[G.R. No. 127685.
July 23, 1998]
BLAS F. OPLE, petitioner, vs. RUBEN D. TORRES,
ALEXANDER AGUIRRE, HECTOR VILLANUEVA, CIELITO
HABITO, ROBERT BARBERS, CARMENCITA REODICA,
CESAR SARINO, RENATO VALENCIA, TOMAS P.
AFRICA, HEAD OF THE NATIONAL COMPUTER
CENTER and CHAIRMAN OF THE COMMISSION ON
AUDIT, respondents.
DECISION
PUNO, J.:
The petition at bar is a commendable effort on the part of
Senator Blas F. Ople to prevent the shrinking of the right
to privacy, which the revered Mr. Justice Brandeis
considered as "the most comprehensive of rights and the
right most valued by civilized men."[1] Petitioner Ople
prays that we invalidate Administrative Order No. 308
entitled "Adoption of a National Computerized
Identification Reference System" on two important
constitutional grounds, viz: one, it is a usurpation of the
power of Congress to legislate, and two, it impermissibly
intrudes on our citizenry's protected zone of privacy. We
grant the petition for the rights sought to be vindicated
by the petitioner need stronger barriers against further
erosion.
A.O. No. 308 was issued by President Fidel V. Ramos on
December 12, 1996 and reads as follows:
"ADOPTION OF A NATIONAL COMPUTERIZED
IDENTIFICATION REFERENCE SYSTEM
WHEREAS, there is a need to provide Filipino citizens and
foreign residents with the facility to conveniently transact
business with basic service and social security providers
and other government instrumentalities;
WHEREAS, this will require a computerized system to
properly and efficiently identify persons seeking basic
services on social security and reduce, if not totally
eradicate, fraudulent transactions and
misrepresentations;
WHEREAS, a concerted and collaborative effort among
the various basic services and social security providing
agencies and other government instrumentalities is
required to achieve such a system;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the
Republic of the Philippines, by virtue of the powers vested
in me by law, do hereby direct the following:
SECTION 1. Establishment of a National Computerized
Identification Reference System. A decentralized
Identification Reference System among the key basic
services and social security providers is hereby
established.
SEC. 2 Inter-Agency Coordinating Committee. An Inter-
Agency Coordinating Committee (IACC) to draw-up the
implementing guidelines and oversee the implementation
of the System is hereby created, chaired by the Executive
Secretary, with the following as members:
Head, Presidential Management Staff
Secretary, National Economic Development Authority
Secretary, Department of the Interior and
Local Government
Secretary, Department of Health
Administrator, Government Service Insurance
System,
Administrator, Social Security System, Administrator,
National Statistics Office Managing Director, National
Computer Center.
SEC. 3. Secretariat. The National Computer Center (NCC)
is hereby designated as secretariat to the IACC and as
such shall provide administrative and technical support to
the IACC.
SEC. 4. Linkage Among Agencies. The Population
Reference Number (PRN) generated by the NSO shall
serve as the common reference number to establish a
linkage among concerned agencies. The IACC Secretariat
shall coordinate with the different Social Security and
Services Agencies to establish the standards in the use of
Biometrics Technology and in computer application
designs of their respective systems.
Page 1 of 30
SEC. 5. Conduct of Information Dissemination Campaign.
The Office of the Press Secretary, in coordination with the
National Statistics Office, the GSIS and SSS as lead
agencies and other concerned agencies shall undertake a
massive tri-media information dissemination campaign to
educate and raise public awareness on the importance
and use of the PRN and the Social Security Identification
Reference.
SEC. 6. Funding. The funds necessary for the
implementation of the system shall be sourced from the
respective budgets of the concerned agencies.
SEC. 7. Submission of Regular Reports. The NSO, GSIS and
SSS shall submit regular reports to the Office of the
President, through the IACC, on the status of
implementation of this undertaking.
SEC. 8. Effectivity. This Administrative Order shall take
effect immediately.
DONE in the City of Manila, this 12th day of December in
the year of Our Lord, Nineteen Hundred and Ninety-Six.
(SGD.) FIDEL V. RAMOS"
A.O. No. 308 was published in four newspapers of general
circulation on January 22, 1997 and January 23, 1997. On
January 24, 1997, petitioner filed the instant petition
against respondents, then Executive Secretary Ruben
Torres and the heads of the government agencies, who as
members of the Inter-Agency Coordinating Committee,
are charged with the implementation of A.O. No. 308. On
April 8, 1997, we issued a temporary restraining order
enjoining its implementation.
Petitioner contends:
"A. THE ESTABLISHMENT OF A NATIONAL
COMPUTERIZED IDENTIFICATION REFERENCE SYSTEM
REQUIRES A LEGISLATIVE ACT. THE ISSUANCE OF A.O.
NO. 308 BY THE PRESIDENT OF THE REPUBLIC OF THE
PHILIPPINES IS, THEREFORE, AN UNCONSTITUTIONAL
USURPATION OF THE LEGISLATIVE POWERS OF THE
CONGRESS OF THE REPUBLIC OF THE PHILIPPINES.
B. THE APPROPRIATION OF PUBLIC FUNDS BY THE
PRESIDENT FOR THE IMPLEMENTATION OF A.O. NO. 308
IS AN UNCONSTITUTIONAL USURPATION OF THE
EXCLUSIVE RIGHT OF CONGRESS TO APPROPRIATE
PUBLIC FUNDS FOR EXPENDITURE.
C. THE IMPLEMENTATION OF A.O. NO. 308 INSIDIOUSLY
LAYS THE GROUNDWORK FOR A SYSTEM WHICH WILL
VIOLATE THE BILL OF RIGHTS ENSHRINED IN THE
CONSTITUTION."[2]
Respondents counter-argue:
A. THE INSTANT PETITION IS NOT A JUSTICIABLE CASE AS
WOULD WARRANT A JUDICIAL REVIEW;
B. A.O. NO. 308 [1996] WAS ISSUED WITHIN THE
EXECUTIVE AND ADMINISTRATIVE POWERS OF THE
PRESIDENT WITHOUT ENCROACHING ON THE
LEGISLATIVE POWERS OF CONGRESS;
C. THE FUNDS NECESSARY FOR THE IMPLEMENTATION
OF THE IDENTIFICATION REFERENCE SYSTEM MAY BE
SOURCED FROM THE BUDGETS OF THE CONCERNED
AGENCIES;
D. A.O. NO. 308 [1996] PROTECTS AN INDIVIDUAL'S
INTEREST IN PRIVACY.[3]
We now resolve.
I
As is usual in constitutional litigation, respondents raise
the threshold issues relating to the standing to sue of the
petitioner and the justiciability of the case at bar. More
specifically, respondents aver that petitioner has no legal
interest to uphold and that the implementing rules of A.O.
No. 308 have yet to be promulgated.
These submissions do not deserve our sympathetic ear.
Petitioner Ople is a distinguished member of our Senate.
As a Senator, petitioner is possessed of the requisite
standing to bring suit raising the issue that the issuance
of A.O. No. 308 is a usurpation of legislative power.[4] As
taxpayer and member of the Government Service
Insurance System (GSIS), petitioner can also impugn the
legality of the misalignment of public funds and the
misuse of GSIS funds to implement A.O. No. 308.[5]
The ripeness for adjudication of the petition at bar is not
affected by the fact that the implementing rules of A.O.
No. 308 have yet to be promulgated. Petitioner Ople
Page 2 of 30
assails A.O. No. 308 as invalid per se and as infirmed on
its face. His action is not premature for the rules yet to be
promulgated cannot cure its fatal defects. Moreover, the
respondents themselves have started the implementation
of A.O. No. 308 without waiting for the rules. As early as
January 19, 1997, respondent Social Security System (SSS)
caused the publication of a notice to bid for the
manufacture of the National Identification (ID) card.[6]
Respondent Executive Secretary Torres has publicly
announced that representatives from the GSIS and the
SSS have completed the guidelines for the national
identification system.[7] All signals from the respondents
show their unswerving will to implement A.O. No. 308 and
we need not wait for the formality of the rules to pass
judgment on its constitutionality. In this light, the
dissenters insistence that we tighten the rule on standing
is not a commendable stance as its result would be to
throttle an important constitutional principle and a
fundamental right.
II
We now come to the core issues. Petitioner claims that
A.O. No. 308 is not a mere administrative order but a law
and hence, beyond the power of the President to issue.
He alleges that A.O. No. 308 establishes a system of
identification that is all-encompassing in scope, affects
the life and liberty of every Filipino citizen and foreign
resident, and more particularly, violates their right to
privacy.
Petitioner's sedulous concern for the Executive not to
trespass on the lawmaking domain of Congress is
understandable. The blurring of the demarcation line
between the power of the Legislature to make laws and
the power of the Executive to execute laws will disturb
their delicate balance of power and cannot be allowed.
Hence, the exercise by one branch of government of
power belonging to another will be given a stricter
scrutiny by this Court.
The line that delineates Legislative and Executive power is
not indistinct. Legislative power is "the authority, under
the Constitution, to make laws, and to alter and repeal
them."[8] The Constitution, as the will of the people in
their original, sovereign and unlimited capacity, has
vested this power in the Congress of the Philippines.[9]
The grant of legislative power to Congress is broad,
general and comprehensive.[10] The legislative body
possesses plenary power for all purposes of civil
government.[11] Any power, deemed to be legislative by
usage and tradition, is necessarily possessed by Congress,
unless the Constitution has lodged it elsewhere.[12] In
fine, except as limited by the Constitution, either expressly
or impliedly, legislative power embraces all subjects and
extends to matters of general concern or common
interest.[13]
While Congress is vested with the power to enact laws, the
President executes the laws.[14] The executive power is
vested in the President.[15] It is generally defined as the
power to enforce and administer the laws.[16] It is the
power of carrying the laws into practical operation and
enforcing their due observance.[17]
As head of the Executive Department, the President is the
Chief Executive. He represents the government as a whole
and sees to it that all laws are enforced by the officials and
employees of his department.[18] He has control over the
executive department, bureaus and offices. This means
that he has the authority to assume directly the functions
of the executive department, bureau and office, or
interfere with the discretion of its officials.[19] Corollary to
the power of control, the President also has the duty of
supervising the enforcement of laws for the maintenance
of general peace and public order. Thus, he is granted
administrative power over bureaus and offices under his
control to enable him to discharge his duties
effectively.[20]
Administrative power is concerned with the work of
applying policies and enforcing orders as determined by
proper governmental organs.[21] It enables the President
to fix a uniform standard of administrative efficiency and
check the official conduct of his agents.[22] To this end,
he can issue administrative orders, rules and regulations.
Prescinding from these precepts, we hold that A.O. No.
308 involves a subject that is not appropriate to be
covered by an administrative order. An administrative
order is:
"Sec. 3. Administrative Orders.-- Acts of the President
which relate to particular aspects of governmental
operation in pursuance of his duties as administrative
head shall be promulgated in administrative orders."[23]
An administrative order is an ordinance issued by the
President which relates to specific aspects in the
administrative operation of government. It must be in
Page 3 of 30
harmony with the law and should be for the sole purpose
of implementing the law and carrying out the legislative
policy.[24] We reject the argument that A.O. No. 308
implements the legislative policy of the Administrative
Code of 1987. The Code is a general law and "incorporates
in a unified document the major structural, functional and
procedural principles of governance"[25] and "embodies
changes in administrative structures and procedures
designed to serve the people."[26] The Code is divided
into seven (7) Books: Book I deals with Sovereignty and
General Administration, Book II with the Distribution of
Powers of the three branches of Government, Book III on
the Office of the President, Book IV on the Executive
Branch, Book V on the Constitutional Commissions, Book
VI on National Government Budgeting, and Book VII on
Administrative Procedure. These Books contain provisions
on the organization, powers and general administration
of the executive, legislative and judicial branches of
government, the organization and administration of
departments, bureaus and offices under the executive
branch, the organization and functions of the
Constitutional Commissions and other constitutional
bodies, the rules on the national government budget, as
well as guidelines for the exercise by administrative
agencies of quasi-legislative and quasi-judicial powers.
The Code covers both the internal administration of
government, i.e, internal organization, personnel and
recruitment, supervision and discipline, and the effects of
the functions performed by administrative officials on
private individuals or parties outside government.[27]
It cannot be simplistically argued that A.O. No. 308 merely
implements the Administrative Code of 1987. It
establishes for the first time a National Computerized
Identification Reference System. Such a System requires a
delicate adjustment of various contending state policies-
- the primacy of national security, the extent of privacy
interest against dossier-gathering by government, the
choice of policies, etc. Indeed, the dissent of Mr. Justice
Mendoza states that the A.O. No. 308 involves the all-
important freedom of thought. As said administrative
order redefines the parameters of some basic rights of our
citizenry vis-a-vis the State as well as the line that
separates the administrative power of the President to
make rules and the legislative power of Congress, it ought
to be evident that it deals with a subject that should be
covered by law.
Nor is it correct to argue as the dissenters do that A.O. No.
308 is not a law because it confers no right, imposes no
duty, affords no protection, and creates no office. Under
A.O. No. 308, a citizen cannot transact business with
government agencies delivering basic services to the
people without the contemplated identification card. No
citizen will refuse to get this identification card for no one
can avoid dealing with government. It is thus clear as
daylight that without the ID, a citizen will have difficulty
exercising his rights and enjoying his privileges. Given this
reality, the contention that A.O. No. 308 gives no right and
imposes no duty cannot stand.
Again, with due respect, the dissenting opinions unduly
expand the limits of administrative legislation and
consequently erodes the plenary power of Congress to
make laws. This is contrary to the established approach
defining the traditional limits of administrative legislation.
As well stated by Fisher: "x x x Many regulations however,
bear directly on the public. It is here that administrative
legislation must be restricted in its scope and application.
Regulations are not supposed to be a substitute for the
general policy-making that Congress enacts in the form
of a public law. Although administrative regulations are
entitled to respect, the authority to prescribe rules and
regulations is not an independent source of power to
make laws."[28]
III
Assuming, arguendo, that A.O. No. 308 need not be the
subject of a law, still it cannot pass constitutional muster
as an administrative legislation because facially it violates
the right to privacy. The essence of privacy is the "right to
be let alone."[29] In the 1965 case of Griswold v.
Connecticut,[30] the United States Supreme Court gave
more substance to the right of privacy when it ruled that
the right has a constitutional foundation. It held that there
is a right of privacy which can be found within the
penumbras of the First, Third, Fourth, Fifth and Ninth
Amendments,[31] viz:
"Specific guarantees in the Bill of Rights have penumbras
formed by emanations from these guarantees that help
give them life and substance x x x. Various guarantees
create zones of privacy. The right of association contained
in the penumbra of the First Amendment is one, as we
have seen. The Third Amendment in its prohibition
against the quartering of soldiers `in any house' in time of
peace without the consent of the owner is another facet
of that privacy. The Fourth Amendment explicitly affirms
the `right of the people to be secure in their persons,
Page 4 of 30
houses, papers, and effects, against unreasonable
searches and seizures.' The Fifth Amendment in its Self-
Incrimination Clause enables the citizen to create a zone
of privacy which government may not force him to
surrender to his detriment. The Ninth Amendment
provides: `The enumeration in the Constitution, of certain
rights, shall not be construed to deny or disparage others
retained by the people.'"
In the 1968 case of Morfe v. Mutuc,[32] we adopted the
Griswold ruling that there is a constitutional right to
privacy. Speaking thru Mr. Justice, later Chief Justice,
Enrique Fernando, we held:
"xxx
The Griswold case invalidated a Connecticut statute which
made the use of contraceptives a criminal offense on the
ground of its amounting to an unconstitutional invasion
of the right of privacy of married persons; rightfully it
stressed "a relationship lying within the zone of privacy
created by several fundamental constitutional
guarantees." It has wider implications though. The
constitutional right to privacy has come into its own.
So it is likewise in our jurisdiction. The right to privacy as
such is accorded recognition independently of its
identification with liberty; in itself, it is fully deserving of
constitutional protection. The language of Prof. Emerson
is particularly apt: 'The concept of limited government has
always included the idea that governmental powers stop
short of certain intrusions into the personal life of the
citizen. This is indeed one of the basic distinctions
between absolute and limited government. Ultimate and
pervasive control of the individual, in all aspects of his life,
is the hallmark of the absolute state. In contrast, a system
of limited government safeguards a private sector, which
belongs to the individual, firmly distinguishing it from the
public sector, which the state can control. Protection of
this private sector-- protection, in other words, of the
dignity and integrity of the individual--has become
increasingly important as modern society has developed.
All the forces of a technological age --industrialization,
urbanization, and organization-- operate to narrow the
area of privacy and facilitate intrusion into it. In modern
terms, the capacity to maintain and support this enclave
of private life marks the difference between a democratic
and a totalitarian society.'"
Indeed, if we extend our judicial gaze we will find that the
right of privacy is recognized and enshrined in several
provisions of our Constitution.[33] It is expressly
recognized in Section 3(1) of the Bill of Rights:
"Sec. 3. (1) The privacy of communication and
correspondence shall be inviolable except upon lawful
order of the court, or when public safety or order requires
otherwise as prescribed by law."
Other facets of the right to privacy are protected in
various provisions of the Bill of Rights, viz:[34]
"Sec. 1. No person shall be deprived of life, liberty, or
property without due process of law, nor shall any person
be denied the equal protection of the laws.
Sec. 2. The right of the people to be secure in their
persons, houses, papers, and effects against unreasonable
searches and seizures of whatever nature and for any
purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause
to be determined personally by the judge after
examination under oath or affirmation of the complainant
and the witnesses he may produce, and particularly
describing the place to be searched and the persons or
things to be seized.
x x x.
Sec. 6. The liberty of abode and of changing the same
within the limits prescribed by law shall not be impaired
except upon lawful order of the court. Neither shall the
right to travel be impaired except in the interest of
national security, public safety, or public health, as may be
provided by law.
x x x.
Sec. 8. The right of the people, including those employed
in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law
shall not be abridged.
Sec. 17. No person shall be compelled to be a witness
against himself."
Zones of privacy are likewise recognized and protected in
our laws. The Civil Code provides that "[e]very person shall
respect the dignity, personality, privacy and peace of mind
Page 5 of 30
of his neighbors and other persons" and punishes as
actionable torts several acts by a person of meddling and
prying into the privacy of another.[35] It also holds a
public officer or employee or any private individual liable
for damages for any violation of the rights and liberties of
another person,[36] and recognizes the privacy of letters
and other private communications.[37] The Revised Penal
Code makes a crime the violation of secrets by an
officer,[38] the revelation of trade and industrial
secrets,[39] and trespass to dwelling.[40] Invasion of
privacy is an offense in special laws like the Anti-
Wiretapping Law,[41] the Secrecy of Bank Deposit Act[42]
and the Intellectual Property Code.[43] The Rules of Court
on privileged communication likewise recognize the
privacy of certain information.[44]
Unlike the dissenters, we prescind from the premise that
the right to privacy is a fundamental right guaranteed by
the Constitution, hence, it is the burden of government to
show that A.O. No. 308 is justified by some compelling
state interest and that it is narrowly drawn. A.O. No. 308
is predicated on two considerations: (1) the need to
provide our citizens and foreigners with the facility to
conveniently transact business with basic service and
social security providers and other government
instrumentalities and (2) the need to reduce, if not totally
eradicate, fraudulent transactions and misrepresentations
by persons seeking basic services. It is debatable whether
these interests are compelling enough to warrant the
issuance of A.O. No. 308. But what is not arguable is the
broadness, the vagueness, the overbreadth of A.O. No.
308 which if implemented will put our people's right to
privacy in clear and present danger.
The heart of A.O. No. 308 lies in its Section 4 which
provides for a Population Reference Number (PRN) as a
"common reference number to establish a linkage among
concerned agencies" through the use of "Biometrics
Technology" and "computer application designs."
Biometry or biometrics is "the science of the application
of statistical methods to biological facts; a mathematical
analysis of biological data."[45] The term "biometrics" has
now evolved into a broad category of technologies which
provide precise confirmation of an individual's identity
through the use of the individual's own physiological and
behavioral characteristics.[46] A physiological
characteristic is a relatively stable physical characteristic
such as a fingerprint, retinal scan, hand geometry or facial
features. A behavioral characteristic is influenced by the
individual's personality and includes voice print, signature
and keystroke.[47] Most biometric identification systems
use a card or personal identification number (PIN) for
initial identification. The biometric measurement is used
to verify that the individual holding the card or entering
the PIN is the legitimate owner of the card or PIN.[48]
A most common form of biological encoding is finger-
scanning where technology scans a fingertip and turns the
unique pattern therein into an individual number which is
called a biocrypt. The biocrypt is stored in computer data
banks[49] and becomes a means of identifying an
individual using a service. This technology requires one's
fingertip to be scanned every time service or access is
provided.[50] Another method is the retinal scan. Retinal
scan technology employs optical technology to map the
capillary pattern of the retina of the eye. This technology
produces a unique print similar to a finger print.[51]
Another biometric method is known as the "artificial
nose." This device chemically analyzes the unique
combination of substances excreted from the skin of
people.[52] The latest on the list of biometric
achievements is the thermogram. Scientists have found
that by taking pictures of a face using infra-red cameras,
a unique heat distribution pattern is seen. The different
densities of bone, skin, fat and blood vessels all contribute
to the individual's personal "heat signature."[53]
In the last few decades, technology has progressed at a
galloping rate. Some science fictions are now science
facts. Today, biometrics is no longer limited to the use of
fingerprint to identify an individual. It is a new science that
uses various technologies in encoding any and all
biological characteristics of an individual for identification.
It is noteworthy that A.O. No. 308 does not state what
specific biological characteristics and what particular
biometrics technology shall be used to identify people
who will seek its coverage. Considering the banquet of
options available to the implementors of A.O. No. 308, the
fear that it threatens the right to privacy of our people is
not groundless.
A.O. No. 308 should also raise our antennas for a further
look will show that it does not state whether encoding of
data is limited to biological information alone for
identification purposes. In fact, the Solicitor General
claims that the adoption of the Identification Reference
System will contribute to the "generation of population
data for development planning."[54] This is an admission
that the PRN will not be used solely for identification but
Page 6 of 30
for the generation of other data with remote relation to
the avowed purposes of A.O. No. 308. Clearly, the
indefiniteness of A.O. No. 308 can give the government
the roving authority to store and retrieve information for
a purpose other than the identification of the individual
through his PRN.
The potential for misuse of the data to be gathered under
A.O. No. 308 cannot be underplayed as the dissenters do.
Pursuant to said administrative order, an individual must
present his PRN everytime he deals with a government
agency to avail of basic services and security. His
transactions with the government agency will necessarily
be recorded-- whether it be in the computer or in the
documentary file of the agency. The individual's file may
include his transactions for loan availments, income tax
returns, statement of assets and liabilities,
reimbursements for medication, hospitalization, etc. The
more frequent the use of the PRN, the better the chance
of building a huge and formidable information base
through the electronic linkage of the files.[55] The data
may be gathered for gainful and useful government
purposes; but the existence of this vast reservoir of
personal information constitutes a covert invitation to
misuse, a temptation that may be too great for some of
our authorities to resist.[56]
We can even grant, arguendo, that the computer data file
will be limited to the name, address and other basic
personal information about the individual.[57] Even that
hospitable assumption will not save A.O. No. 308 from
constitutional infirmity for again said order does not tell
us in clear and categorical terms how these information
gathered shall be handled. It does not provide who shall
control and access the data, under what circumstances
and for what purpose. These factors are essential to
safeguard the privacy and guaranty the integrity of the
information.[58] Well to note, the computer linkage gives
other government agencies access to the information. Yet,
there are no controls to guard against leakage of
information. When the access code of the control
programs of the particular computer system is broken, an
intruder, without fear of sanction or penalty, can make use
of the data for whatever purpose, or worse, manipulate
the data stored within the system.[59]
It is plain and we hold that A.O. No. 308 falls short of
assuring that personal information which will be gathered
about our people will only be processed for unequivocally
specified purposes.[60] The lack of proper safeguards in
this regard of A.O. No. 308 may interfere with the
individual's liberty of abode and travel by enabling
authorities to track down his movement; it may also
enable unscrupulous persons to access confidential
information and circumvent the right against self-
incrimination; it may pave the way for "fishing
expeditions" by government authorities and evade the
right against unreasonable searches and seizures.[61] The
possibilities of abuse and misuse of the PRN, biometrics
and computer technology are accentuated when we
consider that the individual lacks control over what can be
read or placed on his ID, much less verify the correctness
of the data encoded.[62] They threaten the very abuses
that the Bill of Rights seeks to prevent.[63]
The ability of a sophisticated data center to generate a
comprehensive cradle-to-grave dossier on an individual
and transmit it over a national network is one of the most
graphic threats of the computer revolution.[64] The
computer is capable of producing a comprehensive
dossier on individuals out of information given at different
times and for varied purposes.[65] It can continue adding
to the stored data and keeping the information up to date.
Retrieval of stored data is simple. When information of a
privileged character finds its way into the computer, it can
be extracted together with other data on the subject.[66]
Once extracted, the information is putty in the hands of
any person. The end of privacy begins.
Though A.O. No. 308 is undoubtedly not narrowly drawn,
the dissenting opinions would dismiss its danger to the
right to privacy as speculative and hypothetical. Again, we
cannot countenance such a laidback posture. The Court
will not be true to its role as the ultimate guardian of the
people's liberty if it would not immediately smother the
sparks that endanger their rights but would rather wait for
the fire that could consume them.
We reject the argument of the Solicitor General that an
individual has a reasonable expectation of privacy with
regard to the National ID and the use of biometrics
technology as it stands on quicksand. The reasonableness
of a person's expectation of privacy depends on a two-
part test: (1) whether by his conduct, the individual has
exhibited an expectation of privacy; and (2) whether this
expectation is one that society recognizes as
reasonable.[67] The factual circumstances of the case
determines the reasonableness of the expectation.[68]
However, other factors, such as customs, physical
surroundings and practices of a particular activity, may
Page 7 of 30
serve to create or diminish this expectation.[69] The use
of biometrics and computer technology in A.O. No. 308
does not assure the individual of a reasonable expectation
of privacy.[70] As technology advances, the level of
reasonably expected privacy decreases.[71] The measure
of protection granted by the reasonable expectation
diminishes as relevant technology becomes more widely
accepted.[72] The security of the computer data file
depends not only on the physical inaccessibility of the file
but also on the advances in hardware and software
computer technology. A.O. No. 308 is so widely drawn
that a minimum standard for a reasonable expectation of
privacy, regardless of technology used, cannot be inferred
from its provisions.
The rules and regulations to be drawn by the IACC cannot
remedy this fatal defect. Rules and regulations merely
implement the policy of the law or order. On its face, A.O.
No. 308 gives the IACC virtually unfettered discretion to
determine the metes and bounds of the ID System.
Nor do our present laws provide adequate safeguards for
a reasonable expectation of privacy. Commonwealth Act
No. 591 penalizes the disclosure by any person of data
furnished by the individual to the NSO with imprisonment
and fine.[73] Republic Act No. 1161 prohibits public
disclosure of SSS employment records and reports.[74]
These laws, however, apply to records and data with the
NSO and the SSS. It is not clear whether they may be
applied to data with the other government agencies
forming part of the National ID System. The need to clarify
the penal aspect of A.O. No. 308 is another reason why its
enactment should be given to Congress.
Next, the Solicitor General urges us to validate A.O. No.
308's abridgment of the right of privacy by using the
rational relationship test.[75] He stressed that the
purposes of A.O. No. 308 are: (1) to streamline and speed
up the implementation of basic government services, (2)
eradicate fraud by avoiding duplication of services, and (3)
generate population data for development planning. He
concludes that these purposes justify the incursions into
the right to privacy for the means are rationally related to
the end.[76]
We are not impressed by the argument. In Morfe v.
Mutuc,[77] we upheld the constitutionality of R.A. 3019,
the Anti-Graft and Corrupt Practices Act, as a valid police
power measure. We declared that the law, in compelling
a public officer to make an annual report disclosing his
assets and liabilities, his sources of income and expenses,
did not infringe on the individual's right to privacy. The
law was enacted to promote morality in public
administration by curtailing and minimizing the
opportunities for official corruption and maintaining a
standard of honesty in the public service.[78]
The same circumstances do not obtain in the case at bar.
For one, R.A. 3019 is a statute, not an administrative order.
Secondly, R.A. 3019 itself is sufficiently detailed. The law is
clear on what practices were prohibited and penalized,
and it was narrowly drawn to avoid abuses. In the case at
bar, A.O. No. 308 may have been impelled by a worthy
purpose, but, it cannot pass constitutional scrutiny for it is
not narrowly drawn. And we now hold that when the
integrity of a fundamental right is at stake, this court will
give the challenged law, administrative order, rule or
regulation a stricter scrutiny. It will not do for the
authorities to invoke the presumption of regularity in the
performance of official duties. Nor is it enough for the
authorities to prove that their act is not irrational for a
basic right can be diminished, if not defeated, even when
the government does not act irrationally. They must
satisfactorily show the presence of compelling state
interests and that the law, rule, or regulation is narrowly
drawn to preclude abuses. This approach is demanded by
the 1987 Constitution whose entire matrix is designed to
protect human rights and to prevent authoritarianism. In
case of doubt, the least we can do is to lean towards the
stance that will not put in danger the rights protected by
the Constitution.
The case of Whalen v. Roe[79] cited by the Solicitor
General is also off-line. In Whalen, the United States
Supreme Court was presented with the question of
whether the State of New York could keep a centralized
computer record of the names and addresses of all
persons who obtained certain drugs pursuant to a
doctor's prescription. The New York State Controlled
Substances Act of 1972 required physicians to identify
patients obtaining prescription drugs enumerated in the
statute, i.e., drugs with a recognized medical use but with
a potential for abuse, so that the names and addresses of
the patients can be recorded in a centralized computer file
of the State Department of Health. The plaintiffs, who
were patients and doctors, claimed that some people
might decline necessary medication because of their fear
that the computerized data may be readily available and
open to public disclosure; and that once disclosed, it may
stigmatize them as drug addicts.[80] The plaintiffs alleged
Page 8 of 30
that the statute invaded a constitutionally protected zone
of privacy, i.e, the individual interest in avoiding disclosure
of personal matters, and the interest in independence in
making certain kinds of important decisions. The U.S.
Supreme Court held that while an individual's interest in
avoiding disclosure of personal matters is an aspect of the
right to privacy, the statute did not pose a grievous threat
to establish a constitutional violation. The Court found
that the statute was necessary to aid in the enforcement
of laws designed to minimize the misuse of dangerous
drugs. The patient-identification requirement was a
product of an orderly and rational legislative decision
made upon recommendation by a specially appointed
commission which held extensive hearings on the matter.
Moreover, the statute was narrowly drawn and contained
numerous safeguards against indiscriminate disclosure.
The statute laid down the procedure and requirements for
the gathering, storage and retrieval of the information. It
enumerated who were authorized to access the data. It
also prohibited public disclosure of the data by imposing
penalties for its violation. In view of these safeguards, the
infringement of the patients' right to privacy was justified
by a valid exercise of police power. As we discussed above,
A.O. No. 308 lacks these vital safeguards.
Even while we strike down A.O. No. 308, we spell out in
neon that the Court is not per se against the use of
computers to accumulate, store, process, retrieve and
transmit data to improve our bureaucracy. Computers
work wonders to achieve the efficiency which both
government and private industry seek. Many information
systems in different countries make use of the computer
to facilitate important social objectives, such as better law
enforcement, faster delivery of public services, more
efficient management of credit and insurance programs,
improvement of telecommunications and streamlining of
financial activities.[81] Used wisely, data stored in the
computer could help good administration by making
accurate and comprehensive information for those who
have to frame policy and make key decisions.[82] The
benefits of the computer has revolutionized information
technology. It developed the internet,[83] introduced the
concept of cyberspace[84] and the information
superhighway where the individual, armed only with his
personal computer, may surf and search all kinds and
classes of information from libraries and databases
connected to the net.
In no uncertain terms, we also underscore that the right
to privacy does not bar all incursions into individual
privacy. The right is not intended to stifle scientific and
technological advancements that enhance public service
and the common good. It merely requires that the law be
narrowly focused[85] and a compelling interest justify
such intrusions.[86] Intrusions into the right must be
accompanied by proper safeguards and well-defined
standards to prevent unconstitutional invasions. We
reiterate that any law or order that invades individual
privacy will be subjected by this Court to strict scrutiny.
The reason for this stance was laid down in Morfe v.
Mutuc, to wit:
"The concept of limited government has always included
the idea that governmental powers stop short of certain
intrusions into the personal life of the citizen. This is
indeed one of the basic distinctions between absolute and
limited government. Ultimate and pervasive control of the
individual, in all aspects of his life, is the hallmark of the
absolute state. In contrast, a system of limited
government safeguards a private sector, which belongs to
the individual, firmly distinguishing it from the public
sector, which the state can control. Protection of this
private sector-- protection, in other words, of the dignity
and integrity of the individual-- has become increasingly
important as modern society has developed. All the forces
of a technological age-- industrialization, urbanization,
and organization-- operate to narrow the area of privacy
and facilitate intrusion into it. In modern terms, the
capacity to maintain and support this enclave of private
life marks the difference between a democratic and a
totalitarian society."[87]
IV
The right to privacy is one of the most threatened rights
of man living in a mass society. The threats emanate from
various sources-- governments, journalists, employers,
social scientists, etc.[88] In the case at bar, the threat
comes from the executive branch of government which by
issuing A.O. No. 308 pressures the people to surrender
their privacy by giving information about themselves on
the pretext that it will facilitate delivery of basic services.
Given the record-keeping power of the computer, only
the indifferent will fail to perceive the danger that A.O. No.
308 gives the government the power to compile a
devastating dossier against unsuspecting citizens. It is
timely to take note of the well-worded warning of Kalvin,
Jr., "the disturbing result could be that everyone will live
burdened by an unerasable record of his past and his
limitations. In a way, the threat is that because of its
Page 9 of 30
record-keeping, the society will have lost its benign
capacity to forget."[89] Oblivious to this counsel, the
dissents still say we should not be too quick in labelling
the right to privacy as a fundamental right. We close with
the statement that the right to privacy was not engraved
in our Constitution for flattery.
IN VIEW WHEREOF, the petition is granted and
Administrative Order No. 308 entitled "Adoption of a
National Computerized Identification Reference System"
declared null and void for being unconstitutional.
SO ORDERED.
REPUBLIC VS MIGRINO, GR 89483
August 30, 1990
Facts:
Acting on information received by the New AFP Anti-Graft
Board, which indicated the acquisition of wealth beyond
his lawful income, private respondent Ret. Lt.Tecson was
required by the Board to submit his explanation/comment
together with his supporting evidence. Private respondent
was unable to produce his supporting evidence because
they were allegedly in the custody of his bookkeeper who
had gone abroad. The Board proceeded with its
investigation and submitted its resolution, recommending
that private respondent be prosecuted and tried for
violation of Rep. Act No. 3019, as amended, and Rep. Act
No. 1379, as amended.
The case was set for preliminary investigation by the
PCGG. Private respondent moved to dismiss the case on
the following grounds: (1) that the PCGG has no
jurisdiction over his person; (2) that the action against him
under Rep. Act No. 1379 has already prescribed; (3) that
E.O. No. 14, insofar as it suspended the provisions of Rep.
Act No. 1379 on prescription of actions, was inapplicable
to his case; and (4) that having retired from the AFP, he
was now beyond the reach of Rep. Act No. 3019. The
Board opposed the motion to dismiss. The PCGG denied
the motion to dismiss for lack of merit. Private
respondent moved for reconsideration but was denied by
the PCGG. Private respondent was directed to submit his
counter-affidavit and other controverting evidence.
Private respondent filed a petition for prohibition with
preliminary injunction with the RTC. Petitioner filed a
motion to dismiss and opposed the application for the
issuance of a writ of preliminary injunction on the
principal ground that the RTC had no jurisdiction over the
Board, citing the case of PCGG v. Pena. Private respondent
opposed the motion to dismiss. Petitioner replied to the
opposition.
The court judge denied petitioner’s motion to dismiss.
The respondent judge granted the application for the
issuance of a writ of preliminary injunction, enjoining
petitioners from investigating or prosecuting private
respondent under Rep. Acts Nos. 3019 and 1379 upon the
filing of a bond in the amount of Twenty Thousand Pesos.
Petitioner strongly argues that the private respondent’s
case falls within the jurisdiction of the PCGG. Hence, this
petition.
Issues:
WON PCGG has jurisdiction over the case of private
respondent
Ruling:
No. It will not do to cite the order of the PCGG Chairman,
creating the Board and authorizing it to investigate the
unexplained wealth and corrupt practices of AFP
personnel, both retired and in active service, to support
the contention that PCGG has jurisdiction over the case of
private respondent
Applying the rule in statutory construction known as
ejusdem generis, the term “subordinate” as used in E.O.
Nos. 1 and 2 would refer to one who enjoys a close
association or relation with former Pres. Marcos and/or his
wife, similar to the immediate family member, relative,
and close associate in E.O. No. 1 and the close relative,
business associate, dummy, agent, or nominee in E.O. No.
2. Clearly, this alleged unlawful accumulation of wealth is
not that contemplated in E.O. Nos. 1, 2, 14 and 14-A.
LUPANGCO VS. CA (G.R. NO. 77372)
Facts:
On or about October 6, 1986, herein respondent
Professional Regulation Commission (PRC) issued
Resolution No. 105 as parts of its "Additional Instructions
to Examinees," to all those applying for admission to take
the licensure examinations in accountancy:
No examinee shall attend any review class, briefing,
conference or the like conducted by, or shall receive any
hand-out, review material, or any tip from any school,
Page 10 of 30
college or university, or any review center or the like or
any reviewer, lecturer, instructor official or employee of
any of the aforementioned or similar institutions during
the three days immediately proceeding every examination
day including examination day.
Any examinee violating this instruction shall be subject to
the sanctions prescribed by Sec. 8, Art. III of the Rules and
Regulations of the Commission.
On October 16, 1986, herein petitioners, all reviewees
preparing to take the licensure examinations in
accountancy schedule on October 25 and November 2 of
the same year, filed on their own behalf of all others
similarly situated like them, with the Regional Trial Court
of Manila a complaint for injunction with a prayer with the
issuance of a writ of a preliminary injunction against
respondent PRC to restrain the latter from enforcing the
above-mentioned resolution and to declare the same
unconstitutional.
Respondent PRC filed a motion to dismiss on October 21,
1987 on the ground that the lower court had no
jurisdiction to review and to enjoin the enforcement of its
resolution. In an Order of October 21, 1987, the lower
court declared that it had jurisdiction to try the case and
enjoined the respondent commission from enforcing and
giving effect to Resolution No. 105 which it found to be
unconstitutional. Not satisfied therewith, respondent PRC,
on November 10, 1986, an appeal with the Court of
Appeals. The petition was granted.
Issue:
Whether or not Resolution No. 105 is constitutional.
Held:
CA stated as basis its conclusion that PCS and RTC are co-
equal branches. They relied heavily on the case of
National Electrification Administration vs. Mendoza where
the Court held that a Court of First Instance cannot
interfere with the orders of SEC, the two being a co-equal
branch.
SC said the cases cited by CA are not in point. It is glaringly
apparent that the reason why the Court ruled that the
Court of First Instance could not interfere with the orders
of SEC was that this was provided for by the law. Nowhere
in the said cases was it held that a Court of First Instance
has no jurisdiction over all other government agencies. On
the contrary, the ruling was specifically limited to the SEC.
The respondent court erred when it place he SEC and PRC
in the same category. There is no law providing for the
next course of action for a party who wants to question a
ruling or order of the PRC. What is clear from PD No. 223
is that PRC is attached to the Office of the President for
general direction and coordination. Well settled in our
jurisprudence the view that even acts of the Office of the
President may be reviewed by the RTC. In view of the
foregoing, SC rules that RTC has jurisdiction to entertain
the case and enjoin PRC from enforcing its resolution.
As to the validity of Resolution No. 105, although the
resolution has a commendable purpose which is to
preserve the integrity and purity of the licensure
examinations, the resolution is unreasonable in that an
examinee cannot even attend and review class, briefing,
conference or the like or receive hand-out, review
material, or any tip from any school, college or university,
or any review center. The unreasonableness is more
obvious in that one who is caught committing the
prohibited acts even without ill motives will be barred
from taking future examinations.
Resolution No. 105 is not only unreasonable and arbitrary,
it also infringes on the examinees’ right to liberty
guaranteed by the Constitution. PRC has no authority to
dictate on the reviewees as to how they should prepare
themselves for the licensure examinations specially if the
steps they take are lawful.
Another evident objection to Resolution No. 105 is that it
violates the academic freedom of the schools concerned.
PRC cannot interfere with the conduct of review that
review schools and centers believe would best enable
their enrollees to pass the examination. Unless the means
and methods of instruction are clearly found to be
inefficient, impractical, or riddled with corruption, review
schools and centers may not be stopped from helping out
their students.
The enforcement of Resolution No. 105 is not a guarantee
that the alleged leakages in the licensure examinations
will be eradicated or at least minimized. What is needed
to be done by the respondent is to find out the source of
such leakages and stop it right there.
The decision of the CA was REVERSE and SET ASIDE.
Page 11 of 30
JUDGE DADOLE VS COA therein is not absolute. Congress may set limitations on
the exercise of autonomy. It is for the President, through
the DBM, to check whether these legislative limitations are
FACTS: In 1986, the RTC and MTC judges of Mandaue City
being followed by the local government units.
started receiving monthly allowances through the yearly
ISSUE: Whether LBC 55 of the DBM is void for going
appropriation ordinance enacted by the Sangguniang
beyond the supervisory powers of the President
Panlungsod of the said city. In 1991, Mandaue City
HELD: The petitioner’s contention is meritorious. Section
increased the amount to P1,500 for each judge.
4 of Article X of the 1987 Philippine Constitution provides
On March 15, 1994, the Department of Budget and
that “ The President of the Philippines shall exercise
Management (DBM) issued the disputed Local Budget
general supervision over local governments. “ This
Circular No. 55 (LBC 55) which provided that such
provision has been interpreted to exclude the power of
additional allowances in the form of honorarium at rates
control. It was emphasized that the two terms --
shall be granted but it shall not exceed P1,000.00 in
supervision and control -- differed in meaning and extent.
provinces and cities and P700.00 in municipalities subject
The Court distinguished them as follows:
to the following conditions:
"x x x In administrative law, supervision means overseeing
a) That the grant is not mandatory on the part of the LGUs;
or the power or authority of an officer to see that
b) That all contractual and statutory obligations of the
subordinate officers perform their duties. If the latter fail
LGU including the implementation of R.A. 6758 shall have
or neglect to fulfill them, the former may take such action
been fully provided in the budget;
or step as prescribed by law to make them perform their
c) That the budgetary requirements/limitations under
duties. Control, on the other hand, means the power of an
Section 324 and 325 of R.A. 7160 should be satisfied
officer to alter or modify or nullify or set aside what a
and/or complied with; and
subordinate officer ha[s] done in the performance of his
d) That the LGU has fully implemented the devolution of
duties and to substitute the judgment of the former for
functions/personnel in accordance with R.A. 7160.3"
that of the latter."ii 6
(italics supplied)
In Taule v. Santos,iii 7 we further stated that the Chief
Acting on the DBM directive, the Mandaue City Auditor
Executive wielded no more authority than that of checking
issued notices of disallowance to petitioners. Beginning
whether local governments or their officials were
October, 1994, the additional monthly allowances of the
performing their duties as provided by the fundamental
petitioner judges were reduced to P1,000 each. They were
law and by statutes. He cannot interfere with local
also asked to reimburse the amount they received in
governments, so long as they act within the scope of their
excess of P1,000 from April to September, 1994. The
authority. "Supervisory power, when contrasted with
petitioner judges filed with the Office of the City Auditor
control, is the power of mere oversight over an inferior
a protest against the notices of disallowance. But the City
body; it does not include any restraining authority over
Auditor treated the protest as a motion for
such body,"iv 8 we said.
reconsideration and indorsed the same to the COA
In a more recent case, Drilon v. Lim,v 9 the difference
Regional Office No. 7. In turn, the COA Regional Office
between control and supervision was further delineated.
referred the motion to the head office with a
Officers in control lay down the rules in the performance
recommendation that the same be denied.
or accomplishment of an act. If these rules are not
On November 27, 1995, Executive Judge Mercedes Gozo-
followed, they may, in their discretion, order the act
Dadole, for and in behalf of the petitioner judges, filed a
undone or redone by their subordinates or even decide to
motion for reconsideration of the decision of the COA. In
do it themselves. On the other hand, supervision does not
a resolution dated May 28, 1996, the COA denied the
cover such authority. Supervising officials merely see to it
motion. Hence, this petition.
that the rules are followed, but they themselves do not lay
Petitioner judges argue that LBC 55 is void for infringing
down such rules, nor do they have the discretion to
on the local autonomy of Mandaue City. They also
modify or replace them. If the rules are not observed, they
maintain that said circular is not supported by any law and
may order the work done or redone, but only to conform
therefore goes beyond the supervisory powers of the
to such rules. They may not prescribe their own manner
President. Respondent COA, on the other hand, insists
of execution of the act. They have no discretion on this
that the constitutional and statutory authority of a city
matter except to see to it that the rules are followed.
government to provide allowances to judges stationed

Page 12 of 30
By constitutional fiat, local government units are subject
to the President's supervision only, not control, so long as
their acts are exercised within the sphere of their
legitimate powers. By the same token, the President may
not withhold or alter any authority or power given them
by the Constitution and the law.
Clearly then, the President can only interfere in the affairs
and activities of a local government unit if he or she finds
that the latter has acted contrary to law. Hence, the
President or any of his or her alter egos cannot interfere
in local affairs as long as the concerned local government
unit acts within the parameters of the law and the
Constitution.
It was then held that LBC 55 went beyond the law it seeks
to implement.
LBC 55 provides that the additional monthly allowances
to be given by a local government unit should not
exceedP1,000 in provinces and cities and P700 in
municipalities. Section 458, par. (a)(1)(xi), of RA 7160, the
law that supposedly serves as the legal basis of LBC 55,
allows the grant of additional allowances to judges "when
the finances of the city government allow." The said
provision does not authorize setting a definite maximum
limit to the additional allowances granted to judges.
Setting a uniform amount for the grant of additional
allowances is an inappropriate way of enforcing the
criterion found in Section 458, par. (a)(1)(xi), of RA 7160.
The DBM over-stepped its power of supervision over local
government units by imposing a prohibition that did not
correspond with the law it sought to implement. In other
words, the prohibitory nature of the circular had no legal
basis.
WHEREFORE, the petition is hereby GRANTED, and the
assailed decision and resolution, dated September 21,
1995 and May 28, 1996, respectively, of the Commission
on Audit are hereby set aside.
CIR vs. CA, CTA and FORTUNE TOBACCO
CORPORATION G.R. No. 119761 August 29,
1996, Taxation OCTOBER 25, 2017
FACTS:
‘Champion,’ ‘Hope,’ and ‘More’ were classified 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
and registered as a local brand.” Ad Valorem taxes were
imposed on these brands.
RMC 37-93, Reclassification of Cigarettes Subject to Excise
Tax, was issued by the BIR which aims to collect
deficiencies on ad valorem taxes against Fortune Tobacco
following their reclassification as foreign branded
cigarettes.
“HOPE,” “MORE” and “CHAMPION” being manufactured
by Fortune Tobacco Corporation were considered locally
manufactured cigarettes bearing a foreign brand subject
to the 55% ad valorem tax on cigarettes under RA 7654.
Fortune Tobacco filed a petition for review with the CTA.
RMC 37-93 is found to be defective, invalid and
unenforceable.
The CA sustained the decision of the CTA. Hence, this
appeal.
ISSUE:
Is RMC 37-93 a mere interpretative ruling, therefore not
requiring, for its effectivity, hearing and filing with the UP
Law Center?
RULING:
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
Page 13 of 30
within the scope of the amendatory law and subject them [G.R. No. 131082. June 19, 2000]
to an increased tax rate, the now disputed RMC 37-93 had
to be issued. In so doing, the BIR not simply intrepreted ROMULO, MABANTA, BUENAVENTURA, SAYOC
the law; verily, it legislated under its quasi-legislative
& DE LOS ANGELES, petitioner, vs. HOME
authority.The due observance of the requirements of
DEVELOPMENT MUTUAL FUND, respondent.
notice, of hearing, and of publication should not have
been then ignored.
DECISION
Indeed, the BIR itself, in its RMC 10-86, has observed and
provided:
DAVIDE, JR., C.J.: CODES
In order that there shall be a just enforcement of rules
and regulations, in conformity with the basic element of
Once again, this Court is confronted with the issue of the
due process, the following procedures are hereby
validity of the Amendments to the Rules and Regulations
prescribed for the drafting, issuance and implementation
Implementing Republic Act No. 7742, which require the
of the said Revenue Tax Issuances:
existence of a plan providing for both
(1) This Circular shall apply only to (a) Revenue
provident/retirement and housing benefits for exemption
Regulations; (b) Revenue Audit Memorandum Orders; and
from the Pag~IBIG Fund coverage under Presidential
(c) Revenue Memorandum Circulars and Revenue
Decree No. 1752, as amended.
Memorandum Orders bearing on internal revenue tax
rules and regulations.
Pursuant to Section 19[1] of P.D. No. 1752, as amended
(2) Except when the law otherwise expressly provides,
by R.A. No. 7742, petitioner Romulo, Mabanta,
the aforesaid internal revenue tax issuances shall not
Buenaventura, Sayoc and De Los Angeles (hereafter
begin to be operative until after due notice thereof may
PETITIONER), a law firm, was exempted for the period 1
be fairly presumed.
January to 31 December 1995 from the Pag~IBIG Fund
coverage by respondent Home Development Mutual
Fund (hereafter HDMF) because of a superior retirement
plan.[2]
Due notice of the said issuances may be fairly presumed
only after the following procedures have been taken;
On 1 September 1995, the HDMF Board of Trustees,
pursuant to Section 5 of Republic Act No. 7742, issued
xxx xxx xxx
Board Resolution No. 1011, Series of 1995, amending and
modifying the Rules and Regulations Implementing R.A.
(5) Strict compliance with the foregoing procedures is
No. 7742. As amended, Section 1 of Rule VII provides that
enjoined.
for a company to be entitled to a waiver or suspension of
Fund coverage,[3] it must have a plan providing for both
Nothing on record could tell us that it was either
provident/ retirement and housing benefits superior to
impossible or impracticable for the BIR to observe and
those provided under the Pag~IBIG Fund.
comply with the above requirements before giving effect
to its questioned circular.
On 16 November 1995, PETITIONER filed with the
respondent an application for Waiver or Suspension of
All taken, the Court is convinced that the hastily
Fund Coverage because of its superior retirement plan.[4]
promulgated RMC 37-93 has fallen short of a valid and
In support of said application, PETITIONER submitted to
effective administrative issuance.
the HDMF a letter explaining that the 1995 Amendments
to the Rules are invalid.[5] Jksm
The decision of the Court of Appeals, sustaining that of
the Court of Tax Appeals, is AFFIRMED.
In a letter dated 18 March 1996, the President and Chief
Executive Officer of HDMF disapproved PETITIONER's
application on the ground that the requirement that there
should be both a provident retirement fund and a housing
plan is clear in the use of the phrase "and/or," and that

Page 14 of 30
the Rules Implementing R.A. No. 7742 did not amend nor
repeal Section 19 of P.D. No. 1752 but merely implement
the law.[6]
PETITIONER's appeal[7] with the HDMF Board of Trustees
was denied for having been rendered moot and academic
by Board Resolution No. 1208, Series of 1996, removing
the availment of waiver of the mandatory coverage of the
Pag~IBIG Fund, except for distressed employers.[8]
On 31 March 1997, PETITIONER filed a petition for
review[9] before the Court of Appeals. On motion by
HDMF, the Court of Appeals dismissed[10] the petition on
the ground that the coverage of employers and
employees under the Home Development Mutual Fund is
mandatory in character as clearly worded in Section 4 of
P.D. No. 1752, as amended by R.A. No. 7742. There is no
allegation that petitioner is a distressed employer to
warrant its exemption from the Fund coverage. As to the
amendments to the Rules and Regulations Implementing
R.A. No. 7742, the same are valid. Under P.D. No. 1752 and
R.A. No. 7742 the Board of Trustees of the HDMF is
authorized to promulgate rules and regulations, as well as
amendments thereto, concerning the extension, waiver or
suspension of coverage under the Pag~IBIG Fund. And
the publication requirement was amply met, since the
questioned amendments were published in the 21
October 1995 issue of the Philippine Star, which is a
newspaper of general circulation.
PETITIONER's motion for reconsideration[11] was
denied.[12] Hence, on 6 November 1997, PETITIONER
filed a petition before this Court assailing the 1995 and
the 1996 Amendments to the Rules and Regulations
Implementing Republic Act No. 7742 for being contrary
to law. In support thereof, PETITIONER contends that the
subject 1995 Amendments issued by HDMF are
inconsistent with the enabling law, P.D. No. 1752, as
amended by R.A. No. 7742, which merely requires as a
pre~condition for exemption from coverage the existence
of either a superior provident/ retirement plan or a
superior housing plan, and not the concurrence of both
plans. Hence, considering that PETITIONER has a
provident plan superior to that offered by the HDMF, it is
entitled to exemption from the coverage in accordance
with Section 19 of P.D. No. 1752. The 1996 Amendment
are also void insofar as they abolished the exemption
granted by Section 19 of P.D. 1752, as amended. The
repeal of such exemption involves the exercise of
legislative power, which cannot be delegated to HMDF.
Kycalr
PETITIONER also cites Section 9 (1), Chapter 2, Book VII of
the Administrative Code of 1987, which provides:
SEC. 9. Public Participation ~~ (1) 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.
Since the Amendments to the Rules and Regulations
Implementing Republic Act No. 7742 involve an
imposition of an additional burden, a public hearing
should have first been conducted to give chance to the
employers, like PETITIONER, to be heard before the HDMF
adopted the said Amendments. Absent such public
hearing, the amendments should be voided.
Finally, PETITIONER contends that HDMF did not comply
with Section 3, Chapter 2, Book VII of the Administrative
Code of 1987, which provides that "[e]very agency shall
file with the University of the Philippines Law Center three
(3) certified copies of every rule adopted by it."
On the other hand, the HDMF contends that in
promulgating the amendments to the rules and
regulations which require the existence of a plan
providing for both provident and housing benefits for
exemption from the Fund Coverage, the respondent
Board was merely exercising its rule-making power under
Section 13 of P.D. No. 1752. It had the option to use "and"
only instead of "or" in the rules on waiver in order to
effectively implement the Pag-IBIG Fund Law. By choosing
"and," the Board has clarified the confusion brought
about by the use of "and/or" in Section 19 of P.D. No.
1752, as amended.
As to the public hearing, HDMF maintains that as can be
clearly deduced from Section 9(1), Chapter 2, book VII of
the Revised Administrative Code of 1987, public hearing
is required only when the law so provides, and if not, only
if the same is practicable. It follows that public hearing is
only optional or discretionary on the part of the agency
concerned, except when the same is required by law. P.D.
No. 1752 does not require that pubic hearing be first
conducted before the rules and regulations implementing
it would become valid and effective. What it requires is
the publication of said rules and regulations at least once
Page 15 of 30
in a newspaper of general circulation. Having published
said 1995 and 1996 Amendments through the Philippine
Star on 21 October 1995[13] and 15 November 1996,[14]
respectively, HDMF has complied with the publication
requirement.
Finally, HDMF claims that as early as 18 October 1996, it
had already filed certified true copies of the Amendments
to the Rules and Regulations with the University of the
Philippines Law Center. This fact is evidenced by certified
true copies of the Certification from the Office of the
National Administrative Register of the U.P. Law
Center.[15]
We find for the PETITIONER. Calrky
The issue of the validity of the 1995 Amendments to the
Rules and Regulations Implementing R.A. No. 7742,
specifically Section I, Rule VII on Waiver and Suspension,
has been squarely resolved in the relatively recent case of
China Banking Corp. v. The Members of the Board of
Trustees of the HDMF.[16] We held in that case that
Section 1 of Rule VII of the Amendments to the Rules and
Regulations Implementing R.A. No. 7742, and HDMF
Circular No. 124~B prescribing the Revised Guidelines and
Procedure for Filing Application for Waiver or Suspension
of Fund Coverage under P.D. No. 1752, as amended by
R.A. No. 7742, are null and void insofar as they require that
an employer should have both a provident/ retirement
plan and a housing plan superior to the benefits offered
by the Fund in order to qualify for waiver or suspension of
the Fund coverage. In arriving at said conclusion, we ruled:
The controversy lies in the legal signification of the words
"and/or."
In the instant case, the legal meaning of the words
"and/or" should be taken in its ordinary signification, i.e.,
"either and or; e.g. butter and/or eggs means butter and
eggs or butter or eggs.
"The term and/or means that the effect shall be given to
both the conjunctive "and" and the disjunctive "or"; or
that one word or the other may be taken accordingly as
one or the other will best effectuate the purpose intended
by the legislature as gathered from the whole statute. The
term is used to avoid a construction which by the use of
the disjunctive "or" alone will exclude the combination of
several of the alternatives or by the use of the conjunctive
"and" will exclude the efficacy of any one of the
alternatives standing alone."
It is accordingly ordinarily held that the intention of the
legislature in using the term "and/or" is that the word
"and" and the word "or" are to be used interchangeably.
It ... seems to us clear from the language of the enabling
law that Section 19 of P.D. No. 1752 intended that an
employer with a provident plan or an employee housing
plan superior to that of the fund may obtain exemption
from coverage. If the law had intended that the employee
[sic] should have both a superior provident plan and a
housing plan in order to qualify for exemption, it would
have used the words "and" instead of "and/or." Notably,
paragraph (a) of Section 19 requires for annual
certification of waiver or suspension, that the features of
the plan or plans are superior to the fund or continue to
be so. The law obviously contemplates that the existence
of either plan is considered as sufficient basis for the grant
of an exemption; needless to state, the concurrence of
both plans is more than sufficient. To require the existence
of both plans would radically impose a more stringent
condition for waiver which was not clearly envisioned by
the basic law. By removing the disjunctive word "or" in the
implementing rules the respondent Board has exceeded
its authority. Slx
It is without doubt that the HDMF Board has rule~making
power as provided in Section 5[17] of R.A. No. 7742 and
Section 13[18] of P.D. No. 1752. However, it is well~settled
that rules and regulations, which are the product of a
delegated power to create new and additional legal
provisions that have the effect of law, should be within the
scope of the statutory authority granted by the legislature
to the administrative agency.[19] It is required that the
regulation be germane to the objects and purposes of the
law, and be not in contradiction to, but in conformity with,
the standards prescribed by law.[20]
In the present case, when the Board of Trustees of the
HDMF required in Section 1, Rule VII of the 1995
Amendments to the Rules and Regulations Implementing
R.A. No. 7742 that employers should have both
provident/retirement and housing benefits for all its
employees in order to qualify for exemption from the
Fund, it effectively amended Section 19 of P.D. No. 1752.
And when the Board subsequently abolished that
exemption through the 1996 Amendments, it repealed
Section 19 of P.D. No. 1752. Such amendment and
Page 16 of 30
subsequent repeal of Section 19 are both invalid, as they
are not within the delegated power of the Board. The
HDMF cannot, in the exercise of its rule~making power,
issue a regulation not consistent with the law it seeks to
apply. Indeed, administrative issuances must not override,
supplant or modify the law, but must remain consistent
with the law they intend to carry out.[21] Only Congress
can repeal or amend the law. Scslx
While it may be conceded that the requirement of having
both plans to qualify for an exemption, as well as the
abolition of the exemption, would enhance the interest of
the working group and further strengthen the Home
Development Mutual Fund in its pursuit of promoting
public welfare through ample social services as mandated
by the Constitution, we are of the opinion that the basic
law should prevail. A department zeal may not be
permitted to outrun the authority conferred by the
statute.[22]
Considering the foregoing conclusions, it is unnecessary
to dwell on the other issues raised.
WHEREFORE, the petition is GRANTED. The assailed
decision of 31 July 1997 of the Court of Appeals in
CA~G.R. No. SP~43668 and its Resolution of 15 October
1997 are hereby REVERSED and SET ASIDE. The
disapproval by the Home Development Mutual Fund of
the application of the petitioner for waiver or suspension
of Fund coverage is SET ASIDE, and the Home
Development Mutual Fund is hereby directed to refund to
petitioner all sums of money it collected from the latter.
SO ORDERED.
[G.R. No. 116422. November 4, 1996]
AVELINA B. CONTE AND LETICIA BOISER-PALMA,
PETITIONERS, VS. COMMISSION ON AUDIT
(COA), RESPONDENT.
DECISION
PANGANIBAN, J.:
Are the benefits provided for under Social Security System
Resolution No. 56 to be considered simply as financial
assistance for retiring employees, or does such scheme
constitute a supplementary retirement plan proscribed by
Republic Act No. 4968?
The foregoing question is addressed by this Court in
resolving the instant petition for certiorari which seeks to
reverse and set aside Decision No. 94-126[1]dated March
15, 1994 of respondent Commission on Audit, which
denied petitioners request for reconsideration of its
adverse ruling disapproving claims for financial assistance
under SSS Resolution No. 56.
The Facts
Petitioners Avelina B. Conte and Leticia Boiser-Palma were
former employees of the Social Security System (SSS) who
retired from government service on May 9, 1990 and
September 13, 1992, respectively. They availed of
compulsory retirement benefits under Republic Act No.
660.[2]
In addition to retirement benefits provided under R.A.
660, petitioners also claimed SSS financial assistance
benefits granted under SSS Resolution No. 56, series of
1971.
A brief historical backgrounder is in order. SSS Resolution
No. 56,[3] approved on January 21, 1971, provides
financial incentive and inducement to SSS employees
qualified to retire to avail of retirement benefits under RA
660 as amended, rather than the retirement benefits
under RA 1616 as amended, by giving them financial
assistance equivalent in amount to the difference
between what a retiree would have received under RA
1616, less what he was entitled to under RA 660. The said
SSS Resolution No. 56 states:
RESOLUTION NO. 56
WHEREAS, the retirement benefits of SSS employees are
provided for under Republic Acts 660 and 1616 as
amended;
WHEREAS, SSS employees who are qualified for
compulsory retirement at age 65 or for optional
retirement at a lower age are entitled to either the life
annuity under R.A. 660, as amended, or the gratuity under
R.A. 1616, as amended;
Page 17 of 30
WHEREAS, a retirement benefit to be effective must be a
periodic income as close as possible to the monthly
income that would have been due to the retiree during
the remaining years of his life were he still employed;
WHEREAS, the life annuity under R.A. 660, as amended,
being closer to the monthly income that was lost on
account of old age than the gratuity under R.A. 1616, as
amended, would best serve the interest of the retiree;
WHEREAS, it is the policy of the Social Security
Commission to promote and to protect the interest of all
SSS employees, with a view to providing for their well-
being during both their working and retirement years;
WHEREAS, the availment of life annuities built up by
premiums paid on behalf of SSS employees during their
working years would mean more savings to the SSS;
WHEREAS, it is a duty of the Social Security Commission
to effect savings in every possible way for economical and
efficient operations;
WHEREAS, it is the right of every SSS employee to choose
freely and voluntarily the benefit he is entitled to solely
for his own benefit and for the benefit of his family;
NOW, THEREFORE, BE IT RESOLVED, That all the SSS
employees who are simultaneously qualified for
compulsory retirement at age 65 or for optional
retirement at a lower age be encouraged to avail for
themselves the life annuity under R.A. 660, as amended;
RESOLVED, FURTHER, That SSS employees who availed
themselves of the said life annuity, in appreciation and
recognition of their long and faithful service, be granted
financial assistance equivalent to the gratuity plus return
of contributions under R.A. 1616, as amended, less the five
year guaranteed annuity under R.A. 660, as amended;
RESOLVED, FINALLY, That the Administrator be
authorized to act on all applications for retirement
submitted by SSS employees and subject to availability of
funds, pay the corresponding benefits in addition to the
money value of all accumulated leaves. (underscoring
supplied)
Long after the promulgation of SSS Resolution No. 56,
respondent Commission on Audit (COA) issued a ruling,
captioned as 3rd Indorsement dated July 10, 1989,[4]
disallowing in audit all such claims for financial assistance
under SSS Resolution No. 56, for the reason that: --
x x x the scheme of financial assistance authorized by the
SSS is similar to those separate retirement plan or
incentive/separation pay plans adopted by other
government corporate agencies which results in the
increase of benefits beyond what is allowed under existing
retirement laws. In this regard, attention x x x is invited to
the view expressed by the Secretary of Budget and
Management dated February 17, 1988 to the COA General
Counsel against the proliferation of retirement plans
which, in COA Decision No. 591 dated August 31, 1988,
was concurred in by this Commission. x x x.
Accordingly, all such claims for financial assistance under
SSS Resolution No. 56 dated January 21, 1971 should be
disallowed in audit. (underscoring supplied)
Despite the aforequoted ruling of respondent COA, then
SSS Administrator Jose L. Cuisia, Jr. nevertheless wrote[5]
on February 12, 1990 then Executive Secretary Catalino
Macaraig, Jr., seeking presidential authority for SSS to
continue implementing its Resolution No. 56 dated
January 21, 1971 granting financial assistance to its
qualified retiring employees.
However, in a letter-reply dated May 28, 1990,[6] then
Executive Secretary Macaraig advised Administrator
Cuisia that the Office of the President is not inclined to
favorably act on the herein request, let alone overrule the
disallowance by COA of such claims, because, aside from
the fact that decisions, order or actions of the COA in the
exercise of its audit functions are appealable to the
Supreme Court[7] pursuant to Sec. 50 of PD 1445, the
benefits under said Res. 56, though referred to as financial
assistance, constituted additional retirement benefits, and
the scheme partook of the nature of a supplementary
pension/retirement plan proscribed by law.
The law referred to above is RA 4968 (The Teves
Retirement Law), which took effect June 17, 1967 and
amended CA 186 (otherwise known as the Government
Service Insurance Act, or the GSIS Charter), making Sec. 28
(b) of the latter act read as follows:
(b) Hereafter, no insurance or retirement plan for officers
or employees shall be created by employer. All
supplementary retirement or pension plans heretofore in
force in any government office, agency or instrumentality
Page 18 of 30
or corporation owned or controlled by the government,
are hereby declared inoperative or abolished; Provided,
That the rights of those who are already eligible to retire
thereunder shall not be affected. (underscoring supplied)
On January 12, 1993, herein petitioners filed with
respondent COA their letter-appeal/protest[8] seeking
reconsideration of COAs ruling of July 10, 1989
disallowing claims for financial assistance under Res. 56.
On November 15, 1993, petitioner Conte sought payment
from SSS of the benefits under Res. 56. On December 9,
1993, SSS Administrator Renato C. Valencia denied[9] the
request in consonance with the previous disallowance by
respondent COA, but assured petitioner that should the
COA change its position, the SSS will resume the grant of
benefits under said Res. 56.
On March 15, 1994, respondent COA rendered its COA
Decision No. 94-126 denying petitioners request for
reconsideration.
Thus this petition for certiorari under Rule 65 of the Rules
of Court.
The Issues
The issues[10] submitted by petitioners may be simplified
and re-stated thus: Did public respondent abuse its
discretion when it disallowed in audit petitioners claims
for benefits under SSS Res. 56?
Petitioners argue that the financial assistance under Res.
56 is not a retirement plan prohibited by RA 4968, and
that Res. 56 provides benefits different from and aside
from what a retiring SSS employee would be entitled to
under RA 660. Petitioners contend that it is a social
amelioration and economic upliftment measure
undertaken not only for the benefit of the SSS but more
so for the welfare of its qualified retiring employees. As
such, it should be interpreted in a manner that would give
the x x x most advantage to the recipient -- the retiring
employees whose dedicated, loyal, lengthy and faithful
service to the agency of government is recognized and
amply rewarded -- the rationale for the financial
assistance plan. Petitioners reiterate the argument in their
letter dated January 12, 1993 to COA that:
Motivation can be in the form of financial assistance,
during their stay in the service or upon retirement, as in
the SSS Financial Assistance Plan. This is so, because
Government has to have some attractive remuneration
programs to encourage well-qualified personnel to
pursue a career in the government service, rather than in
the private sector or in foreign countries ...
A more developmental view of the financial institutions
grant of certain forms of financial assistance to its
personnel, we believe, would enable government
administrators to see these financial forms of
remuneration as contributory to the national
developmental efforts for effective and efficient
administration of the personnel programs in different
institutions.[11]
The Courts Ruling
Petitioners contentions are not supported by law. We hold
that Res. 56 constitutes a supplementary retirement plan.
A cursory examination of the preambular clauses and
provisions of Res. 56 provides a number of clear
indications that its financial assistance plan constitutes a
supplemental retirement/pension benefits plan. In
particular, the fifth preambular clause which provides that
it is the policy of the Social Security Commission to
promote and to protect the interest of all SSS employees,
with a view to providing for their well-being during both
their working and retirement years, and the wording of
the resolution itself which states Resolved, further, that
SSS employees who availed themselves of the said life
annuity (under RA 660), in appreciation and recognition
of their long and faithful service, be granted financial
assistance x x x can only be interpreted to mean that the
benefit being granted is none other than a kind of
amelioration to enable the retiring employee to enjoy (or
survive) his retirement years and a reward for his loyalty
and service. Moreover, it is plain to see that the grant of
said financial assistance is inextricably linked with and
inseparable from the application for and approval of
retirement benefits under RA 660, i.e., that availment of
said financial assistance under Res. 56 may not be done
independently of but only in conjunction with the
availment of retirement benefits under RA 660, and that
the former is in augmentation or supplementation of the
latter benefits.
Likewise, then SSS Administrator Cuisias historical
overview of the origins and purpose of Res. 56 is very
instructive and sheds much light on the controversy:[12]
Page 19 of 30

Resolution No. 56, x x x, applies where a retiring SSS
employee is qualified to claim under either RA 660
(pension benefit, that is, 5 year lump sum pension and
after 5 years, life time pension), or RA 1616 (gratuity
benefit plus return of contribution), at his option. The
benefits under RA 660 are entirely payable by GSIS while
those under RA 1616 are entirely shouldered by SSS
except the return of contribution by GSIS.
Resolution No. 56 came about upon observation that
qualified SSS employees have invariably opted to retire
under RA 1616 instead of RA 660 because the total benefit
under the former is much greater than the 5-year lump
sum under the latter. As a consequence, the SSS usually
ended up virtually paying the entire retirement benefit,
instead of GSIS which is the main insurance carrier for
government employees. Hence, the situation has become
so expensive for SSS that a study of the problem became
inevitable.
As a result of the study and upon the recommendation of
its Actuary, the SSS Management recommended to the
Social Security Commission that retiring employees who
are qualified to claim under either RA 660 or 1616 should
be encouraged to avail for themselves the life annuity
under RA 660, as amended, with the SSS providing a
financial assistance equivalent to the difference between
the benefit under RA 1616 (gratuity plus return of
contribution) and the 5-year lump sum pension under RA
660.
The Social Security Commission, as the policy-making
body of the SSS approved the recommendation in line
with its mandate to insure the efficient, honest and
economical administration of the provisions and purposes
of this Act. (Section 3 (c) of the Social Security Law).
Necessarily, the situation was reversed with qualified SSS
employees opting to retire under RA No. 660 or RA 1146
instead of RA 1616, resulting in substantial savings for the
SSS despite its having to pay financial assistance.
Until Resolution No. 56 was questioned by COA.
(underscoring part of original text; italics ours)
Although such financial assistance package may have
been instituted for noble, altruistic purposes as well as
from self-interest and a desire to cut costs on the part of
the SSS, nevertheless, it is beyond any dispute that such
package effectively constitutes a supplementary
retirement plan. The fact that it was designed to equalize
the benefits receivable from RA 1616 with those payable
under RA 660 and make the latter program more
attractive, merely confirms the foregoing finding.
That the Res. 56 package is labelled financial assistance
does not change its essential nature. Retirement benefits
are, after all, a form of reward for an employees loyalty
and service to the employer, and are intended to help the
employee enjoy the remaining years of his life, lessening
the burden of worrying about his financial support or
upkeep.[13] On the other hand, a pension partakes of the
nature of retained wages of the retiree for a dual purpose:
to entice competent people to enter the government
service, and to permit them to retire from the service with
relative security, not only for those who have retained
their vigor, but more so for those who have been
incapacitated by illness or accident.[14]
Is SSS Resolution No. 56 then within the ambit of and thus
proscribed by Sec. 28 (b) of CA 186 as amended by RA
4968?
We answer in the affirmative. Said Sec. 28 (b) as amended
by RA 4968 in no uncertain terms bars the creation of any
insurance or retirement plan -- other than the GSIS -- for
government officers and employees, in order to prevent
the undue and inequitous proliferation of such plans. It is
beyond cavil that Res. 56 contravenes the said provision
of law and is therefore invalid, void and of no effect. To
ignore this and rule otherwise would be tantamount to
permitting every other government office or agency to
put up its own supplementary retirement benefit plan
under the guise of such financial assistance.
We are not unmindful of the laudable purposes for
promulgating Res. 56, and the positive results it must have
had, not only in reducing costs and expenses on the part
of the SSS in connection with the pay-out of retirement
benefits and gratuities, but also in improving the quality
of life for scores of retirees. But it is simply beyond dispute
that the SSS had no authority to maintain and implement
such retirement plan, particularly in the face of the
statutory prohibition. The SSS cannot, in the guise of rule-
making, legislate or amend laws or worse, render them
nugatory.
It is doctrinal that in case of conflict between a statute and
an administrative order, the former must prevail.[15] A
Page 20 of 30
rule or regulation must conform to and be consistent with
the provisions of the enabling statute in order for such
rule or regulation to be valid.[16] The rule-making power
of a public administrative body is a delegated legislative
power, which it may not use either to abridge the
authority given it by the Congress or the Constitution or
to enlarge its power beyond the scope intended.
Constitutional and statutory provisions control with
respect to what rules and regulations may be
promulgated by such a body, as well as with respect to
what fields are subject to regulation by it. It may not make
rules and regulations which are inconsistent with the
provisions of the Constitution or a statute, particularly the
statute it is administering or which created it, or which are
in derogation of, or defeat, the purpose of a statute.[17]
Though well-settled is the rule that retirement laws are
liberally interpreted in favor of the retiree,[18]
nevertheless, there is really nothing to interpret in either
RA 4968 or Res. 56, and correspondingly, the absence of
any doubt as to the ultra-vires nature and illegality of the
disputed resolution constrains us to rule against
petitioners.
As a necessary consequence of the invalidity of Res. 56,
we can hardly impute abuse of discretion of any sort to
respondent Commission for denying petitioners request
for reconsideration of the 3rd Indorsement of July 10,
1989. On the contrary, we hold that public respondent in
its assailed Decision acted with circumspection in denying
petitioners claim. It reasoned thus:
After a careful evaluation of the facts herein obtaining,
this Commission finds the instant request to be devoid of
merit. It bears stress that the financial assistance
contemplated under SSS Resolution No. 56 is granted to
SSS employees who opt to retire under R.A. No. 660. In
fact, by the aggrieved parties own admission (page 2 of
the request for reconsideration dated January 12, 1993), it
is a financial assistance granted by the SSS management
to its employees, in addition to the retirement benefits
under Republic Act No. 660. (underscoring supplied for
emphasis) There is therefore no question, that the said
financial assistance partakes of the nature of a retirement
benefit that has the effect of modifying existing
retirement laws particularly R.A. No. 660.
Petitioners also asseverate that the scheme of financial
assistance under Res. 56 may be likened to the monetary
benefits of government officials and employees who are
paid, over and above their salaries and allowances as
provided by statute, an additional honorarium in varying
amounts. We find this comparison baseless and
misplaced. As clarified by the Solicitor General:[19]
Petitioners comparison of SSS Resolution No. 56 with the
honoraria given to government officials and employees of
the National Prosecution Service of the Department of
Justice, Office of the Government Corporate Counsel and
even in the Office of the Solicitor General is devoid of any
basis. The monetary benefits or honoraria given to these
officials or employees are categorized as travelling and/or
representation expenses which are incurred by them in
the course of handling cases, attending
court/administrative hearings, or performing other field
work. These monetary benefits are given upon rendition
of service while the financial benefits under SSS
Resolution No. 56 are given upon retirement from service.
In a last-ditch attempt to convince this Court that their
position is tenable, petitioners invoke equity. They believe
that they are deserving of justice and equity in their quest
for financial assistance under SSS Resolution No. 56, not
so much because the SSS is one of the very few stable
agencies of government where no doubt this recognition
and reputation is earned x x x but more so due to the
miserable scale of compensation granted to employees in
various agencies to include those obtaining in the SSS.[20]
We must admit we sympathize with petitioners in their
financial predicament as a result of their misplaced
decision to avail of retirement benefits under RA 660, with
the false expectation that financial assistance under the
disputed Res. 56 will also materialize. Nevertheless, this
Court has always held that equity, which has been aptly
described as justice outside legality, is applied only in the
absence of, and never against, statutory law or judicial
rules of procedure.[21] In this case, equity cannot be
applied to give validity and effect to Res. 56, which directly
contravenes the clear mandate of the provisions of RA
4968.
Likewise, we cannot but be aware that the clear imbalance
between the benefits available under RA 660 and those
under RA 1616 has created an unfair situation for it has
shifted the burden of paying such benefits from the GSIS
(the main insurance carrier of government employees) to
the SSS. Without the corrective effects of Res. 56, all
retiring SSS employees without exception will be impelled
to avail of benefits under RA 1616. The cumulative effect
of such availments on the financial standing and stability
Page 21 of 30
of the SSS is better left to actuarians. But the solution or
remedy for such situation can be provided only by
Congress. Judicial hands cannot, on the pretext of
showing concern for the welfare of government
employees, bestow equity contrary to the clear provisions
of law.
facilitate their applications under RA 1616, and to advance
to them, unless barred by existing regulations, the
corresponding amounts representing the difference
between the two benefits programs. No costs.
SO ORDERED.

Nevertheless, insofar as herein petitioners are concerned,

this Court cannot just sit back and watch as these two
erstwhile government employees, who after spending the PHILIPPINE CONSUMERS FOUNDATION, INC. VS
best parts of their lives in public service have retired SECRETARY OF EDUCATION, CULTURE AND
hoping to enjoy their remaining years, face a financially
SPORTS, 153 SCRA 622
dismal if not distressed future, deprived of what should
Nature of Particular Acts
have been due them by way of additional retirement
benefits, on account of a bureaucratic boo-boo
FACTS: Petitioner Philippine Consumers Foundation, Inc.
improvidently hatched by their higher-ups. It is clear to
is a non-stock, non-profit corporate entity duly organized
our mind that petitioners applied for benefits under RA
and existing under the laws of the Philippines. The herein
660 only because of the incentives offered by Res. 56, and
respondent Secretary of Education, Culture and Sports is
that absent such incentives, they would have without fail
a ranking cabinet member who heads the Department of
availed of RA 1616 instead. We likewise have no doubt
Education, Culture and Sports of the Office of the
that petitioners are simply innocent bystanders in this
President of the Philippines.
whole bureaucratic rule-making/financial scheme-making
drama, and that therefore, to the extent possible,
On February 21, 1987, the Task Force on Private Higher
petitioners ought not be penalized or made to suffer as a
Education created by the Department of Education,
result of the subsequently determined invalidity of Res.
Culture and Sports submitted a report entitled "Report
56, the promulgation and implementation of which they
and Recommendations on a Policy for Tuition and Other
had nothing to do with.
School Fees." The report favorably recommended to the
DECS the following courses of action with respect to the
And here is where equity may properly be invoked: since
Government's policy on increases in school fees for the
SSS employees who are qualified for compulsory
schoolyear 1987 to 1988. DECS took note of the report of
retirement at age 65 or for optional retirement at a lower
the Task Force and on the basis of the same, the DECS,
age are entitled to either the life annuity under R.A. 660,
through the respondent Secretary of Education, Culture
as amended, or the gratuity under R.A. 1616, as
and Sports (hereinafter referred to as the respondent
amended,[22] it appears that petitioners, being qualified
Secretary), issued an Order authorizing, inter alia, the 15%
to avail of benefits under RA 660, may also readily qualify
to 20% increase in school fees as recommended by the
under RA 1616. It would therefore not be misplaced to
Task Force. The petitioner sought a reconsideration of the
enjoin the SSS to render all possible assistance to
said Order, apparently on the ground that the increases
petitioners for the prompt processing and approval of
were too high. Thereafter, the DECS issued Department
their applications under RA 1616, and in the meantime,
Order No. 37 dated April 10, 1987 modifying its previous
unless barred by existing regulations, to advance to
Order and reducing the increases to a lower ceiling of 10%
petitioners the difference between the amounts due
to 15%, accordingly.
under RA 1616, and the amounts they already obtained, if
any, under RA 660.
Thus, on May 20, 1987, the petitioner, allegedly on the
basis of the public interest, went to this Court and filed
WHEREFORE, the petition is hereby DISMISSED for lack of
the instant Petition for prohibition, seeking that judgment
merit, there having been no grave abuse of discretion on
be rendered declaring the questioned Department Order
the part of respondent Commission. The assailed Decision
unconstitutional. The thrust of the Petition is that the said
of public respondent is AFFIRMED, and SSS Resolution
Department Order was issued without any legal basis. The
No. 56 is hereby declared ILLEGAL, VOID AND OF NO
petitioner also maintains that the questioned Department
EFFECT. The SSS is hereby urged to assist petitioners and
Page 22 of 30
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.
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.
ISSUE: Whether or not the fixing of school fees through
department order by DECS is a valid delegation of
legislative power
RULING: Yes. 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.
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.
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.
RATIO: Fixing rates and charges. - As regards rates
prescribes by an administrative agency in the exercise of
its quasi-judicial function, prior notice and hearing are
essential to the validity of such rates.
MISSING CASE- FEDERACION ESPANOL PROFESORES
VS. SEC. QUISOMBING
COMMISSION ON HUMAN RIGHTS EMPLOYEES'
ASSOCIATION (CHREA) Represented by its
President, MARCIAL A. SANCHEZ, JR., petitioner,
vs. COMMISSION ON HUMAN RIGHTS,
respondent./ November 25, 2004
FACTS: Congress passed RA 8522, otherwise known as the
General Appropriations Act of 1998. It provided for
Special Provisions Applicable to All Constitutional Offices
Enjoying Fiscal Autonomy. On the strength of these
special provisions, the CHR promulgated Resolution No.
A98-047 adopting an upgrading and reclassification
scheme among selected positions in the Commission.
By virtue of Resolution No. A98-062, the CHR “collapsed”
the vacant positions in the body to provide additional
source of funding for said staffing modification.
The CHR forwarded said staffing modification and
upgrading scheme to the DBM with a request for its
approval, but the then DBM secretary denied the request.
In light of the DBM’s disapproval of the proposed
personnel modification scheme, the CSC-National Capital
Region Office, through a memorandum, recommended to
the CSC-Central Office that the subject appointments be
rejected owing to the DBM’s disapproval of the plantilla
reclassification.
Page 23 of 30
Meanwhile, the officers of petitioner CHR-employees
association (CHREA) in representation of the rank and file
employees of the CHR, requested the CSC-Central Office
to affirm the recommendation of the CSC-Regional Office.
The CSC-Central Office denied CHREA’s request in a
Resolution and reversed the recommendation of the CSC-
Regional Office that the upgrading scheme be censured.
CHREA filed a motion for reconsideration, but the CSC-
Central Office denied the same.
CHREA elevated the matter to the CA, which affirmed the
pronouncement of the CSC-Central Office and upheld the
validity of the upgrading, retitling, and reclassification
scheme in the CHR on the justification that such action is
within the ambit of CHR’s fiscal autonomy.
ISSUE: Can the CHR validly implement an upgrading,
reclassification, creation, and collapsing of plantilla
positions in the Commission without the prior approval of
the Department of Budget and Management?
HELD: the petition is GRANTED, the Decision of the CA
and its are hereby REVERSED and SET ASIDE. The ruling
CSC-National Capital Region is REINSTATED. The 3 CHR
Resolutions, without the approval of the DBM are
disallowed.
1. RA 6758, An Act Prescribing a Revised Compensation
and Position Classification System in the Government and
For Other Purposes, or the Salary Standardization Law,
provides that it is the DBM that shall establish and
administer a unified Compensation and Position
Classification System.
The disputation of the CA that the CHR is exempt from
the long arm of the Salary Standardization Law is flawed
considering that the coverage thereof encompasses the
entire gamut of government offices, sans qualification.
This power to “administer” is not purely ministerial in
character as erroneously held by the CA. The word to
administer means to control or regulate in behalf of
others; to direct or superintend the execution, application
or conduct of; and to manage or conduct public affairs, as
to administer the government of the state.
2. The regulatory power of the DBM on matters of
compensation is encrypted not only in law, but in
jurisprudence as well. In the recent case of PRA v. Buñag,
this Court ruled that compensation, allowances, and other
benefits received by PRA officials and employees without
the requisite approval or authority of the DBM are
unauthorized and irregular
In Victorina Cruz v. CA , we held that the DBM has the sole
power and discretion to administer the compensation and
position classification system of the national government.
In Intia, Jr. v. COA the Court held that although the charter
of the PPC grants it the power to fix the compensation
and benefits of its employees and exempts PPC from the
coverage of the rules and regulations of the
Compensation and Position Classification Office, by virtue
of Section 6 of P.D. No. 1597, the compensation system
established by the PPC is, nonetheless, subject to the
review of the DBM.
(It should be emphasized that the review by the DBM of
any PPC resolution affecting the compensation structure
of its personnel should not be interpreted to mean that
the DBM can dictate upon the PPC Board of Directors and
deprive the latter of its discretion on the matter. Rather,
the DBM’s function is merely to ensure that the action
taken by the Board of Directors complies with the
requirements of the law, specifically, that PPC’s
compensation system “conforms as closely as possible
with that provided for under R.A. No. 6758.” )
3. As measured by the foregoing legal and jurisprudential
yardsticks, the imprimatur of the DBM must first be
sought prior to implementation of any reclassification or
upgrading of positions in government. This is consonant
to the mandate of the DBM under the RAC of 1987,
Section 3, Chapter 1, Title XVII, to wit:
SEC. 3. Powers and Functions. – The Department of
Budget and Management shall assist the President in the
preparation of a national resources and expenditures
budget, preparation, execution and control of the
National Budget, preparation and maintenance of
accounting systems essential to the budgetary process,
achievement of more economy and efficiency in the
management of government operations, administration
of compensation and position classification systems,
assessment of organizational effectiveness and review
and evaluation of legislative proposals having budgetary
or organizational implications.
Page 24 of 30
Irrefragably, it is within the turf of the DBM Secretary to
disallow the upgrading, reclassification, and creation of
additional plantilla positions in the CHR based on its
finding that such scheme lacks legal justification.
Notably, the CHR itself recognizes the authority of the
DBM to deny or approve the proposed reclassification of
positions as evidenced by its three letters to the DBM
requesting approval thereof. As such, it is now estopped
from now claiming that the nod of approval it has
previously sought from the DBM is a superfluity
4. The CA incorrectly relied on the pronouncement of the
CSC-Central Office that the CHR is a constitutional
commission, and as such enjoys fiscal autonomy.
Palpably, the CA’s Decision was based on the mistaken
premise that the CHR belongs to the species of
constitutional commissions. But the Constitution states in
no uncertain terms that only the CSC, the COMELEC, and
the COA shall be tagged as Constitutional Commissions
with the appurtenant right to fiscal autonomy.
Along the same vein, the Administrative Code, on
Distribution of Powers of Government, the constitutional
commissions shall include only the CSC, the COMELEC,
and the COA, which are granted independence and fiscal
autonomy. In contrast, Chapter 5, Section 29 thereof, is
silent on the grant of similar powers to the other bodies
including the CHR. Thus:
SEC. 24. Constitutional Commissions. – The Constitutional
Commissions, which shall be independent, are the Civil
Service Commission, the Commission on Elections, and
the Commission on Audit.
SEC. 26. Fiscal Autonomy. – The Constitutional
Commissions shall enjoy fiscal autonomy. The approved
annual appropriations shall be automatically and regularly
released.
SEC. 29. Other Bodies. – There shall be in accordance with
the Constitution, an Office of the Ombudsman, a
Commission on Human Rights, and independent central
monetary authority, and a national police commission.
Likewise, as provided in the Constitution, Congress may
establish an independent economic and planning agency.
From the 1987 Constitution and the Administrative Code,
it is abundantly clear that the CHR is not among the class
of Constitutional Commissions. As expressed in the oft-
repeated maxim expressio unius est exclusio alterius, the
express mention of one person, thing, act or consequence
excludes all others. Stated otherwise, expressium facit
cessare tacitum – what is expressed puts an end to what
is implied.
Nor is there any legal basis to support the contention that
the CHR enjoys fiscal autonomy. In essence, fiscal
autonomy entails freedom from outside control and
limitations, other than those provided by law. It is the
freedom to allocate and utilize funds granted by law, in
accordance with law, and pursuant to the wisdom and
dispatch its needs may require from time to time.22 In
Blaquera v. Alcala and Bengzon v. Drilon,23 it is
understood that it is only the Judiciary, the CSC, the COA,
the COMELEC, and the Office of the Ombudsman, which
enjoy fiscal autonomy.
Neither does the fact that the CHR was admitted as a
member by the Constitutional Fiscal Autonomy Group
(CFAG) ipso facto clothed it with fiscal autonomy. Fiscal
autonomy is a constitutional grant, not a tag obtainable
by membership.
We note with interest that the special provision under
Rep. Act No. 8522, while cited under the heading of the
CHR, did not specifically mention CHR as among those
offices to which the special provision to formulate and
implement organizational structures apply, but merely
states its coverage to include Constitutional Commissions
and Offices enjoying fiscal autonomy
All told, the CHR, although admittedly a constitutional
creation is, nonetheless, not included in the genus of
offices accorded fiscal autonomy by constitutional or
legislative fiat.
Even assuming en arguendo that the CHR enjoys fiscal
autonomy, we share the stance of the DBM that the grant
of fiscal autonomy notwithstanding, all government
offices must, all the same, kowtow to the Salary
Standardization Law. We are of the same mind with the
DBM on its standpoint, thus-
Being a member of the fiscal autonomy group does not
vest the agency with the authority to reclassify, upgrade,
and create positions without approval of the DBM. While
the members of the Group are authorized to formulate
and implement the organizational structures of their
Page 25 of 30
respective offices and determine the compensation of
their personnel, such authority is not absolute and must
be exercised within the parameters of the Unified Position
Classification and Compensation System established
under RA 6758 more popularly known as the
Compensation Standardization Law.
5. The most lucid argument against the stand of
respondent, however, is the provision of Rep. Act No.
8522 “that the implementation hereof shall be in
accordance with salary rates, allowances and other
benefits authorized under compensation standardization
laws.”26
NOTES:
1. Respondent CHR sharply retorts that petitioner has no
locus standi considering that there exists no official
written record in the Commission recognizing petitioner
as a bona fide organization of its employees nor is there
anything in the records to show that its president has the
authority to sue the CHR.
On petitioner’s personality to bring this suit, we held in a
multitude of cases that a proper party is one who has
sustained or is in immediate danger of sustaining an injury
as a result of the act complained of. Here, petitioner,
which consists of rank and file employees of respondent
CHR, protests that the upgrading and collapsing of
positions benefited only a select few in the upper level
positions in the Commission resulting to the
demoralization of the rank and file employees. This
sufficiently meets the injury test. Indeed, the CHR’s
upgrading scheme, if found to be valid, potentially entails
eating up the Commission’s savings or that portion of its
budgetary pie otherwise allocated for Personnel Services,
from which the benefits of the employees, including those
in the rank and file, are derived.
Further, the personality of petitioner to file this case was
recognized by the CSC when it took cognizance of the
CHREA’s request to affirm the recommendation of the
CSC-National Capital Region Office. CHREA’s personality
to bring the suit was a non-issue in the CA when it passed
upon the merits of this case. Thus, neither should our
hands be tied by this technical concern. Indeed, it is
settled jurisprudence that an issue that was neither raised
in the complaint nor in the court below cannot be raised
for the first time on appeal, as to do so would be offensive
to the basic rules of fair play, justice, and due process.
2. In line with its role to breathe life into the policy behind
the Salary Standardization Law of “providing equal pay for
substantially equal work and to base differences in pay
upon substantive differences in duties and
responsibilities, and qualification requirements of the
positions,” the DBM, in the case under review, made a
determination, after a thorough evaluation, that the
reclassification and upgrading scheme proposed by the
CHR lacks legal rationalization.
The DBM expounded that Section 78 of the general
provisions of the General Appropriations Act FY 1998,
which the CHR heavily relies upon to justify its
reclassification scheme, explicitly provides that “no
organizational unit or changes in key positions shall be
authorized unless provided by law or directed by the
President.” Here, the DBM discerned that there is no law
authorizing the creation of a Finance Management Office
and a Public Affairs Office in the CHR. Anent CHR’s
proposal to upgrade twelve positions of Attorney VI, SG-
26 to Director IV, SG-28, and four positions of Director III,
SG-27 to Director IV, SG-28, in the Central Office, the DBM
denied the same as this would change the context from
support to substantive without actual change in functions.
This view of the DBM, as the law’s designated body to
implement and administer a unified compensation
system, is beyond cavil. The interpretation of an
administrative government agency, which is tasked to
implement a statute is accorded great respect and
ordinarily controls the construction of the courts. In
Energy Regulatory Board v. CA, we echoed the basic rule
that the courts will not interfere in matters which are
addressed to the sound discretion of government
agencies entrusted with the regulation of activities
coming under the special technical knowledge and
training of such agencies.
Page 26 of 30
CIVIL SERVICE COMMISSION V. required to perform any act to receive the ―just share‖
DEPARTMENT OF BUDGET AND accruing to them from the national coffers.

MANAGEMENT
By parity of construction, ―automatic release‖ of
482 SCRA 233 (2005), EN BANC (Carpio Morales, J.)
approved annual appropriations to petitioner, a
constitutional commission which is vested with fiscal
“Automatic release” of approved annual appropriations to
autonomy, should thus be construed to mean that no
Civil Service Commission, a constitutional commission
condition to fund releases to it may be imposed. This
which is vested with fiscal autonomy, should thus be
conclusion is consistent with the Resolution of this Court
construed to mean that no condition to fund releases to
which effectively prohibited the enforcement of a ―no
it may be imposed.
report, no release‖ policy against the Judiciary which has
also been granted fiscal autonomy by the Constitution.
FACTS: The total funds appropriated by General
Appropriations Act of 2002 (GAA) for Civil Service
Furthermore, the Constitution grants the enjoyment of
Commission (CSC) was P285,660,790.44. CSC complains
fiscal autonomy only to the Judiciary, the Constitutional
that the total funds released by Department of Budget
Commissions, of which petitioner is one, and the
and Management (DBM) was only P279,853,398.14,
Ombudsman. To hold that the CSC may be subjected to
thereby leaving an unreleased balance of P5,807,392.30.
withholding or reduction of funds in the event of a
revenue shortfall would, to that extent, place CSC and the
CSC contends that the funds were intentionally withheld
other entities vested with fiscal autonomy on equal
by DBM on the ground of their ―no report, no release‖
footing with all others which are not granted the same
policy. Hence, CSC filed a petition for mandamus seeking
autonomy, thereby reducing to naught the distinction
to compel the DBM to release the balance of its budget
established by the Constitution.
for fiscal year 2002. At the same time, it seeks a
determination by this Court of the extent of the
constitutional concept of fiscal autonomy.

ISSUE: Whether or not DBM‘s policy, ―no report, no

G.R. No. 147096 January 15, 2002
release‖ is constitutional
REPUBLIC OF THE PHILIPPINES, represented by
NATIONAL TELECOMMUNICATIONS COMMISSION,
HELD: DBM‘s act of withholding the subject funds from
vs. EXPRESS TELECOMMUNICATION CO., INC. and
CSC due to revenue shortfall is hereby declared
BAYAN TELECOMMUNICATIONS CO., INC.
unconstitutional.
x---------------------------------------------------------x
G.R. No. 147210 January 15, 2002
The no report, no release policy may not be validly
BAYAN TELECOMMUNICATIONS (Bayantel), INC., ,
enforced against offices vested with fiscal autonomy is not
vs. EXPRESS TELECOMMUNICATION CO., INC.
disputed. Indeed, such policy cannot be enforced against
(Extelcom),
offices possessing fiscal autonomy without violating
Article IX (A), Section 5 of the Constitution, which provides
that the Commission shall enjoy fiscal autonomy and that
FACTS:
their approved appropriations shall be automatically and
regularly released.
On December 29, 1992, the International
Communications Corporation (now Bayantel) filed an
The Court held in the case of, Batangas v. Romulo,
application with the NTC for a CPCN to install, operate
―automatic release‖ in Section 6, Article X of the
and maintain a digital Cellular MobileTelephone
Constitution is defined as ―an automatic manner;
System/Service (CMTS) with prayer for a Provisional
without thought or conscious intention. Being
Authority (PA). However, ExpressTelecommunication Co.,
―automatic,‖ thus, connotes something mechanical,
Inc. (Extelcom) filed in NTC an Opposition praying for the
spontaneous and perfunctory. As such the LGUs are not
dismissal of Bayantel’s application. On May 3, 2000, the
NTC issued an Order granting in favor of Bayantel,
Page 27 of 30
applying Rule 15, Section 3 of its 1978 Rules of Practice
and Procedure. Extelcom filed with the CA a petition
seeking the annulment of the Order of the RTC, which was
eventually granted by the CA. Aggrieved, Bayantel
brought the case to the SC.
Extelcom contends that the NTC should have applied the
Revised Rules which were filed with the Office of the NAR
on February 3, 1993.. The NTC, on the other hand, 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. Thus, the present petition.
ISSUE: Which among the NTC Rules of Practice and
Procedure should govern in the approval of Bayantel’s
application?
HELD:
The 1978 NTC 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.
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.
Still, 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. The Rules of
Practice and Procedure of the NTC, which implements
Section 29 of the Public Service Act (Commonwealth Act
146, as amended), fall squarely within the scope of these
laws. 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.
PILIPINAS KAO, INC. vs. HONORABLE COURT OF
APPEALS , G.R. No. 105014. December 18, 2001
FACTS:
Pilipinas Kao, Inc. is a corporation organized and existing
under the laws of the Philippines with principal office at
108-A E. Rodriguez, Jr. Avenue, Libis, Quezon City.
Each project is entitled to a certain set of incentives
depending upon, among others, the law of registration
and the status and type of registration. The present
controversy refers only to the tax incentives provided for
under Article 48 of P.D. No. 1789, as amended by B.P. Blg.
391.
On July 27, 1990, respondent denied petitioner’s request
for reconsideration anent its 1988 tax credit, the denial
being communicated to petitioner in a letter dated
August 1, 1990 (annex “11”, Comment) and received by
the latter on August 15, 1990.
On December 17, 1990, petitioner again moved for
reconsideration of respondent’s letter dated August 1,
1990 (Annex “12”, Comment), but the same was denied by
respondent in a letter dated March 11, 1991 (copy of
which was received by petitioner on March 15, 1991).
(Annex “13”, Comment)
On March 11, 1991, respondent also advised petitioner of
the approval of its application for the year 1989 tax credit
but only in the following reduced amounts.
Because of the failure of respondent BOI to resolved the
issues, petitioner again asked for reconsideration by a
Letter dated December 17, 1990,[9] reiterating that the
use of the base figure defeated the very purpose of the
law which was to encourage private domestic and foreign
investment and reward performance contributing to
economic development. Further, that the use of the
highest attained production in the three (3) years
preceding the expansion as base figure in effect penalized
petitioner for its efficiency.
Denying petitioner’s last request in the same cavalier
fashion, respondent BOI simply informed it “that the
Board in its meeting of March 5, 1991 denied your request
for reconsideration of your NLC/NVE tax credit
application for 1988.”[10]
In the same Letter of March 11, 1991, respondent BOI
informed petitioner that its application for 1989 NLC/NVE
tax credit had been approved in reduced amount stated
therein, again without any explanation for the reduction.
This letter is supposed to be the decision of the BOI on
the matter.
Page 28 of 30
ISSUE:
Whether BOI rendered a decision within the meaning of
its own rules which requires that the decision in a
contested case shall be in writing and shall state clearly
and distinctly the facts and the law on which it is based.
HELD:
In the context of what the law and its own rules prescribe,
as well as our applicable pronouncements, the BOI
Resolution of May 10, 1990, as well as its Letters of August
1, 1990 and March 11, 1991 did not qualify as “decision,”
absent a clear and distinct statement of the facts and the
law to support the action.
Lacking the essential attribute of a decision, the acts in
question were at best interlocutory orders that did not
attain finality nor acquire the effects of a final judgment
despite the lapse of the statutory period of appeal.
Thus, the element of time relied upon by respondents
does not bar our inquiry into the substantive merits of the
petition, and that respondent court erred in considering
the petition for review filed out of time.
While BOI should first resolve the merits of the case in the
proper exercise of its primary jurisdiction, we shall
nevertheless proceed with this review for procedural
expediency and consideration of public interest involved
in the questions before us which bear on the certainty and
stability of economic policies an proper implementation
thereof. For it cannot be denied that inappropriate and
irresolute implementation of our investment incentive
laws detracts from the very purpose of these laws.
The essential fact which gave rise to the substantive issue
resolved by respondent court and which is now before
this Court are not disputed.
GREGORIO HONASAN II PETITIONER VS. THE
PANEL OF INVESTIGATING PROSECUTORS OF
THE DEPARTMENT OF JUSTICE, G.R.NO. 159747
APRIL 13,2004
Lessons Applicable: Rule on Interpretative Regulations
(persons), Powers of the Ombudsman (consti), concurrent
jurisdiction of the Ombudsman and the DOJ to conduct
preliminary investigation (consti)
Law Applicable: Section 13, Article XI of the Constitution,
Art. 2 Civil Code
Facts:
· August 4, 2003: CIDG-PNP/P Director Edguardo
Matillano filed an affidavit-complaint with the
Department of Justice (DOJ) which contains the following
in part:
o July 27, 2003: crime of coup d’ etat was committed by
military personnel who occupied Oakwood and Senator
Gregorio “Gringo” Honasan, II
o On or about 11 p.m. June 4,2003: A meeting was held
and presided by Senator Honasan in a house located in
San Juan, Metro Manila
o Early morning of July 27, 2003: Capt. Gerardo Gambala,
in behalf of the military rebels occupying Oakwood, made
a public statement aired on national television, stating
their withdrawal of support to the chain of command of
the AFP and the Government of President Gloria
Macapagal Arroyo. Willing to risk their lives to achieve the
National Recovery Agenda (NRA) of Senator Honasan
which they believe is the only program that would solve
the ills of society.
· Sworn statement of AFP Major Perfecto Ragil stated
that:
o June 4, 2003 about 11 pm: Senator Gregorio “Gringo”
Honasan arrived with Capt. Turinga to hold the NRP
meeting where they concluded the use of force, violence
and armed struggle to achieve the vision of NRP where a
junta will be constituted which will run the new
government. They had a blood compact and that he only
participated due to the threat made by Senator Honasan
when he said “Kung kaya nating pumatay sa ating mga
kalaban, kaya din nating pumatay sa mga kasamahang
magtataksil.”
o July 27, 2003: He saw on TV that Lieutenant Antonio
Trillanes, Captain Gerardo Gambala, Captain Alejano and
some others who were present during the NRP meeting
he attended, having a press conference about their
occupation of the Oakwood Hotel. He saw that the letter
"I" on the arm bands and the banner is the same letter "I"
in the banner is the same as their blood compact wound.
· August 27, 2003: Senator Honasan appeared with
counsel at the DOJ to file a a Motion for Clarification
questioning DOJ's jurisdiction over the case since the
imputed acts were committed in relation to his public
office by a group of public officials with Salary Grade 31
which should be handled by the Office of the
Ombudsman and the Sandiganbayan
· Senator Honasan then filed a petition for certiorari
under Rule 65 of the Rules of Court against the DOJ Panel
and its members, CIDG-PNP-P/Director Eduardo
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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 directing him to file his respective counter-
affidavits and controverting evidence on the ground that
the DOJ has no jurisdiction to conduct the preliminary
investigation
Issues:
Whether in regards to Ombudsman-DOJ Circular no. 95-
001, the office of the Ombudsman should deputize the
prosecutors of the DOJ to conduct the preliminary
investigation.
Whether the Ombudsman-DOJ Joint Circular no. 95-001
is ineffective on the ground that it was not published
Whether the Ombudsman has jurisdiction to conduct the
preliminary investigation because the petitioner is a
public officer with salary grade 31 (Grade 27 or Higher)
thereby falling within the jurisdiction of the Sandigan
Bayan.
Held: Wherefore, the petition for certiorari is DISMISSED
for lack of merit
1. No.
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
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.
circular supports the view of the respondent Ombudsman
that it is just an internal agreement between the
Ombudsman and the DOJ
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.
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.
2. No.
· In the case of People vs. Que Po Lay, 94 Phil. 640
(1954). The only circulars and regulations which prescribe
a penalty for its violation should be published before
becoming effective.
· In the case of Taňada V. Tuvera, 146 Scra 453 (1986),
The Honorable Court rules that:
o 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 the administrative
superiors concerning the rules on guidelines to be
followed by their subordinates in performance of their
duties.
OMB-DOJ Joint Circulars 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.
It does not regulate the conduct of persons or the public,
in general.
3. No. Whether or not the offense is within exclusive
jurisdiction or not will not resolve the present petition so
as not to pre-empt the result of the investigation
conducted by the DOJ Panel.
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