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Dante B., Editor Gatmaytan. Grandeur: Lectures
Delivered on the Occasion of the Centennial of the
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(2013).

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 PHILIPPINE ADMINISTRATIVE RULEMAKING AND
ADJUDICATION IN THE TWENTIETH CENTURY: ISSUES,
TRENDS, AND PERSPECTIVES

SalvadorT. Car/ota

T he emergence of administrative agencies with rulemaking and

adjudication powers is a twentieth century phenomenon with
pervasive and far-reaching effects on modern day governance and on
private rights. With the rapidly increasing volume of administrative
rulemaking and adjudication, it is not an exaggeration to say that there is
hardly any aspect of modern life, which is left untouched by the rules
and decisions of these administrative agencies. Even the practice of law
has been greatly affected. The practice of the profession used to be
confined to appearances before regular courts of law. This is no longer
entirely true. Today not a few members of the bar devote most, if not
all, of their time practicing law before these agencies.
While their place in the Philippine legal system is now recognized,
these unique agencies were virtually unheard of in the previous century,
when the range of governmental regulation was quite limited. Philippine
society then was relatively simpler and easier to govern. Governance was
mainly focused on the traditional areas of tax collection, maintenance of
peace and order, and the enforcement of the civil, commercial, and
penal codes. The executive, legislative, and judicial authorities had the
luxury of time to address the comparatively simpler problems that arose
in these areas.
The multifarious and more intricate issues or problems pertaining to
modern day corporations, labor-management relations, social security,
transportation, telecommunications, energy, housing and land use, and
pollution were simply non-existent in the Philippine society of the
nineteenth century. There was, consequently, no need for the State to
create regulatory agencies such as the Securities and Exchange
Commission, National Labor Relations Commission, Social Security
Commission, Land Transportation and Franchising Regulatory Board,
Civil Aeronautics Board, National Telecommunications Commission,
Energy Regulatory Commission, Housing and Land Use Regulatory
 CENTENNIAL LECTURES OF THE UP COLLEGE OFLAW

Board, and the Pollution Adjudication Board.

The advent of the twentieth century, however, has radically altered
the landscape of governance. It ushered a host of social, economic,
technological, environmental, and population changes, which spawned a
bewildering number of issues and problems that seriously challenged the
capability of the traditional branches of government to effectively
respond to these novel concerns. It was precisely the expansion of the
areas of governmental regulation and the lack of time, expertise, and
organizational aptitude of the executive, legislative, and judicial branches
for effective regulatory control over the new areas which eventually
compelled the State to create administrative agencies with delegated
hybrid powers of rulemaking and adjudication. 1 Justice Laurel, speaking
for the Supreme Court in the case of PangasinanTransportation Co. v. Public
Service Commission,2 attributed the increasing reliance of the State to
delegate powers to these agencies to "the growing complexity of modern
life, the multiplication of the subjects of governmental regulation, and
the increased difficulty of administering the laws." 3
Today, as we enter the second decade of a new millennium, we find
these regulatory agencies all around us. With the inability of the three
branches of government to directly and effectively respond to the new
developments brought about by our increasingly complex society, the
unmistakable trend is the continuing reliance by the State on the creation
of agencies with delegated rulemaking and adjudication powers. There
is really no other choice inasmuch as the force of necessity dictates the
rise of the regulatory agencies. Considering that these agencies have a
great impact not just on the public interest but on private rights as well,
it is important for us to be sensitive to the varied issues and problems
associated with their rulemaking and adjudication powers and to be
involved in the search for ways by which fairness can be maximized in
the exercise of such powers.

I See Julius Stone, The Twentieth Centugy Administrative Explosion and After, 52 CALIF L.
REv. 513, 516-517 (1964).
2 G.R. No. 47065, 70 PHIL. REP. 221 (S.C.,June 26, 1940).
3 Id.at 229.
 Administrative Rulemaking andAdjudication

I
ADMINISTRATIVE RULEMAKING AND ADJUDICATION AND THE
DOCTRINE OF SEPARATION OF POWERS

The nature and scope of administrative rulemaking and adjudication

can be better appreciated when viewed in the light of the doctrine of
separation of powers and its corollary doctrine of non-delegation of
powers. The issue that was raised in the early stages of the development
of regulatory agencies was whether or not the concentration of
executive, rulemaking, and adjudication powers in a single agency
collides with the central idea behind the doctrine of separation of
powers which is the dispersal of such sovereign functions to the
traditional executive, legislative, and judicial organs of government. A
literal interpretation of the doctrine can theoretically lead to the
conclusion that there is such a conflict. Under this myopic view, the
existence of regulatory agencies with hybrid powers is not in harmony
with the doctrine and the trichotomy that was set up by our
constitutional system.
The constitutional position of regulatory agencies is an issue that has
engaged the attention of legal scholars. How are we to classify these
ubiquitous agencies in the light of the dominant principle of separation
of powers? In the first place, no matter how crucial their role is in
governance, they do not constitute a fourth branch in our constitutional
order. Secondly, because of their hybrid functions, they cannot be
regarded as strictly or exclusively belonging to the executive, legislative,
or judicial branches of government. So, how are we to explain their
place in our constitutional system? The following observations on the
doctrine of separation of powers and the constitutional position of
administrative agencies are enlightening.

The separation of powers principle is a fundamental and

valid dogma of our constitutions. Its object is the
preservation of political safeguards against the capricious
exercise of power; and, incidentally, it lays down the
broad lines of an efficient division of functions. Its logic
is the logic of polarity rather than strict classification.
History, convention, and constitutional mandate
definitely allocate certain functions to one or another of
the three great organs. But in many crucial instances
where there is pressure for the transfer of old or the
creation of new functions or for the better
 CENTENIAL LEUTURES OF THE UP COLLEGE OF LAW

implementation of old ones, the logical implications of

the principle are conflicting. Our constitutions recognize
the legislative as the organ of widest law-making
competence; our courts consequently presume that
legislative acts are constitutional. If, therefore, the
legislature has seen fit to create an organism for the
transaction of public business, its validity should be
sustained if one among competing logical implications
reasonably supports it. At such points, the theory of
separation is logically too infirm to condemn any
sensible or convenient arrangement. We should in sum
keep in mind that the great end of the theory is, by
dispersing in some measure the centers of authority, to
prevent absolutism. It is not eternally to stratify our
governmental arrangements in the particular mold of
1789, or any other date.4

The prevention of absolutism and the capricious exercise of the

sovereign powers of the State being the ultimate objective of allocating
such powers to the three traditional organs of government, it stands to
reason that if there are existing control or checking mechanisms that can
keep the regulatory agencies within legal bounds in the exercise of their
hybrid functions, then the existence of such agencies can be reconciled
with the doctrine of separation of powers under our constitutional
framework. As shall be pointed out subsequently, there are such control
or checking mechanisms, although with varying efficacy.

II
RULEMAKING AND THE NON-DELEGATION DOCTRINE

The basic idea behind the non-delegation doctrine is that since the
constitution has conferred upon the legislature the power to make laws,
the latter cannot evade responsibility by delegating such power to some
other body or agency. As explained by the Supreme Court in the 1908
case of United States v. Barias,the non-delegation doctrine "is based on
the ethical principle that such delegated power constitutes not only a
right but a duty to be performed by the delegate by the instrumentality

4 Louis L. JAFFE & NATHANIEL L. NATHANSON, ADMINISTRATIVE LAW: CASES AND

MATERIALS 37-38 (3d ed. 1968).
 Administrative Rulemaking andAdjudication

of his own judgment acting immediately upon the '5

matter of legislation
and not through the intervening mind of another.
Conventional legal thinking considers the delegation of rulemaking
power to administrative agencies as an exception to the non-delegation
doctrine. Judicial decisions perfunctorily point out that what is
permissible is merely the delegation of power to implement the law.
Thus, rulemaking has been characterized as "subordinate legislation" to
denote the idea that it cannot transcend the limits of its statutory
authority and the rules promulgated cannot be inconsistent with the law.
That rulemaking is subject to the control of the legislature is too well
settled in administrative law to require an extended discussion.
Nevertheless, the often quoted judicial declaration that the power to
make the law cannot be delegated should not be too narrowly or literally
construed as it could obscure the reality that regulatory agencies do in
fact make laws. Rulemaking is legislative in character. When the rules
promulgated are within the scope of the rulemaking grant and when the
legal requirements for the valid exercise of the rulemaking power are
observed, such rules, according to settled jurisprudence, have the force
and effect of law.6 This explains why the Supreme Court, in the leading
case of Tanada v. Tuvera, has ruled that due process requires not only
laws but also rules and regulations, except interpretative rules and
internal rules, to be published in a newspaper of general circulation
before they become effective. Moreover, under the Administrative Code
of 1987, rules take effect fifteen days from the date of filing with the
University of the Philippines Law Center.8
Pursuant to the separation of powers and the non-delegation
doctrines, jurisprudence has developed a test to determine when the
delegation of power to agencies is permissible. In the case of PelaeZ v.

5 G.R. No. 4349, 11 PHIL. REP. 327, 330 (S.C., Sept. 24, 1908).
6 See People v. Que Po Lay, G.R. No. L-6791, 94 PHIL. REP. 640 (S.C., Mar. 29,
1954).
7 G.R. No. L-63915, 146 SCRA 446 (Dec. 29, 1986) (Phil.).
8 The Administrative Code in part provides:
Effecfiviy. - In addition to other rule-making requirements provided by law not
inconsistent with this Book, each rule shall become effective fifteen (15) days
from the date of filing as above provided unless a different date is fixed by law,
or specified in the rule in cases of imminent danger to public health, safety and
welfare, the existence of which must be expressed in a statement accompanying
the rule. The agency shall take appropriate measures to make emergency rules
known to persons who may be affected by them.
ADMINISTRATIVE CODE, bk. VII, § 4, Exec. Ord. No. 292, as amended by Rep. Act
No. 6682 (Phil.).
 CENTENNIAL LECFURES OF THE UP COLLEGE OFLA W

Auditor General,9 a 1965 case where the Supreme Court declared as

unconstitutional the power delegated to the President under Section 68
of the previous Revised Administrative Code to create municipalities in
the guise of fixing boundaries, the Court laid down the so-called
"completeness test." The Court declared that:

Although Congress may delegate to another branch of

the government the power to fill in the details in the
execution, enforcement or administration of a law, it is
essential, to forestall a violation of the principle of
separation of powers, that said law: (a) be complete in
itself - must set forth therein the policy to be executed,
carried out or implemented by the delegate - and (b) fix
a standard - the limits of which the delegate must
conform in the performance of his functions. Indeed,
without a statutory declaration of policy, which is the
essence of every law, and, without the aforementioned
standard, there would be no means to determine with
reasonable certainty whether the delegate has acted
within or beyond the scope of his authority. Hence, he
could thereby arrogate upon himself the power, not only
to make the law, but also - and this is worse - to
unmake it, by adopting measures inconsistent with the
end sought to be attained by the Act of Congress, thus
nullifying the principle of separation of powers and
system of checks and balances, and consequently,
undermining the very foundation of our republican
system.'0

As explained by the Supreme Court, the "completeness test" appears

to be a workable device to prevent arbitrariness in the exercise of
delegated powers. It is, however, in the fixing of standards that the
functional value of this test can be seriously questioned. It is conceded
that if the standards are sufficiently definite or specific, the exercise of
discretion, to borrow the felicitous language of Justice Cardozo, can be
"canalized within the banks that keep it from overflowing."" On the
other hand, if the standards are broad or vague, what could result is

9 G.R. No. L-23825, 15 SCRA 569 (Dec. 24, 1965) (Phil.).

10 Id. at 576-577.
1 Panama Refining Co. v. Ryan, 293 U.S. 388 (1935) (CardozoJ., dissenting).
 Administrative Rulemaking andAdjudicalion

unbridled discretion in the exercise of delegated powers. In the history

of delegation cases in the Philippines, broad standards, such as "interest
of law and order,"' 12 "public interest,"' 13 and "justice and substantial
merits of the case,"14 have been considered by the Supreme Court as
sufficient standards that could withstand an attack on the
constitutionality of the delegation of powers.
The inability of the legislature to provide specific standards in every
case of delegation of power is not difficult to discern if we consider the
fact that administrative agencies operate in different areas, which are
subject to conditions and policy considerations with varying degrees of
susceptibility to specific standards. It has been pointed out that the
laying down of definite standards should take into account the number,
vagueness, and degree of potential conflicts among the policy indications
which the legislature wants to be accommodated and the rate of change
and movement in the facts concerning such policies."5 In instances
where the fixing of specific standards cannot be done, Congress
proceeds with the delegation of power by providing broad standards
rather than withhold it and thereby frustrate the implementation of a
desired legislative policy.
Notwithstanding the difficulty involved in the fixing of specific
standards, the Supreme Court has taken a perspective, which
acknowledges that the delegation of powers to regulatory agencies is an
imperative in our modern society. Consequently, it has assumed a liberal
attitude in resolving issues on sufficiency of standards.16 Viewed in the
light of the inability of the legislature to supply definite or specific
standards in all instances of delegation of power, and considering the
liberal posture of the Supreme Court in resolving questions on
sufficiency of standards, an important issue pertaining to the efficacy of
the non-delegation doctrine as a tool to curb the capricious exercise of
delegated powers arises. It is noteworthy that Kenneth Culp Davis, a

12 Rubi v. Provincial Bd., G.R. No. L-14078, 39 PHIL. REP. 660 (S.C., Mar. 7, 1919).
13 People v. Rosenthal, G.R. No. L-46076-77, 68 PHIL. REP. 328 (S.C., June 12, 1939).
14 Int'l Hardwood & Veneer Co. v. Pafigil Fed'n of Labor, G.R. No. L-47178, 70

PHIL. REP. 602 (S.C., Nov. 25, 1940).

15 Stone, supra note 1, at 533.
16 It must be noted, however, that while this liberal attitude is manifest in most

delegation cases, in four cases, the Supreme Court struck down the validity of the
delegation of power. See Compania General de Tabacos de Filipinas v. Bd. of Pub. Util.
Comm'rs, G.R. No. L-11216, 34 PHIL. REP. 136 (S.C., Mar. 6, 1916); United States v.
Ang Tang Ho, G.R. No. 17122, 43 PHIL. REP. 1 (S.C., Feb. 27, 1922); People v. Vera,
G.R. No. L-45685, 65 PHIL. REP. 56 (S.C., Nov. 16, 1937); Pelaez v. Auditor Gen.,
G.R. No. L-23825, 15 SCRA 569 (Dec. 24, 1965) (Phil.).
 CENTENNAiL LECIVRES OF THE UP COLLEGE OFLAW

recognized authority on Administrative Law, considers the non-

delegation doctrine as a failed doctrine. He advocates its modification
into a judicial tool that can effectively control administrative discretion.

According to Davis:

The non-delegation doctrine can and should be altered

to turn it into an effective and useful judicial tool. Its
purpose should no longer be either to prevent delegation
of legislative power or to require meaningful statutory
standards; its purpose should be the much deeper one of
protecting against unnecessary and uncontrolled
discretionary power. The focus should no longer be
exclusively on standards; it should be on the totality of
protections against arbitrariness, including both
safeguards and standards. The key should no longer be
statutory words; it should be the protections the
administrators in fact provide, irrespective of what the
statutes say or fail to say. The focus of judicial inquiries
thus should shift from statutory standards to
administrative safeguards and administrative standards.
As soon as that shift is accomplished, the protections
should grow beyond the non-delegation doctrine to a
much broader requirement, judicially enforced, that as
far as is practicable administrators must structure their
discretionary power through appropriate safeguards and
must confine and guide their discretionary power
17
through standards, principles, and rules.

In addition to the modified non-delegation doctrine, Davis is also of

the view that due process and the void for vagueness principle as applied
to administrative policy can likewise be utilized to enable the courts to
require the articulation of administrative standards and safeguards. 8

17 KENNETH CULP DAvIs, ADMINISTRATIVE LAW TREATISE, 1970 SUPPLEMENT 40-

41(1971).
18 KENNETH CULP DAvis, KENNETH CULP DAvIS' ADMINISTRATIVE LAW OF THE
SEVENTIES: SUPPLEMENTING ADMINISTRATiVE LAW TREATISE 39 (1976).
 Administrative Rulemaking andAdjudication 79

III
LIMITATIONS ON THE RULEMAKING POWER

Being in the nature of subordinate legislation, administrative

rulemaking is subject to certain limitations. The rulemaking grant is not a
license for the agency to promulgate any rule. Aside from being
authorized by law, the rule must not be inconsistent with the law or the
Constitution. It must likewise be reasonable and germane to the purpose
of the law. Agency perception regarding the desirability of the rule or its
possible beneficial effects is immaterial where the rule is shown to be
inconsistent with the law. The rule is void and can be successfully
challenged in court.19
The provision in Executive Order No. 292, otherwise known as the
Administrative Code of 1987, on effectivity of rules and public
participation through notice and hearing must be highlighted as it serves
to provide safeguards that could maximize fairness in rulemaking. It is
now a requirement for effectivity that three certified copies of every rule
shall be filed with the U.P. Law Center. Moreover, it is expressly
provided that "each rule shall become effective fifteen (15) days from
the date of filing ... unless a different date is fixed by law, or specified
in the rule in cases of imminent danger to the public health, safety and
welfare, the existence of which must be expressed in a statement
accompanying the rule." 20 This provision should be harmonized with the
ruling in Tanada v. Tuvera21 that laws and rules take effect fifteen days
from publication in a newspaper of general circulation, unless otherwise

19 Concerning the limits on the rulemaking power, see Olsen & Co., Inc. v. Aldanese,
G.R. No. L-18740, 43 PHIL. REP. 259 (S.C., Apr. 28, 1922); Sy Man v Jacinto, G.R. No.
L-5612, 93 PHIL. REP. 1093 (S.C., Oct. 31, 1953); People v. Maceren, G.R. No. L-
32166, 79 SCRA 450 (Oct. 18, 1977) (Phil.); Toledo v. Civil Serv. Comm'n, G.R. No.
92646-47, 202 SCRA 507 (Oct. 4, 1991) (Phil.); Comm'r v. Court of Appeals, G.R. No.
108358, 240 SCRA 368 (Jan. 20, 1995) (Phil.); Land Bank of the Phil. v. Court of
Appeals, G.R. No. 118712, 249 SCRA 149 (Oct. 6, 1995) (Phil.); GMCR, Inc. v. Bell
Telecomm. Phil., Inc., G.R. No. 126496, 271 SCRA 790 (Apr. 30, 1997) (Phil.); Ass'n
of Philippine Coconut Desiccators v. Philippine Coconut Auth., G.R. No. 110526, 286
SCRA 109 (Feb. 10, 1998) (Phil.); Ople v. Torres, G.R. No. 127685, 293 SCRA 141
(July 23, 1998) (Phil.); Philippine Bank of Commc'ns v. Comm'r, G.R. No. 112024, 302
SCRA 241 (Jan. 28, 1999) (Phil.); China Banking Corp. v. Members of the Bd. of Trs.,
Home Dev. Mut. Fund, G.R. No. 131787, 307 SCRA 443 (May 19, 1999) (Phil.);
Maxima Realty Mgmt. & Dev. Corp. v. Parkway Real Estate Dev. Corp., G.R. No.
136492, 422 SCRA 572 (Feb. 13, 2004) (Phil.).
20 ADMINISTRATIVE CODE, bk. VII, §§ 3-4, Exec. Ord. No. 292, as amended by Rep.
Act No. 6682 (Phil.).
21 G.R. No. L-63915, 146 SCRA 446 (Dec. 29, 1986) (Phil.).
 CE1NTENNIAL LECITIRES OF THE UP COLLEGE OF LA w

provided by law. Under the Administrative Code of 1987, rules take

effect fifteen days from the date of filing with the U.P. Law Center. On
the other hand, in the Tanada ruling, rules take effect fifteen days from
publication in a newspaper of general circulation. Suppose a rule was
published in a newspaper of general circulation but was not filed in the
U.P. Law Center, will it take effect fifteen days from publication?
Conversely, if it was filed in the U.P. Law Center but was not published
in a newspaper of general circulation, will it take effect fifteen days from
filing as provided in the Administrative Code of 1987? Subsequent
decisions of the Supreme Court, which affirmed Tanada, require for the
effectivity of rules both publication and filing.22 This means that if either
the publication or filing of the rule comes ahead of the other, the
effectivity of the rule has to wait until the other requirement is complied
with.
On public participation, it is now a requirement that "an agency
shall, as far as practicable, publish, or circulate notices of proposed rules
and afford interested parties the opportunity to submit their views prior
to the adoption of any rule. ' ' 23 The importance of public participation in
rulemaking cannot be overemphasized. It must not be forgotten that
administrators who wield rulemaking powers are not elected
representatives of the people who can be changed by the electorate
during elections. These administrators are appointed public officers
without a constituency and, as a general rule, cannot be removed from
office except for cause as provided by law and after due process. If they
make rules unilaterally without the benefit of public participation, there
is a greater probability of abuse in the exercise of the rulemaking power.
In the making of laws in Congress, public participation is ensured
through the public hearings conducted by the different congressional
committees and through the activities of various lobby or pressure
groups. There is no reason why public participation should not be made
an integral part of the rulemaking process. By allowing the public to
submit suggestions or counterproposals to a proposed agency rule, the
agency can take a second look at its own proposed rule and, if need be,

22 See Republic v. Express Telecomm. Co., G.R. No. 147096, 373 SCRA 316 (an. 15,
2002) (Phil.); Nat'l Ass'n of Elec. Consumers for Reforms v. Energy Regulatory
Comm'n, G.R. No. 163935, 481 SCRA 480 (Feb. 2, 2006) (Phil.); GMA Network, Inc.
v. Movie & Television Review & Classification Bd., G.R. No. 148579, 514 SCRA 191
(Feb. 5, 2007) (Phil.); Republic v. Pilipinas Shell Petroleum Corp., G.R. No. 173918,
550 SCRA 680 (Apr. 8, 2008) (Phil.).
23 ADMINISTRATIvE CODE, bk. VII, § 9, Exec. Ord. No. 292, as amended by Rep. Act
No. 6682 (Phil.).
 Administraive Rulemakang andAdjdication

to accommodate the input from the public in the final shaping of the
rule to be adopted.
One of the significant innovations introduced by the Administrative
Code of 1987 is the provision that "in the fixing of rates, no rule or final
order shall be valid unless the proposed rates shall have been published
ina newspaper of general circulation at least two (2) weeks before the
first hearing thereon., 24 Rate fixing is legislative in nature. However,
there are instances when rate fixing assumes a quasi-judicial character.
This happens, according to the Supreme Court in the leading case of
Vigan Electric Li'gbt Co. v. Public Service Commission, 5 when the rate fixed
applies exclusively to one enterprise or entity and is based on a finding
of fact, in which case, due process requires notice and hearing. However,
when the rate to be fixed applies to all entities or enterprises of a given
kind, rate fixing becomes legislative in character and, unless the law
requires otherwise, notice and hearing may be dispensed with. With the
adoption of the policy of public participation in rate fixing, proposed
rates of legislative character should now be published in a newspaper of
general circulation before the first hearing.

IV
JUDICIAL FUNCTION OF ADMINISTRATwE AGENCIES

If rulemaking is viewed as "subordinate legislation," the judicial

function of administrative agencies is characterized as "quasi-judicial."
However, it must be stressed at the outset that when agencies decide
cases within their jurisdiction, they are truly exercising the judicial
function just like the regular courts. The essential or constitutive
elements of the judicial function may be reduced to the following: (1) a
competent tribunal, (2) a case or controversy, and (3) a law to be applied
to resolve the case. When an agency exercises its adjudicatory power to
decide a case within its jurisdiction by applying the law, which it also
administers, all of these elements concur. Thus, when there is, for
instance, an unfair labor practice controversy, the case must be filed with
the National Labor Relations Commission because it is the competent
tribunal to decide the case by applying the pertinent provisions of the
Labor Code. So why use the term "quasi-judicial" to describe the

24 Id. 5 9(2).
25 G.R. No. L-19850, 10 SCRA 46, 52-53 (an. 30, 1964) (Phil.). The ruling of the
Supreme Court was subsequently reaffirmed in the case of Philippine Commc'ns
Satellite Corp. v. Alcuaz, G.R. No. 84818, 180 SCRA 218 (Dec. 18, 1989) (Phil.).
 CEi\TENNLL LECTURES OF THE UP COLLEGE OF LAW

adjudicatory power of the agencies?

The usage of the term "quasi-judicial" can be explained by the
following considerations. First of all, these agencies are not regular
courts and are not part of the judiciary. They are creations of the
legislature and they exercise delegated powers granted in the enabling
statutes. In addition, the quantum of evidence in administrative
proceedings is only substantial evidence or "such relevant evidence
which a reasonable mind will accept as adequate to support a
conclusion, ' '26 while in civil and criminal cases, it is preponderance of
evidence and proof beyond reasonable doubt, respectively. Moreover,
although these agencies can issue subpoenas, writs of execution, and
even issue contempt citations when the law expressly grants such
power, 7 they do not strictly observe the technical rules of evidence and
procedure in the conduct of their proceedings.
The inapplicability of the technical rules of procedure in
administrative proceedings is based on a laudable purpose. Unlike the
regular courts, which move rather slowly, administrative agencies are
created to act with dispatch and flexibility. Whether the reality matches
this grand objective is, of course, an entirely different matter. It would
be interesting to validate by empirical research the growing impression
that many quasi-judicial agencies act like courts of law, forgetting the
need to act with speed and flexibility.
It is also important to take into account that, in many instances, the
administrators who wield adjudicatory powers are not members of the
bar and, therefore, not conversant with the highly technical rules of
evidence and procedure. The Supreme Court had the opportunity to
comment on this matter in a case involving the Board of Examiners for
Surveyors. The Court noted that:

A rule so long respected, because it is buttressed upon

reason and authority, is that technical rules of court
practice, procedure and evidence are not to be applied
with rigidity in administrative proceedings. We should
have in mind the nature of administrative bodies, the
character of the duties they are required to perform, the
purposes for which they are organized and the persons

26 Ang Tibay v. Court of Indus. Relations, G.R. No. L-46496, 69 PHIL. REP. 635 (S.C.,
Feb. 27, 1940).
27 See ADMINISTRATIVE CODE, bk. VII, § 13, Exec. Ord. No. 292, as amended by

Rep. Act No. 6682 (Phil.); Gov't Serv. Ins. Sys. v. Civil Serv. Comm'n, G.R. No.
96938, 202 SCRA 799 (Oct. 15, 1991) (Phil.).
 Administraive Rulemaking andAdjudication

who compose them. Here we are concerned with

members of a board of surveyors - technical men but
not necessarily trained lawmen. In this posture, it is quite
reasonable to assume that their proceedings may not be
conducted with that degree of exactness or with such
scrupulous observance of the complex technical rules
expected in a legal battle before a court of justice. Their
acts should not be measured by the same yardstick
exacted of a judge of a court of law. So much leeway is
given an investigating administrative body.28

To be sure, there are many administrators who are required by law

to be members of the bar. This is especially true in cases where their
adjudicatory powers cannot be exercised effectively without knowledge
of law and procedure. But this is not a guarantee that they will conduct
their proceedings swiftly and expeditiously without being hampered by
the rigidities of the rules on evidence and procedure.
Having emphasized the need for acting with dispatch and flexibility,
we must hasten to add that agencies cannot take shortcuts and disregard
the fundamental requirements of procedural due process. In the
landmark and frequently quoted case of Ang Tibay v. Court of Industrial
Relations, the Supreme Court enumerated the following "cardinal
primary" rights or requirements which must be respected in
administrative proceedings: (1) the right to a hearing, (2) consideration
by the agency of the party's evidence, (3) the agency's decision must
have something to support it, (4) the evidence to support a finding or
conclusion must be substantial, (5) the decision must be rendered on the
basis of the evidence presented at the hearing, or at least contained in
the record and disclosed to the parties affected, (6) the agency must act
on its own independent consideration of the law and facts of the case,
and not simply accept the views of a subordinate in arriving at a
decision, and (7) the decision of the agency must be rendered in a
manner that will enable the parties to know the issues involved and the
explanation or reasons for the decision. 29 The last requirement is what
we might call a "reasoned" decision, which usually includes a discussion
of the facts, the issues, and the law upon which the decision is based.
The principle of procedural due process embodies the idea of
fairness. In dispensing fairness to the parties, however, the principle

28 Asprec v. Itchon, G.R. No. L-21685, 16 SCRA 921 (Apr. 30, 1966) (Phil.).
29 G.R. No. L-46496, 69 PHIL. REP. 635 (S.C., Feb. 27, 1940).
 CENTEI'NIAL LEC17JRES OFTHE UP COLLEGE OF LAW

itself provides elbow room or flexibility to quasi-judicial agencies. Thus,

unless the law expressly requires a formal evidentiary hearing, agencies
can just require the presentation of position papers, affidavits, and other
written presentations upon which they will base their decisions. What is
important is the opportunity to be heard. As long as the parties were
given the opportunity to explain their side, a formal hearing is not
necessary. 30

V
CONTROL OVER ADMINISTRATIVE RULEMAKING AND
ADJUDICATION

A full-blown discussion of the checking or control mechanisms over

administrative rulemaking and adjudication would require an extensive
analysis of the relationship of administrative agencies with the executive,
legislative, and judicial branches of government. As previously
mentioned, these agencies cannot be classified as exclusively belonging
to any of the three branches. However, these traditional organs of
government do exercise control in varying degrees over the exercise of
administrative power. Due to our limited time, we can only briefly
discuss the ways by which the three branches can check the
unauthorized or capricious exercise of powers by administrative
agencies.
On the part of the President, the executive power that is vested in
him by the Constitution enables him to exercise supervision over the
entire bureaucracy and see to it that the laws are faithfully executed. He
is likewise authorized to exercise control over the executive
departments, bureaus, and offices. 31 This means that insofar as
departments, bureaus, or offices in the executive department, which
exercise rulemaking and adjudicatory powers are concerned, their
actions or decisions can be changed, altered, or modified by the
President. With regard to agencies created by Congress, the President
exercises control only when the enabling statutes expressly granted such
power to him. Otherwise, if the law is silent, he cannot exercise control
as the intention of Congress is clear that he cannot review the actions or
decisions of these agencies.

30 See Gatus v. Quality House, Inc., G.R. No. 156766, 585 SCRA 177 (Apr. 16, 2009)
(Phil.); Medina v. Comm'n on Audit, G.R. No. 176478, 543 SCRA 684 (Feb. 4, 2008)
(Phil.).
31 CONST. (1987), art. VII, §§ 1, 17 (Phil.).
 Administrative Rulemaking andAdjudicaion

From the perspective of the legislature, its oversight power over the
agencies can be utilized as a control mechanism. Theoretically, through
the creation of oversight committees, agency operations are monitored
or supervised to ensure that the exercise of delegated powers is in
accord with legislative policies. On closer analysis, however, lack of time,
expertise, and organizational aptitude for effective and continuing
supervision-the very same factors that compelled the delegation of
rulemaking and adjudicatory powers to the agencies-substantially
diminish the functional value of these oversight committees as checks to
administrative action. Neither can we realistically consider the
congressional power to conduct investigations in aid of legislation as a
potent check on agency abuse or capriciousness in the exercise of their
powers. While the constitution mandates that these investigations be
conducted in aid of legislation, legislative history shows that quite a
number of these investigations are focused on the past conduct of
public officials who are suspected of having violated laws already in
existence. Oftentimes, the results of these investigations are
recommendations to the Office of the Ombudsman for the criminal
prosecution of officials who were investigated. Moreover, these
investigations are not undertaken on a regular basis and they are mostly
confined to major or sensational cases of graft and corruption. Clearly,
legislative investigation in aid of legislation is not an effective tool to
prevent administrative misbehavior.
Concerning the efficacy of the non-delegation doctrine as a tool to
prevent the capricious exercise of delegated powers, it has been noted
earlier that the fixing of legislative standards in the enabling statutes of
agencies as required by the doctrine can only be considered as an
effective method of checking agency action when such standards are
sufficiently definite or specific. Broad or vague standards are open
invitations to absolute or unfettered discretion, which may or may not
be exercised for the public interest.
It is, however, the rules of administrative procedure enacted by
Congress, which can help prevent uncontrolled discretion. It is
noteworthy that Book VII of the Administrative Code of 1987 contains
provisions, which prescribe procedural rules to be commonly observed
by agencies in administrative rulemaking and adjudication.32 If strictly
followed, these rules can further enhance the opportunity to be heard of

32 ADMINISTRATIVE CODE, bk. VII, §§ 9-16, Exec. Ord. No. 292, as amended by Rep.
Act No. 6682 (Phil.).
 CENTENNIAL LECTURES OF THE UP COLLEGE OF LAW

the parties affected by agency action thereby ensuring their right to due
process.
The judiciary offers the most effective check on agency action
through its power of judicial review. While the executive and legislative
branches can control administrative rulemaking and adjudication only to
a certain extent, the courts, through the various modes of judicial review
provided in the Rules of Court, can better control agency behavior to
ensure that it does not exceed the limits set by law. Undoubtedly, judicial
review offers the most direct way to check arbitrariness in the exercise
of administrative power and it provides immediate relief to the adversely
affected parties.
In evaluating the efficacy of judicial review as a checking device over
agency action, two major issues must be taken into consideration. The
first issue is a threshold issue as it relates to its availability. If judicial
review is available, the next issue that must be addressed pertains to the
scope or extent of such review.
Regarding the issue of availability, it is appropriate to ask at this
point whether or not judicial review is available in cases where the
enabling statute of the agency does not expressly provide for such
review. Should the silence of the law be interpreted to mean that the
intention of Congress is to withhold judicial review? The Supreme Court
answered this question in the negative in a case where the enabling
statute did not expressly provide for judicial review. The Court held that:

It is generally understood that as to administrative

agencies exercising quasi-judicial or legislative power
there is an underlying power in the courts to scrutinize
the acts of such agencies on questions of law and
jurisdiction even though no right of review is given by
statute. The purpose of judicial review is to keep the
administrative agency within its jurisdiction and protect
substantial rights of parties affected by its decisions. It is
part of the system of checks and balances which restricts
the separation of powers and forestalls arbitrary and
unjust adjudications. Judicial review is proper in case of
lack of jurisdiction, grave abuse of discretion, error of
law, fraud or collusion.33

33 San Miguel Corp. v. Sec'y of Labor, G.R. No. L-39195, 64 SCRA 56 (May 16, 1975)
(Phil.). See also Meralco Sec. Indus. Corp. v. Cent. Bd. of Assessment Appeals, G.R.
No. L-46245, 114 SCRA 260 (May 31, 1982) (Phil.); Uy v. Palomar, G.R. No. L-23248,
27 SCRA 287 (Feb. 28, 1969) (Phil.); Sotto v. Ruiz, G.R. No. L-17419, 41 PHIL. REP.
 Administrative Rulemaking andAdjudicaion

Notwithstanding the inherent power of the courts to scrutinize the

acts of administrative agencies on questions of law and jurisdiction, a
party seeking judicial intervention to protect his rights adversely affected
by agency action must satisfy the requirements imposed by the doctrines
on standing to challenge, exhaustion of administrative remedies, and
ripeness before the reviewing court can take cognizance of his case.
Without going into the intricacies of the law on standing, it can be
stated that the fundamental idea behind it is that "one who is in fact
adversely affected by governmental action should have standing to
challenge that action if it is judicially reviewable. ' On the other hand,
the rule on exhaustion of administrative remedies, which applies to the
quasi-judicial function of the agency, 35 and the ripeness doctrine, which
applies to its legislative or rulemaking function, share a common
ultimate objective which is the prevention of the premature resort to the
courts. The exhaustion of administrative remedies gives the agency the
opportunity to correct its own errors, while the observance of the
ripeness doctrine seeks "to prevent the courts, through avoidance of
premature adjudication, from entangling themselves in abstract
disagreements over administrative policies, and also to protect the
agencies from judicial interference until an administrative decision has
been formalized and its effects felt in a concrete way by challenging
parties. 36
The other major issue concerning the scope of judicial review brings
into focus the substantial evidence rule in the review of agency
decisions. Under this rule, if the findings of fact of agencies exercising
quasi-judicial function are supported by substantial evidence, the courts
will no longer review such findings. The rule is based on the respect that
the judiciary bestows on the specialized knowledge, skills, or expertise of
the agencies, which judges may not likely possess.
In determining the substantiality of evidence, the Administrative
Code of 1987 reflects the lesson learned from the American case of
Universal Camera Cor. v. NLRB3 7 that the entire record of the case must
be considered as a whole. The code provides that "Review shall be made
on the basis of the record taken as a whole. The findings of fact of the
agency when supported by substantial evidence shall be final except

468 (S.C., Mar. 18, 1921).

34 DAVIS, supra note 17, at 486.
35 Smart Commc'ns, Inc. v. Nat'l Telecomms. Comm'n, G.R. No.151908, 408 SCRA
678 (Aug. 12, 2003) (Phil.).
36 Abbott Labs. v. Gardner, 387 U.S. 136, 148-149 (1967).
37 340 U.S. 474 (1951).
 CENTENNIAL LECTURES OF THE UP COLLEGE OFLAW
38
when specifically provided otherwise by law."
The application of the substantial evidence rule in the review of
agency decisions effectively narrows down the scope of review into
questions of law and jurisdiction. However, this does not preclude the
courts from reviewing the evidence on record if the substantiality of the
evidence is questioned. It must be emphasized that a decision not based
on substantial evidence is a violation of due process. Hence, raising a
question on the substantiality of the evidence supporting the findings of
fact of the agency, in effect, raises a question of law.
A unique situation can arise concerning the application of the
substantial evidence rule. It must be emphasized that for evidence to be
substantial, it need not be preponderant. Consequently, there is always
the possibility that, in a given case, both sides may be supported by
substantial evidence. When this happens, however the agency decides
the case, its decision is supported by substantial evidence, which should
preclude the court from reviewing its findings of fact.
In the area of administrative rulemaking, the courts assume a
posture of self-restraint and refuse to intervene unless, of course, the
rules are challenged to be ultra vires or outside the scope of the
rulemaking authority delegated to the agency or in cases where the rules
are inconsistent with either the law or the constitution. This attitude of
self-restraint simply follows the prevalent notion that policy making in
general is non-judicial business.

VI
CONCLUSION

I started this lecture by saying that the emergence of administrative

agencies with rulemaking and adjudication powers is a twentieth century
phenomenon. The question to ask at this juncture is: will the rise of
these agencies continue in the twenty first century? The obvious answer
is a clear and resounding yes. Surely, the inadequacies of the traditional
executive, legislative, and judicial organs of the State in terms of lack of
time, expertise, and organizational aptitude to effectively deal with the
problems associated with the complexities of modern life will not
disappear in this century. As we have seen, it was precisely these
inadequacies which compelled the delegation of rulemaking and

38 ADMINIsTRATIvE CODE, bk. VII, § 25(7), Exec. Ord. No. 292, as amended by Rep.
Act No. 6682 (Phil.).
 Administrative Rulemaking andAdjudication

adjudication powers to administrative agencies. The stark reality,

therefore, is that, as our society becomes even more complex in the
coming years, reliance by the State on the regulatory agencies will
definitely increase.
The expected proliferation of regulatory agencies in the twenty first
century is a foregone conclusion. Rulemaking and adjudication will
rapidly increase. In all probability, the volume of rulemaking will be far
greater than the expected volume of legislation in Congress. Rules and
regulations of varying kinds and with the force and effect of law will
practically cover most, if not all, of our activities as citizens of a more
complex society.
Accepting the inevitability of more administrative rulemaking and
adjudication in the future should prompt us to adopt a perspective that
will enable us not only to understand and appreciate the critical role of
regulatory agencies in modern day governance but also to realize that the
uncontrolled exercise of administrative power can run roughshod over
our rights as citizens. It is in this light that the continuing effort to
search for safeguards that could maximize fairness in the administrative
process must be viewed. Although significant strides have been made in
this direction, there is always room for innovative approaches and
strategies.
There is no doubt that the expertise of regulatory agencies has
substantially contributed to good governance. However, it is well to be
reminded that: "Unless we make the requirements for administrative
action strict and demanding, experise, the strength of modern
government, can become a monster which rules with no practical limits
on its discretion. Absolute discretion, like corruption, marks the
beginning of the end of liberty."39 As stakeholders in the administrative
process, we must, therefore, be vigilant to ensure that administrative
rulemaking and adjudication be kept within legal bounds.

39 New York v. United States, 342 U.S. 882 (1951) (Douglas, J., dissenting), dted in
Bernard Schwartz, CrucialAreas in Administrative Law, 34 GEO. WASH. L. REv. 401, 405
(1966).