1
ATENEO DE DAVAO UNIVERSITY – COLLEGE OF LAW
Constitutional Law I | Atty. Edgar B. Pascua II
Express Limitations – APPROPRIATION Laws
MARIA CAROLINA ARAULLO v. AQUINO III
G.R. No. 209287 | July 1, 2014
Facts: These consolidated petitions assail the constitutionality of
the Disbursement Acceleration Program (DAP), National Budget
Circular (NBC) No. 541, and related issuances of the Department of
Budget and Management (DBM) implementing the DAP.
The controversy stemmed from a privilege speech delivered
by Senator Jinggoy Estrada to reveal that some Senators, including
himself, had been allotted an additional P50 Million each as
“incentive” for voting in favor of the impeachment of Chief Justice
Renato Corona.
Petitioners alleged that the DAP, being actually an
appropriation that sets aside public funds for public use, should
require an enabling law for its validity. However, Congress never
enacted a law to establish the DAP nor to authorize release of public
funds to implement the DAP. Thus, it is contended that DAP
contravenes Section 29(1) of Article VI of the 1987 Constitution which
states that “no money shall be paid out of the Treasury except in
pursuance of an appropriation made by law.”
The OSG posits, however, that no law was necessary for the
adoption and implementation of the DAP because of its being neither
a fund nor an appropriation, but a program or an administrative
system of prioritizing spending; and that the adoption of the DAP was
by virtue of the authority of the President as the Chief Executive to
ensure that laws were faithfully executed.
The DBM also cited as legal bases for the DAP’s use of
savings (a) Section 25(5), Article VI of the 1987 Constitution, which
granted to the President the authority to augment an item for his
office in the general appropriations law (b) various sections of EO 292
(Administrative Code of 1987); and (c) the General Appropriations
Acts of 2011, 2012 and 2013, particularly their provisions on the use
of savings.
Issue: W/N the transfer of funds under the DAP were
unconstitutional.
Held: Yes. The transfer of appropriated funds, to be valid under
Section 25(5), must be made upon a concurrence of the following
requisites, namely:
a) There is a law authorizing the President, the President of the
Senate, the Speaker of the House of Representatives, the Chief
Justice of the Supreme Court, and the heads of the Constitutional
Commissions to transfer funds within their respective offices;
b) The funds to be transferred are savings generated from the
appropriations for their respective offices; and
c) The purpose of the transfer is to augment an item in the general
appropriations law for their respective offices.
Anent the first requisite, to comply with such requisite, the
GAAs should expressly authorize the transfer of funds. However, the
GAAs of 2011 and 2012 lacked valid provisions to authorize transfers
of funds under the DAP; hence, transfers under the DAP were
unconstitutional.
Anent the second requisite, savings should be actual. The
court construes savings strictly against expanding the scope of the
power to augment. The power to augment was to be used only when
the purpose for which the funds had been allocated were already
satisfied, or the need for such funds had ceased to exist, for only then
could savings be properly realized. This interpretation prevents the
Executive from unduly transgressing Congress’ power of the purse.
However, unreleased appropriations and withdrawn unobligated
allotments under the DAP were not savings, and the use of such
appropriations contravened Section 25(5), Article VI of the 1987
Constitution.
Anent the third requisite, Cross-border transfers, whether
as augmentation, or as aid, are prohibited under Section 25(5). It
appears that DAP funds were transferred to the COA (P143.7 Million)
and House of Representative (P250 Million). Those transfers of funds,
being from the Executive, constituted cross-border augmentations.
MARIA CAROLINA ARAULLO v. AQUINO III (Resolution)
G.R. No. 209287 | February 3, 2015
Facts: Both respondents and petitioners in G.R. No. 209287
(Araullo vs. Aquino) filed respective Motions for Reconsideration,
raising both procedural and substantive issues.
Respondents contended that the withdrawn unobligated
allotments and unreleased appropriations under the DAP are savings
that may be used for augmentation, and that the withdrawal of
unobligated allotments were made pursuant to Section 38 Chapter 5,
Book VI of the Administrative Code; that Section 38 and Section 39,
Chapter 5, Book VI of the Administrative Code are consistent with
Section 25(5), Article VI of the Constitution, which, taken together,
constitute "a framework for which economic managers of the nation
may pull various levers in the form of authorization from Congress to
efficiently steer the economy towards the specific and general
purposes of the GAA;" and that the President’s augmentation of
deficient items is in accordance with the standing authority issued by
Congress through Section 39 of the Administrative Code.
Issue: W/N the respondents’ contentions are tenable.
Held: No. Section 39 is evidently in conflict with the plain text
of Section 25(5), Article VI of the Constitution because it allows the
President to approve the use of any savings in the regular
appropriations authorized in the GAA for programs and projects
of any department, office or agency to cover a deficit in any other
item of the regular appropriations. As such, Section 39 violates the
mandate of Section 25(5) because the latter expressly limits the
authority of the President to augment an item in the GAA to only
those in his own Department out of the savings in other items of
his own Department’s appropriations. Accordingly, Section 39 cannot
serve as a valid authority to justify cross-border transfers under the
DAP. Augmentations under the DAP which are made by the Executive
within its department shall, however, remain valid so long as the
requisites under Section 25(5) are complied with.
The Court thus declares as Unconstitutional the cross-
border transfers of the savings of the Executive to augment the
appropriations of other offices outside the Executive. Respondents
must always be reminded that the Constitution is the basic law to
which all laws must conform. No act that conflicts with the
Constitution can be valid.
ALAG, Miguel Alleandro M. | 2-Manresa

ATENEO DE DAVAO UNIVERSITY – COLLEGE OF LAW
Constitutional Law I | Atty. Edgar B. Pascua II
TAX LAWS
BRITISH AMERICAN TOBACCO v. JOSE ISIDRO CAMACHO (Reso.)
G.R. No. 163583 | April 15, 2009
Facts: British American Tobacco (BAT), makers of Lucky Strike
brand cigarettes, earlier assailed the validity of Section 145 of the
National Internal Revenue Code (NIRC) and its related implementing
regulations for being violative of the equal protection and uniformity
clauses of the Constitution.
Section 145 (c) provides for four tiers of tax rates based on
the net retail price per pack of cigarettes. Under the provision, new
brands of cigarettes shall be taxed according to their current net
retail price while existing or "old" brands shall be taxed based on
their net retail price as of October 1, 1996.
In its previous Decision, the Court declared (i) Section 145
of the NIRC as constitutional, and (ii) portions of Revenue Regulations
(RR) No. 1-97, RR 9-2003, and Revenue Memorandum Order No. 6-
2003 as invalid insofar as they grant the BIR the power to reclassify or
update the classification of new brands every two years or earlier.
In the present Motion for Reconsideration, petitioner BAT
insists that the assailed provisions (1) violate the equal protection and
uniformity of taxation clauses of the Constitution, (2) contravene
Section 19, Article XII of the Constitution on unfair competition, and
(3) infringe the constitutional provisions on regressive and inequitable
taxation. Petitioner further argues that assuming the assailed
provisions are constitutional, petitioner is entitled to a downward
reclassification of Lucky Strike from the premium-priced to the high-
priced tax bracket.
Issue: W/N the assailed provisions are unconstitutional.
Held: No. Uniformity of taxation, like the kindred concept of equal
protection, merely requires that all subjects or objects of taxation,
similarly situated, are to be treated alike both in privileges and
liabilities.
The uniformity rule does not prohibit classification for
purposes of taxation as long as: (1) the standards that are used
therefor are substantial and not arbitrary, (2) the categorization is
germane to achieve the legislative purpose, (3) the law applies, all
things being equal, to both present and future conditions, and (4) the
classification applies equally well to all those belonging to the same
class.
The classification freeze provision meets the geographical
uniformity requirement because the assailed law applies to all
cigarette brands in the Philippines. And, for reasons already adverted
to in our August 20, 2008 Decision, the above four-fold test has been
met in the present case. As to the third requisite, the classification
freeze provision uniformly applies to all cigarette brands whether
existing or to be introduced in the market at some future time. It does
not purport to exempt any brand from its operation nor single out a
brand for the purpose of imposition of excise taxes.
Anent the issue of regressivity, it may be conceded that the
assailed law imposes an excise tax on cigarettes which is a form of
indirect tax, and thus, regressive in character. While there was an
attempt to make the imposition of the excise tax more equitable by
creating a four-tiered taxation system where higher priced cigarettes
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are taxed at a higher rate, still, every consumer, whether rich or poor,
of a cigarette brand within a specific tax bracket pays the same tax
rate. To this extent, the tax does not take into account the person's
ability to pay. Nevertheless, this does not mean that the assailed law
may be declared unconstitutional for being regressive in character
because the Constitution does not prohibit the imposition of indirect
taxes but merely provides that Congress shall evolve a progressive
system of taxation.
In Tolentino v. Secretary of Finance, the Court explained
that: “Regressivity is not a negative standard for courts to enforce.
What Congress is required by the Constitution to do is to "evolve a
progressive system of taxation." This is a directive to Congress, just
like the directive to it to give priority to the enactment of laws for the
enhancement of human dignity and the reduction of social, economic
and political inequalities [Art. XIII, Section 1] or for the promotion of
the right to "quality education" [Art. XIV, Section 1]. These provisions
are put in the Constitution as moral incentives to legislation, not as
judicially enforceable rights.”
JURISDICTION of the Supreme Court
No law shall be passed increasing the appellate jurisdiction of the Supreme
Court as provided in this Constitution without its advice and
concurrence. (Sec. 30, Art. VI, 1987 Constitution)
DOUGLAS VILLAVERT v. HON. ANIANO DESIERTO
G.R. No. 133715 | February 23, 2000
Facts: Petitioner Douglas R. Villavert is a Sales & Promotion
Supervisor of PCSO Cebu Branch responsible for the sale and disposal
of PCSO sweepstakes tickets withdrawn by him, which are already
considered sold. As Villavert is not expected to sell all withdrawn
tickets on his own, he is allowed by the PCSO to consign tickets to
ticket outlets and/or to engage the help of sales agents, usually
sidewalk peddlers and hawkers.
From March 20 to June 12, 1994, or for two (2) months of
weekly draws, petitioner Villavert incurred a total of P997,373.60
worth of unpaid PCSO tickets.
An administrative charge for grave misconduct was filed
against Villavert for failure to account for the public funds or property
that he is chargeable. The Graft Investigation Officer recommended
the dismissal of the case. However, Deputy Ombudsman-Visayas
issued a Memorandum finding Villavert guilty of the charge. Hence,
this petition for review on certiorari under Rule 45 of the Rules of
Court, in relation to Sec. 27 of RA 6770.
Issue: W/N the decisions of the Office of the Ombudsman may be
appealed to the Supreme Court.
Held: No. In Fabian v. Desierto, Sec. 27 of RA 6770, which
authorizes an appeal to this Court from decisions of the Office of the
Ombudsman in administrative disciplinary cases, was declared
violative of the proscription in Sec. 30, Art. VI, of the Constitution
against a law which increases the appellate jurisdiction of this Court
without its advice and consent.
In addition, the Court noted that Rule 45 of the 1997 Rules
of Civil Procedure precludes appeals from quasi-judicial agencies, like
the Office of the Ombudsman, to the Supreme Court. Consequently,
ALAG, Miguel Alleandro M. | 2-Manresa

ATENEO DE DAVAO UNIVERSITY – COLLEGE OF LAW
Constitutional Law I | Atty. Edgar B. Pascua II
appeals from decisions of the Office of the Ombudsman in
administrative cases should be taken to the Court of Appeals under
Rule 43, as reiterated in the subsequent case of Namuhe v.
Ombudsman.
TITLE OF ROYALTY
Section 31, Art. VI. No law granting a title of royalty or nobility shall be
enacted.
AQUINO III and ROBREDO v. COMELEC
G.R. No. 189793 | April 7, 2010
Facts: Republic Act No. 9716 was signed into law by President
Gloria Macapagal Arroyo, which created an additional legislative
district for the Province of Camarines Sur by reconfiguring the existing
first and second legislative districts of the province.
Prior to RA 9716, the Province of Camarines Sur was
estimated to have a population of 1,693,821, distributed among four
legislative districts. Under the new law, the first and second districts
of Camarines Sur were reconfigured in order to create an additional
legislative district for the province.
Petitioners Senator Benigno Simeon C. Aquino III and Mayor
Jesse Robredo, as public officers, taxpayers and citizens, seek the
nullification as unconstitutional of RA 9716, because the proposed
first district will end up with a population of less than 250,000 or only
176,383. This supposedly runs afoul of the explicit constitutional
standard in Section 5(3), Article VI of the 1987 Constitution that
requires a minimum population of 250,000 for the creation of a
legislative district.
Issue: W/N RA 9716 is unconstitutional.
Held: No. There is no specific provision in the Constitution that
fixes a 250,000 minimum population that must compose a legislative
district. The second sentence of Section 5(3), Article VI of the
Constitution, succinctly provides: "Each city with a population of at
least two hundred fifty thousand, or each province, shall have at least
one representative."
The provision draws a plain and clear distinction between
the entitlement of a city to a district on one hand, and the entitlement
of a province to a district on the other. For while a province is entitled
to at least a representative, with nothing mentioned about
population, a city must first meet a population minimum of 250,000
in order to be similarly entitled. Plainly read, Section 5(3) of the
Constitution requires a 250,000 minimum population only for a city
to be entitled to a representative, but not so for a province.
Dissenting Opinion of Justice Carpio
Legislators Represent People, Not Provinces or Cities – A
democracy in its pure state is one where the majority of the people,
under the principle of "one person, one vote," directly run the
government. A republic is one which has no monarch, royalty or
nobility, ruled by a representative government elected by the
majority of the people under the principle of "one person, one vote,"
where all citizens are equally subject to the laws. A republic is also
known as a representative democracy. The democratic and
republican ideals are intertwined, and converge on the common
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principle of equality – equality in voting power, and equality under
the law.
BULLETIN PUBLISHING CORP. v. HON. JUDGE EDILBERTO NOEL
G.R. No. 76565 | November 9, 1988
Facts: On July 3, 1986, the twenty-one (21) private respondents,
claiming to be the nearest relatives of the late Amir Mindalano, suing
on their own behalf and on behalf of the entire Mindalano clan of
Mindanao, filed a Complaint for damages before RTC of Marawi City
charging petitioners with libel. Private respondents' action was
anchored on a feature article written by Jamil Maidan Flores entitled
"A Changing of the Guard," which appeared in the June 22, 1986 issue
of Philippine Panorama, a publication of petitioner Bulletin Publishing
Corporation.
It is also claimed by private respondents that the excerpts objected to
falsely assert that:
"the late Amir Mindalano has acquired his fluency and literacy by living with
an American family which has a distinct repugnant connotation in Maranao
society in that during the American time the royal families of Lanao hid their
children from the public school system and the Americans. Only the lowliest
commoners were sent to school or allowed to live with any American family.
Amir Manalao Mindalano has received his education at the Lumbatan High
School, was a student leader thereat, and has not lived with an American
family."
Reacting to the complaint, petitioners filed a Motion to
Dismiss urging that (a) venue had been improperly laid, (b) the
complaint failed to state a cause of action, and (c) the complainants
lacked the capacity to bring the suit. In an Order, however,
respondent Judge denied the Motion to Dismiss and directed
petitioners (defendants below) to file their answer to the complaint.
Issue: W/N the excerpts are defamatory.
Held: No. The Court takes judicial notice of the fact that titles of
royalty or nobility have been maintained and appear to be accorded
some value among some members of certain cultural groups in our
society. At the same time, such titles of royalty or nobility are not
generally recognized or acknowledged socially in the national
community. No legal rights or privileges are contingent upon grant
or possession of a title of nobility or royalty, and the Constitution
expressly forbids the enactment of any law conferring such a title.
Thus, the status of a commoner carries with it no legal
disability. Assuming for present purposes only the falsity (in the sense
of being inaccurate or non-factual) of the description in the Panorama
article of Amir Mindalano as not belonging to a royal house, the Court
believed that such a description cannot in this day and age be
regarded as defamatory, as an imputation of "a vice or defect," or as
tending to cause "dishonor, discredit or contempt," or to "blacken the
memory of one who is dead" in the eyes of an average person in our
community.
The Court is similarly unable to see anything defamatory in
a statement (even if inaccurate) that private respondents' patriarch
once lived with an American family. Since the early decades of this
century a great many young Filipinos (including Muslim Filipinos) have
been going abroad for study and many of them share the experience
of staying with a foreign family, improving their language skills and
learning something about the culture and mores of the people.
ALAG, Miguel Alleandro M. | 2-Manresa

ATENEO DE DAVAO UNIVERSITY – COLLEGE OF LAW
Constitutional Law I | Atty. Edgar B. Pascua II
b. Implied Limitations
1. PROHIBITION AGAINST DELEGATION OF LEGISLATIVE POWERS
REVIEW CENTER ASSOCIATION OF THE PHILIPPINES v. EXECUTIVE
SECRETARY EDUARDO ERMITA
G.R. No. 180046 | April 2, 2009
Facts: Due to massive irregularities during the Nursing Board
Exam, on September 8, 2006, President Arroyo issued EO 566 which
authorized the CHED to supervise the establishment and operation
of all review centers and similar entities in the Philippines. On
November 3, 2006, the CHED, through its then Chairman Carlito S.
Puno approved CHED Memorandum Order No. 49, series of 2006.
The Review Center Association of the Philippines, an
organization of independent review centers, asked the CHED to
"amend, if not withdraw" the IRR arguing, among other things, that
giving permits to operate a review center to Higher Education
Institutions or consortia of HEIs and professional organizations will
effectively abolish independent review centers.
Issue: W/N EO 566 violates the principle of non-delegation of
legislative powers.
Held: Yes. The OSG argues that President Arroyo was merely
exercising her executive power to ensure that the laws are faithfully
executed. The OSG further argues that President Arroyo was
exercising her residual powers under Executive Order No. 292
(Administrative Code), particularly Section 20, Title I of Book III, thus:
Section 20. Residual Powers. - Unless Congress provides otherwise,
the President shall exercise such other powers and functions vested
in the President which are provided for under the laws and which are
not specifically enumerated above, or which are not delegated by the
President in accordance with law.
Section 20, Title I of Book III of EO 292 speaks of other powers vested
in the President under the law. The exercise of the President's residual
powers under this provision requires legislation, as the provision
clearly states that the exercise of the President's other powers and
functions has to be "provided for under the law." There is no law
granting the President the power to amend the functions of the
CHED. The President may not amend RA 7722 through an Executive
Order without a prior legislation granting her such power.
The President has no inherent or delegated legislative
power to amend the functions of the CHED under RA 7722.
Legislative power is the authority to make laws and to alter or repeal
them, and this power is vested with the Congress under Section 1,
Article VI of the 1987 Constitution.
Since EO 566 is an invalid exercise of legislative power, the
RIRR is also an invalid exercise of the CHED's quasi-legislative power.
Therefore, EO No. 566 and CHED Memorandum Order No. 30, series
of 2007 are declared void for Usurpation of Legislative Power.
COMMISSIONER OF CUSTOMS v. HYPERMIX FEEDS
G.R. No. 179579 | February 1, 2012
Facts: On November 7, 2003, petitioner COC issued CMO 27-2003,
which for tariff purposes, classifies wheat according to the (1)
importer or consignee; (2) country of origin; and (3) port of discharge.
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Depending on these factors, wheat would then be classified either as
food grade or feed grade with a corresponding tariff of 3% and 7%
respectively.
On December 19, 2003, the respondent, a wheat importer,
filed a Petition for Declaratory Relief with the RTC of Las Pinas
contending that CMO 27-2003 was issued without following the
mandate of the Revised Administrative Code on public participation,
prior notice, and publication or registration with the University of the
Philippines Law Center. The RTC issued a Temporary Restraining
Order (TRO) effective for twenty (20) days from notice.
Petitioners thereafter filed a Motion to Dismiss alleging
that, among others, was an internal administrative rule and not
legislative in nature.
On 28 February 2005, the RTC ruled in favor of respondent,
declaring CMO 27-2003 as INVALID and OF NO FORCE AND EFFECT,
citing the petitioner’s failure to follow the basic requirements of
hearing and publication in the issuance of the CMO.
Petitioners appealed to the CA. The CA dismissed the
appeal, holding that the regulation affected substantial rights of
petitioners and other importers and that the petitioners should have
observed the requirements of notice, hearing and publication.
Issue: W/N CMO 27-2003 is valid.
Held: No. 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. It is required that the regulation be germane
to the objects and purposes of the law; and that it be not in
contradiction to, but in conformity with, the standards prescribed by
law.
Anent the violation of the equal protection clause, the
Court held that it cannot see how the quality of wheat is affected by
who imports it, where it is discharged, or which country it came from.
Anent the Commissioner of Customs’ powers of delegated
authority, Section 1403 of the Tariff and Customs Law mandates that
the customs officer must first assess and determine the classification
of the imported article before tariff may be imposed. Unfortunately,
CMO 23-2007 has already classified the article even before the
customs officer had the chance to examine it. In effect, petitioner
Commissioner of Customs diminished the powers granted by the
Tariff and Customs Code with regard to wheat importation when it no
longer required the customs officer’s prior examination and
assessment of the proper classification of the wheat.
In summary, petitioners violated respondent’s right to due
process in the issuance of CMO 27-2003 when they failed to observe
the requirements under the Revised Administrative Code. Petitioners
likewise violated respondent’s right to equal protection of laws
when they provided for an unreasonable classification in the
application of the regulation. Finally, petitioner Commissioner of
Customs went beyond his powers of delegated authority when the
regulation limited the powers of the customs officer to examine and
assess imported articles.
ALAG, Miguel Alleandro M. | 2-Manresa

ATENEO DE DAVAO UNIVERSITY – COLLEGE OF LAW
Constitutional Law I | Atty. Edgar B. Pascua II
COCOFED v. REPUBLIC
G.R. No. 177857-58 | January 24, 2012
Facts: In 1971, Republic Act No. (R.A.) 6260 was enacted creating
the Coconut Investment Company (CIC) to administer the Coconut
Investment Fund (CIF), which, under Section 8 thereof, was to be
sourced from a PhP 0.55 levy on the sale of every 100 kg. of copra. Of
the PhP 0.55 levy of which the copra seller was, or ought to be,
issued COCOFUND receipts, PhP 0.02 was placed at the disposition of
COCOFED, the national association of coconut producers declared by
the Philippine Coconut Administration (PHILCOA, now PCA) as having
the largest membership.
The declaration of martial law in September 1972 saw the
issuance of several presidential decrees (P.Ds.) purportedly
designed to improve the coconut industry through the collection
and use of the coconut levy fund. While coming generally from
impositions on the first sale of copra, the coconut levy fund came
under various names, the different establishing laws and the stated
ostensible purpose for the exaction explaining the differing
denominations. Charged with the duty of collecting and administering
the Fund was PCA. Like COCOFED with which it had a legal linkage, the
PCA, by statutory provisions scattered in different coco levy decrees,
had its share of the coco levy.
Then came P.D. No. 755 providing under its Section 1 the
following:
It is hereby declared that the policy of the State is to provide readily
available credit facilities to the coconut farmers at a preferential
rates; that this policy can be expeditiously and efficiently realized by
the implementation of the Agreement for the Acquisition of a
Commercial Bank for the benefit of Coconut Farmers executed by the
[PCA]; and that the [PCA] is hereby authorized to distribute, for free,
the shares of stock of the bank it acquired to the coconut farmers.
Issue: W/N Section 1 of PD 755 constitutes an undue delegation
of legislative power.
Held: Yes. P.D. No. 755 involves an invalid delegation of legislative
power, a concept discussed in Soriano v. Laguardia, citing the
following excerpts from Edu v. Ericta:
It is a fundamental that Congress may not delegate its legislative power. What
cannot be delegated is the authority to make laws and to alter and repeal
them; the test is the completeness of the statute in all its term and provisions
when it leaves the hands of the legislature. To determine whether or not there
is an undue delegation of legislative power, the inquiry must be directed to the
scope and definiteness of the measure enacted. The legislature does not
abdicate its functions when it describes what job must be done, who is to do
it, and what the scope of his authority is.
Two tests determine the validity of delegation of
legislative power: (1) the completeness test; and (2) the sufficient
standard test. A law is complete when it sets forth therein the policy
to be executed, carried out or implemented by the delegate.
The two tests lays down a sufficient standard when it
provides adequate guidelines or limitations in the law to map out the
boundaries of the delegates authority and prevent the delegation
from running riot. To be sufficient, the standard must specify the
limits of the delegates’ authority, announce the legislative policy and
identify the conditions under which it is to be implemented.
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In the instant case, the requisite standards or criteria are
absent in P.D. No. 755. As may be noted, the decree authorizes the
PCA to distribute to coconut farmers, for free, the shares of stocks of
UCPB and to pay from the CCSF levy the financial commitments of the
coconut farmers under the Agreement for the acquisition of such
bank. Yet, the decree does not even state who are to be considered
as coconut farmers. Would, say, one who plants a single coconut tree
be already considered a coconut farmer and, therefore, entitled to
own UCPB shares? If so, how many shares shall be given to him? The
definition of a coconut farmer and the basis as to the number of
shares a farmer is entitled to receive for free are important variables
to be determined by law and cannot be left to the discretion of the
implementing agency.
Moreover, P.D. No. 755 did not identify or delineate any
clear condition as to how the disposition of the UCPB shares or their
conversion into private ownership will redound to the advancement
of the national policy declared under it. To recall, P.D. No. 755 seeks
to accelerate the growth and development of the coconut industry
and achieve a vertical integration thereof so that coconut farmers will
become participants in, and beneficiaries of, such growth and
development.
The Sandiganbayan is correct in its observation and ruling
that the said law gratuitously gave away public funds to private
individuals, and converted them exclusively into private property
without any restriction as to its use that would reflect the avowed
national policy or public purpose. Conversely, the private individuals
to whom the UCPB shares were transferred are free to dispose of
them by sale or any other mode from the moment of their acquisition.
Clearly, P.D. No. 755, insofar as it grants PCA a
veritable carte blanche to distribute to coconut farmers UCPB shares
at the level it may determine, as well as the full disposition of such
shares to private individuals in their private capacity without any
conditions or restrictions that would advance the laws national policy
or public purpose, present a case of undue delegation of legislative
power. As such, there is even no need to discuss the validity of the
administrative orders and resolutions of PCA implementing P.D. No.
755. Water cannot rise higher than its source.
BAI SANDRA SEMA v. COMELEC and DIDAGEN DILANGALEN
G.R. 177597 | July 16, 2008
Facts: The Province of Maguindanao forms part of the ARMM,
created under its Organic Act, Republic Act No. 6734, as amended by
Republic Act No. 9054. Maguindanao was apportioned into two
legislative districts. The first legislative district consists of Cotabato
City and eight municipalities. However, while Cotabato City forms part
of Maguindanao’s first legislative district, it is not part of the ARMM
but of Region XII, having voted against its inclusion in the ARMM.
On August 28, 2006, the ARMM Regional Assembly,
exercising its power to create provinces under Section 19, Article VI
of RA 9054, enacted Muslim Mindanao Autonomy Act No. 201
(MMA Act 201) creating the Province of Shariff Kabunsuan composed
of the eight municipalities in the first district of Maguindanao. MMA
Act 201 provided that the eight municipalities shall be separated
from the Province of Maguindanao and constituted into a distinct
and independent province (Shariff Kabunsuan). Thus, what was left
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ATENEO DE DAVAO UNIVERSITY – COLLEGE OF LAW
Constitutional Law I | Atty. Edgar B. Pascua II
of Maguindanao were the municipalities constituting its second
legislative district. Cotabato City, although part of Maguindanao’s first
legislative district, is not part of the Province of Maguindanao.
The Sangguniang Panlungsod of Cotabato City passed
Resolution No. 3999 requesting the COMELEC to “clarify the status of
Cotabato City in view of the conversion of the First District of
Maguindanao into a regular province” under MMA Act 201. The
COMELEC issued Resolution No. 07-0407, "maintaining the status quo
with Cotabato City as part of Shariff Kabunsuan in the First Legislative
District of Maguindanao.”
COMELEC issued Resolution No. 7902, amending
Resolution No. 07-0407 by renaming the first legislative district as
“Shariff Kabunsuan Province with Cotabato City (formerly First District
of Maguindanao with Cotabato City).”
Sema, who was a candidate in the May 2007 elections for
Representative of “Shariff Kabunsuan with Cotabato City,” prayed for
the nullification of COMELEC Resolution No. 7902 and the exclusion
from canvassing of the votes cast in Cotabato City for that office.
Sema claimed that in issuing Resolution No. 7902, the COMELEC
usurped Congress’ power to create or reapportion legislative
districts.
Issue: W/N Section 19, Article VI of RA 9054, which grants to the
ARMM Regional Assembly the power to create provinces
and cities, is unconstitutional.
Held: Yes.
Section 19, Article VI of RA 9054 is Unconstitutional
Under Section 19, Article VI of RA 9054, Congress delegated
to the ARMM Regional Assembly the power to create provinces,
cities, municipalities and barangays within the ARMM.
For Congress to delegate validly the power to create a
province or city, it must also validly delegate at the same time the
power to create a legislative district. The issue then is, can Congress
validly delegate to the ARMM Regional Assembly the power to create
legislative districts for the House of Representatives? The answer is
in the negative.
Legislative districts are created or reapportioned only by an act of
Congress
Under Section 5, Article VI of the Constitution, the power to
increase the allowable membership in the House of Representatives,
and to reapportion legislative districts, is vested exclusively in
Congress.
The allowable membership of the HOR can be increased,
and new legislative districts of Congress can be created, only through
a national law passed by Congress. Only Congress can enact such a
law. It would be anomalous for regional or local legislative bodies to
create or reapportion legislative districts for a national legislature like
Congress. An inferior legislative body, created by a superior legislative
body, cannot change the membership of the superior legislative body.
The ARMM Regional Assembly itself, in creating Shariff
Kabunsuan, recognized the exclusive nature of Congress’ power to
create or reapportion legislative districts by abstaining from
creating a legislative district for Shariff Kabunsuan. However, a
6
province cannot legally be created without a legislative district
because the Constitution mandates that “each province shall have at
least one representative.” Thus, the creation of the Province of
Shariff Kabunsuan under MMA 201 without a legislative district is
unconstitutional.
COMELEC Resolution No. 7902, preserving the geographic
and legislative district of the First District of Maguindanao with
Cotabato City, is valid as it merely complies with Sec. 5 of Article VI
and Sec. 20 of Article X of the Constitution, as well as Sec. 1 of the
Ordinance appended to the Constitution.
ABAKADA v. HON. CESAR PURISIMA
G.R. No. 166715 | August 14, 2008
Facts: RA 9335 provides for a system of rewards and sanctions to
encourage the officials and employees of the Bureau of Internal
Revenue (BIR) and the Bureau of Customs (BOC) to exceed their
revenue targets. Covered officials and employees are those with at
least six (6) months of service in the BIR and the BOC, regardless of
employment status.
RA 9335 created the Rewards and Incentives Fund (Fund),
which is sourced from the collection of the BIR and the BOC in excess
of their revenue targets for the year, as determined by the
Development Budget and Coordinating Committee (DBCC).
The DOF, DBM, NEDA, BIR, BOC and the Civil Service
Commission (CSC) were tasked to promulgate and issue the
implementing rules and regulations of RA 9335 to be approved by a
Joint Congressional Oversight Committee created for such purpose.
Petitioners assail the constitutionality of RA 9335 on the
following grounds: (1) The law transforms the officials and employees
of the BIR and the BOC into mercenaries and bounty hunters as they
will do their best only in consideration of the reward. (2) It violated
the constitutional guarantee of equal protection due to limiting the
scope of the rewards and incentives to the BIR and BOC employees.
(3) The law unduly delegates the power to fix revenue targets to the
President as it lacks a sufficient standard on that matter. (4) The
creation of a congressional oversight committee violates the doctrine
of separation of powers.
Issue: W/N RA 9335 constitutes an undue delegation of legislative
power.
Held: No. Two tests determine the validity of delegation of
legislative power:
a) The completeness test - A law is complete when it sets forth
therein the policy to be executed, carried out or implemented by
the delegate.
b) Sufficient standard test - A law lays down a sufficient standard
when it provides adequate guidelines or limitations in the law to
map out the boundaries of the delegate’s authority and prevent the
delegation from running riot. To be sufficient, the standard must
specify the limits of the delegate’s authority, announce the
legislative policy and identify the conditions under which it is to be
implemented.
RA 9335 adequately states the policy and standards to
guide the President in fixing revenue targets and the implementing
agencies in carrying out the provisions of the law. Revenue targets
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ATENEO DE DAVAO UNIVERSITY – COLLEGE OF LAW
Constitutional Law I | Atty. Edgar B. Pascua II
are based on the original estimated revenue collection expected
respectively of the BIR and the BOC for a given fiscal year as approved
by the Development Budget and Coordinating Committee (DBCC) and
stated in the Budget of Expenditure and Sources of Financing (BESF)
submitted by the President to Congress. Thus, the determination of
revenue targets does not rest solely on the President as it also
undergoes the scrutiny of the DBCC.
At any rate, this Court has recognized the following
as sufficient standards: "public interest," "justice and equity," "public
convenience and welfare" and "simplicity, economy and welfare." In
this case, the declared policy of optimization of the revenue-
generation capability and collection of the BIR and the BOC is infused
with public interest.
FORT BONIFACIO DEVELOPMENT CORP. v. CIR
G.R. No. 173425 | September 4, 2012
Facts: Petitioner FBDC, a duly registered domestic corporation
engaged in the development and sale of real property, purchased
from the national government a portion of the Fort Bonifacio
reservation (“Global City”) under a tax-free transaction.
On January 1, 1996, Republic Act No. 7716 extended the
coverage of Value Added Tax (VAT) to real properties held primarily
for sale to customers or held for lease in the ordinary course of trade
or business. Thus, for its sales and lease of Global City lots, FBDC paid
for the first quarter of 1997 an output VAT to the BIR in the total
amount of Php 359,652,009.47 and credited its unutilized input tax
credits on purchases of goods and services.
In computing its output VAT, however, FBDC did not apply
its transitional input tax credit of Php5,698,200,256, based on the
book value of its beginning inventory of all its real properties. Thus,
FBDC filed a claim for refund of the amount of Php359,652,009.47
erroneously paid as output VAT.
The Court of Tax Appeals (CTA) denied FBDC’s claim for
refund, when the matter was elevated to it due to the inaction of the
BIR. In denying FBDC’s claim, the CTA held that: (1) the benefit of
transitional input tax credit comes with the condition that business
taxes should have been paid first; and (2) under Revenue Regulations
(“RR”) No. 7-95, implementing Section 105 of the old National
Internal Revenue Code (“NIRC”), the transitional input tax credit
should be based on the value of the improvements on land, and not
on the book value of the real property.
The CA affirmed the CTA’s denial of the FBDC’s claim for
refund, relying on the historical background of transitional input tax
credit and upholding the validity of RR No. 7-95 which limited the
transitional input tax credit to the value of the improvements on the
land.
Issue: W/N RR 7-95 is unconstitutional, insofar as it limits the
transitional input tax credit to the value of the
improvement of the real properties, for being inconsistent
with the provision of Section 105 of the old NIRC, in relation
to Section 100 of the same Code, as amended by RA 7716.
Held: Yes. In the Court’s Resolution dated October 2, 2009, in the
related case of Fort Bonifacio, it ruled that Section 4.105-1 of RR 7-
95, insofar as it limits the transitional input tax credit to the value of
7
the improvement of the real properties, is a nullity. Pertinent
portions of the Resolution read:
As mandated by Article 7 of the Civil Code, an administrative
rule or regulation cannot contravene the law on which it is based. RR
7-95 is inconsistent with Section 105 insofar as the definition of the
term "goods" is concerned. This is a legislative act beyond the
authority of the CIR and the Secretary of Finance. The rules and
regulations that administrative agencies promulgate, which are the
product of a delegated legislative 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 objects and purposes of the law, and should not be in
contradiction to, but in conformity with, the standards prescribed by
law.
As such, the 8% transitional input tax credit should not be
limited to the value of the improvements on the real properties but
should include the value of the real properties as well.
In this case, since petitioner is entitled to a transitional input
tax credit of P5,698,200,256, which is more than sufficient to cover its
output VAT liability for the first quarter of 1997, a refund of the
amount of P359,652,009.47 erroneously paid as output VAT for the
said quarter is in order.
GUTIERREZ et al. v. DBM
G.R. No. 153266 | March 18, 2010
Facts: Congress enacted in 1989 Republic Act (R.A.) 6758, called
the Compensation and Position Classification Act of 1989 to
rationalize the compensation of government employees. Section 12
thereof directed the consolidation of allowances and additional
compensation already being enjoyed by employees into their
standardized salary rates. But it exempted certain additional
compensations that the employees may be receiving from such
consolidation.
Pursuant to the above, the Department of Budget and
Management (DBM) issued NCC 59, covering the offices of the
national government, state universities and colleges, and local
government units. NCC 59 enumerated the specific allowances and
additional compensations which were deemed integrated in the basic
salaries and these included the Cost of Living Allowance (COLA) and
Inflation Connected Allowance (ICA).
The DBM also issued Corporate Compensation Circular
(CCC), covering all government-owned or controlled corporations and
government financial institutions. Accordingly, the Commission on
Audit (COA) disallowed the payments of honoraria and other
allowances which were deemed integrated into the standardized
salary rates. Employees of government-owned or controlled
corporations questioned the validity of CCC 10 due to its non-
publication. In De Jesus v. COA, this Court declared CCC 10 ineffective
because of such non-publication. Until then, it ordered the COA to
pass on audit the employees' honoraria which they were receiving
prior to the effectivity of R.A. 6758.
Meanwhile, the DBM also issued Budget Circular 2001-03,
clarifying that only the exempt allowances under Section 12 of R.A.
6758 may continue to be granted the employees; all others were
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ATENEO DE DAVAO UNIVERSITY – COLLEGE OF LAW
Constitutional Law I | Atty. Edgar B. Pascua II
deemed integrated in the standardized salary rates. Thus, the
payment of allowances and compensation such as COLA, amelioration
allowance, and ICA, among others, which were already deemed
integrated in the basic salary were unauthorized.
On October 26, 2005 the DBM issued National Budget
Circular 2005-502 which provided that all Supreme Court rulings on
the integration of allowances, including COLA, of government
employees under R.A. 6758 applied only to specific GOCCs since the
consolidated cases covering the national government employees are
still pending with this Court. Consequently, the payment of
allowances and other benefits to them, such as COLA and ICA,
remained prohibited until otherwise provided by law or ruled by this
Court. The circular further said that all agency heads and other
responsible officials and employees found to have authorized the
grant of COLA and other allowances and benefits already integrated
in the basic salary shall be personally held liable for such payment.
Issue: W/N CCC 10 and NCC 59 constitutes an invalid delegation of
legislative power.
Held: No. Delegated rule-making is a practical necessity in
modern governance because of the increasing complexity and variety
of public functions. Congress has endowed administrative agencies
like respondent DBM with the power to make rules and regulations
to implement a given legislation and effectuate its policies. Such
power is, however, necessarily limited to what the law provides.
Implementing rules and regulations cannot extend the law or expand
its coverage, as the power to amend or repeal a statute belongs to the
legislature. Administrative agencies implement the broad policies laid
down in a law by "filling in" only its details. The regulations must be
germane to the objectives and purposes of the law and must conform
to the standards prescribed by law.
In this case, the DBM promulgated NCC 59 [and CCC 10].
But, instead of identifying some of the additional exclusions that
Section 12 of R.A. 6758 permits it to make, the DBM made a list of
what allowances and benefits are deemed integrated into the
standardized salary rates.
The drawing up of the above list is consistent with Section
12 of R.A. 6758. Said law did not prohibit the DBM from identifying
for the purpose of implementation what fell into the class of "all
allowances." With respect to what employees' benefits fell outside
the term apart from those that the law specified, the DBM, said this
Court in a case, needed to promulgate rules and regulations
identifying those excluded benefits. This leads to the inevitable
conclusion that until and unless the DBM issues such rules and
regulations, the enumerated exclusions in items (1) to (6) remain
exclusive. Thus so, not being an enumerated exclusion, COLA is
deemed already incorporated in the standardized salary rates of
government employees under the general rule of integration.
Clearly, COLA is not in the nature of an allowance intended
to reimburse expenses incurred by officials and employees of the
government in the performance of their official functions. It is not
payment in consideration of the fulfillment of official duty. As defined,
cost of living refers to "the level of prices relating to a range of
everyday items" or "the cost of purchasing those goods and services
which are included in an accepted standard level of consumption."
Based on this premise, COLA is a benefit intended to cover increases
8
in the cost of living. Thus, it is and should be integrated into the
standardized salary rates.
Non-publication of CCC 10 and NCC 59
It is a settled rule that publication is required as a condition
precedent to the effectivity of a law to inform the public of its
contents before their rights and interests are affected by the same.
Administrative rules and regulations must also be published if their
purpose is to enforce or implement existing law pursuant also to a
valid delegation.
Nonetheless, the integration of COLA into the standardized
salary rates is not dependent on the publication of CCC 10 and NCC
59. This benefit is deemed included in the standardized salary rates of
government employees since it falls under the general rule of
integration-"all allowances."
More importantly, the integration was not by mere legal
fiction since it was factually integrated into the employees' salaries.
Records show that the government employees were informed by
their respective offices of their new position titles and their
corresponding salary grades when they were furnished with the
Notices of Position Allocation and Salary Adjustment (NPASA). The
NPASA provided the breakdown of the employee's gross monthly
salary as of June 30, 1989 and the composition of his standardized pay
under R.A. 6758. Notably, the COLA was considered part of the
employee's monthly income.
Consequently, the non-publication of CCC 10 and NCC 59 in
the Official Gazette or newspaper of general circulation does not
nullify the integration of COLA into the standardized salary rates upon
the effectivity of R.A. 6758. As the Court has said in Philippine
International Trading Corporation v. Commission on Audit, the
validity of R.A. 6758 should not be made to depend on the validity
of its implementing rules.
EXCEPTIONS TO THE PROHIBITION ON THE DELEGATION OF
LEGISLATIVE POWERS
A. Delegation to the PRESIDENT
EXECUTIVE SECRETARY v. SOUTHWING HEAVY INDUSTRIES INC.
G.R. No. 164171 | February 20, 2006
Facts: In 2002, President Gloria Macapagal-Arroyo, through
Executive Secretary Alberto G. Romulo, issued EO 156 entitled
"Providing for a comprehensive industrial policy and directions for the
motor vehicle development program and its implementing
guidelines."
Under Article 2, Section 3.1 of EO 156, the “importation
into the country, inclusive of the Freeport, of all types of used motor
vehicles is prohibited” subject to certain specified exceptions.
Separate actions for declaratory relief were filed before the
Regional Trial Court of Olongapo City by the respondent entities
(Southwing, United Auctioneers and Microvan) who are classified as
Subic Bay Freeport Enterprises and engaged in the business of, among
others, importing and/or trading used motor vehicles.
A summary judgment was rendered by the RTC declaring
that Article 2, Section 3.1 of EO 156 constitutes an unlawful
usurpation of legislative power vested by the Constitution with
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ATENEO DE DAVAO UNIVERSITY – COLLEGE OF LAW
Constitutional Law I | Atty. Edgar B. Pascua II
Congress. The RTC further held that the proviso is contrary to the
mandate of Republic Act No. 7227 or the Bases Conversion and
Development Act of 1992 which allows the free flow of goods and
capital within the Freeport.
Issue: W/N Art. 2, Sec. 3.1 of EO 156 constitutes an unlawful
usurpation of legislative power.
Held: Yes. Delegation of legislative powers to the President is
permitted in Section 28(2) of Article VI of the Constitution:
“The Congress may, by law, authorize the President to fix within
specified limits, and subject to such limitations and restrictions as it
may impose, tariff rates, import and export quotas, tonnage and
wharfage dues, and other duties or imposts within the framework of
the national development program of the Government.”
The relevant statutes to execute this provision are:
a) Under Section 401 of the Tariff and Customs Code: “In the interest
of national economy, general welfare and/or national security, and
subject to the limitations herein prescribed, the President, upon
recommendation of the National Economic and Development
Authority (NEDA), is herebyempowered: x x x (2) to establish
import quota or to ban imports of any commodity, as may be
necessary”
b) (Under Article 7(1) of Executive Order No. 226, the Omnibus
Investment Code of the Philippines: “In appropriate cases and upon
approval of the President, the [Board of Investments] may restrict,
either totally or partially, the importation of any equipment or raw
materials or finished products involved in the rationalization
program”
c) Republic Act No. 8800 or the Safeguard Measures Act (SMA)
designated the Secretaries of the Department of Trade and
Industry (DTI) and the Department of Agriculture, in their capacity
as alter egos of the President, as the implementing authorities of
the safeguard measures, which include, inter alia, modification or
imposition of any quantitative restriction on the importation of a
product into the Philippines.
To be valid, an administrative issuance must not be ultra
vires or beyond the limits of the authority conferred. It must not
supplant or modify the Constitution, its enabling statute and other
existing laws, for such is the sole function of the legislature which the
other branches of the government cannot usurp.
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 Congress or the Constitution or to enlarge its
power beyond the scope intended. Constitutional and statutory
provisions control 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.
Under RA 7227, the Freeport was designed to ensure free
flow or movement of goods and capital within a portion of the
Philippine territory in order to attract investors to invest their capital
in a business climate with the least governmental intervention.
Investors can, in general, engage in any kind of business as well as
import and export any article into and out of the Freeport. These are
9
among the rights accorded to Subic Bay Freeport Enterprises under
Section 39 of the Rules and Regulations Implementing RA 7227.
The importation ban runs afoul the third requisite for a
valid administrative order. The subject matter of the laws
authorizing the President to regulate or forbid importation of used
motor vehicles, is the domestic industry. EO 156, however, exceeded
the scope of its application by extending the prohibition on the
importation of used cars to the Freeport, which RA 7227, considers to
some extent, a foreign territory. The domestic industry which the EO
seeks to protect is actually the "customs territory" which is defined
under the Rules and Regulations Implementing RA 7227.
The proscription in the importation of used motor vehicles
should be operative only outside the Freeport and the inclusion of
said zone within the ambit of the prohibition is an invalid modification
of RA 7227. Indeed, when the application of an administrative
issuance modifies existing laws or exceeds the intended scope, as in
the instant case, the issuance becomes void, not only for being ultra
vires, but also for being unreasonable.
SOUTHERN CROSS CEMENT CORP. v. THE PHILIPPINE CEMENT
MANUFACTURERS CORP.
G.R. No. 158540 | July 8, 2004
Facts: Petitioner Southern Cross Cement Corporation is a
domestic corporation engaged in the business of cement
manufacturing, production, importation and exportation. Private
respondent Philippine Cement Manufacturers Corporation
(Philcemcor) is an association of domestic cement manufacturers.
DTI accepted an application from Philcemcor, alleging that
the importation of gray Portland cement in increased quantities has
caused declines in domestic production, capacity utilization, market
share, sales and employment; as well as caused depressed local
prices. Accordingly, Philcemcor sought the imposition a definitive
safeguard measures on the import of cement pursuant to the
Safeguard Measures Act (SMA).
The Tariff Commission received a request from the DTI for
a formal investigation to determine whether or not to impose a
definitive safeguard measure on imports of gray Portland cement.
Tariff Commission’s report: The elements of serious injury
and imminent threat of serious injury not having been established, it
is hereby recommended that no definitive general safeguard measure
be imposed on the importation of gray Portland cement.
After reviewing the report, then DTI Secretary Manuel
Roxas II (DTI Secretary) disagreed with the conclusion of the Tariff
Commission that there was no serious injury to the local cement
industry caused by the surge of imports. In view of this disagreement,
the DTI requested an opinion from the Department of Justice (DOJ)
on the DTI Secretary’s scope of options in acting on the Commission’s
recommendations.
Subsequently, then DOJ Secretary Hernando Perez
rendered an opinion stating that Section 13 of the SMA precluded a
review by the DTI Secretary of the Tariff Commission’s negative
finding, or finding that a definitive safeguard measure should not be
imposed. DTI then denied application for safeguard measures
against the importation of gray Portland cement.
ALAG, Miguel Alleandro M. | 2-Manresa

ATENEO DE DAVAO UNIVERSITY – COLLEGE OF LAW
Constitutional Law I | Atty. Edgar B. Pascua II
Philcemcor received a copy of the DTI Decision on 12 April
2002. Ten days later, it filed with the Court of Appeals a Petition for
Certiorari, Prohibition and Mandamus seeking to set aside the DTI
Decision, as well as the Tariff Commissions Report. On the other hand,
Southern Cross filed its Comment arguing that the Court of Appeals
had no jurisdiction over Philcemcors Petition, for it is on the Court of
Tax Appeals (CTA) that the SMA conferred jurisdiction to review
rulings of the Secretary in connection with the imposition of a
safeguard measure.
Issue: W/N the DTI Secretary may impose general safeguard
measures in the absence of a positive final determination
by the Tariff Commission.
Held: No. The DTI Secretary is barred from imposing a general
safeguard measure absent a positive final determination rendered by
the Tariff Commission. The required positive final determination
of the Tariff Commission exists as a properly enacted
constitutional limitation imposed on the delegation of the
legislative power to impose tariffs and imposts to the President
under Section 28(2), Article VI of the Constitution. The provision
states: “The Congress may, by law, authorize the President to fix
within specified limits, and subject to such limitations and restrictions
as it may impose, tariff rates, import and export quotas, tonnage and
wharfage dues, and other duties or imposts within the framework of
the national development program of the Government.”
The entire SMA provides for a limited framework under
which the President, through the DTI and Agriculture Secretaries, may
impose safeguard measures in the form of tariffs and similar imposts.
The limitation most relevant to this case is contained in Section 5 of
the SMA, captioned “Conditions for the Application of General
Safeguard Measures,” and stating: “The Secretary shall apply a
general safeguard measure upon a positive final determination of
the Tariff Commission that a product is being imported into the
country in increased quantities, whether absolute or relative to the
domestic production, as to be a substantial cause of serious injury or
threat thereof to the domestic industry; however, in the case of
non-agricultural products, the Secretary shall first establish that the
application of such safeguard measures will be in the public interest.
Section 5 of the SMA operates as a limitation validly
imposed by Congress on the presidential authority under the SMA
to impose tariffs and imposts. The positive final determination by
the Tariff Commission is plainly required by the law and so it must be
strictly complied with.
C. Delegation to LOCAL GOVERNMENTS
JOSE FERRER, JR. v. CITY MAYOR HERBERT BAUTISTA
| June 30, 2015
Facts: The City of Quezon passed two ordinances namely: (1) the
Socialized Housing Tax of QC allowing the imposition of special
assessment (1/2 of the assessed valued of land in excess of P100k);
and (2) Ordinance No. SP-2235, S-2013 on Garbage Collection Fees
imposing fees depending on the amount of the land or floor area).
Jose Ferrer, as a property owner in Quezon City questioned
the validity of the city ordinances. According to Ferrer, among others,
the city has no power to impose the tax. Also, he assails the validity
10
of the garbage fees imposition because it allegedly violates the rule
on double taxation.
Issue: W/N the ordinances were valid.
Held: Yes. LGUs are able to legislate only by virtue of a valid
delegation of legislative power from the national legislature; they are
mere agents vested with what is called the power of subordinate
legislation. “Congress enacted the LGC as the implementing law for
the delegation to the various LGUs of the State’s great powers,
namely: the police power, the power of eminent domain, and the
power of taxation.
Per Section 5, Article X of the 1987 Constitution, “the power
to tax is no longer vested exclusively on Congress; local legislative
bodies are now given direct authority to levy taxes, fees and other
charges.” Nevertheless, such authority is “subject to such guidelines
and limitations as the Congress may provide.”
In conformity with Section 3, Article X of the 1987
Constitution, Congress enacted Republic Act No. 7160, otherwise
known as the Local Government Code of 1991.
Indeed, LGUs have no inherent power to tax except to the
extent that such power might be delegated to them either by the
basic law or by the statute. “Under the now prevailing Constitution,
where there is neither a grant nor a prohibition by statute, the tax
power must be deemed to exist although Congress may provide
statutory limitations and guidelines. The basic rationale for the
current rule is to safeguard the viability and self-sufficiency of local
government units by directly granting them general and broad tax
powers. Nevertheless, the fundamental law did not intend the
delegation to be absolute and unconditional; the constitutional
objective obviously is to ensure that, while the local government units
are being strengthened and made more autonomous, the legislature
must still see to it that (a) the taxpayer will not be over-burdened or
saddled with multiple and unreasonable impositions; (b) each local
government unit will have its fair share of available resources; (c) the
resources of the national government will not be unduly disturbed;
and (d) local taxation will be fair, uniform, and just.”
Subject to the provisions of the LGC and consistent with the
basic policy of local autonomy, every LGU is now empowered and
authorized to create its own sources of revenue and to levy taxes,
fees, and charges which shall accrue exclusively to the local
government unit as well as to apply its resources and assets for
productive, developmental, or welfare purposes, in the exercise or
furtherance of their governmental or proprietary powers and
functions.
ALAG, Miguel Alleandro M. | 2-Manresa