EN BANC 

[G.R. Nos. 95203-05, December 18, 1990] 

SENATOR ERNESTO MACEDA, PETITIONER, VS. ENERGY REGULATORY BOARD (ERB); MARCELO N. FERNANDO, ALEJANDRO B. AFURONG; REX V. TANTIONGCO; AND OSCAR E. ALA, IN THEIR COLLECTIVE OFFICIAL CAPACITIES AS CHAIRMAN AND MEMBERS OF THE BOARD (ERB), RESPECTIVELY; CATALINO

MACARAIG, IN HIS QUADRUPLE OFFICIAL CAPACITIES AS EXECUTIVE SECRETARY, CHAIRMAN OF PHILIPPINE NATIONAL OIL COMPANY, OFFICE OF ENERGY AFFAIRS, AND WITH MANUEL ESTRELLA, IN

THEIR RESPECTIVE OFFICIAL CAPACITIES AS CHAIRMAN AND PRESIDENT OF THE PETRON CORPORATION; PILIPINAS SHELL PETROLEUM CORPORATION, WITH CESAR BUENAVENTURA AND REY GAMBOA AS CHAIR-MAN AND PRESIDENT, RESPECTIVELY; CALTEX PHILIPPINES WITH FRANCIS ABLAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER; AND THE PRESIDENTS OF PHILIPPINE PETROLEUM DEALER'S ASSOCIATION, CALTEX DEALER'S CO., PETRON DEALER'S ASSO., SHELL DEALER'S ASSO. OF THE PHIL., LIQUEFIED PETROLEUM

GAS INSTITUTE OF THE PHILS., ANY AND ALL CONCERNED GASOLINE AND PETROL DEALERS OR STATIONS; AND SUCH OTHER PERSONS, OFFICIALS, AND PARTIES, ACTING FOR AND ON THEIR BEHALF; OR IN

REPRESENTATION OF AND/OR UNDER THEIR AUTHORITY, RESPONDENTS. 

[G.R. NOS. 95119-21. DECEMBER 18, 1990]

OLIVER O. LOZANO, PETITIONER, VS. ENERGY REGULATORY BOARD (ERB), PILIPINAS SHELL PETROLEUM CORPORATION, CALTEX (PHIL.), INC., AND PETRON CORPORATION, RESPONDENTS. 

D E C I S I O N 

SARMIENTO, J.:

The petitioners pray for injunctive relief, to stop the Energy Regulatory Board (Board hereinafter) from implementing its Order, dated September 21, 1990, mandating a provisional increase in the prices of petroleum and petroleum products, as follows:

PRODUCTS IN PESOS PER LITER OPSF

Premium Gasoline 1.7700

Regular Gasoline 1.7700

Avturbo 1.8664

Kerosene 1.2400

Diesel Oil 1.2400

Fuel Oil 1.4900

Feedstock 1.4900

LPG 0.8487

Asphalts 2.7160

Thinners 1.7121[1]

It appears that on September 10, 1990, Caltex (Philippines) Inc., Pilipinas Shell Petroleum Corporation, and Petron Corporation proferred separate applications with the Board for permission to increase the wholesale posted prices of petroleum products, as follows:

Caltex P3.2697 per liter

Shell 2.0338 per liter

Petron 2.00 per liter[2]

and meanwhile, for provisional authority to increase temporarily such wholesale posted prices pending further proceedings.

On September 21, 1990, the Board, in a joint (on three applications) Order granted provisional relief as follows:

WHEREFORE, considering the foregoing, and pursuant to Section 8 of Executive Order No. 172; this Board hereby grants herein applicants’ prayer for provisional relief and, accordingly, authorizes said applicants a weighted average provisional

increase of ONE PESO AND FORTY-TWO CENTAVOS (P1.42) per liter in the wholesale posted prices of their various petroleum products enumerated below, refined and/or marketed by them locally.[3]

The petitioners submit that the above Order had been issued with grave abuse of discretion, tantamount to lack of jurisdiction, and correctible by certiorari.

The petitioner, Senator Ernesto Maceda,[4] also submits that the same was issued without proper notice and hearing, in violation of Section 3, paragraph (e), of Executive Order No. 172; that the Board, in decreeing an increase, had created a new source for the Oil Price Stabilization Fund (OPSF), or otherwise that it had levied a tax, a power vested in the legislature, and/or that it had "re-collected", by an act of taxation, ad valoremtaxes on oil which Republic Act No. 6965 had abolished.

The petitioner, Atty. Oliver Lozano,[5] likewise argues that the Board's Order was issued without notice and hearing, and hence, without due process of law.

The intervenor, the Trade Union of the Philippines and Allied Services (TUPAS/FSM)-W.F.T.U.,[6] argues on the other hand, that the increase can not be allowed since the respondents oil companies had not exhausted their existing oil stock which they had bought at old prices and that they can not be allowed to charge new rates for stock purchased at such lower rates.

The Court set the cases (in G.R. Nos. 95203-05) for hearing on October 25, 1990, in which Senator Maceda and his counsel, Atty. Alexander Padilla, argued.  The Solicitor General, on behalf of the Board, also presented his arguments, together with Board Commissioner Rex Tantiangco.  Attys. Federico Alikpala, Jr. and Joselia Pobladorrepresented the oil firms (Petron and Caltex, respectively).

The parties were thereafter required to submit their memorandums after which, the Court considered the cases submitted for resolution.

On November 20, 1990, the Court ordered these cases consolidated.

On November 27, 1990, we gave due course to both petitions.

The Court finds no merit in these petitions.

Senator Maceda and Atty. Lozano, in questioning the lack of a hearing, have overlooked the provisions of Section 8 of Executive Order No. 172, which we quote:

SECTION 8.  Authority to Grant Provisional Relief.  – The Board may, upon the filing of an application, petition or complaint or at any stage thereafter and without prior hearing, on the basis or supporting papers duly verified or authenticated, grant provional relief on motion of a party in the case or on its own initiative, without prejudice to a final decision after hearing, should the Board find that the pleadings, together with such affidavits, documents and other evidence which may be submitted in support of the motion, substantially support the provisional order:  Provided, That the Board shall immediately schedule and conduct a hearing thereon within thirty (30) days thereafter, upon publication and notice to all affected parties.

As the Order itself indicates, the authority for provisional increase falls within the above provision.

There is no merit in the Senator's contention that the "applicable" provision is Section 3, paragraph (e) of the Executive Order, which we quote:

(e) Whenever the Board has determined that there is a shortage of any petroleum product, or when public interest so requires, it may take such steps as it may consider necessary, including the temporary adjustment of the levels of prices of petroleum products and the payment to the Oil Price Stabilization Fund created under Presidential Decree No. 1956 by persons or entities engaged in the petroleum industry of such amounts as may be determined by the Board, which will enable the importer to recover its cost of importation.

What must be stressed is that while under Executive Order No. 172, a hearing is indispensable, it does not preclude the Board from ordering, ex parte, a provisional increase, as it did here, subject to its final disposition of whether or not:  (1) to make it permanent; (2) to reduce or increase it further; or (3) to deny the application.  Section 3, paragraph (e) is akin to a temporary restraining order or a writ of preliminary attachment issued by the courts, which are given ex parte, and which are subject to the resolution of the main case.

Section 3, paragraph (e) and Section 8 do not negate each other, or otherwise, operate exclusively of the other, in that the Board may resort to one but not to both at the same time.  Section 3(e) outlines the jurisdiction of the Board and the grounds for which it may decree a price adjustment, subject to the requirements of notice and hearing. Pending that, however, it may order, under Section 8, an authority to increase provisionally, without need of a hearing, subject to the final outcome of the proceeding. The Board, of course, is not prevented from conducting a hearing on the grant of provisional authority--which is of course, the better procedure--however, it can not be stigmatized later if it failed to conduct one.  As we held in Citizens' Alliance for Consumer Protection v. Energy Regulatory Board.[7]

In the light of Section 8 quoted above, public respondent Board need not even have conducted formal hearings in these cases prior to issuance of its Order of 14 August 1987granting a provisional increase of prices.  The Board, upon its own discretion and on the basis of documents and evidence submitted by private respondents, could have issued an order granting provisional relief immediately upon filing by private respondents of their respective applications.  In this respect, the court considers the evidence presented by private respondents in support of their applications--i.e., evidence showing that importation costs of petroleum products had gone up; that the peso had depreciated in value; and that the Oil Price Stabilization Fund (OPSF) had by then been depleted--as substantial and hence constitutive of at least prima facie basis for issuance by the Board of a provisional relief order granting an increase in the prices of petroleum products.[8]

We do not therefore find the challenged action of the Board to have been done in violation of the due process clause.  The petitioners may contest however, the applications at the hearings proper.

Senator Maceda's attack on the Order in question on premises that it constitutes an act of taxation or that it negates the effects of Republic Act No. 6965, can not prosper. Republic Act No. 6965 operated to lower taxes on petroleum and petroleum products by imposing specific taxes rather than ad valorem taxes thereon; it is, not, however, an insurance against an “oil hike”, whenever warranted, or is it a price control mechanism on petroleum and petroleum products.  The statute had possibly forestalled a larger hike, but it operated no more.

The Board Order authorizing the proceeds generated by the increase to be deposited to the OPSF is not an act of taxation.  It is authorized by Presidential Decree No. 1956, as amended by Executive Order No. 137, as follows:

SECTION 8.  There is hereby created a Trust Account in the books of accounts of the Ministry of Energy to be designated as Oil Price Stabilization Fund (OPSF) for the purpose of minimizing frequent price changes brought about by exchange rate adjustments and/or changes in world market prices of crude oil and imported petroleum products.  The Oil Price Stabilization Fund (OPSF) may be sourced from any of the following:

a) Any increase in the tax collection from ad valorem tax or customs duty imposed on petroleum products subject to tax under this Decree arising form exchange rate adjustment, as may be determined by the Minister of Finance in consultation with the Board of Energy;

b) Any increase in the tax collection as a result of the lifting of tax exemptions of government corporations, as may be determined by the Minister of Finance in consultation with the Board of Energy;

c) Any additional amount to be imposed on petroleum products to augment the resources of the Fund through an appropriate Order that may be issued by the Board of Energy requiring payment by persons or companies engaged in the business of importing, manufacturing and/or marketing petroleum products;

d) Any resulting peso cost differentials in case the actual peso costs paid by oil companies in the importation of crude oil and petroleum products is less than the peso costs computed using the reference foreign exchange rates as fixed by the Board of Energy.

Anent claims that oil companies can not charge new prices for oil purchased at old rates, suffice it to say that the increase in question was not prompted alone by the increase in world oil prices arising from tension in the Persian Gulf.  What the Court gathers from the pleadings as well as events of which it takes judicial notice, is that:  (1) as of June 30, 1990, the OPSF has incurred a deficit of P6.1

Billion; (2) the exchange rate has fallen to P28.00 to $1.00; (3) the country's balance of payments is expected to reach $1 Billion; (4) our trade deficit is at $2.855 Billion as of the first nine months of the year.

Evidently, authorities have been unable to collect enough taxes necessary to replenish the OPSF as provided by Presidential Decree No. 1956, and hence, there was no available alternative but to hike existing prices.

The OPSF, as the Court held in the aforecited CACP cases, must not be understood to be a funding designed to guarantee oil firms profits although as a subsidy, or a trust account, the Court has no doubt that oil firms make money from it.  As we held there, however, the OPSF was established precisely to protect the consuming public from the erratic movement of oil prices and to preclude oil companies from taking advantage of fluctuations occurring every so often.  As a buffer mechanism, it stabilizes domestic prices by bringing about a uniform rate rather than leaving pricing to the caprices of the market.

In all likelihood, therefore, an oil hike would have probably been imminent, with or without trouble in the Gulf, although trouble would have probably aggravated it.

The Court is not to be understood as having prejudged the justness of an oil price increase amid the above premises.  What the Court is saying is that it thinks that based thereon, the Government has made out a prima facie case to justify the provisional increase in question.  Let the Court therefore make clear that these findings are not final; the burden, however, is on the petitioners’ shoulders to demonstrate the fact that the present economic picture does not warrant a permanent increase.

There is no doubt that the increase in oil prices in question (not to mention another one impending, which the Court undertands has been under consideration by policy-makers) spells hard(er) times for the Filipino people.  The Court can not, however, debate the wisdom of policy or the logic behind it (unless it is otherwise arbitrary), not because the Court agrees with policy, but because the Court is not the suitable forum for debate.  It is a question best judged by the political leadership which after all, determines policy, and ultimately, by the electorate, that stands to be better for it or worse off, either in the short or long run.

At this point, the Court shares the indignation of the people over the conspiracy of events and regrets its own powerlessness, if by this Decision it has been powerless.  The constitutional scheme of things has simply left it with no choice.

In fine, we find no grave abuse of discretion committed by the respondent Board in issuing its questioned Order.

WHEREFORE, these petitions are DISMISSED.  No costs.

SO ORDERED.

Narvasa, Gutirrez, Jr., Cruz, Gancayco, Bidin, Griño-Aquino, Medialdea, and Regalado, JJ., concur.Fernan, C.J., no parrt, formerly counsel for Cebu Shell Corp.Melencio-Herrera, no part; related by affinity to the Chairman, ERB.Padilla, JJ., no part.Paras, J., I dissent (separate op.)Feliciano, J., on leave..

DISSENTING OPINION

PARAS, J.:

I dissent.

In fixing the oil prices complained of, the Energy Regulatory Board (ERB) gravely abused its discretion -

(1)            in approving the prices without due process of law, and

(2)            in exercising the taxing power in gross violation of the 1987 Constitution which vests such power only in Congress.

With respect to due process, it will be noted that it is Sec. 3(e) (and not Sec. 8) of Ex. Order No. 172 which should apply to the instant case (and therefore a hearing is essential) [1] for it is Sec. 3(e) that refers to "the temporary adjustment of the levels ofprices of petroleum products" or instances "when public interest so requires." Sec. 8, which is relied upon by the majority opinion, does NOT speak of price increases. Additionally it is clear that in the instant case, "public interest" [also mentioned in Sec. 3 (e)] necessitated a prior hearing.

Anent the unconstitutional use of the taxing power, the decision of the majority says that "the Board Order authorizing the proceeds generated by the increases" is "authorized by Presidential Decree No. 1456, as amended by Executive Order No. 137" (See Decision, pp. 7-8).  Assuming that such is authorized by law, still a law, no matter how imperative, cannot prevail over the Constitution which grants only to Congress the power to tax.  And indeed, there can be no denying the fact that when revenue is earned by the government from the consuming public (except when only licenses are concerned) there is an exercise of the taxing power.

I am of course aware of the dangerous economic quagmire to which our country has been plunged by the sadism precipitating the Middle East crisis, but certainly one error cannot be corrected by another error.  Besides there are more significant and clear-cut reasons for our economic crisis:  namely, the intentional depreciation (actually, a devaluation) of our already demeaned currency, our unfortunate liberalization of imports, and our slavish subservience to the dictates of the IMF.

[1] The majority opinion itself concedes that when Sec. 3(e) is applicable, a hearing is indispensable (See Decision, p. 6).

G.R. No. 161113             June 15, 2004

FREEDOM FROM DEBT COALITION, ANA MARIA NEMENZO, as President of FREEDOM FROM DEBT COALITION, MA. TERESA I. DIOKNO-PASCUAL, REP. LORETTA ANN ROSALES (Party-List Akbayan), REP. JOSE VIRGILIO BAUTISTA (Party-List Sanlakas), REP. RENATO MAGTUBO (Party-List Partido Manggagawa),petitioners, vs.ENERGY REGULATORY COMMISSION, MANILA ELECTRIC COMPANY (MERALCO), respondents.

D E C I S I O N

TINGA, J.:

The privately-owned public utility "is the substitute for the State in the performance of . . . (a) public service, thus becoming a public servant,"1 so wrote Justice Louis Brandeis more than eighty years ago. As in the United States, the provision of public utility services in the Philippine setting is a combination of private ownership and public control. Such an amalgam of clashing interests is a formula for inevitable conflicts. At bar here is one such conflict, in fact the current high point of a raging controversy where the public, on one side, is pitted against the regulatory body and the country’s leading power utility, on the other.

Before the Court is a Petition for Certiorari, Prohibition and Injunction with Prayer for the Issuance of a Temporary Restraining Order or a Status Quo Order. The Petition assails the Order dated November 27, 2003 of respondent Energy Regulatory Commission (ERC), provisionally authorizing respondent Manila Electric Company (MERALCO) to increase its rates by an average amount of twelve centavos (P0.12) per kilowatt hour.

On October 10, 2003, MERALCO filed with the ERC an Application for an increase in rates. MERALCO also prayed ex parte for the grant of a provisional authority to implement the increase according to the schedule attached to its Application. The case was docketed as ERC Case No. 2003-480.2

On October 14, 2003, the National Association of Electricity Consumers for Reforms, Inc. (NASECORE), in a Letteraddressed to then ERC Chairman Manuel R. Sanchez (Sanchez), informed him of its intention to file an Oppositionto MERALCO’s Application.3

On October 24, 2003, Mr. Genaro Lualhati (Lualhati) sent a Letter to Sanchez seeking the dismissal of MERALCO’s Application.4

On October 29, 2003, petitioner Freedom from Debt Coalition (FDC) also expressed its intention to file an opposition to MERALCO’s Application.5

On November 3, 2003, the ERC directed FDC, NASECORE and Lualhati to file their respective comments on theApplication within fifteen (15) days from their receipt thereof.6

On November 11, 2003, NASECORE filed a Motion for Production of Documents to enable it to evaluate MERALCO’s Application.7

In an Order dated November 13, 2003, the ERC directed MERALCO to file its comment on NASECORE’s Motion for Production of Documents.8

On November 19, 2003, the ERC issued an Order directing MERALCO to submit certain documents in connection with the evaluation of its Application.9

On November 21, Lualhati filed his Opposition10 to MERALCO’s Application.

The FDC likewise filed a Motion for Production of Documents on November 27, 2003, adopting NASECORE’s list in its Motion, and requesting for other documents in addition thereto.11

However, on November 27, 2003, the ERC, without first resolving the Motions for Production of Documents of NASECORE and FDC and apparently without considering Lualhati’s Opposition, issued an Order provisionally approving MERALCO’s ex parte application for rate increases. The dispositive portion of the Order states:

WHEREFORE, considering all the foregoing, this Commission, pursuant to Section 8 of Executive Order No. 172 and Section 4 (e) of the Implementing Rules and Regulations of the EPIRA (R.A. 9136), hereby provisionally authorizes applicant Manila Electric Company (MERALCO) to adopt and implement the attached rate schedules embodying a rate adjustment in the average amount of TWELVE (12) CENTAVOS per kwh, effective with respect to its billing cycles beginning January 2004. The impact of this approved rate adjustment will vary from one customer class to another depending on the load cycles.

The rate adjustment authorized herein shall be subject to refund in the event that this Commission finds, after completion of the hearings of this case, that the same is unjust and unreasonable.

The hearing of this case is hereby set on December 22, 2003 at nine o’ clock in the morning (9:00 A.M.) at the ERC Hearing Room, 15th Floor, Pacific Center Building, San Miguel Avenue, Ortigas Center, Pasig City. In this connection, MERALCO is hereby directed to publish, at its own expenses, the attached Notice of Public Hearing at least twice (2) for two (2) successive weeks in two (2) newspapers of nationwide circulation in the country, the last date of publication to be made not later than two (2) weeks before the scheduled date of initial hearing.

Let copies of this Order and the attached Notice of Public Hearing be furnished all the Municipal/City mayors within the MERALCO’s franchise area for appropriate posting thereof on their respective bulletin boards….12

Thereafter, the following were filed with the ERC after its issuance of the November 27, 2003 Order:

(1) Urgent Motion to Resolve Motion for Production of Documents & Opposition to the Provisional Authorityfiled by NASECORE on December 8, 2003;

(2) Manifestation Joining the National Association of Electricity Consumers for Reforms, Inc. in its Opposition to the Provisional Authority and Motion for Production of Documents filed by the Philippine Consumers Watch on December 11, 2003;

(3) Opposition filed by the Philippine Consumers Welfare Union (PCWU) on December 15, 2003;

(4) Urgent Motion to Suspend Implementation and Motion for Reconsideration filed by the Napocor Industrial Consumers Association, Inc. (NICAI) on December 12, 2003;

(5) Letter requesting for reconsideration of the November 27, 2003 Order of the ERC, sent by the National Consumer Affairs Council on December 9, 2003;

(6) Letter objecting to the November 27, 2003 Order of the ERC, sent by the Federation of Philippine Industries, Inc. on December 11, 2003; and

(7) Motion for Production of Documents and Motion for Production of Documents (Supplemental) filed by Atty. Ruperto J. Estrada on December 15, 2003 and December 16, 2003, respectively.

On December 19, 2003, MERALCO filed its Comment.13 It refused to produce the documents requested by the oppositors on the ground that such documents are immaterial and irrelevant to its application.

On December 22, 2003, the scheduled date of hearing, the ERC did not revoke the provisional authority granted to MERALCO per its November 27, 2003 Order.

FDC did not move for reconsideration of the Order but on December 23, 2003, it filed the instant Petition.

FDC argues that the November 27, 2003 Order of the ERC is void for having been issued without legal or statutory authority. It also contends that Rule 3, Section 4(e) of the Implementing Rules of the EPIRA is unconstitutional for being an undue delegation of legislative power. FDC further asserts that the November 27, 2003 Order is void for having been issued by the ERC with grave abuse of discretion and manifest bias. In support of its prayer for the issuance of injunctive relief, FDC claims that the implementation by MERALCO of the provisional rate increase will result in irreparable prejudice to FDC and others similarly situated unless the Court restrains such implementation.14

On December 29, 2003, FDC filed with the Court an Urgent Motion to Grant Restraining or Status Quo Order.

On January 9, 2004, The ERC issued an Order clarifying that the provisional rate increase granted to MERALCO in its November 27, 2003 Order should be applied beginning January 1, 2004.

The Court En Banc issued on January 13, 2004, a R E S O L U T I O N ordering ERC and MERALCO to file their respective Comments on the Petition. The Court also enjoined ERC and MERALCO to observe the status quoprevailing before the filing of the Petition and set the case for oral arguments on January 27, 2004.

On January 26, 2004, ERC, MERALCO and the Office of the Solicitor General (OSG) filed their respectiveComments on the Petition.

In its Comment, the ERC concurred with the arguments of the OSG and insists that it is authorized to issue provisional orders under the law. ERC argues that it must not have been the intention of Congress to expand the functions of the ERC, as the successor of the Energy Regulatory Board (ERB), and clip its powers at the same time.15

The ERC further asserts that it is authorized to issue provisional rate increases ex parte, and that it may base its provisional order on the verified application and supporting documents submitted by the application, and it is not required to wait for the comments of consumers or local government units (LGUs) concerned before issuing a provisional order.16

The ERC likewise denies that the November 27, 2003 Order was issued with grave abuse of discretion. On the contrary, it claims that the Order is supported by substantial evidence.17

Finally, ERC asseverates that the filing of the instant Petition is premature because it was denied the opportunity to have a full determination of the Application after trial on the merits, and is violative of the doctrine of primary jurisdiction.18

For its part, MERALCO asserts that the November 27, 2003 Order is valid, because it was issued by the ERC pursuant to Section 44 of the EPIRA which allows the transfer of powers (not inconsistent with the EPIRA) of the old ERB to the ERC.19 It also denies that the assailed Order was issued by the ERC with grave abuse of discretion, asserting that on the contrary, the issuance thereof was based on the Application, affidavits and other supporting documents which it submitted earlier.20

Bayan Muna, Bayan, KMU, Gabriela, Kadamay, Agham, Gabriela Women’s Party and the Anak Pawis (petitioners-in-intervention) filed their Motion to Intervene, and attached thereto their Petition-in-Intervention. The Court granted the Motion and admitted the Petition-in- Intervention in its R E S O L U T I O N dated January 27, 2004.21

In their Petition-in-Intervention, petitioners-in-intervention argue that the November 27, 2003 Order is void for having been issued by ERC with manifest bias in favor of MERALCO and without due regard for the rights of consumers. They assert further that the ERC committed grave abuse of discretion in considering the appraisal of MERALCO’s assets as of the year 2002, in violation of Section 43(f)(i) of the EPIRA. Lastly, they claim that the assailed Order is void for unjustifiably imposing upon the consumers increased rates to fund the 42 major capital projects of MERALCO for the year 2004.22

During the oral arguments, the Court defined the issues as follows:

(1) Whether the ERC has legal authority to grant provisional rate adjustments under Republic Act (R.A.) No. 9136, otherwise known as the "Electric Power Industry Reform Act of 2001" (EPIRA); and

(2) Assuming that the ERC has the authority to grant provisional orders, whether the grant by the ERC of the provisional rate adjustment in question was committed with grave abuse of discretion amounting to lack or excess of jurisdiction.23

The Court thereafter required the parties to submit their respective Memoranda within a non-extendible period of twenty days from January 27, 2004. The ERC was likewise ordered to produce certain documents pertinent to the resolution of the case.24

We rule in the affirmative on both issues.

Overview of the EPIRA

One of the landmark pieces of legislation enacted by Congress in recent years is the EPIRA.25 It established a new policy, legal structure and regulatory framework for the electric power industry.

The new thrust is to tap private capital for the expansion and improvement of the industry as the large government debt and the highly capital-intensive character of the industry itself have long been acknowledged as the critical constraints to the program. To attract private investment, largely foreign, the jaded structure of the industry had to be addressed. While the generation and transmission sectors were centralized and monopolistic, the distribution side was fragmented with over 130 utilities, mostly small and uneconomic. The pervasive flaws have caused a low utilization of existing generation capacity; extremely high and uncompetitive power rates; poor quality of service to consumers; dismal to forgettable performance of the government power sector; high system losses; and an inability to develop a clear strategy for overcoming these shortcomings.

Thus, the EPIRA provides a framework for the restructuring of the industry, including the privatization of the assets of the National Power Corporation (NPC), the transition to a competitive structure, and the delineation of the roles of various government agencies and the private entities.26 The law ordains the division of the industry into four (4) distinct sectors, namely: generation, transmission, distribution and supply.27 Corollarily, the NPC generating plants have to privatized28 and its transmission business spun off and privatized thereafter.29

In tandem with the restructuring of the industry is the establishment of "a strong and purely independent regulatory body."30 Thus, the law created the ERC in place of the Energy Regulatory Board (ERB).31

To achieve its aforestated goal, the law has reconfigured the organization of the regulatory body. It requires the Chairman and four (4) members of the ERC to be equipped with "at least three (3) years of active and distinguished experience" in the fields of energy, law, economics, finance, commerce or engineering, and at least one of them with ten (10) years or more of experience in the active practice of law and another one with similar experience as a certified public accountant.32 Their terms of office were increased to seven (7) years from the four (4) provided in Executive Order No. 172 (E.O. No. 172) and their security of tenure assured.33 The Chairman and members were given the same salaries, allowances, benefits and retirement pay as the Chief Justice and Associate Justices of the Supreme Court,34 a lot higher than the salary and benefits accorded the Chairman and members of the ERB which were equivalent only to those of a Department Undersecretary and the official next in rank, and those of the Chairman and members of the Commission on Elections, respectively.35

Statutory Authority To

Grant Provisional Increase

FDC posits that the ERC has no power to issue provisional orders because the EPIRA repealed Commonwealth Act No. 146 (The Public Service Act) and E.O. No. 172 (creating the ERB), which laws expressly conferred upon the precursors of ERC the power to grant provisional orders. It argues further that while Section 44 of the EPIRA provides for the transfer of the powers and functions of the ERB to the ERC, such transfer cannot be deemed to include the power to issue provisional orders because such power is inconsistent with the policies ordained in Section 2 of the EPIRA to protect the public interest insofar as it is affected by the rates and services of electric utilities and other providers of electric power and to ensure transparency and full accountability in rate-fixing.36Considering that the EPIRA itself does not confer upon the ERC the power to issue provisional orders,

Section 4(e), Rule 3 of the law’s Implementing Rules, which refers to the grant of provisional authority by the ERC, constitutes an undue delegation of legislative power.37

The petitioners-in-intervention agree with and adopt the aforementioned arguments of FDC.38

MERALCO, on the other hand, claims that the power of the ERB to issue provisional orders under Section 16(c) of the Public Service Act and Section 8 of E.O. No. 172 was not repealed by the EPIRA. On the contrary, Section 80 of the EPIRA expressly mentions that the applicable provisions of the Public Service Act and E.O. No. 172 that are not inconsistent therewith shall continue to have full force and effect.39 It adds that the power of the ERC to approve reasonable rates would be rendered meaningless if it can only do so after a full hearing, and in the meantime the insufficiency of the applicant’s rates would result in its inability to supply quality, reliable and secure electric power.40

The OSG contends that ERC has statutory authority to issue provisional orders, including provisional rate increases. It points out that the EPIRA expressly states that the powers of the Energy Regulatory Board (ERB) under E.O. No. 172 shall be exercised by the ERC.41

For its part, the ERC maintains that it possesses the authority to grant provisional orders under Section 16 (c) of the Public Service Act and Section 8 of E.O. No. 172 in relation to Sections 44 and 80 of the EPIRA.42 Thus, it claims that Section 4(e), Rule 3 of the Rules and Regulations To Implement Republic Act No. 9031, Entitled "Electric Power Industry Reform Act of 2001" (IRR) is valid. It further argues that its duty to protect the public interest necessarily requires it to balance the interests of the consumers and the utilities — that is, to maintain reasonable rates while ensuring that the utilities will be able to remain financially sound and operationally viable.43

The Court agrees with the respondents and the OSG.

ERC authority is found in

Secs. 44 and 80 of the EPIRA

The ERC is endowed with the statutory authority to approve provisional rate adjustments under the aegis of Sections 44 and 80 of the EPIRA. The sections read, thus:

SEC. 44. Transfer of Powers and Functions. — The powers and functions of the Energy Regulatory Board not inconsistent with the provisions of this Act are hereby transferred to the ERC. The foregoing transfer of powers and functions shall include all applicable funds and appropriations, records, equipment, property and personnel as may be necessary.

Sec. 80. Applicability and Repealing Clause. — The applicability provisions of Commonwealth Act No. 146, as amended, otherwise known as the "Public Services Act;" Republic Act 6395, as amended, revising the charter of NPC; Presidential Decree 269, as amended, referred to as the National Electrification Decree; Republic Act 7638, otherwise known as the "Department of Energy Act of 1992;" Executive Order 172, as amended, creating the ERB; Republic 7832 otherwise known as the "Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994;" shall continue to have full force and effect except insofar as they are inconsistent with this Act.

The provisions with respect to electric power of Section 11(c) of Republic Act 7916, as amended, and Section5(f) of Republic Act 7227 are hereby repealed or modified accordingly.

Presidential Decree No. 40 and all laws, decrees, rules and regulations, or portions thereof, inconsistent with this Act are hereby repealed or modified accordingly. (Emphasis supplied)

The principal powers of the ERB relative to electric public utilities transferred to the ERC are the following:

1. To regulate and fix the power rates to be charged by elective companies;44

2. To issue certificates of public convenience for the operation of electric power utilities;45

3. To grant or approve provisional electric rates.46

It bears stressing that the conferment upon the ERC of the power to grant provisional rate adjustments is not inconsistent with any provision of the EPIRA. The powers of the ERB transferred to the ERC under Section 44 are in addition to the new powers conferred upon the ERC under Section 43.

Section 80 of the EPIRA complements Section 44, as it mandates the continued efficacy of the applicable provisions of the laws referred to therein. The material provisions of the Public Service Act which continue to be in full force and effect are contained in Section 16(c), which states thus:

Section 16. Proceedings of the Commission, upon notice and hearing. — The Commission shall have power, upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary:

…

(c) To fix and determine individual or joint rates, toll, charges, classifications, or schedules thereof, as well as commutation, mileage, kilometrage, and other special rates which shall be imposed, observed, and followed thereafter by any public service: Provided, That the Commission may, in its discretion, approve rates proposed by public services provisionally and without necessity of any hearing; but it shall call a hearing thereon within thirty days thereafter, upon publication and notice to the concerned parties operating in the territory affected: Provided, further, That in case the public service equipment of an operator is used principally or secondarily for the promotion of a private business, the net profits of said private business shall be considered in relation with the public service of such operator for the purposes of fixing the rates.

Similarly, Sections 8 and 14 of E.O. No. 172 or the ERB Charter continue to be in full force by virtue of Sections 44 and 80 of the EPIRA. Said provisions of the ERB charter read:

SEC. 8. Authority to Grant Provisional Relief. -- The Board may, upon the filing of an application, petition or complaint or at any stage thereafter and without prior hearing, on the basis of the supporting papers duly verified or authenticated, grant provisional relief on motion of a party in the case or on its own initiative, without prejudice to a final decision after hearing, should the Board find that the pleadings, together with such affidavits, documents and other evidence which may be submitted in support of the motion, substantially support of the provisional order; Provided, That the Board shall immediately schedule and conduct a hearing thereon within thirty (30) days thereafter, upon publication and notice to all affected parties.

SEC. 14. Applicability Clause.— The applicability (applicable) provisions of Commonwealth Act No. 146, as amended, otherwise known as the "Public Service Act;" Republic Act No. 6173, as amended, otherwise known as the "Oil Industry Commission Act;" Republic Act No. 6395, as amended, revising the charter of the National Power Corporation under C.A. 120; Presidential Decree No. 269, as amended, also referred to as the "National Electrification Administration Decree;" and Presidential Decree No. 1206, as amended, creating the Department of Energy, shall continue to have full force and effect, except insofar as inconsistent with this Order. (Word in parenthesis supplied)

The above-quoted applicability clause is quite clear. It cannot be argued that the clause could not have referred to the provisions of the prior laws empowering the Public Service Commission (PSC) and the ERB to grant provisional rate adjustments on the premise that the lawmakers deliberately deleted the provisions in the crafting of the EPIRA. Such an argument begs the question. What is clear from Sections 80 and 44 is that the legislators saw the superfluity or needlessness of carrying over in the EPIRA the same provision found in the previous laws. The power to approve provisional rate increases is included among the powers transferred to the ERC by virtue of Section 44 since the grant of that authority is not inconsistent with the EPIRA; rather, it is in full harmony with the thrust of the law which is to strengthen the ERC as the new regulatory body.

Furthermore, under Section 80, only three (3) specific laws were expressly repealed or modified. These are Section 11(c) of Republic Act No. 7916,47 as amended, Section 5(f) of Republic Act No. 722748 and Presidential Decree No.

40.49 Section 8 of E.O. No. 172 and Section 16(c) of C.A. No. 146 which both grant the regulatory body concerned the authority to approve provisional rate increases are not among the provisions expressly repealed or modified. This clearly indicates the law’s intent to transfer the power to the ERC.

Indeed, nary a hint in the EPIRA intimates that the powers of ERC’s predecessors not mentioned therein are revoked or repealed. Be it noted that implied repeals are not favored in our jurisdiction.50 The legislature is presumed to know the existing laws; if it intended a repeal of the earlier law, it should have so expressed that intention in the subsequent statute.51

Thus, a statute will not be deemed to have been impliedly repealed by another enacted subsequent thereto unless there is a showing that a plain, unavoidable and irreconcilable repugnancy exists between the two.52

Likewise, it may not be asserted with success that the power to grant provisional rate adjustments runs counter to the statutory construction guide provided in Section 7553 of the law. The section ordains that the EPIRA shall be construed in favor of market competition and people power empowerment, thereby ensuring the widest participation of the people.

To the Court, the goals of market competition and people empowerment are not negated by the ERC’s exercise of the authority to approve provisional rate adjustments. The concerns are taken care of by Section 43 of the EPIRA and its IRR. While Section 43 lays down the publication requirement as regards the rate application, Section 4(e), Rule 3 of the IRR fleshes out the requirement.54

Neither is the notion of provisional rate adjustment incompatible with the policy to protect public interest, as enunciated in Section 2(f)55 of the law. The common weal is not relegated to the back-burner simply by upholding the grant to the ERC of the authority to approve provisional rate adjustments. Again for one, even if there is a ground to grant the provisional rate increase, the ERC may do so only after the publication requirement is met and the consumers affected are given the opportunity to present their side. For another, the rate increase is provisional in character and therefore may be modified or even recalled anytime. Still for another, the ERC is mandated to prescribe a rate-setting methodology "in the public interest"56 and "to promote efficiency."57

For that matter, there is a plethora of provisions in Section 43 and related sections which seek to promote public interest, market competition and consumer protection.58

Sec. 43 of the EPIRA, being a list of ERC’s new powers, is not inconsistent with Sec. 44

Although the power to grant provisional rate adjustments is not one of the powers mentioned in Section 43, this provision itself characterizes the listed powers as the "key functions in the restructured industry." They are not the typical or traditional prerogatives or functions of regulatory bodies. Reproducing the initial paragraph of the section is illuminating, viz:

The ERC shall promote competition, encourage market development, ensure customer choice and penalize abuse of market power in the restructured electricity industry. In appropriate cases, the ERC is authorized to issue cease and desist order after due notice and hearing. Towards this end, it shall be responsible for the following key functions in the restructured industry: (Emphasis supplied).

….

Significantly, the fundamental power to fix rates is also not one of the functions enumerated under Section 43. Thus, to deny the power to grant provisional rate increase to ERC simply because it is not mentioned in Section 43 is also to deny the power to fix rates to the Commission by the same token. Clearly, the proposition is absurd.

Moreover, as the OSG correctly pointed out, to interpret the EPIRA as not retaining the ERC’s power to issue provisional orders will wreak havoc on the regulatory environment, which has been painstakingly built and enhanced since the enactment of the EPIRA.59

To repeat, the EPIRA grants unto the ERC both old and new powers. The old powers are referred to in Section 44 while the new ones are listed in Section 43 of the law.

The powers enumerated in Section 43 have a common thread. Characterized as the "key functions," they are thenew powers granted to the ERC in relation to the reform and modernization of the electric power industry sought to be achieved by the law. They are also invariably mentioned with particularity in other provisions of the law. In other words, Section 43 merely repeats what is found in the other sections. It is a compendium of powers provided in other provisions of the same law but were not enjoyed by the previous regulatory bodies. It is a statutory tool to achieve clarity and convenience, at least with respect to the new powers.

The powers provided in Section 43 and the corresponding related provisions in the EPIRA are:

1. Section 43(a) on the power to implement the rules and regulations of the Act, also provided in Section 177;

2. Section 43(b) on the power to promulgate and enforce the National Grid Code and Distribution Code, also provided in Sections 9, 11, 19, 20, 21, 22, 23 and 24.

3. Section 43(c) on the power to enforce the rules and regulations on the operation of the electricity spot market and on the participants in the spot market, also provided in Sections 30 and 31.

4. Section 43(d) on the power to determine the level of cross-subsidies in the retail rate until its removal, also provided in Section 74;

5. Section 43(e) on the power to amend or revoke the authority to operate of any person or entity for failure to comply with the IRR or an order or resolution of the ERC, also provided in Sections 6, 7, 20, 22, 26, 28, 29 and 30;

6. Section 43(g) on the power to ensure that the charges of the TRANSCO and distribution utilities do not bear cross-subsidies, also provided in Section 74;

7. Section 43(l) on the power to review and approve changes on the terms and conditions of service of the TRANSCO and any distribution utility, also provided in Sections 9, 22 and 23;

8. Section 43(h) on the power to allow the TRANSCO to charge user fees, also provided in Section 9 (b);

9. Section 43(j) on the power to set a lifeline rate for marginalized end-users, also provided in Section 73;

10. Section 43(k) on the power to penalize abuse of market power, cartelization and anti-competitive or discriminatory behavior, also provided in Section 45.

11. Section 43(l) on the power to impose fines and penalties, also provided in Section 46.

12. Section 43(o) on the power to monitor activities in the generation and supply of the electric power industry, also provided in Sections 6 and 29;

13. Section 43(p) on the power to act on application for/or modifications of certificates of public convenience and/or necessity, etc., also provided in Sections 22 and 23;

14. Section 43(r) on the power to act against any participant or player in the energy sector for violations of law, rule or regulation, also provided in Sections 46 and 74.

Notably, under Section 43(u) the ERC is granted "original and exclusive jurisdiction over all cases contesting rates, fees, fines and penalties" imposed thereby in the exercise of its functions and responsibilities in Section 43.

In determining the extent of powers possessed by the ERC, the provisions of the EPIRA must not be read in separate parts. Rather, the law must be read in its entirety, because a statute is passed as a whole, and is animated by one general purpose and intent. Its meaning cannot to be extracted from any single part thereof but from a general consideration of the statute as a whole.60

Considering the intent of Congress in enacting the EPIRA and reading the statute in its entirety, it is plain to see that the law has expanded the jurisdiction of the regulatory body, the ERC in this case, to enable the latter to implement the reforms sought to be accomplished by the EPIRA. When the legislators decided to broaden the jurisdiction of the ERC, they did not intend to abolish or reduce the powers already conferred upon ERC’s predecessors. To sustain the view that the ERC possesses only the powers and functions listed under Section 43 of the EPIRA is to frustrate the objectives of the law.

All the foregoing undeniably lead to the conclusion that the ERC, under Sections 43(u), 44 and 80 of the EPIRA, in relation to Section 16 (c) of the Public Service Act and Section 8 of E.O. No. 172, possesses the power to grant provisional rate adjustments subject to the procedure laid down in these laws as well as in the IRR.

Legislative history supports ERC’s power to grant provisional rate adjustments

A brief review of the legislative history of the regulatory bodies which preceded the ERC is instructive.

The first regulatory body was the Board of Rate Regulation (BRR) which came into existence in 1907.61 It had the power, after a full hearing, to fix, revise, regulate, reduce or increase the rates charged by public service corporations from time to time.62 In 1913, the Board of Public Utility Commissioners (BPUC) was created to take over the functions of the BRR.63 The BPUC was empowered, after conducting a hearing, to fix rates imposed by any public utility.64 In addition, it had the power to hear and determine, upon a written complaint or motu proprio, whether any increase or changes in classification of rates proposed by a public utility is just and reasonable. Pending such hearing and determination, the BPUC had the power to order the suspension of the increase or change in classification for a period not exceeding three (3) months.65

The BPUC was shortly replaced by the PSC. Under its Charter,66 the PSC was authorized to fix rates andapprove provisional rate adjustments.67

With the advent of Martial Law, on September 24, 1972, then President Marcos through Presidential Decree No. 1 reorganized the executive branch of the National Government and implemented the Integrated Reorganization Plan. Under the Plan, the Board of Power and Waterworks (BOPW) was created in place of the PSC, taking over the "pertinent regulatory and adjudicatory functions" of the latter.68

Later, President Marcos created the Board of Energy (BOE) through Presidential Decree No. 1206, transferring to it the powers and functions of the BOPW relative to power utilities.69

The Board of Energy had the authority to grant provisional rate adjustments on the basis of the last paragraph of Section 11 of P.D. No. 1206, which reads:

….

Likewise, the foregoing transfers of powers and functions of the abolished agencies shall be to the extent that they are not modified by any specific provision of this Decree.

This Court, in Bautista v. Board of Energy,70 held that the Board of Energy derived its prerogative to grant provisional relief not only from Section 11 of P.D. No. 1128, amending Section 12 of R.A. No. 6173, but also from Section 16(c) of the Public Service Act.71

The BOE in turn was replaced by the ERB pursuant to E.O. No. 172. Sections 872 and 1473 of the E.O. empowered the ERB to grant provisional rate adjustments.

Historically, therefore, in this jurisdiction, at least beginning with the Public Service Act in 1936, the regulatory bodies concerned have exercised the power to grant provisional rate adjustments only because there was a statutory grant of such power.

The foregoing recital establishes the following salient points: (1) Section 16(c) of the Public Service Act authorizing the approval of provisional rate increases has never been repealed and as such continues to be in full force and effect up to the present; (2) The BOPW had the power to grant provisional rate increases on the basis of the

provision of the Integrated Reorganization Plan that the pertinent powers of the PSC were transferred to it; (3) The applicability clause found in Section 44 of the EPIRA is the same as or similar to the applicability clauses contained in Sections 11 and 21 of P.D. No. 1206 and Section 14 of E.O. No. 172; and, (4) The applicability clause or transfer of power provision is sufficient to effect the transfer of powers from a regulatory agency to its successor.

All told, the provisions of the Public Service Act74 and E.O. No. 17275 which relate to the power of the regulatory body to approve provisional rates continue to have full force and effect, and the power was transferred to the ERC by virtue of Section 80 in relation to Section 44 of the EPIRA. Said provisions are not inconsistent with the EPIRA except the directives therein dispensing with the need for prior hearing. They are deemed modified to the extent that the EPIRA imposes a publication requirement76 and, through the IRR, assures the customers affected the opportunity to oppose or comment on the application for provisional rate adjustment before it is acted upon by the ERC.77

Indeed, both the letter and spirit of the law require that the authority of the ERC to grant provisional power rate adjustments should be upheld. The law is so clear that it cannot be misread.

Grave Abuse of Discretion

The FDC contends that the issuance of the November 27, 2003 Order provisionally approving MERALCO’s application for rate increase is void because, among others, the affected sectors were not afforded the opportunity to be heard. Since the issuance of provisional orders is quasi-judicial in character, the ERC cannot dispense with the requirements of notice and hearing.78 It likewise claims that the ERC based the provisional increase only on MERALCO’s bare allegation that it was in dire financial straits, as there was no proof of MERALCO’s actual financial condition.79

Petitioners-in-intervention, for their part, argue that the ERC issued the assailed Order in haste, thereby virtually ignoring the opposition expressed by the oppositors in their pleadings submitted to the Commission. They point out that the issuance by the ERC of the Order notwithstanding the failure of MERALCO to comply with the publication requirement under Section 4(e), Rule 3 of the IRR manifests the Commission’s partiality for MERALCO.80

Significantly, the OSG is also of the view that the proceedings before the ERC relative to MERALCO’s Applicationis defective. Among the defects, according to the OSG, are MERALCO’s failure to publish its Application or at least a summary of the reasons for its application, as required by Section 4(e), Rule 3 of the IRR; the ERC’s failure to consider the serious objections raised by the oppositors to the application and the ERC’s failure to resolve the motions for production of documents filed by several oppositors.81

Maintaining that FDC and the petitioners-in-intervention have failed to show any grave abuse of discretion on its part, the ERC stresses that it is authorized under the law to issue provisional rate adjustments without conducting a prior hearing and that such issuance may be made permanent, modified or denied in the course of the main proceeding.82

The ERC also argues that Section 4(e) of the IRR does not require the publication of the Application itself, citing in support of its contention the ruling of the Court in Beautifont, Inc. v. Court of Appeals83 that Section 7 of the Permissible Investments Law requires the publication of the summary or abstract of the application, not the application itself.84 The ERC further asserts that it is premature for the Court to rule on the issue of whether it acted with grave abuse of discretion in issuing the November 27, 2003 Order considering that MERALCO’s main petition is pending hearing before it.85

In its Memorandum, MERALCO maintains that the ERC acted not with grave abuse of discretion but rather in accordance with its duty under Section 43(f) of the EPIRA to fix rates that will allow the recovery of just and reasonable costs and a reasonable return on rate base (RORB) to operate viably. MERALCO insists that the ERC had substantial basis for issuing the assailed Order.86

The Court is convinced of the meritoriousness of FDC’s position which is the same stance taken by the petitioners-in-intervention and the OSG.

Under Section 16(c), C.A. No. 146 and Section 8, E.O. No. 172 in relation to Sections 43 and 80 of the EPIRA, the ERC may grant provisional rate adjustments without first conducting a hearing prior to such grant. However, it is required to conduct a hearing on the propriety of the grant of provisional rate adjustments within 30 days from the issuance of the provisional order.87

Section 4(e), Rule 3 of the IRR requires the ERC to resolve the motion for issuance of a provisional order within seventy five (75) calendar days from the filing of the application or petition. If, within 30 days from the publication of the application or receipt of a copy thereof, an affected consumer or the Local Government Unit (LGU) concerned files with the ERC a comment on the prayed for provisional rate adjustment and/or the application itself, the ERC is mandated to consider such comment in its action on the prayer for provisional rate adjustment. Section 4(e), Rule 3 reads in full:

Any application or petition for rate adjustment or for any relief affecting the consumers must be verified and accompanied with an acknowledgement of receipt of a copy thereof by the LGU Legislative body of the locality where the applicant or petitioner principally operates together with the certification of the notice of publication thereof in a newspaper of general circulation in the same locality.

The ERC may grant provisionally or deny the relief prayed for not later than seventy five (75) calendar days from the filing of the application or petition, based on the same or supporting documents attached thereto and such comments or pleadings the customers or the LGU concerned may have filed within thirty (30) calendar days from receipt of a copy of the application or petition or from the publication thereof as the case may be.

Thereafter, the ERC shall conduct a formal hearing on the application or petition, giving proper notices to all parties concerned, with at least one public hearing in the affected locality, and shall decide the matter on the merits not later than twelve (12) months from the issuance of the aforementioned provisional order.

… (Emphasis supplied)

Two postulates evidently flow from a reading of Section 4(e), Rule 3. First, the publication of the application itself is required, not merely the notice of hearing issued by the ERC. Second, in granting a provisional authority, the ERC must consider not only the evidence submitted by the applicant in support thereof, but also the comments of the consumers and the Local Government Units (LGUs) concerned.

It is suggested that the IRR provision in point should be construed as granting the ERC the power to issue provisional rate adjustments ex parte.88 Such power, partaking as it does the nature of the police power of the State, is conferred on administrative agencies like the ERC to enable them to pursue temporary measures to address problems that cannot wait until the completion of formal proceedings. Thus, the ERC may grant provisional rate adjustments on the basis of the public utility’s application and supporting documents, and the pleadings submitted by other parties may have filed at that time. Thereafter, it is mandated to hold a full-blown hearing to resolve the case on the merits.89

Concededly, like Section 16(c), C.A. No. 146 and Section 8, E.O. No. 172, Section 4(e), Rule 3 of the IRR does not require the conduct of a hearing prior to the issuance of a provisional order. However, reading the aforementioned provisions of the Public Service Act, the ERB Charter and the IRR in relation to one another, as they should be read, the inexorable conclusion is that the provisional order cannot be issued under the circumstances based exclusively on the application and supporting documents thereof. The IRR explicitly requires, as a prerequisite to such issuance, that the ERC consider also the comments of the consumers and the LGUs concerned on the application which were filed within thirty (30) days from their receipt of a copy of the application or the publication thereof.

In other words, the ERC must wait for thirty (30) days from service of copies of the application for rate adjustments on interested parties or from the publication of such application before it can issue a provisional order. If after the 30th day, no comments are filed by concerned parties, then and only then may the ERC, if it deems proper under the circumstances, issue a provisional order on the basis of the application and its supporting documents.

To synthesize, the new order on rate adjustments is as follows:

(1) The applicant must file with the ERC a verified application/petition for rate adjustment. It must indicate that a copy thereof was received by the legislative body of the LGU concerned. It must also include a certification of the notice of publication thereof in a newspaper of general circulation in the same locality.

(2) Within 30 days from receipt of the application/petition or the publication thereof, any consumer affected by the proposed rate adjustment or the LGU concerned may file its comment on the application/petition, as well as on the motion for provisional rate adjustment.

(3) If such comment is filed, the ERC must consider it in its action on the motion for provisional rate adjustment, together with the documents submitted by the applicant in support of its application/petition. If no such comment is filed within the 30-day period, then and only then may the ERC resolve the motion for provisional rate adjustment on the basis of the documents submitted by the applicant.

(4) However, the ERC need not conduct a hearing on the motion for provisional rate adjustment. It is sufficient that it consider the written comment, if there is any.

(5) The ERC must resolve the motion for provisional rate adjustment within 75 days from the filing of the application/petition.

(6) Thereafter, the ERC must conduct a full-blown hearing on the application/petition not later than 30 days from the date of issuance of the provisional order and must resolve the application/petition not later than 12 months from the issuance of the provisional order.90 Effectively, this provision limits the lifetime of the provisional order to only 12 months.

Section 4(e), Rule 3 of the IRR, outlining as it does the approval process for an application or petition for provisional rate adjustment, enforces not only Section 43(u) thereof but also Sections 44 and 80 which, as earlier stated, refer to the powers of the ERB passed on to the ERC and found in other prevailing laws, such as Section 16(c) of the Public Service Act.

The validity of the IRR, including Section 4(e) under Rule 3 thereof, is not in dispute.

The IRR was crafted by the Department of Energy (DOE) in consultation with relevant government agencies in accordance with its mandate under the EPIRA.91 It was promulgated on the same day that it was approved by the Joint Congressional Power Commission on February 27, 2002.92 This Commission is composed of fourteen (14) members of the Senate and the House.93

It is settled that an administrative agency possesses the power to issue rules and regulations to implement the statute which it is tasked to enforce, unless another agency is the one so authorized by the law as in the case of the EPIRA. This is so because it is impracticable, if not impossible, for the legislature to anticipate and provide for the multifarious and complex situations that may be encountered in enforcing the law. So long as the rules and regulations are germane to the objects and purposes of the law and conforms to the standards prescribed thereby, they are deemed to have the force and effect of law.94

In Victoria’s Milling Co., Inc. v. Social Security Commission,95 the Court explained:

When an administrative agency promulgates rules and regulations, it "makes" a new law with the force and effect of a valid law, …Rules and regulations when promulgated in pursuance of the procedure or authority conferred upon the administrative agency by law, partake of the nature of a statute …This is so because statutes are usually couched in general terms, after expressing the policy, purposes, objectives, remedies and sanctions intended by the legislature. The details and the manner of carrying out the law are often times (sic) left to the administrative agency entrusted with its enforcement. In this sense, it has been said that rules and regulations are the product of a delegated power to create new or additional legal provisions that have the effect of law….96

The challenged provisional rate increase transgresses Section 4(e), Rule 3 of the IRR in two major respects. The violations involve a couple of new requirements prescribed by the IRR. These are, first, the need to publish the application in a newspaper of general circulation in the locality where the applicant operates; and second, the need

for ERC to consider the comments or pleadings of the customers and LGU concerned in its action on the application or motion for provisional rate adjustment.

Obviously, the new requirements are aimed at protecting the consumers and diminishing the disparity or imbalance between the utility and the consumers. The publication requirement gives them enhanced opportunity to consciously weigh the application in terms of the additional financial burden which the proposed rate increase entails and the basis for the application. With the publication of the application itself, the consumers would right from the start be equipped with the needed information to determine for themselves whether to contest the application or not and if they so decide, to take the needed further steps to repulse the application. On the other hand, the imposition on the ERC to consider the comments of the customers and the LGUs concerned extends the comforting assurance that their interest will be taken into account. Indeed, the requirements address the right of the consuming public to due process and at the same advance the cause of people empowerment which is also a policy goal of the EPIRA along with consumer protection.

Corollarily, the requirements seek to temper the lack of fairness implicit in the kind of ex parte modality theretofore followed in regard to applications for provisional rate increases. Before the adoption of the IRR provision, to secure a provisional rate adjustment all that a public utility needed to do was to file the corresponding application with the supporting documents. Without the burden of a hearing and in total disregard of the opposition, the applicant could press the regulatory body to grant the application. With the new protocol under the IRR, the ERC is tasked to pass upon the comments or opposition of the consumers and the LGUs in its resolution of the application for provisional rate adjustment. Consequently, for the ERC to be true to its mission and to prevent evisceration of the new requirements, it should mention in the provisional order the points and arguments of the oppositors which it adopts or give its reasons if it does not uphold them. In other words, the proof of its compliance with the requirements should appear in the provisional order itself.

While the system of interim rates cannot be dispensed with since it helps ensure the financial viability of a public utility which it needs to be able to deliver adequate service to the consumers, the system may be abused to the detriment of the consumers if not enough safeguards are put in place. It happened many times before that after the provisional rate increase had been granted, no action on the main petition was taken, or if one was taken it was made only after the lapse of a considerable period of time. The ultimate effect of the inaction or delay was virtually to make the provisional rate permanent. Thus, the consumers were made to pay what effectively evolved to be the permanent rate without the benefit of a hearing. In the meantime, the collections on the provisional rate were spent by the utility.

In a recent decision,97 this Court ordered MERALCO to make a refund which remains uncomplied with up to the present, to the prejudice of the consumers. The consumers will similarly suffer if MERALCO, or any power utility for that matter, is allowed to collect on a provisional rate increase, the application for which they effectively have no knowledge of.

The new requirements address the dismal scenario by ensuring dissemination of information on the application for rate increase and consideration by the ERC of the written position taken by consumers in its action on the motion for provisional rate increase.

The publication and comment requirements, like the 30-day period also imposed in Section 4(e), Rule 3 of the IRR, are in keeping with some of the avowed policies of the EPIRA. These are to protect the public interest vis-à-vis the rates and services of electric utilities and other providers of electric power,98 to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability for greater operational and economic efficiency, to enhance the competitiveness of Philippine products in the global market,99and to balance the interests of the consumers and the public utilities providing electric power through the fair and non-discriminatory treatment of the two sectors.100

Clearly, therefore, although the new requirements are procedural in character, they represent significant reforms in public utility regulation as they engender substantial benefits to the consumers. It is in this light that the new requirements should be appreciated and their observance enforced.

The record shows that MERALCO failed to comply with the publication requirement prescribed by the IRR. What the IRR requires to be published is the application itself. In fact, it even requires the applicant to submit the "certification of the notice of publication" of the "application or petition for rate adjustment"101 together with the application/petition

to the ERC. The Notice, quoted in full hereunder, which MERALCO caused to be published on October 10, 2003 in the Manila Times, does not comply with the requirement, thus:

MANILA ELECTRIC COMPANYPasig City

NOTICE OF APPLICATION

Pursuant to paragraph (e), Section 4, Rule 3 of the Implementing Rules and Regulations of R.A. 9136, notice is hereby given that an Application dated October 8, 2003, for the approval of revised rate schedules and provisional authority, will be filed by the MANILA ELECTRIC COMPANY with address at Meralco Center, Ortigas Avenue, Pasig City, before the Energy Regulatory Commission.

Issued this 9th day of October 2003.

(Sgd). GIL S. SAN DIEGOVice President and Head

Legal Services102 (Emphasis supplied)

ERC invokes the case of Beautifont, Inc. v. Court of Appeals,103 involving the deciphering of the publication requirement in the Permissible Investments Law, R.A. No. 5455, where this Court held that the law did not require the publication of the subject application itself with the Board of Investments.104 The case, however, is notapropos. For one thing, despite some imprecision in a segment of the provision involved, other parts thereof clearly signify that only the notice of the application is meant to be published. Here, the IRR provision clearly refers to the application itself which is required to be published. For another, in Beautifont the Court was quite explicit that under the provision involved not just the notice of application "but an abstract or summary thereof, comprehending the items mentioned"105 had to be published and it intimated that the item actually published complied with the law. Here, what was actually published is a mere notice of the intent to file an application. Nothing more, nothing less.

For its part, MERALCO alleges that it relied on the ERC’s interpretation that what had to be published "is simply a notice of the intent to file an application"106 So, it "caused the publication of such notice before it filed the application."107 As it is feeble and self-defeating, the claim is also incongruent with the position actually presented by the ERC in this case.108

In this regard, the stance taken by the OSG as the People’s Tribune deserves to be quoted, thus:

The first paragraph of Section 4(e) of Rule 3 of the EPIRA IRR provides that a "petition for rate adjustment x x x must be x x x accompanied with x x x the certification of the notice of publication thereof in a newspaper of general circulation in the x x x locality." It is very clear from the above-cited rule that the application for rate adjustment must be published in a newspaper of general circulation.

In the case of MERALCO in ERC Case No. 2003-480, it appears that only a notice of hearing has been published. The notice that was published did not cite the essential allegations or contain a summary of the reasons in support of the application for rate increase.

The purpose of the publication of the application or the essential allegations or summary of the reasons given for the relief sought in the application for rate adjustment contained in the notice of hearing in a newspaper of general circulation is to inform and enable the consumers in the applicant’s franchise area to understand as much as possible the application as well as the reasons therefore. This is more so because the relief sought will have an immediate and great impact on the consumers.109

The November 27, 2003 Order reveals that the ERC did not consider the opposition to MERALCO’s Applicationand other pleadings filed by several concerned parties in determining whether the rate increase applied for by MERALCO should be approved provisionally.

The ERC’s provisional approval of MERALCO’s application for rate increase was based on MERALCO’s say-so alone, including the purported value of its assets as of the year 2002 and its claimed financial difficulties, resulting

according to it in its deferral of forty-two (42) major capital projects and failure to meet its maturing debt obligations. In the assailed Order, the Commission held that MERALCO’s inability to construct its capital projects to meet the growing demand of its customers and to ensure the reliability and efficiency of its existing system would ultimately be to the prejudice of the consumers.110

The provisional authority to impose increased rates was approved notwithstanding the fact that soon after MERALCO filed its Application on October 10, 2003, FDC and NASECORE expressed their intention to file their respective oppositions to the Application,111 and later their respective Motions for Production of Documents.112Neither did the ERC consider the Letter dated October 24, 2003 of Lualhati (a consumer), seeking the dismissal of the Application.

Although on November 13, 2003, the ERC issued an Order requiring MERALCO to comment on NASECORE’sMotion for Production of Documents,113 it failed to resolve the same, as well as FDC’s similar Motion, before issuing its November 27, 2003 Order. The motions filed by NASECORE and FDC should have been acted upon by the ERC prior to resolving MERALCO’s prayer for provisional rate increase, because NASECORE and FDC would be able to express their agreement or opposition to MERALCO’s Application only after perusing the documents presented, if their Motions were granted; or in case the Motions were denied, they could at least make known their respective positions on the Application on the basis of the documents submitted by MERALCO. Certainly, the spirit if not the language of the IRR provision should have led ERC to treat the motions which are preludes to active opposition to the application in a more favorable light and in a less cavalier fashion. Without even mentioning the motions in its Order, ERC granted the motion for provisional rate increase.

The foregoing clearly establish that ERC failed to comply with the requirements of Rule 4(e), Rule 3 of the IRR publication and comment requirements of Rule 4(e), Rule 3 of the IRR.

In Benito v. Commission on Elections,114 we held that:

Grave abuse of discretion means "such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law." It is not sufficient that a tribunal, in the exercise of its power, abused its discretion; such abuse must be grave. (Citations omitted)115

It is settled that there is grave abuse of discretion when an act is done contrary to the Constitution, the law or jurisprudence,116 or when executed whimsically, capriciously or arbitrarily out of malice, ill will or personal bias.117

What makes the challenged Order particularly repugnant is that it involves a blatant and inexcusable breach of the very rules which the ERC is mandated to observe and implement. The violated provision which is Section 4(e), Rule 3 of the IRR specifies how the ERC should exercise its power to issue provisional orders pursuant to Section 44 in relation to Section 80 of the EPIRA. Since the IRR was issued pursuant to the EPIRA, Section 4(e) of Rule 3 as part of the IRR has the force and effect of law118 and thus should have been complied with.

In view of the infirmities which attended the issuance of the November 27, 2003 Order, particularly: (1) the failure of MERALCO to publish its Application or at least a summary thereof; (2) the failure of the ERC to resolve theMotions for Production of Documents filed by the oppositors to MERALCO’s Application before acting on the motion for provisional rate adjustment; and (3) the failure of the ERC to consider the arguments raised by the oppositors in their respective pleadings prior to the issuance of the assailed Order; the Court declares void the November 27, 2003 Order of the ERC for having been issued with grave abuse of discretion.

One final word. The character of the infirmities which taint the challenged Order is such that it precludes the remand of the case to the ERC without invalidating the Order. The defect of the notice as published is deemed of so serious a nature as to negate the notice altogether and forestall the ERC’s assumption of jurisdiction over MERALCO’s Application and its prayer

for provisional rate increase. Similarly, the ERC’s failure to consider the oppositions and motions already on record in issuing the challenged Order and to act upon other relevant motions has such grave due process implications that

render the Order void, independently of its breach of its own rules. Thus, should the case be simply remanded to the ERC without further action by the Court, the defects would not be cleansed and they would retain their potency and still serve as solid basis to nullify the challenged Order and all other issuances of the ERC which would be infected by the infirmities. Indeed, such a denouement would be inescapable once the application is elevated again to this Court in connection with the infirm issuances. Clearly then, a remand is not in the best interest of MERALCO and the ERC. Rather, it is to their advantage, same as with the consumers, that they begin again on a clean slate.

WHEREFORE, the Petition and the Petition-in- Intervention are GRANTED, and the November 27, 2003 Order of the respondent Energy Regulatory Commission in ERC Case No. 2003-480, granting provisional rate increases to the respondent MERALCO, is DECLARED VOID and accordingly SET ASIDE.

Respondent Commission is DIRECTED to comply with Section 4(e), Rule 3 of the Implementing Rules and Regulations of Republic Act No. 9136, particularly the publication and comment requirements therein, in conformity with this D E C I S I O N, in acting upon and resolving respondent MERALCO’s prayer for provisional rate increase in its Application dated October 8, 2003 in ERC Case No. 2003-480.

SO ORDERED.

Davide, Jr., Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., and Azcuna, JJ., concur.

G.R. No. 78385 August 31, 1987

PHILIPPINE CONSUMERS FOUNDATION, INC., petitioner, vs.THE SECRETARY OF EDUCATION, CULTURE AND SPORTS, respondent.

 

GANCAYCO, J.:

This is an original Petition for prohibition with a prayer for the issuance of a writ of preliminary injunction.

The record of the case discloses that the herein petitioner Philippine Consumers Foundation, Inc. is a non-stock, non-profit corporate entity duly organized and existing under the laws of the Philippines. The herein respondent Secretary of Education, Culture and Sports is a ranking cabinet member who heads the Department of Education, Culture and Sports of the Office of the President of the Philippines.

On February 21, 1987, the Task Force on Private Higher Education created by the Department of Education, Culture and Sports (hereinafter referred to as the DECS) submitted a report entitled "Report and Recommendations on a Policy for Tuition and Other School Fees." The report favorably recommended to the DECS the following courses of action with respect to the Government's policy on increases in school fees for the schoolyear 1987 to 1988 —

(1) Private schools may be allowed to increase its total school fees by not more than 15 per cent to 20 per cent without the need for the prior approval of the DECS. Schools that wish to increase school fees beyond the ceiling would be subject to the discretion of the DECS;

(2) Any private school may increase its total school fees in excess of the ceiling, provided that the total schools fees will not exceed P1,000.00 for the schoolyear in the elementary and secondary levels, and P50.00 per academic unit on a semestral basis for the collegiate level. 1

The DECS took note of the report of the Task Force and on the basis of the same, the DECS, through the respondent Secretary of Education, Culture and Sports (hereinafter referred to as the respondent Secretary), issued an Order authorizing, inter alia, the 15% to 20% increase in school fees as recommended by the Task Force. The petitioner sought a reconsideration of the said Order, apparently on the ground that the increases were too high. 2 Thereafter, the DECS issued Department Order No. 37 dated April 10, 1987 modifying its previous Order and reducing the increases to a lower ceiling of 10% to 15%, accordingly. 3 Despite this reduction, the petitioner still opposed the increases. On April 23, 1987, the petitioner, through counsel, sent a telegram to the President of the Philippines urging the suspension of the implementation of Department Order No. 37. 4 No response appears to have been obtained from the Office of the President.

Thus, on May 20, 1987, the petitioner, allegedly on the basis of the public interest, went to this Court and filed the instant Petition for prohibition, seeking that judgment be rendered declaring the questioned Department Order unconstitutional. The thrust of the Petition is that the said Department Order was issued without any legal basis. The petitioner also maintains that the questioned Department Order was issued in violation of the due process clause of the Constitution in asmuch as the petitioner was not given due notice and hearing before the said Department Order was issued.

In support of the first argument, the petitioner argues that while the DECS is authorized by law to regulate school fees in educational institutions, the power to regulate does not always include the power to increase school fees. 5

Regarding the second argument, the petitioner maintains that students and parents are interested parties that should be afforded an opportunity for a hearing before school fees are increased. In sum, the petitioner stresses that the questioned Order constitutes a denial of substantive and procedural due process of law.

Complying with the instructions of this Court, 6 the respondent Secretary submitted a Comment on the Petition. 7The respondent Secretary maintains, inter alia, that the increase in tuition and other school fees is urgent and necessary, and that the assailed Department Order is not arbitrary in character. In due time, the petitioner submitted a Reply to the Comment. 8 Thereafter, We considered the case submitted for resolution.

After a careful examination of the entire record of the case, We find the instant Petition devoid of merit.

We are not convinced by the argument that the power to regulate school fees "does not always include the power to increase" such fees. Section 57 (3) of Batas Pambansa Blg. 232, otherwise known as The Education Act of 1982, vests the DECS with the power to regulate the educational system in the country, to wit:

SEC. 57. Educations and powers of the Ministry. The Ministry shall:

xxx xxx xxx

(3) Promulgate rules and regulations necessary for the administration, supervision and regulation of the educational system in accordance with declared policy.

xxx xxx xxx 9

Section 70 of the same Act grants the DECS the power to issue rules which are likewise necessary to discharge its functions and duties under the law, to wit:

SEC. 70. Rule-making Authority. — The Minister of Education and Culture, charged with the administration and enforcement of this Act, shall promulgate the necessary implementing rules and regulations.

In the absence of a statute stating otherwise, this power includes the power to prescribe school fees. No other government agency has been vested with the authority to fix school fees and as such, the power should be considered lodged with the DECS if it is to properly and effectively discharge its functions and duties under the law.

We find the remaining argument of the petitioner untenable. The petitioner invokes the due process clause of the Constitution against the alleged arbitrariness of the assailed Department Order. The petitioner maintains that the

due process clause requires that prior notice and hearing are indispensable for the Department Order to be validly issued.

We disagree.

The function of prescribing rates by an administrative agency may be either a legislative or an adjudicative function. If it were a legislative function, the grant of prior notice and hearing to the affected parties is not a requirement of due process. As regards rates prescribed by an administrative agency in the exercise of its quasi-judicial function, prior notice and hearing are essential to the validity of such rates. When the rules and/or rates laid down by an administrative agency are meant to apply to all enterprises of a given kind throughout the country, they may partake of a legislative character. Where the rules and the rates imposed apply exclusively to a particular party, based upon a finding of fact, then its function is quasi-judicial in character. 9a

Is Department Order No. 37 issued by the DECS in the exercise of its legislative function? We believe so. The assailed Department Order prescribes the maximum school fees that may be charged by all private schools in the country for schoolyear 1987 to 1988. This being so, prior notice and hearing are not essential to the validity of its issuance.

This observation notwithstanding, there is a failure on the part of the petitioner to show clear and convincing evidence of such arbitrariness. As the record of the case discloses, the DECS is not without any justification for the issuance of the questioned Department Order. It would be reasonable to assume that the report of the Task Force created by the DECS, on which it based its decision to allow an increase in school fees, was made judiciously. Moreover, upon the instance of the petitioner, as it so admits in its Petition, the DECS had actually reduced the original rates of 15% to 20% down to 10% to 15%, accordingly. Under the circumstances peculiar to this case, We cannot consider the assailed Department Order arbitrary.

Under the Rules of Court, it is presumed that official duty has been regularly performed. 10 In the absence of proof to the contrary, that presumption prevails. This being so, the burden of proof is on the party assailing the regularity of official proceedings. In the case at bar, the petitioner has not successfully disputed the presumption.

We commend the petitioner for taking the cudgels for the public, especially the parents and the students of the country. Its zeal in advocating the protection of the consumers in its activities should be lauded rather than discouraged. But a more convincing case should be made out by it if it is to seek relief from the courts some time in the future. Petitioner must establish that respondent acted without or in excess of her jurisdiction; or with grave abuse of discretion, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law before the extraordinary writ of prohibition may issue. 11

This Court, however, does not go to the extent of saying that it gives its judicial imprimatur to future increases in school fees. The increases must not be unreasonable and arbitrary so as to amount to an outrageous exercise of government authority and power. In such an eventuality, this Court will not hesitate to exercise the power of judicial review in its capacity as the ultimate guardian of the Constitution.

WHEREFORE, in view of the foregoing, the instant Petition for prohibition is hereby DISMISSED for lack of merit. We make no pronouncement as to costs.

SO ORDERED.

Teehankee, C.J., Yap, Fernan, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Sarmiento and Cortes, JJ., concur.

 

G.R. No. L-63915 December 29, 1986

LORENZO M. TAÑ;ADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. (MABINI), petitioners, vs.HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON. JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President, MELQUIADES P. DE LA CRUZ, ETC., ET AL., respondents.

R E S O L U T I O N

 

CRUZ, J.:

Due process was invoked by the petitioners in demanding the disclosure of a number of presidential decrees which they claimed had not been published as required by law. The government argued that while publication was necessary as a rule, it was not so when it was "otherwise provided," as when the decrees themselves declared that they were to become effective immediately upon their approval. In the decision of this case on April 24, 1985, the Court affirmed the necessity for the publication of some of these decrees, declaring in the dispositive portion as follows:

WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential issuances which are of general application, and unless so published, they shall have no binding force and effect.

The petitioners are now before us again, this time to move for reconsideration/clarification of that decision. 1Specifically, they ask the following questions:

1. What is meant by "law of public nature" or "general applicability"?

2. Must a distinction be made between laws of general applicability and laws which are not?

3. What is meant by "publication"?

4. Where is the publication to be made?

5. When is the publication to be made?

Resolving their own doubts, the petitioners suggest that there should be no distinction between laws of general applicability and those which are not; that publication means complete publication; and that the publication must be made forthwith in the Official Gazette. 2

In the Comment 3 required of the then Solicitor General, he claimed first that the motion was a request for an advisory opinion and should therefore be dismissed, and, on the merits, that the clause "unless it is otherwise provided" in Article 2 of the Civil Code meant that the publication required therein was not always imperative; that publication, when necessary, did not have to be made in the Official Gazette; and that in any case the subject decision was concurred in only by three justices and consequently not binding. This elicited a Reply 4 refuting these arguments. Came next the February Revolution and the Court required the new Solicitor General to file a Rejoinder in view of the supervening events, under Rule 3, Section 18, of the Rules of Court. Responding, he submitted that issuances intended only for the internal administration of a government agency or for particular persons did not have to be 'Published; that publication when necessary must be in full and in the Official Gazette; and that, however, the decision under reconsideration was not binding because it was not supported by eight members of this Court. 5

The subject of contention is Article 2 of the Civil Code providing as follows:

ART. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided. This Code shall take effect one year after such publication.

After a careful study of this provision and of the arguments of the parties, both on the original petition and on the instant motion, we have come to the conclusion and so hold, that the clause "unless it is otherwise provided" refers to the date of effectivity and not to the requirement of publication itself, which cannot in any event be omitted. This clause does not mean that the legislature may make the law effective immediately upon approval, or on any other date, without its previous publication.

Publication is indispensable in every case, but the legislature may in its discretion provide that the usual fifteen-day period shall be shortened or extended. An example, as pointed out by the present Chief Justice in his separate concurrence in the original decision, 6 is the Civil Code which did not become effective after fifteen days from its publication in the Official Gazette but "one year after such publication." The general rule did not apply because it was "otherwise provided. "

It is not correct to say that under the disputed clause publication may be dispensed with altogether. The reason. is that such omission would offend due process insofar as it would deny the public knowledge of the laws that are supposed to govern the legislature could validly provide that a law e effective immediately upon its approval notwithstanding the lack of publication (or after an unreasonably short period after publication), it is not unlikely that persons not aware of it would be prejudiced as a result and they would be so not because of a failure to comply with but simply because they did not know of its existence, Significantly, this is not true only of penal laws as is commonly supposed. One can think of many non-penal measures, like a law on prescription, which must also be communicated to the persons they may affect before they can begin to operate.

We note at this point the conclusive presumption that every person knows the law, which of course presupposes that the law has been published if the presumption is to have any legal justification at all. It is no less important to remember that Section 6 of the Bill of Rights recognizes "the right of the people to information on matters of public concern," and this certainly applies to, among others, and indeed especially, the legislative enactments of the government.

The term "laws" should refer to all laws and not only to those of general application, for strictly speaking all laws relate to the people in general albeit there are some that do not apply to them directly. An example is a law granting citizenship to a particular individual, like a relative of President Marcos who was decreed instant naturalization. It surely cannot be said that such a law does not affect the public although it unquestionably does not apply directly to all the people. The subject of such law is a matter of public interest which any member of the body politic may question in the political forums or, if he is a proper party, even in the courts of justice. In fact, a law without any bearing on the public would be invalid as an intrusion of privacy or as class legislation or as anultra vires act of the legislature. To be valid, the law must invariably affect the public interest even if it might be directly applicable only to one individual, or some of the people only, and t to the public as a whole.

We hold therefore that all statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity date is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative powers whenever the same are validly delegated by the legislature or, at present, directly conferred by the Constitution. administrative rules and regulations must a also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation.

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 published. Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties.

Accordingly, even the charter of a city must be published notwithstanding that it applies to only a portion of the national territory and directly affects only the inhabitants of that place. All presidential decrees must be published, including even, say, those naming a public place after a favored individual or exempting him from certain

prohibitions or requirements. The circulars issued by the Monetary Board must be published if they are meant not merely to interpret but to "fill in the details" of the Central Bank Act which that body is supposed to enforce.

However, no publication is required of the instructions issued by, say, the Minister of Social Welfare on the case studies to be made in petitions for adoption or the rules laid down by the head of a government agency on the assignments or workload of his personnel or the wearing of office uniforms. Parenthetically, municipal ordinances are not covered by this rule but by the Local Government Code.

We agree that publication must be in full or it is no publication at all since its purpose is to inform the public of the contents of the laws. As correctly pointed out by the petitioners, the mere mention of the number of the presidential decree, the title of such decree, its whereabouts (e.g., "with Secretary Tuvera"), the supposed date of effectivity, and in a mere supplement of the Official Gazette cannot satisfy the publication requirement. This is not even substantial compliance. This was the manner, incidentally, in which the General Appropriations Act for FY 1975, a presidential decree undeniably of general applicability and interest, was "published" by the Marcos administration. 7 The evident purpose was to withhold rather than disclose information on this vital law.

Coming now to the original decision, it is true that only four justices were categorically for publication in the Official Gazette 8 and that six others felt that publication could be made elsewhere as long as the people were sufficiently informed. 9 One reserved his vote 10 and another merely acknowledged the need for due publication without indicating where it should be made. 11 It is therefore necessary for the present membership of this Court to arrive at a clear consensus on this matter and to lay down a binding decision supported by the necessary vote.

There is much to be said of the view that the publication need not be made in the Official Gazette, considering its erratic releases and limited readership. Undoubtedly, newspapers of general circulation could better perform the function of communicating, the laws to the people as such periodicals are more easily available, have a wider readership, and come out regularly. The trouble, though, is that this kind of publication is not the one required or authorized by existing law. As far as we know, no amendment has been made of Article 2 of the Civil Code. The Solicitor General has not pointed to such a law, and we have no information that it exists. If it does, it obviously has not yet been published.

At any rate, this Court is not called upon to rule upon the wisdom of a law or to repeal or modify it if we find it impractical. That is not our function. That function belongs to the legislature. Our task is merely to interpret and apply the law as conceived and approved by the political departments of the government in accordance with the prescribed procedure. Consequently, we have no choice but to pronounce that under Article 2 of the Civil Code, the publication of laws must be made in the Official Gazett and not elsewhere, as a requirement for their effectivity after fifteen days from such publication or after a different period provided by the legislature.

We also hold that the publication must be made forthwith or at least as soon as possible, to give effect to the law pursuant to the said Article 2. There is that possibility, of course, although not suggested by the parties that a law could be rendered unenforceable by a mere refusal of the executive, for whatever reason, to cause its publication as required. This is a matter, however, that we do not need to examine at this time.

Finally, the claim of the former Solicitor General that the instant motion is a request for an advisory opinion is untenable, to say the least, and deserves no further comment.

The days of the secret laws and the unpublished decrees are over. This is once again an open society, with all the acts of the government subject to public scrutiny and available always to public cognizance. This has to be so if our country is to remain democratic, with sovereignty residing in the people and all government authority emanating from them.

Although they have delegated the power of legislation, they retain the authority to review the work of their delegates and to ratify or reject it according to their lights, through their freedom of expression and their right of suffrage. This they cannot do if the acts of the legislature are concealed.

Laws must come out in the open in the clear light of the sun instead of skulking in the shadows with their dark, deep secrets. Mysterious pronouncements and rumored rules cannot be recognized as binding unless their existence and

contents are confirmed by a valid publication intended to make full disclosure and give proper notice to the people. The furtive law is like a scabbarded saber that cannot feint parry or cut unless the naked blade is drawn.

WHEREFORE, it is hereby declared that all laws as above defined shall immediately upon their approval, or as soon thereafter as possible, be published in full in the Official Gazette, to become effective only after fifteen days from their publication, or on another date specified by the legislature, in accordance with Article 2 of the Civil Code.

SO ORDERED.

Teehankee, C.J., Feria, Yap, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr., and Paras, JJ., concur.

 

Separate Opinions

FERNAN, J., concurring:

While concurring in the Court's opinion penned by my distinguished colleague, Mr. Justice Isagani A. Cruz, I would like to add a few observations. Even as a Member of the defunct Batasang Pambansa, I took a strong stand against the insidious manner by which the previous dispensation had promulgated and made effective thousands of decrees, executive orders, letters of instructions, etc. Never has the law-making power which traditionally belongs to the legislature been used and abused to satisfy the whims and caprices of a one-man legislative mill as it happened in the past regime. Thus, in those days, it was not surprising to witness the sad spectacle of two presidential decrees bearing the same number, although covering two different subject matters. In point is the case of two presidential decrees bearing number 1686 issued on March 19, 1980, one granting Philippine citizenship to Michael M. Keon the then President's nephew and the other imposing a tax on every motor vehicle equipped with airconditioner. This was further exacerbated by the issuance of PD No. 1686-A also on March 19, 1980 granting Philippine citizenship to basketball players Jeffrey Moore and Dennis George Still

The categorical statement by this Court on the need for publication before any law may be made effective seeks prevent abuses on the part of the lawmakers and, at the same time, ensures to the people their constitutional right to due process and to information on matters of public concern.

FELICIANO, J., concurring:

I agree entirely with the opinion of the court so eloquently written by Mr. Justice Isagani A. Cruz. At the same time, I wish to add a few statements to reflect my understanding of what the Court is saying.

A statute which by its terms provides for its coming into effect immediately upon approval thereof, is properly interpreted as coming into effect immediately upon publication thereof in the Official Gazette as provided in Article 2 of the Civil Code. Such statute, in other words, should not be regarded as purporting literally to come into effect immediately upon its approval or enactment and without need of publication. For so to interpret such statute would be to collide with the constitutional obstacle posed by the due process clause. The enforcement of prescriptions which are both unknown to and unknowable by those subjected to the statute, has been throughout history a common tool of tyrannical governments. Such application and enforcement constitutes at bottom a negation of the fundamental principle of legality in the relations between a government and its people.

At the same time, it is clear that the requirement of publication of a statute in the Official Gazette, as distinguished from any other medium such as a newspaper of general circulation, is embodied in a statutory norm and is not a constitutional command. The statutory norm is set out in Article 2 of the Civil Code and is supported and reinforced by Section 1 of Commonwealth Act No. 638 and Section 35 of the Revised Administrative Code. A specification of the Official Gazette as the prescribed medium of publication may therefore be changed. Article 2 of the Civil Code could, without creating a constitutional problem, be amended by a subsequent statute providing, for instance, for publication either in the Official Gazette or in a newspaper of general circulation in the country. Until such an amendatory statute is in fact enacted, Article 2 of the Civil Code must be obeyed and publication effected in the Official Gazette and not in any other medium.

 

Separate Opinions

FERNAN, J., concurring:

While concurring in the Court's opinion penned by my distinguished colleague, Mr. Justice Isagani A. Cruz, I would like to add a few observations. Even as a Member of the defunct Batasang Pambansa, I took a strong stand against the insidious manner by which the previous dispensation had promulgated and made effective thousands of decrees, executive orders, letters of instructions, etc. Never has the law-making power which traditionally belongs to the legislature been used and abused to satisfy the whims and caprices of a one-man legislative mill as it happened in the past regime. Thus, in those days, it was not surprising to witness the sad spectacle of two presidential decrees bearing the same number, although covering two different subject matters. In point is the case of two presidential decrees bearing number 1686 issued on March 19, 1980, one granting Philippine citizenship to Michael M. Keon the then President's nephew and the other imposing a tax on every motor vehicle equipped with airconditioner. This was further exacerbated by the issuance of PD No. 1686-A also on March 19, 1980 granting Philippine citizenship to basketball players Jeffrey Moore and Dennis George Still

The categorical statement by this Court on the need for publication before any law may be made effective seeks prevent abuses on the part of the lawmakers and, at the same time, ensures to the people their constitutional right to due process and to information on matters of public concern.

FELICIANO, J., concurring:

I agree entirely with the opinion of the court so eloquently written by Mr. Justice Isagani A. Cruz. At the same time, I wish to add a few statements to reflect my understanding of what the Court is saying.

A statute which by its terms provides for its coming into effect immediately upon approval thereof, is properly interpreted as coming into effect immediately upon publication thereof in the Official Gazette as provided in Article 2 of the Civil Code. Such statute, in other words, should not be regarded as purporting literally to come into effect immediately upon its approval or enactment and without need of publication. For so to interpret such statute would be to collide with the constitutional obstacle posed by the due process clause. The enforcement of prescriptions which are both unknown to and unknowable by those subjected to the statute, has been throughout history a common tool of tyrannical governments. Such application and enforcement constitutes at bottom a negation of the fundamental principle of legality in the relations between a government and its people.

At the same time, it is clear that the requirement of publication of a statute in the Official Gazette, as distinguished from any other medium such as a newspaper of general circulation, is embodied in a statutory norm and is not a constitutional command. The statutory norm is set out in Article 2 of the Civil Code and is supported and reinforced by Section 1 of Commonwealth Act No. 638 and Section 35 of the Revised Administrative Code. A specification of the Official Gazette as the prescribed medium of publication may therefore be changed. Article 2 of the Civil Code could, without creating a constitutional problem, be amended by a subsequent statute providing, for instance, for publication either in the Official Gazette or in a newspaper of general circulation in the country. Until such an amendatory statute is in fact enacted, Article 2 of the Civil Code must be obeyed and publication effected in the Official Gazette and not in any other medium.

[G.R. No. 147096.  January 15, 2002]

REPUBLIC OF THE PHILIPPINES, represented by NATIONAL TELECOMMUNICATIONS COMMISSION, petitioner, vs. EXPRESS TELECOMMUNICATION CO., INC. and BAYAN TELECOMMUNICATIONS CO., INC., respondents.

[G.R. No. 147210.  January 15, 2002]

BAYAN TELECOMMUNICATIONS (Bayantel), INC., petitioner, vs. EXPRESS TELECOMMUNICATION CO., INC. (Extelcom), respondent.

D E C I S I O N

YNARES-SANTIAGO, J.:

On December 29, 1992, International Communications Corporation (now Bayan Telecommunications, Inc. or Bayantel) filed an application with the National Telecommunications Commission (NTC) for a Certificate of Public Convenience or Necessity (CPCN) to install, operate and maintain a digital Cellular Mobile Telephone System/Service (CMTS) with prayer for a Provisional Authority (PA).  The application was docketed as NTC Case No. 92-486.[1]

Shortly thereafter, or on January 22, 1993, the NTC issued Memorandum Circular No. 4-1-93 directing all interested applicants for nationwide or regional CMTS to file their respective applications before the Commission on or before February 15, 1993, and deferring the acceptance of any application filed after said date until further orders.[2]

On May 6, 1993, and prior to the issuance of any notice of hearing by the NTC with respect to Bayantel’s original application, Bayantel filed an urgent ex-parte motion to admit an amended application.[3] On May 17, 1993, the notice of hearing issued by the NTC with respect to this amended application was published in the Manila Chronicle.  Copies of the application as well as the notice of hearing were mailed to all affected parties.  Subsequently, hearings were conducted on the amended application.  But before Bayantel could complete the presentation of its evidence, the NTC issued an Order dated December 19, 1993 stating:

In view of the recent grant of two (2) separate Provisional Authorities in favor of ISLACOM and GMCR, Inc., which resulted in the closing out of all available frequencies for the service being applied for by herein applicant, and in order that this case may not remain pending for an indefinite period of time, AS PRAYED FOR, let this case be, as it is, hereby ordered ARCHIVED without prejudice to its reinstatement if and when the requisite frequency becomes available.

SO ORDERED.[4]

On June 18, 1998, the NTC issued Memorandum Circular No. 5-6-98 re-allocating five (5) megahertz (MHz) of the radio frequency spectrum for the expansion of CMTS networks.  The re-allocated 5 MHz were taken from the following bands: 1730-1732.5 / 1825-1827.5 MHz and 1732.5-1735 / 1827.5-1830 MHz.[5]

Likewise, on March 23, 1999, Memorandum Circular No. 3-3-99 was issued by the NTC re-allocating an additional five (5) MHz frequencies for CMTS service, namely: 1735-1737.5 / 1830-1832.5 MHz; 1737.5-1740 / 1832.5-1835 MHz; 1740-1742.5 / 1835-1837.5 MHz; and 1742.5-1745 / 1837.5-1840 MHz.[6]

On May 17, 1999, Bayantel filed an Ex-Parte Motion to Revive Case,[7] citing  the availability of new frequency bands for CMTS operators, as provided for under Memorandum Circular No. 3-3-99.

On February 1, 2000, the NTC granted BayanTel’s motion to revive the latter’s application and set the case for hearings on February 9, 10, 15, 17 and 22, 2000. [8] The NTC noted that the application was ordered archived without prejudice to its reinstatement if and when the requisite frequency shall become available.

Respondent Express Telecommunication Co., Inc. (Extelcom) filed in NTC Case No. 92-486 an Opposition (With Motion to Dismiss) praying for the dismissal of Bayantel’s application.[9]Extelcom argued that Bayantel’s motion sought the revival of an archived application filed almost eight (8) years ago.  Thus, the documentary evidence and the allegations of respondent Bayantelin this application are all outdated and should no longer be used as basis of the necessity for the proposed CMTS service.  Moreover, Extelcom alleged that there was no public need for the service applied for by Bayantel as the present five CMTS operators --- Extelcom, Globe Telecom, Inc., Smart Communication, Inc., Pilipino Telephone Corporation, and Isla Communication Corporation, Inc. --- more than adequately addressed the market demand, and all are in the process of enhancing and expanding their respective networks based on recent technological developments. 

Extelcom likewise contended that there were no available radio frequencies that could accommodate a new CMTS operator as the frequency bands allocated in NTC Memorandum Circular No. 3-3-99 were intended for and had in fact been applied for by the existing CMTS operators.  The NTC, in its Memorandum Circular No. 4-1-93, declared it its policy to defer the acceptance of any application for CMTS.  All the frequency bands allocated for CMTS use under the NTC’s Memorandum Circular No. 5-11-88 and Memorandum Circular No. 2-12-92 had already been allocated to the existing CMTS operators.  Finally, Extelcom pointed out that Bayantel is its substantial stockholder to the

extent of about 46% of its outstanding capital stock, and Bayantel’sapplication undermines the very operations of Extelcom.

On March 13, 2000, Bayantel filed a Consolidated Reply/Comment,[10] stating that the opposition was actually a motion seeking a reconsideration of the NTC Order reviving the instant application, and thus cannot dwell on the material allegations or the merits of the case.  Furthermore, Extelcom cannot claim that frequencies were not available inasmuch as the allocation and assignment thereof rest solely on the discretion of the NTC.

In the meantime, the NTC issued on March 9, 2000 Memorandum Circular No. 9-3-2000, re-allocating the following radio frequency bands for assignment to existing CMTS operators and to public telecommunication entities which shall be authorized to install, operate and maintain CMTS networks, namely: 1745-1750MHz / 1840-1845MHz;  1750-1775MHz / 1845-1850MHz; 1765-1770MHz / 1860-1865MHz; and 1770-1775MHz / 1865-1870MHz.[11]

On May 3, 2000, the NTC issued an Order granting in favor of Bayantel a provisional authority to operate CMTS service.[12] The Order stated in pertinent part:

On the issue of legal capacity on the part of Bayantel, this Commission has already taken notice of the change in name of International Communications Corporation to Bayan Telecommunications,

Inc.  Thus, in the Decision entered in NTC Case No.   93-284/94-200 dated 19 July 1999, it was recognized that Bayan Telecommunications, Inc., was formerly named International Communications Corp. Bayantel and ICC Telecoms, Inc. are one and the same entity, and it necessarily follows that what legal capacity ICC Telecoms has or has acquired is also the legal capacity that Bayantel possesses.

On the allegation that the Commission has committed an error in allowing the revival of the instant application, it appears that the Order dated 14 December 1993 archiving the same was anchored on the non-availability of frequencies for CMTS.  In the same Order, it was expressly stated that the archival hereof, shall be without prejudice to its reinstatement “if and when the requisite frequency becomes available.” Inherent in the said Order is the prerogative of the Commission in reviving the same, subject to prevailing conditions.  The Order of 1 February 2001, cited the availability of frequencies for CMTS, and based thereon, the Commission, exercising its prerogative, revived and reinstated the instant application.  The fact that the motion for revival hereof was made ex-parte by the applicant is of no moment, so long as the oppositors are given the opportunity to be later heard and present the merits of their respective oppositions in the proceedings.

On the allegation that the instant application is already obsolete and overtaken by developments, the issue is whether applicant has the legal, financial and technical capacity to undertake the proposed project.  The determination of such capacity lies solely within the discretion of the Commission, through its applicable rules and regulations.  At any rate, the oppositors are not precluded from showing evidence disputing such capacity in the proceedings at hand.  On the alleged non-availability of frequencies for the proposed service in view of the pending applications for the same, the Commission takes note that it has issued Memorandum Circular 9-3-2000, allocating additional frequencies for CMTS.  The eligibility of existing operators who applied for

additional frequencies shall be treated and resolved in their respective applications, and are not in issue in the case at hand.

Accordingly, the Motions for Reconsideration filed by SMARTCOM and GLOBE TELECOMS/ISLACOM and the Motion to Dismiss filed by EXTELCOM are hereby DENIED for lack of merit.[13]

The grant of the provisional authority was anchored on the following findings:

COMMENTS:

1.  Due to the operational mergers between Smart Communications, Inc. and Pilipino Telephone Corporation (Piltel) and between Globe Telecom, Inc. (Globe) and Isla Communications, Inc. (Islacom), free and effective competition in the CMTS market is threatened.  The fifth operator, Extelcom, cannot provide good competition in as much as it provides service using the analog AMPS.  The GSM system dominates the market.

2.  There are at present two applicants for the assignment of the frequencies in the 1.7 Ghz and 1.8 Ghz allocated to CMTS, namely Globe and Extelcom.  Based on the number of subscribersExtelcom has, there appears to be no congestion in its network - a condition that is necessary for an applicant to be assigned additional frequencies.  Globe has yet to prove that there is congestion in its network considering its operational merger with Islacom.

3.  Based on the reports submitted to the Commission, 48% of the total number of cities and municipalities are still without telephone service despite the more than 3 million installed lines waiting to be subscribed.

CONCLUSIONS:

1.  To ensure effective competition in the CMTS market considering the operational merger of some of the CMTS operators, new CMTS operators must be allowed to provide the service.

2.  The re-allocated frequencies for CMTS of 3 blocks of 5 Mhz x 2 is sufficient for the number of applicants should the applicants be qualified.

3.  There is a need to provide service to some or all of the remaining cities and municipalities without telephone service.

4.  The submitted documents are sufficient to determine compliance to the technical requirements.  The applicant can be directed to submit details such as channeling plans, exact locations of cell sites, etc. as the project implementation progresses, actual area coverage ascertained and traffic data are made available.  Applicant appears to be technically qualified to undertake the proposed project and offer the proposed service.

IN VIEW OF THE FOREGOING and considering that there is prima facie evidence to show that Applicant is legally, technically and financially qualified and that the proposed service is technically feasible and economically viable, in the interest of public service, and in order to facilitate the development of telecommunications services in all areas of the country, as well as to ensure healthy competition among authorized CMTS providers, let a PROVISIONAL AUTHORITY (P.A.) be issued to Applicant BAYAN TELECOMMUNICATIONS, INC. authorizing it to construct, install, operate and maintain a Nationwide Cellular Mobile Telephone Systems (CMTS), subject to the following terms and conditions without prejudice to a final decision after completion of the hearing which shall be called within thirty (30) days from

grant of authority, in accordance with Section 3, Rule 15, Part IV of the Commission’s Rules of Practice and Procedure.  xxx.[14]

Extelcom filed with the Court of Appeals a petition for certiorari and prohibition,[15] docketed as CA-G.R. SP No. 58893, seeking the annulment of the Order reviving the application ofBayantel, the Order granting Bayantel a provisional authority to construct, install, operate and maintain a nationwide CMTS, and Memorandum Circular No. 9-3-2000 allocating frequency bands to new public telecommunication entities which are authorized to install, operate and maintain CMTS.

On September 13, 2000, the Court of Appeals rendered the assailed Decision,[16] the dispositive portion of which reads:

WHEREFORE, the writs of certiorari and prohibition prayed for are GRANTED.  The Orders of public respondent dated February 1, 2000 and May 3, 2000 in NTC Case No. 92-486 are hereby ANNULLED and SET ASIDE and the Amended Application of respondent Bayantel is DISMISSED without prejudice to the filing of a new CMTS application.  The writ of preliminary injunction issued under our Resolution dated August 15, 2000, restraining and enjoining the respondents from enforcing the Orders dated February 1, 2000 and May 3, 2000 in the said NTC case is hereby made permanent.  The Motion for Reconsideration of respondentBayantel dated August 28, 2000 is denied for lack of merit.

SO ORDERED.[17]

Bayantel filed a motion for reconsideration of the above decision.[18] The NTC, represented by the Office of the Solicitor General (OSG), also filed its own motion for reconsideration.[19] On the other hand, Extelcom filed a Motion for Partial Reconsideration, praying that NTC Memorandum Circular No. 9-3-2000 be also declared null and void.[20]

On February 9, 2001, the Court of Appeals issued the assailed Resolution denying all of the motions for reconsideration of the parties for lack of merit.[21]

Hence, the NTC filed the instant petition for review on certiorari, docketed as G.R. No. 147096, raising the following issues for resolution of this Court:

A.      Whether or not the Order dated February 1, 2000 of the petitioner which revived the application of respondent Bayantel in NTC Case No. 92-486 violated respondent Extelcom’s right to procedural due process of law;

B.      Whether or not the Order dated May 3, 2000 of the petitioner granting respondent Bayantel a provisional authority to operate a CMTS is in substantial compliance with NTC Rules of Practice and Procedure and Memorandum Circular No. 9-14-90 dated September 4, 1990.[22]

Subsequently, Bayantel also filed its petition for review, docketed as G.R. No. 147210, assigning the following errors:

I.   THE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION OF THE PRINCIPLE OF “EXHAUSTION OF ADMINISTRATIVE REMEDIES” WHEN IT FAILED TO DISMISS HEREIN

RESPONDENT’S PETITION FOR CERTIORARI DESPITE ITS FAILURE TO FILE A MOTION FOR RECONSIDERATION.

II.  THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE REVIVAL OF NTC CASE NO. 92-486 ANCHORED ON A EX-PARTE MOTION TO REVIVE CASE WAS TANTAMOUNT TO GRAVE ABUSE OF DISCRETION ON THE PART OF THE NTC.

III.  THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DENIED THE MANDATE OF THE NTC AS THE AGENCY OF GOVERNMENT WITH THE SOLE DISCRETION REGARDING ALLOCATION OF FREQUENCY BAND TO TELECOMMUNICATIONS ENTITIES.

IV. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION OF THE LEGAL PRINCIPLE THAT JURISDICTION ONCE ACQUIRED CANNOT BE LOST WHEN IT DECLARED THAT THE ARCHIVED APPLICATION SHOULD BE DEEMED AS A NEW APPLICATION IN VIEW OF THE SUBSTANTIAL CHANGE IN THE CIRCUMSTANCES ALLEGED IN ITS AMENDMENT APPLICATION.

V.  CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE ARCHIVING OF THE BAYANTEL APPLICATION WAS A VALID ACT ON THE PART OF THE NTC EVEN IN THE ABSENCE OF A SPECIFIC RULE ON ARCHIVING OF CASES SINCE RULES OF PROCEDURE ARE, AS A MATTER OF COURSE, LIBERALLY CONSTRUED IN PROCEEDINGS BEFORE ADMINISTRATIVE BODIES AND SHOULD GIVE WAY TO THE GREATER HIERARCHY OF PUBLIC WELFARE AND PUBLIC INTEREST.

VI.    CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE ARCHIVING OF BAYANTEL’S APPLICATION WAS NOT VIOLATIVE OF THE SUMMARY NATURE OF THE PROCEEDINGS IN THE NTC UNDER SEC. 3, RULE 1 OF THE NTC REVISED RULES OF PROCEDURE.

VII.   THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE ARCHIVING OF BAYANTEL’S APPLICATION WAS VIOLATIVE OF THE ALLEGED DECLARED POLICY OF THE GOVERNMENT ON THE TRANSPARENCY AND FAIRNESS OF ADMINISTRATIVE PROCESS IN THE NTC AS LAID DOWN IN SEC 4(1) OF R.A. NO. 7925.

VIII.    THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE NTC VIOLATED THE PROVISIONS OF THE CONSTITUTION PERTAINING TO DUE PROCESS OF LAW.

IX. THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT THE MAY 3, 2000 ORDER GRANTING BAYANTEL A PROVISIONAL AUTHORITY SHOULD BE SET ASIDE AND REVERSED.

i.   Contrary to the finding of the Court of Appeals, there was no violation of the NTC Rule that the legal, technical, financial and economic documentations in support of the prayer for provisional authority should first be submitted.

ii.  Contrary to the finding of the Court of Appeals, there was no violation of Sec. 3, Rule 15 of the NTC Rules of Practice and Procedure that a motion must first be filed before a provisional authority could be issued.

iii.  Contrary to the finding of the Court of Appeals that a plea for provisional authority necessitates a notice and hearing, the very rule cited by the petitioner (Section 5, Rule 4 of the NTC Rules of Practice and Procedure) provides otherwise.

iv. Contrary to the finding of the Court of Appeals, urgent public need is not the only basis for the grant of a provisional authority to an applicant;

v.  Contrary to the finding of the Court of Appeals, there was no violation of the constitutional provision on the right of the public to information when the Common Carrier Authorization Department (CCAD) prepared its evaluation report.[23]

Considering the identity of the matters involved, this Court resolved to consolidate the two petitions.[24]

At the outset, it is well to discuss the nature and functions of the NTC, and analyze its powers and authority as well as the laws, rules and regulations that govern its existence and operations.

The NTC was created pursuant to Executive Order No. 546, promulgated on July 23, 1979.  It assumed the functions formerly assigned to the Board of Communications and the Telecommunications Control Bureau, which were both abolished under the said Executive Order.  Previously, the NTC’s functions were merely those of the defunct Public Service Commission (PSC), created under Commonwealth Act No. 146, as amended, otherwise known as the Public Service Act, considering that the Board of Communications was the successor-in-interest of the PSC.   Under Executive Order No. 125-A, issued in April 1987, the NTC became an attached agency of the Department of Transportation and Communications.

In the regulatory telecommunications industry, the NTC has the sole authority to issue Certificates of Public Convenience and Necessity (CPCN) for the installation, operation, and maintenance of communications facilities and services, radio communications systems, telephone and telegraph systems.  Such power includes the authority to determine the areas of operations of applicants for telecommunications services.  Specifically, Section 16 of the Public Service Act authorizes the then PSC, upon notice and hearing, to issue Certificates of Public Convenience for the operation of public services within the Philippines “whenever the Commission finds that the operation of the public service proposed and the authorization to do business will promote the public interests in a proper and suitable manner.” [25] The procedure governing the issuance of such authorizations is set forth in Section 29 of the said Act, the pertinent portion of which states:

All hearings and investigations before the Commission shall be governed by rules adopted by the Commission, and in the conduct thereof, the Commission shall not be bound by the technical rules of legal evidence.  xxx.

In granting Bayantel the provisional authority to operate a CMTS, the NTC applied Rule 15, Section 3 of its 1978 Rules of Practice and Procedure, which provides:

Sec. 3. Provisional Relief. --- Upon the filing of an application, complaint or petition or at any stage thereafter, the Board may grant on motion of the pleader or on its own initiative, the relief prayed for, based on the pleading, together with the affidavits and supporting documents attached thereto, without prejudice to a final decision after completion of the hearing which shall be called within thirty (30) days from grant of authority asked for.  (underscoring ours)

Respondent Extelcom, however, contends that the NTC should have applied the Revised Rules which were filed with the Office of the National Administrative Register on February 3, 1993. These Revised Rules deleted the phrase “on its own initiative;” accordingly, a provisional authority may be issued only upon filing of the proper motion before the Commission.

In answer to this argument, the NTC, through the Secretary of the Commission, issued a certification to the effect that inasmuch as the 1993 Revised Rules have not been published in a newspaper of general circulation, the NTC has been applying the 1978 Rules.

The absence of publication, coupled with the certification by the Commissioner of the NTC stating that the NTC was still governed by the 1978 Rules, clearly indicate that the 1993 Revised Rules have not taken effect at the time of the grant of the provisional authority to Bayantel.  The fact that the 1993 Revised Rules were filed with the UP Law Center on February 3, 1993 is of no moment.  There is nothing in the Administrative Code of 1987 which implies that the filing of the rules with the UP Law Center is the operative act that gives the rules force and effect.  Book VII, Chapter 2, Section 3 thereof merely states:

Filing. --- (1)  Every agency shall file with the University of the Philippines Law Center three (3) certified copies of every rule adopted by it.  Rules in force on the date of effectivity of this Code which are not filed within three (3) months from the date shall not thereafter be the basis of any sanction against any party or persons.

(2)     The records officer of the agency, or his equivalent functionary, shall carry out the requirements of this section under pain or disciplinary action.

(3)     A permanent register of all rules shall be kept by the issuing agency and shall be open to public inspection.

The National Administrative Register is merely a bulletin of codified rules and it is furnished only to the Office of the President, Congress, all appellate courts, the National Library, other public offices or agencies as the Congress may select, and to other persons at a price sufficient to cover publication and mailing or distribution costs. [26] In a similar case, we held:

This does not imply however, that the subject Administrative Order is a valid exercise of such quasi-legislative power.  The original Administrative Order issued on August 30, 1989, under which the respondents filed their applications for importations, was not published in the Official Gazette or in a newspaper of general circulation.  The questioned Administrative Order, legally, until it is published, is invalid within the context of Article 2 of Civil Code, which reads:

“Article 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette (or in a newspaper of general circulation in the Philippines), unless it is otherwise provided.  x  x  x”

The fact that the amendments to Administrative Order No. SOCPEC 89-08-01 were filed with, and published by the UP Law Center in the National Administrative Register, does not cure the defect related to theeffectivity of the Administrative Order.

This Court, in Tañada vs. Tuvera (G.R. No. L-63915, December 29, 1986, 146 SCRA 446) stated, thus:

“We hold therefore that all statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative power or, at present, directly conferred by the Constitution.  Administrative Rules and Regulations must also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation.

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 published.  Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties.

x  x  x

We agree that the publication must be in full or it is no publication at all since its purpose is to inform the public of the contents of the laws.”

The Administrative Order under consideration is one of those issuances which should be published for its effectivity, since its purpose is to enforce and implement an existing law pursuant to a valid delegation, i.e., P.D. 1071, in relation to LOI 444 and EO 133.[27]

Thus, publication in the Official Gazette or a newspaper of general circulation is a condition sine qua non before statutes, rules or regulations can take effect.  This is explicit from Executive Order No. 200, which repealed Article 2 of the Civil Code, and which states that:

Laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided.[28]

The Rules of Practice and Procedure of the NTC, which implements Section 29 of the Public Service Act (C.A. 146, as amended), fall squarely within the scope of these laws, as explicitly mentioned in the case Tañada v. Tuvera.[29]

Our pronouncement in Tañada vs. Tuvera is clear and categorical.  Administrative rules and regulations must be published if their purpose is to enforce or implement existing law pursuant to a valid delegation.  The only exceptions are interpretative regulations, those merely internal in nature, or those so-called letters of instructions issued by administrative superiors concerning the rules and guidelines to be followed by their subordinates in the performance of their duties.[30]

Hence, the 1993 Revised Rules should be published in the Official Gazette or in a newspaper of general circulation before it can take effect.  Even the 1993 Revised Rules itself mandates that said Rules shall take effect only after their publication in a newspaper of general circulation.[31] In the absence of such publication, therefore, it is the 1978 Rules that governs.

In any event, regardless of whether the 1978 Rules or the 1993 Revised Rules should apply, the records show that the amended application filed by Bayantel in fact included a motion for the issuance of a provisional authority.  Hence, it cannot be said that the NTC granted the provisional authority motu proprio.  The Court of Appeals, therefore, erred when it found that the NTC issued its Order of May 3, 2000 on its own initiative.  This much is acknowledged in the Decision of the Court of Appeals:

As prayer, ICC asked for the immediate grant of provisional authority to construct, install, maintain and operate the subject service and to charge the proposed rates and after due notice and hearing, approve the instant application and grant the corresponding certificate of public convenience and necessity.[32]

The Court of Appeals also erred when it declared that the NTC’s Order archiving Bayantel’s application was null and void.  The archiving of cases is a widely accepted measure designed to shelve cases in which no immediate action is expected but where no grounds exist for their outright dismissal, albeit without prejudice.  It saves the petitioner or applicant from the added trouble and expense of re-filing a dismissed case.  Under this scheme, an inactive case is kept alive but held in abeyance until the situation obtains wherein action thereon can be taken.

In the case at bar, the said application was ordered archived because of lack of available frequencies at the time, and made subject to reinstatement upon availability of the requisite frequency.  To be sure, there was nothing irregular in the revival of the application after the condition therefor was fulfilled.

While, as held by the Court of Appeals, there are no clear provisions in the Rules of the NTC which expressly allow the archiving of any application, this recourse may be justified under Rule 1, Section 2 of the 1978 Rules, which states:

Sec. 2. Scope.--- These rules govern pleadings, practice and procedure before the Board of Communications (now NTC) in all matters of hearing, investigation and proceedings within the jurisdiction of the Board. However, in the broader interest of justice and in order to best serve the public interest, the Board may, in any particular matter, except it from these rules and apply such suitable procedure to improve the service in the transaction of the public business.  (underscoring ours)

The Court of Appeals ruled that the NTC committed grave abuse of discretion when it revived Bayantel’s application based on an ex-parte motion.  In this regard, the pertinent provisions of the NTC Rules:

Sec. 5. Ex-parte Motions. --- Except for motions for provisional authorization of proposed services and increase of rates, ex-parte   motions shall be acted upon by the Board only upon showing of urgent necessity   thereforand the right of the opposing party is not substantially impaired. [33]

Thus, in cases which do not involve either an application for rate increase or an application for a provisional authority, the NTC may entertain ex-parte motions only where there is an urgent necessity to do so and no rights of the opposing parties are impaired.

The Court of Appeals ruled that there was a violation of the fundamental right of Extelcom to due process when it was not afforded the opportunity to question the motion for the revival of the application.  However, it must be noted that said Order referred to a simple revival of the archived application of Bayantel in NTC Case No. 92-426.  At this stage, it cannot be said that Extelcom’sright to procedural due process was prejudiced.  It will still have the opportunity to be heard during the full-blown adversarial hearings that will follow.  In fact, the records show that the NTC has scheduled several hearing dates for this purpose, at which all interested parties shall be allowed to register their opposition.  We have ruled that there is no denial of due process where full-blown adversarial proceedings are conducted before an administrative body.[34] With Extelcom having fully participated in the proceedings, and indeed, given the opportunity to file its opposition to the application, there was clearly no denial of its right to due process.

In Zaldivar vs. Sandiganbayan (166 SCRA 316 [1988]), we held that the right to be heard does not only refer to the right to present verbal arguments in court.  A party may also be heard through his pleadings.  where opportunity to be heard is accorded either through oral arguments or pleadings, there is no denial of procedural due process.  As reiterated in National Semiconductor (HK) Distribution, Ltd. vs. NLRC (G.R. No. 123520, June 26, 1998), the essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one's side.  Hence, in Navarro III vs. Damaso (246 SCRA 260 [1995]), we held that a formal or trial-type hearing is not at all times and not in all instances essential.  Plainly, petitioner was not denied due process.[35]

Extelcom had already entered its appearance as a party and filed its opposition to the application.  It was neither precluded nor barred from participating in the hearings thereon.  Indeed, nothing, not even the Order reviving the application, bars or prevents Extelcom and the other oppositors from participating in the hearings and adducing evidence in support of their respective oppositions.  The motion to revive could not have possibly caused prejudice to Extelcom since the motion only sought the revival of the application.  It was merely a preliminary step towards the resumption of the hearings on the application of Bayantel.  The latter will still have to prove its capability to undertake the proposed CMTS.  Indeed, in its Order dated February 1, 2000, the NTC set several hearing dates precisely intended for the presentation of evidence on Bayantel’s capability and qualification.  Notice of these hearings were sent to all parties concerned, includingExtelcom.

As regards the changes in the personal circumstances of Bayantel, the same may be ventilated at the hearings during Bayantel’s presentation of evidence.  In fact, Extelcom was able to raise its arguments on this matter in the Opposition (With Motion to Dismiss) anent the re-opening and re-instatement of the application of Bayantel.  Extelcom was thus heard on this particular point.

Likewise, the requirements of notice and publication of the application is no longer necessary inasmuch as the application is a mere revival of an application which has already been published earlier.  At any rate, the records show that all of the five (5) CMTS

operators in the country were duly notified and were allowed to raise their respective oppositions to Bayantel’sapplication through the NTC’s Order dated February 1, 2000.

It should be borne in mind that among the declared national policies under Republic Act No. 7925, otherwise known as the Public Telecommunications Policy Act of the Philippines, is the healthy competition among telecommunications carriers, to wit:

A healthy competitive environment shall be fostered, one in which telecommunications carriers are free to make business decisions and to interact with one another in providing telecommunications services, with the end in view of encouraging their financial viability while maintaining affordable rates.[36]

The NTC is clothed with sufficient discretion to act on matters solely within its competence.  Clearly, the need for a healthy competitive environment in telecommunications is sufficient impetus for the NTC to consider all those applicants who are willing to offer competition, develop the market and provide the environment necessary for greater public service.  This was the intention that came to light with the issuance of Memorandum Circular 9-3-2000, allocating new frequency bands for use of  CMTS.  This memorandum circular enumerated the conditions prevailing and the reasons which necessitated its issuance as follows:

-    the international accounting rates are rapidly declining, threatening the subsidy to the local exchange service as mandated in EO 109 and RA 7925;

-    the public telecommunications entities which were obligated to install, operate and maintain local exchange network have performed their obligations in varying degrees;

-    after more than three (3) years from the performance of the obligations only 52% of the total number of cities and municipalities are provided with local telephone service.

-    there are mergers and consolidations among the existing cellular mobile telephone service (CMTS) providers threatening the efficiency of competition;

-    there is a need to hasten the installation of local exchange lines in unserved areas;

-    there are existing CMTS operators which are experiencing congestion in the network resulting to low grade of service;

-    the consumers/customers shall be given the freedom to choose CMTS operators from which they could get the service.[37]

Clearly spelled out is the need to provide enhanced competition and the requirement for more landlines and telecommunications facilities in unserved areas in the country.  On both scores, therefore, there was sufficient showing that the NTC acted well within its jurisdiction and in pursuance of its avowed duties when it allowed the revival of Bayantel’s application.

We now come to the issue of exhaustion of administrative remedies.  The rule is well-entrenched that a party must exhaust all administrative remedies before resorting to the courts.  The premature invocation of the intervention of the court is fatal to one’s cause of action.  This rule would not only give the administrative agency an opportunity to decide the matter by itself correctly, but would also prevent the unnecessary and premature resort to courts.[38] In the case of Lopez v. City of Manila,[39] we held:

As a general rule, where the law provides for the remedies against the action of an administrative board, body or officer, relief to courts can be sought only after exhausting all remedies provided.  The reason rests upon the presumption that the administrative body, if given the chance to correct its mistake or error, may amend its decision on a given matter and decide it properly.  Therefore, where a remedy is available within the administrative machinery, this should be resorted to before resort can be made to the courts, not only to give the administrative agency the opportunity to decide the matter by itself correctly, but also to prevent unnecessary and premature resort to courts.

Clearly, Extelcom violated the rule on exhaustion of administrative remedies when it went directly to the Court of Appeals on a petition for certiorari and prohibition from the Order of the NTC dated May 3, 2000, without first filing a motion for reconsideration.  It is well-settled that the filing of a motion for reconsideration is a prerequisite to the filing of a special civil action for certiorari.

The general rule is that, in order to give the lower court the opportunity to correct itself, a motion for reconsideration is a prerequisite to certiorari.  It also basic that petitioner must exhaust all other available remedies before resorting to certiorari.  This rule, however, is subject to certain exceptions such as any of the following:  (1) the issues raised are purely legal in nature, (2) public interest is involved, (3) extreme urgency is obvious or (4) special circumstances warrant immediate or more direct action.[40]

This case does not fall under any of the recognized exceptions to this rule.  Although the Order of the NTC dated May 3, 2000 granting provisional authority to Bayantel was immediatelyexecutory, it did not preclude the filing of a motion for reconsideration.  Under the NTC Rules, a party adversely affected by a decision, order, ruling or resolution may within fifteen (15) days file a motion for reconsideration.  That the Order of the NTC became immediately executory does not mean that the remedy of filing a motion for reconsideration is foreclosed to the petitioner.[41]

Furthermore, Extelcom does not enjoy the grant of any vested interest on the right to render a public service.  The Constitution is quite emphatic that the operation of a public utility shall not be exclusive.  Thus:

No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted to citizens of the Philippines or to corporations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years.  Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires.  xxx       xxx       xxx.[42]

In Radio Communications of the Phils., Inc. v. National Telecommunications Commission,[43] we held:

It is well within the powers of the public respondent to authorize the installation by the private respondent network of radio communications systems in Catarman, Samar and San

Jose, Mindoro.  Under the circumstances, the mere fact that the petitioner possesses a franchise to put up and operate a radio communications system in certain areas is not an insuperable obstacle to the public respondent’s issuing the proper certificate to an applicant desiring to extend the same services to those areas.  The Constitution mandates that a franchise cannot be exclusive in nature nor can a franchise be granted except that it must be subject to amendment, alteration, or even repeal by the legislature when the common good so requires.  (Art. XII, sec. 11 of the 1986 Constitution).  There is an express provision in the petitioner’s franchise which provides compliance with the above mandate (RA 2036, sec. 15).

Even in the provisional authority granted to Extelcom, it is expressly stated that such authority is not exclusive.  Thus, the Court of Appeals erred when it gave due course to Extelcom’s petition and ruled that it constitutes an exception to the rule on exhaustion of administrative remedies. 

Also, the Court of Appeals erred in annulling the Order of the NTC dated May 3, 2000, granting Bayantel a provisional authority to install, operate and maintain CMTS.  The general rule is that purely administrative and discretionary functions may not be interfered with by the courts.  Thus, in Lacuesta v. Herrera,[44] it was held:

xxx (T)he powers granted to the Secretary of Agriculture and Commerce (natural resources) by law regarding the disposition of public lands such as granting of licenses, permits, leases and contracts, or approving, rejecting, reinstating, or canceling applications, are all executive and administrative in nature.  It is a well recognized principle that purely administrative and discretionary functions may not be interfered with by the courts. (Coloso vs. Board of Accountancy, G.R. No. L-5750, April 20, 1953)  In general, courts have no supervising power over the proceedings and actions of the administrative departments of the government.  This is generally true with respect to acts involving the exercise of judgement or discretion and findings of fact.  (54 Am. Jur. 558-559) xxx. 

The established exception to the rule is where the issuing authority has gone beyond its statutory authority, exercised unconstitutional powers or clearly acted arbitrarily and without regard to his duty or with grave abuse of discretion. [45] None of these obtains in the case at bar.

Moreover, in petitions for certiorari, evidentiary matters or matters of fact raised in the court below are not proper grounds nor may such be ruled upon in the proceedings.  As held in National Federation of Labor v. NLRC:[46]

At the outset, it should be noted that a petition for certiorari under Rule 65 of the Rules of Court will prosper only if there is a showing of grave abuse of discretion or an act without or in excess of jurisdiction on the part of the National Labor Relations Commission.  It does not include an inquiry as to the correctness of the evaluation of evidence which was the basis of the labor official or officer in determining his conclusion.  It is not for this Court to re-examine conflicting evidence, re-evaluate the credibility of witnesses nor substitute the findings of fact of an administrative tribunal which has gained expertise in its special field.  Considering that the findings of fact of the labor arbiter and the NLRC are supported by evidence on record, the same must be accorded due respect and finality.

This Court has consistently held that the courts will not interfere in matters which are addressed to the sound discretion of the government agency entrusted with the regulation of activities coming under the special and technical training and knowledge of such agency.[47] It has also been held that  the exercise of administrative discretion is a policy decision and a matter that can best be discharged by the government agency concerned, and not by the courts.[48] In Villanueva v. Court of Appeals,[49] it was held that findings of fact which are supported by evidence and the conclusion of experts should not be disturbed.  This was reiterated in Metro Transit Organization, Inc. v. National Labor Relations Commission,[50] wherein it was ruled that factual findings of quasi-judicial bodies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality and are binding even upon the Supreme Court if they are supported by substantial evidence.

Administrative agencies are given a wide latitude in the evaluation of evidence and in the exercise of its adjudicative functions.  This latitude includes the authority to take judicial notice of facts within its special competence.

In the case at bar, we find no reason to disturb the factual findings of the NTC which formed the basis for awarding the provisional authority to Bayantel.  As found by the NTC, Bayantel has been granted several provisional and permanent authorities before to operate various telecommunications services.[51] Indeed, it was established that Bayantel was the first company to comply with its obligation to install local exchange lines pursuant to E.O. 109 and R.A. 7925.  In recognition of the same, the provisional authority awarded in favor of Bayantel to operate Local Exchange Services in Quezon City, Malabon, Valenzuela and the entire Bicol region was made permanent and a CPCN for the said service was granted in its favor.  Prima facie evidence was likewise found showing Bayantel’s legal, financial and technical capacity to undertake the proposed cellular mobile telephone service.

Likewise, the May 3, 2000 Order did not violate NTC Memorandum Circular No. 9-14-90 dated September 4, 1990, contrary to the ruling of the Court of Appeals.  The memorandum circular sets forth the procedure for the issuance of provisional authority thus:

EFFECTIVE THIS DATE, and as part of the Commission’s drive to streamline and fast track action on applications/petitions for CPCN  other forms of authorizations, the Commission shall be evaluating applications/petitions for immediate issuance of provisional authorizations, pending hearing and final authorization of an application on its merit.

For this purpose, it is hereby directed that all applicants/petitioners seeking for provisional authorizations, shall submit immediately to the Commission, either together with their application or in a Motion all their legal, technical, financial, economic documentations in support of their prayer for provisional authorizations for evaluation.  On the basis of their completeness and their having complied with requirements, the Commission shall be issuing provisional authorizations.

Clearly, a provisional authority may be issued even pending hearing and final determination of an application on its merits.

Finally, this Court finds that the Manifestations of Extelcom alleging forum shopping on the part of the NTC and Bayantel are not impressed with merit.  The divisions of the Supreme Court are not to be considered as separate and distinct courts.  The Supreme Court remains a unit notwithstanding that it works in divisions.  Although it may have three divisions, it is but a single court. Actions considered in any of these divisions and decisions rendered therein are, in effect, by the same Tribunal.  The divisions of this Court are not to be considered as separate and distinct courts but as divisions of one and the same court.[52]

Moreover, the rules on forum shopping should not be literally interpreted.  We have stated thus: 

It is scarcely necessary to add that Circular No. 28-91 must be so interpreted and applied as to achieve the purposes projected by the Supreme Court when it promulgated that circular.  Circular No. 28-91 was designed to serve as an instrument to promote and facilitate the orderly administration of justice and should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objection or the goal of all rules of procedure – which is to achieve substantial justice as expeditiously as possible.[53]

Even assuming that separate actions have been filed by two different parties involving essentially the same subject matter, no forum shopping was committed as the parties did not resort to multiple judicial remedies.  The Court, therefore, directed the consolidation of the two cases because they involve essentially the same issues.  It would also prevent the absurd situation wherein two different divisions of the same court would render altogether different rulings in the cases at bar.

We rule, likewise, that the NTC has legal standing to file and initiate legal action in cases where it is clear that its inaction would result in an impairment of its ability to execute and perform its functions.  Similarly, we have previously held in Civil Service Commission v.   Dacoycoy [54]  that the Civil Service Commission, as an aggrieved party, may appeal the decision of the Court of Appeals to this Court.

As correctly stated by the NTC, the rule invoked by Extelcom is Rule 65 of the Rules of Civil Procedure, which provides that public respondents shall not appear in or file an answer or comment to the petition or any pleading therein. [55] The instant petition, on the other hand, was filed under Rule 45 where no similar proscription exists.

WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED.   The Court of Appeals’ Decision dated September 13, 2000 and Resolution dated February 9, 2001 are REVERSED and SET ASIDE.  The permanent injunction issued by the Court of Appeals is LIFTED.  The Orders of the NTC dated February 1, 2000 and May 3, 2000 are REINSTATED.  No pronouncement as to costs.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.

G.R. No. 119761 August 29, 1996

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs.HON. COURT OF APPEALS, HON. COURT OF TAX APPEALS and FORTUNE TOBACCO CORPORATION,respondents.

 

VITUG, J.:p

The Commissioner of Internal Revenue ("CIR") disputes the decision, dated 31 March 1995, of respondent Court of Appeals 1 affirming the 10th August 1994 decision and the 11th October 1994 resolution of the Court of Tax Appeals 2 ("CTA") in C.T.A. Case No. 5015, entitled "Fortune Tobacco Corporation vs. Liwayway Vinzons-Chato in her capacity as Commissioner of Internal Revenue."

The facts, by and large, are not in dispute.

Fortune Tobacco Corporation ("Fortune Tobacco") is engaged in the manufacture of different brands of cigarettes.

On various dates, the Philippine Patent Office issued to the corporation separate certificates of trademark registration over "Champion," "Hope," and "More" cigarettes. In a letter, dated 06 January 1987, of then Commissioner of Internal Revenue Bienvenido A. Tan, Jr., to Deputy Minister Ramon Diaz of the Presidential Commission on Good Government, "the initial position of the Commission was to classify 'Champion,' 'Hope,' and 'More' as foreign brands since they were listed in the World Tobacco Directory as belonging to foreign companies. However, Fortune Tobacco changed the names of 'Hope' to 'Hope Luxury' and 'More' to 'Premium More,' thereby removing the said brands from the foreign brand category. Proof was also submitted to the Bureau (of Internal Revenue ['BIR']) that 'Champion' was an original Fortune Tobacco Corporation register and therefore a local brand." 3 Ad Valorem taxes were imposed on these brands, 4 at the following rates:

BRAND AD VALOREM TAX RATEE.O. 22 and E.O. 273 RA 695606-23-86 07-25-87 06-18-9007-01-86 01-01-88 07-05-90

Hope Luxury M. 100'sSec. 142, (c), (2) 40% 45%Hope Luxury M. KingSec. 142, (c), (2) 40% 45%More Premium M. 100'sSec. 142, (c), (2) 40% 45%More Premium InternationalSec. 142, (c), (2) 40% 45%Champion Int'l. M. 100'sSec. 142, (c), (2) 40% 45%Champion M. 100'sSec. 142, (c), (2) 40% 45%Champion M. KingSec. 142, (c), last par. 15% 20%Champion LightsSec. 142, (c), last par. 15% 20% 5

A bill, which later became Republic Act ("RA") No. 7654, 6 was enacted, on 10 June 1993, by the legislature and signed into law, on 14 June 1993, by the President of the Philippines. The new law became effective on 03 July 1993. It amended Section 142(c)(1) of the National Internal Revenue Code ("NIRC") to read; as follows:

Sec. 142. Cigars and Cigarettes. —

xxx xxx xxx

(c) Cigarettes packed by machine. — There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below based on the constructive manufacturer's wholesale price or the actual manufacturer's wholesale price, whichever is higher:

(1) On locally manufactured cigarettes which are currently classified and taxed at fifty-five percent (55%) or the exportation of which is not authorized by contract or otherwise, fifty-five (55%) provided that the minimum tax shall not be less than Five Pesos (P5.00) per pack.

(2) On other locally manufactured cigarettes, forty-five percent (45%) provided that the minimum tax shall not be less than Three Pesos (P3.00) per pack.

xxx xxx xxx

When the registered manufacturer's wholesale price or the actual manufacturer's wholesale price whichever is higher of existing brands of cigarettes, including the amounts intended to cover the taxes, of cigarettes packed in twenties does not exceed Four Pesos and eighty centavos (P4.80) per pack, the rate shall be twenty percent (20%). 7 (Emphasis supplied)

About a month after the enactment and two (2) days before the effectivity of RA 7654, Revenue Memorandum Circular No. 37-93 ("RMC 37-93"), was issued by the BIR the full text of which expressed:

REPUBLIKA NG PILIPINASKAGAWARAN NG PANANALAPI

KAWANIHAN NG RENTAS INTERNAS

July 1, 1993

REVENUE MEMORANDUM CIRCULAR NO. 37-93

SUBJECT: Reclassification of Cigarettes Subject to Excise Tax

TO: All Internal Revenue Officers and Others Concerned.

In view of the issues raised on whether "HOPE," "MORE" and "CHAMPION" cigarettes which are locally manufactured are appropriately considered as locally manufactured cigarettes bearing a foreign brand, this Office is compelled to review the previous rulings on the matter.

Section 142 (c)(1) National Internal Revenue Code, as amended by R.A. No. 6956, provides:

On locally manufactured cigarettes bearing a foreign brand, fifty-five percent (55%) Provided, That this rate shall apply regardless of whether or not the right to use or title to the foreign brand was sold or transferred by its owner to the local manufacturer. Whenever it has to be determined whether or not a cigarette bears a foreign brand, the listing of brands manufactured in foreign countries appearing in the current World Tobacco Directory shall govern.

Under the foregoing, the test for imposition of the 55% ad valorem tax on cigarettes is that the locally manufactured cigarettes bear a foreign brand regardless of whether or not the right to use or title to the foreign brand was sold or transferred by its owner to the local manufacturer. The brand must be originally owned by a foreign manufacturer or producer. If ownership of the cigarette brand is, however, not definitely determinable, ". . . the listing of brands manufactured in foreign countries appearing in the current World Tobacco Directory shall govern. . . ."

"HOPE" is listed in the World Tobacco Directory as being manufactured by (a) Japan Tobacco, Japan and (b) Fortune Tobacco, Philippines. "MORE" is listed in the said directory as being manufactured by: (a) Fills de Julia Reig, Andorra; (b) Rothmans, Australia; (c) RJR-Macdonald Canada; (d) Rettig-Strenberg, Finland; (e) Karellas, Greece; (f) R.J. Reynolds, Malaysia; (g) Rothmans, New Zealand; (h) Fortune Tobacco, Philippines; (i) R.J. Reynolds, Puerto Rico; (j) R.J. Reynolds, Spain; (k) Tabacalera, Spain; (l) R.J. Reynolds, Switzerland; and (m) R.J. Reynolds, USA. "Champion" is registered in the said directory as being manufactured by (a) Commonwealth Bangladesh; (b) Sudan, Brazil; (c) Japan Tobacco, Japan; (d) Fortune Tobacco, Philippines; (e) Haggar, Sudan; and (f) Tabac Reunies, Switzerland.

Since there is no showing who among the above-listed manufacturers of the cigarettes bearing the said brands are the real owner/s thereof, then it follows that the same shall be considered foreign brand for purposes of determining the ad valorem tax pursuant to Section 142 of the National Internal Revenue Code. As held in BIR Ruling No. 410-88, dated August 24, 1988, "in cases where it cannot be established or there is dearth of evidence as to whether a brand is foreign or not, resort to the World Tobacco Directory should be made."

In view of the foregoing, the aforesaid brands of cigarettes, viz: "HOPE," "MORE" and "CHAMPION" being manufactured by Fortune Tobacco Corporation are hereby considered locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax on cigarettes.

Any ruling inconsistent herewith is revoked or modified accordingly.

(SGD) LIWAYWAY VINZONS-CHATO

Commissioner

On 02 July 1993, at about 17:50 hours, BIR Deputy Commissioner Victor A. Deoferio, Jr., sent via telefax a copy of RMC 37-93 to Fortune Tobacco but it was addressed to no one in particular. On 15 July 1993, Fortune Tobacco received, by ordinary mail, a certified xerox copy of RMC 37-93.

In a letter, dated 19 July 1993, addressed to the appellate division of the BIR, Fortune Tobacco requested for a review, reconsideration and recall of RMC 37-93. The request was denied on 29 July 1993. The following day, or on 30 July 1993, the CIR assessed Fortune Tobacco for ad valorem tax deficiency amounting to P9,598,334.00.

On 03 August 1993, Fortune Tobacco filed a petition for review with the CTA. 8

On 10 August 1994, the CTA upheld the position of Fortune Tobacco and adjudged:

WHEREFORE, Revenue Memorandum Circular No. 37-93 reclassifying the brands of cigarettes, viz: "HOPE," "MORE" and "CHAMPION" being manufactured by Fortune Tobacco Corporation as locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax on cigarettes is found to be defective, invalid and unenforceable, such that when R.A. No. 7654 took effect on July 3, 1993, the brands in question were not CURRENTLY CLASSIFIED AND TAXED at 55% pursuant to Section 1142(c)(1) of the Tax Code, as amended by R.A. No. 7654 and were therefore still classified as other locally manufactured cigarettes and taxed at 45% or 20% as the case may be.

Accordingly, the deficiency ad valorem tax assessment issued on petitioner Fortune Tobacco Corporation in the amount of P9,598,334.00, exclusive of surcharge and interest, is hereby canceled for lack of legal basis.

Respondent Commissioner of Internal Revenue is hereby enjoined from collecting the deficiency tax assessment made and issued on petitioner in relation to the implementation of RMC No. 37-93.

SO ORDERED. 9

In its resolution, dated 11 October 1994, the CTA dismissed for lack of merit the motion for reconsideration.

The CIR forthwith filed a petition for review with the Court of Appeals, questioning the CTA's 10th August 1994 decision and 11th October 1994 resolution. On 31 March 1993, the appellate court's Special Thirteenth Division affirmed in all respects the assailed decision and resolution.

In the instant petition, the Solicitor General argues: That —

I. RMC 37-93 IS A RULING OR OPINION OF THE COMMISSIONER OF INTERNAL REVENUE INTERPRETING THE PROVISIONS OF THE TAX CODE.

II. BEING AN INTERPRETATIVE RULING OR OPINION, THE PUBLICATION OF RMC 37-93, FILING OF COPIES THEREOF WITH THE UP LAW CENTER AND PRIOR HEARING ARE NOT NECESSARY TO ITS VALIDITY, EFFECTIVITY AND ENFORCEABILITY.

III. PRIVATE RESPONDENT IS DEEMED TO HAVE BEEN NOTIFIED OR RMC 37-93 ON JULY 2, 1993.

IV. RMC 37-93 IS NOT DISCRIMINATORY SINCE IT APPLIES TO ALL LOCALLY MANUFACTURED CIGARETTES SIMILARLY SITUATED AS "HOPE," "MORE" AND "CHAMPION" CIGARETTES.

V. PETITIONER WAS NOT LEGALLY PROSCRIBED FROM RECLASSIFYING "HOPE," "MORE" AND "CHAMPION" CIGARETTES BEFORE THE EFFECTIVITY OF R.A. NO. 7654.

VI. SINCE RMC 37-93 IS AN INTERPRETATIVE RULE, THE INQUIRY IS NOT INTO ITS VALIDITY, EFFECTIVITY OR ENFORCEABILITY BUT INTO ITS CORRECTNESS OR PROPRIETY; RMC 37-93 IS CORRECT. 10

In fine, petitioner opines that RMC 37-93 is merely an interpretative ruling of the BIR which can thus become effective without any prior need for notice and hearing, nor publication, and that its issuance is not discriminatory since it would apply under similar circumstances to all locally manufactured cigarettes.

The Court must sustain both the appellate court and the tax court.

Petitioner stresses on the wide and ample authority of the BIR in the issuance of rulings for the effective implementation of the provisions of the National Internal Revenue Code. Let it be made clear that such authority of the Commissioner is not here doubted. Like any other government agency, however, the CIR may not disregard legal requirements or applicable principles in the exercise of its quasi-legislative powers.

Let us first distinguish between two kinds of administrative issuances — a legislative rule and aninterpretative rule.

In Misamis Oriental Association of Coco Traders, Inc., vs. Department of Finance Secretary, 11 the Court expressed:

. . . a legislative rule is in the nature of subordinate legislation, designed to implement a primary legislation by providing the details thereof . In the same way that laws must have the benefit of public hearing, it is generally required that before a legislative rule is adopted there must be hearing. In this connection, the Administrative Code of 1987 provides:

Public Participation. — If not otherwise required by law, 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.

(2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published in a newspaper of general circulation at least two (2) weeks before the first hearing thereon.

(3) In case of opposition, the rules on contested cases shall be observed.

In addition such rule must be published. On the other hand, interpretative rules are designed to provide guidelines to the law which the administrative agency is in charge of enforcing. 12

It should be understandable that when an administrative rule is merely interpretative in nature, its applicability needs nothing further than its bare issuance for it gives no real consequence more than what the law itself has already prescribed. When, upon the other hand, the administrative rule goes beyond merely providing for the means that can facilitate or render least cumbersome the implementation of the law but substantially adds to or 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 that new issuance is given the force and effect of law.

A reading of RMC 37-93, particularly considering the circumstances under which it has been issued, convinces us that the circular cannot be viewed simply as a corrective measure (revoking in the process the previous holdings of past Commissioners) or merely as construing Section 142(c)(1) of the NIRC, as amended, but has, in fact and most importantly, been made in order to place "Hope Luxury," "Premium More" and "Champion" within the classification of locally manufactured cigarettes bearing foreign brands and to thereby have them covered by RA 7654. Specifically, the new law would have its amendatory provisions applied to locally manufactured cigarettes which at the time of its effectivity were not so classified as bearing foreign brands. Prior to the issuance of the questioned circular, "Hope Luxury," "Premium More," and "Champion" cigarettes were in the category of locally manufactured cigarettes not bearing foreign brand subject to 45% ad valorem tax. Hence, without RMC 37-93, the enactment of RA 7654, would have had no new tax rate consequence on private respondent's products. Evidently, in order to place "Hope Luxury," "Premium More," and "Champion" cigarettes within the scope of the amendatory law and subject them to an increased tax rate, the now disputed RMC 37-93 had to be issued. In so doing, the BIR not simply intrepreted the law; verily, it legislated under its quasi-legislative authority. The due observance of the requirements of notice, of hearing, and of publication should not have been then ignored.

Indeed, the BIR itself, in its RMC 10-86, has observed and provided:

RMC NO. 10-86Effectivity of Internal Revenue Rules and Regulations

It has been observed that one of the problem areas bearing on compliance with Internal Revenue Tax rules and regulations is lack or insufficiency of due notice to the tax paying public. Unless there is due notice, due compliance therewith may not be reasonably expected. And most importantly, their strict enforcement could possibly suffer from legal infirmity in the light of the constitutional provision on "due process of law" and the essence of the Civil Code provision concerning effectivity of laws, whereby due notice is a basic requirement (Sec. 1, Art. IV, Constitution; Art. 2, New Civil Code).

In order that there shall be a just enforcement of rules and regulations, in conformity with the basic element of due process, the following procedures are hereby prescribed for the drafting, issuance and implementation of the said Revenue Tax Issuances:

(1) This Circular shall apply only to (a) Revenue Regulations; (b) Revenue Audit Memorandum Orders; and (c) Revenue Memorandum Circulars and Revenue Memorandum Orders bearing on internal revenue tax rules and regulations.

(2) Except when the law otherwise expressly provides, the aforesaid internal revenue tax issuances shall not begin to be operative until after due notice thereof may be fairly presumed.

Due notice of the said issuances may be fairly presumed only after the following procedures have been taken;

xxx xxx xxx

(5) Strict compliance with the foregoing procedures isenjoined. 13

Nothing on record could tell us that it was either impossible or impracticable for the BIR to observe and comply with the above requirements before giving effect to its questioned circular.

Not insignificantly, RMC 37-93 might have likewise infringed on uniformity of taxation.

Article VI, Section 28, paragraph 1, of the 1987 Constitution mandates taxation to be uniform and equitable. Uniformity requires that all subjects or objects of taxation, similarly situated, are to be treated alike or put on equal footing both in privileges and liabilities. 14 Thus, all taxable articles or kinds of property of the same class must be taxed at the same rate 15 and the tax must operate with the same force and effect in every place where the subject may be found.

Apparently, RMC 37-93 would only apply to "Hope Luxury," "Premium More" and "Champion" cigarettes and, unless petitioner would be willing to concede to the submission of private respondent that the circular should, as in fact my esteemed colleague Mr. Justice Bellosillo so expresses in his separate opinion, be considered adjudicatory in nature and thus violative of due process following the Ang Tibay 16 doctrine, the measure suffers from lack of uniformity of taxation. In its decision, the CTA has keenly noted that other cigarettes bearing foreign brands have not been similarly included within the scope of the circular, such as —

1. Locally manufactured by ALHAMBRA INDUSTRIES, INC.

(a) "PALM TREE" is listed as manufactured by office of Monopoly, Korea (Exhibit "R")

2. Locally manufactured by LA SUERTE CIGAR and CIGARETTE COMPANY

(a) "GOLDEN KEY" is listed being manufactured by United Tobacco, Pakistan (Exhibit "S")

(b) "CANNON" is listed as being manufactured by Alpha Tobacco, Bangladesh (Exhibit "T")

3. Locally manufactured by LA PERLA INDUSTRIES, INC.

(a) "WHITE HORSE" is listed as being manufactured by Rothman's, Malaysia (Exhibit "U")

(b) "RIGHT" is listed as being manufactured by SVENSKA, Tobaks, Sweden (Exhibit "V-1")

4. Locally manufactured by MIGHTY CORPORATION

(a) "WHITE HORSE" is listed as being manufactured by Rothman's, Malaysia (Exhibit "U-1")

5. Locally manufactured by STERLING TOBACCO CORPORATION

(a) "UNION" is listed as being manufactured by Sumatra Tobacco, Indonesia and Brown and Williamson, USA (Exhibit "U-3")

(b) "WINNER" is listed as being manufactured by Alpha Tobacco, Bangladesh; Nangyang, Hongkong; Joo Lan, Malaysia; Pakistan Tobacco Co., Pakistan; Premier Tobacco, Pakistan and Haggar, Sudan (Exhibit "U-4"). 17

The court quoted at length from the transcript of the hearing conducted on 10 August 1993 by the Committee on Ways and Means of the House of Representatives; viz:

THE CHAIRMAN. So you have specific information on Fortune Tobacco alone. You don't have specific information on other tobacco manufacturers. Now, there are other brands which are similarly situated. They are locally manufactured bearing foreign brands. And may I enumerate to you all these brands, which are also listed in the World Tobacco Directory . . . Why were these brand not reclassified at 55 if your want to give a level playing filed to foreign manufacturers?

MS. CHATO. Mr. Chairman, in fact, we have already prepared a Revenue Memorandum Circular that was supposed to come after RMC No. 37-93 which have really named specifically the list of locally manufactured cigarettes bearing a foreign brand for excise tax purposes and includes all these brands that you mentioned at 55 percent except that at that time, when we had to come up with this, we were forced to study the brands of Hope, More and Champion because we were given documents that would indicate the that these brands were actually being claimed or patented in other countries because we went by Revenue Memorandum Circular 1488 and we wanted to give some rationality to how it came about but we couldn't find the rationale there. And we really found based on our own interpretation that the only test that is given by that existing law would be registration in the World Tobacco Directory. So we came out with this proposed revenue memorandum circular which we forwarded to the Secretary of Finance except that at that point in time, we went by the Republic Act 7654 in Section 1 which amended Section 142, C-1, it said, that on locally manufactured cigarettes which are currently classified and taxed at 55 percent. So we were saying that when this law took effect in July 3 and if we are going to come up with this revenue circular thereafter, then I think our action would really be subject to question but we feel that . . . Memorandum Circular Number 37-93 would really cover even similarly situated brands. And in fact, it was really because of the study, the short time that we were given to study the matter that we could not include all the rest of the other brands that would have been really classified as foreign brand if we went by the law itself. I am sure that by the reading of the law, you would without that ruling by Commissioner Tan they would really have been included in the definition or in the classification of foregoing brands. These brands that you referred to or just read to us and in fact just for your information, we really came out with a proposed revenue memorandum circular for those brands. (Emphasis supplied)

(Exhibit "FF-2-C," pp. V-5 TO V-6, VI-1 to VI-3).

xxx xxx xxx

MS. CHATO. . . . But I do agree with you now that it cannot and in fact that is why I felt that we . . . I wanted to come up with a more extensive coverage and precisely why I asked that revenue memorandum circular that would cover all those similarly situated would be prepared but because of the lack of time and I came out with a study of RA 7654, it would not have been possible to really come up with the reclassification or the proper classification of all brands that are listed there. . .(emphasis supplied) (Exhibit "FF-2d," page IX-1)

xxx xxx xxx

HON. DIAZ. But did you not consider that there are similarly situated?

MS. CHATO. That is precisely why, Sir, after we have come up with this Revenue Memorandum Circular No. 37-93, the other brands came about the would have also clarified RMC 37-93 by I was saying really because of the fact that I was just recently appointed and the lack of time, the period that was allotted to

us to come up with the right actions on the matter, we were really caught by the July 3 deadline. But in fact, We have already prepared a revenue memorandum circular clarifying with the other . . . does not yet, would have been a list of locally manufactured cigarettes bearing a foreign brand for excise tax purposes which would include all the other brands that were mentioned by the Honorable Chairman. (Emphasis supplied) (Exhibit "FF-2-d," par. IX-4). 18

All taken, the Court is convinced that the hastily promulgated RMC 37-93 has fallen short of a valid and effective administrative issuance.

WHEREFORE, the decision of the Court of Appeals, sustaining that of the Court of Tax Appeals, is AFFIRMED. No costs.

SO ORDERED.

Kapunan, J., concurs.

 

 

 

G.R. No. 115942 May 31, 1995

RUBLE RUBENECIA, petitioner, vs.CIVIL SERVICE COMMISSION, respondent.

 

FELICIANO, J.:

Petitioner Ruble Rubenecia assails Civil Service Commission ("CSC" or "Commission") Resolution No. 94-0533, dated 25 January 1994, aquitting him of a charge of insubordination but finding him guilty of several other administrative charges and imposing upon him the penalty of dismissal from the service. He also questions the validity of CSC Resolution No. 93-2387 dated 29 June 1993, which allegedly abolished the Merit System Protection Board ("MSPB") and authorized the elevation of cases pending before that body to the Commission.

Teachers of Catarman National High School in Catarman, Northern Samar, filed before the MSPB an administrative complaint against petitioner Rubenecia, the School Principal, for dishonesty, nepotism, oppression and violation of Civil Service Rules. After a preliminary inquiry, the MSPB on 15 January 1992 formally charged Rubenecia and required him to file an answer with the CSC Regional Office in Tacloban City. On 24 February 1992, petitioner Rubenecia, instead of filing an answer, requested that he be furnished with copies of the documents submitted by complainants in support of the charges against him. 1

On 15 May 1992, the CSC Regional Director assigned to investigate the case invited Rubenecia to the Regional Office and there identify and pick up the documents he desired. The Regional Office had then just received the records of the case transmitted by the MSPB.

In response, Rubenecia requested that his visit to the CSC Regional Office be deferred because of alleged problems in his school relating to the enrollment period. The CSC reiterated on 10 June 1992 its order to Rubenecia to file his answer. In turn, petitioner through counsel in a letter dated 9 July 1992, reiterated his request that the CSC Regional Office furnish him copies of the documents submitted in connection with the charges against him.

Although petitioner did not file his answer, the Regional Director set the case for hearing on 20 August 1992. This hearing, however, did not take place as the complainants did not there show up. Petitioner Rubenecia appeared at

that hearing, but filed no answer. In an order issued on the same day, i.e., 20 August 1992, the Regional Office declared that the case was deemed submitted for resolution on the basis of the documents theretofore filed.

On 25 August 1992, Rubenecia wrote to the Chairman of the Civil Service Commission, praying that the case against him be dismissed and attaching to that letter many documents in support of his claim of innocence.

On 28 September 1992, the Regional Director submitted an investigation report to the Chairman, MSPB. Before the MSPB could render a decision, the Commission issued on 29 June 1993 Resolution No. 93-2387 which provided, among other things, that cases then pending before the MSPB were to be elevated to the Commission for decision.

The Commission, accordingly, took over the case against petitioner and on 25 January 1994, rendered its Resolution No. 94-0533 finding petitioner guilty and ordering his dismissal from the service. Petitioner moved for reconsideration, asserting lack of jurisdiction on the part of the Commission and attaching most if not all of the same documents he had annexed to his letter-answer to support his assertion of innocence. The motion for reconsideration was denied in a resolution of the Commission on 31 May 1994.

Two (2) principal issues are raised in this Petition for Certiorari:

(1) Whether or not the CSC had authority to issue its Resolution No. 93-2387 and assume jurisdiction over the administrative case against petitioner; and

(2) Whether or not petitioner had been accorded due process in connection with rendition of CSC Resolution No. 94-0533 finding him guilty and ordering his dismissal from the service.

I

In respect of the first issue, petitioner Rubenecia contends that the Commission had no jurisdiction to take over the administrative case against him from the MSPB for the reason that CSC Resolution No. 93-2387 was invalid. The argument of the petitioner is that since the MSPB was a creation of law, it could be abolished only by law, and that Resolution No. 93-2387 was accordingly an ultra vires act on the part of the Commission.

Resolution No. 93-2387 reads in full:

WHEREAS, the Civil Service Commission recognizes the government-wide call and the need for streamlining of operations which requires implification of systems, cutting of red tape and elimination of unnecessary bureaucratic layer;

WHEREAS, one of the powers and functions of the Commission provided for in Section 12 (11) of Book V of the Administrative Code of 1987 is to hear and decide administrative cases instituted by or brought before it directly or on appeal, including contested appointments and review decisions and actions of its offices and of the agencies attach to it;

WHEREAS, Section 47 (1) of Book V of the Administrative Code of 1987 specifically provides that theCommission shall decide upon appeal all administrative disciplinary cases involving the imposition of penalty of suspension for more that thirty days, or fine in an amount exceeding thirty days salary, demotion in rank or salary or transfer removal or dismissal from office;

WHEREAS, under Section 16 (2) of Book V of the Code, the Merit System Protection Board (MSPB),an office of the Commission, has the function to hear and decide administrative cases involving officials and employees of the civil service concurrently with the Commission;

WHEREAS, most decisions on administrative cases rendered by the MSPB are later appealed to the Commission for review and final resolution;

WHEREAS, the existing procedure wherein most administrative cases are first reviewed by the MSPB before they are elevated to the Commission makes it difficult for these cases to be finally resolved within a short period of time;

WHEREAS, the present situation requires immediate streamlining of the operation of the Civil Service Commission to achieve as speedier delivery of administrative justice and economical operation without impairing due process and the substantive rights of the parties in administrative cases;

NOW, THEREFORE, pursuant to the provisions of Section 17 of Book V of the Administrative Code of 1987 which authorizes the Commission, as an independent constitutional body, to effect changes in its organization as the need arises, the Commission Resolves as it is hereby Resolved to effect the following changes;

1. Decisions in administrative cases involving officials and employees of the civil serviceappealable to the Commission pursuant to Section 47 of Book V of the Code including personnel actions such as contested appointments shall now be appealed directly to the Commission and not to the MSPB; and

2. Decisions and administrative cases involving the officials and employees of the Civil Service including contested appointments which have already been appealed to the MSPB and other pending administrative cases brought directly before the MSPB, shall now be elevated to the Commission for final resolution.

Parties in administrative cases pending before the MSPB shall be notified in writing that their respective cases have already been elevated to the Commission for final resolution. They shall have 15 days from receipt of notice to submit their comments on or objections to the new procedures.

This Resolution shall take effect on 1 July 1993 and the new procedure shall remain effective until rescinded by the Commission in another resolution.

Adopted this 29th day of June 1993.

Patricia A. Sto. TomasChairman

Ramon P. Ereneta, Jr. Thelma P. GamindeCommissioner Commissioner

Juanito DemetrioBoard Secretary VI

(Emphasis supplied)

The Merit System Protection Board was originally created by P.D. No. 1409, dated 8 June 1978, Section 1 of which said: "There is hereby created in the Civil Service Commission a Merit Systems Board." The Board was composed of "a commissioner and two (2) associate commissioners" appointed by the CSC. 2 The powers and functions of this Board were set out in Section 5 of P.D. No. 1409 in the following terms:

Sec. 5. Powers and Functions of the Board. — The Board shall have the following powers and functions, among others:

(1) Hear and decide administrative cases involving officers and employees of the civil service.

(2) Hear and decide cases brought before it by officers and employees who feel aggrieved by the determination of appointing authorities involving appointment promotion, transfer, detail, reassignment and other personnel actions, as well as complaints against any officers in the government arising from abuses arising from personnel actions of these officers or from violation of the merit system.

(3) Hear and decide complaints of civil service employees regarding malpractices of other officials and employees.

(4) Promulgate, subject to the approval of the Civil Service Commission, rules and regulations to carry out the functions of the Board.

(5) Administer oaths, issue subpoena and subpoena duces tecum, and take testimony in any investigation or inquiry. The Board shall have the power to punish for contempt in accordance with the rules of court under the same procedure with the same penalties provided therein.

(6) Perform such other functions as may be assigned by the Civil Service Commission.

xxx xxx xxx

Decisions of the Board involving removal of officers and employees from the service were "subject to automatic review by the Commission;" all other decisions of the Board were also subject to appeal to the Commission.  3

As noted, P.D. No. 1409 had "created in the Civil Service Commission [the] Merit Systems Board." Section 16 of the present Civil Service Law found in the 1987 Administrative Code followed the same line and re-created the Merit Systems Board as an office of the Commission and gave it a new name: "Merit System Protection Board."

Section 16 of the present Civil Service Law reads as follows, in pertinent part:

Sec. 16. Offices in the Commission. The Commission shall have the following offices:

(1) The Office of the Executive Director . . .

(2) The Merit System Protection Board composed of a Chairman and two (2) members which have the following functions:

(a) Hear and decide on appeal administrative cases involving officials and employees of the Civil Service. Its decision shall be final except those involving dismissal or separation from the service which may be appealed to the Commission;

(b) Hear and decide cases brought before it on appeal by officials and employees who feel aggrieved by the determination of appointing authorities involving personnel actions and violations of the merit system. The decision of the Board shall be final except those involving division chiefs or officials of higher ranks which may be appealed to the Commission;

(c) Directly take cognizance of complaints affecting functions of the Commission, those which are unacted upon by the agencies, and such other complains which required direct action of the Board in the interest of justice;

(d) Administer oaths, issue subpoena and subpoena duces tecum, take testimony in any investigation or inquiry, punish for contempt in accordance with the same procedures and penalties prescribed in the Rules of Court; and

(e) Promulgate rules and regulations to carry out the functions of the Board subject to the approval of the Commission.

(3) The Office of Legal Affairs . . . . .

xxx xxx xxx

The 1987 Administrative Code thus made clear that the MSPB was intended to be an office of the Commission like any of the other thirteen (13) offices in the Commission: e.g., the Office of Legal Affairs; the Office of Planning and Management; the Central Administrative Office, and so forth. The MSPB was, in other words, a part of the internal structure and organization of the Commission and thus a proper subject of organizational change which the Commission is authorized to undertake under Section 17 of the present Civil Service Law:

Sec. 17. Organizational Structure. — Each office of the Commission shall be headed by a Director with at least one (1) Assistant Director, and may have such divisions as are necessary to carry out their respective functions. As an independent constitutional body, the Commission may effect changes in the organization as the need arises. (Emphasis supplied).

Since it was part and parcel of the internal organization of the Commission, the MSPB was not an autonomous entity created by law and merely attached for administrative purposes to the Civil Service Commission. In Aida Eugenio v. Civil Service Commission, 4 the Court invalidated a CSC Resolution which had transferred the Career Executive Service Board to the Office for Career Executive Service of the CSC precisely because the Career Executive Service Board was an autonomous entity created by a special law and attached, for administrative purposes only, to the Civil Service Commission; that Board did not fall within the control of the Civil Service Commission.

It will be noted that under the provisions of Section 16 (2) (a) and (b) quoted earlier, cases originating outside the Civil Service Commission itself and appealed to the MSPB were, in cases involving division chiefs and higher officials and cases where the penalty imposed was dismissal or separation from the service, subject to further appeal to the Commission itself. At the same time, cases filed originally with the MSPB could also be filed directly with the Commission itself under Section 12 (11) of the Civil Service Law. It was this apparent duplication or layering of functions within the Commission that the Commission sought to rationalize and eliminate by enacting Resolution No. 93-2387 quoted in full earlier.

The change instituted by CSC Resolution No. 93-2387 consisted basically of the following: decision in administrative cases appealable to the Commission pursuant to Section 47 of the present Civil Service Law may now be appealed directly to the Commission itself and not to the MSPB. Administrative cases already pending on appeal before the MSPB or previously brought directly to the MSPB, at the time of the issuance of Resolution No. 93-2387, were required to be elevated to the Commission for final resolution. The functions of the MSPB relating to the determination of administrative disciplinary cases were, in other words, re-allocated to the Commission itself. These changes were prescribed by the Commission in its effort to "streamline the operation of the CSC" which in turn required the "simplification of systems, cutting of red tape and elimination of [an] unnecessary bureaucratic layer." The previous procedure made it difficult for cases to be finally resolved within a reasonable period of time. The change, therefore, was moved by the quite legitimate objective of simplifying the course that administrative disciplinary cases, like those involving petitioner Rubenecia, must take. We consider that petitioner Rubenecia had no vested right to a two-step administrative appeal procedure within the Commission, that is, appeal to an office of the Commission, the MSPB, and thereafter a second appeal to the Civil Service Commission itself (i.e., the Chairman and the two [2] Commissioners of the Civil Service Commission), a procedure which most frequently consumed a prolonged period of time.

We note also that Resolution No. 93-2387 did not purport to abolish the MSPB nor to effect the termination of the relationship of public employment between the Commission and any of its officers or employees. At all events, even if Resolution No. 93-2387 had purported to do so, petitioner Rubenecia, who does not claim to be an officer or employee of the MSPB, has no personality or standing to contest such termination of public employment. InFernandez and De Lima v. Hon. Patricia A. Sto. Tomas, etc., et al., 5 the Court upheld Resolution No. 94-3710 of the Civil Service which effected certain changes in the internal organization and structure of the Commission. The Court said:

We consider that Resolution No. 94-3710 has not abolished any public office as that term is used in the law of public officers. It is essential to note that none of the "changes in organization" introduced by Resolution No. 94-3710 carried with it or necessarily involved the termination of the relationship of public employment between the Commission and any of its officers and employees. We find it very difficult to suppose that the 1987 Revised Administrative Code having mentioned fourteen (14) different offices of the CSC, meant to freeze these offices and to cast in concrete, as it were, the internal organization of the Commission until it might please Congress to change such internal

organization regardless of the ever changing needs of the civil service as a whole. To the contrary, the legislative authority had expressly authorized the Commission to carry out "changes in the organization," as the need [for such changes] arises.

Petitioner Rubenecia also claims that the Civil Service Commission itself (as distinguished from the MSPB) did not acquire jurisdiction over his case because he had not been notified by individual written notice sent by mail that his case had been elevated to the Civil Service Commission as required by Resolution No. 93-2387. We consider this objection unmeritorious. CSC Resolution No. 93-2387, quoted earlier, did not require individual written notice sent by mail to parties in administrative cases pending before the MSPB. Assuming that Rubenecia had not in fact been sent an individual notice, the fact remains that Resolution No. 93-2387 was published in a newspaper of general circulation (The Manila Standard, issue of 16 July 1993 6 ); the Commission may accordingly be deemed to have complied substantially with the requirement of written notice in its own Resolution. Moreover, petitioner himself had insisted on pleading before the Commission, rather than before the MSPB; he filed before the Commission itself his letter-cum-annexes which effectively was his answer to the Formal Charge instituted before the MSPB. He cannot now be heard to question the jurisdiction of the Commission.

II

We turn to petitioner's contention that he had been denied due process when the Commission rendered its Resolution No. 94-0533 finding him guilty and ordering his dismissal from the government service.

The fundamental rule of due to process requires that a person be accorded notice and an opportunity to be heard. These requisites were respected in the case of petitioner Rubenecia.

The Formal Charge prepared by the MSPB and given to petitioner Rubenecia constituted sufficient notice which, in fact, had enabled him to prepare his defense. The Formal Charge contained the essence of the complaint and the documents in support thereof and the conclusion of the MSPB finding a prima facie case against Rubenecia. Rubenecia himself admitted that he had been furnished with copies of an affidavit and testimonies of the principal witnesses against him that were given during the preliminary hearing of the case against Rubenecia.  7

We are also not persuaded by petitioner's complaint that he had not been furnished copies of all the documents that had accompanied the Formal Charge. Rubenecia was given an opportunity by the Investigating Officer, the Regional Director of CSC, to obtain those documents from the CSC Regional Office. Rubenecia did not avail himself of that opportunity and he cannot now be heard to complain that he was not given such documents. At all events, as already noted, he sent a formal letter-answer to Chairman Sto. Tomas controverting the charges against him and submitted voluminous documents in support of his claim of innocence and prayed for dismissal of the Formal Charge. This letter-answer constitutes proof that he did have notice of the accusations against him and was in fact able to present his own defense.

Petitioner's answer to the Formal Charge was considered by the Investigating Officer. This Officer, however, concluded in his report that "the evidence presented by respondent [Rubenecia] could not outweigh that of the prosecution as contained in the records. 8

Finally, the motion for reconsideration filed by Rubenecia before the Commission cured whatever defect might have existed in respect of alleged denial of procedural due process. 9 Denial of due process cannot be successfully invoked by a party who has had the opportunity to be heard on his motion for reconsideration.  10 In the instant case, petitioner was heard not only in respect of his motion for reconsideration; he was also in fact afforded reasonable opportunity to present his case before decision was rendered by the Commission finding him guilty.

Rubenecia also claims that the Commission had erred in disregarding the "overwhelming evidence" in his favor. The settled rule in our jurisdiction is that the findings of fact of an administrative agency must be respected, so long as such findings of fact are supported by substantial evidence, even if such evidence might not be overwhelming or even preponderant. It is not the task of an appellate court, like this Court, to weigh once more the evidence submitted before the administrative body and to substitute its own judgment for that of the administrative agency in respect of sufficiency of evidence. 11 In the present case, in any event, after examination of the record of this case, we conclude that the decision of the Civil Service Commission finding Rubenecia guilty of the administrative charges prepared against him, is supported by substantial evidence.

In Resolution No. 94-0533, the Commission drew the following conclusions in respect of the charges against petitioner Rubenecia:

I. VIOLATION OF CIVIL SERVICE RULES AND REGULATIONS

The records show that Rubenecia committed the said offense. He himself admitted that he did not accomplish his DTR but this was upon the suggestion of the Administrative Officer. Rubenecia cannot use as an excuse the alleged suggestion of an Administrative Officer. As the principal of a national high School, he is expected to know the basic civil service law, rules, and regulations.

II DISHONESTY

The Commission finds Rubenecia liable. He was charged for misrepresenting that he was on "Official Travel" to Baguio City to attend a three-week seminar and making it appear in his CSC Form No. 7 for the month of October 1988 that the has a perfect attendance for that month. Rubenecia in order to rebut the same simply reiterated previous allegation that he attended the SEDP Training in Baguio City during the questioned months without even an attempt on his part to adduce evidence documentary or testimonial that would attest to the truth of his allegation that he was indeed in Baguio during those weeks for training purposes. A mere allegation cannot obviously prevail over a more direct and positive statement of Celedonio Layon, School Division Superintendent, Division of Northern Samar, when the latter certified that he had no official knowledge of the alleged "official travel" of Rubenecia. Moreover, verification with the Bureau of Secondary Schools reveals that no training seminar for school principal was conducted by DECS during that time. It was also proven by records that he caused one Mrs. Cecilia vestra to render service as Secondary School Teacher from January 19, 1990 to August 30, 1991 without any duly issued appointment by the appointing authority.

III. NEPOTISM

With respect to the charge of Nepotism, Rubenecia alleged that he is not the appointing authority with regard to the appointment of his brother-in-law as Utilityman but merely a recommending authority. With this statement, the Commission finds Rubenecia guilty. It should be noted that under the provision of Sec. 59, of the 1987 Administrative Code, the recommending authority is also prohibited from recommending the appointment to a non-teaching position of his relatives within the prohibited degree.

IV. OPPRESSION

Rubenecia is also guilty of Oppression. He did not give on time the money benefits due to Ms. Leah Rebadulla and Mr. Rolando Tafalla, both Secondary Teachers of CNHS, specifically their salary differentials for July to December 1987, their salaries for the month of May and half of June 1988; their proportional vacation salaries for the semester of 1987-1988, and the salary of Mr. Tafalla for the month of June, 1987. Rubenecia did not even attempt to present countervailing evidence. Without being specifically denied, they are deemed admitted by Rubenecia.

V INSUBORDINATION

He is not liable for Insubordination arising from his alleged refusal to obey the "Detail Order" by filing a sick leave and vacation leave successively. The records show that the two applications for leave filed by Rubenecia were duly approved by proper official, hence it cannot be considered an act of Insubordination on the part of Rubenecia when he incurred absences based on an approved application for leave of absence.

Rubenecia is therefore found guilty of Dishonesty, Nepotism, Oppression and Violations of Civil Service Rules and Regulations.

WHEREFORE, foregoing premises considered, the Commission hereby resolves to find Ruble Rubenecia guilty of Dishonesty, Nepotism, Oppression and Violation of Civil Service Rules and Ragulations. Accordingly, he is meted, out the penalty of dismissal from the service. 12

We find no basis for overturning the above conclusions as the product merely of arbitrary whims and caprice or of bad faith and malice.

We conclude that petitioner Rubenecia has failed to show grave abuse of discretion or any act without or in excess of jurisdiction on the part of public respondent Commission in issuing its Resolution No. 93-2387 dated 29 June 1993 and Resolution No. 94-0533 dated 25 January 1994.

WHEREFORE, for all the foregoing, the Petition for Certiorari is hereby DISMISSED for lack of merit.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza and Francisco, JJ., concur.

Quiason, J., is on leave.

 

G.R. No. 132593 June 25, 1999

PHILIPPINE INTERNATIONAL TRADING CORPORATION, petitioner, vs.COMMISSION ON AUDIT, respondent.

 

GONZAGA-REYES, J.:

This is a petition for certiorari under Rule 64 of the 1997 Rules of Civil Procedure to annul Decision No. 2447 dated July 27, 1992 of the Commission on Audit (COA) denying Philippine International Trading Corporation's (PITC) appeal from the disallowances made by the resident COA auditor on PITC's car plan benefits; and Decision No. 98-048 dated January 27, 1998 of the COA denying PITC's motion for reconsideration.

The following facts are undisputed:

The PITC is a government-owned and controlled corporation created under Presidential Decree (PD) No. 252 on July 21, 1973 1, primarily for the purpose of promoting and developing Philippine trade in pursuance of national economic development. On October 19, 1988, the PITC Board of Directors approved a Car Plan Program for qualified PITC officers. 2 Under such car plan program, an eligible officer is entitled to purchase a vehicle, fifty percent (50%) of the value of which shall be shouldered by PITC while the remaining fifty percent (50%) will be shouldered by the officer through salary deduction over a period of five (5) years. Maximum value of the vehicle to be purchased ranges from Two Hundred Thousand Pesos (P200,000.00) to Three Hundred and Fifty Thousand Pesos (P350,000.00), depending on the position of the officer in the corporation. In addition, PITC will reimburse the officer concerned fifty percent (50%) of the annual car registration, insurance premiums and costs of registration of the chattel mortgage over the car for a period of five (5) years from the date the vehicle was purchased. The terms and conditions of the car plan are embodied in a "Car Loan Agreement". 3 Per PITC's car plan guidelines, the purpose of the plan is to provide financial assistance to qualified employees in purchasing their own transportation facilities in the performanced of their work, for representation, and personal use. 4 The plan is envisioned to facilitate greater mobility during official trips especially within Metro Manila or the employee's principal place of assignment, without having to rely on PITC vehicles, taxis or cars for hire. 5

On July 1, 1989, Republic Act No. 6758 (RA 6758), entitled "An Act Prescribing a Revised Compensation and Position Classification System in the Government and For Other Purposes", took effect. Section 12 of said law provides for the consolidation of allowances and additional compensation into standardized salary rates save for certain additional compensation such as representation and transportation allowances which were exempted from consolidation into the standardized rate. Said section likewise provides that other additional compensation being received by incumbents as by of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.

Sec. 12, RA 6758, reads —

Sec. 12. Consolidation of All 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.

To implement RA 6758, the Department of Budget and Management (DBM) issued Corporate Compensation Circular No. 10 (DBM-CCC No. 10). Paragraph 5.6 of DBM-CCC No. 10 discontinued effective November 1, 1989, all allowances and fringe benefits granted on top of basic salary, not otherwise enumerated under paragraphs 5.4 and 5.5 thereof.

Paragraph 5.6 of DBM-CCC No. 10 provides:

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, not mentioned in Sub-paragraphs 5.4 and 5.5 6 above shall be discontinued effective November 1, 1989. Payment made for such allowance/fringe benefits after said date shall be considered as illegal disbursement of public funds.

On post audit, the payment/reimbursement of the above-mentioned expenses (50% of the yearly car registration and insurance premiums and 50% of the costs of registration of the chattel mortgage over the car) made after November 1, 1989 was disallowed by the resident COA auditor. The disallowance was made on the ground that the subject car plan benefits were not one of the fringe benefits or form of compensation allowed to be continued after said date under the aforequoted paragraph 5.6 of DBM-CCC No. 10 7, in relation to Paragraphs 5.4 and 5.5 thereof.

PITC, on its behalf, and that of the affected PITC officials, appealed the decision of the resident COA auditor to the COA. On July 27, 1992, COA denied PITC's appeal and affirmed the disallowance of the said car plan expenses in the assailed Decision No. 2447 dated July 27, 1992. Relevant portions of the decision read thus:

Upon circumspect evaluation thereof, this Commission finds the instant appeal to be devoid of merit. It should be noted that the reimbursement/payment of expenses in question is based on the Car Plan benefit granted under Board Resolution No. 10-88-03 adopted by the PITC Board of Directors on October 19, 1988. The Car Plan is undeniably a fringe benefit as appearing in PITC's "Compensation Policy under the heading "3. Other Fringe Benefits", particularly Item No. 3.13 thereof. Inasmuch as PITC is a government-owned and/or controlled corporation, the grant of the Car Plan (being a fringe benefit) should be governed by the provisions of Corporate Compensation Circular No. 10, implementing RA 6758. Under sub-paragraph 5.6 of said Circular, it explicitly provides:

xxx xxx xxx

Since the Car Plan benefit is not one of those fringe benefits or other forms of compensation mentioned in Sub-paragraphs 5.4 and 5.5 of CCC No. 10, consequently the reimbursement of the 50% share of PITC in the yearly registration and insurance premium of the cars purchased under said Car Plan benefit should not be allowed. . . . 8

PITC's motion for reconsideration was denied by the COA in its Resolution dated January 27, 1998. 9

Hence, the instant petition on the following grounds:

1. That the legislature did not intend to revoke existing benefits being received by incumbent government employees as of July 1, 1989 (including subject car plan benefits) when RA 6758 was passed;

2. That the Car Loan Agreements signed between PITC and its officers pursuant to PITC's Car Plan Program, including the Car Loan Agreements, duly executed prior to the effectivity of RA 6758, constitute the law between the parties and as such, protected by Section 10, Article III of the 1987 Philippine Constitution which prohibits the impairment of contracts; and

3. Finally, that the provisions of PD 985 do not apply to PITC inasmuch as under its Revised Charter, PD 1071, as amended by E.O. 756 and E.O. 1067, PITC is not only expressly exempted from OCPC rules and regulations but its Board of Directors was expressly authorized to adopt compensation policies and other related benefits to its officers/employees without need for further approval thereof by any government office, agency or authority. 10

The petition is meritorious.

First of all, we must mention that this Court has confirmed in Philippine Post Authority vs. Commission on Audit 11the legislative intent to protect incumbents who are receiving salaries and/or allowances over and above those authorized by RA 6758 to continue to receive the same even after RA 6758 took effect. In reserving the benefit to incumbents, the legislature has manifested its intent to gradually phase out this privilege without upsetting the policy of non-diminution of pay and consistent with the rule that laws should only be applied prospectively in the spirit of fairness and justice. 12 Addressing the issue as to whether the petitioners-officials may still receive their representation and transportation allowance (RATA) at the higher rates provided by Letter of Implementation (LOI) No. 97 in light of Section 12, RA 6758, this Court said:

Now, under the second sentence of Section 12, first paragraph, the RATA enjoyed by these PPA officials shall continue to be authorized only if they are "being received by incumbents only as of July 1, 1989." RA 6758 has therefore, to this extent, amended LOI No. 97. By limiting the benefit of the RATA granted by LOI No. 97 to incumbents, Congress has manifested its intent to gradually phase out this privilege without upsetting its policy of non-diminution of pay.

The legislature has similarly adhered to this policy of non-diminution of pay when it provided for the transition allowance under Section 17 of RA 6758 which reads:

Sec. 17. Salaries of Incumbents. — Incumbents of position presently receiving salaries and additional compensation/fringe benefits including those absorbed from local government units and other emoluments the aggregate of which exceeds the standardized salary rate as herein prescribed, shall continue to receive such excess compensation, which shall be referred to as transition allowance. The transition allowance shall be reduced by the amount of salary adjustment that the incumbent shall receive in the future.

While Section 12 refers to allowances that are not integrated into the standardized salaries whereas Section 17 refers to salaries and additional compensation or fringe benefits, both sections are intended to protect incumbents who are receiving said salaries and/or allowances at the time RA 6758 took effect. 13 (Emphasis supplied.)

Based on the foregoing pronouncement, petitioner correctly pointed out that there was no intention on the part of the legislature to revoke existing benefits being enjoyed by incumbents of government positions at the time of the virtue of Sections 12 and 17 thereof. There is no dispute that the PITC officials who availed of the subject car plan benefits were incumbents of their positions as of July 1, 1989. Thus, it was legal and proper for them to continue enjoying

said benefits within the five year period from date of purchase of the vehicle allowed by their Car Loan Agreements with PITC.

Further, we see the rationale for the corporation's fifty percent (50%) participation and contribution to the subject expenses. As to the insurance premium, PITC, at least, up to the extent of 50% of the value of the vehicle, has an insurable interest in said vehicle in case of loss or damage thereto. As to the costs of registration of the vehicle in the employee's name and of the chattel mortgage in favor of PITC, this is to secure PITC of the repayment of the "Car Loan Agreement" and the fulfillment of the other obligations contained therein by the employee.

Still further, the vehicle being utilized by the officer is actually being used for corporate purposes because the officer concerned is no longer entitled to utilize company-owned vehicles for official business once he/she has availed of a car plan. Neither is said officer allowed to reimburse the costs of other land transportation used within his principal place of assignment (i.e. Metro Manila) as the vehicle is presumed to be his official vehicle. 14 In the event that the employee resigns, retires or is separated from the company without cause prior to the completion of the 60-month car plan, the employee shall be given the privilege to buy the car provided he pays the remaining installments of the loan and the amount equivalent to that portion of the company's contribution corresponding to the unexpired period of the car plan. On the other hand, if the employee has been separated from the company for cause, the company has the other option aside from the foregoing to repossess the car from the employee, in which case, the company shall pay back to the employee all amortizations already made by the employee to the company, interest free. 15

Secondly, COA relied on DBM-CCC No. 10 16 as basis for the disallowance of the subject car plan benefits. DBM-CCC No. 10 which was issued by the DBM pursuant to Section 23 17 of RA 6758 mandating the said agency to issue the necessary guidelines to implement RA 6758 has been declared by this Court in De Jesus, et al. vs.Commission on Audit, et al. 18 as of no force and effect due to the absence of publication thereof in the Official Gazette or in a newspaper of general circulation. Salient portions of said decision read:

On the need publication of subject DBM-CCC No. 10, we rule in the affirmative. Following the doctrine enunciated in Tanada 19, publication in the Official Gazette or in a newspaper of general circulation in the Philippines is required since DBM-CCC No. 10 is in the nature of an administrative circular the purpose of which is to enforce or implement an existing law. Stated differently, to be effective and enforceable, DBM-CCC No. 10 must go through the requisite publication in the Official Gazette or in a newspaper of general circulation in the Philippines.

In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10, which completely disallows payment of allowances and other additional compensation to government officials and employees, starting November 1, 1989, is not a mere interpretative or internal regulation. It is something more than that. And why not, when it tends to deprive government workers of their allowances and additional compensation sorely needed to keep body and soul together. At the very least, before the circular under attack may be permitted to substantially reduce their income, the government officials and employees concerned should be apprised and alerted by the publication of said circular in the Official Gazette or in a newspaper or general circulation in the Philippines — to the end that they be given amplest opportunity to voice out whatever opposition they may have, and to ventilate their stance on the matter. This approach is more in keeping with democratic precepts and rudiments of fairness and transparency.

In the case at bar, the disallowance of the subject car plan benefits would hamper the officials in the performance of their functions to promote and develop trade which requires mobility in the performance of official business. Indeed, the car plan benefits are supportive of the implementation of the objectives and mission of the agency relative to the nature of its operation and responsive to the exigencies of the service.

It has come to our knowledge that DBM-CCC No. 10 has been re-issued in its entirety and submitted for publication in the Official Gazette per letter to the National Printing Office dated March 9, 1999. Would the subsequent publication thereof cure the defect and retroact to the time that the above-mentioned items were disallowed in audit?

The answer is in the negative, precisely, for the reason that publication is required as a condition precedent to the effectivity of a law to inform the public of the contents of the law or rules and regulations before their rights and interests are affected by the same. From the time the COA disallowed the expenses in audit up to the filing of herein petition the subject circular remained in legal limbo due to its non-publication. As was stated in Tanada vs.Tuvera, 21,

"prior publication of laws before they become effective cannot be dispensed with, for the reason that such omission would offend due process insofar as it would deny the public knowledge of the laws that are supposed to govern it.

In view of the nullity of DBM-CCC No. 10 relied upon by the COA as basis for the disallowance of the subject car plan benefits, we deem it unnecessary to discuss the second issue raised in the instant petition.

We deem it necessary though to resolve the third issue as to whether PITC is exempt from RA 985 22 as subsequently amended by RA 6758. According to petitioner, PITC's Revised Charter, PD 1071 dated January 25, 1977, as amended by EO 756 dated December 29, 1981, and further amended by EO 1067 dated November 25, 1985, expressly exempted PITC from the Office of the Compensation and Position Classification (OCPC) rules and regulations. Petitioner cites Section 28 of P.D. 1071 23; Section 6 of EO 756 24; and Section 3 of EO 1067. 25

According to the COA in its Decision No. 98-048 dated January 27, 1998, the exemption granted to the PITC has been repealed and revoked by the repealing provisions of RA 6758, particularly Section 16 thereof which provides:

Sec. 16. Repeal of Special Salary Laws and Regulations. — All laws, decrees, executive, orders, corporate charters, and other issuances or parts thereof, that exempt agencies from the coverage of the System, or that authorize and fix position classifications, salaries, pay rates or allowances of specified positions, or groups of officials, and employees or of agencies, which are inconsistent with the System, including the proviso under Section 2 and Section 16 of PD No. 985 are hereby repealed.

To this, petitioner argues that RA 6758 which is a law of general application cannot repeal provisions of the Revised Charter of PITC and its amendatory laws expressly exempting PITC from OCPC coverage being special laws. Our rules on statutory construction provide that a special law cannot be repealed, amended or altered by a subsequent general law by mereimplication 26; that a statute, general in character as to its terms and application, is not to be construed as repealing a special or specific enactment, unless the legislative purpose to do so is manifested 27; that if repeal of particular or specific law or laws is intended, the proper step is to so express it. 28

In the case at bar, the repeal by Section 16 of RA 6758 of "all corporate charters that exempt agencies from the coverage of the System" was clear and expressed necessarily to achieve the purposes for which the law was enacted, that is, the standardization of salaries of all employees in government owned and/or controlled corporations to achieve "equal pay for substantially equal work". Henceforth, PITC should now be considered as covered by laws prescribing a compensation and position classification system in the government including RA 6758. This is without prejudice, however, as discussed above, to the non-diminution of pay of incumbents as of July 1, 1989 as provided in Sections 12 and 17 of said law.

WHEREFORE, the Petition is hereby GRANTED, the assailed Decisions of the Commission on Audit are SET ASIDE.

SO ORDERED.

Davide, Jr., C.J., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Quisumbing, Purisima, Pardo and Ynares-Santiago, JJ., concur.

Panganiban and Buena, JJ., are on leave.

G.R. No. L-14283           November 29, 1960

GIL BALBUNA, ET AL., petitioners-appellants, vs.THE HON. SECRETARY OF EDUCATION, ET AL., respondents-appellees.

K. V. Faylona and Juan B. Soliven for appellants.Office of the Solicitor General Edilberto Barot and Solicitor Ceferino Padua for appellees.

REYES, J.B.L., J.:

Appeal by members of the "Jehovah's Witnesses" from a decision of the Court of First Instance of Capiz, dated June 23, 1958, dismissing their petition for prohibition and mandamus against the Secretary of Education and the other respondents.

The action was brought to enjoin the enforcement of Department Order No. 8, s. 1955, issued by the Secretary of Education, promulgating rules and regulations for the conduct of the compulsory flag ceremony in all schools, as provided in Republic Act No. 1265. Petitioners appellants assail the validity of the above Department Order, for it allegedly denies them freedom of worship and of speech guaranteed by the Bill of Rights; that it denies them due process of law and the equal protection of the laws; and that it unduly restricts their rights in the upbringing of their children. Since the brief for the petitioners-appellants assails Republic Act No. 1265 only as construed and applied, the issue ultimately boils down the validity of Department Order No. 8, s. 1955, which promulgated the rules and regulations for the implementation of the law.

This case, therefore, is on all fours with Gerona, et al., vs. Secretary of Education, et al., 106 Phil., 2; 57 Off. Gaz., (5) 820, also involving Jehovah's Witnesses, and assailing, on practically identical grounds, the validity of the same Department Order above-mentioned. This Court discerns no reasons for changing its stand therein, where we said:

In conclusion, we find and hold that the Filipino flag is not an image that requires religious veneration; rather, it is a symbol of the Republic of the Philippines, of sovereignty, an emblem of freedom, liberty and national unity; that the flag salute is not a religious ceremony but an act and profession of love and allegiance and pledge of loyalty to the fatherland which the flag stands for; that by the authority of the Legislature of the Secretary of Education was duly authorized to promulgate Department Order No. 8, series of 1955; that the requirement of observance of the flag ceremony, or salute provided for in said Department Order No. 8 does not violate the Constitutional provisions about freedom of religion and exercise of religion; that compliance with the non-discriminatory and reasonable rules and regulations and school discipline, including observance of the flag ceremony, is a prerequisite to attendance in public schools; and that for failure and refusal to participate in the flag ceremony, petitioners were properly excluded and dismissed from the public school they were attending.

However, in their memorandum, petitioners-appellants raise the new issue that that Department Order No. 8 has no binding force and effect, not having been published in the Official Gazette as allegedly required by Commonwealth Act 638, Article 2 of the New Civil Code, and Section 11 of the Revised Administrative Code. We see no merit in this contention. The assailed Department Order, being addressed only to the Directors of Public and Private Schools, and educational institutions under their supervision, can not be said to be of general application. Moreover, as observed in People vs. QuePo Lay, 94 Phil., 640; 50 Off. Gaz., (10) 4850 (affirmed in Lim Hoa Ting vs. Central Bank, 104 Phil., 573; 55 Off. Gaz., [6] 1006), —

the laws in question (Commonwealth Act 638 and Act 2930) do not require the publication of the circulars, regulations or notices therein mentioned in order to become binding and effective. All that said two laws provide is that laws, regulations, decisions of the Supreme Court and Court of Appeals, notices and documents required by law to be published shall be published in the Official Gazette but said two laws do not say that unless so published they will be of no force and effect. In other words, said two acts merely enumerate and make a list of what should be published in the Official Gazette, presumably, for the guidance of the different branches of the government issuing the same, and of the Bureau of Printing.

It is true, as held in the above cases, that pursuant to Article 2 of the New Civil Code and Section 11 of the Revised Administrative Code, statutes or laws shall take effect fifteen days following the completion of their publication in the Official Gazette, unless otherwise provided. It is likewise true that administrative rules and regulations, issued to implement a law, have the force of law. Nevertheless, the cases cited above involved circulars of the Central Bank

which provided for penalties for violations thereof and that was the primary factor that influenced the rationale of those decisions. In the case at bar, Department Order No. 8 does not provide any penalty against those pupils or students refusing to participate in the flag ceremony or otherwise violating the provisions of said order. Their expulsion was merely the consequence of their failure to observe school discipline which the school authorities are bound to maintain. As observed in Gerona vs. Secretary of Education, supra,

... for their failure or refusal to obey school regulations about the flag salute, they were not being prosecuted. Neither were they being criminally prosecuted under threat of penal sanction. If they choose not to obey the flag salute regulation, they merely lost the benefits of public education being maintained at the expense of their fellow citizens, nothing more. Having elected not to comply with the regulations about the flag salute, they forfeited their right to attend public schools.

Finally, appellants contend that Republic Act No. 1265 is unconstitutional and void for being an undue delegations of legislative power, "for its failure to lay down any specific and definite standard by which the Secretary of Education may be guided in the preparation of those rules and regulations which he has been authorized to promulgate." With this view we again disagree. Sections 1 and 2 of the Act read as follows:

Section 1. All educational institutions shall henceforth, observed daily flag ceremony, which shall be simple and dignified and shall include the playing or singing of the Philippine National Anthem.

Section 2. The Secretary of Education is hereby authorized and directed to issue or cause to be issued rules and regulations for the proper conduct of the flag ceremony herein provide.

In our opinion, the requirements above-quoted constitute an adequate standard, to wit, simplicity and dignity of the flag ceremony and the singing of the National Anthem — specially when contrasted with other standards heretofore upheld by the Courts: "public interest"(People vs. Rosenthal, 68 Phil. 328); "public welfare" (Municipality of Cardona vs. Binangonan, 36 Phil. 547); Interest of law and order"(Rubi vs. Provincial Board, 39 Phil., 669; justice and equity and the substantial merits of the case" (Int. Hardwood vs. Pañgil Federation of Labor, 70 Phil. 602); or "adequate and efficient instruction" (P.A.C.U. vs. Secretary of Education, 97 Phil., 806; 51 Off. Gaz., 6230). That the Legislature did not specify the details of the flag ceremony is no objection to the validity of the statute, for all that is required of it is the laying down of standards and policy that will limit the discretion of the regulatory agency. To require the statute to establish in detail the manner of exercise of the delegated power would be to destroy the administrative flexibility that the delegation is intended to achieve.

Wherefore, the decision appealed from is affirmed. Costs against petitioner-appellants.

Paras, C.J., Padilla, Bautista Angelo, Labrador, Barrera, Gutierrez David, Paredes, and Dizon, JJ., concur.

G.R. No. 159747             April 13, 2004

GREGORIO B. HONASAN II, petitioner, vs.THE PANEL OF INVESTIGATING PROSECUTORS OF THE DEPARTMENT OF JUSTICE (LEO DACERA, SUSAN F. DACANAY, EDNA A. VALENZUELA AND SEBASTIAN F. CAPONONG, JR.), CIDG-PNP- P/DIRECTOR EDUARDO MATILLANO, and HON. OMBUDSMAN SIMEON V. MARCELO, respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

On August 4, 2003, an affidavit-complaint was filed with the Department of Justice (DOJ) by respondent CIDG-PNP/P Director Eduardo Matillano. It reads in part:

…

2. After a thorough investigation, I found that a crime of coup d'etat was indeed committed by military personnel who occupied Oakwood on the 27th day of July 2003 and Senator Gregorio "Gringo"Honasan, II …

3. …

4. The said crime was committed as follows:

4.1 On June 4, 2003, at on or about 11 p.m., in a house located in San Juan, Metro Manila, a meeting was held and presided by Senator Honasan. Attached as Annex "B" is the affidavit of Perfecto Ragil and made an integral part of this complaint.

…

4.8 In the early morning of July 27, 2003, Capt. Gerardo Gambala, for and in behalf of the military rebels occupying Oakwood, made a public statement aired on nation television, stating their withdrawal of support to the chain of command of the AFP and the Government of President Gloria Macapagal Arroyo and they are willing to risk their lives in order to achieve the National Recovery Agenda of Sen. Honasan, which they believe is the only program that would solve the ills of society. . . . (Emphasis supplied).

The Sworn Statement of AFP Major Perfecto Ragil referred to by PNP/P Director Matillano is quoted verbatim, to wit:

1. That I am a member of the Communication –Electronics and Information Systems Services, Armed Forces of the Philippines with the rank of Major;

2. That I met a certain Captain Gary Alejano of the Presidential Security Guard (PSG) during our Very Important Person (VIP) Protection Course sometime in last week of March 2003;

3. That sometime in May 2003, Captain Alejano gave me a copy of the pamphlet of the National Recovery Program (NRP) and told me that: "Kailangan ng Bansa ng taong kagaya mo na walang bahid ng corruption kaya basahin mo ito (referring to NRP) pamphlet. I took the pamphlet but never had the time to read it;

4. That sometime in the afternoon of June 4, 2003, Captain Alejano invited me to join him in a meeting where the NRP would be discussed and that there would be a special guest;

5. That Capt. Alejano and I arrived at the meeting at past 9 o'clock in the evening of June 4, 2003 in a house located somewhere in San Juan, Metro Manila;

6. That upon arrival we were given a document consisting of about 3-4 pages containing discussion of issues and concerns within the framework of NRP and we were likewise served with dinner;

7. That while we were still having dinner at about past 11 o'clock in the evening, Sen. Gregorio "Gringo" Honasan arrived together with another fellow who was later introduced as Capt. Turingan;

8. That after Sen. Honasan had taken his dinner, the meeting proper started presided by Sen. Honasan;

9. That Sen. Honasan discussed the NRP, the graft and corruption in the government including the military institution, the judiciary, the executive branch and the like;

10. That the discussion concluded that we must use force, violence and armed struggle to achieve the vision of NRP. At this point, I raised the argument that it is my belief that reforms will be achieved through the democratic processes and not thru force and violence and/or armed struggle. Sen. Honasan countered that "we will never achieve reforms through the democratic processes because the people who are in power will not give up their positions as they have their vested interests to protect." After a few more exchanges of views, Sen. Honasan appeared irritated and asked me directly three (3) times: "In ka ba o out?" I then asked whether all those present numbering 30 people, more or less, are really committed, Sen. Honasan replied: "Kung kaya nating pumatay sa ating mga kalaban, kaya din nating pumatay sa mga kasamahang magtataksil." I decided not to pursue further questions;

11. That in the course of the meeting, he presented the plan of action to achieve the goals of NRP, i.e., overthrow of the government under the present leadership thru armed revolution and after which, a junta will be constituted and that junta will run the new government. He further said that some of us will resign from the military service and occupy civilian positions in the new government. He also said that there is urgency that we implement this plan and that we would be notified of the next activities.

12. That after the discussion and his presentation, he explained the rites that we were to undergo-some sort of "blood compact". He read a prayer that sounded more like a pledge and we all recited it with raised arms and clenched fists. He then took a knife and demonstrated how to make a cut on the left upper inner arm until it bleeds. The cut was in form of the letter "I" in the old alphabet but was done in a way that it actually looked like letter "H". Then, he pressed his right thumb against the blood and pressed the thumb on the lower middle portion of the copy of the Prayer. He then covered his thumb mark in blood with tape. He then pressed the cut on his left arm against the NRP flag and left mark of letter "I" on it. Everybody else followed;

13. That when my turn came, I slightly made a cut on my upper inner arm and pricked a portion of it to let it bleed and I followed what Senator HONASAN did;

14. That I did not like to participate in the rites but I had the fear for my life with what Senator HONASAN said that "…kaya nating pumatay ng kasamahan";

15. That after the rites, the meeting was adjourned and we left the place;

16. That I avoided Captain Alejano after that meeting but I was extra cautious that he would not notice it for fear of my life due to the threat made by Senator HONASAN during the meeting on June 4, 2003 and the information relayed to me by Captain Alejano that their group had already deeply established their network inside the intelligence community;

17. That sometime in the first week of July 2003, Captain Alejano came to see me to return the rifle that he borrowed and told me that when the group arrives at the Malacañang Compound for "D-DAY", my task is to

switch off the telephone PABX that serves the Malacañang complex. I told him that I could not do it. No further conversation ensued and he left;

18. That on Sunday, July 27, 2003, while watching the television, I saw flashed on the screen Lieutenant Antonio Trillanes, Captain Gerardo Gambala, Captain Alejano and some others who were present during the June 4th meeting that I attended, having a press conference about their occupation of the Oakwood Hotel. I also saw that the letter "I" on the arm bands and the banner is the same letter "I" in the banner which was displayed and on which we pressed our wound to leave the imprint of the letter "I";

19. That this Affidavit is being executed in order to attest the veracity of the foregoing and in order to charge SENATOR GREGORIO "GRINGO" HONASAN, Capt. FELIX TURINGAN, Capt. GARY ALEJANO, Lt. ANTONIO TRILLANES, Capt. GERARDO GAMBALA and others for violation of Article 134-A of the Revised Penal Code for the offense of "coup d'etat". (Emphasis supplied)

The affidavit-complaint is docketed as I.S. No. 2003-1120 and the Panel of Investigating Prosecutors of the Department of Justice (DOJ Panel for brevity) sent a subpoena to petitioner for preliminary investigation.

On August 27, 2003, petitioner, together with his counsel, appeared at the DOJ. He filed a Motion for Clarification questioning DOJ's jurisdiction over the case, asserting that since the imputed acts were committed in relation to his public office, it is the Office of the Ombudsman, not the DOJ, that has the jurisdiction to conduct the corresponding preliminary investigation; that should the charge be filed in court, it is the Sandiganbayan, not the regular courts, that can legally take cognizance of the case considering that he belongs to the group of public officials with Salary Grade 31; and praying that the proceedings be suspended until final resolution of his motion.

Respondent Matillano submitted his comment/opposition thereto and petitioner filed a reply.

On September 10, 2003, the DOJ Panel issued an Order, to wit:

On August 27, 2003, Senator Gregorio B. Honasan II filed through counsel a "Motion to Clarify Jurisdiction". On September 1, 2003, complainant filed a Comment/Opposition to the said motion.

The motion and comment/opposition are hereby duly noted and shall be passed upon in the resolution of this case.

In the meantime, in view of the submission by complainant of additional affidavits/evidence and to afford respondents ample opportunity to controvert the same, respondents, thru counsel are hereby directed to file their respective counter-affidavits and controverting evidence on or before September 23, 2003.1

Hence, Senator Gregorio B. Honasan II filed the herein petition for certiorari under Rule 65 of the Rules of Court against the DOJ Panel and its members, CIDG-PNP-P/Director Eduardo Matillano and Ombudsman Simeon V. Marcelo, attributing grave abuse of discretion on the part of the DOJ Panel in issuing the aforequoted Order of September 10, 2003 on the ground that the DOJ has no jurisdiction to conduct the preliminary investigation.

Respondent Ombudsman, the Office of Solicitor General in representation of respondents DOJ Panel, and Director Matillano submitted their respective comments.

The Court heard the parties in oral arguments on the following issues:

1) Whether respondent Department of Justice Panel of Investigators has jurisdiction to conduct preliminary investigation over the charge of coup d'etat against petitioner;

2) Whether Ombudsman-DOJ Circular No. 95-001 violates the Constitution and Republic Act No. 6770 or Ombudsman Act of 1989; and

3) Whether respondent DOJ Panel of Investigators committed grave abuse of discretion in deferring the resolution of the petitioner's motion to clarify jurisdiction considering the claim of the petitioner that the DOJ Panel has no jurisdiction to conduct preliminary investigation.

After the oral arguments, the parties submitted their respective memoranda. The arguments of petitioner are:

1. The Office of the Ombudsman has jurisdiction to conduct the preliminary investigation over all public officials, including petitioner.

2. Respondent DOJ Panel is neither authorized nor deputized under OMB-DOJ Joint Circular No. 95-001 to conduct the preliminary investigation involving Honasan.

3. Even if deputized, the respondent DOJ Panel is still without authority since OMB-DOJ Joint Circular No. 95-001 is ultra vires for being violative of the Constitution, beyond the powers granted to the Ombudsman by R.A. 6770 and inoperative due to lack of publication, hence null and void.

4. Since petitioner is charged with coup de 'etat in relation to his office, it is the Office of the Ombudsman which has the jurisdiction to conduct the preliminary investigation.

5. The respondent DOJ Panel gravely erred in deferring the resolution of petitioner's Motion to Clarify Jurisdiction since the issue involved therein is determinative of the validity of the preliminary investigation.

6. Respondent DOJ Panel gravely erred when it resolved petitioner's Motion in the guise of directing him to submit Counter-Affidavit and yet refused and/or failed to perform its duties to resolve petitioner's Motion stating its legal and factual bases.

The arguments of respondent DOJ Panel are:

1. The DOJ has jurisdiction to conduct the preliminary investigation on petitioner pursuant to Section 3, Chapter I, Title III, Book IV of the Revised Administrative Code of 1987 in relation to P.D. No. 1275, as amended by P.D. No. 1513.

2. Petitioner is charged with a crime that is not directly nor intimately related to his public office as a Senator. The factual allegations in the complaint and the supporting affidavits are bereft of the requisite nexus between petitioner's office and the acts complained of.

3. The challenge against the constitutionality of the OMB-DOJ Joint Circular, as a ground to question the jurisdiction of the DOJ over the complaint below, is misplaced. The jurisdiction of the DOJ is a statutory grant under the Revised Administrative Code. It is not derived from any provision of the joint circular which embodies the guidelines governing the authority of both the DOJ and the Office of the Ombudsman to conduct preliminary investigation on offenses charged in relation to public office.

4. Instead of filing his counter-affidavit, petitioner opted to file a motion to clarify jurisdiction which, for all intents and purposes, is actually a motion to dismiss that is a prohibited pleading under Section 3, Rule 112 of the Revised Rules of Criminal Procedure. The DOJ Panel is not required to act or even recognize it since a preliminary investigation is required solely for the purpose of determining whether there is a sufficient ground to engender a well founded belief that a crime has been committed and the respondent is probably guilty thereof and should be held for trial. The DOJ panel did not outrightly reject the motion of petitioner but ruled to pass upon the same in the determination of the probable cause; thus, it has not violated any law or rule or any norm of discretion.

The arguments of respondent Ombudsman are:

1. The DOJ Panel has full authority and jurisdiction to conduct preliminary investigation over the petitioner for the reason that the crime of coup d'etat under Article No. 134-A of the Revised Penal Code (RPC) may fall under the jurisdiction of the Sandiganbayan only if the same is committed "in relation to office" of petitioner, pursuant to Section 4, P.D. No. 1606, as amended by R.A. No. 7975 and R.A. No. 8249.

2. Petitioner's premise that the DOJ Panel derives its authority to conduct preliminary investigation over cases involving public officers solely from the OMB-DOJ Joint Circular No. 95-001 is misplaced because the DOJ's concurrent authority with the OMB to conduct preliminary investigation of cases involving public

officials has been recognized in Sanchez vs. Demetriou (227 SCRA 627 [1993]) and incorporated in Section 4, Rule 112 of the Revised Rules of Criminal Procedure.

3. Petitioner's assertion that the Joint Circular is ultra vires and the DOJ cannot be deputized by the Ombudsman en masse but must be given in reference to specific cases has no factual or legal basis. There is no rule or law which requires the Ombudsman to write out individualized authorities to deputize prosecutors on a per case basis. The power of the Ombudsman to deputize DOJ prosecutors proceeds from the Constitutional grant of power to request assistance from any government agency necessary to discharge its functions, as well as from the statutory authority to so deputize said DOJ prosecutors under Sec. 31 of RA 6770.

4. The Joint Circular which is an internal arrangement between the DOJ and the Office of the Ombudsman need not be published since it neither contains a penal provision nor does it prescribe a mandatory act or prohibit any under pain or penalty. It does not regulate the conduct of persons or the public, in general.

The Court finds the petition without merit.

The authority of respondent DOJ Panel is based not on the assailed OMB-DOJ Circular No. 95-001 but on the provisions of the 1987 Administrative Code under Chapter I, Title III, Book IV, governing the DOJ, which provides:

Sec. 1. Declaration of policy - It is the declared policy of the State to provide the government with a principal law agency which shall be both its legal counsel and prosecution arm; administer the criminal justice system in accordance with the accepted processes thereof consisting in the investigation of the crimes, prosecution of offenders and administration of the correctional system; …

Sec. 3. Powers and Functions - To accomplish its mandate, the Department shall have the following powers and functions:

…

(2) Investigate the commission of crimes, prosecute offenders and administer the probation and correction system; (Emphasis supplied)

and Section 1 of P.D. 1275, effective April 11, 1978, to wit:

SECTION 1. Creation of the National Prosecution Service; Supervision and Control of the Secretary of Justice. – There is hereby created and established a National Prosecution Service under the supervision and control of the Secretary of Justice, to be composed of the Prosecution Staff in the Office of the Secretary of Justice and such number of Regional State Prosecution Offices, and Provincial and City Fiscal's Offices as are hereinafter provided, which shall be primarily responsible for the investigation and prosecution of all cases involving violations of penal laws. (Emphasis supplied)

Petitioner claims that it is the Ombudsman, not the DOJ, that has the jurisdiction to conduct the preliminary investigation under paragraph (1), Section 13, Article XI of the 1987 Constitution, which confers upon the Office of the Ombudsman the power to investigate on its own, or on complaint by any person, any act or omission of any public official, employee, office or agency, when such act or omission appears to be illegal, unjust, improper, or inefficient. Petitioner rationalizes that the 1987 Administrative Code and the Ombudsman Act of 1989 cannot prevail over the Constitution, pursuant to Article 7 of the Civil Code, which provides:

Article 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse, or custom or practice to the contrary.

When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern.

Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution.

and Mabanag vs. Lopez Vito.2

The Court is not convinced. Paragraph (1) of Section 13, Article XI of the Constitution, viz:

SEC. 13. The Office of the Ombudsman shall have the following powers, functions, and duties:

1. Investigate on its own, or on complaint by any person, any act or omission of any public official, employee, office or agency, when such act or omission appears to be illegal, unjust, improper, or inefficient.

does not exclude other government agencies tasked by law to investigate and prosecute cases involving public officials. If it were the intention of the framers of the 1987 Constitution, they would have expressly declared the exclusive conferment of the power to the Ombudsman. Instead, paragraph (8) of the same Section 13 of the Constitution provides:

(8) Promulgate its rules of procedure and exercise such other powers or perform such functions or duties as may be provided by law.

Accordingly, Congress enacted R.A. 6770, otherwise known as "The Ombudsman Act of 1989." Section 15 thereof provides:

Sec. 15. Powers, Functions and Duties. - The Office of the Ombudsman shall have the following powers, functions and duties:

(1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or employee, office or agency, when such act or omission appears to be illegal, unjust, improper or inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of this primary jurisdiction, it may take over, at any stage, from any investigatory agency of the government, the investigation of such cases.

…. (Emphasis supplied)

Pursuant to the authority given to the Ombudsman by the Constitution and the Ombudsman Act of 1989 to lay down its own rules and procedure, the Office of the Ombudsman promulgated Administrative Order No. 8, dated November 8, 1990, entitled, Clarifying and Modifying Certain Rules of Procedure of the Ombudsman, to wit:

A complaint filed in or taken cognizance of by the Office of the Ombudsman charging any public officer or employee including those in government-owned or controlled corporations, with an act or omission alleged to be illegal, unjust, improper or inefficient is an Ombudsman case. Such a complaint may be the subject of criminal or administrative proceedings, or both.

For purposes of investigation and prosecution, Ombudsman cases involving criminal offenses may be subdivided into two classes, to wit: (1) those cognizable by the Sandiganbayan, and (2) those falling under the jurisdiction of the regular courts. The difference between the two, aside from the category of the courts wherein they are filed, is on the authority to investigate as distinguished from the authority to prosecute, such cases.

The power to investigate or conduct a preliminary investigation on any Ombudsman case may be exercised by an investigator or prosecutor of the Office of the Ombudsman, or by any Provincial or City Prosecutor or their assistance, either in their regular capacities or as deputized Ombudsman prosecutors.

The prosecution of cases cognizable by the Sandiganbayan shall be under the direct exclusive control and supervision of the Office of the Ombudsman. In cases cognizable by the regular Courts, the control and supervision by the Office of the Ombudsman is only in Ombudsman cases in the sense defined above. The law recognizes a concurrence of jurisdiction between the Office of the Ombudsman and other investigative agencies of the government in the prosecution of cases cognizable by regular courts. (Emphasis supplied)

It is noteworthy that as early as 1990, the Ombudsman had properly differentiated the authority to investigate cases from the authority to prosecute cases. It is on this note that the Court will first dwell on the nature or extent of the authority of the Ombudsman to investigate cases. Whence, focus is directed to the second sentence of paragraph (1), Section 15 of the Ombudsman Act which specifically provides that the Ombudsman has primary jurisdiction over cases cognizable by the Sandiganbayan, and, in the exercise of this primary jurisdiction, it may take over, at any stage, from any investigating agency of the government, the investigation of such cases.

That the power of the Ombudsman to investigate offenses involving public officers or employees is not exclusive but is concurrent with other similarly authorized agencies of the government such as the provincial, city and state prosecutors has long been settled in several decisions of the Court.

In Cojuangco, Jr. vs. Presidential Commission on Good Government, decided in 1990, the Court expressly declared:

A reading of the foregoing provision of the Constitution does not show that the power of investigation including preliminary investigation vested on the Ombudsman is exclusive.3

Interpreting the primary jurisdiction of the Ombudsman under Section 15 (1) of the Ombudsman Act, the Court held in said case:

Under Section 15 (1) of Republic Act No. 6770 aforecited, the Ombudsman has primary jurisdiction over cases cognizable by the Sandiganbayan so that it may take over at any stage from any investigatory agency of the government, the investigation of such cases. The authority of the Ombudsman to investigate offenses involving public officers or employees is not exclusive but is concurrent with other similarly authorized agencies of the government. Such investigatory agencies referred to include the PCGG and the provincial and city prosecutors and their assistants, the state prosecutors and the judges of the municipal trial courts and municipal circuit trial court.

In other words the provision of the law has opened up the authority to conduct preliminary investigation of offenses cognizable by the Sandiganbayan to all investigatory agencies of the government duly authorized to conduct a preliminary investigation under Section 2, Rule 112 of the 1985 Rules of Criminal Procedure with the only qualification that the Ombudsman may take over at any stage of such investigation in the exercise of his primary jurisdiction.4 (Emphasis supplied)

A little over a month later, the Court, in Deloso vs. Domingo,5 pronounced that the Ombudsman, under the authority of Section 13 (1) of the 1987 Constitution, has jurisdiction to investigate any crime committed by a public official, elucidating thus:

As protector of the people, the office of the Ombudsman has the power, function and duty to "act promptly on complaints filed in any form or manner against public officials" (Sec. 12) and to "investigate x x x any act or omission of any public official x x x when such act or omission appears to be illegal, unjust, improper or inefficient." (Sec. 13[1].) The Ombudsman is also empowered to "direct the officer concerned," in this case the Special Prosecutor, "to take appropriate action against a public official x x x and to recommend his prosecution" (Sec. 13[3]).

The clause "any [illegal] act or omission of any public official" is broad enough to embrace any crime committed by a public official. The law does not qualify the nature of the illegal act or omission of the public official or employee that the Ombudsman may investigate. It does not require that the act or omission be related to or be connected with or arise from, the performance of official duty. Since the law does not distinguish, neither should we.

The reason for the creation of the Ombudsman in the 1987 Constitution and for the grant to it of broad investigative authority, is to insulate said office from the long tentacles of officialdom that are able to penetrate judges' and fiscals' offices, and others involved in the prosecution of erring public officials, and through the exertion of official pressure and influence, quash, delay, or dismiss investigations into malfeasances and misfeasances committed by public officers. It was deemed necessary, therefore, to create a special office to investigate all criminal complaints against public officers regardless of whether or

not the acts or omissions complained of are related to or arise from the performance of the duties of their office. The Ombudsman Act makes perfectly clear that the jurisdiction of the Ombudsman encompasses "all kinds of malfeasance, misfeasance, and non-feasance that have been committed by any officer or employee as mentioned in Section 13 hereof, during his tenure of office" (Sec. 16, R.A. 6770).

. . . . . . . . .

Indeed, the labors of the constitutional commission that created the Ombudsman as a special body to investigate erring public officials would be wasted if its jurisdiction were confined to the investigation of minor and less grave offenses arising from, or related to, the duties of public office, but would exclude those grave and terrible crimes that spring from abuses of official powers and prerogatives, for it is the investigation of the latter where the need for an independent, fearless, and honest investigative body, like the Ombudsman, is greatest.6

At first blush, there appears to be conflicting views in the rulings of the Court in the Cojuangco, Jr. case and theDeloso case. However, the contrariety is more apparent than real. In subsequent cases, the Court elucidated on the nature of the powers of the Ombudsman to investigate.

In 1993, the Court held in Sanchez vs. Demetriou,7 that while it may be true that the Ombudsman has jurisdiction to investigate and prosecute any illegal act or omission of any public official, the authority of the Ombudsman to investigate is merely a primary and not an exclusive authority, thus:

The Ombudsman is indeed empowered under Section 15, paragraph (1) of RA 6770 to investigate and prosecute any illegal act or omission of any public official. However as we held only two years ago in the case of Aguinaldo vs. Domagas,8 this authority "is not an exclusive authority but rather a shared or concurrent authority in respect of the offense charged."

Petitioners finally assert that the information and amended information filed in this case needed the approval of the Ombudsman. It is not disputed that the information and amended information here did not have the approval of the Ombudsman. However, we do not believe that such approval was necessary at all. In Deloso v. Domingo, 191 SCRA 545 (1990), the Court held that the Ombudsman has authority to investigate charges of illegal acts or omissions on the part of any public official, i.e., any crime imputed to a public official. It must, however, be pointed out that the authority of the Ombudsman to investigate "any [illegal] act or omission of any public official" (191 SCRA 550) is not an exclusive authority but rather a shared or concurrent authority in respect of the offense charged, i.e., the crime of sedition. Thus, the non-involvement of the office of the Ombudsman in the present case does not have any adverse legal consequence upon the authority of the panel of prosecutors to file and prosecute the information or amended information.

In fact, other investigatory agencies of the government such as the Department of Justice in connection with the charge of sedition, and the Presidential Commission on Good Government, in ill gotten wealth cases, may conduct the investigation.9 (Emphasis supplied)

In Natividad vs. Felix,10 a 1994 case, where the petitioner municipal mayor contended that it is the Ombudsman and not the provincial fiscal who has the authority to conduct a preliminary investigation over his case for alleged Murder, the Court held:

The Deloso case has already been re-examined in two cases, namely Aguinaldo vs. Domagas and Sanchez vs. Demetriou. However, by way of amplification, we feel the need for tracing the history of the legislation relative to the jurisdiction of Sandiganbayan since the Ombudsman's primary jurisdiction is dependent on the cases cognizable by the former.

In the process, we shall observe how the policy of the law, with reference to the subject matter, has been in a state of flux.

These laws, in chronological order, are the following: (a) Pres. Decree No. 1486, -- the first law on the Sandiganbayan; (b) Pres. Decree No. 1606 which expressly repealed Pres. Decree No. 1486; (c) Section 20 of Batas Pambansa Blg. 129; (d) Pres. Decree No. 1860; and (e) Pres. Decree No. 1861.

The latest law on the Sandiganbayan, Sec. 1 of Pres. Decree No. 1861 reads as follows:

"SECTION 1. Section 4 of Presidential Decree No. 1606 is hereby amended to read as follows:

'SEC. 4. Jurisdiction. – The Sandiganbayan shall exercise:

'(a) Exclusive original jurisdiction in all cases involving:

. . .

(2) Other offenses or felonies committed by public officers and employees in relation to their office, including those employed in government-owned or controlled corporation, whether simple or complexed with other crimes, where the penalty prescribed by law is higher thatprision correccional or imprisonment for six (6) years, or a fine of P6,000: PROVIDED, HOWEVER, that offenses or felonies mentioned in this paragraph where the penalty prescribed by law does not exceed prision correccional or imprisonment for six (6) years or a fine ofP6,000 shall be tried by the proper Regional Trial Court, Metropolitan Trial Court, Municipal Trial Court and Municipal Circuit Trial Court."

A perusal of the aforecited law shows that two requirements must concur under Sec. 4 (a) (2) for an offense to fall under the Sandiganbayan's jurisdiction, namely: the offense committed by the public officer must be in relation to his office and the penalty prescribed be higher then prision correccional or imprisonment for six (6) years, or a fine of P6,000.00.11

Applying the law to the case at bench, we find that although the second requirement has been met, the first requirement is wanting. A review of these Presidential Decrees, except Batas Pambansa Blg. 129, would reveal that the crime committed by public officers or employees must be "in relation to their office" if it is to fall within the jurisdiction of the Sandiganbayan. This phrase which is traceable to Pres. Decree No. 1468, has been retained by Pres. Decree No. 1861 as a requirement before the Ombudsman can acquire primary jurisdiction on its power to investigate.

It cannot be denied that Pres. Decree No. 1861 is in pari materia to Article XI, Sections 12 and 13 of the 1987 Constitution and the Ombudsman Act of 1989 because, as earlier mentioned, the Ombudsman's power to investigate is dependent on the cases cognizable by the Sandiganbayan. Statutes are in pari materia when they relate to the same person or thing or to the same class of persons or things, or object, or cover the same specific or particular subject matter.

It is axiomatic in statutory construction that a statute must be interpreted, not only to be consistent with itself, but also to harmonize with other laws on the same subject matter, as to form a complete, coherent and intelligible system. The rule is expressed in the maxim, "interpretare et concordare legibus est optimus interpretandi," or every statute must be so construed and harmonized with other statutes as to form a uniform system of jurisprudence. Thus, in the application and interpretation of Article XI, Sections 12 and 13 of the 1987 Constitution and the Ombudsman Act of 1989, Pres. Decree No. 1861 must be taken into consideration. It must be assumed that when the 1987 Constitution was written, its framers had in mind previous statutes relating to the same subject matter. In the absence of any express repeal or amendment, the 1987 Constitution and the Ombudsman Act of 1989 are deemed in accord with existing statute, specifically, Pres. Decree No. 1861.12 (Emphasis supplied)

R.A. No. 8249 which amended Section 4, paragraph (b) of the Sandiganbayan Law (P.D. 1861) likewise provides that for other offenses, aside from those enumerated under paragraphs (a) and (c), to fall under the exclusive jurisdiction of the Sandiganbayan, they must have been committed by public officers or employees in relation to their office.

In summation, the Constitution, Section 15 of the Ombudsman Act of 1989 and Section 4 of the Sandiganbayan Law, as amended, do not give to the Ombudsman exclusive jurisdiction to investigate offenses committed by public officers or employees. The authority of the Ombudsman to investigate offenses involving public officers or employees is concurrent with other government investigating agencies such as provincial, city and state prosecutors. However, the Ombudsman, in the exercise of its primary jurisdiction over cases cognizable by the Sandiganbayan, may take over, at any stage, from any investigating agency of the government, the investigation of such cases.

In other words, respondent DOJ Panel is not precluded from conducting any investigation of cases against public officers involving violations of penal laws but if the cases fall under the exclusive jurisdiction of the Sandiganbayan, then respondent Ombudsman may, in the exercise of its primary jurisdiction take over at any stage.

Thus, with the jurisprudential declarations that the Ombudsman and the DOJ have concurrent jurisdiction to conduct preliminary investigation, the respective heads of said offices came up with OMB-DOJ Joint Circular No. 95-001 for the proper guidelines of their respective prosecutors in the conduct of their investigations, to wit:

OMB-DOJ JOINT CIRCULAR NO. 95-001

Series of 1995

TO: ALL GRAFT INVESTIGATION/SPECIAL PROSECUTION OFFICERS OF THE OFFICE OF THE OMBUDSMAN

ALL REGIONAL STATE PROSECUTORS AND THEIR ASSISTANTS, PROVINCIAL/CITY PROSECUTORS AND THEIR ASSISTANTS, STATE PROSECUTORS AND PROSECUTING ATTORNEYS OF THE DEPARTMENT OF JUSTICE.

SUBJECT: HANDLING COMPLAINTS FILED AGAINST PUBLIC OFFICERS AND EMPLOYEES, THE CONDUCT OF PRELIMINARY INVESTIGATION, PREPARATION OF RESOLUTIONS AND INFORMATIONS AND PROSECUTION OF CASES BY PROVINCIAL AND CITY PROSECUTORS AND THEIR ASSISTANTS.

x-------------------------------------------------------------------------------------------------------x

In a recent dialogue between the OFFICE OF THE OMBUDSMAN and the DEPARTMENT OF JUSTICE, discussion centered around the latest pronouncement of the supreme court on the extent to which the ombudsman may call upon the government prosecutors for assistance in the investigation and prosecution of criminal cases cognizable by his office and the conditions under which he may do so. Also discussed was Republic Act No. 7975 otherwise known as "an act to strengthen the functional and structural organization of the sandiganbayan, amending for the purpose presidential decree no. 1606, as amended" and its implications on the jurisdiction of the office of the Ombudsman on criminal offenses committed by public officers and employees.

Concerns were expressed on unnecessary delays that could be caused by discussions on jurisdiction between the OFFICE OF THE OMBUDSMAN and the department of justice, and by procedural conflicts in the filing of complaints against public officers and employees, the conduct of preliminary investigations, the preparation of resolutions and informations, and the prosecution of cases by provincial and city prosecutors and their assistants as deputized prosecutors of the ombudsman.

Recognizing the concerns, the office of the ombudsman and the department of justice, in a series of consultations, have agreed on the following guidelines to be observed in the investigation and prosecution of cases against public officers and employees:

1. Preliminary investigation and prosecution of offenses committed by public officers and employees in relation to office whether cognizable by the sandiganbayan or the regular courts, and whether filed with the office of the ombudsman or with the office of the provincial/city prosecutor shall be under the control and supervision of the office of the ombudsman.

2. Unless the Ombudsman under its Constitutional mandate finds reason to believe otherwise, offenses not in relation to office and cognizable by the regular courts shall be investigated and prosecuted by the office of the provincial/city prosecutor, which shall rule thereon with finality.

3. Preparation of criminal information shall be the responsibility of the investigating officer who conducted the preliminary investigation. Resolutions recommending prosecution together with the duly accomplished criminal informations shall be forwarded to the appropriate approving authority.

4. Considering that the office of the ombudsman has jurisdiction over public officers and employees and for effective monitoring of all investigations and prosecutions of cases involving public officers and employees, the office of the provincial/city prosecutor shall submit to the office of the ombudsman a monthly list of complaints filed with their respective offices against public officers and employees.

Manila, Philippines, October 5, 1995.

(signed)

TEOFISTO T. GUINGONA, JR.SecretaryDepartment of Justice

(signed)

ANIANO A. DESIERTOOmbudsmanOffice of the Ombudsman

A close examination of the circular supports the view of the respondent Ombudsman that it is just an internal agreement between the Ombudsman and the DOJ.

Sections 2 and 4, Rule 112 of the Revised Rules on Criminal Procedure on Preliminary Investigation, effective December 1, 2000, to wit:

SEC. 2. Officers authorized to conduct preliminary investigations-

The following may conduct preliminary investigations:

(a) Provincial or City Prosecutors and their assistants;

(b) Judges of the Municipal Trial Courts and Municipal Circuit Trial Courts;

(c) National and Regional State Prosecutors; and

(d) Other officers as may be authorized by law.

Their authority to conduct preliminary investigation shall include all crimes cognizable by the proper court in their respective territorial jurisdictions.

SEC. 4. Resolution of investigating prosecutor and its review. - If the investigating prosecutor finds cause to hold the respondent for trial, he shall prepare the resolution and information, He shall certify under oath in the information that he, or as shown by the record, an authorized officer, has personally examined the complainant and his witnesses; that there is reasonable ground to believe that a crime has been committed and that the accused is probably guilty thereof; that the accused was informed of the complaint and of the evidence submitted against him; and that he was given an opportunity to submit controverting evidence. Otherwise, he shall recommend the dismissal of the complaint.

Within five (5) days from his resolution, he shall forward the record of the case to the provincial or city prosecutor or chief state prosecutor, or to the Ombudsman or his deputy in cases of offenses cognizable by the Sandiganbayan in the exercise of its original jurisdiction. They shall act on the resolution within ten (10) days from their receipt thereof and shall immediately inform the parties of such action.

No complaint or information may be filed or dismissed by an investigating prosecutor without the prior written authority or approval of the provincial or city prosecutor or chief state prosecutor or the Ombudsman or his deputy.

Where the investigating prosecutor recommends the dismissal of the complaint but his recommendation is disapproved by the provincial or city prosecutor or chief state prosecutor or the Ombudsman or his deputy on the ground that a probable cause exists, the latter may, by himself file the information against the respondent, or direct another assistant prosecutor or state prosecutor to do so without conducting another preliminary investigation.

If upon petition by a proper party under such rules as the Department of Justice may prescribe or motu proprio, the Secretary of Justice reverses or modifies the resolution of the provincial or city prosecutor or chief state prosecutor, he shall direct the prosecutor concerned either to file the corresponding information without conducting another preliminary investigation, or to dismiss or move for dismissal of the complaint or information with notice to the parties. The same Rule shall apply in preliminary investigations conducted by the officers of the Office of the Ombudsman. (Emphasis supplied)

confirm the authority of the DOJ prosecutors to conduct preliminary investigation of criminal complaints filed with them for offenses cognizable by the proper court within their respective territorial jurisdictions, including those offenses which come within the original jurisdiction of the Sandiganbayan; but with the qualification that in offenses falling within the original jurisdiction of the Sandiganbayan, the prosecutor shall, after their investigation, transmit the records and their resolutions to the Ombudsman or his deputy for appropriate action. Also, the prosecutor cannot dismiss the complaint without the prior written authority of the Ombudsman or his deputy, nor can the prosecutor file an Information with the Sandiganbayan without being deputized by, and without prior written authority of the Ombudsman or his deputy.

Next, petitioner contends that under OMB-Joint Circular No. 95-001, there is no showing that the Office of the Ombudsman has deputized the prosecutors of the DOJ to conduct the preliminary investigation of the charge filed against him.

We find no merit in this argument. As we have lengthily discussed, the Constitution, the Ombudsman Act of 1989, Administrative Order No. 8 of the Office of the Ombudsman, the prevailing jurisprudence and under the Revised Rules on Criminal Procedure, all recognize and uphold the concurrent jurisdiction of the Ombudsman and the DOJ to conduct preliminary investigation on charges filed against public officers and employees.

To reiterate for emphasis, the power to investigate or conduct preliminary investigation on charges against any public officers or employees may be exercised by an investigator or by any provincial or city prosecutor or their assistants, either in their regular capacities or as deputized Ombudsman prosecutors. The fact that all prosecutors are in effect deputized Ombudsman prosecutors under the OMB-DOJ Circular is a mere superfluity. The DOJ Panel need not be authorized nor deputized by the Ombudsman to conduct the preliminary investigation for complaints filed with it because the DOJ's authority to act as the principal law agency of the government and investigate the commission of crimes under the Revised Penal Code is derived from the Revised Administrative Code which had been held in the Natividad case13 as not being contrary to the Constitution. Thus, there is not even a need to delegate the conduct of the preliminary investigation to an agency which has the jurisdiction to do so in the first place. However, the Ombudsman may assert its primary jurisdiction at any stage of the investigation.

Petitioner's contention that OMB-DOJ Joint Circular No. 95-001 is ineffective on the ground that it was not published is not plausible. We agree with and adopt the Ombudsman's dissertation on the matter, to wit:

Petitioner appears to be of the belief, although NOT founded on a proper reading and application of jurisprudence, that OMB-DOJ Joint Circular No. 95-001, an internal arrangement between the DOJ and the Office of the Ombudsman, has to be published.

As early as 1954, the Honorable Court has already laid down the rule in the case of People vs. Que Po Lay, 94 Phil. 640 (1954) that only circulars and regulations which prescribe a penalty for its violation should be published before becoming effective, this, on the general principle and theory that before the public is bound by its contents, especially its penal provision, a law, regulation or circular must first be published and the people officially and specifically informed of said contents and its penalties: said precedent, to date, has

not yet been modified or reversed. OMB-DOJ Joint Circular No. 95-001 DOES NOT contain any penal provision or prescribe a mandatory act or prohibit any, under pain or penalty.

What is more, in the case of Tanada v. Tuvera, 146 SCRA 453 (1986), the Honorable Court ruled that:

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 published. Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties. (at page 454. emphasis supplied)

OMB-DOJ Joint Circular No. 95-001 is merely an internal circular between the DOJ and the Office of the Ombudsman, outlining authority and responsibilities among prosecutors of the DOJ and of the Office of the Ombudsman in the conduct of preliminary investigation. OMB-DOJ Joint Circular No. 95-001 DOES NOT regulate the conduct of persons or the public, in general.

Accordingly, there is no merit to petitioner's submission that OMB-DOJ Joint Circular No. 95-001 has to be published.14

Petitioner insists that the Ombudsman has jurisdiction to conduct the preliminary investigation because petitioner is a public officer with salary Grade 31 so that the case against him falls exclusively within the jurisdiction of the Sandiganbayan. Considering the Court's finding that the DOJ has concurrent jurisdiction to investigate charges against public officers, the fact that petitioner holds a Salary Grade 31 position does not by itself remove from the DOJ Panel the authority to investigate the charge of coup d'etat against him.

The question whether or not the offense allegedly committed by petitioner is one of those enumerated in the Sandiganbayan Law that fall within the exclusive jurisdiction of the Sandiganbayan will not be resolved in the present petition so as not to pre-empt the result of the investigation being conducted by the DOJ Panel as to the questions whether or not probable cause exists to warrant the filing of the information against the petitioner; and to which court should the information be filed considering the presence of other respondents in the subject complaint.

WHEREFORE, the petition for certiorari is DISMISSED for lack of merit.

SO ORDERED.

Davide, Jr., C.J., Panganiban, Carpio, Corona, Carpio-Morales, Callejo, Sr., Azcuna, and Tinga, JJ., concur.Puno, J., joins J. Ynares-Santiago.Vitug, J., see separate dissenting opinion.Quisumbing, J., joins the dissent.Ynares-Santiago, J., see separate dissenting opinion.Sandoval-Gutierrez, J., see dissenting opinion.

EN BANC  

PHILIPPINE PORTS AUTHORITY          G.R. No. 160396(PPA) EMPLOYEES HIRED AFTERJULY 1, 1989,                                                     Present:                                                Petitioners,                                                                                                           Davide Jr., CJ,*                                                                                        Puno,*

                                                                                 Panganiban,                                                                              Quisumbing,*

                      - versus -                                          Ynares-Santiago,*

                                                                                 Sandoval-Gutierrez,                                                                                 Carpio,                                                                                 Austria-Martinez,                                                                                 Corona,COMMISSION ON AUDIT (COA);                 Carpio Morales,*

ARTHUR H. HINAL, in His Capacity            Callejo Sr.,as the Philippine Ports Authority                      Azcuna,*

Corporate Auditor; RAQUEL R.                        Tinga,HABITAN, in Her Capacity as Director          Nazario, andof Corporate Audit Office II, COA;                   Garcia, JJ.and SANTOS M. ALQUIZALAS,in His Capacity as General Counsel,             Promulgated:COA,

     Respondents.         September 6, 2005x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --

x 

DECISION  

PANGANIBAN, Acting CJ:  

“Those that have less in life should have more in law to give

them  a  better  chance  at  competing  with  those  that  have

more in______________________*          On official business.             

life.”[1]  Accordingly, in case of doubt, laws should be interpreted

to favor the working class -- whether in the government or in the

private sector --  in order to give flesh and vigor to the pro-poor

and pro-labor provisions of our Constitution.

 

The Case

 

Before us is a Petition for Certiorari[2] under Rule 65 of the

Rules of Court, assailing the May 27, 2003 Decision[3] and

the October 16, 2003 Resolution[4]of the Commission on Audit

(COA).  The dispositive part of the Decision reads as follows: “Wherefore, premises considered the instant petitions are hereby denied

for lack of merit.”[5]

   

          The assailed COA Resolution denied reconsideration. 

  

The Facts 

 

The COA narrates the factual antecedents in this wise:“Records will bear that the PPA has been paying its officials and employees COLA

and amelioration allowance equivalent to 40% and 10%, respectively, of their basic salary

pursuant to various legislative and administrative issuances.  During the last quarter of 1989, the PPA discontinued the payment thereof in view of Corporate Compensation Circular (CCC) No. 10 prescribing the implementing rules and regulations of R.A. No. 6758 otherwise known as the Salary Standardization Law which integrated said allowances into the basic salary effective July 1, 1989.  However, the Supreme Court in the case of Rodolfo de Jesus, et al. vs. COA, G.R. No. 109023 dated August 12, 1998, declared CCC No. 10 as ineffective and unenforceable due to non-publication.  Consequently, the PPA Board of Directors passed Resolution No. 1856 directing the payment of COLA and amelioration backpay to PPA personnel in the service during the period July 1, 1989 to March 16, 1999, the date of publication of CCC No. 10.

 “Doubting the validity of said Resolution, the PPA Auditor requested the opinion of

the General Counsel on the propriety of the payment of the backpay.  In fully concurring with the recommendation of the then Director, CAO II, the General Counsel ruled that ‘in order for a PPA employee to be entitled to backpay representing COLA and amelioration pay equivalent to 40% and 10% respectively, of their basic salary, the following conditions must concur:

 1)    he has to be an incumbent as of July 1, 1989; and 2)    has been receiving the COLA and amelioration pay as of July 1, 1989.’

 Aggrieved, PPA sought reconsideration of the said advisory opinion which was denied by the General Counsel in a 1st Indorsement dated September 13, 2001, since she found no cogent reason to set aside the earlier opinion.  The PPA Auditor accordingly ruled against the grant of the subject backpay.  Hence, the instant petitions for review anchored on the following arguments: 

1)              The unenforceability of CCC No. 10 did not alter the nature of COLA and amelioration allowance into a ‘not integrated’ benefit within the purview of the second sentence of Section 12, R.A. No. 6758 but merely rendered them unidentified as integrated allowances;

 2)      The jurisprudence laid in PPA vs. COA, 214 SCRA 653 is not

applicable in the determination of who areentitled to the payment of backpay for COLA and amelioration allowance;

 3)      There is no valid reason not to treat ‘non-incumbents’ at par with

‘incumbents’ during the period of ineffectivity of CCC No. 10; and 

4)      PPA employees hired after July 1, 1989 are entitled to the payment of backpay representing COLA and amelioration allowance.”[6]

 

 

Ruling of the Commission on Audit

 

          The COA ruled that “in the absence of effective integration

of the COLA and amelioration allowance into the basic salary in

1989, the inevitable conclusion is that they are deemed not

integrated from the time RA 6758 was promulgated until DBM-

CCC No. 10 was published in March 1999.”  During that period, it

thus disallowed the disputed allowances on the ground that these

fell under the second sentence of Section 12 of RA 6758.  It held

that only officials hired on or before July 1, 1989 were entitled to

receive back pay equivalent to the additional compensation

(COLA and amelioration allowance) mentioned.

     Hence, this Petition.[7]

 

The Issue

 

Petitioner raised this sole issue for our consideration: “Whether or not herein petitioners -- who were hired by the Philippine Ports Authority on various dates after July 1, 1989 -- are entitled to the payment of back pay for cost of living allowance (COLA) and amelioration allowance.”[8]

   

The Court’s Ruling

 

The Petition is meritorious.

 Sole Issue:

Entitlement to COLAand Amelioration Allowance

  

          In its “Manifestation and Motion in Lieu of Comment,” the

Office of the Solicitor General (OSG) disagreed with the COA and

argued that “petitioners [were] legally entitled to their accrued

COLA and amelioration allowance as a matter of right.”  Thus,

this Court required respondents to defend themselves. 

Accordingly, the Office of the COA General Counsel prepared and

filed the Comment and Memorandum on behalf of respondents.

  

Petitioners assail the COA for allowing only incumbents as

of July 1, 1989 to receive COLA and amelioration allowance

during the “ineffectivity” of DBM-CCC No. 10; that is, from July 1,

1989 to March 16, 1999.  They contend that the COLA and the

amelioration allowance did not automatically become “not

integrated” benefits,  within the purview of the second sentence

of Section 12 of RA No. 6758, which reads as follows:           “SEC. 12. Consolidation of Allowances and Compensation. --  All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowances 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.”

A reading of the first sentence of this provision readily

reveals that all allowances are “deemed included” or integrated

into the prescribed standardized salary rates, except  the

following: (a) representation and transportation allowances, (b)

clothing and laundry allowances, (c) subsistence allowances of

marine officers and crew on board government vessels, (d)

subsistence allowances of hospital personnel, (e) hazard pay, (f)

allowances of foreign service personnel stationed abroad, and

(g) such other additional compensation not otherwise specified in

Section 12.  These additional “non-integrated benefits” (item g)

were to be determined by the Department of Budget and

Management (DBM) in an appropriate issuance.

 

Clearly, the last clause of the first sentence of Section 12,

which is a “catch-all” proviso, necessarily entails the DBM’s

promulgation of pertinent implementing rules and regulations. 

These will identify the “additional compensation” that may be

given over and above the standardized salary rates.

 

Pursuant to its authority under Section 23 of RA 6758, the

DBM thus issued on October 2, 1989, DBM-CCC No.

10, Section 4.0 of which enumerated the various allowances that

were deemed “integrated” into the standardized basic salary. 

Admittedly, among these allowances were the COLA and the

amelioration allowance.

 

However, because of its lack of publication in either

the Official Gazette or in a newspaper of general circulation,

DBM-CCC No. 10 was declared ineffective onAugust 12, 1998,

in De Jesus v. COA,[9] which we quote: 

“In the present case under scrutiny, its is decisively clear that DDM-CCC No. 10, which completely disallows payment of allowances and other additional compensation to government officials and employees, starting November 1, 1989, is not a mere interpretative or internal regulation.  It is something more than that.  And why not, when it tends to deprive government workers of

their allowances and additional compensation sorely needed to keep body and soul together.  At the very least, before the said circular under attack may be permitted to substantially reduce their income, the government officials and employees concerned should be apprised and alerted by the publication of the subject circular in the Official Gazette or in a newspaper of general circulation in the Philippines – to the end that they be given amplest opportunity to voice out whatever opposition they may have, and to ventilate their stance on the subject matter.  This approach is more in keeping with democratic precepts and rudiments of fairness and transparency.”[10]

 

 

          In other words, during the period that DBM-CCC No. 10

was in legal limbo,[11] the COLA and the amelioration allowance

were not effectively integrated into the standardized salaries. 

  Hence, it would be incorrect to contend that because those

allowances were not effectively integrated under the first

sentence, then they were “non-integrated benefits” falling under

the second sentence of Section 12 of RA 6758.  Their

characterization must be deemed to have also been in legal limbo,

pending the effectivity of DBM-CCC No. 10.  Consequently,

contrary to the ruling of the COA, the second sentence does not

apply to the present case.  By the same token, the policy

embodied in the provision -- the non-diminution of benefits in

favor of incumbents as of July 1, 1989 -- is also inapplicable. 

 

          The parties fail to cite any law barring the continuation of

the grant of the COLA and the amelioration allowance during the

period when DBM-CCC No. 10 was in legal limbo.

 

          The present case should be distinguished from PNB v.

Palma,[12] in which the respondents sought by mandamus to

compel the petitioner therein to grant them certain fringe

benefits and allowances that continued to be given to Philippine

National Bank (PNB) employees hired prior to July 1, 1989.  This

Court held that PNB could not be compelled to do so, because the

respondents had been hired after that date. Under Section 12 of

RA 6758, only “incumbent” government employees (as of July 1,

1989) already receiving those benefits may continue to receive

them, apart from their standardized pay.

 

          In the present case, the PPA already granted herein

petitioners the COLA and the amelioration allowances, even if

they were hired after July 1, 1989.  The only issue is whether they

should have continued to receive the benefits during the period of

the “ineffectivity” of DBC-CCC No. 10; that is, from July 1,

1989 toMarch 16, 1999, the period during which those

allowances were not deemed integrated into their standard salary

rates.  Furthermore, in the PNB Decision, the employees claimed

a right to receive the allowances from July 1, 1989 to January 1,

1997.  PNB was able to grant the benefits post facto,  because on

that date (January 1, 1997) it had already been privatized and

was thus no longer subject to the restrictions imposed by RA

6758 (the Salary Standardization Law).

          Tellingly, the subject matter of the PNB case involved

benefits that had not been deemed integrated into, but in fact

exempted from, the standardized salary rates.  In the present 

case, the subject matter refers to those deemed included, but

were placed “in limbo” as a result of this Court’s ruling in De

Jesus v. COA. 

 

          To stress, the failure to publish DBM-CCC No. 10 meant

that the COLA and the amelioration allowance were not

effectively integrated into the standardized salaries of the PPA

employees as of July 1, 1989.  The integration became effective

only on March 16, 1999.  Thus, in between those two dates, they

were still entitled to receive the two allowances.

 

          Be it remembered that the “other additional

compensations” not expressly specified in Section 12 of RA 6758

had to be determined by the DBM before they could be deemed

included or not included in the standardized salary rates.  True,

Section 12 could be considered self-executing in regard to items (a)

to (f) above, but it was not so in regard to item (g).  It was only upon

the issuance and effectivity of the corresponding DBM

Implementing Rules and Regulations thatthe enumeration found in

item (g) could be deemed legally completed.

 

          As pointed out by the OSG, until and unless the DBM issued

those Implementing Rules categorically excluding the COLA and

the amelioration allowance, there could not have been any valid

notice to the government employees concerned that indeed those

allowances were deemed included in the standardized salary

rates.[13]  Consequently, there was no reason or basis to

distinguish or classify PPA employees into two categories for

purposes of determining their entitlement to the back payment of

those unpaid allowances during the period in dispute.

 

          Hence, in consonance with the equal-protection clause of

the Constitution, and considering that the employees were all

similarly situated as to the matter of the COLA and the

amelioration allowance, they should all be treated similarly.  All --

not only incumbents as of July 1, 1989 -- should be allowed to

receive back pay corresponding to the said benefits, from July 1,

1989 to the new effectivity date of DBM-CCC No. 10 -- March 16,

1999.

          The principle of equal protection is not a barren concept that

may be casually swept aside.  While it does not demand absolute

equality, it requires that all persons similarly situated be treated

alike, both as to privileges conferred and liabilities enforced. 

Verily, equal protection and security shall be accorded every

person under identical or analogous circumstances.[14]

 

          WHEREFORE, the Petition is GRANTED and the assailed

Decision and Resolution of the Commission on

Audit ANNULLED and SET ASIDE.  No costs.

 

SO ORDERED.

[G.R. No. 109023. August 12, 1998]

RODOLFO S. DE JESUS, EDELWINA DE PARUNGAO, VENUS M. POZON AND other similarly situated personnel of the LOCAL WATER UTILITIES ADMINISTRATION (LWUA), petitioners, vs. COMMISSION ON AUDIT AND LEONARDO L. JAMORALIN in his capacity as COA-LWUA Corporate Auditor respondents.

DECISION

PURISIMA, J.:

The pivotal issue raised in this petition is whether or not the petitioners are entitled to the payment of honoraria which they were receiving prior to the effectivity of Rep. Act 6758.

Petitioners are employees of the Local Water Utilities Administration (LWUA).  Prior to July 1, 1989, they were receiving honoraria as designated members of the LWUA Board Secretariat and the Pre-Qualification, Bids and Awards Committee.

On July 1, 1989, Republic Act No. 6758 (Rep. Act 6758), entitled “An Act Prescribing A Revised Compensation and Position Classification System in the Government and For Other Purposes”, took effect.  Section 12 of said law provides for the consolidation of allowances and additional compensation into standardized salary rates.  Certain additional compensations, however, were exempted from consolidation.

Section 12, Rep. Act 6758, reads -

“Sec. 12. - Consolidation of Allowances and Compensation.-  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 services 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 as of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.”[1] (Underscoring supplied)

To implement Rep. Act 6758, the Department of Budget and Management (DBM) issued Corporate Compensation Circular No. 10 (DBM-CCC No. 10), discontinuing without qualification effective November 1, 1989, all allowances and fringe benefits granted on top of basic salary.

Paragraph 5.6 of DBM-CCC No. 10  provides :

“Payment of other allowances/fringe benefits and all other forms of compensation granted on top of basic salary, whether in cash or in kind, xxx 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.”[2]

Pursuant to the aforesaid Law and Circular, respondent Leonardo Jamoralin, as corporate auditor, disallowed on post audit, the payment of honoraria to the herein petitioners.

Aggrieved, petitioners appealed to the COA, questioning the validity and enforceability of DBM-CCC No. 10.  More specifically, petitioners contend that DBM-CCC No. 10 is inconsistent with the provisions of Rep. Act 6758 (the law it is supposed to implement) and, therefore, void.  And it is without force and effect because it was not published in the Official Gazette; petitioners stressed.

In its decision dated January 29, 1993, the COA upheld the validity and effectivity of DBM-CCC No. 10 and sanctioned the disallowance of petitioners’  honoraria.[3]

Undaunted, petitioners found their way to this court via the present petition, posing the questions:

(1)  Whether or not  par. 5.6 of DBM-CCC No. 10 can supplant or negate the express provisions of Sec. 12 of Rep. Act 6758 which it seeks to implement; and

(2)  Whether or not DBM-CCC No. 10 is legally effective despite its lack of publication in the Official Gazette.  Petitioners are of the view that par. 5.6 of DBM-CCC No. 10 prohibiting fringe benefits and allowances effective November 1, 1989, is violative of Sec. 12 of Rep. Act  6758 which authorizes payment of additional compensation not integrated into the standardized salary which incumbents were enjoying prior to July 1, 1989.

To buttress petitioners’ stance, the Solicitor General presented a Manifestation and Motion in Lieu of Comment, opining that Sec. 5.6 of DBM-CCC No. 10 is a nullity for being inconsistent with and repugnant to the very law it is intended to implement.  The Solicitor General theorized, that:

“xxx following the settled principle that implementing rules must necessarily adhere to and not depart from the provisions of the statute it seeks to implement, it is crystal clear that Section 5.6 of DBM-CCC No. 10 is a patent  nullity.  An implementing rule can only be declared valid if it is in harmony with the provisions of the legislative act and for the sole purpose of carrying into effect its general provisions.  When an implementing rule is inconsistent or repugnant to the provisions of the statute it seeks to interpret, the mandate of the statute must prevail and must be followed.”[4]

Respondent COA, on the other hand, pointed out that to allow  honoraria without statutory,  presidential or DBM authority, as in this case, would run counter to Sec. 8, Article IX-B of the Constitution which proscribes payment of “additional or double compensation, unless specifically authorized by law.”  Therefore, the grant of honoraria or like allowances requires a specific legal or statutory authority.   And  DBM-CCC No. 10 need not be published for it is merely an interpretative regulation of a law already published[5]; COA concluded.

In his Motion for Leave to intervene, the DBM Secretary asserted that the honoraria in question are considered included in the basic salary, for the reason that they are not listed as exceptions under    Sec. 12 of Rep. Act 6758.

Before resolving the other issue - whether or not Paragraph 5.6 of DBM-CCC No. 10 can supplant or negate the pertinent provisions of Rep.  Act 6758  which it seeks to implement,  we have to tackle first the other question whether or not DBM-CCC No. 10 has legal force and effect  notwithstanding the absence of publication thereof in the Official Gazette.  This should take precedence because should we rule that publication in the Official Gazette or in a newspaper of general circulation in the Philippines[6] is sine qua non to the effectiveness or enforceability of DBM-CCC No. 10,  resolution of the first issue posited by petitioner would not be necessary.

The applicable provision of law requiring publication in the Official Gazette is found in Article 2 of the New Civil Code of the Philippines, which reads:

“Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided.  This Code shall take effect one year after such publication.”

In Tanada v. Tuvera, 146 SCRA 453, 454, this Court succinctly construed the aforecited provision of law in point, thus:

“We hold therefore that all  statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity, which shall begin fifteen days after publication unless a different effectivity date is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative powers whenever the same are validly delegated by the legislature or, at present, deirectly conferred by the Constitution. Administrative rules and regulations must also be published if their purpose is to enforce or implement existing law pursuant to a valid delegation.

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 published.  Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties.

Accordingly, even the charter of a city must be published notwithstanding that it applies to only a portion of the national territory and directly affects only the inhabitants of that place.  All presidential decrees must be published, including even, say, those naming a public place after a favored individual or exempting him from certain prohibitions or requirements.  The circulars issued by the Monetary Board must be published if they are meant not merely to interpret but to ‘fill in the details’ of the Central Bank Act which that body is supposed to enforce.” (Italics ours)

The same ruling was reiterated in the  case of Philippine Association of Service Exporters, Inc. vs. Torres, 212 SCRA 299 [1992].

On the need for publication of subject DBM-CCC No. 10, we rule in the affirmative.  Following the doctrine enunciated in Tanada, publication in the Official Gazette or in a newspaper of general circulation in the Philippines is required since DBM-CCC No. 10 is in the nature of an administrative circular the purpose of which is to enforce or implement an existing law.  Stated differently, to be effective and enforceable, DBM-CCC No. 10 must go through the requisite publication in the Official Gazette or in a newspaper of general circulation in the Philippines.

In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10,  which completely disallows payment of allowances and other additional compensation to government officials and employees, starting November 1, 1989,  is not a mere interpretative or internal regulation.  It is something more than that.  And why not, when it tends to deprive government workers of their allowances and additional compensation sorely needed to keep body and soul together.  At the very least, before the said circular under attack may be permitted to substantially reduce their income, the government officials and employees concerned should be apprised and alerted by the publication of subject circular in the Official Gazette or in a  newspaper of general circulation in the Philippines  -  to the end  that they be given amplest opportunity to voice out whatever opposition they may have, and to ventilate their stance on the matter.  This approach is more in keeping with democratic precepts and rudiments of fairness and transparency.

In light of the foregoing disquisition on the ineffectiveness of DBM-CCC No. 10 due to  its non-publication in the Official Gazette or in a  newspaper of general circulation in the country,  as required by law, resolution of  the other issue at bar is unnecessary.

WHEREFORE, the Petition is hereby GRANTED,  the assailed Decision of respondent Commission on Audit is SET ASIDE, and respondents are ordered to pass on audit the honoraria of petitioners.  No pronouncement as to costs.

SO ORDERED.

Narvasa CJ., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Martinez and Quisumbing, JJ., concur.

G.R. No. 169777*             April 20, 2006

SENATE OF THE PHILIPPINES, represented by FRANKLIN M. DRILON, in his capacity as Senate President, JUAN M. FLAVIER, in his capacity as Senate President Pro Tempore, FRANCIS N. PANGILINAN, in his capacity as Majority Leader, AQUILINO Q. PIMENTEL, JR., in his capacity as Minority Leader, SENATORS RODOLFO G. BIAZON, "COMPANERA" PIA S. CAYETANO, JINGGOY EJERCITO ESTRADA, LUISA "LOI" EJERCITO ESTRADA, JUAN PONCE ENRILE, RICHARD J. GORDON, PANFILO M. LACSON, ALFREDO S.LIM, M. A. MADRIGAL, SERGIO OSMENA III, RALPH G. RECTO, and MAR ROXAS,Petitioners, vs.EDUARDO R. ERMITA, in his capacity as Executive Secretary and alter-ego of President Gloria Macapagal-Arroyo, and anyone acting in his stead and in behalf of the President of the Philippines,Respondents.

x-------------------------x

G.R. No. 169659             April 20, 2006

BAYAN MUNA represented by DR. REYNALDO LESACA, JR., Rep. SATUR OCAMPO, Rep. CRISPIN BELTRAN, Rep. RAFAEL MARIANO, Rep. LIZA MAZA, Rep. TEODORO CASINO, Rep. JOEL VIRADOR, COURAGE represented by FERDINAND GAITE, and COUNSELS FOR THE DEFENSE OF LIBERTIES (CODAL) represented by ATTY. REMEDIOS BALBIN, Petitioners, vs.EDUARDO ERMITA, in his capacity as Executive Secretary and alter-ego of President Gloria Macapagal-Arroyo, Respondent.

x-------------------------x

G.R. No. 169660             April 20, 2006

FRANCISCO I. CHAVEZ, Petitioner, vs.EDUARDO R. ERMITA, in his capacity as Executive Secretary, AVELINO J. CRUZ, JR., in his capacity as Secretary of Defense, and GENEROSO S. SENGA, in his capacity as AFP Chief of Staff, Respondents.

x-------------------------x

G.R. No. 169667             April 20, 2006

ALTERNATIVE LAW GROUPS, INC. (ALG), Petitioner, vs.HON. EDUARDO R. ERMITA, in his capacity as Executive Secretary, Respondent.

x-------------------------x

G.R. No. 169834             April 20, 2006

PDP- LABAN, Petitioner, vs.EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.

x-------------------------x

G.R. No. 171246             April 20, 2006

JOSE ANSELMO I. CADIZ, FELICIANO M. BAUTISTA, ROMULO R. RIVERA, JOSE AMOR AMORANDO, ALICIA A. RISOS-VIDAL, FILEMON C. ABELITA III, MANUEL P. LEGASPI, J. B. JOVY C. BERNABE, BERNARD L. DAGCUTA, ROGELIO V. GARCIA, and the INTEGRATED BAR FOR THE PHILIPPINES, Petitioners, vs.HON. EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.

D E C I S I O N

CARPIO MORALES, J.:

A transparent government is one of the hallmarks of a truly republican state. Even in the early history of republican thought, however, it has been recognized that the head of government may keep certain information confidential in pursuit of the public interest. Explaining the reason for vesting executive power in only one magistrate, a distinguished delegate to the U.S. Constitutional Convention said: "Decision, activity, secrecy, and dispatch will generally characterize the proceedings of one man, in a much more eminent degree than the proceedings of any greater number; and in proportion as the number is increased, these qualities will be diminished."1

History has been witness, however, to the fact that the power to withhold information lends itself to abuse, hence, the necessity to guard it zealously.

The present consolidated petitions for certiorari and prohibition proffer that the President has abused such power by issuing Executive Order No. 464 (E.O. 464) last September 28, 2005. They thus pray for its declaration as null and void for being unconstitutional.

In resolving the controversy, this Court shall proceed with the recognition that the issuance under review has come from a co-equal branch of government, which thus entitles it to a strong presumption of constitutionality. Once the challenged order is found to be indeed violative of the Constitution, it is duty-bound to declare it so. For the Constitution, being the highest expression of the sovereign will of the Filipino people, must prevail over any issuance of the government that contravenes its mandates.

In the exercise of its legislative power, the Senate of the Philippines, through its various Senate Committees, conducts inquiries or investigations in aid of legislation which call for, inter alia, the attendance of officials and employees of the executive department, bureaus, and offices including those employed in Government Owned and Controlled Corporations, the Armed Forces of the Philippines (AFP), and the Philippine National Police (PNP).

On September 21 to 23, 2005, the Committee of the Senate as a whole issued invitations to various officials of the Executive Department for them to appear on September 29, 2005 as resource speakers in a public hearing on the railway project of the North Luzon Railways Corporation with the China National Machinery and Equipment Group (hereinafter North Rail Project). The public hearing was sparked by a privilege speech of Senator Juan Ponce Enrile urging the Senate to investigate the alleged overpricing and other unlawful provisions of the contract covering the North Rail Project.

The Senate Committee on National Defense and Security likewise issued invitations2 dated September 22, 2005 to the following officials of the AFP: the Commanding General of the Philippine Army, Lt. Gen. Hermogenes C.

Esperon; Inspector General of the AFP Vice Admiral Mateo M. Mayuga; Deputy Chief of Staff for Intelligence of the AFP Rear Admiral Tirso R. Danga; Chief of the Intelligence Service of the AFP Brig. Gen. Marlu Q. Quevedo; Assistant Superintendent of the Philippine Military Academy (PMA) Brig. Gen. Francisco V. Gudani; and Assistant Commandant, Corps of Cadets of the PMA, Col. Alexander F. Balutan, for them to attend as resource persons in a public hearing scheduled on September 28, 2005 on the following: (1) Privilege Speech of Senator Aquilino Q. Pimentel Jr., delivered on June 6, 2005 entitled "Bunye has Provided Smoking Gun or has Opened a Can of Worms that Show Massive Electoral Fraud in the Presidential Election of May 2005"; (2) Privilege Speech of Senator Jinggoy E. Estrada delivered on July 26, 2005 entitled "The Philippines as the Wire-Tapping Capital of the World"; (3) Privilege Speech of Senator Rodolfo Biazon delivered on August 1, 2005 entitled "Clear and Present Danger"; (4) Senate Resolution No. 285 filed by Senator Maria Ana Consuelo Madrigal – Resolution Directing the Committee on National Defense and Security to Conduct an Inquiry, in Aid of Legislation, and in the National Interest, on the Role of the Military in the So-called "Gloriagate Scandal"; and (5) Senate Resolution No. 295 filed by Senator Biazon – Resolution Directing the Committee on National Defense and Security to Conduct an Inquiry, in Aid of Legislation, on the Wire-Tapping of the President of the Philippines.

Also invited to the above-said hearing scheduled on September 28 2005 was the AFP Chief of Staff, General Generoso S. Senga who, by letter3 dated September 27, 2005, requested for its postponement "due to a pressing operational situation that demands [his utmost personal attention" while "some of the invited AFP officers are currently attending to other urgent operational matters."

On September 28, 2005, Senate President Franklin M. Drilon received from Executive Secretary Eduardo R. Ermita a letter4 dated September 27, 2005 "respectfully request[ing] for the postponement of the hearing [regarding the NorthRail project] to which various officials of the Executive Department have been invited" in order to "afford said officials ample time and opportunity to study and prepare for the various issues so that they may better enlighten the Senate Committee on its investigation."

Senate President Drilon, however, wrote5 Executive Secretary Ermita that the Senators "are unable to accede to [his request]" as it "was sent belatedly" and "[a]ll preparations and arrangements as well as notices to all resource persons were completed [the previous] week."

Senate President Drilon likewise received on September 28, 2005 a letter6 from the President of the North Luzon Railways Corporation Jose L. Cortes, Jr. requesting that the hearing on the NorthRail project be postponed or cancelled until a copy of the report of the UP Law Center on the contract agreements relative to the project had been secured.

On September 28, 2005, the President issued E.O. 464, "Ensuring Observance of the Principle of Separation of Powers, Adherence to the Rule on Executive Privilege and Respect for the Rights of Public Officials Appearing in Legislative Inquiries in Aid of Legislation Under the Constitution, and For Other Purposes,"7 which, pursuant to Section 6 thereof, took effect immediately. The salient provisions of the Order are as follows:

SECTION 1. Appearance by Heads of Departments Before Congress. – In accordance with Article VI, Section 22 of the Constitution and to implement the Constitutional provisions on the separation of powers between co-equal branches of the government, all heads of departments of the Executive Branch of the government shall secure the consent of the President prior to appearing before either House of Congress.

When the security of the State or the public interest so requires and the President so states in writing, the appearance shall only be conducted in executive session.

SECTION. 2. Nature, Scope and Coverage of Executive Privilege. –

(a) Nature and Scope. - The rule of confidentiality based on executive privilege is fundamental to the operation of government and rooted in the separation of powers under the Constitution (Almonte vs. Vasquez, G.R. No. 95367, 23 May 1995). Further, Republic Act No. 6713 or the Code of Conduct and Ethical Standards for Public Officials and Employees provides that Public Officials and Employees shall not use or divulge confidential or classified information officially known to them by reason of their office and not made available to the public to prejudice the public interest.

Executive privilege covers all confidential or classified information between the President and the public officers covered by this executive order, including:

Conversations and correspondence between the President and the public official covered by this executive order (Almonte vs. Vasquez G.R. No. 95367, 23 May 1995; Chavez v. Public Estates Authority, G.R. No. 133250, 9 July 2002);

Military, diplomatic and other national security matters which in the interest of national security should not be divulged (Almonte vs. Vasquez, G.R. No. 95367, 23 May 1995; Chavez v. Presidential Commission on Good Government, G.R. No. 130716, 9 December 1998).

Information between inter-government agencies prior to the conclusion of treaties and executive agreements (Chavez v. Presidential Commission on Good Government, G.R. No. 130716, 9 December 1998);

Discussion in close-door Cabinet meetings (Chavez v. Presidential Commission on Good Government, G.R. No. 130716, 9 December 1998);

Matters affecting national security and public order (Chavez v. Public Estates Authority, G.R. No. 133250, 9 July 2002).

(b) Who are covered. – The following are covered by this executive order:

Senior officials of executive departments who in the judgment of the department heads are covered by the executive privilege;

Generals and flag officers of the Armed Forces of the Philippines and such other officers who in the judgment of the Chief of Staff are covered by the executive privilege;

Philippine National Police (PNP) officers with rank of chief superintendent or higher and such other officers who in the judgment of the Chief of the PNP are covered by the executive privilege;

Senior national security officials who in the judgment of the National Security Adviser are covered by the executive privilege; and

Such other officers as may be determined by the President.

SECTION 3. Appearance of Other Public Officials Before Congress. – All public officials enumerated in Section 2 (b) hereof shall secure prior consent of the President prior to appearing before either House of Congress to ensure the observance of the principle of separation of powers, adherence to the rule on executive privilege and respect for the rights of public officials appearing in inquiries in aid of legislation. (Emphasis and underscoring supplied)

Also on September 28, 2005, Senate President Drilon received from Executive Secretary Ermita a copy of E.O. 464, and another letter8 informing him "that officials of the Executive Department invited to appear at the meeting [regarding the NorthRail project] will not be able to attend the same without the consent of the President, pursuant to [E.O. 464]" and that "said officials have not secured the required consent from the President." On even date which was also the scheduled date of the hearing on the alleged wiretapping, Gen. Senga sent a letter9 to Senator Biazon, Chairperson of the Committee on National Defense and Security, informing him "that per instruction of [President Arroyo], thru the Secretary of National Defense, no officer of the [AFP] is authorized to appear before any Senate or Congressional hearings without seeking a written approval from the President" and "that no approval has been granted by the President to any AFP officer to appear before the public hearing of the Senate Committee on National Defense and Security scheduled [on] 28 September 2005."

Despite the communications received from Executive Secretary Ermita and Gen. Senga, the investigation scheduled by the Committee on National Defense and Security pushed through, with only Col. Balutan and Brig. Gen. Gudani among all the AFP officials invited attending.

For defying President Arroyo’s order barring military personnel from testifying before legislative inquiries without her approval, Brig. Gen. Gudani and Col. Balutan were relieved from their military posts and were made to face court martial proceedings.

As to the NorthRail project hearing scheduled on September 29, 2005, Executive Secretary Ermita, citing E.O. 464, sent letter of regrets, in response to the invitations sent to the following government officials: Light Railway Transit Authority Administrator Melquiades Robles, Metro Rail Transit Authority Administrator Roberto Lastimoso, Department of Justice (DOJ) Chief State Counsel Ricardo V. Perez, then Presidential Legal Counsel Merceditas Gutierrez, Department of Transportation and Communication (DOTC) Undersecretary Guiling Mamonding, DOTC Secretary Leandro Mendoza, Philippine National Railways General Manager Jose Serase II, Monetary Board Member Juanita Amatong, Bases Conversion Development Authority Chairperson Gen. Narciso Abaya and Secretary Romulo L. Neri.10 NorthRail President Cortes sent personal regrets likewise citing E.O. 464.11

On October 3, 2005, three petitions, docketed as G.R. Nos. 169659, 169660, and 169667, for certiorari and prohibition, were filed before this Court challenging the constitutionality of E.O. 464.

In G.R. No. 169659, petitioners party-list Bayan Muna, House of Representatives Members Satur Ocampo, Crispin Beltran, Rafael Mariano, Liza Maza, Joel Virador and Teodoro Casino, Courage, an organization of government employees, and Counsels for the Defense of Liberties (CODAL), a group of lawyers dedicated to the promotion of justice, democracy and peace, all claiming to have standing to file the suit because of the transcendental importance of the issues they posed, pray, in their petition that E.O. 464 be declared null and void for being unconstitutional; that respondent Executive Secretary Ermita, in his capacity as Executive Secretary and alter-ego of President Arroyo, be prohibited from imposing, and threatening to impose sanctions on officials who appear before Congress due to congressional summons. Additionally, petitioners claim that E.O. 464 infringes on their rights and impedes them from fulfilling their respective obligations. Thus, Bayan Muna alleges that E.O. 464 infringes on its right as a political party entitled to participate in governance; Satur Ocampo, et al. allege that E.O. 464 infringes on their rights and duties as members of Congress to conduct investigation in aid of legislation and conduct oversight functions in the implementation of laws; Courage alleges that the tenure of its members in public office is predicated on, and threatened by, their submission to the requirements of E.O. 464 should they be summoned by Congress; and CODAL alleges that its members have a sworn duty to uphold the rule of law, and their rights to information and to transparent governance are threatened by the imposition of E.O. 464.

In G.R. No. 169660, petitioner Francisco I. Chavez, claiming that his constitutional rights as a citizen, taxpayer and law practitioner, are affected by the enforcement of E.O. 464, prays in his petition that E.O. 464 be declared null and void for being unconstitutional.

In G.R. No. 169667, petitioner Alternative Law Groups, Inc.12 (ALG), alleging that as a coalition of 17 legal resource non-governmental organizations engaged in developmental lawyering and work with the poor and marginalized sectors in different parts of the country, and as an organization of citizens of the Philippines and a part of the general public, it has legal standing to institute the petition to enforce its constitutional right to information on matters of public concern, a right which was denied to the public by E.O. 464,13 prays, that said order be declared null and void for being unconstitutional and that respondent Executive Secretary Ermita be ordered to cease from implementing it.

On October 11, 2005, Petitioner Senate of the Philippines, alleging that it has a vital interest in the resolution of the issue of the validity of E.O. 464 for it stands to suffer imminent and material injury, as it has already sustained the same with its continued enforcement since it directly interferes with and impedes the valid exercise of the Senate’s powers and functions and conceals information of great public interest and concern, filed its petition for certiorari and prohibition, docketed as G.R. No. 169777 and prays that E.O. 464 be declared unconstitutional.

On October 14, 2005, PDP-Laban, a registered political party with members duly elected into the Philippine Senate and House of Representatives, filed a similar petition for certiorari and prohibition, docketed as G.R. No. 169834, alleging that it is affected by the challenged E.O. 464 because it hampers its legislative agenda to be implemented through its members in Congress, particularly in the conduct of inquiries in aid of legislation and transcendental issues need to be resolved to avert a constitutional crisis between the executive and legislative branches of the government.

Meanwhile, by letter14 dated February 6, 2006, Senator Biazon reiterated his invitation to Gen. Senga for him and other military officers to attend the hearing on the alleged wiretapping scheduled on February 10, 2005. Gen. Senga replied, however, by letter15 dated February 8, 2006, that "[p]ursuant to Executive Order No. 464, th[e] Headquarters requested for a clearance from the President to allow [them] to appear before the public hearing" and that "they will attend once [their] request is approved by the President." As none of those invited appeared, the hearing on February 10, 2006 was cancelled.16

In another investigation conducted jointly by the Senate Committee on Agriculture and Food and the Blue Ribbon Committee on the alleged mismanagement and use of the fertilizer fund under the Ginintuang Masaganang Ani program of the Department of Agriculture (DA), several Cabinet officials were invited to the hearings scheduled on October 5 and 26, November 24 and December 12, 2005 but most of them failed to attend, DA Undersecretary Belinda Gonzales, DA Assistant Secretary Felix Jose Montes, Fertilizer and Pesticide Authority Executive Director Norlito R. Gicana,17 and those from the Department of Budget and Management18 having invoked E.O. 464.

In the budget hearings set by the Senate on February 8 and 13, 2006, Press Secretary and Presidential Spokesperson Ignacio R. Bunye,19 DOJ Secretary Raul M. Gonzalez20 and Department of Interior and Local Government Undersecretary Marius P. Corpus21 communicated their inability to attend due to lack of appropriate clearance from the President pursuant to E.O. 464. During the February 13, 2005 budget hearing, however, Secretary Bunye was allowed to attend by Executive Secretary Ermita.

On February 13, 2006, Jose Anselmo I. Cadiz and the incumbent members of the Board of Governors of the Integrated Bar of the Philippines, as taxpayers, and the Integrated Bar of the Philippines as the official organization of all Philippine lawyers, all invoking their constitutional right to be informed on matters of public interest, filed their petition for certiorari and prohibition, docketed as G.R. No. 171246, and pray that E.O. 464 be declared null and void.

All the petitions pray for the issuance of a Temporary Restraining Order enjoining respondents from implementing, enforcing, and observing E.O. 464.

In the oral arguments on the petitions conducted on February 21, 2006, the following substantive issues were ventilated: (1) whether respondents committed grave abuse of discretion in implementing E.O. 464 prior to its publication in the Official Gazette or in a newspaper of general circulation; and (2) whether E.O. 464 violates the following provisions of the Constitution: Art. II, Sec. 28, Art. III, Sec. 4, Art. III, Sec. 7, Art. IV. Sec. 1, Art. VI, Sec. 21, Art. VI, Sec. 22, Art. XI, Sec. 1, and Art. XIII, Sec. 16. The procedural issue of whether there is an actual case or controversy that calls for judicial review was not taken up; instead, the parties were instructed to discuss it in their respective memoranda.

After the conclusion of the oral arguments, the parties were directed to submit their respective memoranda, paying particular attention to the following propositions: (1) that E.O. 464 is, on its face, unconstitutional; and (2) assuming that it is not, it is unconstitutional as applied in four instances, namely: (a) the so called Fertilizer scam; (b) the NorthRail investigation (c) the Wiretapping activity of the ISAFP; and (d) the investigation on the Venable contract.22

Petitioners in G.R. No. 16966023 and G.R. No. 16977724 filed their memoranda on March 7, 2006, while those in G.R. No. 16966725 and G.R. No. 16983426 filed theirs the next day or on March 8, 2006. Petitioners in G.R. No. 171246 did not file any memorandum.

Petitioners Bayan Muna et al. in G.R. No. 169659, after their motion for extension to file memorandum27 was granted, subsequently filed a manifestation28 dated March 14, 2006 that it would no longer file its memorandum in the interest of having the issues resolved soonest, prompting this Court to issue a Resolution reprimanding them.29

Petitioners submit that E.O. 464 violates the following constitutional provisions:

Art. VI, Sec. 2130

Art. VI, Sec. 2231

Art. VI, Sec. 132

Art. XI, Sec. 133

Art. III, Sec. 734

Art. III, Sec. 435

Art. XIII, Sec. 16 36

Art. II, Sec. 2837

Respondents Executive Secretary Ermita et al., on the other hand, pray in their consolidated memorandum38 on March 13, 2006 for the dismissal of the petitions for lack of merit.

The Court synthesizes the issues to be resolved as follows:

1. Whether E.O. 464 contravenes the power of inquiry vested in Congress;

2. Whether E.O. 464 violates the right of the people to information on matters of public concern; and

3. Whether respondents have committed grave abuse of discretion when they implemented E.O. 464 prior to its publication in a newspaper of general circulation.

Essential requisites for judicial review

Before proceeding to resolve the issue of the constitutionality of E.O. 464, ascertainment of whether the requisites for a valid exercise of the Court’s power of judicial review are present is in order.

Like almost all powers conferred by the Constitution, the power of judicial review is subject to limitations, to wit: (1) there must be an actual case or controversy calling for the exercise of judicial power; (2) the person challenging the act must have standing to challenge the validity of the subject act or issuance; otherwise stated, he 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; (3) the question of constitutionality must be raised at the earliest opportunity; and (4) the issue of constitutionality must be the very lis mota of the case.39

Except with respect to the requisites of standing and existence of an actual case or controversy where the disagreement between the parties lies, discussion of the rest of the requisites shall be omitted.

Standing

Respondents, through the Solicitor General, assert that the allegations in G.R. Nos. 169659, 169660 and 169667 make it clear that they, adverting to the non-appearance of several officials of the executive department in the investigations called by the different committees of the Senate, were brought to vindicate the constitutional duty of the Senate or its different committees to conduct inquiry in aid of legislation or in the exercise of its oversight functions. They maintain that Representatives Ocampo et al. have not shown any specific prerogative, power, and privilege of the House of Representatives which had been effectively impaired by E.O. 464, there being no mention of any investigation called by the House of Representatives or any of its committees which was aborted due to the implementation of E.O. 464.

As for Bayan Muna’s alleged interest as a party-list representing the marginalized and underrepresented, and that of the other petitioner groups and individuals who profess to have standing as advocates and defenders of the Constitution, respondents contend that such interest falls short of that required to confer standing on them as parties "injured-in-fact."40

Respecting petitioner Chavez, respondents contend that Chavez may not claim an interest as a taxpayer for the implementation of E.O. 464 does not involve the exercise of taxing or spending power.41

With regard to the petition filed by the Senate, respondents argue that in the absence of a personal or direct injury by reason of the issuance of E.O. 464, the Senate and its individual members are not the proper parties to assail the constitutionality of E.O. 464.

Invoking this Court’s ruling in National Economic Protectionism Association v. Ongpin42 and Valmonte v. Philippine Charity Sweepstakes Office,43 respondents assert that to be considered a proper party, one must have a personal and substantial interest in the case, such that he has sustained or will sustain direct injury due to the enforcement of E.O. 464.44

That the Senate of the Philippines has a fundamental right essential not only for intelligent public decision-making in a democratic system, but more especially for sound legislation45 is not disputed. E.O. 464, however, allegedly stifles the ability of the members of Congress to access information that is crucial to law-making.46 Verily, the Senate, including its individual members, has a substantial and direct interest over the outcome of the controversy and is the proper party to assail the constitutionality of E.O. 464. Indeed, legislators have standing to maintain inviolate the prerogative, powers and privileges vested by the Constitution in their office and are allowed to sue to question the validity of any official action which they claim infringes their prerogatives as legislators.47

In the same vein, party-list representatives Satur Ocampo (Bayan Muna), Teodoro Casino (Bayan Muna), Joel Virador (Bayan Muna), Crispin Beltran (Anakpawis), Rafael Mariano (Anakpawis), and Liza Maza (Gabriela) are allowed to sue to question the constitutionality of E.O. 464, the absence of any claim that an investigation called by the House of Representatives or any of its committees was aborted due to the implementation of E.O. 464 notwithstanding, it being sufficient that a claim is made that E.O. 464 infringes on their constitutional rights and duties as members of Congress to conduct investigation in aid of legislation and conduct oversight functions in the implementation of laws.

The national political party, Bayan Muna, likewise meets the standing requirement as it obtained three seats in the House of Representatives in the 2004 elections and is, therefore, entitled to participate in the legislative process consonant with the declared policy underlying the party list system of affording citizens belonging to marginalized and underrepresented sectors, organizations and parties who lack well-defined political constituencies to contribute to the formulation and enactment of legislation that will benefit the nation.48

As Bayan Muna and Representatives Ocampo et al. have the standing to file their petitions, passing on the standing of their co-petitioners Courage and Codal is rendered unnecessary.49

In filing their respective petitions, Chavez, the ALG which claims to be an organization of citizens, and the incumbent members of the IBP Board of Governors and the IBP in behalf of its lawyer members,50 invoke their constitutional right to information on matters of public concern, asserting that the right to information, curtailed and violated by E.O. 464, is essential to the effective exercise of other constitutional rights51 and to the maintenance of the balance of power among the three branches of the government through the principle of checks and balances.52

It is well-settled that when suing as a citizen, the interest of the petitioner in assailing the constitutionality of laws, presidential decrees, orders, and other regulations, must be direct and personal. In Franciso v. House of Representatives,53 this Court held that when the proceeding involves the assertion of a public right, the mere fact that he is a citizen satisfies the requirement of personal interest.

As for petitioner PDP-Laban, it asseverates that it is clothed with legal standing in view of the transcendental issues raised in its petition which this Court needs to resolve in order to avert a constitutional crisis. For it to be accorded standing on the ground of transcendental importance, however, it must establish (1) the character of the funds (that it is public) or other assets involved in the case, (2) the presence of a clear case of disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality of the government, and (3) the lack of any party with a more direct and specific interest in raising the questions being raised.54 The first and last determinants not being present as no public funds or assets are involved and petitioners in G.R. Nos. 169777 and 169659 have direct and specific interests in the resolution of the controversy, petitioner PDP-Laban is bereft of standing to file its petition. Its allegation that E.O. 464 hampers its legislative agenda is vague and uncertain, and at best is only a "generalized interest" which it shares with the rest of the political parties. Concrete injury, whether actual or threatened, is that indispensable element of a dispute which serves in part to cast it in a form traditionally capable of judicial resolution.55 In fine, PDP-Laban’s alleged interest as a political party does not suffice to clothe it with legal standing.

Actual Case or Controversy

Petitioners assert that an actual case exists, they citing the absence of the executive officials invited by the Senate to its hearings after the issuance of E.O. 464, particularly those on the NorthRail project and the wiretapping controversy.

Respondents counter that there is no case or controversy, there being no showing that President Arroyo has actually withheld her consent or prohibited the appearance of the invited officials.56 These officials, they claim, merely communicated to the Senate that they have not yet secured the consent of the President, not that the President prohibited their attendance.57 Specifically with regard to the AFP officers who did not attend the hearing on September 28, 2005, respondents claim that the instruction not to attend without the President’s consent was based on its role as Commander-in-Chief of the Armed Forces, not on E.O. 464.

Respondents thus conclude that the petitions merely rest on an unfounded apprehension that the President will abuse its power of preventing the appearance of officials before Congress, and that such apprehension is not sufficient for challenging the validity of E.O. 464.

The Court finds respondents’ assertion that the President has not withheld her consent or prohibited the appearance of the officials concerned immaterial in determining the existence of an actual case or controversy insofar as E.O. 464 is concerned. For E.O. 464 does not require either a deliberate withholding of consent or an express prohibition issuing from the President in order to bar officials from appearing before Congress.

As the implementation of the challenged order has already resulted in the absence of officials invited to the hearings of petitioner Senate of the Philippines, it would make no sense to wait for any further event before considering the present case ripe for adjudication. Indeed, it would be sheer abandonment of duty if this Court would now refrain from passing on the constitutionality of E.O. 464.

Constitutionality of E.O. 464

E.O. 464, to the extent that it bars the appearance of executive officials before Congress, deprives Congress of the information in the possession of these officials. To resolve the question of whether such withholding of information violates the Constitution, consideration of the general power of Congress to obtain information, otherwise known as the power of inquiry, is in order.

The power of inquiry

The Congress power of inquiry is expressly recognized in Section 21 of Article VI of the Constitution which reads:

SECTION 21. The Senate or the House of Representatives or any of its respective committees may conduct inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of persons appearing in or affected by such inquiries shall be respected. (Underscoring supplied)

This provision is worded exactly as Section 8 of Article VIII of the 1973 Constitution except that, in the latter, it vests the power of inquiry in the unicameral legislature established therein – the Batasang Pambansa – and its committees.

The 1935 Constitution did not contain a similar provision. Nonetheless, in Arnault v. Nazareno,58 a case decided in 1950 under that Constitution, the Court already recognized that the power of inquiry is inherent in the power to legislate.

Arnault involved a Senate investigation of the reportedly anomalous purchase of the Buenavista and Tambobong Estates by the Rural Progress Administration. Arnault, who was considered a leading witness in the controversy, was called to testify thereon by the Senate. On account of his refusal to answer the questions of the senators on an important point, he was, by resolution of the Senate, detained for contempt. Upholding the Senate’s power to punish Arnault for contempt, this Court held:

Although there is no provision in the Constitution expressly investing either House of Congress with power to make investigations and exact testimony to the end that it may exercise its legislative functions advisedly and effectively, such power is so far incidental to the legislative function as to be implied. In other words, the power of inquiry – with process to enforce it – is an essential and appropriate auxiliary to the legislative function. A legislative body cannot legislate wisely or effectively in the absence of information respecting the conditions which the legislation is intended to affect or change; and where the legislative body does not itself possess the requisite information – which is not infrequently true – recourse must be had to others who do possess it. Experience has shown that mere requests for such information are often unavailing, and also that information which is volunteered is not always accurate or complete; so some means of compulsion is essential to obtain what is needed.59 . . . (Emphasis and underscoring supplied)

That this power of inquiry is broad enough to cover officials of the executive branch may be deduced from the same case. The power of inquiry, the Court therein ruled, is co-extensive with the power to legislate.60 The matters which may be a proper subject of legislation and those which may be a proper subject of investigation are one. It follows that the operation of government, being a legitimate subject for legislation, is a proper subject for investigation.

Thus, the Court found that the Senate investigation of the government transaction involved in Arnault was a proper exercise of the power of inquiry. Besides being related to the expenditure of public funds of which Congress is the guardian, the transaction, the Court held, "also involved government agencies created by Congress and officers whose positions it is within the power of Congress to regulate or even abolish."

Since Congress has authority to inquire into the operations of the executive branch, it would be incongruous to hold that the power of inquiry does not extend to executive officials who are the most familiar with and informed on executive operations.

As discussed in Arnault, the power of inquiry, "with process to enforce it," is grounded on the necessity of information in the legislative process. If the information possessed by executive officials on the operation of their offices is necessary for wise legislation on that subject, by parity of reasoning, Congress has the right to that information and the power to compel the disclosure thereof.

As evidenced by the American experience during the so-called "McCarthy era," however, the right of Congress to conduct inquiries in aid of legislation is, in theory, no less susceptible to abuse than executive or judicial power. It may thus be subjected to judicial review pursuant to the Court’s certiorari powers under Section 1, Article VIII of the Constitution.

For one, as noted in Bengzon v. Senate Blue Ribbon Committee,61 the inquiry itself might not properly be in aid of legislation, and thus beyond the constitutional power of Congress. Such inquiry could not usurp judicial functions. Parenthetically, one possible way for Congress to avoid such a result as occurred in Bengzon is to indicate in its invitations to the public officials concerned, or to any person for that matter, the possible needed statute which prompted the need for the inquiry. Given such statement in its invitations, along with the usual indication of the subject of inquiry and the questions relative to and in furtherance thereof, there would be less room for speculation on the part of the person invited on whether the inquiry is in aid of legislation.

Section 21, Article VI likewise establishes crucial safeguards that proscribe the legislative power of inquiry. The provision requires that the inquiry be done in accordance with the Senate or House’s duly published rules of procedure, necessarily implying the constitutional infirmity of an inquiry conducted without duly published rules of procedure. Section 21 also mandates that the rights of persons appearing in or affected by such inquiries be respected, an imposition that obligates Congress to adhere to the guarantees in the Bill of Rights.

These abuses are, of course, remediable before the courts, upon the proper suit filed by the persons affected, even if they belong to the executive branch. Nonetheless, there may be exceptional circumstances, none appearing to obtain at present, wherein a clear pattern of abuse of the legislative power of inquiry might be established, resulting in palpable violations of the rights guaranteed to members of the executive department under the Bill of Rights. In such instances, depending on the particulars of each case, attempts by the Executive Branch to forestall these abuses may be accorded judicial sanction.

Even where the inquiry is in aid of legislation, there are still recognized exemptions to the power of inquiry, which exemptions fall under the rubric of "executive privilege." Since this term figures prominently in the challenged order,

it being mentioned in its provisions, its preambular clauses,62 and in its very title, a discussion of executive privilege is crucial for determining the constitutionality of E.O. 464.

Executive privilege

The phrase "executive privilege" is not new in this jurisdiction. It has been used even prior to the promulgation of the 1986 Constitution.63 Being of American origin, it is best understood in light of how it has been defined and used in the legal literature of the United States.

Schwartz defines executive privilege as "the power of the Government to withhold information from the public, the courts, and the Congress."64 Similarly, Rozell defines it as "the right of the President and high-level executive branch officers to withhold information from Congress, the courts, and ultimately the public."65

Executive privilege is, nonetheless, not a clear or unitary concept. 66 It has encompassed claims of varying kinds.67 Tribe, in fact, comments that while it is customary to employ the phrase "executive privilege," it may be more accurate to speak of executive privileges "since presidential refusals to furnish information may be actuated by any of at least three distinct kinds of considerations, and may be asserted, with differing degrees of success, in the context of either judicial or legislative investigations."

One variety of the privilege, Tribe explains, is the state secrets privilege invoked by U.S. Presidents, beginning with Washington, on the ground that the information is of such nature that its disclosure would subvert crucial military or diplomatic objectives. Another variety is the informer’s privilege, or the privilege of the Government not to disclose the identity of persons who furnish information of violations of law to officers charged with the enforcement of that law. Finally, a generic privilege for internal deliberations has been said to attach to intragovernmental documents reflecting advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated. 68

Tribe’s comment is supported by the ruling in In re Sealed Case, thus:

Since the beginnings of our nation, executive officials have claimed a variety of privileges to resist disclosure of information the confidentiality of which they felt was crucial to fulfillment of the unique role and responsibilities of the executive branch of our government. Courts ruled early that the executive had a right to withhold documents that might reveal military or state secrets. The courts have also granted the executive a right to withhold the identity of government informers in some circumstances and a qualified right to withhold information related to pending investigations. x x x"69 (Emphasis and underscoring supplied)

The entry in Black’s Law Dictionary on "executive privilege" is similarly instructive regarding the scope of the doctrine.

This privilege, based on the constitutional doctrine of separation of powers, exempts the executive from disclosure requirements applicable to the ordinary citizen or organization where such exemption is necessary to the discharge of highly important executive responsibilities involved in maintaining governmental operations, and extends not only to military and diplomatic secrets but also to documents integral to an appropriate exercise of the executive’ domestic decisional and policy making functions, that is, those documents reflecting the frank expression necessary in intra-governmental advisory and deliberative communications.70 (Emphasis and underscoring supplied)

That a type of information is recognized as privileged does not, however, necessarily mean that it would be considered privileged in all instances. For in determining the validity of a claim of privilege, the question that must be asked is not only whether the requested information falls within one of the traditional privileges, but also whether that privilege should be honored in a given procedural setting.71

The leading case on executive privilege in the United States is U.S. v. Nixon, 72 decided in 1974. In issue in that case was the validity of President Nixon’s claim of executive privilege against a subpoena issued by a district court requiring the production of certain tapes and documents relating to the Watergate investigations. The claim of privilege was based on the President’s general interest in the confidentiality of his conversations and correspondence. The U.S. Court held that while there is no explicit reference to a privilege of confidentiality in the U.S. Constitution, it is constitutionally based to the extent that it relates to the effective discharge of a President’s

powers. The Court, nonetheless, rejected the President’s claim of privilege, ruling that the privilege must be balanced against the public interest in the fair administration of criminal justice. Notably, the Court was careful to clarify that it was not there addressing the issue of claims of privilege in a civil litigation or against congressional demands for information.

Cases in the U.S. which involve claims of executive privilege against Congress are rare.73 Despite frequent assertion of the privilege to deny information to Congress, beginning with President Washington’s refusal to turn over treaty negotiation records to the House of Representatives, the U.S. Supreme Court has never adjudicated the issue.74 However, the U.S. Court of Appeals for the District of Columbia Circuit, in a case decided earlier in the same year as Nixon, recognized the President’s privilege over his conversations against a congressional subpoena.75 Anticipating the balancing approach adopted by the U.S. Supreme Court in Nixon, the Court of Appeals weighed the public interest protected by the claim of privilege against the interest that would be served by disclosure to the Committee. Ruling that the balance favored the President, the Court declined to enforce the subpoena. 76

In this jurisdiction, the doctrine of executive privilege was recognized by this Court in Almonte v. Vasquez.77Almonte used the term in reference to the same privilege subject of Nixon. It quoted the following portion of the Nixon decision which explains the basis for the privilege:

"The expectation of a President to the confidentiality of his conversations and correspondences, like the claim of confidentiality of judicial deliberations, for example, has all the values to which we accord deference for the privacy of all citizens and, added to those values, is the necessity for protection of the public interest in candid, objective, and even blunt or harsh opinions in Presidential decision-making. A President and those who assist him must be free to explore alternatives in the process of shaping policies and making decisions and to do so in a way many would be unwilling to express except privately. These are the considerations justifying a presumptive privilege for Presidential communications. The privilege is fundamental to the operation of government and inextricably rooted in the separation of powers under the Constitution x x x " (Emphasis and underscoring supplied)

Almonte involved a subpoena duces tecum issued by the Ombudsman against the therein petitioners. It did not involve, as expressly stated in the decision, the right of the people to information.78 Nonetheless, the Court recognized that there are certain types of information which the government may withhold from the public, thus acknowledging, in substance if not in name, that executive privilege may be claimed against citizens’ demands for information.

In Chavez v. PCGG,79 the Court held that this jurisdiction recognizes the common law holding that there is a "governmental privilege against public disclosure with respect to state secrets regarding military, diplomatic and other national security matters."80 The same case held that closed-door Cabinet meetings are also a recognized limitation on the right to information.

Similarly, in Chavez v. Public Estates Authority,81 the Court ruled that the right to information does not extend to matters recognized as "privileged information under the separation of powers,"82 by which the Court meant Presidential conversations, correspondences, and discussions in closed-door Cabinet meetings. It also held that information on military and diplomatic secrets and those affecting national security, and information on investigations of crimes by law enforcement agencies before the prosecution of the accused were exempted from the right to information.

From the above discussion on the meaning and scope of executive privilege, both in the United States and in this jurisdiction, a clear principle emerges. Executive privilege, whether asserted against Congress, the courts, or the public, is recognized only in relation to certain types of information of a sensitive character. While executive privilege is a constitutional concept, a claim thereof may be valid or not depending on the ground invoked to justify it and the context in which it is made. Noticeably absent is any recognition that executive officials are exempt from the duty to disclose information by the mere fact of being executive officials. Indeed, the extraordinary character of the exemptions indicates that the presumption inclines heavily against executive secrecy and in favor of disclosure.

Validity of Section 1

Section 1 is similar to Section 3 in that both require the officials covered by them to secure the consent of the President prior to appearing before Congress. There are significant differences between the two provisions, however, which constrain this Court to discuss the validity of these provisions separately.

Section 1 specifically applies to department heads. It does not, unlike Section 3, require a prior determination by any official whether they are covered by E.O. 464. The President herself has, through the challenged order, made the determination that they are. Further, unlike also Section 3, the coverage of department heads under Section 1 is not made to depend on the department heads’ possession of any information which might be covered by executive privilege. In fact, in marked contrast to Section 3 vis-à-vis Section 2, there is no reference to executive privilege at all. Rather, the required prior consent under Section 1 is grounded on Article VI, Section 22 of the Constitution on what has been referred to as the question hour.

SECTION 22. The heads of departments may upon their own initiative, with the consent of the President, or upon the request of either House, as the rules of each House shall provide, appear before and be heard by such House on any matter pertaining to their departments. Written questions shall be submitted to the President of the Senate or the Speaker of the House of Representatives at least three days before their scheduled appearance. Interpellations shall not be limited to written questions, but may cover matters related thereto. When the security of the State or the public interest so requires and the President so states in writing, the appearance shall be conducted in executive session.

Determining the validity of Section 1 thus requires an examination of the meaning of Section 22 of Article VI. Section 22 which provides for the question hour must be interpreted vis-à-vis Section 21 which provides for the power of either House of Congress to "conduct inquiries in aid of legislation." As the following excerpt of the deliberations of the Constitutional Commission shows, the framers were aware that these two provisions involved distinct functions of Congress.

MR. MAAMBONG. x x x When we amended Section 20 [now Section 22 on the Question Hour] yesterday, I noticed that members of the Cabinet cannot be compelled anymore to appear before the House of Representatives or before the Senate. I have a particular problem in this regard, Madam President, because in our experience in the Regular Batasang Pambansa – as the Gentleman himself has experienced in the interim Batasang Pambansa – one of the most competent inputs that we can put in our committee deliberations, either in aid of legislation or in congressional investigations, is the testimonies of Cabinet ministers. We usually invite them, but if they do not come and it is a congressional investigation, we usually issue subpoenas.

I want to be clarified on a statement made by Commissioner Suarez when he said that the fact that the Cabinet ministers may refuse to come to the House of Representatives or the Senate [when requested under Section 22] does not mean that they need not come when they are invited or subpoenaed by the committee of either House when it comes to inquiries in aid of legislation or congressional investigation. According to Commissioner Suarez, that is allowed and their presence can be had under Section 21. Does the gentleman confirm this, Madam President?

MR. DAVIDE. We confirm that, Madam President, because Section 20 refers only to what was originally the Question Hour, whereas, Section 21 would refer specifically to inquiries in aid of legislation, under which anybody for that matter, may be summoned and if he refuses, he can be held in contempt of the House.83 (Emphasis and underscoring supplied)

A distinction was thus made between inquiries in aid of legislation and the question hour. While attendance was meant to be discretionary in the question hour, it was compulsory in inquiries in aid of legislation. The reference to Commissioner Suarez bears noting, he being one of the proponents of the amendment to make the appearance of department heads discretionary in the question hour.

So clearly was this distinction conveyed to the members of the Commission that the Committee on Style, precisely in recognition of this distinction, later moved the provision on question hour from its original position as Section 20 in the original draft down to Section 31, far from the provision on inquiries in aid of legislation. This gave rise to the following exchange during the deliberations:

MR. GUINGONA. [speaking in his capacity as Chairman of the Committee on Style] We now go, Mr. Presiding Officer, to the Article on Legislative and may I request the chairperson of the Legislative Department, Commissioner Davide, to give his reaction.

THE PRESIDING OFFICER (Mr. Jamir). Commissioner Davide is recognized. |avvphi|.net

MR. DAVIDE. Thank you, Mr. Presiding Officer. I have only one reaction to the Question Hour. I propose that instead of putting it as Section 31, it should follow Legislative Inquiries.

THE PRESIDING OFFICER. What does the committee say?

MR. GUINGONA. I ask Commissioner Maambong to reply, Mr. Presiding Officer.

MR. MAAMBONG. Actually, we considered that previously when we sequenced this but we reasoned that in Section 21, which is Legislative Inquiry, it is actually a power of Congress in terms of its own lawmaking; whereas, a Question Hour is not actually a power in terms of its own lawmaking power because in Legislative Inquiry, it is in aid of legislation. And so we put Question Hour as Section 31. I hope Commissioner Davide will consider this.

MR. DAVIDE. The Question Hour is closely related with the legislative power, and it is precisely as a complement to or a supplement of the Legislative Inquiry. The appearance of the members of Cabinet would be very, very essential not only in the application of check and balance but also, in effect, in aid of legislation.

MR. MAAMBONG. After conferring with the committee, we find merit in the suggestion of Commissioner Davide. In other words, we are accepting that and so this Section 31 would now become Section 22. Would it be, Commissioner Davide?

MR. DAVIDE. Yes.84 (Emphasis and underscoring supplied)

Consistent with their statements earlier in the deliberations, Commissioners Davide and Maambong proceeded from the same assumption that these provisions pertained to two different functions of the legislature. Both Commissioners understood that the power to conduct inquiries in aid of legislation is different from the power to conduct inquiries during the question hour. Commissioner Davide’s only concern was that the two provisions on these distinct powers be placed closely together, they being complementary to each other. Neither Commissioner considered them as identical functions of Congress.

The foregoing opinion was not the two Commissioners’ alone. From the above-quoted exchange, Commissioner Maambong’s committee – the Committee on Style – shared the view that the two provisions reflected distinct functions of Congress. Commissioner Davide, on the other hand, was speaking in his capacity as Chairman of the Committee on the Legislative Department. His views may thus be presumed as representing that of his Committee.

In the context of a parliamentary system of government, the "question hour" has a definite meaning. It is a period of confrontation initiated by Parliament to hold the Prime Minister and the other ministers accountable for their acts and the operation of the government,85 corresponding to what is known in Britain as the question period. There was a specific provision for a question hour in the 1973 Constitution86 which made the appearance of ministers mandatory. The same perfectly conformed to the parliamentary system established by that Constitution, where the ministers are also members of the legislature and are directly accountable to it.

An essential feature of the parliamentary system of government is the immediate accountability of the Prime Minister and the Cabinet to the National Assembly. They shall be responsible to the National Assembly for the program of government and shall determine the guidelines of national policy. Unlike in the presidential system where the tenure of office of all elected officials cannot be terminated before their term expired, the Prime Minister and the Cabinet remain in office only as long as they enjoy the confidence of the National Assembly. The moment this confidence is lost the Prime Minister and the Cabinet may be changed.87

The framers of the 1987 Constitution removed the mandatory nature of such appearance during the question hour in the present Constitution so as to conform more fully to a system of separation of powers.88 To that extent, the question hour, as it is presently understood in this jurisdiction, departs from the question period of the parliamentary system. That department heads may not be required to appear in a question hour does not, however, mean that the legislature is rendered powerless to elicit information from them in all circumstances. In fact, in light of the absence of a mandatory question period, the need to enforce Congress’ right to executive information in the performance of its legislative function becomes more imperative. As Schwartz observes:

Indeed, if the separation of powers has anything to tell us on the subject under discussion, it is that the Congress has the right to obtain information from any source – even from officials of departments and agencies in the executive branch. In the United States there is, unlike the situation which prevails in a parliamentary system such as that in Britain, a clear separation between the legislative and executive branches. It is this very separation that makes the congressional right to obtain information from the executive so essential, if the functions of the Congress as the elected representatives of the people are adequately to be carried out. The absence of close rapport between the legislative and executive branches in this country, comparable to those which exist under a parliamentary system, and the nonexistence in the Congress of an institution such as the British question period have perforce made reliance by the Congress upon its right to obtain information from the executive essential, if it is intelligently to perform its legislative tasks. Unless the Congress possesses the right to obtain executive information, its power of oversight of administration in a system such as ours becomes a power devoid of most of its practical content, since it depends for its effectiveness solely upon information parceled out ex gratia by the executive.89 (Emphasis and underscoring supplied)

Sections 21 and 22, therefore, while closely related and complementary to each other, should not be considered as pertaining to the same power of Congress. One specifically relates to the power to conduct inquiries in aid of legislation, the aim of which is to elicit information that may be used for legislation, while the other pertains to the power to conduct a question hour, the objective of which is to obtain information in pursuit of Congress’ oversight function.

When Congress merely seeks to be informed on how department heads are implementing the statutes which it has issued, its right to such information is not as imperative as that of the President to whom, as Chief Executive, such department heads must give a report of their performance as a matter of duty. In such instances, Section 22, in keeping with the separation of powers, states that Congress may only request their appearance. Nonetheless, when the inquiry in which Congress requires their appearance is "in aid of legislation" under Section 21, the appearance is mandatory for the same reasons stated in Arnault.90

In fine, the oversight function of Congress may be facilitated by compulsory process only to the extent that it is performed in pursuit of legislation. This is consistent with the intent discerned from the deliberations of the Constitutional Commission.

Ultimately, the power of Congress to compel the appearance of executive officials under Section 21 and the lack of it under Section 22 find their basis in the principle of separation of powers. While the executive branch is a co-equal branch of the legislature, it cannot frustrate the power of Congress to legislate by refusing to comply with its demands for information.

When Congress exercises its power of inquiry, the only way for department heads to exempt themselves therefrom is by a valid claim of privilege. They are not exempt by the mere fact that they are department heads. Only one executive official may be exempted from this power — the President on whom executive power is vested, hence, beyond the reach of Congress except through the power of impeachment. It is based on her being the highest official of the executive branch, and the due respect accorded to a co-equal branch of government which is sanctioned by a long-standing custom.

By the same token, members of the Supreme Court are also exempt from this power of inquiry. Unlike the Presidency, judicial power is vested in a collegial body; hence, each member thereof is exempt on the basis not only of separation of powers but also on the fiscal autonomy and the constitutional independence of the judiciary. This point is not in dispute, as even counsel for the Senate, Sen. Joker Arroyo, admitted it during the oral argument upon interpellation of the Chief Justice.

Having established the proper interpretation of Section 22, Article VI of the Constitution, the Court now proceeds to pass on the constitutionality of Section 1 of E.O. 464.

Section 1, in view of its specific reference to Section 22 of Article VI of the Constitution and the absence of any reference to inquiries in aid of legislation, must be construed as limited in its application to appearances of department heads in the question hour contemplated in the provision of said Section 22 of Article VI. The reading is dictated by the basic rule of construction that issuances must be interpreted, as much as possible, in a way that will render it constitutional.

The requirement then to secure presidential consent under Section 1, limited as it is only to appearances in the question hour, is valid on its face. For under Section 22, Article VI of the Constitution, the appearance of department heads in the question hour is discretionary on their part.

Section 1 cannot, however, be applied to appearances of department heads in inquiries in aid of legislation. Congress is not bound in such instances to respect the refusal of the department head to appear in such inquiry, unless a valid claim of privilege is subsequently made, either by the President herself or by the Executive Secretary.

Validity of Sections 2 and 3

Section 3 of E.O. 464 requires all the public officials enumerated in Section 2(b) to secure the consent of the President prior to appearing before either house of Congress. The enumeration is broad. It covers all senior officials of executive departments, all officers of the AFP and the PNP, and all senior national security officials who, in the judgment of the heads of offices designated in the same section (i.e. department heads, Chief of Staff of the AFP, Chief of the PNP, and the National Security Adviser), are "covered by the executive privilege."

The enumeration also includes such other officers as may be determined by the President. Given the title of Section 2 — "Nature, Scope and Coverage of Executive Privilege" —, it is evident that under the rule of ejusdem generis, the determination by the President under this provision is intended to be based on a similar finding of coverage under executive privilege.

En passant, the Court notes that Section 2(b) of E.O. 464 virtually states that executive privilege actually covers persons. Such is a misuse of the doctrine. Executive privilege, as discussed above, is properly invoked in relation to specific categories of information and not to categories of persons.

In light, however, of Sec 2(a) of E.O. 464 which deals with the nature, scope and coverage of executive privilege, the reference to persons being "covered by the executive privilege" may be read as an abbreviated way of saying that the person is in possession of information which is, in the judgment of the head of office concerned, privileged as defined in Section 2(a). The Court shall thus proceed on the assumption that this is the intention of the challenged order.

Upon a determination by the designated head of office or by the President that an official is "covered by the executive privilege," such official is subjected to the requirement that he first secure the consent of the President prior to appearing before Congress. This requirement effectively bars the appearance of the official concerned unless the same is permitted by the President. The proviso allowing the President to give its consent means nothing more than that the President may reverse a prohibition which already exists by virtue of E.O. 464.

Thus, underlying this requirement of prior consent is the determination by a head of office, authorized by the President under E.O. 464, or by the President herself, that such official is in possession of information that is covered by executive privilege. This determination then becomes the basis for the official’s not showing up in the legislative investigation.

In view thereof, whenever an official invokes E.O. 464 to justify his failure to be present, such invocation must be construed as a declaration to Congress that the President, or a head of office authorized by the President, has determined that the requested information is privileged, and that the President has not reversed such determination. Such declaration, however, even without mentioning the term "executive privilege," amounts to an implied claim that the information is being withheld by the executive branch, by authority of the President, on the basis of executive privilege. Verily, there is an implied claim of privilege.

The letter dated September 28, 2005 of respondent Executive Secretary Ermita to Senate President Drilon illustrates the implied nature of the claim of privilege authorized by E.O. 464. It reads:

In connection with the inquiry to be conducted by the Committee of the Whole regarding the Northrail Project of the North Luzon Railways Corporation on 29 September 2005 at 10:00 a.m., please be informed that officials of the Executive Department invited to appear at the meeting will not be able to attend the same without the consent of the President, pursuant to Executive Order No. 464 (s. 2005), entitled "Ensuring Observance Of The Principle Of Separation Of Powers, Adherence To The Rule On Executive Privilege And Respect For The Rights Of Public

Officials Appearing In Legislative Inquiries In Aid Of Legislation Under The Constitution, And For Other Purposes". Said officials have not secured the required consent from the President. (Underscoring supplied)

The letter does not explicitly invoke executive privilege or that the matter on which these officials are being requested to be resource persons falls under the recognized grounds of the privilege to justify their absence. Nor does it expressly state that in view of the lack of consent from the President under E.O. 464, they cannot attend the hearing.

Significant premises in this letter, however, are left unstated, deliberately or not. The letter assumes that the invited officials are covered by E.O. 464. As explained earlier, however, to be covered by the order means that a determination has been made, by the designated head of office or the President, that the invited official possesses information that is covered by executive privilege. Thus, although it is not stated in the letter that such determination has been made, the same must be deemed implied. Respecting the statement that the invited officials have not secured the consent of the President, it only means that the President has not reversed the standing prohibition against their appearance before Congress.

Inevitably, Executive Secretary Ermita’s letter leads to the conclusion that the executive branch, either through the President or the heads of offices authorized under E.O. 464, has made a determination that the information required by the Senate is privileged, and that, at the time of writing, there has been no contrary pronouncement from the President. In fine, an implied claim of privilege has been made by the executive.

While there is no Philippine case that directly addresses the issue of whether executive privilege may be invoked against Congress, it is gathered from Chavez v. PEA that certain information in the possession of the executive may validly be claimed as privileged even against Congress. Thus, the case holds:

There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the separation of powers. The information does not cover Presidential conversations, correspondences, or discussions during closed-door Cabinet meetings which, like internal-deliberations of the Supreme Court and other collegiate courts, or executive sessions of either house of Congress, are recognized as confidential. This kind of information cannot be pried open by a co-equal branch of government. A frank exchange of exploratory ideas and assessments, free from the glare of publicity and pressure by interested parties, is essential to protect the independence of decision-making of those tasked to exercise Presidential, Legislative and Judicial power. This is not the situation in the instant case.91 (Emphasis and underscoring supplied)

Section 3 of E.O. 464, therefore, cannot be dismissed outright as invalid by the mere fact that it sanctions claims of executive privilege. This Court must look further and assess the claim of privilege authorized by the Order to determine whether it is valid.

While the validity of claims of privilege must be assessed on a case to case basis, examining the ground invoked therefor and the particular circumstances surrounding it, there is, in an implied claim of privilege, a defect that renders it invalid per se. By its very nature, and as demonstrated by the letter of respondent Executive Secretary quoted above, the implied claim authorized by Section 3 of E.O. 464 is not accompanied by any specific allegation of the basis thereof (e.g., whether the information demanded involves military or diplomatic secrets, closed-door Cabinet meetings, etc.). While Section 2(a) enumerates the types of information that are covered by the privilege under the challenged order, Congress is left to speculate as to which among them is being referred to by the executive. The enumeration is not even intended to be comprehensive, but a mere statement of what is included in the phrase "confidential or classified information between the President and the public officers covered by this executive order."

Certainly, Congress has the right to know why the executive considers the requested information privileged. It does not suffice to merely declare that the President, or an authorized head of office, has determined that it is so, and that the President has not overturned that determination. Such declaration leaves Congress in the dark on how the requested information could be classified as privileged. That the message is couched in terms that, on first impression, do not seem like a claim of privilege only makes it more pernicious. It threatens to make Congress doubly blind to the question of why the executive branch is not providing it with the information that it has requested.

A claim of privilege, being a claim of exemption from an obligation to disclose information, must, therefore, be clearly asserted. As U.S. v. Reynolds teaches:

The privilege belongs to the government and must be asserted by it; it can neither be claimed nor waived by a private party. It is not to be lightly invoked. There must be a formal claim of privilege, lodged by the head of the department which has control over the matter, after actual personal consideration by that officer. The court itself must determine whether the circumstances are appropriate for the claim of privilege, and yet do so without forcing a disclosure of the very thing the privilege is designed to protect.92 (Underscoring supplied)

Absent then a statement of the specific basis of a claim of executive privilege, there is no way of determining whether it falls under one of the traditional privileges, or whether, given the circumstances in which it is made, it should be respected.93 These, in substance, were the same criteria in assessing the claim of privilege asserted against the Ombudsman in Almonte v. Vasquez94 and, more in point, against a committee of the Senate in Senate Select Committee on Presidential Campaign Activities v. Nixon.95

A.O. Smith v. Federal Trade Commission is enlightening:

[T]he lack of specificity renders an assessment of the potential harm resulting from disclosure impossible, thereby preventing the Court from balancing such harm against plaintiffs’ needs to determine whether to override any claims of privilege.96 (Underscoring supplied)

And so is U.S. v. Article of Drug:97

On the present state of the record, this Court is not called upon to perform this balancing operation. In stating its objection to claimant’s interrogatories, government asserts, and nothing more, that the disclosures sought by claimant would inhibit the free expression of opinion that non-disclosure is designed to protect. The government has not shown – nor even alleged – that those who evaluated claimant’s product were involved in internal policymaking, generally, or in this particular instance. Privilege cannot be set up by an unsupported claim. The facts upon which the privilege is based must be established. To find these interrogatories objectionable, this Court would have to assume that the evaluation and classification of claimant’s products was a matter of internal policy formulation, an assumption in which this Court is unwilling to indulge sua sponte.98 (Emphasis and underscoring supplied)

Mobil Oil Corp. v. Department of Energy99 similarly emphasizes that "an agency must provide ‘precise and certain’ reasons for preserving the confidentiality of requested information."

Black v. Sheraton Corp. of America100 amplifies, thus:

A formal and proper claim of executive privilege requires a specific designation and description of the documents within its scope as well as precise and certain reasons for preserving their confidentiality. Without this specificity, it is impossible for a court to analyze the claim short of disclosure of the very thing sought to be protected. As the affidavit now stands, the Court has little more than its sua sponte speculation with which to weigh the applicability of the claim. An improperly asserted claim of privilege is no claim of privilege. Therefore, despite the fact that a claim was made by the proper executive as Reynolds requires, the Court can not recognize the claim in the instant case because it is legally insufficient to allow the Court to make a just and reasonable determination as to its applicability. To recognize such a broad claim in which the Defendant has given no precise or compelling reasons to shield these documents from outside scrutiny, would make a farce of the whole procedure.101 (Emphasis and underscoring supplied)

Due respect for a co-equal branch of government, moreover, demands no less than a claim of privilege clearly stating the grounds therefor. Apropos is the following ruling in McPhaul v. U.S:102

We think the Court’s decision in United States v. Bryan, 339 U.S. 323, 70 S. Ct. 724, is highly relevant to these questions. For it is as true here as it was there, that ‘if (petitioner) had legitimate reasons for failing to produce the records of the association, a decent respect for the House of Representatives, by whose authority the subpoenas issued, would have required that (he) state (his) reasons for noncompliance upon the return of the writ. Such a statement would have given the Subcommittee an opportunity to avoid the blocking of its inquiry by taking other appropriate steps to obtain the records. ‘To deny the Committee the opportunity to consider the objection or remedy is in itself a contempt of its authority and an obstruction of its processes. His failure to make any such statement was "a patent evasion of the duty of one summoned to produce papers before a congressional committee[, and] cannot be condoned." (Emphasis and underscoring supplied; citations omitted)

Upon the other hand, Congress must not require the executive to state the reasons for the claim with such particularity as to compel disclosure of the information which the privilege is meant to protect.103 A useful analogy in determining the requisite degree of particularity would be the privilege against self-incrimination. Thus, Hoffman v. U.S.104 declares:

The witness is not exonerated from answering merely because he declares that in so doing he would incriminate himself – his say-so does not of itself establish the hazard of incrimination. It is for the court to say whether his silence is justified, and to require him to answer if ‘it clearly appears to the court that he is mistaken.’ However, if the witness, upon interposing his claim, were required to prove the hazard in the sense in which a claim is usually required to be established in court, he would be compelled to surrender the very protection which the privilege is designed to guarantee. To sustain the privilege, it need only be evident from the implications of the question, in the setting in which it is asked, that a responsive answer to the question or an explanation of why it cannot be answered might be dangerous because injurious disclosure could result." x x x (Emphasis and underscoring supplied)

The claim of privilege under Section 3 of E.O. 464 in relation to Section 2(b) is thus invalid per se. It is not asserted. It is merely implied. Instead of providing precise and certain reasons for the claim, it merely invokes E.O. 464, coupled with an announcement that the President has not given her consent. It is woefully insufficient for Congress to determine whether the withholding of information is justified under the circumstances of each case. It severely frustrates the power of inquiry of Congress.

In fine, Section 3 and Section 2(b) of E.O. 464 must be invalidated.

No infirmity, however, can be imputed to Section 2(a) as it merely provides guidelines, binding only on the heads of office mentioned in Section 2(b), on what is covered by executive privilege. It does not purport to be conclusive on the other branches of government. It may thus be construed as a mere expression of opinion by the President regarding the nature and scope of executive privilege.

Petitioners, however, assert as another ground for invalidating the challenged order the alleged unlawful delegation of authority to the heads of offices in Section 2(b). Petitioner Senate of the Philippines, in particular, cites the case of the United States where, so it claims, only the President can assert executive privilege to withhold information from Congress.

Section 2(b) in relation to Section 3 virtually provides that, once the head of office determines that a certain information is privileged, such determination is presumed to bear the President’s authority and has the effect of prohibiting the official from appearing before Congress, subject only to the express pronouncement of the President that it is allowing the appearance of such official. These provisions thus allow the President to authorize claims of privilege by mere silence.

Such presumptive authorization, however, is contrary to the exceptional nature of the privilege. Executive privilege, as already discussed, is recognized with respect to information the confidential nature of which is crucial to the fulfillment of the unique role and responsibilities of the executive branch,105 or in those instances where exemption from disclosure is necessary to the discharge of highly important executive responsibilities.106 The doctrine of executive privilege is thus premised on the fact that certain informations must, as a matter of necessity, be kept confidential in pursuit of the public interest. The privilege being, by definition, an exemption from the obligation to disclose information, in this case to Congress, the necessity must be of such high degree as to outweigh the public interest in enforcing that obligation in a particular case.

In light of this highly exceptional nature of the privilege, the Court finds it essential to limit to the President the power to invoke the privilege. She may of course authorize the Executive Secretary to invoke the privilege on her behalf, in which case the Executive Secretary must state that the authority is "By order of the President," which means that he personally consulted with her. The privilege being an extraordinary power, it must be wielded only by the highest official in the executive hierarchy. In other words, the President may not authorize her subordinates to exercise such power. There is even less reason to uphold such authorization in the instant case where the authorization is not explicit but by mere silence. Section 3, in relation to Section 2(b), is further invalid on this score.

It follows, therefore, that when an official is being summoned by Congress on a matter which, in his own judgment, might be covered by executive privilege, he must be afforded reasonable time to inform the President or the Executive Secretary of the possible need for invoking the privilege. This is necessary in order to provide the

President or the Executive Secretary with fair opportunity to consider whether the matter indeed calls for a claim of executive privilege. If, after the lapse of that reasonable time, neither the President nor the Executive Secretary invokes the privilege, Congress is no longer bound to respect the failure of the official to appear before Congress and may then opt to avail of the necessary legal means to compel his appearance.

The Court notes that one of the expressed purposes for requiring officials to secure the consent of the President under Section 3 of E.O. 464 is to ensure "respect for the rights of public officials appearing in inquiries in aid of legislation." That such rights must indeed be respected by Congress is an echo from Article VI Section 21 of the Constitution mandating that "[t]he rights of persons appearing in or affected by such inquiries shall be respected."

In light of the above discussion of Section 3, it is clear that it is essentially an authorization for implied claims of executive privilege, for which reason it must be invalidated. That such authorization is partly motivated by the need to ensure respect for such officials does not change the infirm nature of the authorization itself.

Right to Information

E.O 464 is concerned only with the demands of Congress for the appearance of executive officials in the hearings conducted by it, and not with the demands of citizens for information pursuant to their right to information on matters of public concern. Petitioners are not amiss in claiming, however, that what is involved in the present controversy is not merely the legislative power of inquiry, but the right of the people to information.

There are, it bears noting, clear distinctions between the right of Congress to information which underlies the power of inquiry and the right of the people to information on matters of public concern. For one, the demand of a citizen for the production of documents pursuant to his right to information does not have the same obligatory force as a subpoena duces tecum issued by Congress. Neither does the right to information grant a citizen the power to exact testimony from government officials. These powers belong only to Congress and not to an individual citizen.

Thus, while Congress is composed of representatives elected by the people, it does not follow, except in a highly qualified sense, that in every exercise of its power of inquiry, the people are exercising their right to information.

To the extent that investigations in aid of legislation are generally conducted in public, however, any executive issuance tending to unduly limit disclosures of information in such investigations necessarily deprives the people of information which, being presumed to be in aid of legislation, is presumed to be a matter of public concern. The citizens are thereby denied access to information which they can use in formulating their own opinions on the matter before Congress — opinions which they can then communicate to their representatives and other government officials through the various legal means allowed by their freedom of expression. Thus holds Valmonte v. Belmonte:

It is in the interest of the State that the channels for free political discussion be maintained to the end that the government may perceive and be responsive to the people’s will. Yet, this open dialogue can be effective only to the extent that the citizenry is informed and thus able to formulate its will intelligently. Only when the participants in the discussion are aware of the issues and have access to information relating thereto can such bear fruit.107(Emphasis and underscoring supplied)

The impairment of the right of the people to information as a consequence of E.O. 464 is, therefore, in the sense explained above, just as direct as its violation of the legislature’s power of inquiry.

Implementation of E.O. 464 prior to its publication

While E.O. 464 applies only to officials of the executive branch, it does not follow that the same is exempt from the need for publication. On the need for publishing even those statutes that do not directly apply to people in general, Tañada v. Tuvera states:

The term "laws" should refer to all laws and not only to those of general application, for strictly speaking all laws relate to the people in general albeit there are some that do not apply to them directly. An example is a law granting citizenship to a particular individual, like a relative of President Marcos who was decreed instant naturalization. It surely cannot be said that such a law does not affect the public although it unquestionably does not apply directly to all the people. The subject of such law is a matter of public interest which any member of the body politic may

question in the political forums or, if he is a proper party, even in courts of justice.108 (Emphasis and underscoring supplied)

Although the above statement was made in reference to statutes, logic dictates that the challenged order must be covered by the publication requirement. As explained above, E.O. 464 has a direct effect on the right of the people to information on matters of public concern. It is, therefore, a matter of public interest which members of the body politic may question before this Court. Due process thus requires that the people should have been apprised of this issuance before it was implemented.

Conclusion

Congress undoubtedly has a right to information from the executive branch whenever it is sought in aid of legislation. If the executive branch withholds such information on the ground that it is privileged, it must so assert it and state the reason therefor and why it must be respected.

The infirm provisions of E.O. 464, however, allow the executive branch to evade congressional requests for information without need of clearly asserting a right to do so and/or proffering its reasons therefor. By the mere expedient of invoking said provisions, the power of Congress to conduct inquiries in aid of legislation is frustrated. That is impermissible. For

[w]hat republican theory did accomplish…was to reverse the old presumption in favor of secrecy, based on the divine right of kings and nobles, and replace it with a presumption in favor of publicity, based on the doctrine of popular sovereignty. (Underscoring supplied)109

Resort to any means then by which officials of the executive branch could refuse to divulge information cannot be presumed valid. Otherwise, we shall not have merely nullified the power of our legislature to inquire into the operations of government, but we shall have given up something of much greater value – our right as a people to take part in government.

WHEREFORE, the petitions are PARTLY GRANTED. Sections 2(b) and 3 of Executive Order No. 464 (series of 2005), "Ensuring Observance of the Principle of Separation of Powers, Adherence to the Rule on Executive

Privilege and Respect for the Rights of Public Officials Appearing in Legislative Inquiries in Aid of Legislation Under the Constitution, and For Other Purposes," are declared VOID. Sections 1 and 2(a) are, however, VALID.

SO ORDERED.

CONCHITA CARPIO MORALES Associate Justice

WE CONCUR:

G.R. No. L-6791             March 29, 1954

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.QUE PO LAY, defendant-appellant.

Prudencio de Guzman for appellant.First Assistant Solicitor General Ruperto Kapunan, Jr., and Solicitor Lauro G. Marquez for appellee.

MONTEMAYOR, J.:

Que Po Lay is appealing from the decision of the Court of First Instance of Manila, finding him guilty of violating Central Bank Circular No. 20 in connection with section 34 of Republic Act No. 265, and sentencing him to suffer six months imprisonment, to pay a fine of P1,000 with subsidiary imprisonment in case of insolvency, and to pay the costs.

The charge was that the appellant who was in possession of foreign exchange consisting of U.S. dollars, U.S. checks and U.S. money orders amounting to about $7,000 failed to sell the same to the Central Bank through its agents within one day following the receipt of such foreign exchange as required by Circular No. 20. the appeal is based on the claim that said circular No. 20 was not published in the Official Gazette prior to the act or omission imputed to the appellant, and that consequently, said circular had no force and effect. It is contended that Commonwealth Act. No., 638 and Act 2930 both require said circular to be published in the Official Gazette, it being an order or notice of general applicability. The Solicitor General answering this contention says that Commonwealth Act. No. 638 and 2930 do not require the publication in the Official Gazette of said circular issued for the implementation of a law in order to have force and effect.

We agree with the Solicitor General that the laws in question do not require the publication of the circulars, regulations and notices therein mentioned in order to become binding and effective. All that said two laws provide is that laws, resolutions, decisions of the Supreme Court and Court of Appeals, notices and documents required by law to be of no force and effect. In other words, said two Acts merely enumerate and make a list of what should be published in the Official Gazette, presumably, for the guidance of the different branches of the Government issuing same, and of the Bureau of Printing.

However, section 11 of the Revised Administrative Code provides that statutes passed by Congress shall, in the absence of special provision, take effect at the beginning of the fifteenth day after the completion of the publication of the statute in the Official Gazette. Article 2 of the new Civil Code (Republic Act No. 386) equally provides that laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided. It is true that Circular No. 20 of the Central Bank is not a statute or law but being issued for the implementation of the law authorizing its issuance, it has the force and effect of law according to settled jurisprudence. (See U.S. vs. Tupasi Molina, 29 Phil., 119 and authorities cited therein.) Moreover, as a rule, circulars and regulations especially like the Circular No. 20 of the Central Bank in question which prescribes a penalty for its violation should be published before becoming effective, this, on the general principle and theory that before the public is bound by its contents, especially its penal provisions, a law, regulation or circular must first be published and the people officially and specifically informed of said contents and its penalties.

Our Old Civil code, ( Spanish Civil Code of 1889) has a similar provision about the effectivity of laws, (Article 1 thereof), namely, that laws shall be binding twenty days after their promulgation, and that their promulgation shall be understood as made on the day of the termination of the publication of the laws in the Gazette. Manresa, commenting on this article is of the opinion that the word "laws" include regulations and circulars issued in accordance with the same. He says:

El Tribunal Supremo, ha interpretado el articulo 1. del codigo Civil en Sentencia de 22 de Junio de 1910, en el sentido de que bajo la denominacion generica de leyes, se comprenden tambien los Reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordenes dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. Tambien el poder ejecutivo lo ha venido entendiendo asi, como lo prueba el hecho de que muchas de sus disposiciones contienen la advertencia de que empiezan a regir el mismo dia de su publicacion en la Gaceta, advertencia que seria perfectamente inutil si no fuera de aplicacion al caso el articulo 1.o del Codigo Civil. (Manresa, Codigo Civil Español, Vol. I. p. 52).

In the present case, although circular No. 20 of the Central Bank was issued in the year 1949, it was not published until November 1951, that is, about 3 months after appellant's conviction of its violation. It is clear that said circular, particularly its penal provision, did not have any legal effect and bound no one until its publication in the Official Gazzette or after November 1951. In other words, appellant could not be held liable for its violation, for it was not binding at the time he was found to have failed to sell the foreign exchange in his possession thereof.

But the Solicitor General also contends that this question of non-publication of the Circular is being raised for the first time on appeal in this Court, which cannot be done by appellant. Ordinarily, one may raise on appeal any question of law or fact that has been raised in the court below and which is within the issues made by the parties in their pleadings. (Section 19, Rule 48 of the Rules of Court). But the question of non-publication is fundamental and

decisive. If as a matter of fact Circular No. 20 had not been published as required by law before its violation, then in the eyes of the law there was no such circular to be violated and consequently appellant committed no violation of the circular or committed any offense, and the trial court may be said to have had no jurisdiction. This question may be raised at any stage of the proceeding whether or not raised in the court below.

In view of the foregoing, we reverse the decision appealed from and acquit the appellant, with costs de oficio.

Paras, C.J., Bengzon, Padilla, Reyes, Bautista Angelo, Labrador, Concepcion and Diokno, JJ., concur.

G.R. No. L-62243 October 12, 1984

PEOPLE OF THE PHILIPPINES, petitioner, vs.HON. REGINO VERIDIANO II, as Presiding Judge of the Court of First Instance of Zambales and Olongapo City, Branch I, and BENITO GO BIO, JR., respondents.

The Solicitor General for petitioner.

Anacleto T. Lacanilao and Carmelino M. Roque for respondents.

 

RELOVA, J.:ñé+.£ªwph!1

Private respondent Benito Go Bio, Jr. was charged with violation of Batas Pambansa Bilang 22 in Criminal Case No. 5396 in the then Court of First Instance of Zambales, presided by respondent judge. The information reads: têñ.£îhqwâ£

That on or about and during the second week of May 1979, in the City of Olongapo, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, guaranteeing the authenticity and genuineness of the same and with intent to defraud one Filipinas Tan by means of false pretenses and pretending to have sufficient funds deposited in the Bank of the Philippine Island, did then and there wilfully, unlawfully and feloniously make and issue Bank of Philippine Island Check No. D-357726 in the amount of P200,000.00 Philippine Currency, said accused well knowing that he has no sufficient funds at the Bank of the Philippine Island and upon presentation of the said check to the bank for encashment, the same was dishonored for the reason that the said accused has no sufficient funds with the said bank and despite repeated demands made by Filipinas Tan on the accused to redeem the said check or pay the amount of P200,000.00, said accused failed and continues to fail to redeem the said check or to pay the said amount, to the damage and prejudice of said Filipinas Tan in the aforementioned amount of P200,000.00 Philippine Currency. (pp. 23-24, Rollo)

Before he could be arraigned respondent Go Bio, Jr. filed a Motion to Quash the information on the ground that the information did not charge an offense, pointing out that at the alleged commission of the offense, which was about the second week of May 1979, Batas Pambansa Bilang 22 has not yet taken effect.

The prosecution opposed the motion contending, among others, that the date of the dishonor of the check, which is on September 26, 1979, is the date of the commission of the offense; and that assuming that the effectivity of the law — Batas Pambansa Bilang 22 — is on June 29, 1979, considering that the offense was committed on September 26, 1979, the said law is applicable.

In his reply, private respondent Go Bio, Jr. submits that what Batas Pambansa Bilang 22 penalizes is not the fact of the dishonor of the check but the act of making or drawing and issuing a check without sufficient funds or credit.

Resolving the motion, respondent judge granted the same and cancelled the bail bond of the accused. In its order of August 23, 1982, respondent judge said: têñ.£îhqwâ£

The Court finds merit to the contention that the accused cannot be held liable for bouncing checks prior to the effectivity of Batas Pambansa Bilang 22 although the check may have matured after the effectivity of the said law. No less than the Minister of Justice decreed that the date of the drawing or making and issuance of the bouncing check is the date to reckon with and not on the date of the maturity of the check. (Resolution No. 67, S. 1981, People's Car vs. Eduardo N. Tan, Feb. 3, 1981; Resolution No. 192, S. 1981, Ricardo de Guia vs. Agapito Miranda, March 20, 1981).

Hence, the Court believes that although the accused can be prosecuted for swindling (Estafa, Article 315 of the Revised Penal Code), the Batas Pambansa Bilang 22 cannot be given a retroactive effect to apply to the above entitled case. (pp. 49- 50, Rollo)

Hence, this petition for review on certiorari, petitioner submitting for review respondent judge's dismissal of the criminal action against private respondent Go Bio, Jr. for violation of Batas Pambansa Bilang 22, otherwise known as the Bouncing Checks Law.

Petitioner contends that Batas Pambansa Bilang 22 was published in the April 9, 1979 issue of the Official Gazette. Fifteen (15) days therefrom would be April 24, 1979, or several days before respondent Go Bio, Jr. issued the questioned check around the second week of May 1979; and that respondent judge should not have taken into account the date of release of the Gazette for circulation because Section 11 of the Revised Administrative Code provides that for the purpose of ascertaining the date of effectivity of a law that needed publication, "the Gazette is conclusively presumed to be published on the day indicated therein as the date of issue."

Private respondent Go Bio, Jr. argues that although Batas Pambansa Bilang 22 was published in the Official Gazette issue of April 9, 1979, nevertheless, the same was released only on June 14, 1979 and, considering that the questioned check was issued about the second week of May 1979, then he could not have violated Batas Pambansa Bilang 22 because it was not yet released for circulation at the time.

We uphold the dismissal by the respondent judge of the criminal action against the private respondent.

The Solicitor General admitted the certification issued by Ms. Charito A. Mangubat, Copy Editor of the Official Gazette Section of the Government Printing Office, stating- têñ.£îhqwâ£

This is to certify that Volume 75, No. 15, of the April 9, 1979 issue of the Official Gazette was officiallyreleased for circulation on June 14, 1979. (p. 138, Rollo)

It is therefore, certain that the penal statute in question was made public only on June 14, 1979 and not on the printed date April 9, 1979. Differently stated, June 14, 1979 was the date of publication of Batas Pambansa Bilang 22. Before the public may be bound by its contents especially its penal provisions, the law must be published and the people officially informed of its contents and/or its penalties. For, if a statute had not been published before its violation, then in the eyes of the law there was no such law to be violated and, consequently, the accused could not have committed the alleged crime.

The effectivity clause of Batas Pambansa Bilang 22 specifically states that "This Act shall take effect fifteen days after publication in the Official Gazette." The term "publication" in such clause should be given the ordinary accepted meaning, that is, to make known to the people in general. If the Batasang Pambansa had intended to make the printed date of issue of the Gazette as the point of reference in determining the effectivity of the statute in question, then it could have so stated in the special effectivity provision of Batas Pambansa Bilang 22.

When private respondent Go Bio, Jr. committed the act, complained of in the Information as criminal, in May 1979, there was then no law penalizing such act. Following the special provision of Batas Pambansa Bilang 22, it became

effective only on June 29, 1979. As a matter of fact, in May 1979, there was no law to be violated and, consequently, respondent Go Bio, Jr. did not commit any violation thereof.

With respect to the allegation of petitioner that the offense was committed on September 26, 1979 when the check was presented for encashment and was dishonored by the bank, suffice it to say that the law penalizes the act of making or drawing and issuance of a bouncing check and not only the fact of its dishonor. The title of the law itself states:

AN ACT PENALIZING THE MAKING OR DRAWING AND ISSUANCE OF A CHECK WITHOUT SUFFICIENT FUNDS OR CREDIT AND FOR OTHER PURPOSES.

and, Sections 1 and 2 of said Batas Pambansa Bilang 22 provide: têñ.£îhqwâ£

SECTION 1. Checks without sufficient funds. — Any person who makes or draws and issues any check to apply on account or for value, knowing at the time of issue that he does not have sufficient funds ... shall be punished ...

The same penalty shall be imposed upon any person who, having sufficient funds in or credit with the drawee bank when he makes or draws and issues a check, shall fail to keep sufficient funds or to maintain a credit to cover the full amount of the check if presented within a period of ninety (90) days from the date appearing thereon, for which reason it is dishonored by the drawee bank.

xxx xxx xxx

SECTION 2. Evidence of knowledge of insufficient funds. — The making, drawing and issuance of a check payment of which is refused by the drawee because of insufficient funds ... . (Emphasis supplied)

ACCORDINGLY, the order of respondent judge dated August 23, 1982 is hereby AFFIRMED. No costs.

SO ORDERED.1äwphï1.ñët

Melencio-Herrera, Plana, Gutierrez, Jr. and De la Fuente, JJ., concur.

TEEHANKEE, Actg. C.J., concurring:

I concur on the ground that actual publication of the penal law is indispensable for its effectivity (Pesigan vs. Angeles, 129 SCRA 174).

G.R. No. 108524 November 10, 1994

MISAMIS ORIENTAL ASSOCIATION OF COCO TRADERS, INC., petitioner, vs.DEPARTMENT OF FINANCE SECRETARY, COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE (BIR), AND REVENUE DISTRICT OFFICER, BIR MISAMIS ORIENTAL, respondents.

Damasing Law Office for petitioner.

 

MENDOZA, J.:

This is a petition for prohibition and injunction seeking to nullify Revenue Memorandum Circular No. 47-91 and enjoin the collection by respondent revenue officials of the Value Added Tax (VAT) on the sale of copra by members of petitioner organization. 1

Petitioner Misamis Oriental Association of Coco Traders, Inc. is a domestic corporation whose members, individually or collectively, are engaged in the buying and selling of copra in Misamis Oriental. The petitioner alleges that prior to the issuance of Revenue Memorandum Circular 47-91 on June 11, 1991, which implemented VAT Ruling 190-90, copra was classified as agricultural food product under $ 103(b) of the National Internal Revenue Code and, therefore, exempt from VAT at all stages of production or distribution.

Respondents represent departments of the executive branch of government charged with the generation of funds and the assessment, levy and collection of taxes and other imposts.

The pertinent provision of the NIRC states:

Sec. 103. Exempt Transactions. — The following shall be exempt from the value-added tax:

(a) Sale of nonfood agricultural, marine and forest products in their original state by the primary producer or the owner of the land where the same are produced;

(b) Sale or importation in their original state of agricultural and marine food products, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption, and breeding stock and genetic material therefor;

Under §103(a), as above quoted, the sale of agricultural non-food products in their original state is exempt from VAT only if the sale is made by the primary producer or owner of the land from which the same are produced. The sale made by any other person or entity, like a trader or dealer, is not exempt from the tax. On the other hand, under §103(b) the sale of agricultural food products in their original state is exempt from VAT at all stages of production or distribution regardless of who the seller is.

The question is whether copra is an agricultural food or non-food product for purposes of this provision of the NIRC. On June 11, 1991, respondent Commissioner of Internal Revenue issued the circular in question, classifying copra as an agricultural non-food product and declaring it "exempt from VAT only if the sale is made by the primary producer pursuant to Section 103(a) of the Tax Code, as amended." 2

The reclassification had the effect of denying to the petitioner the exemption it previously enjoyed when copra was classified as an agricultural food product under §103(b) of the NIRC. Petitioner challenges RMC No. 47-91 on various grounds, which will be presently discussed although not in the order raised in the petition for prohibition.

First. Petitioner contends that the Bureau of Food and Drug of the Department of Health and not the BIR is the competent government agency to determine the proper classification of food products. Petitioner cites the opinion of Dr. Quintin Kintanar of the Bureau of Food and Drug to the effect that copra should be considered "food" because it is produced from coconut which is food and 80% of coconut products are edible.

On the other hand, the respondents argue that the opinion of the BIR, as the government agency charged with the implementation and interpretation of the tax laws, is entitled to great respect.

We agree with respondents. In interpreting §103(a) and (b) of the NIRC, the Commissioner of Internal Revenue gave it a strict construction consistent with the rule that tax exemptions must be strictly construed against the taxpayer and liberally in favor of the state. Indeed, even Dr. Kintanar said that his classification of copra as food was based on "the broader definition of food which includes agricultural commodities and other components used in the manufacture/processing of food." The full text of his letter reads:

10 April 1991

Mr. VICTOR A. DEOFERIO, JR.Chairman VAT Review Committee

Bureau of Internal RevenueDiliman, Quezon City

Dear Mr. Deoferio:

This is to clarify a previous communication made by this Office about copra in a letter dated 05 December 1990 stating that copra is not classified as food. The statement was made in the context of BFAD's regulatory responsibilities which focus mainly on foods that are processed and packaged, and thereby copra is not covered.

However, in the broader definition of food which include agricultural commodities and other components used in the manufacture/ processing of food, it is our opinion that copra should be classified as an agricultural food product since copra is produced from coconut meat which is food and based on available information, more than 80% of products derived from copra are edible products.

Very truly yours,

QUINTIN L. KINTANAR, M.D., Ph.D. DirectorAssistant Secretary of Health for Standards and Regulations

Moreover, as the government agency charged with the enforcement of the law, the opinion of the Commissioner of Internal Revenue, in the absence of any showing that it is plainly wrong, is entitled to great weight. Indeed, the ruling was made by the Commissioner of Internal Revenue in the exercise of his power under § 245 of the NIRC to "make rulings or opinions in connection with the implementation of the provisions of internal revenue laws,including rulings on the classification of articles for sales tax and similar purposes."

Second. Petitioner complains that it was denied due process because it was not heard before the ruling was made. There is a distinction in administrative law between legislative rules and interpretative rules. 3 There would be force in petitioner's argument if the circular in question were in the nature of a legislative rule. But it is not. It is a mere interpretative rule.

The reason for this distinction is that a legislative rule is in the nature of subordinate legislation, designed to implement a primary legislation by providing the details thereof. In the same way that laws must have the benefit of public hearing, it is generally required that before a legislative rule is adopted there must be hearing. In this connection, the Administrative Code of 1987 provides:

Public Participation. — If not otherwise required by law, 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.

(2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published in a newspaper of general circulation at least two (2) weeks before the first hearing thereon.

(3) In case of opposition, the rules on contested cases shall be observed. 4

In addition such rule must be published. 5 On the other hand, interpretative rules are designed to provide guidelines to the law which the administrative agency is in charge of enforcing.

Accordingly, in considering a legislative rule a court is free to make three inquiries: (i) whether the rule is within the delegated authority of the administrative agency; (ii) whether it is reasonable; and (iii) whether it was issued

pursuant to proper procedure. But the court is not free to substitute its judgment as to the desirability or wisdom of the rule for the legislative body, by its delegation of administrative judgment, has committed those questions to administrative judgments and not to judicial judgments. In the case of an interpretative rule, the inquiry is not into the validity but into the correctness or propriety of the rule. As a matter of power a court, when confronted with an interpretative rule, is free to (i) give the force of law to the rule; (ii) go to the opposite extreme and substitute its judgment; or (iii) give some intermediate degree of authoritative weight to the interpretative rule. 6

In the case at bar, we find no reason for holding that respondent Commissioner erred in not considering copra as an "agricultural food product" within the meaning of § 103(b) of the NIRC. As the Solicitor General contends, "copra per se is not food, that is, it is not intended for human consumption. Simply stated, nobody eats copra for food." That previous Commissioners considered it so, is not reason for holding that the present interpretation is wrong. The Commissioner of Internal Revenue is not bound by the ruling of his predecessors. 7 To the contrary, the overruling of decisions is inherent in the interpretation of laws.

Third. Petitioner likewise claims that RMC No. 47-91 is discriminatory and violative of the equal protection clause of the Constitution because while coconut farmers and copra producers are exempt, traders and dealers are not, although both sell copra in its original state. Petitioners add that oil millers do not enjoy tax credit out of the VAT payment of traders and dealers.

The argument has no merit. There is a material or substantial difference between coconut farmers and copra producers, on the one hand, and copra traders and dealers, on the other. The former produce and sell copra, the latter merely sell copra. The Constitution does not forbid the differential treatment of persons so long as there is a reasonable basis for classifying them differently. 8

It is not true that oil millers are exempt from VAT. Pursuant to § 102 of the NIRC, they are subject to 10% VAT on the sale of services. Under § 104 of the Tax Code, they are allowed to credit the input tax on the sale of copra by traders and dealers, but there is no tax credit if the sale is made directly by the copra producer as the sale is VAT exempt. In the same manner, copra traders and dealers are allowed to credit the input tax on the sale of copra by other traders and dealers, but there is no tax credit if the sale is made by the producer.

Fourth. It is finally argued that RMC No. 47-91 is counterproductive because traders and dealers would be forced to buy copra from coconut farmers who are exempt from the VAT and that to the extent that prices are reduced the government would lose revenues as the 10% tax base is correspondingly diminished.

This is not so. The sale of agricultural non-food products is exempt from VAT only when made by the primary producer or owner of the land from which the same is produced, but in the case of agricultural food products their sale in their original state is exempt at all stages of production or distribution. At any rate, the argument that the classification of copra as agricultural non-food product is counterproductive is a question of wisdom or policy which should be addressed to respondent officials and to Congress.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

Narvasa, C.J., Regalado and Puno, JJ., concur.

G.R. No. L-59234 September 30, 1982

TAXICAB OPERATORS OF METRO MANILA, INC., FELICISIMO CABIGAO and ACE TRANSPORTATION CORPORATION, petitioners, vs.THE BOARD OF TRANSPORTATION and THE DIRECTOR OF THE BUREAU OF LAND TRANSPORTATION,respondents.

 

MELENCIO-HERRERA, J.:

This Petition for "Certiorari, Prohibition and mandamus with Preliminary Injunction and Temporary Restraining Order" filed by the Taxicab Operators of Metro Manila, Inc., Felicisimo Cabigao and Ace Transportation, seeks to declare the nullity of Memorandum Circular No. 77-42, dated October 10, 1977, of the Board of Transportation, and Memorandum Circular No. 52, dated August 15, 1980, of the Bureau of Land Transportation.

Petitioner Taxicab Operators of Metro Manila, Inc. (TOMMI) is a domestic corporation composed of taxicab operators, who are grantees of Certificates of Public Convenience to operate taxicabs within the City of Manila and to any other place in Luzon accessible to vehicular traffic. Petitioners Ace Transportation Corporation and Felicisimo Cabigao are two of the members of TOMMI, each being an operator and grantee of such certificate of public convenience.

On October 10, 1977, respondent Board of Transportation (BOT) issued Memorandum Circular No. 77-42 which reads:

SUBJECT: Phasing out and Replacement of

Old and Dilapidated Taxis

WHEREAS, it is the policy of the government to insure that only safe and comfortable units are used as public conveyances;

WHEREAS, the riding public, particularly in Metro-Manila, has, time and again, complained against, and condemned, the continued operation of old and dilapidated taxis;

WHEREAS, in order that the commuting public may be assured of comfort, convenience, and safety, a program of phasing out of old and dilapidated taxis should be adopted;

WHEREAS, after studies and inquiries made by the Board of Transportation, the latter believes that in six years of operation, a taxi operator has not only covered the cost of his taxis, but has made reasonable profit for his investments;

NOW, THEREFORE, pursuant to this policy, the Board hereby declares that no car beyond six years shall be operated as taxi, and in implementation of the same hereby promulgates the following rules and regulations:

1. As of December 31, 1977, all taxis of Model 1971 and earlier are ordered withdrawn from public service and thereafter may no longer be registered and operated as taxis. In the registration of cards for 1978, only taxis of Model 1972 and later shall be accepted for registration and allowed for operation;

2. As of December 31, 1978, all taxis of Model 1972 are ordered withdrawn from public service and thereafter may no longer be registered and operated as taxis. In the registration of cars for 1979, only taxis of Model 1973 and later shall be accepted for registration and allowed for operation; and every year thereafter, there shall be a six-year lifetime of taxi, to wit:

1980 — Model 1974

1981 — Model 1975, etc.

All taxis of earlier models than those provided above are hereby ordered withdrawn from public service as of the last day of registration of each particular year and their respective plates shall be

surrendered directly to the Board of Transportation for subsequent turnover to the Land Transportation Commission.

For an orderly implementation of this Memorandum Circular, the rules herein shall immediately be effective in Metro-Manila. Its implementation outside Metro- Manila shall be carried out only after the project has been implemented in Metro-Manila and only after the date has been determined by the Board. 1

Pursuant to the above BOT circular, respondent Director of the Bureau of Land Transportation (BLT) issued Implementing Circular No. 52, dated August 15, 1980, instructing the Regional Director, the MV Registrars and other personnel of BLT, all within the National Capitol Region, to implement said Circular, and formulating a schedule of phase-out of vehicles to be allowed and accepted for registration as public conveyances. To quote said Circular:

Pursuant to BOT Memo-Circular No. 77-42, taxi units with year models over six (6) years old are now banned from operating as public utilities in Metro Manila. As such the units involved should be considered as automatically dropped as public utilities and, therefore, do not require any further dropping order from the BOT.

Henceforth, taxi units within the National Capitol Region having year models over 6 years old shall be refused registration. The following schedule of phase-out is herewith prescribed for the guidance of all concerned:

Year Model Automatic Phase-Out Year

1980

1974 1981

1975 1982

1976 1983

1977

etc. etc.

Strict compliance here is desired. 2

In accordance therewith, cabs of model 1971 were phase-out in registration year 1978; those of model 1972, in 1979; those of model 1973, in 1980; and those of model 1974, in 1981.

On January 27, 1981, petitioners filed a Petition with the BOT, docketed as Case No. 80-7553, seeking to nullify MC No. 77-42 or to stop its implementation; to allow the registration and operation in 1981 and subsequent years of taxicabs of model 1974, as well as those of earlier models which were phased-out, provided that, at the time of registration, they are roadworthy and fit for operation.

On February 16, 1981, petitioners filed before the BOT a "Manifestation and Urgent Motion", praying for an early hearing of their petition. The case was heard on February 20, 1981. Petitioners presented testimonial and documentary evidence, offered the same, and manifested that they would submit additional documentary proofs. Said proofs were submitted on March 27, 1981 attached to petitioners' pleading entitled, "Manifestation, Presentation of Additional Evidence and Submission of the Case for Resolution." 3

On November 28, 1981, petitioners filed before the same Board a "Manifestation and Urgent Motion to Resolve or Decide Main Petition" praying that the case be resolved or decided not later than December 10, 1981 to enable them, in case of denial, to avail of whatever remedy they may have under the law for the protection of their interests before their 1975 model cabs are phased-out on January 1, 1982.

Petitioners, through its President, allegedly made personal follow-ups of the case, but was later informed that the records of the case could not be located.

On December 29, 1981, the present Petition was instituted wherein the following queries were posed for consideration by this Court:

A. Did BOT and BLT promulgate the questioned memorandum circulars in accord with the manner required by Presidential Decree No. 101, thereby safeguarding the petitioners' constitutional right to procedural due process?

B. Granting, arguendo, that respondents did comply with the procedural requirements imposed by Presidential Decree No. 101, would the implementation and enforcement of the assailed memorandum circulars violate the petitioners' constitutional rights to.

(1) Equal protection of the law;

(2) Substantive due process; and

(3) Protection against arbitrary and unreasonable classification and standard?

On Procedural and Substantive Due Process:

Presidential Decree No. 101 grants to the Board of Transportation the power

4. To fix just and reasonable standards, classification, regulations, practices, measurements, or service to be furnished, imposed, observed, and followed by operators of public utility motor vehicles.

Section 2 of said Decree provides procedural guidelines for said agency to follow in the exercise of its powers:

Sec. 2. Exercise of powers. — In the exercise of the powers granted in the preceding section, the Board shag proceed promptly along the method of legislative inquiry.

Apart from its own investigation and studies, the Board, in its discretion, may require the cooperation and assistance of the Bureau of Transportation, the Philippine Constabulary, particularly the Highway Patrol Group, the support agencies within the Department of Public Works, Transportation and Communications, or any other government office or agency that may be able to furnish useful information or data in the formulation of the Board of any policy, plan or program in the implementation of this Decree.

The Board may also can conferences, require the submission of position papers or other documents, information, or data by operators or other persons that may be affected by the implementation of this Decree, or employ any other suitable means of inquiry.

In support of their submission that they were denied procedural due process, petitioners contend that they were not caged upon to submit their position papers, nor were they ever summoned to attend any conference prior to the issuance of the questioned BOT Circular.

It is clear from the provision aforequoted, however, that the leeway accorded the Board gives it a wide range of choice in gathering necessary information or data in the formulation of any policy, plan or program. It is not mandatory that it should first call a conference or require the submission of position papers or other documents from operators or persons who may be affected, this being only one of the options open to the Board, which is given wide discretionary authority. Petitioners cannot justifiably claim, therefore, that they were deprived of procedural due process. Neither can they state with certainty that public respondents had not availed of other sources of inquiry prior to issuing the challenged Circulars. operators of public conveyances are not the only primary sources of the data and information that may be desired by the BOT.

Dispensing with a public hearing prior to the issuance of the Circulars is neither violative of procedural due process. As held in Central Bank vs. Hon. Cloribel and Banco Filipino, 44 SCRA 307 (1972):

Pevious notice and hearing as elements of due process, are constitutionally required for the protection of life or vested property rights, as well as of liberty, when its limitation or loss takes place in consequence of a judicial or quasi-judicial proceeding, generally dependent upon a past act or event which has to be established or ascertained. It is not essential to the validity of general rules or regulations promulgated to govern future conduct of a class or persons or enterprises, unless the law provides otherwise. (Emphasis supplied)

Petitioners further take the position that fixing the ceiling at six (6) years is arbitrary and oppressive because the roadworthiness of taxicabs depends upon their kind of maintenance and the use to which they are subjected, and, therefore, their actual physical condition should be taken into consideration at the time of registration. As public contend, however, it is impractical to subject every taxicab to constant and recurring evaluation, not to speak of the fact that it can open the door to the adoption of multiple standards, possible collusion, and even graft and corruption. A reasonable standard must be adopted to apply to an vehicles affected uniformly, fairly, and justly. The span of six years supplies that reasonable standard. The product of experience shows that by that time taxis have fully depreciated, their cost recovered, and a fair return on investment obtained. They are also generally dilapidated and no longer fit for safe and comfortable service to the public specially considering that they are in continuous operation practically 24 hours everyday in three shifts of eight hours per shift. With that standard of reasonableness and absence of arbitrariness, the requirement of due process has been met.

On Equal Protection of the Law:

Petitioners alleged that the Circular in question violates their right to equal protection of the law because the same is being enforced in Metro Manila only and is directed solely towards the taxi industry. At the outset it should be pointed out that implementation outside Metro Manila is also envisioned in Memorandum Circular No. 77-42. To repeat the pertinent portion:

For an orderly implementation of this Memorandum Circular, the rules herein shall immediately be effective in Metro Manila. Its implementation outside Metro Manila shall be carried out only after the project has been implemented in Metro Manila and only after the date has been determined by the Board. 4

In fact, it is the understanding of the Court that implementation of the Circulars in Cebu City is already being effected, with the BOT in the process of conducting studies regarding the operation of taxicabs in other cities.

The Board's reason for enforcing the Circular initially in Metro Manila is that taxicabs in this city, compared to those of other places, are subjected to heavier traffic pressure and more constant use. This is of common knowledge. Considering that traffic conditions are not the same in every city, a substantial distinction exists so that infringement of the equal protection clause can hardly be successfully claimed.

As enunciated in the preambular clauses of the challenged BOT Circular, the overriding consideration is the safety and comfort of the riding public from the dangers posed by old and dilapidated taxis. The State, in the exercise, of its police power, can prescribe regulations to promote the health, morals, peace, good order, safety and general welfare of the people. It can prohibit all things hurtful to comfort, safety and welfare of society. 5 It may also regulate property rights. 6 In the language of Chief Justice Enrique M. Fernando "the necessities imposed by public welfare may justify the exercise of governmental authority to regulate even if thereby certain groups may plausibly assert that their interests are disregarded". 7

In so far as the non-application of the assailed Circulars to other transportation services is concerned, it need only be recalled that the equal protection clause does not imply that the same treatment be accorded all and sundry. It applies to things or persons Identically or similarly situated. It permits of classification of the object or subject of the law provided classification is reasonable or based on substantial distinction, which make for real differences, and that it must apply equally to each member of the class. 8 What is required under the equal protection clause is the uniform operation by legal means so that all persons under Identical or similar circumstance would be accorded the same treatment both in privilege conferred and the liabilities imposed. 9 The challenged Circulars satisfy the foregoing criteria.

Evident then is the conclusion that the questioned Circulars do not suffer from any constitutional infirmity. To declare a law unconstitutional, the infringement of constitutional right must be clear, categorical and undeniable.10

WHEREFORE, the Writs prayed for are denied and this Petition is hereby dismissed. No costs.

SO ORDERED.

Fernando, CJ., Barredo, Makasiar, Concepcion, Jr., Guerrero, Abad Santos, De Castro, Plana, Escolin, Vasquez, Relova and Gutierrez, Jr., JJ., concur.

Teehankee and Aquino, JJ., concur in the result.

 

G.R. No. L-44291             August 15, 1936

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellant, vs.AUGUSTO A. SANTOS, defendant-appellee.

Office of the Solicitor-General Hilado for appellant.Arsenio Santos for appellee.

VILLA-REAL, J.:

This case is before us by virtue of an appeal taken by the prosecuting attorney from the order of the Court of First Instance of Cavite which reads as follows:

O R D E R

When this case was called for trial for the arraignment, counsel for the accused appeared stating that in view of the ruling laid down by this court in criminal case No. 6785 of this court, holding that the penalty applicable is under section 83 of Act No. 4003 which falls within the original jurisdiction of the justice of the peace court he requests that the case be remanded to the justice of the peace court of Cavite which conducted the preliminary investigation, so that the latter may try it, being within its original jurisdiction.

We agree that it falls within the jurisdiction of the corresponding justice of the peace court, but it being alleged in the information that the infraction was committed within the waters of the Island of Corregidor, the competent justice of the peace court is that of Corregidor, not Cavite.

Wherefore, we decree the dismissal of this case, cancelling the bond filed by the accused, with costs de oficio, without prejudice to the filing by the prosecuting attorney of a new information in the justice of the peace court of Corregidor, if he so deems convenient. It is so ordered.

In support of his appeal the appellant assigns as the sole alleged error committed by the court a quo its having dismissed the case on the ground that it does not fall within its original jurisdiction.

On June 18, 1930, the provincial fiscal of Cavite filed against the accused -appellee Augusta A. Santos an information which reads as follows:

The undersigned Provincial Fiscal accuses Augusta A. Santos of violation of section 28 of Fish and Game Administrative Order No. 2 and penalized by section 29 thereof committed as follows:

That on or about April 29, 1935, within 1,500 yards north of Cavalry Point, Corregidor Island, Province of Cavite, P.I., the said accused Augusta A. Santos, the registered owner of two fishing motor boats Malabon IIand Malabon III, did then and there willfully, unlawfully and criminally have his said boats, manned and

operated by his fishermen, fish, loiter and anchor without permission from the Secretary of Agriculture and Commerce within three (3) kilometers from the shore line of the Island of Corregidor over which the naval and military authorities of the United States exercise jurisdiction.

Contrary to law.

Cavite, Cavite, June 18, 1935.

Section 28 of Administrative Order No. 2 relative to fish and game, issued by the Secretary of Agriculture and Commerce, provides as follows:

28. Prohibited fishing areas. — No boats licensed in accordance with the provisions of Act No. 4003 and this order to catch, collect, gather, take, or remove fish and other sea products from Philippine waters shall be allowed to fish, loiter, or anchor within 3 kilometers of the shore line of islands and reservations over which jurisdiction is exercised by naval or military authorities of the United States, particularly Corregidor, Pulo Caballo, La Monja, El Fraile, and Carabao, and all other islands and detached rocks lying between Mariveles Reservation on the north side of the entrance to Manila Bay and Calumpan Point Reservation on the south side of said entrance: Provided, That boats not subject to license under Act No. 4003 and this order may fish within the areas mentioned above only upon receiving written permission therefor, which permission may be granted by the Secretary of Agriculture and Commerce upon recommendation of the military or naval authorities concerned.

A violation of this paragraph may be proceeded against under section 45 of the Federal Penal Code.

The above quoted provisions of Administrative, Order No. 2 were issued by the then Secretary of Agriculture and Natural Resources, now Secretary of Agriculture and Commerce, by virtue of the authority vested in him by section 4 of Act No. 4003 which reads as follows:

SEC. 4. Instructions, orders, rules and regulations. — The Secretary of Agriculture and Natural Resources shall from time to time issue such instructions, orders, rules and regulations consistent with this Act, as may be necessary and proper to carry into effect the provisions thereof and for the conduct of proceedings arising under such provisions.

The herein accused and appellee Augusto A. Santos is charged with having ordered his fishermen to manage and operate the motor launches Malabon II and Malabon Ill registered in his name and to fish, loiter and anchor within three kilometers of the shore line of the Island of Corregidor over which jurisdiction is exercised by naval and military authorities of the United States, without permission from the Secretary of Agriculture and Commerce.

These acts constitute a violation of the conditional clause of section 28 above quoted, which reads as follows:

Provided, That boats not subject to license under Act No. 4003 and this order may fish within the areas mentioned above (within 3 kilometers of the shore line of islands and reservations over which jurisdiction is exercised by naval and military authorities of the United States, particularly Corregidor) only upon receiving written permission therefor, which permission may be granted by the Secretary of Agriculture and Commerce upon recommendation of the military and naval authorities of concerned. (Emphasis supplied.)

Act No. 4003 contains no similar provision prohibiting boats not subject to license from fishing within three kilometers of the shore line of islands and reservations over which jurisdiction is exercised by naval and military authorities of the United States, without permission from the Secretary of Agriculture and Commerce upon recommendation of the military and naval authorities concerned. Inasmuch as the only authority granted to the Secretary of Agriculture and Commerce, by section 4 of Act No. 4003, is to issue from time to time such instructions, orders, rules, and regulations consistent with said Act, as may be necessary and proper to carry into effect the provisions thereof and for the conduct of proceedings arising under such provisions; and inasmuch as said Act No. 4003, as stated, contains no provisions similar to those contained in the above quoted conditional clause of section 28 of Administrative Order No. 2, the conditional clause in question supplies a defect of the law, extending it. This is equivalent to legislating on the matter, a power which has not been and cannot be delegated to him, it being exclusively reserved to the then Philippine Legislature by the Jones Law, and now to the National Assembly by the

Constitution of the Philippines. Such act constitutes not only an excess of the regulatory power conferred upon the Secretary of Agriculture and Commerce, but also an exercise of a legislative power which he does not have, and therefore said conditional clause is null and void and without effect (12 Corpus Juris, 845; Rubi vs. Provincial Board of Mindoro, 39 Phil., 660; U.S. vs. Ang Tang Ho, 43 Phil., 1; U.S. vs. Barrias, 11 Phil., 327).

For the foregoing considerations, we are of the opinion and so hold that the conditional clause of section 28 of Administrative Order No. 2. issued by the Secretary of Agriculture and Commerce, is null and void and without effect, as constituting an excess of the regulatory power conferred upon him by section 4 of Act No. 4003 and an exercise of a legislative power which has not been and cannot be delegated to him.

Wherefore, inasmuch as the facts with the commission of which Augusto A. Santos is charged do not constitute a crime or a violation of some criminal law within the jurisdiction of the civil courts, the information filed against him is dismissed, with the costs de oficio. So ordered.

Avanceña, C. J., Abad Santos, Imperial, Diaz, Recto, and Laurel, JJ., concur.

G.R. No. L-9876 December 8, 1914

THE UNITED STATES, plaintiff-appellee, vs.ADRIANO PANLILIO, defendant-appellant.

Pedro Abad Santos for appellant.Office of the Solicitor General Corpus for appellee.

 

MORELAND, J.:

This is an appeal from a judgment of the Court of First Instance of the Province of Pampanga convicting the accused of a violation of the law relating to the quarantining of animals suffering from dangerous communicable or contagious diseases and sentencing him to pay a fine of P40, with subsidiary imprisonment in case of insolvency, and to pay the costs of the trial.

The information charges: "That on or about the 22nd day of February, 1913, all of the carabaos belonging to the above-named accused having been exposed to the dangerous and contagious disease known as rinderpest, were, in accordance with an order of duly-authorized agent of the Director of Agriculture, duly quarantined in a corral in the barrio of Masamat, municipality of Mexico, Province of Pampanga, P. I.; that, on said place, the said accused, Adriano Panlilio, illegally and voluntarily and without being authorized so to do, and while the quarantine against said carabaos was still in force, permitted and ordered said carabaos to be taken from the corral in which they were then quarantined and conducted from one place to another; that by virtue of said orders of the accused, his servants and agents took the said carabaos from the said corral and drove them from one place to another for the purpose of working them."

The defendant demurred to this information on the ground that the acts complained of did not constitute a crime. The demurrer was overruled and the defendant duly excepted and pleaded not guilty.

From the evidence introduced by the prosecution on the trial of the cause it appears that the defendant was notified in writing on February 22, 1913, by a duly authorized agent of the Director of agriculture, that all of his carabaos in the barrio of Masamat, municipality of Mexico, Pampanga Province, had been exposed to the disease commonly known as rinderpest, and that said carabaos were accordingly declared under quarantine, and were ordered kept in a corral designated by an agent of the Bureau of Agriculture and were to remain there until released by further order of the Director of Agriculture.

It further appears from the testimony of the witnesses for the prosecution that the defendant fully understood that, according to the orders of the Bureau of Agriculture, he was not to remove the animals, or to permit anyone else to remove them, from the quarantine in which they had been placed. In spite, however, of all this, the carabaos were

taken from the corral by the commands of the accused and driven from place to place on his hacienda, and were used as work animals thereon in the same manner as if they had not been quarantined.

The contention of the accused is that the facts alleged in the information and proved on the trial do not constitute a violation of Act No. 1760 or any portion thereof.

We are forced to agree with this contention. 1awphil.net

The original information against the accused charged a violation of section 6 of Act No. 1760 committed by the accused in that he ordered and permitted his carabaos, which, at the time, were in quarantine, to be taken from quarantine and moved from one place to another on his hacienda. An amended information was filed. It failed, however, to specify that section of Act No. 1760 alleged to have been violated, evidently leaving that to be ascertained by the court on the trial.

The only sections of Act No. 1760, which prohibit acts and pronounce them unlawful are 3, 4 and 5. This case does not fall within any of them. Section 3 provides, in effect, that it shall be unlawful for any person, firm, or corporation knowingly to ship or otherwise bring into the Philippine Islands any animal suffering from, infected with, or dead of any dangerous communicable disease, or any of the effects pertaining to such animal which are liable to introduce such disease into the Philippine Islands. Section 4 declares, substantially, that it shall be unlawful for any reason, firm, or corporation knowingly to ship, drive or otherwise take or transport from one island, province, municipality, township, or settlement to another any domestic animal suffering from any dangerous communicable diseased or to expose such animal either alive or dead on any public road or highway where it may come in contact with other domestic animals. Section 5 provides that whenever the Secretary of the Interior shall declare that a dangerous communicable animal disease prevails in any island, province, municipality, township, or settlement and that there is danger of spreading such disease by shipping, driving or otherwise transporting or taking out of such island, province, municipality, township, or settlement any class of domestic animal, it shall be unlawful for any person, firm or corporation to ship, drive or otherwise remove the kind of animals so specified from such locality except when accompanied by a certificate issued by authority of the Director of Agriculture stating the number and the kind of animals to be shipped, driven, taken or transported, their destination, manner in which they are authorized to be shipped, driven, taken, or transported, and their brands and distinguishing marks.

A simple reading of these sections demonstrates clearly that the case at bar does not fall within any of them. There is no question here of importation and there is no charge or proof that the animals in question were suffering from a dangerous communicable disease or that the Secretary of the Interior had made the declaration provided for in section 5 or that the accused had driven or taken said animals from one island, province, municipality, township or settlement to another. It was alleged had been exposed to a dangerous communicable disease and that they had been placed in a corral in quarantine on the premises of the accused and that he, in violation of the quarantine, had taken them from the corral and worked them upon the lands adjoining. They had not been in highway nor moved from one municipality or settlement to another. They were left upon defendant's hacienda, where they were quarantined, and there worked by the servants of the accused.

The Solicitor-General in his brief in this court admits that the sections referred to are not applicable to the case at bar and also admits that section 7 of said Act is not applicable. This section provides: "Whenever the Director of Agriculture shall order any animal placed in quarantine in accordance with the provisions of this Act, the owner of such animal, or his agent, shall deliver it at the place designated for the quarantine and shall provide it with proper food, water, and attendance. Should the owner or his agent fail to comply with this requirement the Director of Agriculture may furnish supplies and attendance needed, and the reasonable cost of such supplies and attendance shall be collectible from the owner or his agent."

We are in accord with the opinion expressed by the Solicitor-General with respect to this section, as we are with his opinion as to sections 3, 4, and 5. the law nowhere makes it a penal offense to refuse to comply with the provisions of section 7, nor is the section itself so phrased as to warrant the conclusion that it was intended to be a penal section. The section provides the means by which the refusal of the owner to comply therewith shall be overcome and the punishment, if we may call it punishment, which he shall receive by reason of that refusal. It has none of the aspects of a penal provision or the form or substance of such provision. It does not prohibit any act. It does not compel an act nor does it really punish or impose a criminal penalty. The other sections of the law under which punishments may be inflicted are so phrased as to make the prohibited act unlawful, and section 8 provides the punishment for any act declared unlawful by the law.

The Solicitor-General suggests, but does not argue, that section 6 is applicable to the case at bar. Section 6 simply authorizes the Director of Agriculture to do certain things, among them, paragraph (c) "to require that animals which are suffering from dangerous communicable diseases or have been exposed thereto be placed in quarantine at such place and for such time as may be deemed by him necessary to prevent the spread of the disease." Nowhere in the law, however, is the violation of the orders of the Bureau of Agriculture prohibited or made unlawful, nor is there provided any punishment for a violation of such orders. Section 8 provides that "any person violating any of the provisions of this Act shall, upon conviction, be punished by a fine of not more than one thousand pesos, or by imprisonment for not more than six months, or by both such fine and imprisonment, in the discretion of the court, for each offense." A violation of the orders of the Bureau of Agriculture, as authorized by paragraph (c), is not a violation of the provision of the Act. The orders of the Bureau of Agriculture, while they may possibly be said to have the force of law, are statutes and particularly not penal statutes, and a violation of such orders is not a penal offense unless the statute itself somewhere makes a violation thereof unlawful and penalizes it. Nowhere in Act No. 1760 is a violation of the orders of the Bureau of Agriculture made a penal offense, nor is such violation punished in any way therein.

Finally, it is contended by the Government that if the offense stated in the information and proved upon the trial does not constitute a violation of any of the provisions of Act No. 1760, it does constitute a violation of article 581, paragraph 2, of the Penal Code. It provides:

A fine of not less than fifteen and not more than seventy pesetas and censure shall be imposed upon: . . .

2. Any person who shall violate the regulations, ordinances, or proclamations issued with reference to any epedemic disease among animals, the extermination of locusts, or any other similar plague. 1awphil.net

It alleged in the information and was proved on the trial that the Bureau of agriculture had ordered a quarantine of the carabaos at the time and place mentioned; that the quarantine had been executed and completed and the animals actually segregated and confined; that the accused, in violation of such quarantine and of the orders of the Bureau of Agriculture, duly promulgated, broke the quarantine, removed the animals and used them in the ordinary work of his plantation. We consider these acts a plain violation of the article of the Penal Code as above quoted. The fact that the information in its preamble charged a violation of act No. 1760 does not prevent us from finding the accused guilty of a violation of an article of the Penal Code. The complaint opens as follows: "The undersigned accuses Adriano Panlilio of a violation of Act No. 1760, committed as follows:" Then follows the body of the information already quoted in this opinion. We would not permit an accused to be convicted under one Act when he is charged with the violation of another, if the change from one statute to another involved a change of the theory of the trial or required of the defendant a different defense or surprised him in any other way. The allegations required under Act No. 1760 include those required under article 581. The accused could have defended himself in no different manner if he had been expressly charged with a violation of article 581.

In the case of United States vs. Paua (6 Phil. Rep., 740), the information stating the facts upon which the charge was founded terminated with his expression: "In violation of section 315 of Act No. 355 of the Philippine Commission, in effect on the 6th of February, 1902."

In the resolution of this case the Supreme Court found that the facts set forth in the information and proved on the trial did not constitute a violation of section 315 of Act No. 355 as alleged in the information, but did constitute a violation of article 387 in connection with article 383 of the Penal Code, and accordingly convicted the accused under those articles and sentenced him to the corresponding penalty.

In that case the court said: "The foregoing facts, duly established as they were by the testimony of credible witnesses who heard and saw everything that occurred, show beyond peradventure of doubt that the crime of attempted bribery, as defined in article 387, in connection with article 383 of the Penal Code, has been committed, it being immaterial whether it is alleged in the complaint that section 315 of Act No. 355 of the Philippine Commission was violated by the defendant, as the same recites facts and circumstances sufficient to constitute the crime of bribery as defined and punished in the aforesaid articles of the Penal Code." (U. S. vs. Lim San, 17 Phil. Rep., 273; U.S. vs. Jeffrey, 15 Phil. Rep., 391; U. S. vs. Guzman, 25 Phil. Rep., 22.)

The accused is accordingly convicted of a violation of article 581, paragraph 2, of the Penal Code, and is sentenced to pay a fine of seventy pesetas (P14) and censure, with subsidiary imprisonment in case of insolvency, and the costs of this appeal. So ordered.

Arellano, C.J., Torres, Carson and Araullo, JJ., concur.Johnson, J., dissents.

G.R. No. L-64279 April 30, 1984

ANSELMO L. PESIGAN and MARCELINO L. PESIGAN, petitioners, vs.JUDGE DOMINGO MEDINA ANGELES, Regional Trial Court, Caloocan City Branch 129, acting for REGIONAL TRIAL COURT of Camarines Norte, now presided over by JUDGE NICANOR ORIÑO, Daet Branch 40; DRA. BELLA S. MIRANDA, ARNULFO V. ZENAROSA, ET AL., respondents.

Quiazon, De Guzman Makalintal and Barot for petitioners.

The Solicitor General for respondents.

 

AQUINO, J.:ñé+.£ªwph!1

At issue in this case is the enforceability, before publication in the Official Gazette of June 14, 1982, of Presidential Executive Order No. 626-A dated October 25, 1980, providing for the confiscation and forfeiture by the government of carabaos transported from one province to another.

Anselmo L. Pesigan and Marcelo L. Pesigan, carabao dealers, transported in an Isuzu ten-wheeler truck in the evening of April 2, 1982 twenty-six carabaos and a calf from Sipocot, Camarines Sur with Padre Garcia, Batangas, as the destination.

They were provided with (1) a health certificate from the provincial veterinarian of Camarines Sur, issued under the Revised Administrative Code and Presidential Decree No. 533, the Anti-Cattle Rustling Law of 1974; (2) a permit to transport large cattle issued under the authority of the provincial commander; and (3) three certificates of inspection, one from the Constabulary command attesting that the carabaos were not included in the list of lost, stolen and questionable animals; one from the LIvestock inspector, Bureau of Animal Industry of Libmanan, Camarines Sur and one from the mayor of Sipocot.

In spite of the permit to transport and the said four certificates, the carabaos, while passing at Basud, Camarines Norte, were confiscated by Lieutenant Arnulfo V. Zenarosa, the town's police station commander, and by Doctor Bella S. Miranda, provincial veterinarian. The confiscation was basis on the aforementioned Executive Order No. 626-A which provides "that henceforth, no carabao, regardless of age, sex, physical condition or purpose and no carabeef shall be transported from one province to another. The carabaos or carabeef transported in violation of this Executive Order as amended shall be subject to confiscation and forfeiture by the government to be distributed ... to deserving farmers through dispersal as the Director of Animal Industry may see fit, in the case of carabaos" (78 OG 3144).

Doctor Miranda distributed the carabaos among twenty-five farmers of Basud, and to a farmer from the Vinzons municipal nursery (Annex 1).

The Pesigans filed against Zenarosa and Doctor Miranda an action for replevin for the recovery of the carabaos allegedly valued at P70,000 and damages of P92,000. The replevin order could not be executed by the sheriff. In his order of April 25, 1983 Judge Domingo Medina Angeles, who heard the case at Daet and who was later transferred to Caloocan City, dismissed the case for lack of cause of action.

The Pesigans appealed to this Court under Rule 45 of the Rules of Court and section 25 of the Interim Rules and pursuant to Republic Act No. 5440, a 1968 law which superseded Rule 42 of the Rules of Court.

We hold that the said executive order should not be enforced against the Pesigans on April 2, 1982 because, as already noted, it is a penal regulation published more than two months later in the Official Gazette dated June 14, 1982. It became effective only fifteen days thereafter as provided in article 2 of the Civil Code and section 11 of the Revised Administrative Code.

The word "laws" in article 2 (article 1 of the old Civil Code) includes circulars and regulations which prescribe penalties. Publication is necessary to apprise the public of the contents of the regulations and make the said penalties binding on the persons affected thereby. (People vs. Que Po Lay, 94 Phil. 640; Lim Hoa Ting vs. Central Bank of the Phils., 104 Phil. 573; Balbuna vs. Secretary of Education, 110 Phil. 150.)

The Spanish Supreme Court ruled that "bajo la denominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordenes dictadas de conformidad con las mismas por el Gobierno en uso de su potestad (1 Manresa, Codigo Civil, 7th Ed., p. 146.)

Thus, in the Que Po Lay case, a person, convicted by the trial court of having violated Central Bank Circular No. 20 and sentenced to six months' imprisonment and to pay a fine of P1,000, was acquitted by this Court because the circular was published in the Official Gazette three months after his conviction. He was not bound by the circular.

That ruling applies to a violation of Executive Order No. 626-A because its confiscation and forfeiture provision or sanction makes it a penal statute. Justice and fairness dictate that the public must be informed of that provision by means of publication in the Gazette before violators of the executive order can be bound thereby.

The cases of Police Commission vs. Bello, L-29960, January 30, 1971, 37 SCRA 230 and Philippine Blooming Mills vs. Social Security System, 124 Phil. 499, cited by the respondents, do not involve the enforcement of any penal regulation.

Commonwealth Act No. 638 requires that all Presidential executive orders having general applicability should be published in the Official Gazette. It provides that "every order or document which shag prescribe a penalty shall be deemed to have general applicability and legal effect."

Indeed, the practice has always been to publish executive orders in the Gazette. Section 551 of the Revised Administrative Code provides that even bureau "regulations and orders shall become effective only when approved by the Department Head and published in the Official Gazette or otherwise publicly promulgated". (See Commissioner of Civil Service vs. Cruz, 122 Phil. 1015.)

In the instant case, the livestock inspector and the provincial veterinarian of Camarines Norte and the head of the Public Affairs Office of the Ministry of Agriculture were unaware of Executive Order No. 626-A. The Pesigans could not have been expected to be cognizant of such an executive order.

It results that they have a cause of action for the recovery of the carabaos. The summary confiscation was not in order. The recipients of the carabaos should return them to the Pesigans. However, they cannot transport the carabaos to Batangas because they are now bound by the said executive order. Neither can they recover damages. Doctor Miranda and Zenarosa acted in good faith in ordering the forfeiture and dispersal of the carabaos.

WHEREFORE, the trial court's order of dismissal and the confiscation and dispersal of the carabaos are reversed and set aside. Respondents Miranda and Zenarosa are ordered to restore the carabaos, with the requisite documents, to the petitioners, who as owners are entitled to possess the same, with the right to dispose of them in Basud or Sipocot, Camarines Sur. No costs.

SO ORDERED.1äwphï1.ñët

Makasiar, (Chairman), Concepcion, Jr., Guerrero, and Escolin, JJ., concur.

De Castro, J., took no part.

 

 

Separate Opinions

 

ABAD SANTOS, J., concurring:

The Pesigans are entitled to the return of their carabaos or the value of each carabao which is not returned for any reason. The Pesigans are also entitled to a reasonable rental for each carabao from the twenty six farmers who used them. The farmers should not enrich themselves at the expense of the Pesigans.

 

 

Separate Opinions

ABAD SANTOS, J., concurring:

The Pesigans are entitled to the return of their carabaos or the value of each carabao which is not returned for any reason. The Pesigans are also entitled to a reasonable rental for each carabao from the twenty six farmers who used them. The farmers should not enrich themselves at the expense of the Pesigans.