit (or make impossible) the establishment of another

stock exchange (besides the Manila Stock Exchange), on the ground that the operation of two or more exchanges adversely affects the public interest. At first glance, the answer should be in the negative, because the law itself contemplated, and, therefore, tacitly permitted or tolerated at least, the operation of two or more exchanges. Wherever two or more exchanges exist, the Commission, by order, shall require and enforce uniformity of trading regulations in and/or between said exchanges. [Emphasis Ours] (Sec. 28b13, Securities Act.) In fact, as admitted by respondents, there were five stock exchanges in Manila, before the Pacific War (p. 10, brief), when the Securities Act was approved or amended. (Respondent Commission even admits that dual listing was practiced then.) So if the existence of more than one exchange were contrary to public interest, it is strange that the Congress having from time to time enacted legislation amending the Securities Act, 4 has not barred multiplicity of exchanges. Forgetting for the moment the monopolistic aspect of the Commission's resolution, let us examine the authority of the Commission to promulgate and implement the rule in question. It is fundamental that an administrative officer has only such powers as are expressly granted to him by the statute, and those necessarily implied in the exercise thereof. In its brief and its resolution now subject to review, the Commission cites no provision expressly supporting its rule. Nevertheless, it suggests that the power is "necessary for the execution of the functions vested in it"; but it makes no explanation, perhaps relying on the reasons advanced in support of its position that trading of the same securities in two or more stock exchanges, fails to give protection to the investors, besides contravening public interest. (Of this, we shall treat later) . On the legality of its rule, the Commission's argument is that: (a) it was approved by the Department Head before the War; and (b) it is not in conflict with the provisions of the Securities Act. In our opinion, the approval of the Department, 5 by itself, adds no weight in a judicial litigation; and the test is not whether the Act forbids the Commission from imposing a prohibition, but whether it empowers the Commission to prohibit. No specific portion of the statute has been cited to uphold this power. It is not found in sec. 28 (of the Securities Act), which is entitled "Powers (of the Commission) with Respect to Exchanges and Securities." 6 According to many court precedents, the general power to "regulate" which the Commission has (Sec. 33) does not imply authority to prohibit." 7 The Manila Stock Exchange, obviously the beneficiary of the disputed rule, contends that the power may be inferred from the express power of the Commission to suspend trading in a security, under said sec. 28 which reads partly: And if in its opinion, the public interest so requires, summarily to suspend trading in any registered security on any securities exchange ... . (Sec. 28[3], Securities Act.)

However, the Commission has not acted nor claimed to have acted in pursuance of such authority, for the simple reason that suspension under it may only be for ten days. Indeed, this section, if applicable, precisely argues against the position of the Commission because the "suspension," if it is, and as applied to Makati Stock Exchange, continues for an indefinite period, if not forever; whereas this Section 28 authorizes suspension for ten days only. Besides, the suspension of trading in the security should not be on one exchange only, but on allexchanges; bearing in mind that suspension should be ordered "for the protection of investors" (first par., sec. 28) in all exchanges, naturally, and if "the public interest so requires" [sec. 28(3)]. This brings up the Commission's principal conclusions underlying its determination viz.: (a) that the establishment of another exchange in the environs of Manila would be inimical to the public interest; and (b) that double or multiple listing of securities should be prohibited for the "protection of the investors." (a) Public Interest Having already adverted to this aspect of the matter, and the emerging monopoly of the Manila Stock Exchange, we may, at this juncture, emphasize that by restricting free competition in the marketing of stocks, and depriving the public of the advantages thereof the Commission all but permits what the lawpunishes as monopolies as "crimes against public interest." 8 "A stock exchange is essentially monopolistic," the Commission states in its resolution (p. 14-a, Appendix, Brief for Petitioner). This reveals the basic foundation of the Commission's process of reasoning. And yet, a few pages afterwards, it recalls the benefits to be derived "from the existence of two or more exchanges," and the desirability of "a healthy and fair competition in the securities market," even as it expresses the belief that "a fair field of competition among stock exchanges should be encouraged only to resolve, paradoxically enough, that Manila Stock Exchange shall, in effect, continue to be the only stock exchange in Manila or in the Philippines. "Double listing of a security," explains the Commission, "divides the sellers and the buyers, thus destroying the essence of a stock exchange as a two-way auction market for the securities, where all the buyers and sellers in one geographical area converge in one defined place, and the bidders compete with each other to purchase the security at the lowest possible price and those seeking to sell it compete with each other to get the highest price therefor. In this sense, a stock exchange is essentially monopolistic." Inconclusive premises, for sure. For it is debatable whether the buyer of stock may get the lowest price where all the sellers assemble in only one place. The price there, in one sale, will tend to fix the price for the succeeding, sales, and he has no chance to get a lower price except at another stock exchange. Therefore, the arrangement desired by the Commission may, at most, be beneficial to sellers of stock not to buyers although what applies to buyers should obtain equally as to sellers (looking for higher prices). Besides, there is the brokerage fee which must be considered. Not to mention the personality of the broker. (b) Protection of investors. At any rate, supposing the arrangement contemplated is beneficial to investors (as the Commission says), it is to be doubted whether it is "necessary" for their "protection" within the purview of the Securities Act. As the purpose of the Act is to give adequate and effective protection to the investing publicagainst fraudulent representations, or false promises and the imposition of worthless ventures, 9 it is hard to see how the proposed concentration of the market has a necessary bearing to the prevention of deceptive devices or unlawful practices. For it is not mere

semantics to declare that acts for the protection of investors are necessarily beneficial to them; but not everything beneficial to them is necessary for their protection. And yet, the Commission realizes that if there were two or more exchanges "the same security may sell for more in one exchange and sell for less in the other. Variance in price of the same security would be the rule ... ." Needless to add, the brokerage rates will also differ. This, precisely, strengthens the objection to the Commission's ruling. Such difference in prices and rates gives the buyer of shares alternative options, with the opportunity to invest at lower expense; and the seller, to dispose at higher prices. Consequently, for the investors' benefit (protection is not the word), quality of listing 10 should be permitted, nay, encouraged, and other exchanges allowed to operate. The circumstance that some people "made a lot of money due to the difference in prices of securities traded in the stock exchanges of Manila before the war" as the Commission noted, furnishes no sufficient reason to let one exchange corner the market. If there was undue manipulation or unfair advantage in exchange trading the Commission should have other means to correct the specific abuses. Granted that, as the Commission observes, "what the country needs is not another" market for securities already listed on the Manila Stock Exchange, but "one that would focus its attention and energies on the listing of new securities and thus effectively help in raising capital sorely needed by our ... unlisted industries and enterprises." Nonetheless, we discover no legal authority for it to shore up (and stifle) free enterprise and individual liberty along channels leading to that economic desideratum. 11 The Legislature has specified the conditions under which a stock exchange may legally obtain a permit (sec. 17, Securities Act); it is not for the Commission to impose others. If the existence of two competing exchanges jeopardizes public interest which is doubtful let the Congress speak. 12 Undoubtedly, the opinion and recommendation of the Commission will be given weight by the Legislature, in judging whether or not to restrict individual enterprise and business opportunities. But until otherwise directed by law, the operation of exchanges should not be so regulated as practically to create a monopoly by preventing the establishment of other stock exchanges and thereby contravening: (a) the organizers' (Makati's) Constitutional right to equality before the law; (b) their guaranteed civil liberty to pursue any lawful employment or trade; and (c) the investor's right to choose where to buy or to sell, and his privilege to select the brokers in his employment. 13 And no extended elucidation is needed to conclude that for a licensing officer to deny license solely on the basis of what he believes is best for the economy of the country may amount to regimentation or, in this instance, the exercise of undelegated legislative powers and discretion. Thus, it has been held that where the licensing statute does not expressly or impliedly authorize the officer in charge, he may not refuse to grant a license simply on the ground that a sufficient number of licenses to serve the needs of the public have already been issued. (53 C.J.S. p. 636.)

Concerning res judicata. Calling attention to the Commission's order of May 27, 1963, which Makati Stock did not appeal, the Manila Stock Exchange pleads the doctrine of res judicata. 14 (The order now reviewed is dated May 7, 1964.) It appears that when Makati Stock Exchange, Inc. presented its articles of incorporation to the Commission, the latter, after making some inquiries, issued on May 27, 1963, an order reading as follows. Let the certificate of incorporation of the MAKATI STOCK EXCHANGE be issued, and if the organizers thereof are willing to abide by the foregoing conditions, they may file the proper application for the registration and licensing of the said Exchange. In that order, the Commission advanced the opinion that "it would permit the establishment and operation of the proposed Makati Stock Exchange, provided ... it shall not list for trading on its board, securities already listed in the Manila Stock Exchange ... ." Admittedly, Makati Stock Exchange, Inc. has not appealed from that order of May 27, 1963. Now, Manila Stock insists on res judicata. Why should Makati have appealed? It got the certificate of incorporation which it wanted. The condition or proviso mentioned would only apply if and when it subsequently filed the application for registration as stock exchange. It had not yet applied. It was not the time to question the condition; 15 Makati was still exploring the convenience of soliciting the permit to operate subject to that condition. And it could have logically thought that, since the condition did not affect its articles of incorporation, it should not appeal the order (of May 27, 1963) which after all, granted the certificate of incorporation (corporate existence) it wanted at that time. And when the Makati Stock Exchange finally found that it could not successfully operate with the condition attached, it took the issue by the horns, and expressing its desire for registration and license, it requested that the condition (against double listing) be dispensed with. The order of the Commission denying, such request is dated May 7, 1964, and is now under, review. Indeed, there can be no valid objection to the discussion of this issue of double listing now, 16 because even if the Makati Stock Exchange, Inc. may be held to have accepted the permission to operate with the condition against double listing (for having failed to appeal the order of May 27, 1963), still it was not precluded from afterwards contesting 17 the validity of such condition or rule: (1) An agreement (which shall not be construed as a waiver of any constitutional right or any right to contest the validity of any rule or regulation) to comply and to enforce so far as is within its powers, compliance by its members, with the provisions of this Act, and any amendment thereto, and any rule or regulation made or to be made thereunder. (See. 17-a-1, Securities Act [Emphasis Ours].) Surely, this petition for review has suitably been coursed. And making reasonable allowances for the presumption of regularity and validity of administrative action, we feel constrained to reach the conclusion that the respondent Commission possesses no power to impose the condition of the rule, which, additionally, results in discrimination and violation of constitutional rights.

ACCORDINGLY, the license of the petition to operate a stock exchange is approved without such condition. Costs shall be paid by the Manila Stock Exchange. So ordered. Bautista Angelo, Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur. Barrera, J., is on leave

G.R. No. 85439 January 13, 1992 KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA NG BAGONG PAMILIHANG BAYAN NG MUNTINLUPA, INC. (KBMBPM), TERESITA A. FAJARDO, NADYESDA B. PONSONES, MA. FE V. BOMBASE, LOIDA D. LUCES, MARIO S. FRANCISCO, AMADO V. MANUEL and ROLANDO G. GARCIA, incumbent members of the Board, AMADO G. PEREZ and MA. FE V. BOMBASE, incumbent General Manager and Secretary-Treasurer, respectively, petitioners, vs. HON. CARLOS G. DOMINGUEZ, Secretary of Agriculture, Regional Director of Region IV of the Department of Agriculture ROGELIO P. MADRIAGA, RECTO CORONADO and Municipal Mayor IGNACIO R. BUNYE, both in his capacity as Municipal Mayor of Muntinlupa, Metro Manila and as Presiding Officer of Sangguniang Bayan ng Muntinglupa, and JOHN DOES, respondents. G.R. No. 91927 January 13, 1992 IGNACIO R. BUNYE, JAIME R. FRESNEDI, CARLOS G. TENSUAN, VICTOR E. AGUINALDO, ALEJANDRO I. MARTINEZ, EPIFANIO A. ESPELETA, REY E. BULAY, LUCIO B. CONSTANTINO, ROMAN E. NIEFES, NEMESIO O. MOZO, ROGER SMITH, RUFINO B. JOAQUIN, NOLASCO I. DIAZ, RUFINO IBE and NESTOR SANTOS, petitioners, vs. THE SANDIGANBAYAN, THE OMBUDSMAN and ROGER C. BERBANO, Special Prosecutor III,respondents. Jose O. Villanueva and Roberto B. Romanillos for petitioners in G.R. No. 85439. Alampay & Manhit Law Offices for petitioners in G.R. No. 91927.

DAVIDE, JR., J.: These cases have been consolidated because they are closely linked with each other as to factual antecedents and issues. The first case, G.R. No. 85439 (hereinafter referred to as the Kilusang Bayan case), questions the validity of the order of 28 October 1988 of then Secretary of Agriculture Hon. Carlos G. Dominguez which ordered: (1) the take-over by the Department of Agriculture of the management of the petitioner Kilusang Bayan sa Paglilingkod Ng Mga Magtitinda ng Bagong Pamilihang Bayan ng Muntilupa, Inc. (KBMBPM) pursuant to the Department's regulatory and supervisory powers under Section 8 of P.D. No. 175, as amended, and Section 4 of Executive Order No. 13, (2) the creation of a Management Committee which shall assume the management of KBMBPM upon receipt of the order, (3) the disbandment of the Board of Directors, and (4) the turn over of all assets, properties and records of the KBMBPM the Management Committee. The second case. G.R. No. 91927 (hereinafter referred to as the Bunye case), seeks the nullification of the Resolution of 4 January 1990 of the Sandiganbayan admitting the Amended Information against

petitioners in Criminal Case No. 13966 and denying their motion to order or direct preliminary investigation, and its Resolution of 1 February 1990 denying the motion to reconsider the former. The procedural and factual antecedents are not disputed. On 2 September 1985, the Municipal Government of Muntinlupa (hereinafter, Municipality), Metro Manila, thru its then Mayor Santiago Carlos, Jr., entered into a contract with the KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA SA BAGONG PAMILIHANG BAYAN NG MUNTINLUPA, INC. (KBMBPM) represented by its General Manager, Amado Perez, for the latter's management and operation of the new Muntinlupa public market. The contract provides for a twenty-five (25) year term commencing on 2 September 1985, renewable for a like period, unless sooner terminated and/or rescinded by mutual agreement of the parties, at a monthly consideration of Thirty-Five Thousand Pesos (P35,000) to be paid by the KBMBPM within the first five (5) days of each month which shall, however, be increased by ten percent (10%) each year during the first five (5) years only. 1 The KBMBPM is a service cooperative organized by and composed of vendors occupying the New Muntinlupa Public Market in Alabang, Muntinlupa, Metro Manila pursuant to Presidential Decree No. 175 and Letter of Implementation No. 23; its articles of incorporation and by-laws were registered with the then Office of the Bureau of Cooperatives Development (thereafter the Bureau of Agricultural Cooperatives Development or BACOD and now the Cooperative Development Authority). 2 Following his assumption into office as the new mayor succeeding Santiago Carlos, Jr., petitioner Ignacio Bunye, claiming to be particularly scandalized by the "virtual 50-year term of the agreement, contrary to the provision of Section 143, paragraph 3 of Batas Pambansa Blg. 337," and the "patently inequitable rental," directed a review of the aforesaid contract. 3 He sought opinions from both the Commission on Audit and the Metro Manila Commission (MMC) on the validity of the instrument. In separate letters, these agencies urged that appropriate legal steps be taken towards its rescission. The letter of Hon. Elfren Cruz of the MMC even granted the Municipality authority "to take the necessary legal steps for the cancellation/recission of the above cited contract and make representations with KBMBPM for the immediate transfer/takeover of the possession, management and operation of the New Muntinlupa Market to the Municipal Government of Muntinlupa." 4 Consequently, upon representations made by Bunye with the Municipal Council, the latter approved on 1 August 1988 Resolution No. 45 abrogating the contract. To implement this resolution, Bunye, together with his co-petitioners and elements of the Capital Command of the Philippine Constabulary, proceeded, on 19 August 1986, to the public market and announced to the general public and the stallholders thereat that the Municipality was taking over the management and operation of the facility, and that the stallholders should henceforth pay their market fees to the Municipality, thru the Market Commission, and no longer to the KBMBPM. 5 On 22 August 1988, the KBMBPM filed with Branch 13 of the Regional Trial Court of Makati a complaint for breach of contract, specific performance and damages with prayer for a writ of preliminary injunction against the Municipality and its officers, which was docketed as Civil Case No. 88-1702. 6 The complaint was premised on the alleged illegal take-over of the public market effected "in excess of his (Bunye's) alleged authority" and thus "constitutes breach of contract and duty as a public official."

The writ applied for having been denied, 7 the KBMBPM officers resisted the attempts of Bunye and company to complete the take-over; they continued holding office in the KBS building, under their respective official capacities. The matter having been elevated to this Court by way of certiorari, 8 We remanded the same to the Court of Appeals which docketed it as C.A.-G.R. No. L-16930. 9 On 26 August 1988, Amado Perez filed with the Office of the Ombudsman a letter-complaint charging Bunye and his co-petitioners with oppression, harassment, abuse of authority and violation of the AntiGraft and Corrupt Practices Act 10 for taking over the management and operation of the public market from KBMBPM. 11 In a subpoena dated 7 October 1988, prosecutor Mothalib C. Onos of the Office of the Special Prosecutor directed Bunye and his co-petitioners to submit within ten (10) days from receipt thereof counter-affidavits, affidavits of their witnesses and other supporting documents. 12 The subpoena and letter-complaint were received on 12 October 1988. On 20 October 1988, two (2) days before the expiration of the period granted to file said documents, Bunye, et al. filed by mail an urgent motion for extension of "at least fifteen (15) days from October 22, 1988" within which to comply 13 with the subpoena. Thereafter, the following transpired which subsequently gave rise to these petitions: G.R. No. 85439 In the early morning of 29 October 1988, a Saturday, respondent Madriaga and Coronado, allegedly accompanied by Mayor Bunye and the latters' heavily armed men, both in uniform and in civilian clothes, together with other civilians, namely: Romulo Bunye II, Alfredo Bunye, Tomas Osias, Reynaldo Camilon, Benjamin Taguibao, Benjamin Bulos and other unidentified persons, allegedly through force, violence and intimidation, forcibly broke open the doors of the offices of petitioners located at the second floor of the KBS Building, new Muntinlupa Public Market, purportedly to serve upon petitioners the Order of respondent Secretary of Agriculture dated 28 October 1988, and to implement the same, by taking over and assuming the management of KBMBPM, disbanding the then incumbent Board of Directors for that purpose and excluding and prohibiting the General Manager and the other officers from exercising their lawful functions as such. 14 The Order of the Secretary reads as follows: 15 ORDER WHEREAS, the KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA NG BAGONG PAMILIHANG BAYAN NG MUNTINLUPA, INC., (KBMBPM), Alabang, Muntinlupa, Metro Manila is a Cooperative registered under the provisions of Presidential Decree No. 175, as amended; WHEREAS, the Department of Agriculture is empowered to regulate and supervise cooperatives registered under the provisions of Presidential Decree No. 175, as amended;

WHEREAS, the general membership of the KBMBPM has petitioned the Department of Agriculture for assistance in the removal of the members of the Board of Directors who were not elected by the general membership of said cooperative; WHEREAS, the on-going financial and management audit of the Department of Agriculture auditors show (sic) that the management of the KBMBPM is not operating that cooperative in accordance with PD. 175, LOI No. 23, the Circulars issued by DA/BACOD and the provisions of the by-laws of KBMBPM; WHEREAS, the interest of the public so demanding it is evident and urgently necessary that the KBMBPM MUST BE PLACED UNDER MANAGEMENT TAKE-OVER of the Department of Agriculture in order to preserve the financial interest of the members of the cooperative and to enhance the cooperative development program of the government; WHEREAS, it is ordered that the Department of Agriculture in the exercise of its regulatory and supervisory powers under Section 8 of PD 175, as amended, and Section 4 of Executive Order No. 113, take over the management of KBMBPM under the following directives: 1. THAT a Management Committee is hereby created composed of the following: a) Reg. Dir. or OIC RD DA Region IV b) Atty. Rogelio P. Madriaga BACOD c) Mr. Recto Coronado KBMBPM d) Mrs. Nadjasda Ponsones KBMBPM e) One (1) from the Municipal Government of Muntinlupa to be designated by the Sangguniang Pambayan ng Muntinlupa; 2. THAT the Management Committee shall, upon receipt of this Order, assume the management of KBMBPM; 3. THAT the present Board of Directors is hereby disbanded and the officers and Manager of the KBMBPM are hereby directed to turnover all assets, properties and records of the KBMBPM to the Management Committee herein created; 4. THAT the Management Committee is hereby empowered to promulgate rules of procedure to govern its workings as a body;

5. THAT the Management Committee shall submit to the undersigned thru the Director of BACOD monthly reports on the operations of KBMBPM; 6. THAT the Management Committee shall call a General Assembly of all registered members of the KBMBPM within Ninety (90) days from date of this Order to decide such matters affecting the KBMBPM, including the election of a new set of Board of Director (sic). This Order takes effect immediately and shall continue to be in force until the members of the Board of Directors shall have been duly elected and qualified. Done this 28th day of October, 1988 at Quezon City. As claimed by petitioners, the Order served on them was not written on the stationary of the Department, does not bear its seal and is a mere xerox copy. The so-called petition upon which the Order is based appears to be an unverified petition dated 10 October 1988 signed, according to Mayor Bunye, 16 by 371 members of the KBMBPM. On 2 November 1988, petitioners filed the petition in this case alleging, inter alia, that: (a) Respondent Secretary acted without or in excess of jurisdiction in issuing the Order for he arrogated unto himself a judicial function by determining the alleged guilt of petitioners on the strength of a mere unverified petition; the disbandment of the Board of Directors was done without authority of law since under Letter of Implementation No. 23, removal of officers, directors or committee members could be done only by the majority of the members entitled to vote at an annual or special general assembly and only after an opportunity to be heard at said assembly. (b) Respondent Secretary acted in a capricious, whimsical, arbitrary and despotic manner, so patent and gross that it amounted to a grave abuse of discretion. (c) The Order is a clear violation of the By-Laws of KBMBPM and is likewise illegal and unlawful for it allows or tolerates the violation of the penal provisions under paragraph (c), Section 9 of P.D. No. 175. (d) The Order is a clear violation of the constitutional right of the individual petitioners to be heard. 17 They pray that upon the filing of the petition, respondents, their agents, representatives or persons acting on their behalf be ordered to refrain, cease and desist from enforcing and implementing the questioned Order or from excluding the individual petitioners from the exercise of their rights as such officers and, in the event that said acts sought to be restrained were already partially or wholly done, to immediately restore the management and operation of the public market to petitioners, order respondents to vacate the premises and, thereafter, preserve the status quo; and that, finally, the challenged Order be declared null and void.

In the Resolution of 9 October 1988, 18 We required the respondents to Comment on the petition. Before any Comment could be filed, petitioners filed on 2 January 1989 an Urgent Ex-Parte Motion praying that respondent Atty. Rogelio Madriaga, who had assumed the position of Chairman of the Management Committee, be ordered to stop and/or cancel the scheduled elections of the officers of the KBMBPM on 6 January 1989 and, henceforth, desist from scheduling any election of officers or Members of the Board of Directors thereof until further orders on the Court. 19 The elections were, nevertheless, held and a new board of directors was elected. So, on 19 January 1989, petitioners filed a supplemental motion 20 praying that respondent Madriaga and the "newly elected Board of Directors be ordered to cease and desist from assuming, performing or exercising powers as such, and/or from removing or replacing the counsels of petitioners as counsels for KBMBPM and for Atty. Fernando Aquino, Jr., to cease and desist from unduly interfering with the affairs and business of the cooperative." Respondent Bunye, by himself, filed his Comment on 23 January 1989. 21 He denies the factual allegations in the petition and claims that petitioners failed to exhaust administrative remedies. A reply thereto was filed by petitioners on 7 February 1989. 22 Respondent Recto Coronado filed two (2) Comments. The first was filed on 6 February 1989 23 by his counsel, Atty. Fernando Aquino, Jr., and the second, which is for both him and Atty. Madriaga, was filed by the latter on 10 February 1989. 24 On 20 February 1989, petitioners filed a Reply to the first Comment of Coronado 25 and an ExParte Motion for the immediate issuance of a cease and desist order 26 praying that the so-called new directors and officers of KBMBPM, namely: Tomas M. Osias, Ildefonso B. Reyes, Paulino Moldez, Fortunato M. Medina, Aurora P. del Rosario, Moises Abrenica, and Lamberto Casalla, be ordered to immediately cease and desist from filing notices of withdrawals or motions to dismiss cases filed by the Cooperative now pending before the courts, administrative offices and the Ombudsman and Tanodbayan, and that if such motions or notices were already filed, to immediately withdraw and desist from further pursuing the same until further orders of this Court. The latter was precipitated by the Resolution No. 19 of the "new" board of directors withdrawing all cases filed by its predecessors against Bunye, et al., and more particularly the following cases: (a) G.R. No. 85439 (the instant petition), (b) Civil Case No. 88-1702, (c) OSP Case No. 88-2110 before the Ombudsman, (d) IBP Case No. 88-0119 before the Tanodbayan, and Civil Case No. 88-118 for Mandamus. 27 On 1 March 1989, We required the Solicitor General to file his Comment to the petition and the urgent motion for the immediate issuance of a cease and desist order. 28 A motion to dismiss the instant petition was filed on 30 March 1989. 29 On 19 April 1989, We resolved to dismiss the case and consider it closed and terminated. 30 Thereupon, after some petitioners filed a motion for clarification and reconsideration, We set aside the dismissal order and required the new directors to comment on the Opposition to Motion to Dismiss filed by the former. 31 The new board, on 14 June 1989, prayed that its Manifestation of 6 June 1989 and Opposition dated 9 June 1989, earlier submitted it response to petitioners' motion for reconsideration of the order dismissing the instant petition, be treated as its Comment. 32 Both parties then continued their legal fencing, serving several pleadings on each other.

In Our Resolution of 9 August 1989, 33 We gave the petition due course and required the parties to submit their respective Memoranda. On 14 August 1989, petitioners filed an urgent ex-parte motion for the immediate issuance of a cease and desist order 34 in view of the new board's plan to enter into a new management contract; the motion was noted by this Court on 23 August 1989. A second ex-parte motion, noted on 18 October 1989, was filed on 19 September 1989 asking this court to consider the "Invitation to pre-qualify and bid" for a new contract published by respondent Bunye. 35 In a belated Comment 36 for the respondent Secretary of Agriculture filed on 22 September 1989, the Office of the Solicitor General asserts that individual petitioners, who were not allegedly elected by the members or duly designated by the BACOD Director, have no right or authority to file this case; the assailed Order of the Secretary was issued pursuant to P.D. No. 175, more particularly Section 8 thereof which authorizes him "(d) to suspend the operation or cancel the registration of any cooperative after hearing and when in its judgment and based on findings, such cooperative is operating in violation of this Decree, rules and regulations, existing laws as well as the by-laws of the cooperative itself;" the Order is reasonably necessary to correct serious flaws in the cooperative and provide interim measures until election of regular members to the board and officers thereof; the elections conducted on 6 January 1989 are valid; and that the motion to dismiss filed by the new board of directors binds the cooperative. It prays for the dismissal of the petition. Respondent Secretary of Agriculture manifested on 22 September 1989 that he is adopting the Comment submitted by the Office of the Solicitor General as his memorandum; 37 petitioners and respondents Coronado and Madriaga filed their separate Memoranda on 6 November 1989; 38 while the new board of directors submitted its Memorandum on 11 December 1989. 39 The new KBMBPM board submitted additional pleadings on 16 February 1990 which it deemed relevant to the issues involved herein. Reacting, petitioners filed a motion to strike out improper and inadmissible pleadings and annexes and sought to have the pleaders cited for contempt. Although We required respondents to comment, the latter did not comply. Nevertheless, a manifestation was filed by the same board on 25 February 1991 40 informing this Court of the holding, on 9 January 1991, of its annual general assembly and election of its board of directors for 1991. It then reiterates the prayer that the instant petition be considered withdrawn and dismissed. Petitioners filed a counter manifestation alleging that the instant petition was already given due course on 9 August 1989. 41 In its traverse to the counter manifestation, the new board insists that it "did not derive authority from the October 28, 1988 Order, the acts of the Management Committee, nor (sic) from the elections held in (sic) January 6, 1989," but rather from the members of the cooperative who elected them into office during the elections. Petitioners filed a rejoinder asserting that the election of new directors is not a supervening event independent of the main issue in the present petition and that to subscribe to the argument that the issues in the instant petition became moot with their assumption into office is to reward a wrong done. G. R. NO. 91927

Petitioners claim that without ruling on their 20 October 1988 motion for an extension of at last 15 days from 22 October 1988 within which to file their counter-affidavits, which was received by the Office of the Special Prosecutor on 3 November 1988, Special Prosecutor Onos promulgated on 11 November 1988 a Resolution finding the evidence on hand sufficient to establish a prima facie case against respondents (herein petitioners) and recommending the filing of the corresponding information against them before the Sandiganbayan. 42Petitioners also claim that they submitted their counter-affidavits on 9 November 1988. 43 In their motion dated 2 December 1988, petitioners move for a reconsideration of the above Resolution, 44 which was denied by Onos 45 in his 18 January 1989 Order. The information against the petitioners was attached to this order. Upon submission of the records for his approval, the Ombudsman issued a first indorsement on 4 April 1989 referring to "Judge Gualberto J. de la Llana, Acting Director , IEO/RSSO, this Office, the within records of OSP Case No. 88-02110 . . . for further preliminary investigation . . ." 46 Thereafter, on 28 April 1989, Bunye and company received a subpoena from de la Llana requiring them to appear before the latter on 25 April 1989, 47 submit a report and file comment. After being granted an extension, Bunye and company submitted their comment on 18 May 1989. 48 On 22 August 1989, de la Llana recommended the filing of an information for violation of section 3 (e) of the Anti-Graft and Corrupt Practices Act. 49 The case was referred to special prosecuting officer Jose Parentela, Jr. who, in his Memorandum 50 to the Ombudsman through the Acting Special Prosecutor, likewise urged that an information be filed against herein petitioners. On 3 October 1989, the Ombudsman signed his conformity to the Memorandum and approved the 18 January information prepared by Onos, which was then filed with the Sandiganbayan. Consequently, Bunye, et al. were served arrest warrants issued by the Sandiganbayan. Detained at the NBI on 9 October 1989, they claim to have discovered only then the existence of documents recommending and approving the filing of the complaint and a memorandum by special prosecutor Bernardita G. Erum proposing the dismissal of the same. 51 Arraignment was set for 18 October 1989. 52 However, on 14 October 1989, petitioners filed with the Sandiganbayan an "Omnibus Motion to Remand to the Office of the Ombudsman; to Defer Arraignment and to Suspend Proceedings." 53 Subsequently, through new counsel, petitioners filed on 17 October 1989 a Consolidated Manifestation and Supplemental Motion 54 praying, inter alia, for the quashal of the information on the ground that they were deprived of their right to a preliminary investigation and that the information did not charge an offense. The Sandiganbayan issued an order on 18 October 1989 deferring arraignment and directing the parties to submit their respective memoranda, 55 which petitioners complied with on 2 November 1989. 56 On 16 November 1989, special Prosecutor Berbano filed a motion to admit amended information. 57

On 17 November 1989, the Sandiganbayan handed down a Resolution 58 denying for lack of merit the Omnibus Motion to Remand the Case To The Office of the Ombudsman, to Defer Arraignment and to Suspend Proceedings. Petitioners then filed a motion to order a preliminary investigation 59 on the basis of the introduction by the amended information of new, material and substantive allegations, which the special prosecutor opposed,60 thereby precipitating a rejoinder filed by petitioners. 61 On 4 January 1990, the Sandiganbayan handed down a Resolution 62 admitting the Amended Information and denying the motion to direct preliminary investigation. Their motion to reconsider this Resolution having been denied in the Resolution of 1 February 1990, 63 petitioners filed the instant petition on 12 February 1990. Petitioners claim that respondent Sandiganbayan acted without or in excess of jurisdiction or with manifest grave abuse of discretion amounting to lack of jurisdiction in denying petitioners their right to preliminary investigation and in admitting the Amended Information. They then pray that: (a) the 4 January and 1 February 1990 Resolutions of the Sandiganbayan, admitting the amended information and denying the motion for reconsideration, respectively, be annulled; (b) a writ be issued enjoining the Sandiganbayan from proceeding further in Criminal Case No. 13966; and (c) respondents be enjoined from pursuing further actions in the graft case. We required the respondents to Comment on the petition. On 21 February 1990, petitioners' counsel filed a motion to drop Epifanio Espeleta and Rey E. Dulay as petitioners, 64 and in the Comment they filed on 30 March 1990, in compliance with Our Resolution of 1 March 1990, they state that they do not interpose any objection to the motion. On 20 March 1990, the Office of the Solicitor General moved that it be excused from filing comment for the respondents as it cannot subscribe to the position taken by the latter with respect to the questions of law involved. 65 We granted this motion in the resolution of 8 May 1990. Respondent Berbano filed his comment on 10 September 1991 and petitioners replied on 20 December 1990; Berbano subsequently filed a Rejoinder thereto on 11 January 1991. 66 The Sandiganbayan then filed a manifestation proposing that it be excused from filing comment as its position on the matters in issue is adequately stated in the resolutions sought to be annulled. 67 On 7 March 1991, We resolved to note the manifestation and order the instant petition consolidated with G.R. No. 85439. The present dispute revolves around the validity of the antecedent proceedings which led to the filing of the original information on 18 January 1989 and the amended information afterwards. THE ISSUES AND THEIR RESOLUTION 1. G. R. No. 85439. As adverted to in the introductory portion of this Decision, the principal issue in G.R. No. 85439 is the validity of the 28 October 1988 Order of respondent Secretary of Agriculture. The exordium of said Order unerringly indicates that its basis is the alleged petition of the general membership of the

KBMBPM requesting the Department for assistance "in the removal of the members of the Board of Directors who were not elected by the general membership" of the cooperative and that the "ongoing financial and management audit of the Department of Agriculture auditors show (sic) that the management of the KBMBPM is not operating that cooperative in accordance with P.D. 175, LOI 23, the Circulars issued by DA/BACOD and the provisions and by-laws of KBMBPM." It is also professed therein that the Order was issued by the Department "in the exercise of its regulatory and supervisory powers under Section 8 of P.D. 175, as amended, and Section 4 of Executive Order No. 113." Respondents challenge the personality of the petitioners to bring this action, set up the defense of nonexhaustion of administrative remedies, and assert that the Order was lawfully and validly issued under the above decree and Executive Order. We find merit in the petition and the defenses interposed do not persuade Us. Petitioners have the personality to file the instant petition and ask, in effect, for their reinstatement as Section 3, Rule 65 of the Rules of Court, defining an action for mandamus, permits a person who has been excluded from the use and enjoyment of a right or office to which he is entitled, to file suit. 68 Petitioners, as ousted directors of the KBMBPM, are questioning precisely the act of respondent Secretary in disbanding the board of directors; they then pray that this Court restore them to their prior stations. As to failure to exhaust administrative remedies, the rule is well-settled that this requirement does not apply where the respondent is a department secretary whose acts, as an alter ego of the President, bear the implied approval of the latter, unless actually disapproved by him. 69 This doctrine of qualified political agency ensures speedy access to the courts when most needed. There was no need then to appeal the decision to the office of the President; recourse to the courts could be had immediately. Moreover, the doctrine of exhaustion of administrative remedies also yields to other exceptions, such as when the question involved is purely legal, as in the instant case, 70 or where the questioned act is patently illegal, arbitrary or oppressive. 71 Such is the claim of petitioners which, as hereinafter shown, is correct. And now on the validity of the assailed Order. Regulation 34 of Letter of Implementation No. 23 (implementing P.D. No. 175) provides the procedure for the removal of directors or officers of cooperatives, thus: An elected officer, director or committee member may be removed by a vote of majority of the members entitled to vote at an annual or special general assembly. The person involved shall have an opportunity to be heard. A substantially identical provision, found in Section 17, Article III of the KBMBPM's by-laws, reads: Sec. 17. Removal of Directors and Committee Members. Any elected director or committee member may be removed from office for cause by a majority vote of the members in good standing present at the annual or special general assembly called for the purpose after having been given the opportunity to be heard at the assembly.

Under the same article are found the requirements for the holding of both the annual general assembly and a special general assembly. Indubitably then, there is an established procedure for the removal of directors and officers of cooperatives. It is likewise manifest that the right to due process is respected by the express provision on the opportunity to be heard. But even without said provision, petitioners cannot be deprived of that right. The procedure was not followed in this case. Respondent Secretary of Agriculture arrogated unto himself the power of the members of the KBMBPM who are authorized to vote to remove the petitioning directors and officers. He cannot take refuge under Section 8 of P.D. No. 175 which grants him authority to supervise and regulate all cooperatives. This section does not give him that right. An administrative officer has only such powers as are expressly granted to him and those necessarily implied in the exercise thereof. 72 These powers should not be extended by implication beyond what may to necessary for their just and reasonable execution. 73 Supervision and control include only the authority to: (a) act directly whenever a specific function is entrusted by law or regulation to a subordinate; (b) direct the performance of duty; restrain the commission of acts; (c) review, approve, reverse or modify acts and decisions of subordinate officials or units; (d) determine priorities in the execution of plans and programs; and (e) prescribe standards, guidelines, plans and programs. Specifically, administrative supervision is limited to the authority of the department or its equivalent to: (1) generally oversee the operations of such agencies and insure that they are managed effectively, efficiently and economically but without interference with day-to-day activities; (2) require the submission of reports and cause the conduct of management audit, performance evaluation and inspection to determine compliance with policies, standards and guidelines of the department; (3) take such action as may be necessary for the proper performance of official functions, including rectification of violations, abuses and other forms of mal-administration; (4) review and pass upon budget proposals of such agencies but may not increase or add to them. 74 The power to summarily disband the board of directors may not be inferred from any of the foregoing as both P.D. No. 175 and the by-laws of the KBMBPM explicitly mandate the manner by which directors and officers are to be removed. The Secretary should have known better than to disregard these procedures and rely on a mere petition by the general membership of the KBMBPM and an on-going audit by Department of Agriculture auditors in exercising a power which he does not have, expressly or impliedly. We cannot concede to the proposition of the Office of the Solicitor General that the Secretary's power under paragraph (d), Section 8 of P.D. No. 175 above quoted to suspend the operation or cancel the registration of any cooperative includes the "milder authority of suspending officers and calling for the election of new officers." Firstly, neither suspension nor cancellation includes the take-over and ouster of incumbent directors and officers, otherwise the law itself would have expressly so stated. Secondly, even granting that the law intended such as postulated, there is the requirement of a hearing. None was conducted. Likewise, even if We grant, for the sake of argument, that said power includes the power to disband the board of directors and remove the officers of the KBMBPM, and that a hearing was not expressly required in the law, still the Order can be validly issued only after giving due process to the affected parties, herein petitioners.

Due process is guaranteed by the Constitution 75 and extends to administrative proceedings. In the landmark case of Ang Tibay vs. Court of Industrial Relations, 76 this Court, through Justice Laurel, laid down the cardinal primary requirements of due process in administrative proceedings, foremost of which is the right to a hearing, which includes the right to present one's case and submit evidence in support thereof. The need for notice and the opportunity to be heard is the heart of procedural due process, be it in either judicial or administrative proceedings. 77 Nevertheless, a plea of a denial of procedural due process does not lie where a defect consisting in an absence of notice of hearing was thereafter cured by the aggrieved party himself as when he had the opportunity to be heard on a subsequent motion for reconsideration. This is consistent with the principle that what the law prohibits is not the absence of previous notice but the absolute absence thereof and lack of an opportunity to be heard. 78 In the instant case, there was no notice of a hearing on the alleged petition of the general membership of the KBMBPM; there was, as well, not even a semblance of a hearing. The Order was based solely on an alleged petition by the general membership of the KBMBPM. There was then a clear denial of due process. It is most unfortunate that it was done after democracy was restored through the peaceful people revolt at EDSA and the overwhelming ratification of a new Constitution thereafter, which preserves for the generations to come the gains of that historic struggle which earned for this Republic universal admiration. If there were genuine grievances against petitioners, the affected members should have timely raise these issues in the annual general assembly or in a special general assembly. Or, if such a remedy would be futile for some reason or another, judicial recourse was available. Be that as it may, petitioners cannot, however, be restored to their positions. Their terms expired in 1989, thereby rendering their prayer for reinstatement moot and academic. Pursuant to Section 13 of the by-laws, during the election at the first annual general assembly after registration, one-half plus one (4) of the directors obtaining the highest number of votes shall serve for two years, and the remaining directors (3) for one year; thereafter, all shall be elected for a term of two years. Hence, in 1988, when the board was disbanded, there was a number of directors whose terms would have expired the next year (1989) and a number whose terms would have expired two years after (1990). Reversion to the status quo preceding 29 October 1988 would not be feasible in view of this turn of events. Besides, elections were held in 1990 and 1991. 79 The affairs of the cooperative are presently being managed by a new board of directors duly elected in accordance with the cooperative's by-laws. 2. G. R. No. 91927. The right of an accused to a preliminary investigation is not among the rights guaranteed him in the Bill of Rights. As stated in Marcos, et al. vs. Cruz, 80 "the preliminary investigation in criminal cases is not a creation of the Constitution; its origin is statutory and it exists and the right thereto can be invoked when so established and granted by law. It is so specifically granted by procedural law. 81If not waived, absence thereof may amount to a denial of due process. 82 However, lack of preliminary investigation is not a ground to quash or dismiss a complaint or information. Much less does it affect the court's jurisdiction. In People vs. Casiano, 83 this Court ruled: Independently of the foregoing, the absence of such investigation [preliminary] did not impair the validity of the information or otherwise render it defective. Much less did it affect the jurisdiction of the court of first instance over the present case. Hence, had the

defendant-appellee been entitled to another preliminary investigation, and had his plea of not guilty upon arraignment not implied a waiver of said right, the court of first instance should have, either conducted such preliminary investigation, or ordered the Provincial Fiscal to make it, in pursuance of section 1687 of the Revised Administrative Code (as amended by Republic Act No. 732), or remanded the record for said investigation to the justice of the peace court, instead of dismissing the case as it did in the order appealed from. This doctrine was thereafter reiterated or affirmed in several case. 84 In the instant case, even if it is to be conceded for argument's sake that there was in fact no preliminary investigation, the Sandiganbayan, per Doromal vs. Sandiganbayan, 85 "should merely suspend or hold in abeyance proceedings upon the questioned Amended Information and remand the case to the Office of the Ombudsman for him to conduct a preliminary investigation." It is Our view, however, that petitioners were not denied the right to preliminary investigation. They, nevertheless, insist that the preliminary investigation conducted by the Office of the Special Prosecutor existed more in form than in substance. This is anchored on the failure by prosecutor Onos to consider the counter-affidavits filed by petitioners. The same sin of omission is ascribed to Acting Director de la Llana who purportedly failed to consider the comments submitted by the petitioners pursuant to a subpoena dated 13 April 1989. The failure of special prosecutor Berbano to conduct a preliminary investigation before amending the information is also challenged. It is finally urged that the Sandiganbayan completely disregarded the "glaring anomaly that on its face the Information filed by the Office of the Special Prosecutor" was prepared and subscribed on 18 January 1989, while the records indicate that the preliminary investigation was concluded on 3 October 1989. In his Comment, respondent Berbano dispassionately traces the genesis of the criminal information filed before the Sandiganbayan. His assessment that a preliminary investigation sufficient in substance and manner was conducted prior to the filing of the information reflects the view of the Sandiganbayan, maintained in both the 17 November 1989 and 4 January 1990 resolutions, that there was compliance with the requirements of due process. Petitioners were provided a reasonable period within which to submit their counter-affidavits; they did not avail of the original period; they moved for an extension of at least fifteen (15) days from 22 October 1988. Despite the urgency of its nature, the motion was sent by mail. The extension prayed for was good up to 6 November 1988. But, as admitted by them, they filed the Counter-Affidavits only on 9 November 1988. Yet, they blamed prosecutor Onos for promulgating the 11 November 1989 Resolution and for, allegedly, not acting on the motion. Petitioners then should not lay the blame on Onos; they should blame themselves for presuming that the motion would be granted. This notwithstanding, petitioners were able to file a Motion for Reconsideration on 13 December 1988 requesting that the reviewing prosecutor consider the belatedly filed documents; 86 thus, there is the recommendation of prosecutor Bernardita Erum calling for the dismissal of the charges on 2 March 1989, which, however, was not sustained upon subsequent review. The Sandiganbayan, in its 17 November 1989 Resolution, succinctly summed up the matter when it asserted that "even granting, for

the sake of argument, that prosecutor Onos . . . failed to consider accused-movants' counter-affidavits, such defect was cured when a "Motion for Reconsideration" was filed, and which . . . de la Llana took into account upon review." It may not then be successfully asserted that the counter-affidavits were not considered by the Ombudsman in approving the information. Perusal of the factual antecedents reveals that a second investigation was conducted upon the "1st Indorsement" of the Ombudsman of 4 April 1989. As a result, subpoenas were issued and comments were asked to be submitted, which petitioners did, but only after a further extension of fifteen (15) days from the expiration of the original deadline. From this submission the matter underwent further review. Moreover, in the 18 January 1989 Order of prosecutor Onos, there was an ample discussion of the defenses raised by the petitioners in their counter-affidavits, thus negating the charge that the issues raised by them were not considered at all. 87 It is indisputable that the respondents were not remiss in their duty to afford the petitioners the opportunity to contest the charges thrown their way. Due process does not require that the accused actually file his counter-affidavits before the preliminary investigation is deemed completed. All that is required is that he be given the opportunity to submit such if he is so minded. 88 In any event, petitioners did in fact, although belatedly, submit their counter-affidavits and as a result thereof, the prosecutors concerned considered them in subsequent reviews of the information, particularly in the re-investigation ordered by the Ombudsman. And now, as to the protestation of lack of preliminary investigation prior to the filing of the Amended Information. The prosecution may amend the information without leave of court before arraignment, 89 and such does not prejudice the accused. 90 Reliance on the pronouncements in Doromal vs. Sandiganbayan 91 is misplaced as what obtained therein was the preparation of an entirely new information as contrasted with mere amendments introduced in the amended information, which also charges petitioners with violating Section 3 (e) of the Anti-Graft Law. In Gaspar vs. Sandiganbayan, 92 We held that there is no rule or law requiring the Tanodbayan to conduct another preliminary investigation of a case under review by it. On the contrary, under P.D. No. 911, in relation to Rule 12, Administrative Order No. VII, the Tanodbayan may, upon review, reverse the findings of the investigator and thereafter "where he finds a prima facie case, to cause the filing of an information in court against the respondent, based on the same sworn statements or evidence submitted, without the necessity of conducting another preliminary investigation." Respondent Sandiganbayan did not then commit any grave abuse of discretion in respect to its Resolutions of 4 January 1990 and 1 February 1990. The petition then must fail. CONCLUSION WHEREFORE, judgment is hereby rendered:

1. GRANTING the petition in G.R. No. 85439; declaring null and void the challenged Order of 28 October 1988 of the respondent Secretary of Agriculture; but denying, for having become moot and academic, the prayer of petitioners that they be restored to their positions in the KBMBPM. 2. DISMISSING, for lack of merit, the petition in G.R. No. 91927. No pronouncement as to costs. IT IS SO ORDERED. Narvasa, C.J., Melencio-Herrera, Cruz, Paras, Feliciano, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado and Romero, JJ., concur. Gutierrez, Jr. and Nocon, JJ., took no part.

SENATOR ROBERT S. JAWORSKI, petitioner, vs. PHILIPPINE AMUSEMENT AND GAMING CORPORATION and SPORTS AND GAMES ENTERTAINMENT CORPORATION, respondents. DECISION YNARES-SANTIAGO, J.: The instant petition for certiorari and prohibition under Rule 65 of the Rules of Court seeks to nullify the Grant of Authority and Agreement for the Operation of Sports Betting and Internet Gaming, executed by respondent Philippine Amusement and Gaming Corporation (hereinafter referred to as PAGCOR) in favor of respondent Sports and Games and Entertainment Corporation (also referred to as SAGE). The facts may be summarized as follows: PAGCOR is a government owned and controlled corporation existing under Presidential Decree No. 1869 issued on July 11, 1983 by then President Ferdinand Marcos. Pertinent provisions of said enabling law read: SECTION 1. Declaration of Policy. It is hereby declared to be the policy of the State to centralize and integrate all games of chance not heretofore authorized by existing franchises or permitted by law in order to attain the following objectives: xxx xxx xxx

b) To establish and operate clubs and casinos, for amusement and recreation, including sports, gaming pools (basketball, football, lotteries, etc.) and such other forms of amusement and recreation including games of chance, which may be allowed by law within the territorial jurisdiction of the Philippines and which will: x x x (3) minimize, if not totally eradicate, the evils, malpractices and corruptions that are normally prevalent in the conduct and operation of gambling clubs and casinos without direct government involvement. xxx xxx TITLE IV GRANT OF FRANCHISE Sec.10. Nature and term of franchise. Subject to the terms and conditions established in this Decree, the Corporation is hereby granted for a period of twenty-five (25) years, renewable for another twentyfive (25) years, the rights, privileges and authority to operate and maintain gambling casinos, clubs, and other recreation or amusement places, sports, gaming pools, i.e. basketball, football, lotteries, etc. whether on land or sea, within the territorial jurisdiction of the Republic of the Philippines. On March 31, 1998, PAGCORs board of directors approved an instrument denominated as Grant of Authority and Agreement for the Operation of Sports Betting and Internet Gaming, which granted SAGE the authority to operate and maintain Sports Betting station in PAGCORs casino locations, and Internet Gaming facilities to service local and international bettors, provided that to the satisfaction of PAGCOR, appropriate safeguards and procedures are established to ensure the integrity and fairness of the games. xxx

On September 1, 1998, PAGCOR, represented by its Chairperson, Alicia Ll. Reyes, and SAGE, represented by its Chairman of the Board, Henry Sy, Jr., and its President, Antonio D. Lacdao, executed the above-named document. Pursuant to the authority granted by PAGCOR, SAGE commenced its operations by conducting gambling on the Internet on a trial-run basis, making pre-paid cards and redemption of winnings available at various Bingo Bonanza outlets. Petitioner, in his capacity as member of the Senate and Chairman of the Senate Committee on Games, Amusement and Sports, files the instant petition, praying that the grant of authority by PAGCOR in favor of SAGE be nullified. He maintains that PAGCOR committed grave abuse of discretion amounting to lack or excess of jurisdiction when it authorized SAGE to operate gambling on the internet. He contends that PAGCOR is not authorized under its legislative franchise, P.D. 1869, to operate gambling on the internet for the simple reason that the said decree could not have possibly contemplated internet gambling since at the time of its enactment on July 11, 1983 the internet was yet inexistent and gambling activities were confined exclusively to real-space. Further, he argues that the internet, being an international network of computers, necessarily transcends the territorial jurisdiction of the Philippines, and the grant to SAGE of authority to operate internet gambling contravenes the limitation in PAGCORs franchise, under Section 14 of P.D. No. 1869 which provides: Place. The Corporation [i.e., PAGCOR] shall conduct gambling activities or games of chance on land or water within the territorial jurisdiction of the Republic of the Philippines. x x x Moreover, according to petitioner, internet gambling does not fall under any of the categories of the authorized gambling activities enumerated under Section 10 of P.D. No. 1869 which grants PAGCOR the right, privilege and authority to operate and maintain gambling casinos, clubs, and other recreation or amusement places, sports gaming pools, within the territorial jurisdiction of the Republic of the Philippines.[1] He contends that internet gambling could not have been included within the commonly accepted definition of gambling casinos, clubs or other recreation or amusement places as these terms refer to a physical structure in real-space where people who intend to bet or gamble go and play games of chance authorized by law. The issues raised by petitioner are as follows: I. WHETHER OR NOT RESPONDENT PAGCOR IS AUTHORIZED UNDER P.D. NO. 1869 TO OPERATE GAMBLING ACTIVITIES ON THE INTERNET; II. WHETHER RESPONDENT PAGCOR ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION, OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, WHEN IT AUTHORIZED RESPONDENT SAGE TO OPERATE INTERNET GAMBLING ON THE BASIS OF ITS RIGHT TO OPERATE AND MAINTAIN GAMBLING CASINOS, CLUBS AND OTHER AMUSEMENT PLACES UNDER SECTION 10 OF P.D. 1869; III. WHETHER RESPONDENT PAGCOR ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT GRANTED AUTHORITY TO SAGE TO OPERATE GAMBLING ACTIVITIES IN THE INTERNET. The above-mentioned issues may be summarized into a single pivotal question: Does PAGCORs legislative franchise include the right to vest another entity, SAGE in this case, with the authority to

operate Internet gambling? Otherwise put, does Presidential Decree No. 1869 authorize PAGCOR to contract any part of its franchise to SAGE by authorizing the latter to operate Internet gambling? Before proceeding with our main discussion, let us first try to hurdle a number of important procedural matters raised by the respondents. In their separate Comments, respondents PAGCOR and SAGE insist that petitioner has no legal standing to file the instant petition as a concerned citizen or as a member of the Philippine Senate on the ground that he is not a real party-in-interest entitled to the avails of the suit. In this light, they argue that petitioner does not have the requisite personal and substantial interest to impugn the validity of PAGCORs grant of authority to SAGE. Objections to the legal standing of a member of the Senate or House of Representative to maintain a suit and assail the constitutionality or validity of laws, acts, decisions, rulings, or orders of various government agencies or instrumentalities are not without precedent. Ordinarily, before a member of Congress may properly challenge the validity of an official act of any department of the government there must be an unmistakable showing that the challenged official act affects or impairs his rights and prerogatives as legislator.[2] However in a number of cases,[3] we clarified that where a case involves an issue of utmost importance, or one of overreaching significance to society, the Court, in its discretion, can brush aside procedural technicalities and take cognizance of the petition. Considering that the instant petition involves legal questions that may have serious implications on public interests, we rule that petitioner has the requisite legal standing to file this petition. Respondents likewise urge the dismissal of the petition for certiorari and prohibition because under Section 1, Rule 65 of the 1997 Rules of Civil Procedure, these remedies should be directed to any tribunal, board, officer or person whether exercising judicial, quasi-judicial, or ministerial functions. They maintain that in exercising its legally-mandated franchise to grant authority to certain entities to operate a gambling or gaming activity, PAGCOR is not performing a judicial or quasi-judicial act. Neither should the act of granting licenses or authority to operate be construed as a purely ministerial act. According to them, in the event that this Court takes cognizance of the instant petition, the same should be dismissed for failure of petitioner to observe the hierarchy of courts. Practically the same procedural infirmities were raised in Del Mar v. Philippine Amusement and Gaming Corporation where an almost identical factual setting obtained. Petitioners therein filed a petition for injunction directly before the Court which sought to enjoin respondent from operating the jai-alai games by itself or in joint venture with another corporate entity allegedly in violation of law and the Constitution. Respondents contended that the Court had no jurisdiction to take original cognizance of a petition for injunction because it was not one of the actions specifically mentioned in Section 1 of Rule 56 of the 1997 Rules of Civil Procedure. Respondents likewise took exception to the alleged failure of petitioners to observe the doctrine on hierarchy of courts. In brushing aside the apparent procedural lapse, we held that x x x this Court has the discretionary power to take cognizance of the petition at bar if compelling reasons, or the nature and importance of the issues raised, warrant the immediate exercise of its jurisdiction.[4] In the case at bar, we are not inclined to rule differently. The petition at bar seeks to nullify, via a petition for certiorari and prohibition filed directly before this Court, the Grant of Authority and Agreement for the Operation of Sports Betting and Internet Gaming by virtue of which SAGE was vested by PAGCOR with the authority to operate on-line Internet gambling. It is well settled that averments in the complaint, and not the nomenclature given by the parties, determine the nature of the action.[5]Although the petition alleges grave abuse of discretion on the part of respondent PAGCOR, what it primarily seeks to accomplish is to prevent the enforcement of the Grant of Authority and

Agreement for the Operation of Sports Betting and Internet Gaming. Thus, the action may properly be characterized as one for Prohibition under Section 2 of Rule 65, which incidentally, is another remedy resorted to by petitioner. Granting arguendo that the present action cannot be properly treated as a petition for prohibition, the transcendental importance of the issues involved in this case warrants that we set aside the technical defects and take primary jurisdiction over the petition at bar. One cannot deny that the issues raised herein have potentially pervasive influence on the social and moral well being of this nation, specially the youth; hence, their proper and just determination is an imperative need. This is in accordance with the well-entrenched principle that rules of procedure are not inflexible tools designed to hinder or delay, but to facilitate and promote the administration of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate, rather than promote substantial justice, must always be eschewed.[6] Having disposed of these procedural issues, we now come to the substance of the action. A legislative franchise is a special privilege granted by the state to corporations. It is a privilege of public concern which cannot be exercised at will and pleasure, but should be reserved for public control and administration, either by the government directly, or by public agents, under such conditions and regulations as the government may impose on them in the interest of the public. It is Congress that prescribes the conditions on which the grant of the franchise may be made. Thus the manner of granting the franchise, to whom it may be granted, the mode of conducting the business, the charter and the quality of the service to be rendered and the duty of the grantee to the public in exercising the franchise are almost always defined in clear and unequivocal language.[7] After a circumspect consideration of the foregoing discussion and the contending positions of the parties, we hold that PAGCOR has acted beyond the limits of its authority when it passed on or shared its franchise to SAGE. In the Del Mar case where a similar issue was raised when PAGCOR entered into a joint venture agreement with two other entities in the operation and management of jai alai games, the Court,[8] in an En Banc Resolution dated 24 August 2001, partially granted the motions for clarification filed by respondents therein insofar as it prayed that PAGCOR has a valid franchise, but only by itself (i.e. not in association with any other person or entity), to operate, maintain and/or manage the game of jai-alai. In the case at bar, PAGCOR executed an agreement with SAGE whereby the former grants the latter the authority to operate and maintain sports betting stations and Internet gaming operations. In essence, the grant of authority gives SAGE the privilege to actively participate, partake and share PAGCORs franchise to operate a gambling activity. The grant of franchise is a special privilege that constitutes a right and a duty to be performed by the grantee. The grantee must not perform its activities arbitrarily and whimsically but must abide by the limits set by its franchise and strictly adhere to its terms and conditionalities. A corporation as a creature of the State is presumed to exist for the common good. Hence, the special privileges and franchises it receives are subject to the laws of the State and the limitations of its charter. There is therefore a reserved right of the State to inquire how these privileges had been employed, and whether they have been abused.[9] While PAGCOR is allowed under its charter to enter into operators and/or management contracts, it is not allowed under the same charter to relinquish or share its franchise, much less grant a veritable franchise to another entity such as SAGE. PAGCOR can not delegate its power in view of the legal principle of delegata potestas delegare non potest, inasmuch as there is nothing in the charter to show that it has been expressly authorized to do so. In Lim v. Pacquing,[10] the Court clarified that since ADC

has no franchise from Congress to operate the jai-alai, it may not so operate even if it has a license or permit from the City Mayor to operate the jai-alai in the City of Manila. By the same token, SAGE has to obtain a separate legislative franchise and not ride on PAGCORs franchise if it were to legally operate on-line Internet gambling. WHEREFORE, in view of all the foregoing, the instant petition is GRANTED. The Grant of Authority and Agreement to Operate Sports Betting and Internet Gaming executed by PAGCOR in favor of SAGE is declared NULL and VOID. SO ORDERED. Davide, Jr., C.J., Puno, Vitug, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, AustriaMartinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, and Tinga, JJ., concur.

G.R. No. 93237 November 6, 1992 RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI), petitioner, vs. NATIONAL TELECOMMUNICATIONS COMMISSION (NTC) and JUAN A. ALEGRE, respondents.

PADILLA, J.: Private respondent Juan A. Alegre's wife, Dr. Jimena Alegre, sent two (2) RUSH telegrams through petitioner RCPI's facilities in Taft Ave., Manila at 9:00 in the morning of 17 March 1989 to his sister and brother-in-law in Valencia, Bohol and another sister-in-law in Espiritu, Ilocos Norte, with the following identical texts: MANONG POLING DIED INTERMENT TUESDAY 1 Both telegrams did not reach their destinations on the expected dates. Private respondent filed a lettercomplaint against the RCPI with the National Telecommunications Commission (NTC) for poor service, with a request for the imposition of the appropriate punitive sanction against the company. Taking cognizance of the complaint, NTC directed RCPI to answer the complaint and set the initial hearing of the case to 2 May 1989. After two (2) resettings, RCPI moved to dismiss the case on the following grounds: 1. Juan Alegre is not the real party in interest; 2. NTC has no jurisdiction over the case; 3. the continued hearing of the case violates its constitutional right to due process of law. 2 RCPI likewise moved for deferment of scheduled hearings until final determination of its motion to dismiss. On 15 June 1989, NTC proceeded with the hearing and received evidence for private respondent Juan Alegre. On 3 October 1989, RCPI's motion to dismiss was denied, thus: The herein complainant is the husband of the sender of the "rush" telegram that respondent allegedly failed to deliver in a manner respondent bound itself to undertake, so his legal interest in this administrative case cannot be seriously called in question. As regards the issue of jurisdiction, the authority of the Commission to hear and decide this case stems from its power of control and supervision over the operation of public communication utilities as conferred upon it by law. Besides, the filing of a motion to dismiss is not allowed by the rules (Section 1, Rule 12, Rules of Practice and Procedures). Following, however, the liberal construction of the

rules, respondent (sic) motion shall be treated as its answer or be passed upon after the conclusion of the hearing on the merits. . . . 3 Hearings resumed in the absence of petitioner RCPI which was, however, duly notified thereof. On 27 November 1989, NTC disposed of the controversy in the following manner: WHEREFORE, in view of all the foregoing, the Commission finds respondent administratively liable for deficient and inadequate service defined under Section 19(a) of C.A. 146 and hereby imposes the penalty of FINE payable within thirty (30) days from receipt hereof in the aggregate amount of ONE THOUSAND PESOS (P1,000.00) for: 1. Rush Telegram sent to Valencia, Bohol on March 17, 1989 and received on March 21, 1989 3 days x P200.00 per day = P600.00 2. Rush Telegram sent to Espiritu, Ilocos Norte on March 17, 1989 and received on March 20, 1989 2 days x P200.00 per day = P400.00 Total = P1,000.00 ENTERED. November 27, 1989. 4 A motion for reconsideration by RCPI reiterating averments in its earlier motion to dismiss was denied for lack of merit; 5 hence, this petition for review invoking C.A. 146 Sec. 19(a) which limits the jurisdiction of the Public Service Commission (precursor of the NTC) to the fixing of rates. RCPI submits that its position finds support in two (2) decided cases 6 identical with the present one. Then Justice (later Chief Justice) Fernando writing for the Court stated: . . . There can be no justification then for the Public Service Commission imposing the fines for these two petitions. The law cannot be any clearer. The only power it possessed over radio companies, as noted was the (sic ) fix rates. It could not take to task a radio company for negligence or misfeasance. It was bereft of such competence. It was not vested within such authority. . . . The Public Service Commission having been abolished by virtue of a Presidential Decree, as set forth at the outset, and a new Board of Communications having been created to take its place, nothing said in its decision has reference to whatever powers are now lodged in the latter body. . . . . . . (Footnotes omitted) Two (2) later cases, 7 adhering to the above tenet ruled: Even assuming that the respondent Board of Communications has the power of jurisdiction over petitioner in the exercise of its supervision to insure adequate public service, petitioner cannot be subjected to payment of fine under sec. 21 of the Public

Service Act, because this provision of the law subjects to a fine every public service that violates or falls (sic) to comply with the terms and conditions of any certificate or any orders, decisions and regulations of the Commission. . . . . The Office of the Solicitor General now claims that the cited cases are no longer applicable, that the power and authority of the NTC to impose fines is incidental to its power to regulate public service utilities and to supervise telecommunications facilities, which are now clearly defined in Section 15, Executive Order No. 546 dated 23 July 1979: thus: Functions of the Commission. The Commission shall exercise the following functions: xxx xxx xxx b. Establish, prescribe and regulate the areas of operation of particular operators of the public service communications; xxx xxx xxx h. Supervise and inspect the operation of radio stations and telecommunications facilities. Regulatory administrative agencies necessarily impose sanctions, adds the Office of the Solicitor General. RCPI was fined based on the finding of the NTC that it failed to undertake adequate service in delivering two (2) rush telegrams. NTC takes the view that its power of supervision was broadened by E. O. No. 546, and that this development superseded the ruling in RCPI vs. Francisco Santiago and companion cases. The issues of due process and real parties in interest do not have to be discussed in this case. This decision will dwell on the primary question of jurisdiction of the NTC to administratively impose fines on a telegraph company which fails to render adequate service to a consumer. E. O. 546, it will be observed, is couched in general terms. The NTC stepped "into the shoes" of the Board of Communications which exercised powers pursuant to the Public Service Act. The power to impose fines should therefore be read in the light of the Francisco Santiago case because subsequent legislation did not grant additional powers to the Board of Communications. The Board in other words, did not possess the power to impose administrative fines on public services rendering deficient service to customers, ergo its successor cannot arrogate unto itself such power, in the absence of legislation. It is true that the decision in RCPI vs. Board of Communications seems to have modified the Santiago ruling in that the later case held that the Board of Communications can impose fines if the public service entity violates or fails to comply with the terms and conditions of any certificate or any order, decision or regulation of the Commission. But can private respondent's complaint be similarly treated when the complaint seeks redress of a grievance against the company? 8 NTC has no jurisdiction to impose a fine. Globe Wireless Ltd. vs. Public Service Commission (G. R. No. L-27250, 21 January 1987, 147 SCRA 269) says so categorically.

Verily, Section 13 of Commonwealth Act No. 146, as amended, otherwise known as the Public Service Act, vested in the Public Service Commission jurisdiction, supervision and control over all public services and their franchises, equipment and other properties. xxx xxx xxx The act complained of consisted in petitioner having allegedly failed to deliver the telegraphic message of private respondent to the addressee in Madrid, Spain. Obviously, such imputed negligence has nothing whatsoever to do with the subject matter of the very limited jurisdiction of the Commission over petitioner. Moreover, under Section 21 of C. A. 146, as amended, the Commission was empowered to impose an administrative fine in cases of violation of or failure by a public service to comply with the terms and conditions of any certificate or any orders, decisions or regulations of the Commission. Petitioner operated under a legislative franchise, so there were no terms nor conditions of any certificate issued by the Commission to violate. Neither was there any order, decision or regulation from the Commission applicable to petitioner that the latter had allegedly violated, disobeyed, defied or disregarded. No substantial change has been brought about by Executive Order No. 546 invoked by the Solicitor General's Office to bolster NTC's jurisdiction. The Executive Order is not an explicit grant of power to impose administrative fines on public service utilities, including telegraphic agencies, which have failed to render adequate service to consumers. Neither has it expanded the coverage of the supervisory and regulatory power of the agency. There appears to be no alternative but to reiterate the settled doctrine in administrative law that: Too basic in administrative law to need citation of jurisprudence is the rule that jurisdiction and powers of administrative agencies, like respondent Commission, are limited to those expressly granted or necessarily implied from those granted in the legislation creating such body; and any order without or beyond such jurisdiction is void and ineffective . . . (Globe Wireless case, supra). WHEREFORE, the decision appealed from is REVERSED and SET ASIDE for lack of jurisdiction of the NTC to render it. The temporary restraining order issued on 18 June 1990 is made PERMANENT without prejudice, however, to the filing by the party aggrieved by the conduct of RCPI, of the proper action in the proper forum. No costs. SO ORDERED. Cruz, Grio-Aquino and Bellosillo, JJ., concur. Medialdea, J., is on leave.

G.R. No. L-45839 June 1, 1988 RUFINO MATIENZO, GODOFREDO ESPIRITU, DIOSCORRO FRANCO, AND LA SUERTE TRANSPORTATION CORPORATION, petitioners, vs. HON. LEOPOLDO M. ABELLERA, ACTING CHAIRMAN OF THE BOARD OF TRANSPORTATION, HON. GODOFREDO Q. ASUNCION, MEMBER OF THE BOARD OF TRANSPORTATION, ARTURO DELA CRUZ, MS TRANSPORTATION CO., INC., NEW FAMILIA TRANSPORTATION CO., ROBERTO MOJARES, ET AL.,respondents.

GUTIERREZ, JR., J.: This is a petition for certiorari and prohibition, with application for preliminary injunction, seeking the annulment and inhibition of the grant or award of provisional permits or special authority by the respondent Board of Transportation (BOT) to respondent taxicab operators, for the operation and legalization of "excess taxicab units" under certain provisions of Presidential Decree No. 101 "despite the lapse of the power to do so thereunder," and "in violation of other provisions of the Decree, Letter of Instructions No. 379 and other relevant rules of the BOT." The petitioners and private respondents are all authorized taxicab operators in Metro Manila. The respondents, however, admittedly operate "colorum" or "kabit" taxicab units. On or about the second week of February, 1977, private respondents filed their petitions with the respondent Board for the legalization of their unauthorized "excess" taxicab units citing Presidential Decree No. 101, promulgated on January 17, 1973, "to eradicate the harmful and unlawful trade of clandestine operators, by replacing or allowing them to become legitimate and responsible operators." Within a matter of days, the respondent Board promulgated its orders setting the applications for hearing and granting applicants provisional authority to operate their "excess taxicab units" for which legalization was sought. Thus, the present petition. Opposing the applications and seeking to restrain the grant of provisional permits or authority, as well as the annulment of permits already granted under PD 101, the petitioners allege that the BOT acted without jurisdiction in taking cognizance of the petitions for legalization and awarding special permits to the private respondents. Presidential Decree No. 101 vested in the Board of Transportation the power, among others "To grant special permits of limited term for the operation of public utility motor vehicles as may, in the judgment of the Board, be necessary to replace or convert clandestine operators into legitimate and responsible operators." (Section 1, PD 101) Citing, however, Section 4 of the Decree which provides: SEC. 4. Transitory Provision. Six months after the promulgation of this Decree, the Board of Transportation, the Bureau of Transportation, The Philippine Constabulary, the city and municipal forces, and the provincial and city fiscals shall wage a concerted and

relentless drive towards the total elimination and punishment of all clandestine and unlawful operators of public utility motor vehicles." the petitioners argue that neither the Board of Transportation chairman nor any member thereof had the power, at the time the petitions were filed (i.e. in 1977), to legitimize clandestine operations under PD 101 as such power had been limited to a period of six (6) months from and after the promulgation of the Decree on January 17, 1973. They state that, thereafter, the power lapses and becomes functus officio. To reinforce their stand, the petitioners refer to certain provisions of the Rules and Regulations implementing PD 101 issued by respondent Board, Letter of Instructions No. 379, and BOT Memorandum Circular No. 76-25 (a). In summary, these rules provide inter alia that (1) only applications for special permits for "colorum" or "kabit" operators filed before July 17, 1973 shall be accepted and processed (Secs. 3 and 16 (c), BOT-LTC-HPG Joint Regulations Implementing PD 101, pp. 33 and 47, Rollo); (2) Every provisional authority given to any taxi operator shall be cancelled immediately and no provisional authority shall thereafter be issued (par. 6, Letter of Instructions No. 379, issued March 10, 1976, p. 58, Rollo); (3) Effective immediately, no provisional authorities on applications for certificates of public convenience shall be granted or existing provisional authorities on new applications extended to, among others, taxi denominations in Metro Manila (BOT Memorandum Circular No. 75-25 (a), August 30, 1976, p. 64, Rollo); (4) All taxis authorized to operate within Metro Manila shall obtain new special permits from the BOT, which permits shall be the only ones recognized within the area (par. 8, LOI No. 379, supra); and (5) No bonafide applicant may apply for special permit to operate, among others, new taxicab services, and, no application for such new service shall be accepted for filing or processed by any LTC agency or granted under these regulations by any LTC Regional Office until after it shall have announced its program of development for these types of public motor vehicles (Sec. 16d, BOT-LTC-HPG Joint Regulations, p. 47, Rollo). The petitioners raise the following issues: I. WHETHER OR NOT THE BOARD OF TRANSPORTATION HAS THE POWER TO GRANT PROVISIONAL PERMITS TO OPERATE DESPITE THE BAN THEREON UNDER LETTER OF INSTRUCTIONS NO. 379; II. WHETHER OR NOT THE BOARD OF TRANSPORTATION HAS THE POWER TO LEGALIZE, AT THIS TIME, CLANDESTINE AND UNLAWFUL TAXICAB OPERATIONS UNDER SECTION 1, P.D. 101; AND III. WHETHER OR NOT THE PROCEDURE BEING FOLLOWED BY THE BOARD IN THE CASES IN QUESTION SATISFIES THE PROCEDURAL DUE PROCESS REQUIREMENTS. (p. 119, Rollo) We need not pass upon the first issue raised anent the grant of provisional authority to respondents. Considering that the effectivity of the provisional permits issued to the respondents was expressly limited to June 30, 1977, as evidenced by the BOT orders granting the same (Annexes G, H, I and J among others) and Memorandum Circular No. 77-4 dated January 20, 1977 (p. 151, Rollo), implementing paragraph 6 of LOI 379 (ordering immediate cancellation of all provisional authorities issued to taxicab operators, supra), which provides:

5. After June 30, 1977, all provisional authorities are deemed cancelled, even if hearings on the main application have not been terminated. the issue is MOOT and ACADEMIC. Only the issue on legalization remains under consideration. Justifying its action on private respondent's applications, the respondent Board emphasizes public need as the overriding concern. It is argued that under PD 101, it is the fixed policy of the State "to eradicate the harmful and unlawful trade of clandestine operators by replacing or allowing them to become legitimate and responsible ones" (Whereas clause, PD 101). In view thereof, it is maintained that respondent Board may continue to grant to "colorum" operators the benefits of legalization under PD 101, despite the lapse of its power, after six (6) months, to do so, without taking punitive measures against the said operators. Indeed, a reading of Section 1, PD 101, shows a grant of powers to the respondent Board to issue provisional permits as a step towards the legalization of colorum taxicab operations without the alleged time limitation. There is nothing in Section 4, cited by the petitioners, to suggest the expiration of such powers six (6) months after promulgation of the Decree. Rather, it merely provides for the withdrawal of the State's waiver of its right to punish said colorum operators for their illegal acts. In other words, the cited section declares when the period of moratorium suspending the relentless drive to eliminate illegal operators shall end. Clearly, there is no impediment to the Board's exercise of jurisdiction under its broad powers under the Public Service Act to issue certificates of public convenience to achieve the avowed purpose of PD 101 (Sec. 16a, Public Service Act, Nov. 7, 1936). It is a settled principle of law that in determining whether a board or commission has a certain power, the authority given should be liberally construed in the light of the purposes for which it was created, and that which is incidentally necessary to a full implementation of the legislative intent should be upheld as being germane to the law. Necessarily, too, where the end is required, the appropriate means are deemed given (Martin, Administrative Law, 1979, p. 46). Thus, as averred by the respondents: ... [A]ll things considered, the question is what is the best for the interest of the public. Whether PD 101 has lost its effectiveness or not, will in no way prevent this Board from resolving the question in the same candor and spirit that P.D. 101 and LOI 379 were issued to cope with the multifarious ills that plague our transport system. ... (Emphasis supplied) (pp. 91-92, Rollo) This, the private respondents appreciate, as they make reference to PD 101, merely to cite the compassion with which colorum operators were dealt with under the law. They state that it is "in the same vein and spirit that this Honorable Board has extended the Decree of legalization to the operatives of the various PUJ and PUB services along legislative methods," that respondents pray for authorization of their colorum units in actual operation in Metro Manila (Petitions for Legalization, Annexes E & F, par. 7, pp. 65-79, Rollo). Anent the petitioners' reliance on the BOT Rules and Regulations Implementing PD 101 as well as its Memorandum Circular No. 76-25(a), the BOT itself has declared:

In line with its duty to rationalize the transport industry, the Board shall. from time to time, re- study the public need for public utilities in any area in the Philippines for the purpose of re- evaluating the policies. (p. 64, Rollo) Thus, the respondents correctly argue that "as the need of the public changes and oscillates with the trends of modern life, so must the Memo Orders issued by respondent jibe with the dynamic and flexible standards of public needs. ... Respondent Board is not supposed to 'tie its hands' on its issued Memo Orders should public interest demand otherwise" (Answer of private respondents, p. 121, Rollo). The fate of the private respondent's petitions is initially for the Board to determine. From the records of the case, acceptance of the respondent's applications appears to be a question correctly within the discretion of the respondent Board to decide. As a rule, where the jurisdiction of the BOT to take cognizance of an application for legalization is settled, the Court enjoins the exercise thereof only when there is fraud, abuse of discretion or error of law. Furthermore, the court does not interfere, as a rule, with administrative action prior to its completion or finality . It is only after judicial review is no longer premature that we ascertain in proper cases whether the administrative findings are not in violation of law, whether they are free from fraud or imposition and whether they find substantial support from the evidence. Finally, with respect to the last issue raised by the petitioners alleging the denial of due process by respondent Board in granting the provisional permits to the private respondents and in taking cognizance of their applications for legalization without notice and hearing, suffice it to say that PD 101 does not require such notice or hearing for the grant of temporary authority . The provisional nature of the authority and the fact that the primary application shall be given a full hearing are the safeguards against its abuse. As to the applications for legalization themselves, the Public Service Act does enjoin the Board to give notice and hearing before exercising any of its powers under Sec. 16 thereof. However, the allegations that due process has been denied are negated by the hearings set by the Board on the applications as expressed in its orders resolving the petitions for special permits (Annexes G, H, I, pp. 80-102, Rollo). The Board stated: The grounds involved in the petition are of first impression. It cannot resolve the issue ex-parte. It needs to hear the views of other parties who may have an interest, or whose interest may be affected by any decision that this Board may take. The Board therefore, decides to set the petition for hearing. xxx xxx xxx As to the required notice, it is impossible for the respondent Board to give personal notice to all parties who may be interested in the matter, which parties are unknown to it. Its aforementioned order substantially complies with the requirement. The petitioners having been able to timely oppose the petitions in question, any lack of notice is deemed cured. WHEREFORE. the petition is hereby DISMISSED for lack of merit. The questioned orders of the then Board of Transportation are AFFIRMED.

SO ORDERED. Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.

COOPERATIVE DEVELOPMENT AUTHORITY, petitioner, vs. DOLEFIL AGRARIAN REFORM BENEFICIARIES COOPERATIVE, INC., ESMERALDO A. DUBLIN, ALICIA SAVAREZ, EDNA URETA, ET AL., respondents. DECISION DE LEON, JR. J. At the core of the instant petition for review on certiorari of the Decision[1] of the Court of Appeals, 13 Division, in CA-G.R. SP. No. 47933 promulgated on September 9, 1998 and its Resolution[2] dated February 9, 1999 is the issue of whether or not petitioner Cooperative Development Authority (CDA for brevity) is vested with quasi-judicial authority to adjudicate intra-cooperative disputes.
th

The record shows that sometime in the later part of 1997, the CDA received from certain members of the Dolefil Agrarian Reform Beneficiaries Cooperative, Inc. (DARBCI for brevity), an agrarian reform cooperative that owns 8,860 hectares of land in Polomolok, South Cotabato, several complaints alleging mismanagement and/or misappropriation of funds of DARBCI by the then incumbent officers and members of the board of directors of the cooperative, some of whom are herein private respondents. Acting on the complaints docketed as CDA-CO Case No. 97-011, CDA Executive Director Candelario L. Verzosa, Jr. issued an order[3] dated December 8, 1997 directing the private respondents to file their answer within ten (10) days from receipt thereof. Before the private respondents could file their answer, however, CDA Administrator Alberto P. Zingapan issued on December 15, 1997 an order,[4] upon the motion of the complainants in CDA-CO Case No. 97-011, freezing the funds of DARBCI and creating a management committee to manage the affairs of the said cooperative. On December 18, 1991, the private respondents filed a Petition for Certiorari[5] with a prayer for preliminary injunction, damages and attorneys fees against the CDA and its officers namely: Candelario L. Verzosa, Jr. and Alberto P. Zingapan, including the DOLE Philippines Inc. before the Regional Trial Court (RTC for brevity) of Polomolok, South Cotabato, Branch 39. The petition which was docketed as SP Civil Case No. 25, primarily questioned the jurisdiction of the CDA to resolve the complaints against the private respondents, specifically with respect to the authority of the CDA to issue the freeze order and to create a management committee that would run the affairs of DARBCI. On February 24, 1998, CDA Chairman Jose C. Medina, Jr. issued an order[6] in CDA-CO Case No. 97011 placing the private respondents under preventive suspension, hence, paving the way for the newlycreated management committee[7] to assume office on March 10, 1998. On March 27, 1998, the RTC of Polomolok, South Cotabato, Branch 39, issued a temporary restraining order[8] (TRO), initially for seventy-two (72) hours and subsequently extended to twenty (20) days, in an Order dated March 31, 1998. The temporary restraining order, in effect, directed the parties to restore status quo ante, thereby enabling the private respondents to reassume the management of DARBCI. The CDA questioned the propriety of the temporary restraining order issued by the RTC of Polomolok, South Cotabato on March 27, 1998 through a petition for certiorari before the Court of Appeals, 12th Division, which was docketed as CA-G.R. SP No. 47318. On April 21, 1998, the Court of Appeals, 12th Division, issued a temporary restraining order[9] in CAG.R. SP No. 47318 enjoining the RTC of Polomolok, South Cotabato, Branch 39, from enforcing the

restraining order which the latter court issued on March 27, 1998, and ordered that the proceedings in SP Civil Case No. 25 be held in abeyance. Consequently, the CDA continued with the proceedings in CDA-CO Case No. 97-011. On May 26, 1998 CDA Administrator Arcadio S. Lozada issued a resolution[10] which directed the holding of a special general assembly of the members of DARBCI and the creation of an ad hoc election committee to supervise the election of officers and members of the board of directors of DARBCI scheduled on June 14, 1998. The said resolution of the CDA, issued on May 26, 1998 prompted the private respondents to file on June 8, 1998 a Petition for Prohibition[11] with a prayer for preliminary mandatory injunction and temporary restraining order with the Court of Appeals, 13th Division, which was docketed as CA-G.R. SP No. 47933. On June 10, 1998, the appellate court issued a resolution[12] restraining the CDA and its administrator, Arcadio S. Lozada, the three (3) members of the ad hoc election committee or any and all persons acting in their behalf from proceeding with the election of officers and members of the board of directors of DARBCI scheduled on June 14, 1998. Incidentally, on the same date that the Court of Appeals issued a temporary restraining order in CAG.R. SP No. 47933 on June 10, 1998, a corporation by the name of Investa Land Corporation (Investa for brevity) which allegedly executed a Lease Agreement with Joint Venture with DARBCI filed a petition[13] with the RTC of Polomolok, South Cotabato, Branch 39, docketed as SP Civil Case No. 28, essentially seeking the annulment of orders and resolutions issued by the CDA in CDA-CO Case No. 97011 with a prayer for temporary restraining order and preliminary injunction. On the following day, June 11, 1998, the trial court issued a temporary restraining order[14] enjoining the respondents therein from proceeding with the scheduled special general assembly and the elections of officers and members of the board of directors of DARBCI on June 14, 1998. Thereafter, it also issued a writ of preliminary injunction. With the issuance of the two (2) restraining orders by the Court of Appeals, 13 th Division, and the RTC of Polomolok, South Cotabato, Branch 39, on June 10 and 11, 1998, respectively, the scheduled special general assembly and the election of officers and members of the board of directors of DARBCI on June 14, 1998 did not take place. Nevertheless, on July 12, 1998, the majority of the 7,511 members of DARBCI, on their own initiative, convened a general assembly and held an election of the members of the board of directors and officers of the cooperative, thereby effectively replacing the private respondents. Hence, the private respondents filed a Twin Motions for Contempt of Court and to Nullify Proceedings[15] with the Court of Appeals in CA-G.R. SP No. 47933. On September 9, 1998 the Court of Appeals, 13th Division, promulgated its subject appealed Decision[16] granting the petition in CA-G.R. SP No. 47933, the dispositive portion of which reads: Wherefore, the foregoing considered, the Petition is hereby GRANTED. The Orders of the respondent Cooperative Development Authority in CDA-CO case No. 97-011 dated 08 December 1997, 15 December 1997, 26 January 1998, 24 February 1998, 03 March 1998, and the Resolution dated 26 May 1998, are hereby declared NULL AND VOID and of no legal force and effect. Further, the respondents are hereby ORDERED to perpetually CEASE AND DESIST from taking any further proceedings in CDA-CO Case No. 97-011.

Lastly, the respondent CDA is hereby ORDERED to REINSTATE the Board of Directors of DARBCI who were ousted by virtue of the questioned Orders, and to RESTORE thestatus quo prior to the filing of CDA-CO Case No. 97-011. SO ORDERED. The CDA filed a motion for reconsideration[17] of the Decision in CA-G.R. SP No. 47933 but it was denied by the Court of Appeals in its assailed Resolution[18] dated February 9, 1999, thus: WHEREFORE, the Motion for Reconsideration is hereby DENIED for being patently without merit. MOREOVER, acting on petitioners Twin Motion, and in view of the Decision in this case dated 09, September 1998, the tenor of which gives it legal effect nunc pro tunc. We therefore hold the 12 July 1998 election of officers, the resolutions passed during the said assembly, and the subsequent oathtaking of the officers elected therein, and all actions taken during the said meeting, being in blatant defiance of a valid restraining order issued by this Court, to be NULL AND VOID AB INITIO AND OF NO LEGAL FORCE AND EFFECT. FURTHERMORE, the private respondents are hereby given thirty (30) days from receipt of this Resolution within which to explain in writing why they should not be held in contempt of this Court for having openly defied the restraining order dated 10 July 1998. The Hon. Jose C. Medina of the CDA is given a like period to explain in writing why he should not be cited in contempt for having administered the oath of the Board of Officers pending the effectivity of the restraining order. The respondent Arcadio S. Lozada, Administrator of the CDA, is likewise given the same period to explain why he should not be held in contempt for issuing a resolution on 21 July 1998 validating the proceedings of the assembly, and another resolution on 28 August 1998 confirming the election of the officers thereof. SO ORDERED. Hence, the instant petition[19] for review which raises the following assignments of error: I THE HONORABLE COURT OF APPEALS, IN NULLIFYING THE ORDERS AND RESOLUTIONS OF THE COOPERATIVE DEVELOPMENT AUTHORITY IN CDA CO CASE NO. 97-011, DECIDED A QUESTION OF SUBSTANCE THAT IS NOT IN ACCORD WITH LAW AND APPLICABLE DECISIONS OF THE SUPREME COURT. II THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING THE RULE ON FORUM-SHOPPING. III THE HONORABLE COURT OF APPEALS ERRED IN RENDERING A DECISION ON THE BASIS OF PURE CONJECTURES AND SURMISES AND HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS WHICH CALL FOR AN EXERCISE OF THIS HONORABLE COURTS SUPERVISION.

Petitioner CDA claims that it is vested with quasi-judicial authority to adjudicate cooperative disputes in view of its powers, functions and responsibilities under Section 3 of Republic Act No. 6939.[20] The quasi-judicial nature of its powers and functions was confirmed by the Department of Justice, through the then Acting Secretary of Justice Demetrio G. Demetria, in DOJ Opinion No. 10, Series of 1995, which was issued in response to a query of the then Chairman Edna E. Aberina of the CDA, to wit: Applying the foregoing, the express powers of the CDA to cancel certificates of registration of cooperatives for non-compliance with administrative requirements or in cases of voluntary dissolution under Section 3(g), and to mandate and conciliate disputes within a cooperative or between cooperatives under Section 8 of R.A. No. 6939, may be deemed quasi-judicial in nature. The reason is that in the performance of its functions such as cancellation of certificate of registration, it is necessary to establish non-compliance or violation of administrative requirement. To do so, there arises an indispensable need to hold hearings, investigate or ascertain facts that possibly constitute noncompliance or violation and, based on the facts investigated or ascertained, it becomes incumbent upon the CDA to use its official discretion whether or not to cancel a cooperatives certificate of registration, thus, clearly revealing the quasi-judicial nature of the said function. When the CDA acts as a conciliatory body pursuant to Section 8 of R.A. No. 6939, it in effect performs the functions of an arbitrator. Arbitrators are by the nature of their functions act in quasi-judicial capacity xxx. The quasi-judicial nature of the foregoing functions is bolstered by the provisions of Sections 3(o) of R.A. No. 6939 which grants CDA on (sic) the exercise of other functions as may be necessary to implement the provisions of cooperative laws, the power to summarily punish for direct contempt any person guilty of misconduct in the presence thereof who seriously interrupts any hearing or inquiry with a fine or imprisonment prescribed therein, a power usually granted to make effective the exercise of quasijudicial functions.[21] Likewise, the Office of the President, through the then Deputy Executive Secretary, Hon. Leonardo A. Quisumbing, espoused the same view in the case of Alberto Ang, et al. v. The Board of Directors, Metro Valenzuela Transport Services Cooperative, Inc., O.P. Case No. 51111, when it declared and ruled that: Concededly, Section 3(o) of R.A. No. 6939 and Article 35(4) of R.A. 6938, may not be relied upon by the CDA as authority to resolve internal conflicts of cooperatives, they being general provisions. Nevertheless, this does not preclude the CDA from resolving the instant case. The assumption of jurisdiction by the CDA on matters which partake of cooperative disputes is a logical, necessary and direct consequence of its authority to register cooperatives. Before a cooperative can acquire juridical personality, registration thereof is a condition sine qua non, and until and unless the CDA issues a certificate of registration under its official seal, any cooperative for that matter cannot be considered as having been legally constituted. To our mind, the grant of this power impliedly carries with it the visitorial power to entertain cooperative conflicts, a lesser power compared to its authority to cancel registration certificates when, in its opinion, the cooperative fails to comply with some administrative requirements (Sec. 2(g), R.A. No. 6939). Evidently, respondents-appellants claim that the CDA is limited to conciliation and mediation proceedings is bereft of legal basis. Simply stated, the CDA, in the exercise of such other function and in keeping with the mandate of the law, could render the decisions and/or resolutions as long as they pertain to the internal affairs of the public service cooperative, such as the rights and privileges of its members, the rules and procedures for meetings of

the general assembly, Board of Directors and committees, election and qualifications of officers, directors and committee members, and allocation and distribution of surpluses.[22] The petitioner avers that when an administrative agency is conferred with quasi-judicial powers and functions, such as the CDA, all controversies relating to the subject matter pertaining to its specialization are deemed to be covered within the jurisdiction of said administrative agency. The courts will not interfere in matters which are addressed to the sound discretion of government agencies entrusted with the regulation of activities undertaken upon their special technical knowledge and training. The petitioner added that the decision in the case of CANORECO v. Hon. Ruben D. Torres,[23] affirmed the adjudicatory powers and functions of CDA contrary to the view held by the Court of Appeals, when the Supreme Court upheld therein the ruling of the CDA annulling the election of therein respondents Norberto Ochoa, et al. as officers of the Camarines Norte Electric Cooperative. Petitioner CDA also claims that herein private respondents are guilty of forum-shopping by filing cases in three (3) different fora seeking the same relief. Petitioner pointed out that private respondents originally filed a petition with a prayer for preliminary injunction dated December 17, 1997 before the RTC of Polomolok, South Cotabato which was docketed as SP Civil Case No. 25. Subsequently, the same private respondents filed another petition with a prayer for preliminary injunction with the Court of Appeals, 13th Division, docketed as CA-G.R. SP No. 47933. Thereafter, Investa, also represented by the same counsel of private respondents, Atty. Reni Dublin, filed another case with the RTC of Polomolok, South Cotabato, docketed as SP Civil Case No. 28, likewise praying, among others, for the issuance of preliminary injunction and an application for a temporary restraining order. In effect, petitioner was confronted with three (3) TROs issued in three (3) separate actions enjoining it from enforcing its orders and resolutions in CDA-CO Case No. 97-011. In their Comment,[24] private respondents contend that the instant petition for review on certiorari filed by CDA Administrator Alberto Zingapan should be dismissed and struck down as a mere scrap of paper for lack of authority to file the same from the Office of the Solicitor General and for having been filed without approval from the Board of Administrators of CDA. The private respondents also contend that, contrary to the claim of the petitioner, the powers, functions and responsibilities of the CDA show that it was merely granted regulatory or supervisory powers over cooperatives in addition to its authority to mediate and conciliate between parties involving the settlement of cooperative disputes. Private respondents denied that they are guilty of forum-shopping. They clarified that the case filed with the RTC of Polomolok, South Cotabato, Branch 39, docketed as SP Civil Case No. 25, was a petition for certiorari. On the other hand, the case that they filed with the Court of Appeals, 13th Division, docketed therein as CA-G.R. SP No. 47933, was a petition for prohibition to stop the holding of a special general assembly and the election of a new set of DARBCI officers on June 14, 1998 as ordered by the petitioner CDA on May 26, 1998, which events have not yet occurred at the time the petition for certiorari was filed by the private respondents with the RTC of Polomolok, South Cotabato, Branch 39. Private respondents also denied that the filing by Investa of the petition for the declaration of nullity of the orders and resolutions of petitioner CDA, with a prayer for temporary restraining order with the RTC of Polomolok, South Cotabato, docketed therein as SP Civil Case No. 28, constituted forumshopping on their part. They pointed out that Investa has a separate juridical personality from DARBCI

and that, contrary to the claim of petitioner CDA, the former is not represented by the lawyer of the private respondents. By way of reply,[25] petitioner claims that Atty. Rogelio P. Madriaga was properly deputized, among other lawyers, as Special Attorney by the Office of the Solicitor General to represent the CDA in the instant petition pursuant to the letter[26] of Assistant Solicitor General Carlos N. Ortega addressed to CDA Chairman Jose C. Medina, Jr. dated April 8, 1999. Likewise, the filing of the instant petition was an official act of CDA Administrator Alberto P. Zingapan who was duly appointed by the CDA Board of Administrators as chairman of the Oversight Committee on Legal Matters per Resolution No. 201, S1998.[27] Meanwhile, on March 26, 1999, certain persons alleging to be incumbent officers and members of the board of directors of DARBCI filed a motion to intervene in the instant petition which was granted by this Court per its Resolution dated July 7, 1999.[28] In the same resolution, this Court required both petitioner CDA and the private respondents in this case to file their respective comments to the petition-in-intervention within ten (10) days from notice, but both parties failed to comply to do so up to the present. We note that the instant petition for review on certiorari suffers from a basic infirmity for lack of the requisite imprimatur from the Office of the Solicitor General, hence, it is dismissible on that ground. The general rule is that only the Solicitor General can bring or defend actions on behalf of the Republic of the Philippines and that actions filed in the name of the Republic, or its agencies and instrumentalities for that matter, if not initiated by the Solicitor General, will be summarily dismissed.[29] The authority of the Office of the Solicitor General to represent the Republic of the Philippines, its agencies and instrumentalities, is embodied under Section 35(1), Chapter 12, Title III, Book IV of the Administrative Code of 1987 which provides that: SEC. 35. Powers and Functions.The Office of the Solicitor General shall represent the Government of the Philippines, its agencies and intrumentalities and its officials and agents in any litigation, proceeding, investigation or matter requiring the services of lawyers. When authorized by the President or head of the office concerned, it shall also represent government owned or controlled corporations. The Office of the Solicitor General shall constitute the law office of the Government and, as such, shall discharge duties requiring the services of lawyers. It shall have the following specific powers and functions: (1) Represent the Government in the Supreme Court and the Court of Appeals in all criminal proceedings; represent the Government and its officers in the Supreme Court, Court of Appeals, and all other courts or tribunals in all civil actions and special proceedings in which the Government or any officer thereof in his official capacity is a party. The import of the above-quoted provision of the Administrative Code of 1987 is to impose upon the Office of the Solicitor General the duty to appear as counsel for the Government, its agencies and instrumentalites and its officials and agents before the Supreme Court, the Court of Appeals, and all other courts and tribunals in any litigation, proceeding, investigation or matter requiring the services of a lawyer. Its mandatory character was emphasized by this Court in the case of Gonzales v. Chavez,[30] thus: It is patent that the intent of the lawmaker was to give the designated official, the Solicitor General, in this case, the unequivocal mandate to appear for the government in legal proceedings. Spread out in

the laws creating the office is the discernible intent which may be gathered from the term shall, which is invariably employed, from Act No. 136 (1901) to the more recent Executive Order No. 292 (1987). xxx xxx xxx

The decision of this Court as early as 1910 with respect to the duties of the Attorney-General well applies to the Solicitor General under the facts of the present case. The Court then declared: In this jurisdiction, it is the duty of the Attorney General to perform the duties imposed upon him by law and he shall prosecute all causes, civil and criminal, to which the Government of the Philippine Islands, or any officer thereof, in his official capacity, is a party xxx. xxx xxx xxx

The Court is firmly convinced that considering the spirit and the letter of the law, there can be no other logical interpretation of Sec. 35 of the Administrative Code than that it is, indeed, mandatory upon the OSG to represent the Government of the Philippines, its agencies and instrumentalities and its officials and agents in any litigation, proceeding, investigation or matter requiring the services of a lawyer. As an exception to the general rule, the Solicitor General, in providing legal representation for the government, is empowered under Section 35(8), Chapter 12, Title III, Book IV of the Administrative Code of 1987 to deputize legal officers of government departments, bureaus, agencies and offices to assist the Solicitor General and appear or represent the Government in cases involving their respective offices, brought before the courts and exercise supervision and control over such legal officers with respect to such cases. Petitioner claims that its counsel of record, Atty. Rogelio P. Madriaga, was deputized by the Solicitor General to represent the CDA in the instant petition. To prove its claim, the petitioner attached to its Reply to the Comment dated January 31, 2000, a photocopy of the alleged deputation letter[31] from the Office of the Solicitor General signed by Hon. Carlos N. Ortega, Assistant Solicitor General, addressed to CDA Chairman Jose C. Medina, Jr. A close scrutiny of the alleged deputation letter from the Office of the Solicitor General shows, however, that said counsel for the petitioner was only authorized to appear as counsel in all civil cases in the lower courts (RTCs and MTCs) wherein the CDA is a party-litigant. Likewise, the same letter appears to be dated April 8, 1999 while the Petition for Review on Certiorari filed by the petitioner was dated February 26, 1999. Clearly then, when the petition was filed with this Court on March 3, 1999, Atty. Rogelio P. Madriaga was not yet deputized by the Office of the Solicitor General to represent the CDA. Even on the assumption that the alleged letter from the Office of the Solicitor General was intended to validate or ratify the authority of counsel to represent the petitioner in this case, the same contains certain conditions, one of which is that petitioner shall submit to the Solicitor General, for review, approval and signature, all important pleadings and motions, including motions to withdraw complaints or appeals, as well as compromise agreements. Significantly, one of the major pleadings filed subsequently by the petitioner in this case namely, the Reply to the Respondents Comment on the Petition dated January 31, 2000, does not have any indication that the same was previously submitted to the Office of the Solicitor General for review or approval, much less bear the requisite signature of the Solicitor General as required in the alleged deputation letter.

Nonetheless, in view of the novelty of the main issue raised in this petition concerning the nature and scope of jurisdiction of the CDA in the settlement of cooperative disputes as well as the long standing legal battle involving the management of DARBCI between two (2) opposing factions that inevitably threatens the very existence of one of the countrys major cooperatives, this Court has decided to act on and determine the merits of the instant petition. Section 3 of R.A. No. 6939 enumerates the powers, functions and responsibilities of the CDA, thus: SEC. 3. Powers, Functions and Responsibilities.The Authority shall have the following powers, functions and responsibilities: (a) Formulate, adopt and implement integrated and comprehensive plans and programs on cooperative development consistent with the national policy on cooperatives and the overall socio-economic development plan of the Government; (b) Develop and conduct management and training programs upon request of cooperatives that will provide members of cooperatives with the entrepreneurial capabilities, managerial expertise, and technical skills required for the efficient operation of their cooperatives and inculcate in them the true spirit of cooperativism and provide, when necessary, technical and professional assistance to ensure the viability and growth of cooperatives with special concern for agrarian reform, fishery and economically depressed sectors; (c) Support the voluntary organization and consensual development of activities that promote cooperative movements and provide assistance to wards upgrading managerial and technical expertise upon request of the cooperatives concerned; (d) Coordinate the effects of the local government units and the private sector in the promotion, organization, and development of cooperatives; (e) Register all cooperatives and their federations and unions, including their division, merger, consolidation, dissolution or liquidation. It shall also register the transfer of all or substantially all of their assets and liabilities and such other matters as may be required by the Authority; (f) Require all cooperatives, their federations and unions to submit their annual financial statements, duly audited by certified public accountants, and general information sheets; (g) Order the cancellation after due notice and hearing of the cooperatives certificate of registration for non-compliance with administrative requirements and in cases of voluntary dissolution; (h) Assist cooperatives in arranging for financial and other forms of assistance under such terms and conditions as are calculated to strengthen their viability and autonomy; (i) Establish extension offices as may be necessary and financially viable to implement this Act. Initially, there shall be extension offices in the Cities of Dagupan, Manila, Naga, Iloilo, Cebu, Cagayan de Oro and Davao; (j) Impose and collect reasonable fees and charges in connection with the registration of cooperatives; (k) Administer all grants and donations coursed through the Government for cooperative development, without prejudice to the right of cooperatives to directly receive and

administer such grants and donations upon agreement with the grantors and donors thereof; (l) Formulate and adopt continuing policy initiatives consultation with the cooperative sector through public hearing; (m) Adopt rules and regulations for the conduct of its internal operations; (n) Submit an annual report to the President and Congress on the state of the cooperative movement; (o) Exercise such other functions as may be necessary to implement the provisions of the cooperative laws and, in the performance thereof, the Authority may summarily punish for direct contempt any person guilty of misconduct in the presence of the Authority which seriously interrupts any hearing or inquiry with a fine of not more than five hundred pesos (P500.00) or imprisonment of not more than ten (10) days, or both. Acts constituting indirect contempt as defined under Rule 71 of the Rules of Court shall be punished in accordance with the said Rule. It is a fundamental rule in statutory construction that when the law speaks in clear and categorical language, there is no room for interpretation, vacillation or equivocation there is only room for application.[32] It can be gleaned from the above-quoted provision of R.A. No. 6939 that the authority of the CDA is to discharge purely administrative functions which consist of policy-making, registration, fiscal and technical assistance to cooperatives and implementation of cooperative laws. Nowhere in the said law can it be found any express grant to the CDA of authority to adjudicate cooperative disputes. At most, Section 8 of the same law provides that upon request of either or both parties, the Authority shall mediate and conciliate disputes with a cooperative or between cooperatives however, with a restriction that if no mediation or conciliation succeeds within three (3) months from request thereof, a certificate of non-resolution shall be issued by the commission prior to the filing of appropriate action before the proper courts. Being an administrative agency, the CDA has only such powers as are expressly granted to it by law and those which are necessarily implied in the exercise thereof.[33] Petitioner CDA, however, insists that its authority to conduct hearings or inquiries and the express grant to it of contempt powers under Section 3, paragraphs (g) and (o) of R. A. No. 6939, respectively, necessarily vests upon the CDA quasi-judicial authority to adjudicate cooperative disputes. A review of the records of the deliberations by both chambers of Congress prior to the enactment of R.A. No. 6939 provides a definitive answer that the CDA is not vested with quasi-judicial authority to adjudicate cooperative disputes. During the house deliberations on the then House Bill No. 10787, the following exchange transpired: MR. AQUINO (A.). The response of the sponsor is not quite clear to this humble Representation. Let me just point out other provisions under this particular section, which to the mind of this humble Representation appear to provide this proposed Authority with certain quasi-judicial functions. Would I be correct in this interpretation of paragraphs (f) and (g) under this section which state that among the powers of the Authority are: To administer the dissolution, disposal of assets and settlement of liabilities of any cooperative that has been found to be inoperable, inactive or defunct. To make appropriate action on cooperatives found to be in violation of any provision

It appears to the mind of this humble Representation that the proposed Authority may be called upon to adjudicate in these particular instances. Is it therefore vested with quasi-judicial authority? MR. ROMUALDO. No, Mr. Speaker. We have to resort to the courts, for instance, for the dissolution of cooperatives. The Authority only administers once a cooperative is dissolved. It is also the CDA which initiates actions against any group of persons that may use the name of a cooperative to its advantage, that is, if the word cooperative is merely used by it in order to advance its intentions, Mr. Speaker. MR. AQUINO (A.). So, is the sponsor telling us that the adjudication will have to be left to the courts of law? MR. ROMUALDO. To the courts, Mr. Speaker.[34] xxx xxx xxx

MR. ADASA. One final question, Mr. Speaker. On page 4, line 33, it seems that one of the functions given to the Cooperative Development Authority is to recommend the filing of legal charges against any officer or member of a cooperative accused of violating the provisions of this Act, existing laws and cooperative by-laws and other rules and regulations set forth by the government. Would this not conflict with the function of the prosecuting fiscal? MR. ROMUALDO. No, it will be the provincial fiscal that will file the case. The Authority only recommends the filing of legal charges, that is, of course, after preliminary investigation conducted by the provincial fiscal or the prosecuting arm of the government. MR. ADASA. Does the Gentleman mean to say that the Cooperative Development Authority can take the place of the private complainant or the persons who are the offended party if the latter would not pursue the case? MR. ROMULDO. Yes, Mr. Speaker. The Authority can initiate even the filing of the charges as embraced and defined on line 33 of page 4 of this proposed bill.[35] xxx xxx xxx

MR. CHIONGBIAN. xxx. Under the same section, line 28, subparagraph (g) says that the Authority can take appropriate action on cooperatives found to be violating any provision of this Act, existing laws and cooperative by-laws, and other rules and regulations set forth by the government by way of withdrawal of Authority assistance, suspension of operation or cancellation of accreditation. My question is: If a cooperative, whose officers are liable for wrongdoing, is found violating any of the provisions of this Act, are we going to sacrifice the existence of that cooperative just because some of the officers have taken advantage of their positions and misused some of the funds? It would be very unfair for the Authority to withdraw its assistance at the expense of the majority. It is not clear as to what the liabilities of the members of these cooperatives are. xxx xxx xxx

MR. ROMUALDO. Mr. Speaker, before this action may be taken by the Authority, there will be due process. However, this provision is applicable in cases where the cooperative as a whole violated the provisions of this Act as well as existing laws. In this case, punitive actions may be taken against the cooperative as a body. With respect to the officials, if they themselves should be punished, then Section (h) of this chapter provides that legal charges shall be filed by the Cooperative Development Authority.[36] In like manner, the deliberations on Senate Bill No. 485, which was the counterpart of House Bill No. 10787, yield the same legislative intent not to grant quasi-judicial authority to the CDA as shown by the following discussions during the period of amendments: SEN. ALVAREZ. On page 3, between lines 5 and 6, if I may, insert the following as one of the powers: CONDUCT INQUIRIES, STUDIES, HEARINGS AND INVESTIGATIONS AND ISSUE ORDERS, DECISIONS AND CIRCULARS AS MAY BE NECESSARY TO IMPLEMENT ALL LAWS, RULES AND REGULATIONS RELATING TO COOPERATIVES. THE AGENCY MAY SUMMARILY PUNISH FOR CONTEMPT BY A FINE OF NOT MORE THAN TWO HUNDRED PESOS (P200.00) OR IMPRISONMENT NOT EXCEEDING TEN (10) DAYS, OR BOTH, ANY PERSONS GUILTY OF SUCH MISCONDUCT IN THE PRESENCE OF THE AGENCY WHICH SERIOUSLY INTERRUPTS ANY HEARING OR INVESTIGATION, INCLUDING WILFULL FAILURE OR REFUSAL, WITHOUT JUST CAUSE, COMPLY WITH A SUMMONS, SUBPOENA, SUBPOENA DUCES TECUM, DECISION OR ORDER, RULE OR REGULATION, OR, BEING PRESENT AT A HEARING OR INVESTIGATION, REFUSES TO BE SWORN IN AS A WITNESS OR TO ANSWER QUESTIONS OR TO FURNISH INFORMATION REQUIRED BY THE AGENCY. THE SHERIFF AND/OR POLICE AGENCIES OF THE PLACE WHERE THE HEARING OR INVESTIGATION IS CONDUCTED SHALL, UPON REQUEST OF THE AGENCY, ASSIST IT TO ENFORCE THE PENALTY. THE PRESIDENT. That is quite a long amendment. Does the Gentleman have a written copy of his amendment, so that the Members will have an opportunity to go over it and examine its implications? Anyway, why do we not hold in abeyance the proposed amendment? Do we have that? xxx xxx xxx

SEN. ALVAREZ. Mr. President, this is almost an inherent power of a registering body. With the tremendous responsibility that we have assigned to the Authority or the agencyfor it to be able to function and discharge its mandateit will need this authority. SEN. AQUINO. Yes, Mr. President, conceptually, we do not like the agency to have quasi-judicial powers. And, we are afraid that if we empower the agency to conduct inquiries, studies, hearings and investigations, it might interfere in the autonomous character of cooperatives. So, I am sorry Mr. President, we dont accept the amendment.[37] The decision to withhold quasi-judicial powers from the CDA is in accordance with the policy of the government granting autonomy to cooperatives. It was noted that in the past 75 years cooperativism failed to flourish in the Philippines. Of the 23,000 cooperatives organized under P.D. No. 175, only 10 to 15 percent remained operational while the rest became dormant. The dismal failure of cooperativism in the Philippines was attributed mainly to the stifling attitude of the government toward

cooperatives. While the government wished to help, it invariably wanted to control.[38] Also, in its anxious efforts to push cooperativism, it smothered cooperatives with so much help that they failed to develop self-reliance. As one cooperative expert put it, The strong embrace of government ends with a kiss of death for cooperatives.[39] But then, acknowledging the role of cooperatives as instruments of national development, the framers of the 1987 Constitution directed Congress under Article XII, Section 15 thereof to create a centralized agency that shall promote the viability and growth of cooperatives. Pursuant to this constitutional mandate, the Congress approved on March 10, 1990 Republic Act No. 6939 which is the organic law creating the Cooperative Development Authority. Apparently cognizant of the errors in the past, Congress declared in an unequivocal language that the state shall maintain the policy of noninterference in the management and operation of cooperatives.[40] After ascertaining the clear legislative intent underlying R.A. No. 6939, effect should be given to it by the judiciary.[41] Consequently, we hold and rule that the CDA is devoid of any quasi-judicial authority to adjudicate intra-cooperative disputes and more particularly disputes as regards the election of the members of the Board of Directors and officers of cooperatives. The authority to conduct hearings or inquiries and the power to hold any person in contempt may be exercised by the CDA only in the performance of its administrative functions under R.A. No. 6939. The petitioners reliance on the case of CANORECO is misplaced for the reason that the central issue raised therein was whether or not the Office of the President has the authority to supplant or reverse the resolution of an administrative agency, specifically the CDA, that had long became final and on which issue we ruled in the negative. In fact, this Court declared in the said case that the CDA has no jurisdiction to adjudicate intra-cooperative disputes thus:[42] xxx xxx xxx

Obviously there was a clear case of intra-cooperative dispute. Article 121 of the Cooperative Code is explicit on how the dispute should be resolved; thus: ART. 121. Settlement of Disputes. Disputes among members, officers, directors, and committee members, and intra-cooperative disputes shall, as far as practicable, be settled amicably in accordance with the conciliation or mediation mechanisms embodied in the by-laws of the cooperative, and in applicable laws. Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of competent jurisdiction. Complementing this Article is Section 8 of R.A. No. 6939, which provides: SEC. 8. Mediation and Conciliation. Upon request of either or both or both parties, the [CDA] shall mediate and conciliate disputes with the cooperative or between cooperatives:Provided, That if no mediation or conciliation succeeds within three (3) months from request thereof, a certificate of nonresolution shall be issued by the request thereof, a certificate of non-resolution shall be issued by the commission prior to the filing of appropriate action before the proper courts. Likewise, we do not find any merit in the allegation of forum-shopping against the private respondents. Forum-shopping exists where the elements of litis pendentia are present or where a final

judgment in one case will amount to res judicata in the other.[43] The requisites for the existence of litis pendentia, in turn, are (1) identity of parties or at least such representing the same interest in both actions; (2) identity of rights asserted as prayed for, the relief being founded on the same facts; and (3) the identity in both cases is such that the judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata to the other case.[44] While there may be identity of parties between SP Civil Case No. 25 filed with the RTC of Polomolok, South Cotabato, Branch 39, and CA-G.R. SP No. 47933 before the Court of Appeals, 13th Division, the two (2) other requisites are not present. The Court of Appeals correctly observed that the case filed with the RTC of Polomolok, South Cotabato was a petition for certiorari assailing the orders of therein respondent CDA for having been allegedly issued without or in excess of jurisdiction. On the other hand, the case filed with the Court of Appeals was a petition for prohibition seeking to restrain therein respondent from further proceeding with the hearing of the case. Besides, the filing of the petition for prohibition with the Court of Appeals was necessary after the CDA issued the Order dated May 26, 1998 which directed the holding of a special general assembly for purposes of conducting elections of officers and members of the board of DARBCI after the Court of Appeals, 12th Division, in CA-G.R. SP No. 47318 issued a temporary restraining order enjoining the proceedings in Special Civil Case No. 25 and for the parties therein to maintain the status quo. Under the circumstances, the private respondents could not seek immediate relief before the trial court and hence, they had to seek recourse before the Court of Appeals via a petition for prohibition with a prayer for preliminary injunction to forestall the impending damage and injury to them in view of the order issued by the petitioner on May 26, 1998. The filing of Special Civil Case No. 28 with the RTC of Polomolok, South Cotabato does not also constitute forum-shopping on the part of the private respondents. Therein petitioner Investa, which claims to have a subsisting lease agreement and a joint venture with DARBCI, is an entity whose juridical personality is separate and distinct from that of private respondent cooperative or herein individual private respondents and that they have totally different interests in the subject matter of the case. Moreover, it was incorrect for the petitioner to charge the private respondents with forumshopping partly based on its erroneous claim that DARBCI and Investa were both represented by the same counsel. A charge of forum-shopping may not be anchored simply on the fact that the counsel for different petitioners in two (2) cases is one and the same.[45] Besides, a review of the records of this case shows that the counsel of record of Investa in Special Civil Case No. 28 is a certain Atty. Ignacio D. Debuque, Jr. and not the same counsel representing the private respondents.[46] Anent the petition-in-intervention, the intervenors aver that the Resolution of the Court of Appeals dated February 9, 1999 in CA-G.R. SP No. 47933 denying the motion for reconsideration of herein petitioner CDA also invalidated the election of officers and members of the board of directors of DARBCI held during the special general assembly on July 12, 1998, thus adversely affecting their substantial rights including their right to due process. They claim that the object of the order issued by the appellate court on June 10, 1998 was to restrain the holding of the general assembly of DARBCI as directed in the order of CDA Administrator Arcadio Lozada dated May 26, 1998. In compliance with the said order of the Court of Appeals, no general assembly was held on June 14, 1998. However, due to the grave concern over the alleged tyrannical administration and unmitigated abuses of herein private respondents, the majority of the members of DARBCI, on their own initiative and in the exercise of their inherent right to assembly under the law and the 1987 Constitution, convened a general assembly on July 12, 1998. On the said occasion, the majority of the members of DARBCI unanimously elected herein petitioners-in-intervention as new officers and members of the board of directors of DARBCI,[47] and thereby resulting in the removal of the private respondents from their positions in DARBCI.

Petitioners-in-intervention pointed out that the validity of the general assembly held on July 12, 1998 was never raised as an issue in CA-G.R. SP No. 47933. The petitioners-in-intervention were not even ordered by the Court of Appeals to file their comment on the Twin Motions For Contempt of Court and to Nullify Proceedings filed by the private respondents on July 29, 1998. As earlier noted, the Court of Appeals issued a temporary restraining order[48] in CA-G.R. SP No. 47933 on June 10, 1998, the pertinent portion of which reads: Meanwhile, respondents or any and all persons acting in their behalf and stead are temporarily restrained from proceeding with the election of officers and members of the board of directors of the Dolefil Agrarian Reform Beneficiaries Cooperative, Inc. scheduled on June 14, 1998 and or any other date thereafter. It was also noted that as a consequence of the temporary restraining order issued by the appellate court, the general assembly and the election of officers and members of the board of directors of DARBCI, pursuant to the resolution issued by CDA Administrator Arcadio S. Lozada, did not take place as scheduled on June 14, 1998. However, on July 12, 1998 the majority of the members of DARBCI, at their own initiative, held a general assembly and elected a new set of officers and members of the board of directors of the cooperative which resulted in the ouster of the private respondents from their posts in the said cooperative. The incident on July 12, 1998 prompted herein private respondents to file their Twin Motions for Contempt of Court and to Nullify Proceedings on July 26, 1998. The twin motions prayed, among others, that after due notice and hearing, certain personalities, including the petitioners-in-intervention, be cited in indirect contempt for their participation in the subject incident and for the nullification of the election on July 12, 1998 for being illegal, contrary to the by-laws of the cooperative and in defiance of the injunctive processes of the appellate court. On September 9, 1998, the Court of Appeals, 13th Division, rendered a Decision in CA-G.R. SP No. 47933 which declared the CDA devoid of quasi-judicial jurisdiction to settle the dispute in CDA-CO Case No. 97-011 without however, taking any action on the Twin Motions for Contempt of Court and to Nullify Proceedings filed by the private respondents. As it turned out, it was only in its Resolution dated February 9, 1999 denying petitioners motion for reconsideration of the Decision in CA-G.R. SP No. 47933 that the Court of Appeals, 13th Division, acted on the Twin Motions for Contempt of Court and to Nullify Proceedings by declaring as null and void the election of the petitioners-in-intervention on July 12, 1998 as officers and members of the board of directors of DARBCI. We find, however, that the action taken by the Court of Appeals, 13th Division, on the Twin Motions for Contempt of Court and to Nullify Proceedings insofar as it nullified the election of the officers and members of the Board of Directors of DARBCI, violated the constitutional right of the petitioners-in-intervention to due process. The requirement of due process is satisfied if the following conditions are present, namely: (1) there must be a court or tribunal clothed with judicial power to hear and determine the matter before it; (2) jurisdiction must be lawfully acquired over the person of the defendant or over the property which is the subject of the proceedings; (3) the defendant must be given an opportunity to be heard; and (4) judgment must be rendered upon lawful hearing.[49] The appellate court should have first required the petitioners-in-intervention to file their comment or opposition to the said Twin Motions For Contempt Of Court And to Nullify Proceedings which also refers to the elections held during the general assembly on July 12, 1998. It was precipitate for the appellate court to render judgment against the petitioners-in-intervention in its Resolution dated February 9, 1999 without

due notice and opportunity to be heard. Besides, the validity of the general assembly held on July 12, 1998 was not raised as an issue in CA-G.R. SP No. 47933. WHEREFORE, judgment is hereby rendered as follows: 1. The petition for review on certiorari is hereby DENIED for lack of merit. The orders, resolutions, memoranda and any other acts rendered by petitioner Cooperative Development Authority in CDA-CO Case No. 97-011 are hereby declared null and void ab initio for lack of quasi-judicial authority of petitioner to adjudicate intra-cooperative disputes; and the petitioner is hereby ordered to cease and desist from taking any further proceedings therein; and 2. In the interest of justice, the dispositive portion of the Resolution of the Court of Appeals, dated February 9, 1999, in CA-G.R. SP No. 47933, insofar as it nullified the elections of the members of the Board of Directors and Officers of DARBCI held during the general assembly of the DARBCI members on July 12, 1998, is hereby SET ASIDE. No pronouncement as to costs. SO ORDERED. Bellosillo, (Chairman), Mendoza, Quisumbing, and Corona, JJ., concur.

G.R. Nos. 120865-71 December 7, 1995 LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE HERCULANO TECH, PRESIDING JUDGE, BRANCH 70, REGIONAL TRIAL COURT OF BINANGONAN RIZAL; FLEET DEVELOPMENT, INC. and CARLITO ARROYO; THE MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE AURELIO C. TRAMPE, PRESIDING JUDGE, BRANCH 163, REGIONAL TRIAL COURT OF PASIG; MANILA MARINE LIFE BUSINESS RESOURCES, INC. represented by, MR. TOBIAS REYNALD M. TIANGCO; MUNICIPALITY OF TAGUIG, METRO MANILA and/or MAYOR RICARDO D. PAPA, JR., respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING JUDGE, BRANCH 79, REGIONAL TRIAL COURT OF MORONG, RIZAL; GREENFIELD VENTURES INDUSTRIAL DEVELOPMENT CORPORATION and R. J. ORION DEVELOPMENT CORPORATION; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE MANUEL S. PADOLINA, PRESIDING JUDGE, BRANCH 162, REGIONAL TRIAL COURT OF PASIG, METRO MANILA; IRMA FISHING & TRADING CORP.; ARTM FISHING CORP.; BDR CORPORATION, MIRT CORPORATION and TRIM CORPORATION; MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; BLUE LAGOON FISHING CORP. and ALCRIS CHICKEN GROWERS, INC.; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; AGP FISH VENTURES, INC., represented by its PRESIDENT ALFONSO PUYAT; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA,respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE EUGENIO S. LABITORIA, PRESIDING JUDGE, BRANCH 161, REGIONAL TRIAL COURT OF PASIG, METRO MANILA; SEA MAR TRADING CO. INC.; EASTERN LAGOON FISHING CORP.; MINAMAR FISHING CORP.; MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.

HERMOSISIMA, JR., J.: It is difficult for a man, scavenging on the garbage dump created by affluence and profligate consumption and extravagance of the rich or fishing in the murky waters of the Pasig River and the Laguna Lake or making a clearing in the forest so that he can produce food for his family, to understand why protecting birds, fish, and trees is more important than protecting him and keeping his family alive. How do we strike a balance between environmental protection, on the one hand, and the individual personal interests of people, on the other? Towards environmental protection and ecology, navigational safety, and sustainable development, Republic Act No. 4850 created the "Laguna Lake Development Authority." This Government Agency is supposed to carry out and effectuate the aforesaid declared policy, so as to accelerate the development and balanced growth of the Laguna Lake area and the surrounding provinces, cities and towns, in the act clearly named, within the context of the national and regional plans and policies for social and economic development. Presidential Decree No. 813 of former President Ferdinand E. Marcos amended certain sections of Republic Act No. 4850 because of the concern for the rapid expansion of Metropolitan Manila, the suburbs and the lakeshore towns of Laguna de Bay, combined with current and prospective uses of the lake for municipal-industrial water supply, irrigation, fisheries, and the like. Concern on the part of the Government and the general public over: the environment impact of development on the water quality and ecology of the lake and its related river systems; the inflow of polluted water from the Pasig River, industrial, domestic and agricultural wastes from developed areas around the lake; the increasing urbanization which induced the deterioration of the lake, since water quality studies have shown that the lake will deteriorate further if steps are not taken to check the same; and the floods in Metropolitan Manila area and the lakeshore towns which will influence the hydraulic system of Laguna de Bay, since any scheme of controlling the floods will necessarily involve the lake and its river systems, likewise gave impetus to the creation of the Authority. Section 1 of Republic Act No. 4850 was amended to read as follows: Sec. 1. Declaration of Policy. It is hereby declared to be the national policy to promote, and accelerate the development and balanced growth of the Laguna Lake area and the surrounding provinces, cities and towns hereinafter referred to as the region, within the context of the national and regional plans and policies for social and economic development and to carry out the development of the Laguna Lake region with due regard and adequate provisions for environmental management and control, preservation of the quality of human life and ecological systems, and the prevention of undue ecological disturbances, deterioration and pollution. 1 Special powers of the Authority, pertinent to the issues in this case, include:

Sec. 3. Section 4 of the same Act is hereby further amended by adding thereto seven new paragraphs to be known as paragraphs (j), (k), (l), (m), (n), (o), and (p) which shall read as follows: xxx xxx xxx (j) The provisions of existing laws to the contrary notwithstanding, to engage in fish production and other aqua-culture projects in Laguna de Bay and other bodies of water within its jurisdiction and in pursuance thereof to conduct studies and make experiments, whenever necessary, with the collaboration and assistance of the Bureau of Fisheries and Aquatic Resources, with the end in view of improving present techniques and practices. Provided, that until modified, altered or amended by the procedure provided in the following sub-paragraph, the present laws, rules and permits or authorizations remain in force; (k) For the purpose of effectively regulating and monitoring activities in Laguna de Bay,the Authority shall have exclusive jurisdiction to issue new permit for the use of the lake waters for any projects or activities in or affecting the said lake including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like, and to impose necessary safeguards for lake quality control and management and to collect necessary fees for said activities and projects: Provided, That the fees collected for fisheries may be shared between the Authority and other government agencies and political sub-divisions in such proportion as may be determined by the President of the Philippines upon recommendation of the Authority's Board: Provided, further, That the Authority's Board may determine new areas of fishery development or activities which it may place under the supervision of the Bureau of Fisheries and Aquatic Resources taking into account the overall development plans and programs for Laguna de Bay and related bodies of water: Provided, finally, That the Authority shall subject to the approval of the President of the Philippines promulgate such rules and regulations which shall govern fisheries development activities in Laguna de Bay which shall take into consideration among others the following: socio-economic amelioration of bonafide resident fishermen whether individually or collectively in the form of cooperatives, lakeshore town development, a master plan for fishpen construction and operation, communal fishing ground for lake shore town residents, and preference to lake shore town residents in hiring laborer for fishery projects; (l) To require the cities and municipalities embraced within the region to pass appropriate zoning ordinances and other regulatory measures necessary to carry out the objectives of the Authority and enforce the same with the assistance of the Authority;

(m) The provisions of existing laws to the contrary notwithstanding, to exercise water rights over public waters within the Laguna de Bay region whenever necessary to carry out the Authority's projects; (n) To act in coordination with existing governmental agencies in establishing water quality standards for industrial, agricultural and municipal waste discharges into the lake and to cooperate with said existing agencies of the government of the Philippines in enforcing such standards, or to separately pursue enforcement and penalty actions as provided for in Section 4 (d) and Section 39-A of this Act:Provided, That in case of conflict on the appropriate water quality standard to be enforced such conflict shall be resolved thru the NEDA Board. 2 To more effectively perform the role of the Authority under Republic Act No. 4850, as though Presidential Decree No. 813 were not thought to be completely effective, the Chief Executive, feeling that the land and waters of the Laguna Lake Region are limited natural resources requiring judicious management to their optimal utilization to insure renewability and to preserve the ecological balance, the competing options for the use of such resources and conflicting jurisdictions over such uses having created undue constraints on the institutional capabilities of the Authority in the light of the limited powers vested in it by its charter, Executive Order No. 927 further defined and enlarged the functions and powers of the Authority and named and enumerated the towns, cities and provinces encompassed by the term "Laguna de Bay Region". Also, pertinent to the issues in this case are the following provisions of Executive Order No. 927 which include in particular the sharing of fees: Sec 2. Water Rights Over Laguna de Bay and Other Bodies of Water within the Lake Region: To effectively regulate and monitor activities in the Laguna de Bay region, the Authority shall have exclusive jurisdiction to issue permit for the use of all surface water for any projects or activities in or affecting the said region including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like. For the purpose of this Executive Order, the term "Laguna de Bay Region" shall refer to the Provinces of Rizal and Laguna; the Cities of San Pablo, Pasay, Caloocan, Quezon, Manila and Tagaytay; the towns of Tanauan, Sto. Tomas and Malvar in Batangas Province; the towns of Silang and Carmona in Cavite Province; the town of Lucban in Quezon Province; and the towns of Marikina, Pasig, Taguig, Muntinlupa, and Pateros in Metro Manila. Sec 3. Collection of Fees. The Authority is hereby empowered to collect fees for the use of the lake water and its tributaries for all beneficial purposes including but not limited to fisheries, recreation, municipal, industrial, agricultural, navigation, irrigation, and waste disposal purpose; Provided, that the rates of the fees to be collected, and the sharing with other government agencies and political subdivisions, if necessary, shall be subject to the approval of the President of the Philippines upon recommendation of the Authority's Board, except fishpen fee, which will be shared in the following manner; 20 percent of the fee shall go to the lakeshore local governments, 5 percent shall go to the Project Development Fund which shall be administered by a Council and

the remaining 75 percent shall constitute the share of LLDA. However, after the implementation within the three-year period of the Laguna Lake Fishery Zoning and Management Plan, the sharing will be modified as follows:35 percent of the fishpen fee goes to the lakeshore local governments, 5 percent goes to the Project Development Fund and the remaining 60 percent shall be retained by LLDA; Provided, however, that the share of LLDA shall form part of its corporate funds and shall not be remitted to the National Treasury as an exception to the provisions of Presidential Decree No. 1234. (Emphasis supplied) It is important to note that Section 29 of Presidential Decree No. 813 defined the term "Laguna Lake" in this manner: Sec 41. Definition of Terms. (11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in this Act, the same shall refer to Laguna de Bay which is that area covered by the lake water when it is at the average annual maximum lake level of elevation 12.50 meters, as referred to a datum 10.00 meters below mean lower low water (M.L.L.W). Lands located at and below such elevation are public lands which form part of the bed of said lake. Then came Republic Act No. 7160, the Local Government Code of 1991. The municipalities in the Laguna Lake Region interpreted the provisions of this law to mean that the newly passed law gave municipal governments the exclusive jurisdiction to issue fishing privileges within their municipal waters because R.A. 7160 provides: Sec. 149. Fishery Rentals, Fees and Charges. (a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters and impose rental fees or charges therefor in accordance with the provisions of this Section. (b) The Sangguniang Bayan may: (1) Grant fishing privileges to erect fish corrals, oyster, mussel or other aquatic beds or bangus fry areas, within a definite zone of the municipal waters, as determined by it; . . . . (2) Grant privilege to gather, take or catch bangus fry, prawn fry or kawag-kawag or fry of other species and fish from the municipal waters by nets, traps or other fishing gears to marginal fishermen free from any rental fee, charges or any other imposition whatsoever. xxx xxx xxx Sec. 447. Power, Duties, Functions and Compensation. . . . . xxx xxx xxx

(XI) Subject to the provisions of Book II of this Code, grant exclusive privileges of constructing fish corrals or fishpens, or the taking or catching of bangus fry, prawn fry orkawag-kawag or fry of any species or fish within the municipal waters. xxx xxx xxx Municipal governments thereupon assumed the authority to issue fishing privileges and fishpen permits. Big fishpen operators took advantage of the occasion to establish fishpens and fishcages to the consternation of the Authority. Unregulated fishpens and fishcages, as of July, 1995, occupied almost one-third of the entire lake water surface area, increasing the occupation drastically from 7,000 hectares in 1990 to almost 21,000 hectares in 1995. The Mayor's permit to construct fishpens and fishcages were all undertaken in violation of the policies adopted by the Authority on fishpen zoning and the Laguna Lake carrying capacity. To be sure, the implementation by the lakeshore municipalities of separate independent policies in the operation of fishpens and fishcages within their claimed territorial municipal waters in the lake and their indiscriminate grant of fishpen permits have already saturated the lake area with fishpens, thereby aggravating the current environmental problems and ecological stress of Laguna Lake. In view of the foregoing circumstances, the Authority served notice to the general public that: In compliance with the instructions of His Excellency PRESIDENT FIDEL V. RAMOS given on June 23, 1993 at Pila, Laguna pursuant to Republic Act 4850 as amended by Presidential Decree 813 and Executive Order 927 series of 1983 and in line with the policies and programs of the Presidential Task Force on Illegal Fishpens and Illegal Fishing, the general public is hereby notified that: 1. All fishpens, fishcages and other aqua-culture structures in the Laguna de Bay Region, which were not registered or to which no application for registration and/or permit has been filed with Laguna Lake Development Authority as of March 31, 1993 are hereby declared outrightly as illegal. 2. All fishpens, fishcages and other aqua-culture structures so declared as illegal shall be subject to demolition which shall be undertaken by the Presidential Task Force for Illegal Fishpen and Illegal Fishing. 3. Owners of fishpens, fishcages and other aqua-culture structures declared as illegal shall, without prejudice to demolition of their structures be criminally charged in accordance with Section 39-A of Republic Act 4850 as amended by P.D. 813 for violation of the same laws. Violations of these laws carries a penalty of imprisonment of not exceeding 3 years or a fine not exceeding Five Thousand Pesos or both at the discretion of the court. All operators of fishpens, fishcages and other aqua-culture structures declared as illegal in accordance with the foregoing Notice shall have one (1) month on or before 27

October 1993 to show cause before the LLDA why their said fishpens, fishcages and other aqua-culture structures should not be demolished/dismantled. One month, thereafter, the Authority sent notices to the concerned owners of the illegally constructed fishpens, fishcages and other aqua-culture structures advising them to dismantle their respective structures within 10 days from receipt thereof, otherwise, demolition shall be effected. Reacting thereto, the affected fishpen owners filed injunction cases against the Authority before various regional trial courts, to wit: (a) Civil Case No. 759-B, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 70, Binangonan, Rizal, filed by Fleet Development, Inc. and Carlito Arroyo; (b) Civil Case No. 64049, for Injunction, Regional Trial Court, Branch 162, Pasig, filed by IRMA Fishing and Trading Corp., ARTM Fishing Corp., BDR Corp., MIRT Corp. and TRIM Corp.; (c) Civil Case No. 566, for Declaratory Relief and Injunction, Regional Trial Court, Branch 163, Pasig, filed by Manila Marine Life Business Resources, Inc. and Tobias Reynaldo M. Tianco; (d) Civil Case No. 556-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by AGP Fishing Ventures, Inc.; (e) Civil Case No. 522-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by Blue Lagoon and Alcris Chicken Growers, Inc.; (f) Civil Case No. 554-, for Certiorari and Prohibition, Regional Trial Court, Branch 79, Morong, Rizal, filed by Greenfields Ventures Industrial Corp. and R.J. Orion Development Corp.; and (g) Civil Case No. 64124, for Injunction, Regional Trial Court, Branch 15, Pasig, filed by SEA-MAR Trading Co., Inc. and Eastern Lagoon Fishing Corp. and Minamar Fishing Corporation. The Authority filed motions to dismiss the cases against it on jurisdictional grounds. The motions to dismiss were invariably denied. Meanwhile, temporary restraining order/writs of preliminary mandatory injunction were issued in Civil Cases Nos. 64124, 759 and 566 enjoining the Authority from demolishing the fishpens and similar structures in question. Hence, the herein petition for certiorari, prohibition and injunction, G.R. Nos. 120865-71, were filed by the Authority with this court. Impleaded as parties-respondents are concerned regional trial courts and respective private parties, and the municipalities and/or respective Mayors of Binangonan, Taguig and Jala-jala, who issued permits for the construction and operation of fishpens in Laguna de Bay. The Authority sought the following reliefs, viz.: (A) Nullification of the temporary restraining order/writs of preliminary injunction issued in Civil Cases Nos. 64125, 759 and 566; (B) Permanent prohibition against the regional trial courts from exercising jurisdiction over cases involving the Authority which is a co-equal body; (C) Judicial pronouncement that R.A. 7610 (Local Government Code of 1991) did not repeal, alter or modify the provisions of R.A. 4850, as amended, empowering the Authority to issue permits for fishpens, fishcages and other aqua-culture structures in Laguna de Bay and that, the Authority the government agency vested with exclusive authority to issue said permits. By this Court's resolution of May 2, 1994, the Authority's consolidated petitions were referred to the Court of Appeals.

In a Decision, dated June 29, 1995, the Court of Appeals dismissed the Authority's consolidated petitions, the Court of Appeals holding that: (A) LLDA is not among those quasi-judicial agencies of government whose decision or order are appealable only to the Court of Appeals; (B) the LLDA charter does vest LLDA with quasi-judicial functions insofar as fishpens are concerned; (C) the provisions of the LLDA charter insofar as fishing privileges in Laguna de Bay are concerned had been repealed by the Local Government Code of 1991; (D) in view of the aforesaid repeal, the power to grant permits devolved to and is now vested with their respective local government units concerned. Not satisfied with the Court of Appeals decision, the Authority has returned to this Court charging the following errors: 1. THE HONORABLE COURT OF APPEALS PROBABLY COMMITTED AN ERROR WHEN IT RULED THAT THE LAGUNA LAKE DEVELOPMENT AUTHORITY IS NOT A QUASI-JUDICIAL AGENCY. 2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT R.A. 4850 AS AMENDED BY P.D. 813 AND E.O. 927 SERIES OF 1983 HAS BEEN REPEALED BY REPUBLIC ACT 7160. THE SAID RULING IS CONTRARY TO ESTABLISHED PRINCIPLES AND JURISPRUDENCE OF STATUTORY CONSTRUCTION. 3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT THE POWER TO ISSUE FISHPEN PERMITS IN LAGUNA DE BAY HAS BEEN DEVOLVED TO CONCERNED (LAKESHORE) LOCAL GOVERNMENT UNITS. We take a simplistic view of the controversy. Actually, the main and only issue posed is: Which agency of the Government the Laguna Lake Development Authority or the towns and municipalities comprising the region should exercise jurisdiction over the Laguna Lake and its environs insofar as the issuance of permits for fishery privileges is concerned? Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, the provisions of Presidential Decree No. 813, and Section 2 of Executive Order No. 927, cited above, specifically provide that the Laguna Lake Development Authority shall have exclusive jurisdiction to issue permits for the use of all surface water for any projects or activities in or affecting the said region, including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like. On the other hand, Republic Act No. 7160, the Local Government Code of 1991, has granted to the municipalities the exclusive authority to grant fishery privileges in municipal waters. The Sangguniang Bayan may grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic beds or bangus fry area within a definite zone of the municipal waters. We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the aforementioned laws creating the Laguna Lake Development Authority and granting the latter water rights authority over Laguna de Bay and the lake region. The Local Government Code of 1991 does not contain any express provision which categorically expressly repeal the charter of the Authority. It has to be conceded that there was no intent on the part of the legislature to repeal Republic Act No. 4850 and its amendments. The repeal of laws should be made clear and expressed.

It has to be conceded that the charter of the Laguna Lake Development Authority constitutes a special law. Republic Act No. 7160, the Local Government Code of 1991, is a general law. It is basic in statutory construction that the enactment of a later legislation which is a general law cannot be construed to have repealed a special law. It is a well-settled rule in this jurisdiction that "a special statute, provided for a particular case or class of cases, is not repealed by a subsequent statute, general in its terms, provisions and application, unless the intent to repeal or alter is manifest, although the terms of the general law are broad enough to include the cases embraced in the special law." 3 Where there is a conflict between a general law and a special statute, the special statute should prevail since it evinces the legislative intent more clearly than the general statute. The special law is to be taken as an exception to the general law in the absence of special circumstances forcing a contrary conclusion. This is because implied repeals are not favored and as much as possible, effect must be given to all enactments of the legislature. A special law cannot be repealed, amended or altered by a subsequent general law by mere implication. 4 Thus, it has to be concluded that the charter of the Authority should prevail over the Local Government Code of 1991. Considering the reasons behind the establishment of the Authority, which are environmental protection, navigational safety, and sustainable development, there is every indication that the legislative intent is for the Authority to proceed with its mission. We are on all fours with the manifestation of petitioner Laguna Lake Development Authority that "Laguna de Bay, like any other single body of water has its own unique natural ecosystem. The 900 km lake surface water, the eight (8) major river tributaries and several other smaller rivers that drain into the lake, the 2,920 km basin or watershed transcending the boundaries of Laguna and Rizal provinces, greater portion of Metro Manila, parts of Cavite, Batangas, and Quezon provinces, constitute one integrated delicate natural ecosystem that needs to be protected with uniform set of policies; if we are to be serious in our aims of attaining sustainable development. This is an exhaustible natural resource a very limited one which requires judicious management and optimal utilization to ensure renewability and preserve its ecological integrity and balance." "Managing the lake resources would mean the implementation of a national policy geared towards the protection, conservation, balanced growth and sustainable development of the region with due regard to the inter-generational use of its resources by the inhabitants in this part of the earth. The authors of Republic Act 4850 have foreseen this need when they passed this LLDA law the special law designed to govern the management of our Laguna de Bay lake resources." "Laguna de Bay therefore cannot be subjected to fragmented concepts of management policies where lakeshore local government units exercise exclusive dominion over specific portions of the lake water. The garbage thrown or sewage discharged into the lake, abstraction of water therefrom or construction of fishpens by enclosing its certain area, affect not only that specific portion but the entire 900 km of lake water. The implementation of a cohesive and integrated lake water resource management policy, therefore, is necessary to conserve, protect and sustainably develop Laguna de Bay." 5 The power of the local government units to issue fishing privileges was clearly granted for revenue purposes. This is evident from the fact that Section 149 of the New Local Government Code empowering

local governments to issue fishing permits is embodied in Chapter 2, Book II, of Republic Act No. 7160 under the heading, "Specific Provisions On The Taxing And Other Revenue Raising Power Of Local Government Units." On the other hand, the power of the Authority to grant permits for fishpens, fishcages and other aquaculture structures is for the purpose of effectively regulating and monitoring activities in the Laguna de Bay region (Section 2, Executive Order No. 927) and for lake quality control and management. 6 It does partake of the nature of police power which is the most pervasive, the least limitable and the most demanding of all State powers including the power of taxation. Accordingly, the charter of the Authority which embodies a valid exercise of police power should prevail over the Local Government Code of 1991 on matters affecting Laguna de Bay. There should be no quarrel over permit fees for fishpens, fishcages and other aqua-culture structures in the Laguna de Bay area. Section 3 of Executive Order No. 927 provides for the proper sharing of fees collected. In respect to the question as to whether the Authority is a quasi-judicial agency or not, it is our holding that, considering the provisions of Section 4 of Republic Act No. 4850 and Section 4 of Executive Order No. 927, series of 1983, and the ruling of this Court in Laguna Lake Development Authority vs. Court of Appeals, 231 SCRA 304, 306, which we quote: xxx xxx xxx As a general rule, the adjudication of pollution cases generally pertains to the Pollution Adjudication Board (PAB), except in cases where the special law provides for another forum. It must be recognized in this regard that the LLDA, as a specialized administrative agency, is specifically mandated under Republic Act No. 4850 and its amendatory laws to carry out and make effective the declared national policy of promoting and accelerating the development and balanced growth of the Laguna Lake area and the surrounding provinces of Rizal and Laguna and the cities of San Pablo, Manila, Pasay, Quezon and Caloocan with due regard and adequate provisions for environmental management and control, preservation of the quality of human life and ecological systems, and the prevention of undue ecological disturbances, deterioration and pollution. Under such a broad grant of power and authority, the LLDA, by virtue of its special charter, obviously has the responsibility to protect the inhabitants of the Laguna Lake region from the deleterious effects of pollutants emanating from the discharge of wastes from the surrounding areas. In carrying out the aforementioned declared policy, the LLDA is mandated, among others, to pass upon and approve or disapprove all plans, programs, and projects proposed by local government offices/agencies within the region, public corporations, and private persons or enterprises where such plans, programs and/or projects are related to those of the LLDA for the development of the region. xxx xxx xxx . . . . While it is a fundamental rule that an administrative agency has only such powers as are expressly granted to it by law, it is likewise a settled rule that an administrative

agency has also such powers as are necessarily implied in the exercise of its express powers. In the exercise, therefore, of its express powers under its charter, as a regulatory and quasi-judicial body with respect to pollution cases in the Laguna Lake region, the authority of the LLDA to issue a "cease and desist order" is, perforce, implied. Otherwise, it may well be reduced to a "toothless" paper agency. there is no question that the Authority has express powers as a regulatory and quasi-judicial body in respect to pollution cases with authority to issue a "cease and desist order" and on matters affecting the construction of illegal fishpens, fishcages and other aqua-culture structures in Laguna de Bay. The Authority's pretense, however, that it is co-equal to the Regional Trial Courts such that all actions against it may only be instituted before the Court of Appeals cannot be sustained. On actions necessitating the resolution of legal questions affecting the powers of the Authority as provided for in its charter, the Regional Trial Courts have jurisdiction. In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, has not repealed the provisions of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, as amended. Thus, the Authority has the exclusive jurisdiction to issue permits for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of municipalities situated therein and the authority to exercise such powers as are by its charter vested on it. Removal from the Authority of the aforesaid licensing authority will render nugatory its avowed purpose of protecting and developing the Laguna Lake Region. Otherwise stated, the abrogation of this power would render useless its reason for being and will in effect denigrate, if not abolish, the Laguna Lake Development Authority. This, the Local Government Code of 1991 had never intended to do. WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby granted, insofar as they relate to the authority of the Laguna Lake Development Authority to grant fishing privileges within the Laguna Lake Region. The restraining orders and/or writs of injunction issued by Judge Arturo Marave, RTC, Branch 78, Morong, Rizal; Judge Herculano Tech, RTC, Branch 70, Binangonan, Rizal; and Judge Aurelio Trampe, RTC, Branch 163, Pasig, Metro Manila, are hereby declared null and void and ordered set aside for having been issued with grave abuse of discretion. The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing permits to construct and operate fishpens, fishcages and other aqua-culture structures within the Laguna Lake Region, their previous issuances being declared null and void. Thus, the fishing permits issued by Mayors Isidro B. Pacis, Municipality of Binangonan; Ricardo D. Papa, Municipality of Taguig; and Walfredo M. de la Vega, Municipality of Jala-jala, specifically, are likewise declared null and void and ordered cancelled. The fishpens, fishcages and other aqua-culture structures put up by operators by virtue of permits issued by Municipal Mayors within the Laguna Lake Region, specifically, permits issued to Fleet Development, Inc. and Carlito Arroyo; Manila Marine Life Business Resources, Inc., represented by, Mr. Tobias Reynald M. Tiangco; Greenfield Ventures Industrial Development Corporation and R.J. Orion Development Corporation; IRMA Fishing And Trading Corporation, ARTM Fishing Corporation, BDR

Corporation, Mirt Corporation and Trim Corporation; Blue Lagoon Fishing Corporation and ALCRIS Chicken Growers, Inc.; AGP Fish Ventures, Inc., represented by its President Alfonso Puyat; SEA MAR Trading Co., Inc., Eastern Lagoon Fishing Corporation, and MINAMAR Fishing Corporation, are hereby declared illegal structures subject to demolition by the Laguna Lake Development Authority. SO ORDERED. Davide, Jr., Bellosillo and Kapunan, JJ., concur.

Separate Opinions

PADILLA, J., concurring: I fully concur with the decision written by Mr. Justice R. Hermosisima, Jr.. I would only like to stress what the decision already states, i.e., that the local government units in the Laguna Lake area are not precluded from imposing permits on fishery operations for revenue raising purposes of such local government units. In other words, while the exclusive jurisdiction to determine whether or not projects or activities in the lake area should be allowed, as well as their regulation, is with the Laguna Lake Development Authority, once the Authority grants a permit, the permittee may still be subjected to an additional local permit or license for revenue purposes of the local government units concerned. This approach would clearly harmonize the special law, Rep. Act No. 4850, as amended, with Rep. Act No. 7160, the Local Government Code. It will also enable small towns and municipalities in the lake area, like Jala-Jala, to rise to some level of economic viability. Separate Opinions PADILLA, J., concurring: I fully concur with the decision written by Mr. Justice R. Hermosisima, Jr.. I would only like to stress what the decision already states, i.e., that the local government units in the Laguna Lake area are not precluded from imposing permits on fishery operations for revenue raising purposes of such local government units. In other words, while the exclusive jurisdiction to determine whether or not projects or activities in the lake area should be allowed, as well as their regulation, is with the Laguna Lake Development Authority, once the Authority grants a permit, the permittee may still be subjected to an additional local permit or license for revenue purposes of the local government units concerned. This approach would clearly harmonize the special law, Rep. Act No. 4850, as amended, with Rep. Act No. 7160, the Local Government Code. It will also enable small towns and municipalities in the lake area, like Jala-Jala, to rise to some level of economic viability.

QUASI LEGISLATIVE POWER G.R. No. 4349 September 24, 1908

THE UNITED STATES, plaintiff-appellee, vs. ANICETO BARRIAS, defendant-appellant. Ortigas & Fisher for appellant. Attorney-General Araneta for appellee. TRACEY, J.: In the Court of First Instance of the city of Manila the defendant was charged within a violation of paragraphs 70 and 83 of Circular No. 397 of the Insular Collector of Customs, duly published in the Official Gazette and approved by the Secretary of Finance and Justice.1 After a demurrer to the complaint of the lighter Maude, he was moving her and directing her movement, when heavily laden, in the Pasig River, by bamboo poles in the hands of the crew, and without steam, sail, or any other external power. Paragraph 70 of Circular No. 397 reads as follows: No heavily loaded casco, lighter, or other similar craft shall be permitted to move in the Pasig River without being towed by steam or moved by other adequate power. Paragraph 83 reads, in part, as follows: For the violation of any part of the foregoing regulations, the persons offending shall be liable to a fine of not less than P5 and not more than P500, in the discretion of the court. In this court, counsel for the appellant attacked the validity of paragraph 70 on two grounds: First that it is unauthorized by section 19 of Act No. 355; and, second, that if the acts of the Philippine Commission bear the interpretation of authorizing the Collector to promulgate such a law, they are void, as constituting an illegal delegation of legislative power. The Attorney-General does not seek to sustain the conviction but joins with the counsel for the defense in asking for the discharge of the prisoner on the first ground stated by the defense, that the rule of the Collector cited was unauthorized and illegal, expressly passing over the other question of the delegation of legislative power. By sections 1, 2, and 3 of Act No. 1136, passed April 29, 1904, the Collector of Customs is authorized to license craft engaged in the lighterage or other exclusively harbor business of the ports of the Islands, and, with certain exceptions, all vessels engaged in lightering are required to be so licensed. Sections 5 and 8 read as follows: SEC. 5. The Collector of Customs for the Philippine Islands is hereby authorized, empowered, and directed to promptly make and publish suitable rules and regulations to carry this law into effect and to regulate the business herein licensed.

SEC. 8. Any person who shall violate the provisions of this Act, or of any rule or regulation made and issued by the Collector of Customs for the Philippine Islands, under and by authority of this Act, shall be deemed guilty of a misdemeanor, and upon conviction shall be punished by imprisonment for not more than six months, or by a fine of not more than one hundred dollars, United States currency, or by both such fine and imprisonment, at the discretion of the court; Provided, That violations of law may be punished either by the method prescribed in section seven hereof, or by that prescribed in this section or by both. Under this statute, which was not referred to on the argument, or in the original briefs, there is no difficulty in sustaining the regulation of the Collector as coming within the terms of section 5. Lighterage, mentioned in the Act, is the very business in which this vessel was engaged, and when heavily laden with hemp she was navigating the Pasig River below the Bridge of Spain, in the city of Manila. This spot is near the mouth of the river, the docks whereof are used for the purpose of taking on and discharging freight, and we entertain no doubt that it was in right sense a part of the harbor, without having recourse to the definition of paragraph 8 of Customs Administrative Circular No. 136, which reads as follows: The limits of a harbor for the purpose of licensing vessels as herein prescribed (for the lighterage and harbor business) shall be considered to include its confluent navigable rivers and lakes, which are navigable during any season of the year. The necessity confiding to some local authority the framing, changing, and enforcing of harbor regulations is recognized throughout the world, as each region and each a harbor requires peculiar use more minute than could be enacted by the central lawmaking power, and which, when kept within the proper scope, are in their nature police regulations not involving an undue grant of legislative power. The complaint in this instance was framed with reference, as its authority, to sections 311 and 319 [19 and 311] at No. 355 of the Philippine Customs Administrative Acts, as amended by Act Nos. 1235 and 1480. Under Act No. 1235, the Collector is not only empowered to make suitable regulations, but also to "fix penalties for violation thereof," not exceeding a fine of P500. This provision of the statute does, indeed, present a serious question. One of the settled maxims in constitutional law is, that the power conferred upon the legislature to make laws can not be delegated by that department to any body or authority. Where the sovereign power of the State has located the authority, there it must remain; only by the constitutional agency alone the laws must be made until the constitution itself is changed. The power to whose judgment, wisdom, and patriotism this high prerogative has been intrusted can not relieve itself of the responsibility by choosing other agencies upon which the power shall be developed, nor can its substitutes the judgment, wisdom, and patriotism and of any other body for those to which alone the people have seen fit to confide this sovereign trust. (Cooley's Constitutional limitations, 6th ed., p. 137.) This doctrine is based on the ethical principle that such a 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. In the case of the United States vs. Breen (40 Fed. Phil. Rep. 402), an Act of Congress allowing the Secretary of War

to make such rules and regulations as might be necessary to protect improvements of the Mississipi River, and providing that a violation thereof should constitute a misdemeanor, was sustained on the ground that the misdemeanor was declared not under the delegated power of the Secretary of War, but in the Act of Congress, itself. So also was a grant to him of power to prescribe rules for the use of canals. (U.S. vs. Ormsbee, 74 Fed. Rep. 207.) but a law authorizing him to require alteration of any bridge and to impose penalties for violations of his rules was held invalid, as vesting in him upon a power exclusively lodged in Congress (U.S. vs. Rider, 50 Fed. Rep., 406.) The subject is considered and some cases reviewed by the Supreme Court of the United States, in re Kollock (165 U.S. 526), which upheld the law authorizing a commissioner of internal revenue to designate and stamps on oleomargarine packages, an improper use of which should thereafter constitute a crime or misdemeanor, the court saying (p. 533): The criminal offense is fully and completely defined by the Act and the designation by the Commissioner of the particular marks and brands to be used was a mere matter of detail. The regulation was in execution of, or supplementary to, but not in conflict with the law itself. . . . In Massachusetts it has been decided that the legislature may delegate to the governor and counsel the power to make pilot regulations. (Martin vs. Witherspoon et al., 135 Mass. 175). In the case of The Board of Harbor Commissioners of the Port of Eureka vs. Excelsior Redwood Company (88 Cal. 491), it was ruled that harbor commissioners can not impose a penalty under statues authorizing them to do so, the court saying: Conceding that the legislature could delegate to the plaintiff the authority to make rules and regulation with reference to the navigation of Humboldt Bay, the penalty for the violation of such rules and regulations is a matter purely in the hands of the legislature. Having reached the conclusion that Act No. 1136 is valid, so far as sections 5 and 8 are concerned, and is sufficient to sustain this prosecution, it is unnecessary that we should pass on the questions discussed in the briefs as to the extend and validity of the other acts. The reference to them in the complaint is not material, as we have frequently held that where an offense is correctly described in the complaint an additional reference to a wrong statute is immaterial. We are also of the opinion that none of the subsequent statutes cited operate to repeal the aforesaid section Act No. 1136. So much of the judgment of the Court of First Instance as convicts the defendant of a violation of Acts Nos. 355 and 1235 is hereby revoked and is hereby convicted of a misdemeanor and punished by a fine of 25 dollars, with costs of both instances. So ordered. Arellano, C.J., Torres, Mapa and Willard, JJ., concur. Carson, J., reserve his opinion.

G.R. No. L-45685

November 16, 1937

THE PEOPLE OF THE PHILIPPINE ISLANDS and HONGKONG & SHANGHAI BANKING CORPORATION,petitioners, vs. JOSE O. VERA, Judge . of the Court of First Instance of Manila, and MARIANO CU UNJIENG,respondents. Office of the Solicitor General Tuason and City Fiscal Diaz for the Government. De Witt, Perkins and Ponce Enrile for the Hongkong and Shanghai Banking Corporation. Vicente J. Francisco, Feria and La O, Orense and Belmonte, and Gibbs and McDonough for respondent Cu Unjieng. No appearance for respondent Judge.

LAUREL, J.: This is an original action instituted in this court on August 19, 1937, for the issuance of the writ of certiorariand of prohibition to the Court of First Instance of Manila so that this court may review the actuations of the aforesaid Court of First Instance in criminal case No. 42649 entitled "The People of the Philippine Islands vs. Mariano Cu Unjieng, et al.", more particularly the application of the defendant Mariano Cu Unjieng therein for probation under the provisions of Act No. 4221, and thereafter prohibit the said Court of First Instance from taking any further action or entertaining further the aforementioned application for probation, to the end that the defendant Mariano Cu Unjieng may be forthwith committed to prison in accordance with the final judgment of conviction rendered by this court in said case (G. R. No. 41200). 1 Petitioners herein, the People of the Philippine and the Hongkong and Shanghai Banking Corporation, are respectively the plaintiff and the offended party, and the respondent herein Mariano Cu Unjieng is one of the defendants, in the criminal case entitled "The People of the Philippine Islands vs. Mariano Cu Unjieng, et al.", criminal case No. 42649 of the Court of First Instance of Manila and G.R. No. 41200 of this court. Respondent herein, Hon. Jose O. Vera, is the Judge ad interim of the seventh branch of the Court of First Instance of Manila, who heard the application of the defendant Mariano Cu Unjieng for probation in the aforesaid criminal case. The information in the aforesaid criminal case was filed with the Court of First Instance of Manila on October 15, 1931, petitioner herein Hongkong and Shanghai Banking Corporation intervening in the case as private prosecutor. After a protracted trial unparalleled in the annals of Philippine jurisprudence both in the length of time spent by the court as well as in the volume in the testimony and the bulk of the exhibits presented, the Court of First Instance of Manila, on January 8, 1934, rendered a judgment of conviction sentencing the defendant Mariano Cu Unjieng to indeterminate penalty ranging from four years and two months of prision correccional to eight years of prision mayor, to pay the costs and with reservation of civil action to the offended party, the Hongkong and Shanghai Banking Corporation. Upon appeal, the court, on March 26, 1935, modified the sentence to an indeterminate penalty of from five years and six months of prision correccional to seven years, six months and twenty-seven days of prision mayor, but affirmed the judgment in all other respects. Mariano Cu Unjieng filed a motion for

reconsideration and four successive motions for new trial which were denied on December 17, 1935, and final judgment was accordingly entered on December 18, 1935. The defendant thereupon sought to have the case elevated on certiorari to the Supreme Court of the United States but the latter denied the petition for certiorari in November, 1936. This court, on November 24, 1936, denied the petition subsequently filed by the defendant for leave to file a second alternative motion for reconsideration or new trial and thereafter remanded the case to the court of origin for execution of the judgment. The instant proceedings have to do with the application for probation filed by the herein respondent Mariano Cu Unjieng on November 27, 1936, before the trial court, under the provisions of Act No. 4221 of the defunct Philippine Legislature. Herein respondent Mariano Cu Unjieng states in his petition, inter alia, that he is innocent of the crime of which he was convicted, that he has no criminal record and that he would observe good conduct in the future. The Court of First Instance of Manila, Judge Pedro Tuason presiding, referred the application for probation of the Insular Probation Office which recommended denial of the same June 18, 1937. Thereafter, the Court of First Instance of Manila, seventh branch, Judge Jose O. Vera presiding, set the petition for hearing on April 5, 1937. On April 2, 1937, the Fiscal of the City of Manila filed an opposition to the granting of probation to the herein respondent Mariano Cu Unjieng. The private prosecution also filed an opposition on April 5, 1937, alleging, among other things, that Act No. 4221, assuming that it has not been repealed by section 2 of Article XV of the Constitution, is nevertheless violative of section 1, subsection (1), Article III of the Constitution guaranteeing equal protection of the laws for the reason that its applicability is not uniform throughout the Islands and because section 11 of the said Act endows the provincial boards with the power to make said law effective or otherwise in their respective or otherwise in their respective provinces. The private prosecution also filed a supplementary opposition on April 19, 1937, elaborating on the alleged unconstitutionality on Act No. 4221, as an undue delegation of legislative power to the provincial boards of several provinces (sec. 1, Art. VI, Constitution). The City Fiscal concurred in the opposition of the private prosecution except with respect to the questions raised concerning the constitutionality of Act No. 4221. On June 28, 1937, herein respondent Judge Jose O. Vera promulgated a resolution with a finding that "las pruebas no han establecido de unamanera concluyente la culpabilidad del peticionario y que todos los hechos probados no son inconsistentes o incongrentes con su inocencia" and concludes that the herein respondent Mariano Cu Unjieng "es inocente por duda racional" of the crime of which he stands convicted by this court in G.R. No. 41200, but denying the latter's petition for probation for the reason that: . . . Si este Juzgado concediera la poblacion solicitada por las circunstancias y la historia social que se han expuesto en el cuerpo de esta resolucion, que hacen al peticionario acreedor de la misma, una parte de la opinion publica, atizada por los recelos y las suspicacias, podria levantarse indignada contra un sistema de probacion que permite atisbar en los procedimientos ordinarios de una causa criminal perturbando la quietud y la eficacia de las decisiones ya recaidas al traer a la superficie conclusiones enteramente differentes, en menoscabo del interes publico que demanda el respeto de las leyes y del veredicto judicial. On July 3, 1937, counsel for the herein respondent Mariano Cu Unjieng filed an exception to the resolution denying probation and a notice of intention to file a motion for reconsideration. An alternative motion for reconsideration or new trial was filed by counsel on July 13, 1937. This was

supplemented by an additional motion for reconsideration submitted on July 14, 1937. The aforesaid motions were set for hearing on July 31, 1937, but said hearing was postponed at the petition of counsel for the respondent Mariano Cu Unjieng because a motion for leave to intervene in the case as amici curiae signed by thirty-three (thirty-four) attorneys had just been filed with the trial court. Attorney Eulalio Chaves whose signature appears in the aforesaid motion subsequently filed a petition for leave to withdraw his appearance as amicus curiae on the ground that the motion for leave to intervene as amici curiae was circulated at a banquet given by counsel for Mariano Cu Unjieng on the evening of July 30, 1937, and that he signed the same "without mature deliberation and purely as a matter of courtesy to the person who invited me (him)." On August 6, 1937, the Fiscal of the City of Manila filed a motion with the trial court for the issuance of an order of execution of the judgment of this court in said case and forthwith to commit the herein respondent Mariano Cu Unjieng to jail in obedience to said judgment. On August 7, 1937, the private prosecution filed its opposition to the motion for leave to intervene as amici curiae aforementioned, asking that a date be set for a hearing of the same and that, at all events, said motion should be denied with respect to certain attorneys signing the same who were members of the legal staff of the several counsel for Mariano Cu Unjieng. On August 10, 1937, herein respondent Judge Jose O. Vera issued an order requiring all parties including the movants for intervention as amici curiae to appear before the court on August 14, 1937. On the last-mentioned date, the Fiscal of the City of Manila moved for the hearing of his motion for execution of judgment in preference to the motion for leave to intervene as amici curiae but, upon objection of counsel for Mariano Cu Unjieng, he moved for the postponement of the hearing of both motions. The respondent judge thereupon set the hearing of the motion for execution on August 21, 1937, but proceeded to consider the motion for leave to intervene as amici curiae as in order. Evidence as to the circumstances under which said motion for leave to intervene as amici curiae was signed and submitted to court was to have been heard on August 19, 1937. But at this juncture, herein petitioners came to this court on extraordinary legal process to put an end to what they alleged was an interminable proceeding in the Court of First Instance of Manila which fostered "the campaign of the defendant Mariano Cu Unjieng for delay in the execution of the sentence imposed by this Honorable Court on him, exposing the courts to criticism and ridicule because of the apparent inability of the judicial machinery to make effective a final judgment of this court imposed on the defendant Mariano Cu Unjieng." The scheduled hearing before the trial court was accordingly suspended upon the issuance of a temporary restraining order by this court on August 21, 1937. To support their petition for the issuance of the extraordinary writs of certiorari and prohibition, herein petitioners allege that the respondent judge has acted without jurisdiction or in excess of his jurisdiction: I. Because said respondent judge lacks the power to place respondent Mariano Cu Unjieng under probation for the following reason: (1) Under section 11 of Act No. 4221, the said of the Philippine Legislature is made to apply only to the provinces of the Philippines; it nowhere states that it is to be made applicable to chartered cities like the City of Manila.

(2) While section 37 of the Administrative Code contains a proviso to the effect that in the absence of a special provision, the term "province" may be construed to include the City of Manila for the purpose of giving effect to laws of general application, it is also true that Act No. 4221 is not a law of general application because it is made to apply only to those provinces in which the respective provincial boards shall have provided for the salary of a probation officer. (3) Even if the City of Manila were considered to be a province, still, Act No. 4221 would not be applicable to it because it has provided for the salary of a probation officer as required by section 11 thereof; it being immaterial that there is an Insular Probation Officer willing to act for the City of Manila, said Probation Officer provided for in section 10 of Act No. 4221 being different and distinct from the Probation Officer provided for in section 11 of the same Act. II. Because even if the respondent judge originally had jurisdiction to entertain the application for probation of the respondent Mariano Cu Unjieng, he nevertheless acted without jurisdiction or in excess thereof in continuing to entertain the motion for reconsideration and by failing to commit Mariano Cu Unjieng to prison after he had promulgated his resolution of June 28, 1937, denying Mariano Cu Unjieng's application for probation, for the reason that: (1) His jurisdiction and power in probation proceedings is limited by Act No. 4221 to the granting or denying of applications for probation. (2) After he had issued the order denying Mariano Cu Unjieng's petition for probation on June 28, 1937, it became final and executory at the moment of its rendition. (3) No right on appeal exists in such cases. (4) The respondent judge lacks the power to grant a rehearing of said order or to modify or change the same. III. Because the respondent judge made a finding that Mariano Cu Unjieng is innocent of the crime for which he was convicted by final judgment of this court, which finding is not only presumptuous but without foundation in fact and in law, and is furthermore in contempt of this court and a violation of the respondent's oath of office as ad interim judge of first instance. IV. Because the respondent judge has violated and continues to violate his duty, which became imperative when he issued his order of June 28, 1937, denying the application for probation, to commit his co-respondent to jail. Petitioners also avers that they have no other plain, speedy and adequate remedy in the ordinary course of law. In a supplementary petition filed on September 9, 1937, the petitioner Hongkong and Shanghai Banking Corporation further contends that Act No. 4221 of the Philippine Legislature providing for a system of probation for persons eighteen years of age or over who are convicted of crime, is unconstitutional because it is violative of section 1, subsection (1), Article III, of the Constitution of the Philippines guaranteeing equal protection of the laws because it confers upon the provincial board of its province the absolute discretion to make said law operative or otherwise in their respective provinces,

because it constitutes an unlawful and improper delegation to the provincial boards of the several provinces of the legislative power lodged by the Jones Law (section 8) in the Philippine Legislature and by the Constitution (section 1, Art. VI) in the National Assembly; and for the further reason that it gives the provincial boards, in contravention of the Constitution (section 2, Art. VIII) and the Jones Law (section 28), the authority to enlarge the powers of the Court of First Instance of different provinces without uniformity. In another supplementary petition dated September 14, 1937, the Fiscal of the City of Manila, in behalf of one of the petitioners, the People of the Philippine Islands, concurs for the first time with the issues raised by other petitioner regarding the constitutionality of Act No. 4221, and on the oral argument held on October 6, 1937, further elaborated on the theory that probation is a form of reprieve and therefore Act. No. 4221 is an encroachment on the exclusive power of the Chief Executive to grant pardons and reprieves. On October 7, 1937, the City Fiscal filed two memorandums in which he contended that Act No. 4221 not only encroaches upon the pardoning power to the executive, but also constitute an unwarranted delegation of legislative power and a denial of the equal protection of the laws. On October 9, 1937, two memorandums, signed jointly by the City Fiscal and the Solicitor-General, acting in behalf of the People of the Philippine Islands, and by counsel for the petitioner, the Hongkong and Shanghai Banking Corporation, one sustaining the power of the state to impugn the validity of its own laws and the other contending that Act No. 4221 constitutes an unwarranted delegation of legislative power, were presented. Another joint memorandum was filed by the same persons on the same day, October 9, 1937, alleging that Act No. 4221 is unconstitutional because it denies the equal protection of the laws and constitutes an unlawful delegation of legislative power and, further, that the whole Act is void: that the Commonwealth is not estopped from questioning the validity of its laws; that the private prosecution may intervene in probation proceedings and may attack the probation law as unconstitutional; and that this court may pass upon the constitutional question in prohibition proceedings. Respondents in their answer dated August 31, 1937, as well as in their oral argument and memorandums, challenge each and every one of the foregoing proposition raised by the petitioners. As special defenses, respondents allege: (1) That the present petition does not state facts sufficient in law to warrant the issuance of the writ of certiorari or of prohibition. (2) That the aforesaid petition is premature because the remedy sought by the petitioners is the very same remedy prayed for by them before the trial court and was still pending resolution before the trial court when the present petition was filed with this court. (3) That the petitioners having themselves raised the question as to the execution of judgment before the trial court, said trial court has acquired exclusive jurisdiction to resolve the same under the theory that its resolution denying probation is unappealable. (4) That upon the hypothesis that this court has concurrent jurisdiction with the Court of First Instance to decide the question as to whether or not the execution will lie, this court nevertheless cannot exercise said jurisdiction while the Court of First Instance has assumed jurisdiction over the same upon motion of herein petitioners themselves.

(5) That upon the procedure followed by the herein petitioners in seeking to deprive the trial court of its jurisdiction over the case and elevate the proceedings to this court, should not be tolerated because it impairs the authority and dignity of the trial court which court while sitting in the probation cases is "a court of limited jurisdiction but of great dignity." (6) That under the supposition that this court has jurisdiction to resolve the question submitted to and pending resolution by the trial court, the present action would not lie because the resolution of the trial court denying probation is appealable; for although the Probation Law does not specifically provide that an applicant for probation may appeal from a resolution of the Court of First Instance denying probation, still it is a general rule in this jurisdiction that a final order, resolution or decision of an inferior court is appealable to the superior court. (7) That the resolution of the trial court denying probation of herein respondent Mariano Cu Unjieng being appealable, the same had not become final and executory for the reason that the said respondent had filed an alternative motion for reconsideration and new trial within the requisite period of fifteen days, which motion the trial court was able to resolve in view of the restraining order improvidently and erroneously issued by this court.lawphi1.net (8) That the Fiscal of the City of Manila had by implication admitted that the resolution of the trial court denying probation is not final and unappealable when he presented his answer to the motion for reconsideration and agreed to the postponement of the hearing of the said motion. (9) That under the supposition that the order of the trial court denying probation is not appealable, it is incumbent upon the accused to file an action for the issuance of the writ ofcertiorari with mandamus, it appearing that the trial court, although it believed that the accused was entitled to probation, nevertheless denied probation for fear of criticism because the accused is a rich man; and that, before a petition for certiorari grounded on an irregular exercise of jurisdiction by the trial court could lie, it is incumbent upon the petitioner to file a motion for reconsideration specifying the error committed so that the trial court could have an opportunity to correct or cure the same. (10) That on hypothesis that the resolution of this court is not appealable, the trial court retains its jurisdiction within a reasonable time to correct or modify it in accordance with law and justice; that this power to alter or modify an order or resolution is inherent in the courts and may be exercise either motu proprio or upon petition of the proper party, the petition in the latter case taking the form of a motion for reconsideration. (11) That on the hypothesis that the resolution of the trial court is appealable as respondent allege, said court cannot order execution of the same while it is on appeal, for then the appeal would not be availing because the doors of probation will be closed from the moment the accused commences to serve his sentence (Act No. 4221, sec. 1; U.S. vs. Cook, 19 Fed. [2d], 827). In their memorandums filed on October 23, 1937, counsel for the respondents maintain that Act No. 4221 is constitutional because, contrary to the allegations of the petitioners, it does not constitute an undue delegation of legislative power, does not infringe the equal protection clause of the Constitution, and does not encroach upon the pardoning power of the Executive. In an additional memorandum filed on the same date, counsel for the respondents reiterate the view that section 11 of

Act No. 4221 is free from constitutional objections and contend, in addition, that the private prosecution may not intervene in probation proceedings, much less question the validity of Act No. 4221; that both the City Fiscal and the Solicitor-General are estopped from questioning the validity of the Act; that the validity of Act cannot be attacked for the first time before this court; that probation in unavailable; and that, in any event, section 11 of the Act No. 4221 is separable from the rest of the Act. The last memorandum for the respondent Mariano Cu Unjieng was denied for having been filed out of time but was admitted by resolution of this court and filed anew on November 5, 1937. This memorandum elaborates on some of the points raised by the respondents and refutes those brought up by the petitioners. In the scrutiny of the pleadings and examination of the various aspects of the present case, we noted that the court below, in passing upon the merits of the application of the respondent Mariano Cu Unjieng and in denying said application assumed the task not only of considering the merits of the application, but of passing upon the culpability of the applicant, notwithstanding the final pronouncement of guilt by this court. (G.R. No. 41200.) Probation implies guilt be final judgment. While a probation case may look into the circumstances attending the commission of the offense, this does not authorize it to reverse the findings and conclusive of this court, either directly or indirectly, especially wherefrom its own admission reliance was merely had on the printed briefs, averments, and pleadings of the parties. As already observed by this court in Shioji vs. Harvey ([1922], 43 Phil., 333, 337), and reiterated in subsequent cases, "if each and every Court of First Instance could enjoy the privilege of overruling decisions of the Supreme Court, there would be no end to litigation, and judicial chaos would result." A becoming modesty of inferior courts demands conscious realization of the position that they occupy in the interrelation and operation of the intergrated judicial system of the nation. After threshing carefully the multifarious issues raised by both counsel for the petitioners and the respondents, this court prefers to cut the Gordian knot and take up at once the two fundamental questions presented, namely, (1) whether or not the constitutionality of Act No. 4221 has been properly raised in these proceedings; and (2) in the affirmative, whether or not said Act is constitutional. Considerations of these issues will involve a discussion of certain incidental questions raised by the parties. To arrive at a correct conclusion on the first question, resort to certain guiding principles is necessary. It is a well-settled rule that the constitutionality of an act of the legislature will not be determined by the courts unless that question is properly raised and presented inappropriate cases and is necessary to a determination of the case; i.e., the issue of constitutionality must be the very lis mota presented. (McGirr vs. Hamilton and Abreu [1915], 30 Phil., 563, 568; 6 R. C. L., pp. 76, 77; 12 C. J., pp. 780-782, 783.) The question of the constitutionality of an act of the legislature is frequently raised in ordinary actions. Nevertheless, resort may be made to extraordinary legal remedies, particularly where the remedies in the ordinary course of law even if available, are not plain, speedy and adequate. Thus, in Cu Unjieng vs. Patstone([1922]), 42 Phil., 818), this court held that the question of the constitutionality of a statute may be raised by the petitioner in mandamus proceedings (see, also, 12 C. J., p. 783); and in Government of the Philippine Islands vs. Springer ([1927], 50 Phil., 259 [affirmed in Springer vs. Government of the Philippine Islands (1928), 277 U. S., 189; 72 Law. ed., 845]), this court declared an act of the legislature unconstitutional in an action of quo warranto brought in the name of the Government of the Philippines. It has also been held that the constitutionality of a statute may be questioned in habeas corpus proceedings (12 C. J., p. 783; Bailey on Habeas Corpus, Vol. I, pp. 97, 117), although

there are authorities to the contrary; on an application for injunction to restrain action under the challenged statute (mandatory, see Cruz vs. Youngberg [1931], 56 Phil., 234); and even on an application for preliminary injunction where the determination of the constitutional question is necessary to a decision of the case. (12 C. J., p. 783.) The same may be said as regards prohibition and certiorari.(Yu Cong Eng vs. Trinidad [1925], 47 Phil., 385; [1926], 271 U. S., 500; 70 Law. ed., 1059; Bell vs. First Judicial District Court [1905], 28 Nev., 280; 81 Pac., 875; 113 A. S. R., 854; 6 Ann. Cas., 982; 1 L. R. A. [N. S], 843, and cases cited). The case of Yu Cong Eng vs. Trinidad, supra, decided by this court twelve years ago was, like the present one, an original action for certiorari and prohibition. The constitutionality of Act No. 2972, popularly known as the Chinese Bookkeeping Law, was there challenged by the petitioners, and the constitutional issue was not met squarely by the respondent in a demurrer. A point was raised "relating to the propriety of the constitutional question being decided in original proceedings in prohibition." This court decided to take up the constitutional question and, with two justices dissenting, held that Act No. 2972 was constitutional. The case was elevated on writ of certiorari to the Supreme Court of the United States which reversed the judgment of this court and held that the Act was invalid. (271 U. S., 500; 70 Law. ed., 1059.) On the question of jurisdiction, however, the Federal Supreme Court, though its Chief Justice, said: By the Code of Civil Procedure of the Philippine Islands, section 516, the Philippine supreme court is granted concurrent jurisdiction in prohibition with courts of first instance over inferior tribunals or persons, and original jurisdiction over courts of first instance, when such courts are exercising functions without or in excess of their jurisdiction. It has been held by that court that the question of the validity of the criminal statute must usually be raised by a defendant in the trial court and be carried regularly in review to the Supreme Court. (Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26 Phil., 192). But in this case where a new act seriously affected numerous persons and extensive property rights, and was likely to cause a multiplicity of actions, the Supreme Court exercised its discretion to bring the issue to the act's validity promptly before it and decide in the interest of the orderly administration of justice. The court relied by analogy upon the cases of Ex parte Young (209 U. S., 123;52 Law ed., 714; 13 L. R. A. [N. S.] 932; 28 Sup. Ct. Rep., 441; 14 Ann. Ca., 764; Traux vs. Raich, 239 U. S., 33; 60 Law. ed., 131; L. R. A. 1916D, 545; 36 Sup. Ct. Rep., 7; Ann. Cas., 1917B, 283; and Wilson vs. New, 243 U. S., 332; 61 Law. ed., 755; L. R. A. 1917E, 938; 37 Sup. Ct. Rep., 298; Ann. Cas. 1918A, 1024). Although objection to the jurisdiction was raise by demurrer to the petition, this is now disclaimed on behalf of the respondents, and both parties ask a decision on the merits. In view of the broad powers in prohibition granted to that court under the Island Code, we acquiesce in the desire of the parties. The writ of prohibition is an extraordinary judicial writ issuing out of a court of superior jurisdiction and directed to an inferior court, for the purpose of preventing the inferior tribunal from usurping a jurisdiction with which it is not legally vested. (High, Extraordinary Legal Remedies, p. 705.) The general rule, although there is a conflict in the cases, is that the merit of prohibition will not lie whether the inferior court has jurisdiction independent of the statute the constitutionality of which is questioned, because in such cases the interior court having jurisdiction may itself determine the constitutionality of the statute, and its decision may be subject to review, and consequently the complainant in such cases ordinarily has adequate remedy by appeal without resort to the writ of prohibition. But where the inferior court or tribunal derives its jurisdiction exclusively from an unconstitutional statute, it may be prevented by the writ of prohibition from enforcing that statute. (50 C. J., 670;Ex parte Round tree [1874, 51 Ala., 42; In re Macfarland, 30 App. [D. C.], 365; Curtis vs. Cornish [1912], 109 Me., 384; 84 A., 799;

Pennington vs. Woolfolk [1880], 79 Ky., 13; State vs. Godfrey [1903], 54 W. Va., 54; 46 S. E., 185; Arnold vs. Shields [1837], 5 Dana, 19; 30 Am. Dec., 669.) Courts of First Instance sitting in probation proceedings derived their jurisdiction solely from Act No. 4221 which prescribes in detailed manner the procedure for granting probation to accused persons after their conviction has become final and before they have served their sentence. It is true that at common law the authority of the courts to suspend temporarily the execution of the sentence is recognized and, according to a number of state courts, including those of Massachusetts, Michigan, New York, and Ohio, the power is inherent in the courts (Commonwealth vs. Dowdican's Bail [1874], 115 Mass., 133; People vs. Stickel [1909], 156 Mich., 557; 121 N. W., 497; People ex rel. Forsyth vs. Court of Session [1894], 141 N. Y., 288; Weber vs. State [1898], 58 Ohio St., 616). But, in the leading case of Ex parte United States ([1916], 242 U. S., 27; 61 Law. ed., 129; L. R. A., 1917E, 1178; 37 Sup. Ct. Rep., 72; Ann. Cas. 1917B, 355), the Supreme Court of the United States expressed the opinion that under the common law the power of the court was limited to temporary suspension, and brushed aside the contention as to inherent judicial power saying, through Chief Justice White: Indisputably under our constitutional system the right to try offenses against the criminal laws and upon conviction to impose the punishment provided by law is judicial, and it is equally to be conceded that, in exerting the powers vested in them on such subject, courts inherently possess ample right to exercise reasonable, that is, judicial, discretion to enable them to wisely exert their authority. But these concessions afford no ground for the contention as to power here made, since it must rest upon the proposition that the power to enforce begets inherently a discretion to permanently refuse to do so. And the effect of the proposition urged upon the distribution of powers made by the Constitution will become apparent when it is observed that indisputable also is it that the authority to define and fix the punishment for crime is legislative and includes the right in advance to bring within judicial discretion, for the purpose of executing the statute, elements of consideration which would be otherwise beyond the scope of judicial authority, and that the right to relieve from the punishment, fixed by law and ascertained according to the methods by it provided belongs to the executive department. Justice Carson, in his illuminating concurring opinion in the case of Director of Prisons vs. Judge of First Instance of Cavite (29 Phil., 265), decided by this court in 1915, also reached the conclusion that the power to suspend the execution of sentences pronounced in criminal cases is not inherent in the judicial function. "All are agreed", he said, "that in the absence of statutory authority, it does not lie within the power of the courts to grant such suspensions." (at p. 278.) Both petitioner and respondents are correct, therefore, when they argue that a Court of First Instance sitting in probation proceedings is a court of limited jurisdiction. Its jurisdiction in such proceedings is conferred exclusively by Act No. 4221 of the Philippine Legislature. It is, of course, true that the constitutionality of a statute will not be considered on application for prohibition where the question has not been properly brought to the attention of the court by objection of some kind (Hill vs. Tarver [1901], 130 Ala., 592; 30 S., 499; State ex rel. Kelly vs. Kirby [1914], 260 Mo., 120; 168 S. W., 746). In the case at bar, it is unquestionable that the constitutional issue has been squarely presented not only before this court by the petitioners but also before the trial court by the private prosecution. The respondent, Hon. Jose O Vera, however, acting as judge of the court below, declined to pass upon the question on the ground that the private prosecutor, not being a party whose rights are affected by the statute, may not raise said question. The respondent judge cited Cooley on Constitutional Limitations (Vol. I, p. 339; 12 C. J., sec. 177, pp. 760 and 762), and McGlue vs. Essex

County ([1916], 225 Mass., 59; 113 N. E., 742, 743), as authority for the proposition that a court will not consider any attack made on the constitutionality of a statute by one who has no interest in defeating it because his rights are not affected by its operation. The respondent judge further stated that it may not motu proprio take up the constitutional question and, agreeing with Cooley that "the power to declare a legislative enactment void is one which the judge, conscious of the fallibility of the human judgment, will shrink from exercising in any case where he can conscientiously and with due regard to duty and official oath decline the responsibility" (Constitutional Limitations, 8th ed., Vol. I, p. 332), proceeded on the assumption that Act No. 4221 is constitutional. While therefore, the court a quo admits that the constitutional question was raised before it, it refused to consider the question solely because it was not raised by a proper party. Respondents herein reiterates this view. The argument is advanced that the private prosecution has no personality to appear in the hearing of the application for probation of defendant Mariano Cu Unjieng in criminal case No. 42648 of the Court of First Instance of Manila, and hence the issue of constitutionality was not properly raised in the lower court. Although, as a general rule, only those who are parties to a suit may question the constitutionality of a statute involved in a judicial decision, it has been held that since the decree pronounced by a court without jurisdiction is void, where the jurisdiction of the court depends on the validity of the statute in question, the issue of the constitutionality will be considered on its being brought to the attention of the court by persons interested in the effect to be given the statute.(12 C. J., sec. 184, p. 766.) And, even if we were to concede that the issue was not properly raised in the court below by the proper party, it does not follow that the issue may not be here raised in an original action of certiorari and prohibitions. It is true that, as a general rule, the question of constitutionality must be raised at the earliest opportunity, so that if not raised by the pleadings, ordinarily it may not be raised at the trial, and if not raised in the trial court, it will not considered on appeal. (12 C. J., p. 786. See, also,Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26 Phil., 192, 193-195.) But we must state that the general rule admits of exceptions. Courts, in the exercise of sounds discretion, may determine the time when a question affecting the constitutionality of a statute should be presented. (In re Woolsey [1884], 95 N. Y., 135, 144.) Thus, in criminal cases, although there is a very sharp conflict of authorities, it is said that the question may be raised for the first time at any stage of the proceedings, either in the trial court or on appeal. (12 C. J., p. 786.) Even in civil cases, it has been held that it is the duty of a court to pass on the constitutional question, though raised for the first time on appeal, if it appears that a determination of the question is necessary to a decision of the case. (McCabe's Adm'x vs. Maysville & B. S. R. Co., [1910], 136 ky., 674; 124 S. W., 892; Lohmeyer vs. St. Louis Cordage Co. [1908], 214 Mo., 685; 113 S. W. 1108; Carmody vs. St. Louis Transit Co., [1905], 188 Mo., 572; 87 S. W., 913.) And it has been held that a constitutional question will be considered by an appellate court at any time, where it involves the jurisdiction of the court below (State vs. Burke [1911], 175 Ala., 561; 57 S., 870.) As to the power of this court to consider the constitutional question raised for the first time before this court in these proceedings, we turn again and point with emphasis to the case of Yu Cong Eng vs. Trinidad, supra. And on the hypotheses that the Hongkong & Shanghai Banking Corporation, represented by the private prosecution, is not the proper party to raise the constitutional question here a point we do not now have to decide we are of the opinion that the People of the Philippines, represented by the SolicitorGeneral and the Fiscal of the City of Manila, is such a proper party in the present proceedings. The unchallenged rule is that the person who impugns the validity of a statute must have a personal and substantial interest in the case such that he has sustained, or will sustained, direct injury as a result of its enforcement. It goes without saying that if Act No. 4221 really violates the constitution, the People of the Philippines, in whose name the present action is brought, has a substantial interest in having it set aside. Of grater import than the damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon the fundamental law by the enforcement of an invalid statute. Hence, the wellsettled rule that the state can challenge the validity of its own laws. In Government of the Philippine

Islands vs. Springer ([1927]), 50 Phil., 259 (affirmed in Springer vs. Government of the Philippine Islands [1928], 277 U.S., 189; 72 Law. ed., 845), this court declared an act of the legislature unconstitutional in an action instituted in behalf of the Government of the Philippines. In Attorney General vs. Perkins ([1889], 73 Mich., 303, 311, 312; 41 N. W. 426, 428, 429), the State of Michigan, through its Attorney General, instituted quo warranto proceedings to test the right of the respondents to renew a mining corporation, alleging that the statute under which the respondents base their right was unconstitutional because it impaired the obligation of contracts. The capacity of the chief law officer of the state to question the constitutionality of the statute was though, as a general rule, only those who are parties to a suit may question the constitutionality of a statute involved in a judicial decision, it has been held that since the decree pronounced by a court without jurisdiction in void, where the jurisdiction of the court depends on the validity of the statute in question, the issue of constitutionality will be considered on its being brought to the attention of the court by persons interested in the effect to begin the statute. (12 C.J., sec. 184, p. 766.) And, even if we were to concede that the issue was not properly raised in the court below by the proper party, it does not follow that the issue may not be here raised in an original action of certiorari and prohibition. It is true that, as a general rule, the question of constitutionality must be raised at the earliest opportunity, so that if not raised by the pleadings, ordinarily it may not be raised a the trial, and if not raised in the trial court, it will not be considered on appeal. (12 C.J., p. 786. See, also, Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26 Phil., 192, 193-195.) But we must state that the general rule admits of exceptions. Courts, in the exercise of sound discretion, may determine the time when a question affecting the constitutionality of a statute should be presented. (In re Woolsey [19884], 95 N.Y., 135, 144.) Thus, in criminal cases, although there is a very sharp conflict of authorities, it is said that the question may be raised for the first time at any state of the proceedings, either in the trial court or on appeal. (12 C.J., p. 786.) Even in civil cases, it has been held that it is the duty of a court to pass on the constitutional question, though raised for first time on appeal, if it appears that a determination of the question is necessary to a decision of the case. (McCabe's Adm'x vs. Maysville & B. S. R. Co. [1910], 136 Ky., 674; 124 S. W., 892; Lohmeyer vs. St. Louis, Cordage Co. [1908], 214 Mo. 685; 113 S. W., 1108; Carmody vs. St. Louis Transit Co. [1905], 188 Mo., 572; 87 S. W., 913.) And it has been held that a constitutional question will be considered by an appellate court at any time, where it involves the jurisdiction of the court below (State vs. Burke [1911], 175 Ala., 561; 57 S., 870.) As to the power of this court to consider the constitutional question raised for the first time before this court in these proceedings, we turn again and point with emphasis to the case of Yu Cong Eng. vs. Trinidad, supra. And on the hypothesis that the Hongkong & Shanghai Banking Corporation, represented by the private prosecution, is not the proper party to raise the constitutional question here a point we do not now have to decide we are of the opinion that the People of the Philippines, represented by the Solicitor-General and the Fiscal of the City of Manila, is such a proper party in the present proceedings. The unchallenged rule is that the person who impugns the validity of a statute must have a personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its enforcement. It goes without saying that if Act No. 4221 really violates the Constitution, the People of the Philippines, in whose name the present action is brought, has a substantial interest in having it set aside. Of greater import than the damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon the fundamental law by the enforcement of an invalid statute. Hence, the wellsettled rule that the state can challenge the validity of its own laws. In Government of the Philippine Islands vs. Springer ([1927]), 50 Phil., 259 (affirmed in Springer vs. Government of the Philippine Islands [1928], 277 U.S., 189; 72 Law. ed., 845), this court declared an act of the legislature unconstitutional in an action instituted in behalf of the Government of the Philippines. In Attorney General vs. Perkings([1889], 73 Mich., 303, 311, 312; 41 N.W., 426, 428, 429), the State of Michigan, through its Attorney General, instituted quo warranto proceedings to test the right of the respondents to renew a mining corporation, alleging that the statute under which the respondents base their right was

unconstitutional because it impaired the obligation of contracts. The capacity of the chief law officer of the state to question the constitutionality of the statute was itself questioned. Said the Supreme Court of Michigan, through Champlin, J.: . . . The idea seems to be that the people are estopped from questioning the validity of a law enacted by their representatives; that to an accusation by the people of Michigan of usurpation their government, a statute enacted by the people of Michigan is an adequate answer. The last proposition is true, but, if the statute relied on in justification is unconstitutional, it is statute only in form, and lacks the force of law, and is of no more saving effect to justify action under it than if it had never been enacted. The constitution is the supreme law, and to its behests the courts, the legislature, and the people must bow . . . The legislature and the respondents are not the only parties in interest upon such constitutional questions. As was remarked by Mr. Justice Story, in speaking of an acquiescence by a party affected by an unconstitutional act of the legislature: "The people have a deep and vested interest in maintaining all the constitutional limitations upon the exercise of legislative powers." (Allen vs. Mckeen, 1 Sum., 314.) In State vs. Doane ([1916], 98 Kan., 435; 158 Pac., 38, 40), an original action (mandamus) was brought by the Attorney-General of Kansas to test the constitutionality of a statute of the state. In disposing of the question whether or not the state may bring the action, the Supreme Court of Kansas said: . . . the state is a proper party indeed, the proper party to bring this action. The state is always interested where the integrity of its Constitution or statutes is involved. "It has an interest in seeing that the will of the Legislature is not disregarded, and need not, as an individual plaintiff must, show grounds of fearing more specific injury. (State vs. Kansas City 60 Kan., 518 [57 Pac., 118])." (State vs. Lawrence, 80 Kan., 707; 103 Pac., 839.) Where the constitutionality of a statute is in doubt the state's law officer, its AttorneyGeneral, or county attorney, may exercise his bet judgment as to what sort of action he will bring to have the matter determined, either by quo warranto to challenge its validity (State vs. Johnson, 61 Kan., 803; 60 Pac., 1068; 49 L.R.A., 662), by mandamus to compel obedience to its terms (State vs. Dolley, 82 Kan., 533; 108 Pac., 846), or by injunction to restrain proceedings under its questionable provisions (State ex rel. vs. City of Neodesha, 3 Kan. App., 319; 45 Pac., 122). Other courts have reached the same conclusion (See State vs. St. Louis S. W. Ry. Co. [1917], 197 S. W., 1006; State vs. S.H. Kress & Co. [1934], 155 S., 823; State vs. Walmsley [1935], 181 La., 597; 160 S., 91; State vs. Board of County Comr's [1934], 39 Pac. [2d], 286; First Const. Co. of Brooklyn vs. State [1917], 211 N.Y., 295; 116 N.E., 1020; Bush vs. State {1918], 187 Ind., 339; 119 N.E., 417; State vs. Watkins [1933], 176 La., 837; 147 S., 8, 10, 11). In the case last cited, the Supreme Court of Luisiana said: It is contended by counsel for Herbert Watkins that a district attorney, being charged with the duty of enforcing the laws, has no right to plead that a law is unconstitutional. In support of the argument three decisions are cited, viz.: State ex rel. Hall, District Attorney, vs. Judge of

Tenth Judicial District (33 La. Ann., 1222); State ex rel. Nicholls, Governor vs. Shakespeare, Mayor of New Orleans (41 Ann., 156; 6 So., 592); and State ex rel., Banking Co., etc. vs. Heard, Auditor (47 La. Ann., 1679; 18 So., 746; 47 L. R. A., 512). These decisions do not forbid a district attorney to plead that a statute is unconstitutional if he finds if in conflict with one which it is his duty to enforce. In State ex rel. Hall, District Attorney, vs. Judge, etc., the ruling was the judge should not, merely because he believed a certain statute to be unconstitutional forbid the district attorney to file a bill of information charging a person with a violation of the statute. In other words, a judge should not judicially declare a statute unconstitutional until the question of constitutionality is tendered for decision, and unless it must be decided in order to determine the right of a party litigant. State ex rel. Nicholls, Governor, etc., is authority for the proposition merely that an officer on whom a statute imposes the duty of enforcing its provisions cannot avoid the duty upon the ground that he considers the statute unconstitutional, and hence in enforcing the statute he is immune from responsibility if the statute be unconstitutional. State ex rel. Banking Co., etc., is authority for the proposition merely that executive officers, e.g., the state auditor and state treasurer, should not decline to perform ministerial duties imposed upon them by a statute, on the ground that they believe the statute is unconstitutional. It is the duty of a district attorney to enforce the criminal laws of the state, and, above all, to support the Constitution of the state. If, in the performance of his duty he finds two statutes in conflict with each other, or one which repeals another, and if, in his judgment, one of the two statutes is unconstitutional, it is his duty to enforce the other; and, in order to do so, he is compelled to submit to the court, by way of a plea, that one of the statutes is unconstitutional. If it were not so, the power of the Legislature would be free from constitutional limitations in the enactment of criminal laws. The respondents do not seem to doubt seriously the correctness of the general proposition that the state may impugn the validity of its laws. They have not cited any authority running clearly in the opposite direction. In fact, they appear to have proceeded on the assumption that the rule as stated is sound but that it has no application in the present case, nor may it be invoked by the City Fiscal in behalf of the People of the Philippines, one of the petitioners herein, the principal reasons being that the validity before this court, that the City Fiscal is estopped from attacking the validity of the Act and, not authorized challenge the validity of the Act in its application outside said city. (Additional memorandum of respondents, October 23, 1937, pp. 8,. 10, 17 and 23.) The mere fact that the Probation Act has been repeatedly relied upon the past and all that time has not been attacked as unconstitutional by the Fiscal of Manila but, on the contrary, has been impliedly regarded by him as constitutional, is no reason for considering the People of the Philippines estopped from nor assailing its validity. For courts will pass upon a constitutional questions only when presented before it in bona fide cases for determination, and the fact that the question has not been raised before is not a valid reason for refusing to allow it to be raised later. The fiscal and all others are justified in relying upon the statute and treating it as valid until it is held void by the courts in proper cases. It remains to consider whether the determination of the constitutionality of Act No. 4221 is necessary to the resolution of the instant case. For, ". . . while the court will meet the question with firmness, where its decision is indispensable, it is the part of wisdom, and just respect for the legislature, renders it proper, to waive it, if the case in which it arises, can be decided on other points." (Ex parte Randolph [1833], 20 F. Cas. No. 11, 558; 2 Brock., 447. Vide, also Hoover vs. wood [1857], 9 Ind.,

286, 287.) It has been held that the determination of a constitutional question is necessary whenever it is essential to the decision of the case (12 C. J., p. 782, citing Long Sault Dev. Co. vs. Kennedy [1913], 158 App. Div., 398; 143 N. Y. Supp., 454 [aff. 212 N.Y., 1: 105 N. E., 849; Ann. Cas. 1915D, 56; and app dism 242 U.S., 272]; Hesse vs. Ledesma, 7 Porto Rico Fed., 520; Cowan vs. Doddridge, 22 Gratt [63 Va.], 458; Union Line Co., vs. Wisconsin R. Commn., 146 Wis., 523; 129 N. W., 605), as where the right of a party is founded solely on a statute the validity of which is attacked. (12 C.J., p. 782, citing Central Glass Co. vs. Niagrara F. Ins. Co., 131 La., 513; 59 S., 972; Cheney vs. Beverly, 188 Mass., 81; 74 N.E., 306). There is no doubt that the respondent Cu Unjieng draws his privilege to probation solely from Act No. 4221 now being assailed. Apart from the foregoing considerations, that court will also take cognizance of the fact that the Probation Act is a new addition to our statute books and its validity has never before been passed upon by the courts; that may persons accused and convicted of crime in the City of Manila have applied for probation; that some of them are already on probation; that more people will likely take advantage of the Probation Act in the future; and that the respondent Mariano Cu Unjieng has been at large for a period of about four years since his first conviction. All wait the decision of this court on the constitutional question. Considering, therefore, the importance which the instant case has assumed and to prevent multiplicity of suits, strong reasons of public policy demand that the constitutionality of Act No. 4221 be now resolved. (Yu Cong Eng vs. Trinidad [1925], 47 Phil., 385; [1926], 271 U.S., 500; 70 Law. ed., 1059. See 6 R.C.L., pp. 77, 78; People vs. Kennedy [1913], 207 N.Y., 533; 101 N.E., 442, 444; Ann. Cas. 1914C, 616; Borginis vs. Falk Co. [1911], 147 Wis., 327; 133 N.W., 209, 211; 37 L.R.A. [N.S.] 489; Dimayuga and Fajardo vs. Fernandez [1922], 43 Phil., 304.) In Yu Cong Eng vs. Trinidad, supra, an analogous situation confronted us. We said: "Inasmuch as the property and personal rights of nearly twelve thousand merchants are affected by these proceedings, and inasmuch as Act No. 2972 is a new law not yet interpreted by the courts, in the interest of the public welfare and for the advancement of public policy, we have determined to overrule the defense of want of jurisdiction in order that we may decide the main issue. We have here an extraordinary situation which calls for a relaxation of the general rule." Our ruling on this point was sustained by the Supreme Court of the United States. A more binding authority in support of the view we have taken can not be found. We have reached the conclusion that the question of the constitutionality of Act No. 4221 has been properly raised. Now for the main inquiry: Is the Act unconstitutional? Under a doctrine peculiarly American, it is the office and duty of the judiciary to enforce the Constitution. This court, by clear implication from the provisions of section 2, subsection 1, and section 10, of Article VIII of the Constitution, may declare an act of the national legislature invalid because in conflict with the fundamental lay. It will not shirk from its sworn duty to enforce the Constitution. And, in clear cases, it will not hesitate to give effect to the supreme law by setting aside a statute in conflict therewith. This is of the essence of judicial duty. This court is not unmindful of the fundamental criteria in cases of this nature that all reasonable doubts should be resolved in favor of the constitutionality of a statute. An act of the legislature approved by the executive, is presumed to be within constitutional limitations. The responsibility of upholding the Constitution rests not on the courts alone but on the legislature as well. "The question of the validity of every statute is first determined by the legislative department of the government itself." (U.S. vs. Ten Yu [1912], 24 Phil., 1, 10; Case vs. Board of Health and Heiser [1913], 24 Phil., 250, 276; U.S. vs. Joson [1913], 26 Phil., 1.) And a statute finally comes before the courts sustained by the sanction of the executive. The members of the Legislature and the Chief Executive have taken an oath to support

the Constitution and it must be presumed that they have been true to this oath and that in enacting and sanctioning a particular law they did not intend to violate the Constitution. The courts cannot but cautiously exercise its power to overturn the solemn declarations of two of the three grand departments of the governments. (6 R.C.L., p. 101.) Then, there is that peculiar political philosophy which bids the judiciary to reflect the wisdom of the people as expressed through an elective Legislature and an elective Chief Executive. It follows, therefore, that the courts will not set aside a law as violative of the Constitution except in a clear case. This is a proposition too plain to require a citation of authorities. One of the counsel for respondents, in the course of his impassioned argument, called attention to the fact that the President of the Philippines had already expressed his opinion against the constitutionality of the Probation Act, adverting that as to the Executive the resolution of this question was a foregone conclusion. Counsel, however, reiterated his confidence in the integrity and independence of this court. We take notice of the fact that the President in his message dated September 1, 1937, recommended to the National Assembly the immediate repeal of the Probation Act (No. 4221); that this message resulted in the approval of Bill No. 2417 of the Nationality Assembly repealing the probation Act, subject to certain conditions therein mentioned; but that said bill was vetoed by the President on September 13, 1937, much against his wish, "to have stricken out from the statute books of the Commonwealth a law . . . unfair and very likely unconstitutional." It is sufficient to observe in this connection that, in vetoing the bill referred to, the President exercised his constitutional prerogative. He may express the reasons which he may deem proper for taking such a step, but his reasons are not binding upon us in the determination of actual controversies submitted for our determination. Whether or not the Executive should express or in any manner insinuate his opinion on a matter encompassed within his broad constitutional power of veto but which happens to be at the same time pending determination in this court is a question of propriety for him exclusively to decide or determine. Whatever opinion is expressed by him under these circumstances, however, cannot sway our judgment on way or another and prevent us from taking what in our opinion is the proper course of action to take in a given case. It if is ever necessary for us to make any vehement affirmance during this formative period of our political history, it is that we are independent of the Executive no less than of the Legislative department of our government independent in the performance of our functions, undeterred by any consideration, free from politics, indifferent to popularity, and unafraid of criticism in the accomplishment of our sworn duty as we see it and as we understand it. The constitutionality of Act No. 4221 is challenged on three principal grounds: (1) That said Act encroaches upon the pardoning power of the Executive; (2) that its constitutes an undue delegation of legislative power and (3) that it denies the equal protection of the laws. 1. Section 21 of the Act of Congress of August 29, 1916, commonly known as the Jones Law, in force at the time of the approval of Act No. 4221, otherwise known as the Probation Act, vests in the Governor-General of the Philippines "the exclusive power to grant pardons and reprieves and remit fines and forfeitures". This power is now vested in the President of the Philippines. (Art. VII, sec. 11, subsec. 6.) The provisions of the Jones Law and the Constitution differ in some respects. The adjective "exclusive" found in the Jones Law has been omitted from the Constitution. Under the Jones Law, as at common law, pardon could be granted any time after the commission of the offense, either before or after conviction (Vide Constitution of the United States, Art. II, sec. 2;In re Lontok [1922], 43 Phil., 293). The Governor-General of the Philippines was thus empowered, like the President of the United States, to pardon a person before the facts of the case were fully brought to light. The framers of our Constitution thought this undesirable and, following most of the state constitutions, provided that the

pardoning power can only be exercised "after conviction". So, too, under the new Constitution, the pardoning power does not extend to "cases of impeachment". This is also the rule generally followed in the United States (Vide Constitution of the United States, Art. II, sec. 2). The rule in England is different. There, a royal pardon can not be pleaded in bar of an impeachment; "but," says Blackstone, "after the impeachment has been solemnly heard and determined, it is not understood that the king's royal grace is further restrained or abridged." (Vide, Ex parte Wells [1856], 18 How., 307; 15 Law. ed., 421; Com. vs. Lockwood [1872], 109 Mass., 323; 12 Am. Rep., 699; Sterling vs. Drake [1876], 29 Ohio St., 457; 23 am. Rep., 762.) The reason for the distinction is obvious. In England, Judgment on impeachment is not confined to mere "removal from office and disqualification to hold and enjoy any office of honor, trust, or profit under the Government" (Art. IX, sec. 4, Constitution of the Philippines) but extends to the whole punishment attached by law to the offense committed. The House of Lords, on a conviction may, by its sentence, inflict capital punishment, perpetual banishment, perpetual banishment, fine or imprisonment, depending upon the gravity of the offense committed, together with removal from office and incapacity to hold office. (Com. vs. Lockwood, supra.) Our Constitution also makes specific mention of "commutation" and of the power of the executive to impose, in the pardons he may grant, such conditions, restrictions and limitations as he may deem proper. Amnesty may be granted by the President under the Constitution but only with the concurrence of the National Assembly. We need not dwell at length on the significance of these fundamental changes. It is sufficient for our purposes to state that the pardoning power has remained essentially the same. The question is: Has the pardoning power of the Chief Executive under the Jones Law been impaired by the Probation Act? As already stated, the Jones Law vests the pardoning power exclusively in the Chief Executive. The exercise of the power may not, therefore, be vested in anyone else. ". . . The benign prerogative of mercy reposed in the executive cannot be taken away nor fettered by any legislative restrictions, nor can like power be given by the legislature to any other officer or authority. The coordinate departments of government have nothing to do with the pardoning power, since no person properly belonging to one of the departments can exercise any powers appertaining to either of the others except in cases expressly provided for by the constitution." (20 R.C.L., pp., , and cases cited.) " . . . where the pardoning power is conferred on the executive without express or implied limitations, the grant is exclusive, and the legislature can neither exercise such power itself nor delegate it elsewhere, nor interfere with or control the proper exercise thereof, . . ." (12 C.J., pp. 838, 839, and cases cited.) If Act No. 4221, then, confers any pardoning power upon the courts it is for that reason unconstitutional and void. But does it? In the famous Killitts decision involving an embezzlement case, the Supreme Court of the United States ruled in 1916 that an order indefinitely suspending sentenced was void. (Ex parte United States [1916], 242 U.S., 27; 61 Law. ed., 129; L.R.A. 1917E, 1178; 37 Sup. Ct. Rep., 72; Ann. Cas. 1917B, 355.) Chief Justice White, after an exhaustive review of the authorities, expressed the opinion of the court that under the common law the power of the court was limited to temporary suspension and that the right to suspend sentenced absolutely and permanently was vested in the executive branch of the government and not in the judiciary. But, the right of Congress to establish probation by statute was conceded. Said the court through its Chief Justice: ". . . and so far as the future is concerned, that is, the causing of the imposition of penalties as fixed to be subject, by probation legislation or such other means as the legislative mind may devise, to such judicial discretion as may be adequate to enable courts to meet by the exercise of an enlarged but wise discretion the infinite variations which may be presented to them for judgment, recourse must be had Congress whose legislative power on the subject is in the very nature of things adequately complete." (Quoted in Riggs vs. United States [1926], 14 F. [2d], 5, 6.) This decision led the National Probation Association and others to agitate for the enactment

by Congress of a federal probation law. Such action was finally taken on March 4, 1925 (chap. 521, 43 Stat. L. 159, U.S.C. title 18, sec. 724). This was followed by an appropriation to defray the salaries and expenses of a certain number of probation officers chosen by civil service. (Johnson, Probation for Juveniles and Adults, p. 14.) In United States vs. Murray ([1925], 275 U.S., 347; 48 Sup. Ct. Rep., 146; 72 Law. ed., 309), the Supreme Court of the United States, through Chief Justice Taft, held that when a person sentenced to imprisonment by a district court has begun to serve his sentence, that court has no power under the Probation Act of March 4, 1925 to grant him probation even though the term at which sentence was imposed had not yet expired. In this case of Murray, the constitutionality of the probation Act was not considered but was assumed. The court traced the history of the Act and quoted from the report of the Committee on the Judiciary of the United States House of Representatives (Report No. 1377, 68th Congress, 2 Session) the following statement: Prior to the so-called Killitts case, rendered in December, 1916, the district courts exercised a form of probation either, by suspending sentence or by placing the defendants under state probation officers or volunteers. In this case, however (Ex parte United States, 242 U.S., 27; 61 L. Ed., 129; L.R.A., 1917E, 1178; 37 Sup. Ct. Rep., 72 Ann. Cas. 1917B, 355), the Supreme Court denied the right of the district courts to suspend sentenced. In the same opinion the court pointed out the necessity for action by Congress if the courts were to exercise probation powers in the future . . . Since this decision was rendered, two attempts have been made to enact probation legislation. In 1917, a bill was favorably reported by the Judiciary Committee and passed the House. In 1920, the judiciary Committee again favorably reported a probation bill to the House, but it was never reached for definite action. If this bill is enacted into law, it will bring the policy of the Federal government with reference to its treatment of those convicted of violations of its criminal laws in harmony with that of the states of the Union. At the present time every state has a probation law, and in all but twelve states the law applies both to adult and juvenile offenders. (see, also, Johnson, Probation for Juveniles and Adults [1928], Chap. I.) The constitutionality of the federal probation law has been sustained by inferior federal courts. In Riggs vs. United States supra, the Circuit Court of Appeals of the Fourth Circuit said: Since the passage of the Probation Act of March 4, 1925, the questions under consideration have been reviewed by the Circuit Court of Appeals of the Ninth Circuit (7 F. [2d], 590), and the constitutionality of the act fully sustained, and the same held in no manner to encroach upon the pardoning power of the President. This case will be found to contain an able and comprehensive review of the law applicable here. It arose under the act we have to consider, and to it and the authorities cited therein special reference is made (Nix vs. James, 7 F. [2d], 590, 594), as is also to a decision of the Circuit Court of Appeals of the Seventh Circuit (Kriebel vs. U.S., 10 F. [2d], 762), likewise construing the Probation Act. We have seen that in 1916 the Supreme Court of the United States; in plain and unequivocal language, pointed to Congress as possessing the requisite power to enact probation laws, that a federal

probation law as actually enacted in 1925, and that the constitutionality of the Act has been assumed by the Supreme Court of the United States in 1928 and consistently sustained by the inferior federal courts in a number of earlier cases. We are fully convinced that the Philippine Legislature, like the Congress of the United States, may legally enact a probation law under its broad power to fix the punishment of any and all penal offenses. This conclusion is supported by other authorities. In Ex parte Bates ([1915], 20 N. M., 542; L.R.A. 1916A, 1285; 151 Pac., 698, the court said: "It is clearly within the province of the Legislature to denominate and define all classes of crime, and to prescribe for each a minimum and maximum punishment." And in State vs. Abbott ([1910], 87 S.C., 466; 33 L.R.A. [N. S.], 112; 70 S. E., 6; Ann. Cas. 1912B, 1189), the court said: "The legislative power to set punishment for crime is very broad, and in the exercise of this power the general assembly may confer on trial judges, if it sees fit, the largest discretion as to the sentence to be imposed, as to the beginning and end of the punishment and whether it should be certain or indeterminate or conditional." (Quoted in State vs. Teal [1918], 108 S. C., 455; 95 S. E., 69.) Indeed, the Philippine Legislature has defined all crimes and fixed the penalties for their violation. Invariably, the legislature has demonstrated the desire to vest in the courts particularly the trial courts large discretion in imposing the penalties which the law prescribes in particular cases. It is believed that justice can best be served by vesting this power in the courts, they being in a position to best determine the penalties which an individual convict, peculiarly circumstanced, should suffer. Thus, while courts are not allowed to refrain from imposing a sentence merely because, taking into consideration the degree of malice and the injury caused by the offense, the penalty provided by law is clearly excessive, the courts being allowed in such case to submit to the Chief Executive, through the Department of Justice, such statement as it may deem proper (see art. 5, Revised Penal Code), in cases where both mitigating and aggravating circumstances are attendant in the commission of a crime and the law provides for a penalty composed of two indivisible penalties, the courts may allow such circumstances to offset one another in consideration of their number and importance, and to apply the penalty according to the result of such compensation. (Art. 63, rule 4, Revised Penal Code; U.S. vs. Reguera and Asuategui [1921], 41 Phil., 506.) Again, article 64, paragraph 7, of the Revised Penal Code empowers the courts to determine, within the limits of each periods, in case the penalty prescribed by law contains three periods, the extent of the evil produced by the crime. In the imposition of fines, the courts are allowed to fix any amount within the limits established by law, considering not only the mitigating and aggravating circumstances, but more particularly the wealth or means of the culprit. (Art. 66, Revised Penal Code.) Article 68, paragraph 1, of the same Code provides that "a discretionary penalty shall be imposed" upon a person under fifteen but over nine years of age, who has not acted without discernment, but always lower by two degrees at least than that prescribed by law for the crime which he has committed. Article 69 of the same Code provides that in case of "incomplete self-defense", i.e., when the crime committed is not wholly excusable by reason of the lack of some of the conditions required to justify the same or to exempt from criminal liability in the several cases mentioned in article 11 and 12 of the Code, "the courts shall impose the penalty in the period which may be deemed proper, in view of the number and nature of the conditions of exemption present or lacking." And, in case the commission of what are known as "impossible" crimes, "the court, having in mind the social danger and the degree of criminality shown by the offender," shall impose upon him either arresto mayor or a fine ranging from 200 to 500 pesos. (Art. 59, Revised Penal Code.) Under our Revised Penal Code, also, one-half of the period of preventive imprisonment is deducted form the entire term of imprisonment, except in certain cases expressly mentioned (art. 29); the death penalty is not imposed when the guilty person is more than seventy years of age, or where upon appeal or revision of the case by the Supreme Court, all the members thereof are not unanimous

in their voting as to the propriety of the imposition of the death penalty (art. 47, see also, sec. 133, Revised Administrative Code, as amended by Commonwealth Act No. 3); the death sentence is not to be inflicted upon a woman within the three years next following the date of the sentence or while she is pregnant, or upon any person over seventy years of age (art. 83); and when a convict shall become insane or an imbecile after final sentence has been pronounced, or while he is serving his sentenced, the execution of said sentence shall be suspended with regard to the personal penalty during the period of such insanity or imbecility (art. 79). But the desire of the legislature to relax what might result in the undue harshness of the penal laws is more clearly demonstrated in various other enactments, including the probation Act. There is the Indeterminate Sentence Law enacted in 1933 as Act No. 4103 and subsequently amended by Act No. 4225, establishing a system of parole (secs. 5 to 100 and granting the courts large discretion in imposing the penalties of the law. Section 1 of the law as amended provides; "hereafter, in imposing a prison sentence for an offenses punished by the Revised Penal Code, or its amendments, the court shall sentence the accused to an indeterminate sentence the maximum term of which shall be that which, in view of the attending circumstances, could be properly imposed under the rules of the said Code, and to a minimum which shall be within the range of the penalty next lower to that prescribed by the Code for the offense; and if the offense is punished by any other law, the court shall sentence the accused to an indeterminate sentence, the maximum term of which shall not exceed the maximum fixed by said law and the minimum shall not be less than the minimum term prescribed by the same." Certain classes of convicts are, by section 2 of the law, excluded from the operation thereof. The Legislature has also enacted the Juvenile Delinquency Law (Act No. 3203) which was subsequently amended by Act No. 3559. Section 7 of the original Act and section 1 of the amendatory Act have become article 80 of the Revised Penal Code, amended by Act No. 4117 of the Philippine Legislature and recently reamended by Commonwealth Act No. 99 of the National Assembly. In this Act is again manifested the intention of the legislature to "humanize" the penal laws. It allows, in effect, the modification in particular cases of the penalties prescribed by law by permitting the suspension of the execution of the judgment in the discretion of the trial court, after due hearing and after investigation of the particular circumstances of the offenses, the criminal record, if any, of the convict, and his social history. The Legislature has in reality decreed that in certain cases no punishment at all shall be suffered by the convict as long as the conditions of probation are faithfully observed. It this be so, then, it cannot be said that the Probation Act comes in conflict with the power of the Chief Executive to grant pardons and reprieves, because, to use the language of the Supreme Court of New Mexico, "the element of punishment or the penalty for the commission of a wrong, while to be declared by the courts as a judicial function under and within the limits of law as announced by legislative acts, concerns solely the procedure and conduct of criminal causes, with which the executive can have nothing to do." (Ex parte Bates, supra.) In Williams vs. State ([1926], 162 Ga., 327; 133 S.E., 843), the court upheld the constitutionality of the Georgia probation statute against the contention that it attempted to delegate to the courts the pardoning power lodged by the constitution in the governor alone is vested with the power to pardon after final sentence has been imposed by the courts, the power of the courts to imposed any penalty which may be from time to time prescribed by law and in such manner as may be defined cannot be questioned." We realize, of course, the conflict which the American cases disclose. Some cases hold it unlawful for the legislature to vest in the courts the power to suspend the operation of a sentenced, by probation or otherwise, as to do so would encroach upon the pardoning power of the executive. (In re Webb [1895], 89 Wis., 354; 27 L.R.A., 356; 46 Am. St. Rep., 846; 62 N.W., 177; 9 Am. Crim., Rep., 702; State ex rel. Summerfield vs. Moran [1919], 43 Nev., 150; 182 Pac., 927; Ex parte Clendenning [1908], 22 Okla., 108; 1 Okla. Crim. Rep., 227; 19 L.R.A. [N.S.], 1041; 132 Am. St. Rep., 628; 97 Pac., 650; People vs. Barrett

[1903], 202 Ill, 287; 67 N.E., 23; 63 L.R.A., 82; 95 Am. St. Rep., 230; Snodgrass vs. State [1912], 67 Tex. Crim. Rep., 615; 41 L. R. A. [N. S.], 1144; 150 S. W., 162;Ex parte Shelor [1910], 33 Nev., 361;111 Pac., 291; Neal vs. State [1898], 104 Ga., 509; 42 L. R. A., 190; 69 Am. St. Rep., 175; 30 S. E. 858; State ex rel. Payne vs. Anderson [1921], 43 S. D., 630; 181 N. W., 839; People vs. Brown, 54 Mich., 15; 19 N. W., 571; States vs. Dalton [1903], 109 Tenn., 544; 72 S. W., 456.) Other cases, however, hold contra. (Nix vs. James [1925; C. C. A., 9th], 7 F. [2d], 590; Archer vs. Snook [1926; D. C.], 10 F. [2d], 567; Riggs. vs. United States [1926; C. C. A. 4th], 14]) [2d], 5; Murphy vs. States [1926], 171 Ark., 620; 286 S. W., 871; 48 A. L. R., 1189; Re Giannini [1912], 18 Cal. App., 166; 122 Pac., 831; Re Nachnaber [1928], 89 Cal. App., 530; 265 Pac., 392; Ex parte De Voe [1931], 114 Cal. App., 730; 300 Pac., 874; People vs. Patrick [1897], 118 Cal., 332; 50 Pac., 425; Martin vs. People [1917], 69 Colo., 60; 168 Pac., 1171; Belden vs. Hugo [1914], 88 Conn., 50; 91 A., 369, 370, 371; Williams vs. State [1926], 162 Ga., 327; 133 S. E., 843; People vs. Heise [1913], 257 Ill., 443; 100 N. E., 1000; Parker vs. State [1893], 135 Ind., 534; 35 N. E., 179; 23 L. R. A., 859; St. Hillarie, Petitioner [1906], 101 Me., 522; 64 Atl., 882; People vs. Stickle [1909], 156 Mich., 557; 121 N. W., 497; State vs. Fjolander [1914], 125 Minn., 529; State ex rel. Bottomnly vs. District Court [1925], 73 Mont., 541; 237 Pac., 525; State vs. Everitt [1913], 164 N. C., 399; 79 S. E., 274; 47 L. R. A. [N. S.], 848; State ex rel. Buckley vs. Drew [1909], 75 N. H., 402; 74 Atl., 875; State vs. Osborne [1911], 79 N. J. Eq., 430; 82 Atl. 424; Ex parte Bates [1915], 20 N. M., 542; L. R. A., 1916 A. 1285; 151 Pac., 698; People vs. ex rel. Forsyth vs. Court of Session [1894], 141 N. Y., 288; 23 L. R. A., 856; 36 N. E., 386; 15 Am. Crim. Rep., 675; People ex rel. Sullivan vs. Flynn [1907], 55 Misc., 639; 106 N. Y. Supp., 928; People vs. Goodrich [1914], 149 N. Y. Supp., 406; Moore vs. Thorn [1935], 245 App. Div., 180; 281 N. Y. Supp., 49; Re Hart [1914], 29 N. D., 38; L. R. A., 1915C, 1169; 149 N. W., 568; Ex parte Eaton [1925], 29 Okla., Crim. Rep., 275; 233 P., 781; State vs. Teal [1918], 108 S. C., 455; 95 S. E., 69; State vs. Abbot [1910], 87 S. C., 466; 33 L.R.A., [N. S.], 112; 70 S. E., 6; Ann. Cas., 1912B, 1189; Fults vs. States [1854],34 Tenn., 232; Woods vs. State [1814], 130 Tenn., 100; 169 S. W., 558; Baker vs. State [1814], 130 Tenn., 100; 169 S. W., 558; Baker vs. State [1913],70 Tex., Crim. Rep., 618; 158 S. W., 998; Cook vs. State [1914], 73 Tex. Crim. Rep., 548; 165 S. W., 573; King vs. State [1914], 72 Tex. Crim. Rep., 394; 162 S. W., 890; Clare vs. State [1932], 122 Tex. Crim. Rep., 394; 162 S. W., 890; Clare vs. State [1932], 122 Tex. Crim. Rep., 211; 54 S. W. [2d], 127; Re Hall [1927], 100 Vt., 197; 136 A., 24; Richardson vs. Com. [1921], 131 Va., 802; 109 S.E., 460; State vs. Mallahan [1911], 65 Wash., 287; 118 Pac., 42; State ex rel. Tingstand vs. Starwich [1922], 119 Wash., 561; 206 Pac., 29; 26 A. L. R., 393; 396.) We elect to follow this long catena of authorities holding that the courts may be legally authorized by the legislature to suspend sentence by the establishment of a system of probation however characterized. State ex rel. Tingstand vs. Starwich ([1922], 119 Wash., 561; 206 Pac., 29; 26 A. L. R., 393), deserved particular mention. In that case, a statute enacted in 1921 which provided for the suspension of the execution of a sentence until otherwise ordered by the court, and required that the convicted person be placed under the charge of a parole or peace officer during the term of such suspension, on such terms as the court may determine, was held constitutional and as not giving the court a power in violation of the constitutional provision vesting the pardoning power in the chief executive of the state. (Vide, also, Re Giannini [1912], 18 Cal App., 166; 122 Pac., 831.) Probation and pardon are not coterminous; nor are they the same. They are actually district and different from each other, both in origin and in nature. In People ex rel. Forsyth vs. Court of Sessions ([1894], 141 N. Y., 288, 294; 36 N. E., 386, 388; 23 L. R. A., 856; 15 Am. Crim. Rep., 675), the Court of Appeals of New York said: . . . The power to suspend sentence and the power to grant reprieves and pardons, as understood when the constitution was adopted, are totally distinct and different in their nature.

The former was always a part of the judicial power; the latter was always a part of the executive power. The suspension of the sentence simply postpones the judgment of the court temporarily or indefinitely, but the conviction and liability following it, and the civil disabilities, remain and become operative when judgment is rendered. A pardon reaches both the punishment prescribed for the offense and the guilt of the offender. It releases the punishment, and blots out of existence the guilt, so that in the eye of the law, the offender is as innocent as if he had never committed the offense. It removes the penalties and disabilities, and restores him to all his civil rights. It makes him, as it were, a new man, and gives him a new credit and capacity. (Ex parteGarland, 71 U. S., 4 Wall., 333; 18 Law. ed., 366; U. S. vs. Klein, 80 U. S., 13 Wall., 128; 20 Law. ed., 519; Knote vs. U. S., 95 U. S., 149; 24 Law. ed., 442.) The framers of the federal and the state constitutions were perfectly familiar with the principles governing the power to grant pardons, and it was conferred by these instruments upon the executive with full knowledge of the law upon the subject, and the words of the constitution were used to express the authority formerly exercised by the English crown, or by its representatives in the colonies. (Ex parte Wells, 59 U. S., 18 How., 307; 15 Law. ed., 421.) As this power was understood, it did not comprehend any part of the judicial functions to suspend sentence, and it was never intended that the authority to grant reprieves and pardons should abrogate, or in any degree restrict, the exercise of that power in regard to its own judgments, that criminal courts has so long maintained. The two powers, so distinct and different in their nature and character, were still left separate and distinct, the one to be exercised by the executive, and the other by the judicial department. We therefore conclude that a statute which, in terms, authorizes courts of criminal jurisdiction to suspend sentence in certain cases after conviction, a power inherent in such courts at common law, which was understood when the constitution was adopted to be an ordinary judicial function, and which, ever since its adoption, has been exercised of legislative power under the constitution. It does not encroach, in any just sense, upon the powers of the executive, as they have been understood and practiced from the earliest times. (Quoted with approval in Directors of Prisons vs. Judge of First Instance of Cavite [1915], 29 Phil., 265, Carson, J., concurring, at pp. 294, 295.) In probation, the probationer is in no true sense, as in pardon, a free man. He is not finally and completely exonerated. He is not exempt from the entire punishment which the law inflicts. Under the Probation Act, the probationer's case is not terminated by the mere fact that he is placed on probation. Section 4 of the Act provides that the probation may be definitely terminated and the probationer finally discharged from supervision only after the period of probation shall have been terminated and the probation officer shall have submitted a report, and the court shall have found that the probationer has complied with the conditions of probation. The probationer, then, during the period of probation, remains in legal custody subject to the control of the probation officer and of the court; and, he may be rearrested upon the non-fulfillment of the conditions of probation and, when rearrested, may be committed to prison to serve the sentence originally imposed upon him. (Secs. 2, 3, 5 and 6, Act No. 4221.) The probation described in the act is not pardon. It is not complete liberty, and may be far from it. It is really a new mode of punishment, to be applied by the judge in a proper case, in substitution of the imprisonment and find prescribed by the criminal laws. For this reason its application is as purely a judicial act as any other sentence carrying out the law deemed applicable to the offense. The executive act of pardon, on the contrary, is against the criminal law, which binds and directs the judges, or rather is outside of and above it. There is thus no

conflict with the pardoning power, and no possible unconstitutionality of the Probation Act for this cause. (Archer vs. Snook [1926], 10 F. [2d], 567, 569.) Probation should also be distinguished from reprieve and from commutation of the sentence. Snodgrass vs. State ([1912], 67 Tex. Crim. Rep., 615;41 L. R. A. [N. S.], 1144; 150 S. W., 162), is relied upon most strongly by the petitioners as authority in support of their contention that the power to grant pardons and reprieves, having been vested exclusively upon the Chief Executive by the Jones Law, may not be conferred by the legislature upon the courts by means of probation law authorizing the indefinite judicial suspension of sentence. We have examined that case and found that although the Court of Criminal Appeals of Texas held that the probation statute of the state in terms conferred on the district courts the power to grant pardons to persons convicted of crime, it also distinguished between suspensions sentence on the one hand, and reprieve and commutation of sentence on the other. Said the court, through Harper, J.: That the power to suspend the sentence does not conflict with the power of the Governor to grant reprieves is settled by the decisions of the various courts; it being held that the distinction between a "reprieve" and a suspension of sentence is that a reprieve postpones the execution of the sentence to a day certain, whereas a suspension is for an indefinite time. (Carnal vs. People, 1 Parker, Cr. R., 262; In re Buchanan, 146 N. Y., 264; 40 N. E., 883), and cases cited in 7 Words & Phrases, pp. 6115, 6116. This law cannot be hold in conflict with the power confiding in the Governor to grant commutations of punishment, for a commutations is not but to change the punishment assessed to a less punishment. In State ex rel. Bottomnly vs. District Court ([1925], 73 Mont., 541; 237 Pac., 525), the Supreme Court of Montana had under consideration the validity of the adult probation law of the state enacted in 1913, now found in sections 12078-12086, Revised Codes of 1921. The court held the law valid as not impinging upon the pardoning power of the executive. In a unanimous decision penned by Justice Holloway, the court said: . . . . the term "pardon", "commutation", and "respite" each had a well understood meaning at the time our Constitution was adopted, and no one of them was intended to comprehend the suspension of the execution of the judgment as that phrase is employed in sections 12078-12086. A "pardon" is an act of grace, proceeding from the power intrusted with the execution of the laws which exempts the individual on whom it is bestowed from the punishment the law inflicts for a crime he has committed (United States vs. Wilson, 7 Pet., 150; 8 Law. ed., 640); It is a remission of guilt (State vs. Lewis, 111 La., 693; 35 So., 816), a forgiveness of the offense (Cook vs. Middlesex County, 26 N. J. Law, 326; Ex parte Powell, 73 Ala., 517; 49 Am. Rep., 71). "Commutation" is a remission of a part of the punishment; a substitution of a less penalty for the one originally imposed (Lee vs. Murphy, 22 Grat. [Va.] 789; 12 Am. Rep., 563; Rich vs. Chamberlain, 107 Mich., 381; 65 N. W., 235). A "reprieve" or "respite" is the withholding of the sentence for an interval of time (4 Blackstone's Commentaries, 394), a postponement of execution (Carnal vs. People, 1 Parker, Cr. R. [N. Y.], 272), a temporary suspension of execution (Butler vs. State, 97 Ind., 373). Few adjudicated cases are to be found in which the validity of a statute similar to our section 12078 has been determined; but the same objections have been urged against parole statutes which vest the power to parole in persons other than those to whom the power of pardon is granted, and these statutes have been upheld quite uniformly, as a reference to the

numerous cases cited in the notes to Woods vs. State (130 Tenn., 100; 169 S. W.,558, reported in L. R. A., 1915F, 531), will disclose. (See, also, 20 R. C. L., 524.) We conclude that the Probation Act does not conflict with the pardoning power of the Executive. The pardoning power, in respect to those serving their probationary sentences, remains as full and complete as if the Probation Law had never been enacted. The President may yet pardon the probationer and thus place it beyond the power of the court to order his rearrest and imprisonment. (Riggs vs. United States [1926], 14 F. [2d], 5, 7.) 2. But while the Probation Law does not encroach upon the pardoning power of the executive and is not for that reason void, does section 11 thereof constitute, as contended, an undue delegation of legislative power? Under the constitutional system, the powers of government are distributed among three coordinate and substantially independent organs: the legislative, the executive and the judicial. Each of these departments of the government derives its authority from the Constitution which, in turn, is the highest expression of popular will. Each has exclusive cognizance of the matters within its jurisdiction, and is supreme within its own sphere. The power to make laws the legislative power is vested in a bicameral Legislature by the Jones Law (sec. 12) and in a unicamiral National Assembly by the Constitution (Act. VI, sec. 1, Constitution of the Philippines). The Philippine Legislature or the National Assembly may not escape its duties and responsibilities by delegating that power to any other body or authority. Any attempt to abdicate the power is unconstitutional and void, on the principle that potestas delegata non delegare potest. This principle is said to have originated with the glossators, was introduced into English law through a misreading of Bracton, there developed as a principle of agency, was established by Lord Coke in the English public law in decisions forbidding the delegation of judicial power, and found its way into America as an enlightened principle of free government. It has since become an accepted corollary of the principle of separation of powers. (5 Encyc. of the Social Sciences, p. 66.) The classic statement of the rule is that of Locke, namely: "The legislative neither must nor can transfer the power of making laws to anybody else, or place it anywhere but where the people have." (Locke on Civil Government, sec. 142.) Judge Cooley enunciates the doctrine in the following oft-quoted language: "One of the settled maxims in constitutional law is, that the power conferred upon the legislature to make laws cannot be delegated by that department to any other body or authority. Where the sovereign power of the state has located the authority, there it must remain; and by the constitutional agency alone the laws must be made until the Constitution itself is charged. The power to whose judgment, wisdom, and patriotism this high prerogative has been intrusted cannot relieve itself of the responsibilities by choosing other agencies upon which the power shall be devolved, nor can it substitute the judgment, wisdom, and patriotism of any other body for those to which alone the people have seen fit to confide this sovereign trust." (Cooley on Constitutional Limitations, 8th ed., Vol. I, p. 224. Quoted with approval in U. S. vs. Barrias [1908], 11 Phil., 327.) This court posits the doctrine "on the ethical principle that such a 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. (U. S. vs. Barrias, supra, at p. 330.) The rule, however, which forbids the delegation of legislative power is not absolute and inflexible. It admits of exceptions. An exceptions sanctioned by immemorial practice permits the central legislative

body to delegate legislative powers to local authorities. (Rubi vs. Provincial Board of Mindoro [1919], 39 Phil., 660; U. S. vs. Salaveria [1918], 39 Phil., 102; Stoutenburgh vs. Hennick [1889], 129 U. S., 141; 32 Law. ed., 637; 9 Sup. Ct. Rep., 256; State vs. Noyes [1855], 30 N. H., 279.) "It is a cardinal principle of our system of government, that local affairs shall be managed by local authorities, and general affairs by the central authorities; and hence while the rule is also fundamental that the power to make laws cannot be delegated, the creation of the municipalities exercising local self government has never been held to trench upon that rule. Such legislation is not regarded as a transfer of general legislative power, but rather as the grant of the authority to prescribed local regulations, according to immemorial practice, subject of course to the interposition of the superior in cases of necessity." (Stoutenburgh vs. Hennick, supra.) On quite the same principle, Congress is powered to delegate legislative power to such agencies in the territories of the United States as it may select. A territory stands in the same relation to Congress as a municipality or city to the state government. (United States vs. Heinszen [1907], 206 U. S., 370; 27 Sup. Ct. Rep., 742; 51 L. ed., 1098; 11 Ann. Cas., 688; Dorr vs. United States [1904], 195 U.S., 138; 24 Sup. Ct. Rep., 808; 49 Law. ed., 128; 1 Ann. Cas., 697.) Courts have also sustained the delegation of legislative power to the people at large. Some authorities maintain that this may not be done (12 C. J., pp. 841, 842; 6 R. C. L., p. 164, citing People vs. Kennedy [1913], 207 N. Y., 533; 101 N. E., 442; Ann. Cas., 1914C, 616). However, the question of whether or not a state has ceased to be republican in form because of its adoption of the initiative and referendum has been held not to be a judicial but a political question (Pacific States Tel. & Tel. Co. vs. Oregon [1912], 223 U. S., 118; 56 Law. ed., 377; 32 Sup. Cet. Rep., 224), and as the constitutionality of such laws has been looked upon with favor by certain progressive courts, the sting of the decisions of the more conservative courts has been pretty well drawn. (Opinions of the Justices [1894], 160 Mass., 586; 36 N. E., 488; 23 L. R. A., 113; Kiernan vs. Portland [1910], 57 Ore., 454; 111 Pac., 379; 1132 Pac., 402; 37 L. R. A. [N. S.], 332; Pacific States Tel. & Tel. Co. vs. Oregon, supra.) Doubtless, also, legislative power may be delegated by the Constitution itself. Section 14, paragraph 2, of article VI of the Constitution of the Philippines provides that "The National Assembly may by law authorize the President, subject to such limitations and restrictions as it may impose, to fix within specified limits, tariff rates, import or export quotas, and tonnage and wharfage dues." And section 16 of the same article of the Constitution provides that "In times of war or other national emergency, the National Assembly may by law authorize the President, for a limited period and subject to such restrictions as it may prescribed, to promulgate rules and regulations to carry out a declared national policy." It is beyond the scope of this decision to determine whether or not, in the absence of the foregoing constitutional provisions, the President could be authorized to exercise the powers thereby vested in him. Upon the other hand, whatever doubt may have existed has been removed by the Constitution itself. The case before us does not fall under any of the exceptions hereinabove mentioned. The challenged section of Act No. 4221 in section 11 which reads as follows: This Act shall apply only in those provinces in which the respective provincial boards have provided for the salary of a probation officer at rates not lower than those now provided for provincial fiscals. Said probation officer shall be appointed by the Secretary of Justice and shall be subject to the direction of the Probation Office. (Emphasis ours.) In testing whether a statute constitute an undue delegation of legislative power or not, it is usual to inquire whether the statute was complete in all its terms and provisions when it left the hands of the legislature so that nothing was left to the judgment of any other appointee or delegate of the legislature. (6 R. C. L., p. 165.) In the United States vs. Ang Tang Ho ([1922], 43 Phil., 1), this court

adhered to the foregoing rule when it held an act of the legislature void in so far as it undertook to authorize the Governor-General, in his discretion, to issue a proclamation fixing the price of rice and to make the sale of it in violation of the proclamation a crime. (See and cf. Compaia General de Tabacos vs. Board of Public Utility Commissioners [1916], 34 Phil., 136.) The general rule, however, is limited by another rule that to a certain extent matters of detail may be left to be filled in by rules and regulations to be adopted or promulgated by executive officers and administrative boards. (6 R. C. L., pp. 177-179.) For the purpose of Probation Act, the provincial boards may be regarded as administrative bodies endowed with power to determine when the Act should take effect in their respective provinces. They are the agents or delegates of the legislature in this respect. The rules governing delegation of legislative power to administrative and executive officers are applicable or are at least indicative of the rule which should be here adopted. An examination of a variety of cases on delegation of power to administrative bodies will show that the ratio decidendi is at variance but, it can be broadly asserted that the rationale revolves around the presence or absence of a standard or rule of action or the sufficiency thereof in the statute, to aid the delegate in exercising the granted discretion. In some cases, it is held that the standard is sufficient; in others that is insufficient; and in still others that it is entirely lacking. As a rule, an act of the legislature is incomplete and hence invalid if it does not lay down any rule or definite standard by which the administrative officer or board may be guided in the exercise of the discretionary powers delegated to it. (See Schecter vs. United States [1925], 295 U. S., 495; 79 L. ed., 1570; 55 Sup. Ct. Rep., 837; 97 A.L.R., 947; People ex rel. Rice vs. Wilson Oil Co. [1936], 364 Ill., 406; 4 N. E. [2d], 847; 107 A.L.R., 1500 and cases cited. See also R. C. L., title "Constitutional Law", sec 174.) In the case at bar, what rules are to guide the provincial boards in the exercise of their discretionary power to determine whether or not the Probation Act shall apply in their respective provinces? What standards are fixed by the Act? We do not find any and none has been pointed to us by the respondents. The probation Act does not, by the force of any of its provisions, fix and impose upon the provincial boards any standard or guide in the exercise of their discretionary power. What is granted, if we may use the language of Justice Cardozo in the recent case of Schecter, supra, is a "roving commission" which enables the provincial boards to exercise arbitrary discretion. By section 11 if the Act, the legislature does not seemingly on its own authority extend the benefits of the Probation Act to the provinces but in reality leaves the entire matter for the various provincial boards to determine. In other words, the provincial boards of the various provinces are to determine for themselves, whether the Probation Law shall apply to their provinces or not at all. The applicability and application of the Probation Act are entirely placed in the hands of the provincial boards. If the provincial board does not wish to have the Act applied in its province, all that it has to do is to decline to appropriate the needed amount for the salary of a probation officer. The plain language of the Act is not susceptible of any other interpretation. This, to our minds, is a virtual surrender of legislative power to the provincial boards. "The true distinction", says Judge Ranney, "is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made." (Cincinnati, W. & Z. R. Co. vs. Clinton County Comrs. [1852]; 1 Ohio St., 77, 88. See also, Sutherland on Statutory Construction, sec 68.) To the same effect are the decision of this court inMunicipality of Cardona vs. Municipality of Binangonan ([1917], 36 Phil., 547); Rubi vs. Provincial Board of Mindoro ([1919],39 Phil., 660) and Cruz vs. Youngberg ([1931], 56 Phil., 234). In the first of these cases, this court sustained the validity of the law conferring upon the Governor-General authority to adjust provincial and municipal boundaries. In the second case, this court held it lawful for the legislature to direct non-Christian inhabitants to take up their habitation on unoccupied lands to be selected by the provincial governor and approved by the provincial board. In the

third case, it was held proper for the legislature to vest in the Governor-General authority to suspend or not, at his discretion, the prohibition of the importation of the foreign cattle, such prohibition to be raised "if the conditions of the country make this advisable or if deceased among foreign cattle has ceased to be a menace to the agriculture and livestock of the lands." It should be observed that in the case at bar we are not concerned with the simple transference of details of execution or the promulgation by executive or administrative officials of rules and regulations to carry into effect the provisions of a law. If we were, recurrence to our own decisions would be sufficient. (U. S. vs. Barrias [1908], 11 Phil., 327; U.S. vs. Molina [1914], 29 Phil., 119; Alegre vs. Collector of Customs [1929], 53 Phil., 394; Cebu Autobus Co. vs. De Jesus [1931], 56 Phil., 446; U. S. vs. Gomez [1915], 31 Phil., 218; Rubi vs. Provincial Board of Mindoro [1919], 39 Phil., 660.) It is connected, however, that a legislative act may be made to the effect as law after it leaves the hands of the legislature. It is true that laws may be made effective on certain contingencies, as by proclamation of the executive or the adoption by the people of a particular community (6 R. C. L., 116, 170-172; Cooley, Constitutional Limitations, 8th ed., Vol. I, p. 227). In Wayman vs. Southard ([1825], 10 Wheat. 1; 6 Law. ed., 253), the Supreme Court of the United State ruled that the legislature may delegate a power not legislative which it may itself rightfully exercise.(Vide, also, Dowling vs. Lancashire Ins. Co. [1896], 92 Wis., 63; 65 N. W., 738; 31 L. R. A., 112.) The power to ascertain facts is such a power which may be delegated. There is nothing essentially legislative in ascertaining the existence of facts or conditions as the basis of the taking into effect of a law. That is a mental process common to all branches of the government. (Dowling vs. Lancashire Ins. Co., supra; In reVillage of North Milwaukee [1896], 93 Wis., 616; 97 N.W., 1033; 33 L.R.A., 938; Nash vs. Fries [1906], 129 Wis., 120; 108 N.W., 210; Field vs. Clark [1892], 143 U.S., 649; 12 Sup. Ct., 495; 36 Law. ed., 294.) Notwithstanding the apparent tendency, however, to relax the rule prohibiting delegation of legislative authority on account of the complexity arising from social and economic forces at work in this modern industrial age (Pfiffner, Public Administration [1936] ch. XX; Laski, "The Mother of Parliaments", foreign Affairs, July, 1931, Vol. IX, No. 4, pp. 569-579; Beard, "Squirt-Gun Politics", in Harper's Monthly Magazine, July, 1930, Vol. CLXI, pp. 147, 152), the orthodox pronouncement of Judge Cooley in his work on Constitutional Limitations finds restatement in Prof. Willoughby's treatise on the Constitution of the United States in the following language speaking of declaration of legislative power to administrative agencies: "The principle which permits the legislature to provide that the administrative agent may determine when the circumstances are such as require the application of a law is defended upon the ground that at the time this authority is granted, the rule of public policy, which is the essence of the legislative act, is determined by the legislature. In other words, the legislature, as it its duty to do, determines that, under given circumstances, certain executive or administrative action is to be taken, and that, under other circumstances, different of no action at all is to be taken. What is thus left to the administrative official is not the legislative determination of what public policy demands, but simply the ascertainment of what the facts of the case require to be done according to the terms of the law by which he is governed." (Willoughby on the Constitution of the United States, 2nd ed., Vol. II, p. 1637.) In Miller vs. Mayer, etc., of New York [1883], 109 U.S., 3 Sup. Ct. Rep., 228; 27 Law. ed., 971, 974), it was said: "The efficiency of an Act as a declaration of legislative will must, of course, come from Congress, but the ascertainment of the contingency upon which the Act shall take effect may be left to such agencies as it may designate." (See, also, 12 C.J., p. 864; State vs. Parker [1854], 26 Vt., 357; Blanding vs. Burr [1859], 13 Cal., 343, 258.) The legislature, then may provide that a contingencies leaving to some other person or body the power to determine when the specified contingencies has arisen. But, in the case at bar, the legislature has not made the operation of the Prohibition Act contingent upon specified facts or conditions to be ascertained by the provincial board. It leaves, as we have already said, the entire operation or non-

operation of the law upon the provincial board. the discretion vested is arbitrary because it is absolute and unlimited. A provincial board need not investigate conditions or find any fact, or await the happening of any specified contingency. It is bound by no rule, limited by no principle of expendiency announced by the legislature. It may take into consideration certain facts or conditions; and, again, it may not. It may have any purpose or no purpose at all. It need not give any reason whatsoever for refusing or failing to appropriate any funds for the salary of a probation officer. This is a matter which rest entirely at its pleasure. The fact that at some future time we cannot say when the provincial boards may appropriate funds for the salaries of probation officers and thus put the law into operation in the various provinces will not save the statute. The time of its taking into effect, we reiterate, would yet be based solely upon the will of the provincial boards and not upon the happening of a certain specified contingency, or upon the ascertainment of certain facts or conditions by a person or body other than legislature itself. The various provincial boards are, in practical effect, endowed with the power of suspending the operation of the Probation Law in their respective provinces. In some jurisdiction, constitutions provided that laws may be suspended only by the legislature or by its authority. Thus, section 28, article I of the Constitution of Texas provides that "No power of suspending laws in this state shall be exercised except by the legislature"; and section 26, article I of the Constitution of Indiana provides "That the operation of the laws shall never be suspended, except by authority of the General Assembly." Yet, even provisions of this sort do not confer absolute power of suspension upon the legislature. While it may be undoubted that the legislature may suspend a law, or the execution or operation of a law, a law may not be suspended as to certain individuals only, leaving the law to be enjoyed by others. The suspension must be general, and cannot be made for individual cases or for particular localities. In Holden vs. James ([1814], 11 Mass., 396; 6 Am. Dec., 174, 177, 178), it was said: By the twentieth article of the declaration of rights in the constitution of this commonwealth, it is declared that the power of suspending the laws, or the execution of the laws, ought never to be exercised but by the legislature, or by authority derived from it, to be exercised in such particular cases only as the legislature shall expressly provide for. Many of the articles in that declaration of rights were adopted from the Magna Charta of England, and from the bill of rights passed in the reign of William and Mary. The bill of rights contains an enumeration of the oppressive acts of James II, tending to subvert and extirpate the protestant religion, and the laws and liberties of the kingdom; and the first of them is the assuming and exercising a power of dispensing with and suspending the laws, and the execution of the laws without consent of parliament. The first article in the claim or declaration of rights contained in the statute is, that the exercise of such power, by legal authority without consent of parliament, is illegal. In the tenth section of the same statute it is further declared and enacted, that "No dispensation by non obstante of or to any statute, or part thereof, should be allowed; but the same should be held void and of no effect, except a dispensation be allowed of in such statute." There is an implied reservation of authority in the parliament to exercise the power here mentioned; because, according to the theory of the English Constitution, "that absolute despotic power, which must in all governments reside somewhere," is intrusted to the parliament: 1 Bl. Com., 160. The principles of our government are widely different in this particular. Here the sovereign and absolute power resides in the people; and the legislature can only exercise what is delegated to them according to the constitution. It is obvious that the exercise of the power in question would be equally oppressive to the subject, and subversive of his right to protection,

"according to standing laws," whether exercised by one man or by a number of men. It cannot be supposed that the people when adopting this general principle from the English bill of rights and inserting it in our constitution, intended to bestow by implication on the general court one of the most odious and oppressive prerogatives of the ancient kings of England. It is manifestly contrary to the first principles of civil liberty and natural justice, and to the spirit of our constitution and laws, that any one citizen should enjoy privileges and advantages which are denied to all others under like circumstances; or that ant one should be subject to losses, damages, suits, or actions from which all others under like circumstances are exempted. To illustrate the principle: A section of a statute relative to dogs made the owner of any dog liable to the owner of domestic animals wounded by it for the damages without proving a knowledge of it vicious disposition. By a provision of the act, power was given to the board of supervisors to determine whether or not during the current year their county should be governed by the provisions of the act of which that section constituted a part. It was held that the legislature could not confer that power. The court observed that it could no more confer such a power than to authorize the board of supervisors of a county to abolish in such county the days of grace on commercial paper, or to suspend the statute of limitations. (Slinger vs. Henneman [1875], 38 Wis., 504.) A similar statute in Missouri was held void for the same reason in State vs. Field ([1853, 17 Mo., 529;59 Am. Dec., 275.) In that case a general statute formulating a road system contained a provision that "if the county court of any county should be of opinion that the provisions of the act should not be enforced, they might, in their discretion, suspend the operation of the same for any specified length of time, and thereupon the act should become inoperative in such county for the period specified in such order; and thereupon order the roads to be opened and kept in good repair, under the laws theretofore in force." Said the court: ". . . this act, by its own provisions, repeals the inconsistent provisions of a former act, and yet it is left to the county court to say which act shall be enforce in their county. The act does not submit the question to the county court as an original question, to be decided by that tribunal, whether the act shall commence its operation within the county; but it became by its own terms a law in every county not excepted by name in the act. It did not, then, require the county court to do any act in order to give it effect. But being the law in the county, and having by its provisions superseded and abrogated the inconsistent provisions of previous laws, the county court is . . . empowered, to suspend this act and revive the repealed provisions of the former act. When the question is before the county court for that tribunal to determine which law shall be in force, it is urge before us that the power then to be exercised by the court is strictly legislative power, which under our constitution, cannot be delegated to that tribunal or to any other body of men in the state. In the present case, the question is not presented in the abstract; for the county court of Saline county, after the act had been for several months in force in that county, did by order suspend its operation; and during that suspension the offense was committed which is the subject of the present indictment . . . ." (SeeMitchell vs. State [1901], 134 Ala., 392; 32 S., 687.) True, the legislature may enact laws for a particular locality different from those applicable to other localities and, while recognizing the force of the principle hereinabove expressed, courts in may jurisdiction have sustained the constitutionality of the submission of option laws to the vote of the people. (6 R.C.L., p. 171.) But option laws thus sustained treat of subjects purely local in character which should receive different treatment in different localities placed under different circumstances. "They relate to subjects which, like the retailing of intoxicating drinks, or the running at large of cattle in the highways, may be differently regarded in different localities, and they are sustained on what seems to us the impregnable ground, that the subject, though not embraced within the ordinary powers of municipalities to make by-laws and ordinances, is nevertheless within the class of public regulations, in respect to which it is proper that the local judgment should control." (Cooley on Constitutional

Limitations, 5th ed., p. 148.) So that, while we do not deny the right of local self-government and the propriety of leaving matters of purely local concern in the hands of local authorities or for the people of small communities to pass upon, we believe that in matters of general of general legislation like that which treats of criminals in general, and as regards the general subject of probation, discretion may not be vested in a manner so unqualified and absolute as provided in Act No. 4221. True, the statute does not expressly state that the provincial boards may suspend the operation of the Probation Act in particular provinces but, considering that, in being vested with the authority to appropriate or not the necessary funds for the salaries of probation officers, they thereby are given absolute discretion to determine whether or not the law should take effect or operate in their respective provinces, the provincial boards are in reality empowered by the legislature to suspend the operation of the Probation Act in particular provinces, the Act to be held in abeyance until the provincial boards should decide otherwise by appropriating the necessary funds. The validity of a law is not tested by what has been done but by what may be done under its provisions. (Walter E. Olsen & Co. vs. Aldanese and Trinidad [1922], 43 Phil., 259; 12 C. J., p. 786.) It in conceded that a great deal of latitude should be granted to the legislature not only in the expression of what may be termed legislative policy but in the elaboration and execution thereof. "Without this power, legislation would become oppressive and yet imbecile." (People vs. Reynolds, 5 Gilman, 1.) It has been said that popular government lives because of the inexhaustible reservoir of power behind it. It is unquestionable that the mass of powers of government is vested in the representatives of the people and that these representatives are no further restrained under our system than by the express language of the instrument imposing the restraint, or by particular provisions which by clear intendment, have that effect. (Angara vs. Electoral Commission [1936], 35 Off. Ga., 23; Schneckenburger vs. Moran [1936], 35 Off. Gaz., 1317.) But, it should be borne in mind that a constitution is both a grant and a limitation of power and one of these time-honored limitations is that, subject to certain exceptions, legislative power shall not be delegated. We conclude that section 11 of Act No. 4221 constitutes an improper and unlawful delegation of legislative authority to the provincial boards and is, for this reason, unconstitutional and void. 3. It is also contended that the Probation Act violates the provisions of our Bill of Rights which prohibits the denial to any person of the equal protection of the laws (Act. III, sec. 1 subsec. 1. Constitution of the Philippines.) This basic individual right sheltered by the Constitution is a restraint on all the tree grand departments of our government and on the subordinate instrumentalities and subdivision thereof, and on many constitutional power, like the police power, taxation and eminent domain. The equal protection of laws, sententiously observes the Supreme Court of the United States, "is a pledge of the protection of equal laws." (Yick Wo vs. Hopkins [1886], 118 U. S., 356; 30 Law. ed., 220; 6 Sup. Ct. Rep., 10464; Perley vs. North Carolina, 249 U. S., 510; 39 Sup. Ct. Rep., 357; 63 Law. ed., 735.) Of course, what may be regarded as a denial of the equal protection of the laws in a question not always easily determined. No rule that will cover every case can be formulated. (Connolly vs. Union Sewer Pipe Co. [1902], 184, U. S., 540; 22 Sup. Ct., Rep., 431; 46 Law. ed., 679.) Class legislation discriminating against some and favoring others in prohibited. But classification on a reasonable basis, and nor made arbitrarily or capriciously, is permitted. (Finely vs. California [1911], 222 U. S., 28; 56 Law. ed., 75; 32 Sup. Ct. Rep., 13; Gulf. C. & S. F. Ry Co. vs. Ellis [1897], 165 U. S., 150; 41 Law. ed., 666; 17 Sup. Ct. Rep., 255; Smith, Bell & Co. vs. Natividad [1919], 40 Phil., 136.) The classification, however, to be reasonable must be based on substantial distinctions which make real differences; it must be germane to the purposes of

the law; it must not be limited to existing conditions only, and must apply equally to each member of the class. (Borgnis vs. Falk. Co. [1911], 147 Wis., 327, 353; 133 N. W., 209; 3 N. C. C. A., 649; 37 L. R. A. [N. S.], 489; State vs. Cooley, 56 Minn., 540; 530-552; 58 N. W., 150; Lindsley vs. Natural Carbonic Gas Co.[1911], 220 U. S., 61, 79, 55 Law. ed., 369, 377; 31 Sup. Ct. Rep., 337; Ann. Cas., 1912C, 160; Lake Shore & M. S. R. Co. vs. Clough [1917], 242 U.S., 375; 37 Sup. Ct. Rep., 144; 61 Law. ed., 374; Southern Ry. Co. vs. Greene [1910], 216 U. S., 400; 30 Sup. Ct. Rep., 287; 54 Law. ed., 536; 17 Ann. Cas., 1247; Truax vs. Corrigan [1921], 257 U. S., 312; 12 C. J., pp. 1148, 1149.) In the case at bar, however, the resultant inequality may be said to flow from the unwarranted delegation of legislative power, although perhaps this is not necessarily the result in every case. Adopting the example given by one of the counsel for the petitioners in the course of his oral argument, one province may appropriate the necessary fund to defray the salary of a probation officer, while another province may refuse or fail to do so. In such a case, the Probation Act would be in operation in the former province but not in the latter. This means that a person otherwise coming within the purview of the law would be liable to enjoy the benefits of probation in one province while another person similarly situated in another province would be denied those same benefits. This is obnoxious discrimination. Contrariwise, it is also possible for all the provincial boards to appropriate the necessary funds for the salaries of the probation officers in their respective provinces, in which case no inequality would result for the obvious reason that probation would be in operation in each and every province by the affirmative action of appropriation by all the provincial boards. On that hypothesis, every person coming within the purview of the Probation Act would be entitled to avail of the benefits of the Act. Neither will there be any resulting inequality if no province, through its provincial board, should appropriate any amount for the salary of the probation officer which is the situation now and, also, if we accept the contention that, for the purpose of the Probation Act, the City of Manila should be considered as a province and that the municipal board of said city has not made any appropriation for the salary of the probation officer. These different situations suggested show, indeed, that while inequality may result in the application of the law and in the conferment of the benefits therein provided, inequality is not in all cases the necessary result. But whatever may be the case, it is clear that in section 11 of the Probation Act creates a situation in which discrimination and inequality are permitted or allowed. There are, to be sure, abundant authorities requiring actual denial of the equal protection of the law before court should assume the task of setting aside a law vulnerable on that score, but premises and circumstances considered, we are of the opinion that section 11 of Act No. 4221 permits of the denial of the equal protection of the law and is on that account bad. We see no difference between a law which permits of such denial. A law may appear to be fair on its face and impartial in appearance, yet, if it permits of unjust and illegal discrimination, it is within the constitutional prohibitions. (By analogy, Chy Lung vs. Freeman [1876], 292 U. S., 275; 23 Law. ed., 550; Henderson vs. Mayor [1876], 92 U. S., 259; 23 Law. ed., 543; Ex parte Virginia [1880], 100 U. S., 339; 25 Law. ed., 676; Neal vs. Delaware [1881], 103 U. S., 370; 26 Law. ed., 567; Soon Hing vs. Crowley [1885], 113 U. S., 703; 28 Law. ed., 1145, Yick Wo vs. Hopkins [1886],118 U. S., 356; 30 Law. ed., 220; Williams vs. Mississippi [1897], 170 U. S., 218; 18 Sup. Ct. Rep., 583; 42 Law. ed., 1012; Bailey vs. Alabama [1911], 219 U. S., 219; 31 Sup. Ct. Rep. 145; 55 Law. ed., Sunday Lake Iron Co. vs. Wakefield [1918], 247 U. S., 450; 38 Sup. Ct. Rep., 495; 62 Law. ed., 1154.) In other words, statutes may be adjudged unconstitutional because of their effect in operation (General Oil Co. vs. Clain [1907], 209 U. S., 211; 28 Sup. Ct. Rep., 475; 52 Law. ed., 754; State vs. Clement Nat. Bank [1911], 84 Vt., 167; 78 Atl., 944; Ann. Cas., 1912D, 22). If the law has the effect of denying the equal protection of the law it is unconstitutional. (6 R. C. L. p. 372; Civil Rights Cases, 109 U. S., 3; 3 Sup. Ct. Rep., 18; 27 Law. ed., 835; Yick Wo vs. Hopkins, supra; State vs. Montgomery, 94 Me., 192; 47 Atl., 165; 80 A. S. R., 386; State vs. Dering, 84 Wis., 585; 54 N. W., 1104; 36 A. S. R., 948; 19 L. R. A., 858.) Under section 11 of the Probation Act, not only may said Act be in force

in one or several provinces and not be in force in other provinces, but one province may appropriate for the salary of the probation officer of a given year and have probation during that year and thereafter decline to make further appropriation, and have no probation is subsequent years. While this situation goes rather to the abuse of discretion which delegation implies, it is here indicated to show that the Probation Act sanctions a situation which is intolerable in a government of laws, and to prove how easy it is, under the Act, to make the guaranty of the equality clause but "a rope of sand". (Brewer, J. Gulf C. & S. F. Ry. Co. vs. Ellis [1897], 165 U. S., 150 154; 41 Law. ed., 666; 17 Sup. Ct. Rep., 255.)lawph!1.net Great reliance is placed by counsel for the respondents on the case of Ocampo vs. United States ([1914], 234 U. S., 91; 58 Law. ed., 1231). In that case, the Supreme Court of the United States affirmed the decision of this court (18 Phil., 1) by declining to uphold the contention that there was a denial of the equal protection of the laws because, as held in Missouri vs. Lewis (Bowman vs. Lewis) decided in 1880 (101 U. S., 220; 25 Law. ed., 991), the guaranty of the equality clause does not require territorial uniformity. It should be observed, however, that this case concerns the right to preliminary investigations in criminal cases originally granted by General Orders No. 58. No question of legislative authority was involved and the alleged denial of the equal protection of the laws was the result of the subsequent enactment of Act No. 612, amending the charter of the City of Manila (Act No. 813) and providing in section 2 thereof that "in cases triable only in the court of first instance of the City of Manila, the defendant . . . shall not be entitled as of right to a preliminary examination in any case where the prosecuting attorney, after a due investigation of the facts . . . shall have presented an information against him in proper form . . . ." Upon the other hand, an analysis of the arguments and the decision indicates that the investigation by the prosecuting attorney although not in the form had in the provinces was considered a reasonable substitute for the City of Manila, considering the peculiar conditions of the city as found and taken into account by the legislature itself. Reliance is also placed on the case of Missouri vs. Lewis, supra. That case has reference to a situation where the constitution of Missouri permits appeals to the Supreme Court of the state from final judgments of any circuit court, except those in certain counties for which counties the constitution establishes a separate court of appeals called St. Louis Court of Appeals. The provision complained of, then, is found in the constitution itself and it is the constitution that makes the apportionment of territorial jurisdiction. We are of the opinion that section 11 of the Probation Act is unconstitutional and void because it is also repugnant to equal-protection clause of our Constitution. Section 11 of the Probation Act being unconstitutional and void for the reasons already stated, the next inquiry is whether or not the entire Act should be avoided. In seeking the legislative intent, the presumption is against any mutilation of a statute, and the courts will resort to elimination only where an unconstitutional provision is interjected into a statute otherwise valid, and is so independent and separable that its removal will leave the constitutional features and purposes of the act substantially unaffected by the process. (Riccio vs. Hoboken, 69 N. J. Law., 649, 662; 63 L. R. A., 485; 55 Atl., 1109, quoted in Williams vs. Standard Oil Co. [1929], 278 U.S., 235, 240; 73 Law. ed., 287, 309; 49 Sup. Ct. Rep., 115; 60 A. L. R., 596.) In Barrameda vs. Moir ([1913], 25 Phil., 44, 47), this court stated the well-established rule concerning partial invalidity of statutes in the following language:

. . . where part of the a statute is void, as repugnant to the Organic Law, while another part is valid, the valid portion, if separable from the valid, may stand and be enforced. But in order to do this, the valid portion must be in so far independent of the invalid portion that it is fair to presume that the Legislative would have enacted it by itself if they had supposed that they could not constitutionally enact the other. (Mutual Loan Co. vs. Martell, 200 Mass., 482; 86 N. E., 916; 128 A. S. R., 446; Supervisors of Holmes Co. vs. Black Creek Drainage District, 99 Miss., 739; 55 Sou., 963.) Enough must remain to make a complete, intelligible, and valid statute, which carries out the legislative intent. (Pearson vs. Bass. 132 Ga., 117; 63 S. E., 798.) The void provisions must be eliminated without causing results affecting the main purpose of the Act, in a manner contrary to the intention of the Legislature. (State vs. A. C. L. R., Co., 56 Fla., 617, 642; 47 Sou., 969; Harper vs. Galloway, 58 Fla., 255; 51 Sou., 226; 26 L. R. A., N. S., 794; Connolly vs. Union Sewer Pipe Co., 184 U. S., 540, 565; People vs. Strassheim, 240 Ill., 279, 300; 88 N. E., 821; 22 L. R. A., N. S., 1135; State vs. Cognevich, 124 La., 414; 50 Sou., 439.) The language used in the invalid part of a statute can have no legal force or efficacy for any purpose whatever, and what remains must express the legislative will, independently of the void part, since the court has no power to legislate. (State vs. Junkin, 85 Neb., 1; 122 N. W., 473; 23 L. R. A., N. S., 839; Vide, also,. U. S., vs. Rodriguez [1918], 38 Phil., 759; Pollock vs. Farmers' Loan and Trust Co. [1895], 158 U. S., 601, 635; 39 Law. ed., 1108, 1125; 15 Sup. Ct. Rep., 912; 6 R.C.L., 121.) It is contended that even if section 11, which makes the Probation Act applicable only in those provinces in which the respective provincial boards provided for the salaries of probation officers were inoperative on constitutional grounds, the remainder of the Act would still be valid and may be enforced. We should be inclined to accept the suggestions but for the fact that said section is, in our opinion, is inseparably linked with the other portions of the Act that with the elimination of the section what would be left is the bare idealism of the system, devoid of any practical benefit to a large number of people who may be deserving of the intended beneficial result of that system. The clear policy of the law, as may be gleaned from a careful examination of the whole context, is to make the application of the system dependent entirely upon the affirmative action of the different provincial boards through appropriation of the salaries for probation officers at rates not lower than those provided for provincial fiscals. Without such action on the part of the various boards, no probation officers would be appointed by the Secretary of Justice to act in the provinces. The Philippines is divided or subdivided into provinces and it needs no argument to show that if not one of the provinces and this is the actual situation now appropriate the necessary fund for the salary of a probation officer, probation under Act No. 4221 would be illusory. There can be no probation without a probation officer. Neither can there be a probation officer without the probation system. Section 2 of the Acts provides that the probation officer shall supervise and visit the probationer. Every probation officer is given, as to the person placed in probation under his care, the powers of the police officer. It is the duty of the probation officer to see that the conditions which are imposed by the court upon the probationer under his care are complied with. Among those conditions, the following are enumerated in section 3 of the Act: That the probationer (a) shall indulge in no injurious or vicious habits; (b) Shall avoid places or persons of disreputable or harmful character; (c) Shall report to the probation officer as directed by the court or probation officers;

(d) Shall permit the probation officer to visit him at reasonable times at his place of abode or elsewhere; (e) Shall truthfully answer any reasonable inquiries on the part of the probation officer concerning his conduct or condition; "(f) Shall endeavor to be employed regularly; "(g) Shall remain or reside within a specified place or locality; (f) Shall make reparation or restitution to the aggrieved parties for actual damages or losses caused by his offense; (g) Shall comply with such orders as the court may from time to time make; and (h) Shall refrain from violating any law, statute, ordinance, or any by-law or regulation, promulgated in accordance with law. The court is required to notify the probation officer in writing of the period and terms of probation. Under section 4, it is only after the period of probation, the submission of a report of the probation officer and appropriate finding of the court that the probationer has complied with the conditions of probation that probation may be definitely terminated and the probationer finally discharged from supervision. Under section 5, if the court finds that there is non-compliance with said conditions, as reported by the probation officer, it may issue a warrant for the arrest of the probationer and said probationer may be committed with or without bail. Upon arraignment and after an opportunity to be heard, the court may revoke, continue or modify the probation, and if revoked, the court shall order the execution of the sentence originally imposed. Section 6 prescribes the duties of probation officers: "It shall be the duty of every probation officer to furnish to all persons placed on probation under his supervision a statement of the period and conditions of their probation, and to instruct them concerning the same; to keep informed concerning their conduct and condition; to aid and encourage them by friendly advice and admonition, and by such other measures, not inconsistent with the conditions imposed by court as may seem most suitable, to bring about improvement in their conduct and condition; to report in writing to the court having jurisdiction over said probationers at least once every two months concerning their conduct and condition; to keep records of their work; make such report as are necessary for the information of the Secretary of Justice and as the latter may require; and to perform such other duties as are consistent with the functions of the probation officer and as the court or judge may direct. The probation officers provided for in this Act may act as parole officers for any penal or reformatory institution for adults when so requested by the authorities thereof, and, when designated by the Secretary of Justice shall act as parole officer of persons released on parole under Act Number Forty-one Hundred and Three, without additional compensation." It is argued, however, that even without section 11 probation officers maybe appointed in the provinces under section 10 of Act which provides as follows: There is hereby created in the Department of Justice and subject to its supervision and control, a Probation Office under the direction of a Chief Probation Officer to be appointed by the Governor-General with the advise and consent of the Senate who shall receive a salary of four eight hundred pesos per annum. To carry out this Act there is hereby appropriated out of any funds in the Insular Treasury not otherwise appropriated, the sum of fifty thousand pesos to be disbursed by the Secretary of Justice, who is hereby authorized to appoint probation officers

and the administrative personnel of the probation officer under civil service regulations from among those who possess the qualifications, training and experience prescribed by the Bureau of Civil Service, and shall fix the compensation of such probation officers and administrative personnel until such positions shall have been included in the Appropriation Act. But the probation officers and the administrative personnel referred to in the foregoing section are clearly not those probation officers required to be appointed for the provinces under section 11. It may be said, reddendo singula singulis, that the probation officers referred to in section 10 abovequoted are to act as such, not in the various provinces, but in the central office known as the Probation Office established in the Department of Justice, under the supervision of the Chief Probation Officer. When the law provides that "the probation officer" shall investigate and make reports to the court (secs. 1 and 4); that "the probation officer" shall supervise and visit the probationer (sec. 2; sec. 6, par. d); that the probationer shall report to the "probationer officer" (sec. 3, par. c.), shall allow "the probationer officer" to visit him (sec. 3, par. d), shall truthfully answer any reasonable inquiries on the part of "the probation officer" concerning his conduct or condition (sec. 3, par. 4); that the court shall notify "the probation officer" in writing of the period and terms of probation (sec. 3, last par.), it means the probation officer who is in charge of a particular probationer in a particular province. It never could have been intention of the legislature, for instance, to require the probationer in Batanes, to report to a probationer officer in the City of Manila, or to require a probation officer in Manila to visit the probationer in the said province of Batanes, to place him under his care, to supervise his conduct, to instruct him concerning the conditions of his probation or to perform such other functions as are assigned to him by law. That under section 10 the Secretary of Justice may appoint as many probation officers as there are provinces or groups of provinces is, of course possible. But this would be arguing on what the law may be or should be and not on what the law is. Between is and ought there is a far cry. The wisdom and propriety of legislation is not for us to pass upon. We may think a law better otherwise than it is. But much as has been said regarding progressive interpretation and judicial legislation we decline to amend the law. We are not permitted to read into the law matters and provisions which are not there. Not for any purpose not even to save a statute from the doom of invalidity. Upon the other hand, the clear intention and policy of the law is not to make the Insular Government defray the salaries of probation officers in the provinces but to make the provinces defray them should they desire to have the Probation Act apply thereto. The sum of P50,000, appropriated "to carry out the purposes of this Act", is to be applied, among other things, for the salaries of probation officers in the central office at Manila. These probation officers are to receive such compensations as the Secretary of Justice may fix "until such positions shall have been included in the Appropriation Act". It was the intention of the legislature to empower the Secretary of Justice to fix the salaries of the probation officers in the provinces or later on to include said salaries in an appropriation act. Considering, further, that the sum of P50,000 appropriated in section 10 is to cover, among other things, the salaries of the administrative personnel of the Probation Office, what would be left of the amount can hardly be said to be sufficient to pay even nominal salaries to probation officers in the provinces. We take judicial notice of the fact that there are 48 provinces in the Philippines and we do not think it is seriously contended that, with the fifty thousand pesos appropriated for the central office, there can be in each province, as intended, a probation officer with a salary not lower than that of a provincial fiscal. If this a correct, the contention that without section 11 of Act No. 4221 said act is complete is an impracticable thing under the remainder of the Act, unless it is conceded that in our case there can be a system of probation in the provinces without probation officers.

Probation as a development of a modern penology is a commendable system. Probation laws have been enacted, here and in other countries, to permit what modern criminologist call the "individualization of the punishment", the adjustment of the penalty to the character of the criminal and the circumstances of his particular case. It provides a period of grace in order to aid in the rehabilitation of a penitent offender. It is believed that, in any cases, convicts may be reformed and their development into hardened criminals aborted. It, therefore, takes advantage of an opportunity for reformation and avoids imprisonment so long as the convicts gives promise of reform. (United States vs. Murray [1925], 275 U. S., 347 357, 358; 72 Law. ed., 309; 312, 313; 48 Sup. Ct. Rep., 146; Kaplan vs. Hecht, 24 F. [2d], 664, 665.) The Welfare of society is its chief end and aim. The benefit to the individual convict is merely incidental. But while we believe that probation is commendable as a system and its implantation into the Philippines should be welcomed, we are forced by our inescapable duty to set the law aside because of the repugnancy to our fundamental law. In arriving at this conclusion, we have endeavored to consider the different aspects presented by able counsel for both parties, as well in their memorandums as in their oral argument. We have examined the cases brought to our attention, and others we have been able to reach in the short time at our command for the study and deliberation of this case. In the examination of the cases and in then analysis of the legal principles involved we have inclined to adopt the line of action which in our opinion, is supported better reasoned authorities and is more conducive to the general welfare. (Smith, Bell & Co. vs. Natividad [1919], 40 Phil., 136.) Realizing the conflict of authorities, we have declined to be bound by certain adjudicated cases brought to our attention, except where the point or principle is settled directly or by clear implication by the more authoritative pronouncements of the Supreme Court of the United States. This line of approach is justified because: (a) The constitutional relations between the Federal and the State governments of the United States and the dual character of the American Government is a situation which does not obtain in the Philippines; (b) The situation of s state of the American Union of the District of Columbia with reference to the Federal Government of the United States is not the situation of the province with respect to the Insular Government (Art. I, sec. 8 cl. 17 and 10th Amendment, Constitution of the United States; Sims vs. Rives, 84 Fed. [2d], 871), (c) The distinct federal and the state judicial organizations of the United States do not embrace the integrated judicial system of the Philippines (Schneckenburger vs. Moran [1936], 35 Off. Gaz., p. 1317); (d) "General propositions do not decide concrete cases" (Justice Holmes in Lochner vs. New York [1904], 198 U. S., 45, 76; 49 Law. ed., 937, 949) and, "to keep pace with . . . new developments of times and circumstances" (Chief Justice Waite in Pensacola Tel. Co. vs. Western Union Tel. Co. [1899], 96 U. S., 1, 9; 24 Law. ed., 708; Yale Law Journal, Vol. XXIX, No. 2, Dec. 1919, 141, 142), fundamental principles should be interpreted having in view existing local conditions and environment. Act No. 4221 is hereby declared unconstitutional and void and the writ of prohibition is, accordingly, granted. Without any pronouncement regarding costs. So ordered.

Avancea, C.J., Imperial, Diaz and Concepcion, JJ., concur. Villa-real and Abad Santos, JJ., concur in the result.

G.R. No. 76633 October 18, 1988 EASTERN SHIPPING LINES, INC., petitioner, vs. PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), MINISTER OF LABOR AND EMPLOYMENT, HEARING OFFICER ABDUL BASAR and KATHLEEN D. SACO, respondents. Jimenea, Dala & Zaragoza Law Office for petitioner. The Solicitor General for public respondent. Dizon Law Office for respondent Kathleen D. Saco.

CRUZ, J.: The private respondent in this case was awarded the sum of P192,000.00 by the Philippine Overseas Employment Administration (POEA) for the death of her husband. The decision is challenged by the petitioner on the principal ground that the POEA had no jurisdiction over the case as the husband was not an overseas worker. Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident in Tokyo, Japan, March 15, 1985. His widow sued for damages under Executive Order No. 797 and Memorandum Circular No. 2 of the POEA. The petitioner, as owner of the vessel, argued that the complaint was cognizable not by the POEA but by the Social Security System and should have been filed against the State Insurance Fund. The POEA nevertheless assumed jurisdiction and after considering the position papers of the parties ruled in favor of the complainant. The award consisted of P180,000.00 as death benefits and P12,000.00 for burial expenses. The petitioner immediately came to this Court, prompting the Solicitor General to move for dismissal on the ground of non-exhaustion of administrative remedies. Ordinarily, the decisions of the POEA should first be appealed to the National Labor Relations Commission, on the theory inter alia that the agency should be given an opportunity to correct the errors, if any, of its subordinates. This case comes under one of the exceptions, however, as the questions the petitioner is raising are essentially questions of law. 1 Moreover, the private respondent himself has not objected to the petitioner's direct resort to this Court, observing that the usual procedure would delay the disposition of the case to her prejudice. The Philippine Overseas Employment Administration was created under Executive Order No. 797, promulgated on May 1, 1982, to promote and monitor the overseas employment of Filipinos and to protect their rights. It replaced the National Seamen Board created earlier under Article 20 of the Labor Code in 1974. Under Section 4(a) of the said executive order, the POEA is vested with "original and exclusive jurisdiction over all cases, including money claims, involving employee-employer relations arising out of or by virtue of any law or contract involving Filipino contract workers, including seamen."

These cases, according to the 1985 Rules and Regulations on Overseas Employment issued by the POEA, include "claims for death, disability and other benefits" arising out of such employment. 2 The petitioner does not contend that Saco was not its employee or that the claim of his widow is not compensable. What it does urge is that he was not an overseas worker but a 'domestic employee and consequently his widow's claim should have been filed with Social Security System, subject to appeal to the Employees Compensation Commission. We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an overseas employee of the petitioner at the time he met with the fatal accident in Japan in 1985. Under the 1985 Rules and Regulations on Overseas Employment, overseas employment is defined as "employment of a worker outside the Philippines, including employment on board vessels plying international waters, covered by a valid contract. 3 A contract worker is described as "any person working or who has worked overseas under a valid employment contract and shall include seamen" 4 or "any person working overseas or who has been employed by another which may be a local employer, foreign employer, principal or partner under a valid employment contract and shall include seamen." 5 These definitions clearly apply to Vitaliano Saco for it is not disputed that he died while under a contract of employment with the petitioner and alongside the petitioner's vessel, the M/V Eastern Polaris, while berthed in a foreign country. 6 It is worth observing that the petitioner performed at least two acts which constitute implied or tacit recognition of the nature of Saco's employment at the time of his death in 1985. The first is its submission of its shipping articles to the POEA for processing, formalization and approval in the exercise of its regulatory power over overseas employment under Executive Order NO. 797. 7 The second is its payment 8 of the contributions mandated by law and regulations to the Welfare Fund for Overseas Workers, which was created by P.D. No. 1694 "for the purpose of providing social and welfare services to Filipino overseas workers." Significantly, the office administering this fund, in the receipt it prepared for the private respondent's signature, described the subject of the burial benefits as "overseas contract worker Vitaliano Saco." 9 While this receipt is certainly not controlling, it does indicate, in the light of the petitioner's own previous acts, that the petitioner and the Fund to which it had made contributions considered Saco to be an overseas employee. The petitioner argues that the deceased employee should be likened to the employees of the Philippine Air Lines who, although working abroad in its international flights, are not considered overseas workers. If this be so, the petitioner should not have found it necessary to submit its shipping articles to the POEA for processing, formalization and approval or to contribute to the Welfare Fund which is available only to overseas workers. Moreover, the analogy is hardly appropriate as the employees of the PAL cannot under the definitions given be considered seamen nor are their appointments coursed through the POEA. The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was made by the POEA pursuant to its Memorandum Circular No. 2, which became effective on February 1, 1984. This circular prescribed a standard contract to be adopted by both foreign and domestic shipping companies in the hiring of Filipino seamen for overseas employment. A similar contract had earlier been required by the

National Seamen Board and had been sustained in a number of cases by this Court. 10 The petitioner claims that it had never entered into such a contract with the deceased Saco, but that is hardly a serious argument. In the first place, it should have done so as required by the circular, which specifically declared that "all parties to the employment of any Filipino seamen on board any ocean-going vessel are advised to adopt and use this employment contract effective 01 February 1984 and to desist from using any other format of employment contract effective that date." In the second place, even if it had not done so, the provisions of the said circular are nevertheless deemed written into the contract with Saco as a postulate of the police power of the State. 11 But the petitioner questions the validity of Memorandum Circular No. 2 itself 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. The authority to issue the said regulation is clearly provided in Section 4(a) of Executive Order No. 797, reading as follows: ... 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). Similar authorization had been granted the National Seamen Board, which, as earlier observed, had itself prescribed a standard shipping contract substantially the same as the format adopted by the POEA. The second challenge is more serious as 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, notwhat 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. Thus, in Ynot v. Intermediate Apellate Court 12 which annulled Executive Order No. 626, this Court held: We also mark, on top of all this, the questionable manner of the disposition of the confiscated property as prescribed in the questioned executive order. It is there authorized that the seized property shall be distributed to charitable institutions and other similar institutions as the Chairman of the National Meat Inspection Commission may see fit, in the case of carabaos.' (Italics supplied.) The phrase "may see fit" is an extremely generous and dangerous condition, if condition it is. It is laden with perilous opportunities for partiality and abuse, and even corruption. One searches in vain for the usual standard and the reasonable guidelines, or better still, the limitations that the officers must observe when they make their distribution. There is none. Their options are apparently boundless. Who shall be the fortunate beneficiaries of their generosity and by what criteria shall they be chosen? Only the officers named can supply the answer, they and they alone may choose the grantee as they see fit, and in their own exclusive discretion. Definitely, there is here a 'roving commission a wide and sweeping authority that is not canalized within banks that keep it from overflowing,' in short a clearly profligate and therefore invalid delegation of legislative powers.

There are two accepted tests to determine whether or not there is a valid delegation of legislative power, viz, the completeness test and the sufficient standard test. Under the first 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. 13 Under the 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. 14 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. The principle of non-delegation of powers is applicable to all the three major powers of the Government but is especially important in the case of the legislative power because of the many instances when its delegation is permitted. The occasions are rare when executive or judicial powers have to be delegated by the authorities to which they legally certain. In the case of the legislative power, however, such occasions have become more and more frequent, if not necessary. This had led to the observation that the delegation of legislative power has become the rule and its non-delegation the exception. The reason is the increasing complexity of the task of government and the growing inability of the legislature to cope directly with the myriad problems demanding its attention. The growth of society has ramified its activities and created peculiar and sophisticated problems that the legislature cannot be expected reasonably to comprehend. Specialization even in legislation has become necessary. To many of the problems attendant upon present-day undertakings, the legislature may not have the competence to provide the required direct and efficacious, not to say, specific solutions. These solutions may, however, be expected from its delegates, who are supposed to be experts in the particular fields assigned to them. 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. Memorandum Circular No. 2 is one such administrative regulation. The model contract prescribed thereby has been applied in a significant number of the cases without challenge by the employer. The power of the POEA (and before it the National Seamen Board) in requiring the model contract is not unlimited as there is a sufficient standard guiding the delegate in the exercise of the said authority. That standard is discoverable in the executive order itself which, in creating the Philippine Overseas Employment Administration, mandated it to protect the rights of overseas Filipino workers to "fair and equitable employment practices."

Parenthetically, it is recalled that this Court has accepted as sufficient standards "Public interest" in People v. Rosenthal 15 "justice and equity" in Antamok Gold Fields v. CIR 16 "public convenience and welfare" in Calalang v. Williams 17 and "simplicity, economy and efficiency" in Cervantes v. Auditor General, 18 to mention only a few cases. In the United States, the "sense and experience of men" was accepted in Mutual Film Corp. v. Industrial Commission, 19 and "national security" in Hirabayashi v. United States. 20 It is not denied that the private respondent has been receiving a monthly death benefit pension of P514.42 since March 1985 and that she was also paid a P1,000.00 funeral benefit by the Social Security System. In addition, as already observed, she also received a P5,000.00 burial gratuity from the Welfare Fund for Overseas Workers. These payments will not preclude allowance of the private respondent's claim against the petitioner because it is specifically reserved in the standard contract of employment for Filipino seamen under Memorandum Circular No. 2, Series of 1984, that Section C. Compensation and Benefits. 1. In case of death of the seamen during the term of his Contract, the employer shall pay his beneficiaries the amount of: a. P220,000.00 for master and chief engineers b. P180,000.00 for other officers, including radio operators and master electrician c. P 130,000.00 for ratings. 2. It is understood and agreed that the benefits mentioned above shall be separate and distinct from, and will be in addition to whatever benefits which the seaman is entitled to under Philippine laws. ... 3. ... c. If the remains of the seaman is buried in the Philippines, the owners shall pay the beneficiaries of the seaman an amount not exceeding P18,000.00 for burial expenses. The underscored portion is merely a reiteration of Memorandum Circular No. 22, issued by the National Seamen Board on July 12,1976, providing an follows: Income Benefits under this Rule Shall be Considered Additional Benefits. All compensation benefits under Title II, Book Four of the Labor Code of the Philippines (Employees Compensation and State Insurance Fund) shall be granted, in addition to whatever benefits, gratuities or allowances that the seaman or his beneficiaries may be entitled to under the employment contract approved by the NSB. If applicable, all benefits under the Social Security Law and the Philippine Medicare Law shall be enjoyed by the seaman or his beneficiaries in accordance with such laws.

The above provisions are manifestations of the concern of the State for the working class, consistently with the social justice policy and the specific provisions in the Constitution for the protection of the working class and the promotion of its interest. One last challenge of the petitioner must be dealt with to close t case. Its argument that it has been denied due process because the same POEA that issued Memorandum Circular No. 2 has also sustained and applied it is an uninformed criticism of administrative law itself. Administrative agencies are vested with two basic powers, the quasi-legislative and the quasi-judicial. The first enables them to promulgate implementing rules and regulations, and the second enables them to interpret and apply such regulations. Examples abound: the Bureau of Internal Revenue adjudicates on its own revenue regulations, the Central Bank on its own circulars, the Securities and Exchange Commission on its own rules, as so too do the Philippine Patent Office and the Videogram Regulatory Board and the Civil Aeronautics Administration and the Department of Natural Resources and so on ad infinitumon their respective administrative regulations. Such an arrangement has been accepted as a fact of life of modern governments and cannot be considered violative of due process as long as the cardinal rights laid down by Justice Laurel in the landmark case of Ang Tibay v. Court of Industrial Relations 21 are observed. Whatever doubts may still remain regarding the rights of the parties in this case are resolved in favor of the private respondent, in line with the express mandate of the Labor Code and the principle that those with less in life should have more in law. When the conflicting interests of labor and capital are weighed on the scales of social justice, the heavier influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the underprivileged worker. This is only fair if he is to be given the opportunity and the right to assert and defend his cause not as a subordinate but as a peer of management, with which he can negotiate on even plane. Labor is not a mere employee of capital but its active and equal partner. WHEREFORE, the petition is DISMISSED, with costs against the petitioner. The temporary restraining order dated December 10, 1986 is hereby LIFTED. It is so ordered. Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

G.R. No. 111812 May 31, 1995 DIONISIO M. RABOR, petitioner, vs. CIVIL SERVICE COMMISSION, respondent.

FELICIANO, J.: Petitioner Dionisio M. Rabor is a Utility Worker in the Office of the Mayor, Davao City. He entered the government service as a Utility worker on 10 April 1978 at the age of 55 years. Sometime in May 1991, 1 Alma, D. Pagatpatan, an official in the Office of the Mayor of Davao City, advised Dionisio M. Rabor to apply for retirement, considering that he had already reached the age of sixty-eight (68) years and seven (7) months, with thirteen (13) years and one (1) month of government service. Rabor responded to this advice by exhibiting a "Certificate of Membership" 2 issued by the Government Service Insurance System ("GSIS") and dated 12 May 1988. At the bottom of this "Certificate of Membership" is a typewritten statement of the following tenor: "Service extended to comply 15 years service reqts." This statement is followed by a non-legible initial with the following date "2/28/91." Thereupon, the Davao City Government, through Ms. Pagatpatan, wrote to the Regional Director of the Civil Service Commission, Region XI, Davao City ("CSRO-XI"), informing the latter of the foregoing and requesting advice "as to what action [should] be taken on this matter." In a letter dated 26 July 1991, Director Filemon B. Cawad of CSRO-XI advised Davao City Mayor Rodrigo R. Duterte as follows: Please be informed that the extension of services of Mr. Rabor is contrary to M.C. No. 65 of the Office of the President, the relevant portion of which is hereunder quoted: Officials and employees who have reached the compulsory retirement age of 65 years shall not be retained the service, except for extremely meritorious reasons in which case the retention shall not exceed six (6) months. IN VIEW WHEREFORE, please be advised that the services of Mr. Dominador [M.] Rabor as Utility Worker in that office, is already non-extend[i]ble. 3 Accordingly, on 8 August l991, Mayor Duterte furnished a copy of the 26 July 1991 letter of Director Cawad to Rabor and advised him "to stop reporting for work effective August 16, 1991." 4 Petitioner Rabor then sent to the Regional Director, CSRO-XI, a letter dated 14 August 1991, asking for extension of his services in the City Government until he "shall have completed the fifteen (15) years service [requirement] in the Government so that [he] could also avail of the benefits of the retirement laws given to employees of the Government." The extension he was asking for was about two (2) years.

Asserting that he was "still in good health and very able to perform the duties and functions of [his] position as Utility Worker," Rabor sought "extension of [his] service as an exception to Memorandum Circular No. 65 of the Office of the President." 5 This request was denied by Director Cawad on 15 August 1991. Petitioner Rabor next wrote to the Office of the President on 29 January 1992 seeking reconsideration of the decision of Director Cawad, CSRO-XI. The Office of the President referred Mr. Rabor's letter to the Chairman of the Civil Service Commission on 5 March 1992. In its Resolution No. 92-594, dated 28 April 1992, the Civil Service Commission dismissed the appeal of Mr. Rabor and affirmed the action of Director Cawad embodied in the latter's letter of 26 July 1991. This Resolution stated in part: In his appeal, Rabor requested that he be allowed to continue rendering services as Utility Worker in order to complete the fifteen (15) year service requirement under P.D. 1146. CSC Memorandum Circular No. 27, s. 1990 provides, in part: 1. Any request for extension of service of compulsory retirees to complete the fifteen years service requirement for retirement shall be allowed only to permanent appointees in the career service who are regular members of the Government Service Insurance System (GSIS) and shall be granted for a period of not exceeding one (1) year. Considering that as early as October 18, 1988, Rabor was already due for retirement, his request for further extension of service cannot be given due course. 6 (Emphasis in the original) On 28 October 1992, Mr. Rabor sought reconsideration of Resolution No. 92-594 of the Civil Service Commission this time invoking the Decision of this Court in Cena v. Civil Service Commission. 7 Petitioner also asked for reinstatement with back salaries and benefits, having been separated from the government service effective 16 August 1991. Rabor's motion for reconsideration was denied by the Commission. Petitioner Rabor sent another letter dated 16 April 1993 to the Office of the Mayor, Davao City, again requesting that he be allowed to continue rendering service to the Davao City Government as Utility Worker in order to complete the fifteen (15) years service requirement under P.D. No. 1146. This request was once more denied by Mayor Duterte in a letter to petitioner dated 19 May 1993. In this letter, Mayor Duterte pointed out that, underCena grant of the extension of service was discretionary on the part of the City Mayor, but that he could not grant the extension requested. Mayor Duterte's letter, in relevant part, read: The matter was referred to the City Legal Office and the Chairman of the Civil Service Commission, in the advent of the decision of the Supreme Court in the Cena vs. CSC, et al. (G.R. No. 97419 dated July 3, 1992), for legal opinion. Both the City Legal Officer and the Chairman of the Civil Service Commission are one in these opinion that extending

you an appointment in order that you may be able to complete the fifteen-year service requirement is discretionary [on the part of] the City Mayor. Much as we desire to extend you an appointment but circumstances are that we can no longer do so. As you are already nearing your 70th birthday may no longer be able to perform the duties attached to your position. Moreover, the position you had vacated was already filled up. We therefore regret to inform you that we cannot act favorably on your request. 8 (Emphases supplied) At this point, Mr. Rabor decided to come to this Court. He filed a Letter/Petition dated 6 July 1993 appealing from Civil Service Resolution No. 92-594 and from Mayor Duterte's letter of 10 May 1993. The Court required petitioner Rabor to comply with the formal requirements for instituting a special civil action ofcertiorari to review the assailed Resolution of the Civil Service Commission. In turn, the Commission was required to comment on petitioner's Letter/Petition. 9 The Court subsequently noted petitioner's Letter of 13 September 1993 relating to compliance with the mentioned formal requirements and directed the Clerk of Court to advise petitioner to engage the services of counsel or to ask for legal assistance from the Public Attorney's Office (PAO). 10 The Civil Service Commission, through the Office of the Solicitor General, filed its comment on 16 November 1993. The Court then resolved to give due course to the Petition and required the parties to file memoranda. Both the Commission and Mr. Rabor (the latter through PAO counsel) did so. In this proceeding, petitioner Rabor contends that his claim falls squarely within the ruling of this Court in Cena v. Civil Service Commission. 11 Upon the other hand, the Commission seeks to distinguish this case from Cena. The Commission, through the Solicitor General, stressed that in Cena, this Court had ruled that the employer agency, the Land Registration Authority of the Department of Justice, was vested with discretion to grant to Cena the extension requested by him. The Land Registration Authority had chosen not to exercise its discretion to grant or deny such extension. In contrast, in the instant case, the Davao City Government did exercise its discretion on the matter and decided to deny the extension sought by petitioner Rabor for legitimate reasons. While the Cena decision is barely three (3) years old, the Court considers that it must reexamine the doctrine ofCena and the theoretical and policy underpinnings thereof. 12 We start by recalling the factual setting of Cena. Gaudencio Cena was appointed Registrar of the Register of Deeds of Malabon, Metropolitan Manila, on 16 July 1987. He reached the compulsory retirement age of sixty-five (65) years on 22 January 1991. By the latter date, his government service would have reached a total of eleven (11) years, nine (9) months and six (6) days. Before reaching his 65th birthday, Cena requested the Secretary of Justice, through the Administrator of the Land Registration Authority ("LRA") that he be allowed to extend his service to complete the fifteen-year service requirement to enable him to retire with the full benefit of an Old-Age

Pension under Section 11 (b) of P.D. No. 1146. If Cena's request were granted, he would complete fifteen (15) years of government service on 15 April 1994, at the age of sixty-eight (68) years. The LRA Administrator sought a ruling from the Civil Service Commission on whether or not Cena's request could be granted considering that Cena was covered by Civil Service Memorandum No. 27, Series of 1990. On 17 October 1990, the Commission allowed Cena a one (1) year extension of his service from 22 January 1991 to 22 January 1992 under its Memorandum Circular No. 27. Dissatisfied, Cena moved for reconsideration, without success. He then came to this Court, claiming that he was entitled to an extension of three (3) years, three (3) months and twenty-four (24) days to complete the fifteen-year service requirement for retirement with full benefits under Section 11 (b) of P.D. No. 1146. This Court granted Cena' s petition in its Decision of 3 July 1992. Speaking through Mr. Justice Medialdea, the Court held that a government employee who has reached the compulsory retirement age of sixty-five (65) years, but at the same time has not yet completed fifteen (15) years of government service required under Section 11 (b) of P.D. No. 1146 to qualify for the Old-Age Pension Benefit, may be granted an extension of his government service for such period of time as may be necessary to "fill up" or comply with the fifteen (15)-year service requirement. The Court also held that the authority to grant the extension was a discretionary one vested in the head of the agency concerned. Thus the Court concluded: Accordingly, the Petition is GRANTED. The Land Registration Authority (LRA) and Department of Justice has the discretion to allow petitioner Gaudencio Cena to extend his 11 years, 9 months and 6 days of government to complete the fifteen-year service so that he may retire with full benefits under Section 11, paragraph (b) of P.D. 1146. 13 (Emphases supplied) The Court reached the above conclusion primarily on the basis of the "plain and ordinary meaning" of Section 11 (b) of P.D. No. 1146. Section 11 may be quoted in its entirety: Sec. 11 Conditions for Old-Age Pension. (a) Old-Age Pension shall be paid to a member who (1) has at least fifteen (15) years of service; (2) is at least sixty (60) years of age; and (3) is separated from the service. (b) unless the service is extended by appropriate authorities, retirement shall be compulsory for an employee at sixty-five-(65) years of age with at least fifteen (15) years of service; Provided, that if he has less than fifteen (15) years of service, he shall he allowed to continue in the service to completed the fifteen (15) years. (Emphases supplied) The Court went on to rely upon the canon of liberal construction which has often been invoked in respect of retirement statutes:

Being remedial in character, a statute granting a pension or establishing [a] retirement plan should be liberally construed and administered in favor of persons intended to be benefitted thereby. The liberal approach aims to achieve the humanitarian purposes of the law in order that efficiency, security and well-being of government employees may be enhanced. 14 (Citations omitted) While Section 11 (b) appeared cast in verbally unqualified terms, there were (and still are) two (2) administrative issuances which prescribe limitations on the extension of service that may be granted to an employee who has reached sixty-five (65) years of age. The first administrative issuance is Civil Service Commission Circular No. 27, Series of 1990, which should be quoted in its entirety: TO : ALL HEADS OF DEPARTMENTS, BUREAUS AND AGENCIES OF THE NATIONAL/LOCAL GOVERNMENTS INCLUDING GOVERNMENT- OWNED AND/OR CONTROLLED CORPORATIONS WITH ORIGINAL CHARTERS. SUBJECT : Extension of Service of Compulsory Retiree to Complete the Fifteen Years Service Requirement for Retirement Purposes. Pursuant to CSC Resolution No. 90-454 dated May 21, 1990, the Civil Service Commission hereby adopts and promulgates the following policies and guidelines in the extension of services of compulsory retirees to complete the fifteen years service requirement for retirement purposes: 1. Any request for the extension of service of compulsory retirees to complete the fifteen (15) years service requirement for retirement shall be allowed only to permanent appointees in the career service who are regular members of the Government Service Insurance System (GSIS), and shall be granted for a period not exceeding one (1) year. 2. Any request for the extension of service of compulsory retiree to complete the fifteen (15) years service requirement for retirement who entered the government service at 57 years of age or over upon prior grant of authority to appoint him or her, shall no longer be granted. 3. Any request for the extension of service to complete the fifteen (15) years service requirement of retirement shall be filled not later than three (3) years prior to the date of compulsory retirement. 4. Any request for the extension of service of a compulsory retiree who meets the minimum number of years of service for retirement purposes may be granted for six (6) months only with no further extension. This Memorandum Circular shall take effect immediately. (Emphases supplied)

The second administrative issuance Memorandum Circular No. 65 of the Office of the President, dated 14 June 1988 provides: xxx xxx xxx WHEREAS, this Office has been. receiving requests for reinstatement and/or retention in the service of employees who have reached the compulsory retirement age of 65 years, despite the strict conditions provided for in Memorandum Circular No. 163, dated March 5, 1968, as amended. WHEREAS, the President has recently adopted a policy to adhere more strictly to the law providing for compulsory retirement age of 65 years and, in extremely meritorious cases, to limit the service beyond the age of 65 years to six (6) months only. WHEREFORE, the pertinent provision of Memorandum Circular No. 163 or on the retention in the service of officials or employees who have reached the compulsory retirement age of 65 years, is hereby amended to read as follows: Officials or employees who have reached the compulsory retirement age of 65 yearsshall not be retained in the service, except for extremely meritorious reasons in which case the retention shall not exceed six (6) months. All heads of departments, bureaus, offices and instrumentalities of the government including government-owned or controlled corporations, are hereby enjoined to require their respective offices to strictly comply with this circular. This Circular shall take effect immediately. By authori ty of the Preside nt (Sgd.) CATALI NO MACAR AIG, JR. Executi ve Secreta ry

Manila, June 14, 1988. 15 (Emphasis supplied) Medialdea, J. resolved the challenges posed by the above two (2) administrative regulations by, firstly, considering as invalid Civil Service Memorandum No. 27 and, secondly, by interpreting the Office of the President's Memorandum Circular No. 65 as inapplicable to the case of Gaudencio T. Cena. We turn first to the Civil Service Commission's Memorandum Circular No. 27. Medialdea, J. wrote: The Civil Service Commission Memorandum Circular No. 27 being in the nature of an administrative regulation, must be governed by the principle that 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 (People v. Maceren, G.R. No. L-32166, October 18, 1977, 79 SCRA 450; Teoxon v. Members of the Board of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel v. General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350). . . . .The rule on limiting to one the year the extension of service of an employee who has reached the compulsory retirement age of sixty-five (65) years, but has less than fifteen (15) years of service under Civil Service Memorandum Circular No. 27, S. 1990, cannot likewise be accorded validity because it has no relationship or connection with any provision of P.D. 1146 supposed to be carried into effect. The rule was an addition to or extension of the law, not merely a mode of carrying it into effect. The Civil Service Commission has no power to supply perceived omissions in P.D. 1146. 16 (Emphasis supplied) It will be seen that Cena, in striking down Civil Service Commission Memorandum No. 27, took a very narrow view on the question of what subordinate rule-making by an administrative agency is permissible and valid. That restrictive view must be contrasted with this Court's earlier ruling in People v. Exconde, 17 where Mr. Justice J.B.L. Reyes said: It is well established in this jurisdiction that, while the making of laws is a non-delegable activity that corresponds exclusively to Congress, nevertheless, the latter may constitutionally delegate authority and promulgate rules and regulations to implement a given legislation and effectuate its policies, for the reason that the legislature often finds it impracticable (if not impossible) to anticipate and provide for the multifarious and complex situations that may be met in carrying the law into effect. All that is required is that the regulation should be germane to the objects and purposes of the law; that the regulation be not in contradiction with it, but conform to standards that the law prescribes. 18 (Emphasis supplied) In Tablarin v. Gutierrez, 19 the Court, in sustaining the validity of a MECS Order which established passing a uniform admission test called the National Medical Admission Test (NMAT) as a prerequisite for eligibility for admission into medical schools in the Philippines, said: The standards set for subordinate legislation in the exercise of rule making authority by an administrative agency like the Board of Medical Education are necessarily broad and highly abstract. As explained by then Mr. Justice Fernando in Edu v. Ericta (35 SCRA 481 [1970])

The standards may be either expressed or implied. If the former, the non-delegation objection is easily met. The Standard though does not have to be spelled out specifically. It could be implied from the policy and purpose of the act considered as a whole. In the Reflector Law, clearly the legislative objective is public safety. What is sought to be attained in Calalang v. William is "safe transit upon the roads." We believe and so hold that the necessary standards are set forth in Section 1 of the 1959 Medical Act: "the standardization and regulation of medical education" and in Section 5 (a) and 7 of the same Act, the body of the statute itself, and that these considered together are sufficient compliance with the requirements of the nondelegation principle. 20 (Citations omitted; emphasis partly in the original and partly supplied) In Edu v. Ericta, 21 then Mr. Justice Fernando stressed the abstract and very general nature of the standards which our Court has in prior case law upheld as sufficient for purposes of compliance with the requirements for validity of subordinate or administrative rule-making: This Court has considered as sufficient standards, "public welfare," (Municipality of Cardona v. Municipality of Binangonan, 36 Phil. 547 [1917]); "necessary in the interest of law and order," (Rubi v. Provincial Board, 39 Phil. 660 [1919]); "public interest," (People v. Rosenthal, 68 Phil. 328 [1939]); and "justice and equity and substantial merits of the case," (International Hardwood v. Pangil Federation of Labor, 17 Phil. 602 [1940]). 22 (Emphasis supplied) Clearly, therefore, Cena when it required a considerably higher degree of detail in the statute to be implemented, went against prevailing doctrine. It seems clear that if the governing or enabling statute is quite detailed and specific to begin with, there would be very little need (or occasion) for implementing administrative regulations. It is, however, precisely the inability of legislative bodies to anticipate all (or many) possible detailed situations in respect of any relatively complex subject matter, that makes subordinate, delegated rule-making by administrative agencies so important and unavoidable. All that may be reasonably; demanded is a showing that the delegated legislation consisting of administrative regulations are germane to the general purposes projected by the governing or enabling statute. This is the test that is appropriately applied in respect of Civil Service Memorandum Circular No. 27, Series of 1990, and to this test we now turn. We consider that the enabling statute that should appropriately be examined is the present Civil Service law found in Book V, Title I, Subtitle A, of Executive Order No. 292 dated 25 July 1987, otherwise known as the Administrative Code of 1987 and not alone P.D. No. 1146, otherwise known as the "Revised Government Service Insurance Act of 1977." For the matter of extension of service of retirees who have reached sixty-five (65) years of age is an area that is covered by both statutes and not alone by Section 11 (b) of P.D. 1146. This is crystal clear from examination of many provisions of the present civil service law. Section 12 of the present Civil Service law set out in the 1987 Administrative Code provides, in relevant part, as follows:

Sec. 12 Powers and Functions. The [Civil Service] Commission shall have the following powers and functions: xxx xxx xxx (2) Prescribe, amend and enforce rules and regulations for carrying into effect the provisions of the Civil Service Law and other pertinent laws; (3) Promulgate policies, standards and guidelines for the Civil Service and adopt plans and programs to promote economical, efficient and effective personnel administration in the government; xxx xxx xxx (10) Formulate, administer and evaluate programs relative to the development and retention of aqualified and competent work force in the public service; xxx xxx xxx (14) Take appropriate action on all appointments and other personnel matters in the Civil Serviceincluding extension of service beyond retirement age; xxx xxx xxx (17) Administer the retirement program for government officials and employees, and accredit government services and evaluate qualifications for retirement; xxx xxx xxx (19) Perform all functions properly belonging to a central personnel agency and such other functions as may be provided by law. (Emphasis supplied) It was on the bases of the above quoted provisions of the 1987 Administrative Code that the Civil Service Commission promulgated its Memorandum Circular No. 27. In doing so, the Commission was acting as "the central personnel agency of the government empowered to promulgate policies, standards and guidelines for efficient, responsive and effective personnel administration in the government." 23 It was also discharging its function of "administering the retirement program for government officials and employees" and of "evaluat[ing] qualifications for retirement." In addition, the Civil Service Commission is charged by the 1987 Administrative Code with providing leadership and assistance "in the development and retention of qualified and efficient work force in the Civil Service" (Section 16 [10]) and with the "enforcement of the constitutional and statutory provisions, relative to retirementand the regulation for the effective implementation of the retirement of government officials and employees" (Section 16 [14]). We find it very difficult to suppose that the limitation of permissible extensions of service after an employee has reached sixty-five (65) years of age has no reasonable relationship or is not germane to

the foregoing provisions of the present Civil Service Law. The physiological and psychological processes associated with ageing in human beings are in fact related to the efficiency and quality of the service that may be expected from individual persons. The policy considerations which guided the Civil Service Commission in limiting the maximum extension of service allowable for compulsory retirees, were summarized by Grio-Aquino, J. in her dissenting opinion inCena: Worth pondering also are the points raised by the Civil Service Commission that extending the service of compulsory retirees for longer than one (1) year would: (1) give a premium to late-comers in the government service and in effect discriminate against those who enter the service at a younger age; (2) delay the promotion of the latter and of next-in-rank employees; and (3) prejudice the chances for employment of qualified young civil service applicants who have already passed the various government examination but must wait for jobs to be vacated by "extendees" who have long passed the mandatory retirement age but are enjoying extension of their government service to complete 15 years so they may qualify for old-age pension. 24 (Emphasis supplied). Cena laid heavy stress on the interest of retirees or would be retirees, something that is, in itself, quite appropriate. At the same time, however, we are bound to note that there should be countervailing stress on the interests of the employer agency and of other government employees as a whole. The results flowing from the striking down of the limitation established in Civil Service Memorandum Circular No. 27 may well be "absurd and inequitable," as suggested by Mme. Justice Grio-Aquino in her dissenting opinion. An employee who has rendered only three (3) years of government service at age sixty-five (65) can have his service extended for twelve (12) years and finally retire at the age of seventyseven (77). This reduces the significance of the general principle of compulsory retirement at age sixtyfive (65) very close to the vanishing point. The very real difficulties posed by the Cena doctrine for rational personnel administration and management in the Civil Service, are aggravated when Cena is considered together with the case of Toledo v. Civil Service Commission. 25 Toledo involved the provisions of Rule III, Section 22, of the Civil Service Rules on Personnel Action and Policies (CSRPAP) which prohibited the appointment of persons fifty-seven (57) years old or above in government service without prior approval of the Civil Service Commission. Civil Service Memorandum Circular No. 5, Series of 1983 provided that a person fifty-seven (57) years of age may be appointed to the Civil Service provided that the exigencies of the government service so required and provided that the appointee possesses special qualifications not possessed by other officers or employees in the Civil Service and that the vacancy cannot be filled by promotion of qualified officers or employees of the Civil Service. Petitioner Toledo was appointed Manager of the Education and Information Division of the Commission on Elections when he was almost fifty-nine (59) years old. No authority for such appointment had been obtained either from the President of the Philippines or from the Civil Service Commission and the Commission found that the other conditions laid down in Section 22 of Rule III, CSRPAP, did not exist. The Court nevertheless struck down Section 22, Rule III on the same exceedingly restrictive view of permissible administrative legislation that Cena relied on. 26 When one combines the doctrine of Toledo with the ruling in Cena, very strange results follow. Under these combined doctrines, a person sixty-four (64) years of age may be appointed to the government service and one (1) year later may demand extension of his service for the next fourteen (14) years; he would retire at age seventy-nine (79). The net effect is thus that the general statutory policy of compulsory retirement at sixty-five (65) years is heavily eroded and effectively becomes unenforceable.

That general statutory policy may be seen to embody the notion that there should be a certain minimum turn-over in the government service and that opportunities for government service should be distributed as broadly as possible, specially to younger people, considering that the bulk of our population is below thirty (30) years of age. That same general policy also reflects the life expectancy of our people which is still significantly lower than the life expectancy of, e.g., people in Northern and Western Europe, North America and Japan. Our conclusion is that the doctrine of Cena should be and is hereby modified to this extent: that Civil Service Memorandum Circular No. 27, Series of 1990, more specifically paragraph (1) thereof, is hereby declared valid and effective. Section 11 (b) of P.D. No. 1146 must, accordingly, be read together with Memorandum Circular No. 27. We reiterate, however, the holding in Cena that the head of the government agency concerned is vested with discretionary authority to allow or disallow extension of the service of an official or employee who has reached sixty-five (65) years of age without completing fifteen (15) years of government service; this discretion is, nevertheless, to be exercised conformably with the provisions of Civil Service Memorandum Circular No. 27, Series of 1990. We do not believe it necessary to deal specifically with Memorandum Circular No. 65 of the Office of the President dated 14 June 1988. It will be noted from the text quoted supra (pp. 11-12) that the text itself of Memorandum Circular No. 65 (and for that matter, that of Memorandum Circular No. 163, also of the Office of the President, dated 5 March 1968) 27 does not purport to apply only to officers or employees who have reached the age of sixty-five (65) years and who have at least fifteen (l5) years of government service. We noted earlier thatCena interpreted Memorandum Circular No. 65 as referring only to officers and employees who have both reached the compulsory retirement age of sixty-five (65) and completed the fifteen (15) years of government service. Cena so interpreted this Memorandum Circular precisely because Cena had reached the conclusion that employees who have reached sixty-five (65) years of age, but who have less than fifteen (15) years of government service, may be allowed such extension of service as may be needed to complete fifteen (15) years of service. In other words, Cena read Memorandum Circular No. 65 in such a way as to comfort with Cena's own conclusion reached without regard to that Memorandum Circular. In view of the conclusion that we today reached in the instant case, this last ruling of Cena is properly regarded as merely orbiter. We also do not believe it necessary to determine whether Civil Service Memorandum Circular No. 27 is fully compatible with Office of the President's Memorandum Circular No. 65; this question must be reserved for detailed analysis in some future justiciable case. Applying now the results of our reexamination of Cena to the instant case, we believe and so hold that Civil Service Resolution No. 92-594 dated 28 April 1992 dismissing the appeal of petitioner Rabor and affirming the action of CSRO-XI Director Cawad dated 26 July 1991, must be upheld and affirmed. ACCORDINGLY, for all the foregoing, the Petition for Certiorari is hereby DISMISSED for lack of merit. No pronouncement as to costs. SO ORDERED. Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza and Francisco, JJ., concur.

Quiason, J., is on leave.

RE: ENTITLEMENT TO HAZARD PAY A.M. No. 03-9-02-SC OF SC MEDICAL AND DENTAL CLINIC PERSONNEL, Present: PUNO, C.J., QUISUMBING, YNARES-SANTIAGO, CARPIO, AUSTRIA-MARTINEZ, CORONA, CARPIO MORALES, AZCUNA, TINGA, CHICO-NAZARIO, VELASCO, JR., NACHURA, REYES, LEONARDO DE CASTRO, and BRION, JJ. Promulgated: November 27, 2008 x--------------------------------------------------------------------------- x

R E S O L U T I ON TINGA, J.: This administrative matter pertains to the latest of the spate of requests of some of the members of the Supreme Court Medical and Dental Services (SCMDS) Division in relation to the grant of hazard allowance. In the Courts Resolution[1] of 9 September 2003, the SCMDS personnel were declared entitled to hazard pay according to the provisions of Republic Act (R.A.) No. 7305,[2] otherwise known as The Magna Carta of Public Health Workers. The resolution paved the way for the issuance of Administrative Circular No. 57-2004[3] which prescribed the guidelines for the grant of hazard allowance in favor of the SCMDS personnel. Now, eleven members of the same office: namely, Ramon S. Armedilla, Celeste P. Vista, Consuelo M. Bernal, Remedios L. Patricio, Madonna Catherine G. Dimaisip, Elmer A. Ruez,

Marybeth V. Jurado, Mary Ann D. Barrientos, Angel S. Ambata, Nora T. Juat and Geslaine C. Juan question the wisdom behind the allocation of hazard pay to the SCMDS personnel at large in the manner provided in the said circular. Administrative Circular No. 57-2004 (the subject Circular) initially classified SCMDS employees according to the level of exposure to health hazards, as follows: (a) physicians, dentists, nurses, medical technologists, nursing and dental aides, and physical therapists who render direct, actual and frequent medical services in the form of consultation, examination, treatment and ancillary care, were said to be subject to high-risk exposure; and (b) psychologists, pharmacists, optometrists, clerks, data encoders, utility workers, ambulance drivers, and administrative and technical support personnel, to low-risk exposure.[4] Accordingly, employees exposed to high-risk hazards belonging to Salary Grade 19 and below, and those belonging to Salary Grade 20 and above, were respectively given 27% and 7% of their basic monthly salaries as hazard allowances; whereas employees open to low-risk hazards belonging to Salary Grade 20 and above, and Salary Grade 19 and below, were respectively given 5% and 25% of their basic monthly salaries as hazard allowances.[5] This classification, however, was abolished when the Department of Health (DOH)after reviewing the corresponding job descriptions of the members of the SCMDS personnel and the nature of their exposure to hazardsdirected that they should all be entitled to a uniform hazard pay rate without regard for the nature of the risks and hazards to which they are exposed.[6] The dual 25% and 5% hazard allowance rates for all the members of the SCMDS personnel were retained. In their Letter[7] dated 21 January 2005 addressed to then Chief Justice Hilario Davide, Jr., eleven of the SCMDS personnel concernedwho claim to be doctors with salary grades higher than 19[8] and who allegedly render front-line and hands-on services but receive less hazard allowance allocations than do those personnel who do not directly deliver patient carelamented that the classification and the rates of hazard allowance implemented by the subject Circular seemed to favor only those belonging to Salary Grade 19 and below, contrary to the very purpose of the grant which is to compensate health workers according to the degree of exposure to hazards regardless of rank or status. They believe that the grant must be based

not on the salary grade but rather on the degree of hazard to which they are actually exposed; thus, they asked for a reexamination of the subject Circular.[9] However, even before the request could be acted upon by the Court, Secretary Francisco Duque III issued Administrative Order (A.O.) No. 2006-0011[10]on 16 May 2006. The administrative order prescribes amended guidelines in the payment of hazard pay applicable to all public health workers regardless of the nature of their appointment. It essentially establishes a 25% hazard pay rate for health workers with salary grade 19 and below but fixed the hazard allowance of those occupying positions belonging to Salary Grade 20 and above to P4,989.75 without further increases.[11] In view of this development, some of the SCMDS personnel concerned,[12] in another Letter dated 19 December 2007 and addressed to Chief Justice Reynato S. Puno, suggesting that the subject Circular be amended to conform to A.O. No. 2006-0011, and that they accordingly be paid hazard pay differentials accruing by virtue thereof.[13]

SCMDS Senior Chief Staff Officer Dr. Prudencio Banzon, Jr. indorsed the letter to Deputy Clerk of Court and Chief Administrative Officer Atty. Eden Candelaria (Atty. Candelaria).[14] On 15 January 2008, Atty. Candelaria issued a Memorandum[15] finding merit in the request to amend the subject Circular because A.O. No. 2006-0011 suggests more equitable guidelines on the allocation of hazard allowances among health workers in the government.[16]Accordingly, she recommended that: (a) the classification as to whether employees are exposed to high or low-risk hazard, as found in the Circular, be abolished and instead replaced by the fixed rates provided in A.O. No. 2006-0011; and that (b) the payment of the adjusted hazard allowance be charged against the regular savings of the Court.[17] In its Resolution[18] dated 22 January 2008, the Court referred Atty. Candelarias memorandum to the Fiscal Management and Budget Office (FMBO) and to the Office of the Chief Attorney (OCAT) for comment. The OCAT posits that the subject Circular may not be amended in accordance with A.O. No. 20060011 and in the manner the personnel concerned desire because, first, the mechanics of payment established by the administrative order is of doubtful validity; and second, the said administrative order has not been duly published and hence not binding on the Court.[19] It also points out that the administrative order does not conform to Section 21 of R.A. No. 7305 in which the rates of hazard pay are clearly based on salary grade.[20] The FMBO advances a contrary position. It maintains that the subject Circular may be amended according to the terms of A.O. No. 2006-0011 inasmuch as the latter could put to rest the objection of the personnel concerned to the allegedly unreasonable and unfair allocation of hazard pay. Additionally, it recommends that once the amendment is made, the hazard allowances due the SCMDS personnel be charged against the savings from the regular appropriations of the Court.[21] This Court has to deny the request because the subject Circular cannot be amended according to the mechanism of hazard pay allocation under AO No. 2006-0011 without denigrating established administrative law principles. Essentially, hazard pay is the premium granted by law to health workers who, by the nature of their work, are constantly exposed to various risks to health and safety.[22] Section 21 of R.A. No. 7305 provides:

SEC. 21. Hazard Allowance.Public health workers in hospitals, sanitaria, rural health units, main health centers, health infirmaries, barangay health stations, clinics and other health-related establishments located in difficult areas, strife-torn or embattled areas, distressed or isolated stations, prison camps, mental hospitals, radiation-exposed clinics, laboratories or disease-infested areas or in areas declared under state of calamity or emergency for the duration thereof which expose them to great danger, contagion, radiation, volcanic activity/eruption, occupational risks or perils to life as determined by the Secretary of Health or the Head of the unit with the approval of the Secretary of Health, shall be compensated hazard allowances equivalent to at least twenty-five percent (25%) of the monthly basic salary of health workers receiving salary grade 19 and below, and five percent (5%) for health workers with salary grade 20 and above. The implementing rules of R.A. No. 7305 likewise stipulate the same rates of hazard pay. Rule 7.1.5 thereof states: 7.1.5 Rates of Hazard Pay a. Public health workers shall be compensated hazard allowances equivalent to at least twenty-five percent (25%) of the monthly basic salary of health workers receiving salary grade 19 and below, and five percent (5%) for health workers with salary grade 20 and above. This may be granted on a monthly, quarterly or annual basis. x x x In a language too plain to be mistaken, R.A. No. 7305 and its implementing rules mandate that the allocation and distribution of hazard allowances to public health workers within each of the two salary grade brackets at the respective rates of 25% and 5% be based on the salary grade to which the covered employees belong. These same rates have in fact been incorporated into the subject Circular to apply to all SCMDS personnel. The computation of the hazard allowance due should, in turn, be based on the corresponding basic salary attached to the position of the employee concerned. To be sure, the law and the implementing rules obviously prescribe the minimum rates of hazard pay due all health workers in the government, as in fact this is evident in the self-explanatory phrase at least used in both the law and the rules. No compelling argument may thus be offered against the competence of the DOH to prescribe, by rules or orders, higher rates of hazard allowance, provided that the same fall within the limits of the law. As the lead agency in the implementation of the provisions of R.A. No. 7305, it has in fact been invested with such power by Section 35.[23] Be that as it may, the question that arises is whether that power is broad enough to vest the DOH with authority to fix an exact amount of hazard pay accruing to public health workers with Salary Grade 20 and above, deviating from the 5% monthly salary benchmark prescribed by both the law and its implementing rules.

The DOH possesses no such power. Fundamental is the precept in administrative law that the rule-making power delegated to an administrative agency is limited and defined by the statute conferring the power. For this reason, valid objections to the exercise of this power lie where it conflicts with the authority granted by the legislature.[24] A mere fleeting glance at A.O. No. 2006-0011 readily reveals that the DOH, in issuing the said administrative order, has exceeded its limited power of implementing the provisions of R.A. No. 7305. It undoubtedly sought to modify the rates of hazard pay and the mechanism for its allocation under both the law and the implementing rules by prescribing a uniform ratelet alone a fixed and exact amount of hazard allowance for government health workers occupying positions with salary grade 20 and above. The effect of this measure can hardly be downplayed especially in view of the unmistakable import of the law to establish a scalar allocation of hazard allowances among public health workers within each of the two salary grade brackets. Section 19[25] of R.A. No. 7305 recognizes, for its own purposes, the applicability of the provisions of R.A. No. 6758[26] (The Salary Standardization Act of 1989) in the determination of the salary scale of all covered public health workers. Telling is this reference to the scalar schedule of salaries when viewed in light of the fact that factoring in the salaries of individual employees and the applicable uniform rate of hazard allowance would yield different results which, when charted against each other, would also bear the scalar schedule intended by the law.

The object, in other words, of both the law and its implementing rules in providing a uniform rate for each of the two groups of public health workers is to establish a scalar allocation of the cash equivalents of the hazard allowance within each of the two groups. A scalar schedule of hazard pay allocation within the Salary Grade 20 and higher bracket can indeed be achieved only by multiplying the basic monthly salary of the covered employees by a constant factor that is 25% as the fixed legal rate. Even without an express reference to the scalar schedule of salaries under R.A. No. 6758, it can nevertheless be inferred that R.A. No. 7305, by mandating a fixed rate of hazard allowance for each of the two groups of health workers, intends to achieve the same effect.

Hence, it can only be surmised that the issuance of AO No. 2006-0011 is an attempt to amend the rates of hazard allowance and the mechanism for its allocation as provided for in R.A. No. 7305 and the implementing rules because it has the effect of obliterating the intended discrepancy in the cash equivalents of the hazard allowance for employees falling within the bracket of Salary Grade 20 and above. Without unnecessarily belaboring this point, the Court finds that the administrative order violates the established principle that administrative issuances cannot amend an act of Congress.[27] It is void on its face, but only insofar as it prescribes a predetermined exact amount in cash of the hazard allowance for public health workers with Salary Grade 20 and above. Indeed, when an administrative agency enters into the exercise of the specific power of implementing a statute, it is bound by what is provided for in the same legislative enactment[28] inasmuch as its rule-making power is a delegated legislative power which may not be used either to abridge the authority given by the Congress or the Constitution or to enlarge the power beyond the scope intended.[29] The power may not be validly extended by implication beyond what may be necessary for its just and reasonable execution.[30] In other words, the function of promulgating rules and regulations may be legitimately exercised only for the purpose of carrying out the provisions of a law, inasmuch as the power is confined to implementing the law or putting it into effect.[31] Therefore, such rules and regulations must not be inconsistent with the provisions of existing laws, particularly the statute being administered and implemented by the agency concerned,[32] that is to say, the statute to which the issuance relates. 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.[33] It must be stressed that the DOH issued the rules and regulations implementing the provisions of R.A. 7305 pursuant to the authority expressly delegated by Congress. Hence, the DOH, as the delegate administrative agency, cannot contravene the law from which its rule-making authority has emanated. As the clich goes, the spring cannot rise higher than its source.[34] In this regard, Fisher observes: x x x The often conflicting and ambiguous passages within interpreted by executive officials to construct the purpose Congress. As important as intent is the extent to which a out. President Taft once remarked, Let anyone make the laws of can construe them. a law must be and intent of law is carried the country, if I

To carry out the laws, administrators issue rules and regulations of their own. The courts long ago appreciated this need. Rules and regulations must be received as the acts of the executive, and as such, be binding upon all within the sphere of his

legal and constitutional authority. Current law authorizes the head of an executive department or military department to prescribe regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, papers, and property.

These duties, primarily of a housekeeping nature, relate only distantly to the citizenry. Many regulations, however, bear directly on the public. It is here that administrative legislation must be restricted in its scope and application. Regulations are not supposed to be a substitute for the general policymaking that Congress enacts in the form of a public law. Although administrative regulations are entitled to respect, the authority to prescribe rules and regulations is not an independent source of power to make laws. Agency rulemaking must rest on authority granted directly or indirectly by Congress.[35] (Emphasis supplied)

Moreover, although an administrative agency is authorized to exercise its discretion in the exercise of its power of subordinate legislation, nevertheless, no similar authority exists to validate an arbitrary or capricious enactment of rules and regulations.[36] Rules which have the effect of extending or conflicting with the authority-granting statute do not represent a valid exercise of rule-making power but constitute an attempt by the agency to legislate.[37] In such a situation, it is said that the issuance becomes void not only for being ultra vires but also for being unreasonable.[38] The law therefore prevails over the administrative issuance.[39]

The Court takes notice of the fact that the enactment of R.A. No. 7305 has touched off, within the public health service sector, a surge of negative sentiments regarding the alleged inequitableness and unfairness of the lawparticularly the provisions thereof relating to the allocation of hazard allowances. Certainly, the DOH can be reasonably expected to respond to the well-meaning clamor of the public health workers; but while indeed the DOH is entitled to a certain amount of hegemony over the statutes which it is tasked to administer, it nevertheless may not go far beyond the letter of the law even if it does perceive that it is acting in the furtherance of the spirit of the law.[40] A final note. Just as the power of the DOH to issue rules and regulations is confined to the clear letter of the law, the Courts hands are likewise tied to interpreting and applying the law. In other

words, the Court cannot infuse vitality, let alone a semblance of validity, to an issuance which on its face is inconsistent with the law and therefore void, by adopting its terms and in effect implementing the samelest we otherwise validate an undue exercise by the DOH of its delegated and limited power of implementation. Suffice it to say that questions relative to the seeming unfairness and inequitableness of the law are matters that lie well within the legitimate powers of Congress and are well beyond the competence of the Court to address.

In light of the foregoing, there appears to be no more necessity to discuss the issue of the nonpublication of A.O. No. 2006-0011. WHEREFORE, the request of the Supreme Court Medical and Dental Services Division to amend Administrative Circular (A.C.) No. 57-2004 according to the provisions of Department of Health Administrative Order No. 2006-0011 is DENIED. The Court DIRECTS that the payment of hazard allowance in favor of the personnel concerned be made in accordance with A.C. No. 57-2004. SO ORDERED.

G.R. No. 166715

August 14, 2008

ABAKADA GURO PARTY LIST (formerly AASJS)1 OFFICERS/MEMBERS SAMSON S. ALCANTARA, ED VINCENT S. ALBANO, ROMEO R. ROBISO, RENE B. GOROSPE and EDWIN R. SANDOVAL, petitioners, vs. HON. CESAR V. PURISIMA, in his capacity as Secretary of Finance, HON. GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner of the Bureau of Internal Revenue, and HON. ALBERTO D. LINA, in his Capacity as Commissioner of Bureau of Customs, respondents. DECISION CORONA, J.: This petition for prohibition1 seeks to prevent respondents from implementing and enforcing Republic Act (RA) 93352 (Attrition Act of 2005). RA 9335 was enacted to optimize the revenue-generation capability and collection of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). The law intends to encourage BIR and BOC officials and employees to exceed their revenue targets by providing a system of rewards and sanctions through the creation of a Rewards and Incentives Fund (Fund) and a Revenue Performance Evaluation Board (Board).3 It covers all officials and employees of the BIR and the BOC with at least six months of service, regardless of employment status.4 The Fund is sourced from the collection of the BIR and the BOC in excess of their revenue targets for the year, as determined by the Development Budget and Coordinating Committee (DBCC). Any incentive or reward is taken from the fund and allocated to the BIR and the BOC in proportion to their contribution in the excess collection of the targeted amount of tax revenue.5 The Boards in the BIR and the BOC are composed of the Secretary of the Department of Finance (DOF) or his/her Undersecretary, the Secretary of the Department of Budget and Management (DBM) or his/her Undersecretary, the Director General of the National Economic Development Authority (NEDA) or his/her Deputy Director General, the Commissioners of the BIR and the BOC or their Deputy Commissioners, two representatives from the rank-and-file employees and a representative from the officials nominated by their recognized organization.6 Each Board has the duty to (1) prescribe the rules and guidelines for the allocation, distribution and release of the Fund; (2) set criteria and procedures for removing from the service officials and employees whose revenue collection falls short of the target; (3) terminate personnel in accordance with the criteria adopted by the Board; (4) prescribe a system for performance evaluation; (5) perform other functions, including the issuance of rules and regulations and (6) submit an annual report to Congress.7 The DOF, DBM, NEDA, BIR, BOC and the Civil Service Commission (CSC) were tasked to promulgate and issue the implementing rules and regulations of RA 9335,8 to be approved by a Joint Congressional Oversight Committee created for such purpose.9 Petitioners, invoking their right as taxpayers filed this petition challenging the constitutionality of RA 9335, a tax reform legislation. They contend that, by establishing a system of rewards and incentives, the law "transform[s] the officials and employees of the BIR and the BOC into mercenaries and bounty

hunters" as they will do their best only in consideration of such rewards. Thus, the system of rewards and incentives invites corruption and undermines the constitutionally mandated duty of these officials and employees to serve the people with utmost responsibility, integrity, loyalty and efficiency. Petitioners also claim that limiting the scope of the system of rewards and incentives only to officials and employees of the BIR and the BOC violates the constitutional guarantee of equal protection. There is no valid basis for classification or distinction as to why such a system should not apply to officials and employees of all other government agencies. In addition, petitioners assert that the law unduly delegates the power to fix revenue targets to the President as it lacks a sufficient standard on that matter. While Section 7(b) and (c) of RA 9335 provides that BIR and BOC officials may be dismissed from the service if their revenue collections fall short of the target by at least 7.5%, the law does not, however, fix the revenue targets to be achieved. Instead, the fixing of revenue targets has been delegated to the President without sufficient standards. It will therefore be easy for the President to fix an unrealistic and unattainable target in order to dismiss BIR or BOC personnel. Finally, petitioners assail the creation of a congressional oversight committee on the ground that it violates the doctrine of separation of powers. While the legislative function is deemed accomplished and completed upon the enactment and approval of the law, the creation of the congressional oversight committee permits legislative participation in the implementation and enforcement of the law. In their comment, respondents, through the Office of the Solicitor General, question the petition for being premature as there is no actual case or controversy yet. Petitioners have not asserted any right or claim that will necessitate the exercise of this Courts jurisdiction. Nevertheless, respondents acknowledge that public policy requires the resolution of the constitutional issues involved in this case. They assert that the allegation that the reward system will breed mercenaries is mere speculation and does not suffice to invalidate the law. Seen in conjunction with the declared objective of RA 9335, the law validly classifies the BIR and the BOC because the functions they perform are distinct from those of the other government agencies and instrumentalities. Moreover, the law provides a sufficient standard that will guide the executive in the implementation of its provisions. Lastly, the creation of the congressional oversight committee under the law enhances, rather than violates, separation of powers. It ensures the fulfillment of the legislative policy and serves as a check to any over-accumulation of power on the part of the executive and the implementing agencies. After a careful consideration of the conflicting contentions of the parties, the Court finds that petitioners have failed to overcome the presumption of constitutionality in favor of RA 9335, except as shall hereafter be discussed. Actual Case And Ripeness An actual case or controversy involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial adjudication.10 A closely related requirement is ripeness, that is, the question must be ripe for adjudication. And a constitutional question is ripe for adjudication when the governmental act being challenged has a direct adverse effect on the individual challenging it.11 Thus, to be ripe for judicial adjudication, the petitioner must show a personal stake in the outcome of the case or an injury to himself that can be redressed by a favorable decision of the Court.12

In this case, aside from the general claim that the dispute has ripened into a judicial controversy by the mere enactment of the law even without any further overt act,13 petitioners fail either to assert any specific and concrete legal claim or to demonstrate any direct adverse effect of the law on them. They are unable to show a personal stake in the outcome of this case or an injury to themselves. On this account, their petition is procedurally infirm. This notwithstanding, public interest requires the resolution of the constitutional issues raised by petitioners. The grave nature of their allegations tends to cast a cloud on the presumption of constitutionality in favor of the law. And where an action of the legislative branch is alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary to settle the dispute.14 Accountability of Public Officers Section 1, Article 11 of the Constitution states: Sec. 1. Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism, and justice, and lead modest lives. Public office is a public trust. It must be discharged by its holder not for his own personal gain but for the benefit of the public for whom he holds it in trust. By demanding accountability and service with responsibility, integrity, loyalty, efficiency, patriotism and justice, all government officials and employees have the duty to be responsive to the needs of the people they are called upon to serve. Public officers enjoy the presumption of regularity in the performance of their duties. This presumption necessarily obtains in favor of BIR and BOC officials and employees. RA 9335 operates on the basis thereof and reinforces it by providing a system of rewards and sanctions for the purpose of encouraging the officials and employees of the BIR and the BOC to exceed their revenue targets and optimize their revenue-generation capability and collection.15 The presumption is disputable but proof to the contrary is required to rebut it. It cannot be overturned by mere conjecture or denied in advance (as petitioners would have the Court do) specially in this case where it is an underlying principle to advance a declared public policy. Petitioners claim that the implementation of RA 9335 will turn BIR and BOC officials and employees into "bounty hunters and mercenaries" is not only without any factual and legal basis; it is also purely speculative. A law enacted by Congress enjoys the strong presumption of constitutionality. To justify its nullification, there must be a clear and unequivocal breach of the Constitution, not a doubtful and equivocal one.16To invalidate RA 9335 based on petitioners baseless supposition is an affront to the wisdom not only of the legislature that passed it but also of the executive which approved it. Public service is its own reward. Nevertheless, public officers may by law be rewarded for exemplary and exceptional performance. A system of incentives for exceeding the set expectations of a public office is not anathema to the concept of public accountability. In fact, it recognizes and reinforces dedication to duty, industry, efficiency and loyalty to public service of deserving government personnel.

In United States v. Matthews,17 the U.S. Supreme Court validated a law which awards to officers of the customs as well as other parties an amount not exceeding one-half of the net proceeds of forfeitures in violation of the laws against smuggling. Citing Dorsheimer v. United States,18 the U.S. Supreme Court said: The offer of a portion of such penalties to the collectors is to stimulate and reward their zeal and industry in detecting fraudulent attempts to evade payment of duties and taxes. In the same vein, employees of the BIR and the BOC may by law be entitled to a reward when, as a consequence of their zeal in the enforcement of tax and customs laws, they exceed their revenue targets. In addition, RA 9335 establishes safeguards to ensure that the reward will not be claimed if it will be either the fruit of "bounty hunting or mercenary activity" or the product of the irregular performance of official duties. One of these precautionary measures is embodied in Section 8 of the law: SEC. 8. Liability of Officials, Examiners and Employees of the BIR and the BOC. The officials, examiners, and employees of the [BIR] and the [BOC] who violate this Act or who are guilty of negligence, abuses or acts of malfeasance or misfeasance or fail to exercise extraordinary diligence in the performance of their duties shall be held liable for any loss or injury suffered by any business establishment or taxpayer as a result of such violation, negligence, abuse, malfeasance, misfeasance or failure to exercise extraordinary diligence. Equal Protection Equality guaranteed under the equal protection clause is equality under the same conditions and among persons similarly situated; it is equality among equals, not similarity of treatment of persons who are classified based on substantial differences in relation to the object to be accomplished.19When things or persons are different in fact or circumstance, they may be treated in law differently. InVictoriano v. Elizalde Rope Workers Union,20 this Court declared: The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all citizens of the [S]tate. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but on persons according to the circumstances surrounding them. It guarantees equality, not identity of rights. The Constitution does not require that things which are different in fact be treated in law as though they were the same. The equal protection clause does not forbid discrimination as to things that are different. It does not prohibit legislation which is limited either in the object to which it is directed or by the territory within which it is to operate. The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the other departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with one another in certain particulars. A law is not invalid because of simple inequality. The very idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of constitutionality. All that is required of a valid classification is that it be reasonable, which means that the classification should be based on substantial distinctions which make for real differences, that it must be germane to the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each

member of the class. This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. In the exercise of its power to make classifications for the purpose of enacting laws over matters within its jurisdiction, the state is recognized as enjoying a wide range of discretion. It is not necessary that the classification be based on scientific or marked differences of things or in their relation. Neither is it necessary that the classification be made with mathematical nicety. Hence, legislative classification may in many cases properly rest on narrow distinctions, for the equal protection guaranty does not preclude the legislature from recognizing degrees of evil or harm, and legislation is addressed to evils as they may appear.21 (emphasis supplied) The equal protection clause recognizes a valid classification, that is, a classification that has a reasonable foundation or rational basis and not arbitrary.22 With respect to RA 9335, its expressed public policy is the optimization of the revenue-generation capability and collection of the BIR and the BOC.23 Since the subject of the law is the revenue- generation capability and collection of the BIR and the BOC, the incentives and/or sanctions provided in the law should logically pertain to the said agencies. Moreover, the law concerns only the BIR and the BOC because they have the common distinct primary function of generating revenues for the national government through the collection of taxes, customs duties, fees and charges. The BIR performs the following functions: Sec. 18. The Bureau of Internal Revenue. The Bureau of Internal Revenue, which shall be headed by and subject to the supervision and control of the Commissioner of Internal Revenue, who shall be appointed by the President upon the recommendation of the Secretary [of the DOF], shall have the following functions: (1) Assess and collect all taxes, fees and charges and account for all revenues collected; (2) Exercise duly delegated police powers for the proper performance of its functions and duties; (3) Prevent and prosecute tax evasions and all other illegal economic activities; (4) Exercise supervision and control over its constituent and subordinate units; and (5) Perform such other functions as may be provided by law.24 xxx xxx xxx (emphasis supplied)

On the other hand, the BOC has the following functions: Sec. 23. The Bureau of Customs. The Bureau of Customs which shall be headed and subject to the management and control of the Commissioner of Customs, who shall be appointed by the President upon the recommendation of the Secretary[of the DOF] and hereinafter referred to as Commissioner, shall have the following functions: (1) Collect custom duties, taxes and the corresponding fees, charges and penalties; (2) Account for all customs revenues collected; (3) Exercise police authority for the enforcement of tariff and customs laws;

(4) Prevent and suppress smuggling, pilferage and all other economic frauds within all ports of entry; (5) Supervise and control exports, imports, foreign mails and the clearance of vessels and aircrafts in all ports of entry; (6) Administer all legal requirements that are appropriate; (7) Prevent and prosecute smuggling and other illegal activities in all ports under its jurisdiction; (8) Exercise supervision and control over its constituent units; (9) Perform such other functions as may be provided by law.25 xxx xxx xxx (emphasis supplied)

Both the BIR and the BOC are bureaus under the DOF. They principally perform the special function of being the instrumentalities through which the State exercises one of its great inherent functions taxation. Indubitably, such substantial distinction is germane and intimately related to the purpose of the law. Hence, the classification and treatment accorded to the BIR and the BOC under RA 9335 fully satisfy the demands of equal protection. Undue Delegation Two tests determine the validity of delegation of legislative power: (1) the completeness test and (2) the sufficient standard test. A law is complete when it sets forth therein the policy to be executed, carried out or implemented by the delegate.26 It lays down a sufficient standard when it provides adequate guidelines or limitations in the law to map out the boundaries of the delegates authority and prevent the delegation from running riot.27 To be sufficient, the standard must specify the limits of the delegates authority, announce the legislative policy and identify the conditions under which it is to be implemented.28 RA 9335 adequately states the policy and standards to guide the President in fixing revenue targets and the implementing agencies in carrying out the provisions of the law. Section 2 spells out the policy of the law: SEC. 2. Declaration of Policy. It is the policy of the State to optimize the revenue-generation capability and collection of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) by providing for a system of rewards and sanctions through the creation of a Rewards and Incentives Fund and a Revenue Performance Evaluation Board in the above agencies for the purpose of encouraging their officials and employees to exceed their revenue targets. Section 4 "canalized within banks that keep it from overflowing"29 the delegated power to the President to fix revenue targets: SEC. 4. Rewards and Incentives Fund. A Rewards and Incentives Fund, hereinafter referred to as the Fund, is hereby created, to be sourced from the collection of the BIR and the BOC in excess of their respective revenue targets of the year, as determined by the Development Budget and Coordinating Committee (DBCC), in the following percentages: Excess of Collection of the Excess Percent (%) of the Excess Collection to Accrue

the Revenue Targets 30% or below More than 30%

to the Fund 15% 15% of the first 30% plus 20% of the remaining excess

The Fund shall be deemed automatically appropriated the year immediately following the year when the revenue collection target was exceeded and shall be released on the same fiscal year. Revenue targets shall refer to the original estimated revenue collection expected of the BIR and the BOC for a given fiscal year as stated in the Budget of Expenditures and Sources of Financing (BESF) submitted by the President to Congress. The BIR and the BOC shall submit to the DBCC the distribution of the agencies revenue targets as allocated among its revenue districts in the case of the BIR, and the collection districts in the case of the BOC. xxx xxx xxx (emphasis supplied)

Revenue targets are based on the original estimated revenue collection expected respectively of the BIR and the BOC for a given fiscal year as approved by the DBCC and stated in the BESF submitted by the President to Congress.30 Thus, the determination of revenue targets does not rest solely on the President as it also undergoes the scrutiny of the DBCC. On the other hand, Section 7 specifies the limits of the Boards authority and identifies the conditions under which officials and employees whose revenue collection falls short of the target by at least 7.5% may be removed from the service: SEC. 7. Powers and Functions of the Board. The Board in the agency shall have the following powers and functions: xxx xxx xxx

(b) To set the criteria and procedures for removing from service officials and employees whose revenue collection falls short of the target by at least seven and a half percent (7.5%), with due consideration of all relevant factors affecting the level of collection as provided in the rules and regulations promulgated under this Act, subject to civil service laws, rules and regulations and compliance with substantive and procedural due process: Provided, That the following exemptions shall apply: 1. Where the district or area of responsibility is newly-created, not exceeding two years in operation, as has no historical record of collection performance that can be used as basis for evaluation; and 2. Where the revenue or customs official or employee is a recent transferee in the middle of the period under consideration unless the transfer was due to nonperformance of revenue targets or potential nonperformance of revenue targets: Provided, however, That when the district or area of responsibility covered by revenue or customs officials or employees has suffered from economic difficulties brought about by natural calamities orforce majeure or economic causes as may be determined by the Board, termination shall be considered only after careful and proper review by the Board.

(c) To terminate personnel in accordance with the criteria adopted in the preceding paragraph: Provided, That such decision shall be immediately executory: Provided, further, That the application of the criteria for the separation of an official or employee from service under this Act shall be without prejudice to the application of other relevant laws on accountability of public officers and employees, such as the Code of Conduct and Ethical Standards of Public Officers and Employees and the Anti-Graft and Corrupt Practices Act; xxx xxx xxx (emphasis supplied)

Clearly, RA 9335 in no way violates the security of tenure of officials and employees of the BIR and the BOC. The guarantee of security of tenure only means that an employee cannot be dismissed from the service for causes other than those provided by law and only after due process is accorded the employee.31 In the case of RA 9335, it lays down a reasonable yardstick for removal (when the revenue collection falls short of the target by at least 7.5%) with due consideration of all relevant factors affecting the level of collection. This standard is analogous to inefficiency and incompetence in the performance of official duties, a ground for disciplinary action under civil service laws.32 The action for removal is also subject to civil service laws, rules and regulations and compliance with substantive and procedural due process. At any rate, this Court has recognized the following as sufficient standards: "public interest," "justice and equity," "public convenience and welfare" and "simplicity, economy and welfare."33 In this case, the declared policy of optimization of the revenue-generation capability and collection of the BIR and the BOC is infused with public interest. Separation Of Powers Section 12 of RA 9335 provides: SEC. 12. Joint Congressional Oversight Committee. There is hereby created a Joint Congressional Oversight Committee composed of seven Members from the Senate and seven Members from the House of Representatives. The Members from the Senate shall be appointed by the Senate President, with at least two senators representing the minority. The Members from the House of Representatives shall be appointed by the Speaker with at least two members representing the minority. After the Oversight Committee will have approved the implementing rules and regulations (IRR) it shall thereafter become functus officio and therefore cease to exist. The Joint Congressional Oversight Committee in RA 9335 was created for the purpose of approving the implementing rules and regulations (IRR) formulated by the DOF, DBM, NEDA, BIR, BOC and CSC. On May 22, 2006, it approved the said IRR. From then on, it became functus officio and ceased to exist. Hence, the issue of its alleged encroachment on the executive function of implementing and enforcing the law may be considered moot and academic. This notwithstanding, this might be as good a time as any for the Court to confront the issue of the constitutionality of the Joint Congressional Oversight Committee created under RA 9335 (or other similar laws for that matter). The scholarly discourse of Mr. Justice (now Chief Justice) Puno on the concept of congressional oversight in Macalintal v. Commission on Elections34 is illuminating:

Concept and bases of congressional oversight Broadly defined, the power of oversight embraces all activities undertaken by Congress to enhance its understanding of and influence over the implementation of legislation it has enacted. Clearly, oversight concerns post-enactment measures undertaken by Congress: (a) to monitor bureaucratic compliance with program objectives, (b) to determine whether agencies are properly administered, (c) to eliminate executive waste and dishonesty, (d) to prevent executive usurpation of legislative authority, and (d) to assess executive conformity with the congressional perception of public interest. The power of oversight has been held to be intrinsic in the grant of legislative power itself and integral to the checks and balances inherent in a democratic system of government. x x x x x x x x x Over the years, Congress has invoked its oversight power with increased frequency to check the perceived "exponential accumulation of power" by the executive branch. By the beginning of the 20th century, Congress has delegated an enormous amount of legislative authority to the executive branch and the administrative agencies. Congress, thus, uses its oversight power to make sure that the administrative agencies perform their functions within the authority delegated to them. x x x x x x x x x Categories of congressional oversight functions The acts done by Congress purportedly in the exercise of its oversight powers may be divided into three categories, namely: scrutiny, investigation and supervision. a. Scrutiny Congressional scrutiny implies a lesser intensity and continuity of attention to administrative operations. Its primary purpose is to determine economy and efficiency of the operation of government activities. In the exercise of legislative scrutiny, Congress may request information and report from the other branches of government. It can give recommendations or pass resolutions for consideration of the agency involved. xxx xxx xxx

b. Congressional investigation While congressional scrutiny is regarded as a passive process of looking at the facts that are readily available, congressional investigation involves a more intense digging of facts. The power of Congress to conduct investigation is recognized by the 1987 Constitution under section 21, Article VI, xxx xxx xxx c. Legislative supervision The third and most encompassing form by which Congress exercises its oversight power is thru legislative supervision. "Supervision" connotes a continuing and informed awareness on the part of a congressional committee regarding executive operations in a given administrative area. While both congressional scrutiny and investigation involve inquiry into past executive branch actions in order to influence future executive branch performance, congressional supervision allows Congress to scrutinize the exercise of delegated law-making authority, and permits Congress to retain part of that delegated authority.

Congress exercises supervision over the executive agencies through its veto power. It typically utilizes veto provisions when granting the President or an executive agency the power to promulgate regulations with the force of law. These provisions require the President or an agency to present the proposed regulations to Congress, which retains a "right" to approve or disapprove any regulation before it takes effect. Such legislative veto provisions usually provide that a proposed regulation will become a law after the expiration of a certain period of time, only if Congress does not affirmatively disapprove of the regulation in the meantime. Less frequently, the statute provides that a proposed regulation will become law if Congress affirmatively approves it. Supporters of legislative veto stress that it is necessary to maintain the balance of power between the legislative and the executive branches of government as it offers lawmakers a way to delegate vast power to the executive branch or to independent agencies while retaining the option to cancel particular exercise of such power without having to pass new legislation or to repeal existing law. They contend that this arrangement promotes democratic accountability as it provides legislative check on the activities of unelected administrative agencies. One proponent thus explains: It is too late to debate the merits of this delegation policy: the policy is too deeply embedded in our law and practice. It suffices to say that the complexities of modern government have often led Congresswhether by actual or perceived necessity- to legislate by declaring broad policy goals and general statutory standards, leaving the choice of policy options to the discretion of an executive officer. Congress articulates legislative aims, but leaves their implementation to the judgment of parties who may or may not have participated in or agreed with the development of those aims. Consequently, absent safeguards, in many instances the reverse of our constitutional scheme could be effected: Congress proposes, the Executive disposes. One safeguard, of course, is the legislative power to enact new legislation or to change existing law. But without some means of overseeing post enactment activities of the executive branch, Congress would be unable to determine whether its policies have been implemented in accordance with legislative intent and thus whether legislative intervention is appropriate. Its opponents, however, criticize the legislative veto as undue encroachment upon the executive prerogatives. They urge that any post-enactment measures undertaken by the legislative branch should be limited to scrutiny and investigation; any measure beyond that would undermine the separation of powers guaranteed by the Constitution. They contend that legislative veto constitutes an impermissible evasion of the Presidents veto authority and intrusion into the powers vested in the executive or judicial branches of government. Proponents counter that legislative veto enhances separation of powers as it prevents the executive branch and independent agencies from accumulating too much power. They submit that reporting requirements and congressional committee investigations allow Congress to scrutinize only the exercise of delegated law-making authority. They do not allow Congress to review executive proposals before they take effect and they do not afford the opportunity for ongoing and binding expressions of congressional intent. In contrast, legislative veto permits Congress to participate prospectively in the approval or disapproval of "subordinate law" or those enacted by the executive branch pursuant to a delegation of authority by Congress. They further argue that legislative veto "is a necessary response by Congress to the accretion of policy control by forces outside its chambers." In an era of delegated authority, they point out that legislative veto "is the most efficient means Congress has yet devised to retain control over the evolution and implementation of its policy as declared by statute."

In Immigration and Naturalization Service v. Chadha, the U.S. Supreme Court resolved the validity of legislative veto provisions. The case arose from the order of the immigration judge suspending the deportation of Chadha pursuant to 244(c)(1) of the Immigration and Nationality Act. The United States House of Representatives passed a resolution vetoing the suspension pursuant to 244(c)(2) authorizing either House of Congress, by resolution, to invalidate the decision of the executive branch to allow a particular deportable alien to remain in the United States. The immigration judge reopened the deportation proceedings to implement the House order and the alien was ordered deported. The Board of Immigration Appeals dismissed the aliens appeal, holding that it had no power to declare unconstitutional an act of Congress. The United States Court of Appeals for Ninth Circuit held that the House was without constitutional authority to order the aliens deportation and that 244(c)(2) violated the constitutional doctrine on separation of powers. On appeal, the U.S. Supreme Court declared 244(c)(2) unconstitutional. But the Court shied away from the issue of separation of powers and instead held that the provision violates the presentment clause and bicameralism. It held that the one-house veto was essentially legislative in purpose and effect. As such, it is subject to the procedures set out in Article I of the Constitution requiring the passage by a majority of both Houses and presentment to the President. x x x x x x x x x Two weeks after the Chadha decision, the Court upheld, in memorandum decision, two lower court decisions invalidating the legislative veto provisions in the Natural Gas Policy Act of 1978 and the Federal Trade Commission Improvement Act of 1980. Following this precedence, lower courts invalidated statutes containing legislative veto provisions although some of these provisions required the approval of both Houses of Congress and thus met the bicameralism requirement of Article I. Indeed, some of these veto provisions were not even exercised.35(emphasis supplied) In Macalintal, given the concept and configuration of the power of congressional oversight and considering the nature and powers of a constitutional body like the Commission on Elections, the Court struck down the provision in RA 9189 (The Overseas Absentee Voting Act of 2003) creating a Joint Congressional Committee. The committee was tasked not only to monitor and evaluate the implementation of the said law but also to review, revise, amend and approve the IRR promulgated by the Commission on Elections. The Court held that these functions infringed on the constitutional independence of the Commission on Elections.36 With this backdrop, it is clear that congressional oversight is not unconstitutional per se, meaning, it neither necessarily constitutes an encroachment on the executive power to implement laws nor undermines the constitutional separation of powers. Rather, it is integral to the checks and balances inherent in a democratic system of government. It may in fact even enhance the separation of powers as it prevents the over-accumulation of power in the executive branch. However, to forestall the danger of congressional encroachment "beyond the legislative sphere," the Constitution imposes two basic and related constraints on Congress.37 It may not vest itself, any of its committees or its members with either executive or judicial power.38 And, when it exercises its legislative power, it must follow the "single, finely wrought and exhaustively considered, procedures" specified under the Constitution,39 including the procedure for enactment of laws and presentment. Thus, any post-enactment congressional measure such as this should be limited to scrutiny and investigation. In particular, congressional oversight must be confined to the following:

(1) scrutiny based primarily on Congress power of appropriation and the budget hearings conducted in connection with it, its power to ask heads of departments to appear before and be heard by either of its Houses on any matter pertaining to their departments and its power of confirmation40 and (2) investigation and monitoring41 of the implementation of laws pursuant to the power of Congress to conduct inquiries in aid of legislation.42 Any action or step beyond that will undermine the separation of powers guaranteed by the Constitution. Legislative vetoes fall in this class. Legislative veto is a statutory provision requiring the President or an administrative agency to present the proposed implementing rules and regulations of a law to Congress which, by itself or through a committee formed by it, retains a "right" or "power" to approve or disapprove such regulations before they take effect. As such, a legislative veto in the form of a congressional oversight committee is in the form of an inward-turning delegation designed to attach a congressional leash (other than through scrutiny and investigation) to an agency to which Congress has by law initially delegated broad powers.43 It radically changes the design or structure of the Constitutions diagram of power as it entrusts to Congress a direct role in enforcing, applying or implementing its own laws.44 Congress has two options when enacting legislation to define national policy within the broad horizons of its legislative competence.45 It can itself formulate the details or it can assign to the executive branch the responsibility for making necessary managerial decisions in conformity with those standards.46 In the latter case, the law must be complete in all its essential terms and conditions when it leaves the hands of the legislature.47 Thus, what is left for the executive branch or the concerned administrative agency when it formulates rules and regulations implementing the law is to fill up details (supplementary rulemaking) or ascertain facts necessary to bring the law into actual operation (contingent rule-making).48 Administrative regulations enacted by administrative agencies to implement and interpret the law which they are entrusted to enforce have the force of law and are entitled to respect.49 Such rules and regulations partake of the nature of a statute50 and are just as binding as if they have been written in the statute itself. As such, they have the force and effect of law and enjoy the presumption of constitutionality and legality until they are set aside with finality in an appropriate case by a competent court.51 Congress, in the guise of assuming the role of an overseer, may not pass upon their legality by subjecting them to its stamp of approval without disturbing the calculated balance of powers established by the Constitution. In exercising discretion to approve or disapprove the IRR based on a determination of whether or not they conformed with the provisions of RA 9335, Congress arrogated judicial power unto itself, a power exclusively vested in this Court by the Constitution. Considered Opinion of Mr. Justice Dante O. Tinga Moreover, the requirement that the implementing rules of a law be subjected to approval by Congress as a condition for their effectivity violates the cardinal constitutional principles of bicameralism and the rule on presentment.52 Section 1, Article VI of the Constitution states:

Section 1. The legislative power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of Representatives, except to the extent reserved to the people by the provision on initiative and referendum. (emphasis supplied) Legislative power (or the power to propose, enact, amend and repeal laws)53 is vested in Congress which consists of two chambers, the Senate and the House of Representatives. A valid exercise of legislative power requires the act of both chambers. Corrollarily, it can be exercised neither solely by one of the two chambers nor by a committee of either or both chambers. Thus, assuming the validity of a legislative veto, both a single-chamber legislative veto and a congressional committee legislative veto are invalid. Additionally, Section 27(1), Article VI of the Constitution provides: Section 27. (1) Every bill passed by the Congress shall, before it becomes a law, be presented to the President. If he approves the same, he shall sign it, otherwise, he shall veto it and return the same with his objections to the House where it originated, which shall enter the objections at large in its Journal and proceed to reconsider it. If, after such reconsideration, two-thirds of all the Members of such House shall agree to pass the bill, it shall be sent, together with the objections, to the other House by which it shall likewise be reconsidered, and if approved by two-thirds of all the Members of that House, it shall become a law. In all such cases, the votes of each House shall be determined by yeas or nays, and the names of the members voting for or against shall be entered in its Journal. The President shall communicate his veto of any bill to the House where it originated within thirty days after the date of receipt thereof; otherwise, it shall become a law as if he had signed it. (emphasis supplied) Every bill passed by Congress must be presented to the President for approval or veto. In the absence of presentment to the President, no bill passed by Congress can become a law. In this sense, law-making under the Constitution is a joint act of the Legislature and of the Executive. Assuming that legislative veto is a valid legislative act with the force of law, it cannot take effect without such presentment even if approved by both chambers of Congress. In sum, two steps are required before a bill becomes a law. First, it must be approved by both Houses of Congress.54 Second, it must be presented to and approved by the President.55 As summarized by Justice Isagani Cruz56 and Fr. Joaquin G. Bernas, S.J.57, the following is the procedure for the approval of bills: A bill is introduced by any member of the House of Representatives or the Senate except for some measures that must originate only in the former chamber. The first reading involves only a reading of the number and title of the measure and its referral by the Senate President or the Speaker to the proper committee for study. The bill may be "killed" in the committee or it may be recommended for approval, with or without amendments, sometimes after public hearings are first held thereon. If there are other bills of the same nature or purpose, they may all be consolidated into one bill under common authorship or as a committee bill. Once reported out, the bill shall be calendared for second reading. It is at this stage that the bill is read in its entirety, scrutinized, debated upon and amended when desired. The second reading is the most important stage in the passage of a bill.

The bill as approved on second reading is printed in its final form and copies thereof are distributed at least three days before the third reading. On the third reading, the members merely register their votes and explain them if they are allowed by the rules. No further debate is allowed. Once the bill passes third reading, it is sent to the other chamber, where it will also undergo the three readings. If there are differences between the versions approved by the two chambers, a conference committee58 representing both Houses will draft a compromise measure that if ratified by the Senate and the House of Representatives will then be submitted to the President for his consideration. The bill is enrolled when printed as finally approved by the Congress, thereafter authenticated with the signatures of the Senate President, the Speaker, and the Secretaries of their respective chambers59 The Presidents role in law-making. The final step is submission to the President for approval. Once approved, it takes effect as law after the required publication.60 Where Congress delegates the formulation of rules to implement the law it has enacted pursuant to sufficient standards established in the said law, the law must be complete in all its essential terms and conditions when it leaves the hands of the legislature. And it may be deemed to have left the hands of the legislature when it becomes effective because it is only upon effectivity of the statute that legal rights and obligations become available to those entitled by the language of the statute. Subject to the indispensable requisite of publication under the due process clause,61 the determination as to when a law takes effect is wholly the prerogative of Congress.62 As such, it is only upon its effectivity that a law may be executed and the executive branch acquires the duties and powers to execute the said law. Before that point, the role of the executive branch, particularly of the President, is limited to approving or vetoing the law.63 From the moment the law becomes effective, any provision of law that empowers Congress or any of its members to play any role in the implementation or enforcement of the law violates the principle of separation of powers and is thus unconstitutional. Under this principle, a provision that requires Congress or its members to approve the implementing rules of a law after it has already taken effect shall be unconstitutional, as is a provision that allows Congress or its members to overturn any directive or ruling made by the members of the executive branch charged with the implementation of the law. Following this rationale, Section 12 of RA 9335 should be struck down as unconstitutional. While there may be similar provisions of other laws that may be invalidated for failure to pass this standard, the Court refrains from invalidating them wholesale but will do so at the proper time when an appropriate case assailing those provisions is brought before us.64 The next question to be resolved is: what is the effect of the unconstitutionality of Section 12 of RA 9335 on the other provisions of the law? Will it render the entire law unconstitutional? No. Section 13 of RA 9335 provides: SEC. 13. Separability Clause. If any provision of this Act is declared invalid by a competent court, the remainder of this Act or any provision not affected by such declaration of invalidity shall remain in force and effect.

In Tatad v. Secretary of the Department of Energy,65 the Court laid down the following rules: The general rule is that where part of a statute is void as repugnant to the Constitution, while another part is valid, the valid portion, if separable from the invalid, may stand and be enforced. The presence of a separability clause in a statute creates the presumption that the legislature intended separability, rather than complete nullity of the statute. To justify this result, the valid portion must be so far independent of the invalid portion that it is fair to presume that the legislature would have enacted it by itself if it had supposed that it could not constitutionally enact the other. Enough must remain to make a complete, intelligible and valid statute, which carries out the legislative intent. x x x The exception to the general rule is that when the parts of a statute are so mutually dependent and connected, as conditions, considerations, inducements, or compensations for each other, as to warrant a belief that the legislature intended them as a whole, the nullity of one part will vitiate the rest. In making the parts of the statute dependent, conditional, or connected with one another, the legislature intended the statute to be carried out as a whole and would not have enacted it if one part is void, in which case if some parts are unconstitutional, all the other provisions thus dependent, conditional, or connected must fall with them. The separability clause of RA 9335 reveals the intention of the legislature to isolate and detach any invalid provision from the other provisions so that the latter may continue in force and effect. The valid portions can stand independently of the invalid section. Without Section 12, the remaining provisions still constitute a complete, intelligible and valid law which carries out the legislative intent to optimize the revenue-generation capability and collection of the BIR and the BOC by providing for a system of rewards and sanctions through the Rewards and Incentives Fund and a Revenue Performance Evaluation Board. To be effective, administrative rules and regulations must be published in full if their purpose is to enforce or implement existing law pursuant to a valid delegation. The IRR of RA 9335 were published on May 30, 2006 in two newspapers of general circulation66 and became effective 15 days thereafter.67 Until and unless the contrary is shown, the IRR are presumed valid and effective even without the approval of the Joint Congressional Oversight Committee. WHEREFORE, the petition is hereby PARTIALLY GRANTED. Section 12 of RA 9335 creating a Joint Congressional Oversight Committee to approve the implementing rules and regulations of the law is declared UNCONSTITUTIONAL and therefore NULL and VOID. The constitutionality of the remaining provisions of RA 9335 is UPHELD. Pursuant to Section 13 of RA 9335, the rest of the provisions remain in force and effect. SO ORDERED. Puno, C.J., Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez, Corona, Carpio-Morales, Azcuna, Tinga, Chico-Nazario, Velasco, Jr., Nachura, Reyes, Leonardo-de-Castro, Brion, JJ.,concur

G.R. No. 153266

March 18, 2010

VICTORIA C. GUTIERREZ, 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, vs. 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 REGION, CARR AND MINDANAO REPRESENTED BY THEIR RESPECTIVE ATTORNEYS-IN-FACT, ATTORNEYS DANTE ILAYA AND VIRGINIA SUAREZ-PINLAC 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 G.R. No. 159007 ESTRELLITA C. AMPONIN, JUDITH A. CUDAL, ROMEO A. PAGALAN, MARISSA F. PARIAS, AND RAYMOND F. FLORES, ET AL., Petitioners,

vs. 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 G.R. No. 159029 AUGUSTO R. NIEVES, BONIFACIO 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, vs. DEPARTMENT OF BUDGET AND MANAGEMENT AND HONORABLE SECRETARY EMILIA T. BONCODIN,Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 170084 KAPISANAN NG MGA MANGGAGAWA 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, vs. DEPARTMENT OF BUDGET AND MANAGEMENT AND HONORABLE SECRETARY ROMULO NERI***,Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 172713 NATIONAL HOUSING AUTHORITY, Petitioner, vs. EPIFANIO P. RECANA, MERCEDES AMURAO, ERASMO APOSTOL, FLORENDO ASUNCION, FIORELLO JOSEFINA BALTAZAR, ET AL., Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 173119 INSURANCE COMMISSION OFFICERS AND EMPLOYEES, REPRESENTED BY INSURANCE COMMISSION EMPLOYEES WELFARE ASSOCIATION (ICEWA), ET AL., Petitioners, vs. DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HONORABLE SECRETARY ROLANDO G. ANDAYA, JR., Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 176477 FIBER INDUSTRY DEVELOPMENT AUTHORITY EMPLOYEES ASSOCIATION (FIDAEA), REMEDIOS V.J. ABGONA, CELERINA T. HILARIO, QUIRINO U. SANTOS, GRACE AURORA F. PASTORES, RHISA V. PEGENIA, ET AL., Petitioners, vs. DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HONORABLE SECRETARY ROLANDO G. ANDAYA, JR.***, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 177990 BUREAU OF ANIMAL INDUSTRY EMPLOYEES ASSOCIATION (BAIEA), LORY C. BANGALISAN, EDGARDO VINCULADO, LORENZO J. ABARCA, ROLANDO M. VASQUEZ, ALFREDO B. DUCUSIN, ET AL., Petitioners, vs. DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HONORABLE SECRETARY ROLANDO G. ANDAYA, JR.***, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x A.M. No. 06-4-02-SB RE: REQUEST OF SANDIGANBAYAN FOR AUTHORITY TO USE THEIR SAVINGS TO PAY THEIR COLA DIFFERENTIAL FROM JULY 1, 1989 TO MARCH 16, 1999, 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 reissued this circular on February 15, 19994 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 non-publication. 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 2005-5028 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; 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 standardizedsalary 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. 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. 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; (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 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 "catchall 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. 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 Administration18 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.201awph!1 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 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 198121 and 198422 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 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.1avvphi1 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 The implementing 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 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 governmentowned 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 Audit25 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 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 integration "all 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. 6758.28Notably, 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 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. 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. 916635 while the police is governed by R.A. 6648,36 as amended by R.A. 6975.37 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.

BPI LEASING CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS, COURT OF TAX APPEAL AND COMMISSIONER OF INTERNAL REVENUE, respondents. DECISION AZCUNA, J.: 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 ofP1,139,041.49 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 ofP361,924.44. 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: 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 Non-Forum 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. 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 non-forum 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. 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 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 beyondmerely 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 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. Davide, Jr., C.J., (Chairman), Panganiban, Ynares-Santiago, and Carpio, JJ., concur.

THE BOARD OF TRUSTEES OF THE GOVERNMENT SERVICE INSURANCE SYSTEM and WINSTON F. GARCIA, in his capacity as GSIS President and General Manager, Petitioners,

G.R. No. 170463

Present:

CARPIO, J., Chairperson, NACHURA, PERALTA,

- versus -

ABAD, and MENDOZA, JJ.

ALBERT M. VELASCO and MARIO I. MOLINA, Respondents.

Promulgated:

February 2, 2011 x--------------------------------------------------x 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 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 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.15 On 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

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 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).21 Since 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. 03-108389 (Velasco, et al. vs. The Board of Trustees of GSIS, et al., RTC-Manila, Branch 19) lies with the Civil Service Commission (CSC) and not with the Regional Trial Court of Manila, Branch 19.

II

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.

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, quasi-judicial 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 theSandiganbayan 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)

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)

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:

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.

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.

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 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.

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 incrementwill 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 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,40then 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 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. 03108389. We DECLARE the assailed provisions on step increment in GSIS Board Resolution Nos. 197 and 372VOID. 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.