CIR V GENERAL FOODS

Facts: Respondent corporation General Foods (Phils), which is engaged in the manufacture of Tang, Calumet and Kool-Aid, filed its income tax return for the fiscal year ending February 1985 and claimed as deduction, among other business expenses, P9,461,246 for media advertising for Tang. The Commissioner disallowed 50% of the deduction claimed and assessed deficiency income taxes of P2,635,141.42 against General Foods, prompting the latter to file an MR which was denied. General Foods later on filed a petition for review at CA, which reversed and set aside an earlier decision by CTA dismissing the companys appeal.

Issue: W/N the subject media advertising expense for Tang was ordinary and necessary expense fully deductible under the NIRC

Held: No. Tax exemptions must be construed in stricissimijuris against the taxpayer and liberally in favor of the taxing authority, and he who claims an exemption must be able to justify his claim by the clearest grant of organic or statute law. Deductions for income taxes partake of the nature of tax exemptions; hence, if tax exemptions are strictly construed, then deductions must also be strictly construed. To be deductible from gross income, the subject advertising expense must comply with the following requisites: (a) the expense must be ordinary and necessary; (b) it must have been paid or incurred during the taxable year; (c) it must have been paid or incurred in carrying on the trade or business of the taxpayer; and (d) it must be supported by receipts, records or other pertinent papers. While the subject advertising expense was paid or incurred within the corresponding taxable year and was incurred in carrying on a trade or business, hence necessary, the parties views conflict as to whether or not it was ordinary. To be deductible, an advertising expense should not only be necessary but also ordinary. The Commissioner maintains that the subject advertising expense was not ordinary on the ground that it failed the two conditions set by U.S. jurisprudence: first, reasonableness of the amount incurred and second, the amount incurred must not be a capital outlay to crea te goodwill for the product and/or private respondents business. Otherwise, the expense must be considered a capital expenditure to be spread out over a reasonable time. There is yet to be a clear-cut criteria or fixed test for determining the reasonableness of an advertising expense. There being no hard and fast rule on the matter, the right to a deduction depends on a number of factors such as but not limited to: the type and size of business in which the taxpayer is engaged; the volume and amount of its net earnings; the nature of the expenditure itself; the intention of the taxpayer

and the general economic conditions. It is the interplay of these, among other factors and properly weighed, that will yield a proper evaluation. The Court finds the subject expense for the advertisement of a single product to be inordinately large. Therefore, even if it is necessary, it cannot be considered an ordinary expense deductible under then Section 29 (a) (1) (A) of the NIRC. Advertising is generally of two kinds: (1) advertising to stimulate the current sale of merchandise or use of services and (2) advertising designed to stimulate the future sale of merchandise or use of services. The second type involves expenditures incurred, in whole or in part, to create or maintain some form of goodwill for the taxpayers trade or business or for the industry or profession of which the taxpayer is a member. If the expenditures are for the advertising of the first kind, then, except as to the question of the reasonableness of amount, there is no doubt such expenditures are deductible as business expenses. If, however, the expenditures are for advertising of the second kind, then normally they should be spread out over a reasonable period of time. The companys media advertising expense for the promotion of a single product is doubtlessly unreasonable considering it comprises almost one-half of the companys entire claim for marketing expenses for that year under review.Petition granted, judgment reversed and set aside.

Case Digest: Lacson-Magallanes Co., Inc. vs. Jose Pao, et. al.
G.R. No. L-27811 :: Sanchez, J. 27 November 1967

FACTS: In 1932, Jose Magallanes was a permittee and actual occupant of a 1,103-hectare pasture land situated in Davao. On 1953, Magallanes ceded his rights and interests to a portion of the above public land to the plaintiff. On 1954, the same was officially released from the forest zone as pasture land and declared agricultural land. On 1955, Jose Pao and nineteen other claimants applied for the purchase of 90 hectares of the released area. Plaintiff in turn filed its own sales application covering the entire released area. The Director of Lands, following an investigation of the conflict, rendered a decision on 1956 giving due course to the application of plaintiff corporation. When the case was elevated to the President of the Philippines, Executive Secretary Juan Pajo, by authority of the president, declared that it would be for public interest that appellants, who are mostly landless farmers, be allocated that portion on which the petitioner have made improvements.

ISSUES:

May the Executive Secretary, acting by authority of the President, reverse a decision of the Director of Lands that had been affirmed by the Executive Secretary of Agriculture and Natural Resources?

HELD:

YES. The Presidents duty to execute the law and control of all executive departments are of constitutional origin. Naturally, he controls and directs their acts. Implicit then is his authority to go over, confirm, modify or reverse the action taken by his department secretaries. It may also be stated that the right to appeal to the President reposes upon the Presidents power of control over the executive departments. He may delegate to his Executive Secretary acts which the Constitution does not command that he perform in person. As the Executive Secretary acts by authority of the President, his decision is that of the Presidents. Such decision is to be given full faith and credit by our courts, unless disapproved or reprobated by the Chief Executive.

Leonardo Montes vs. The Civil Service Board of Appeals, et.al. G.R. No. L-10759 20 May 1957
TOPIC: Principle of Exhaustion of Admin Remedies

FACTS: In Administratice Case No. R-8182 instituted against Montes for negligence in the performance of duty as a watchman of the Floating Equipment Section, Ports and Harbours Division of Bureau of Public Works, the Commissioner of Civil Service exonerated him on the basis of findings made by a committee. On appeal, the Civil Service Board of Appeals modified the decision, finding petitioner guilty of contributory negligence in not pumping the water from the bilge which sunk the dredge under his watch, and ordered that he be considered resigned effective his last day of duty with pay, without prejudice to reinstatement at the discretion of the appointing officer.

Petitioner files an action before the Court of First Instance of Manila to review the decision. On a Motion to Dismiss, the said court dismissed the action on the ground that petitioner had not exhausted all his administrative remedies before he instituted the action as provided in Section 2 of Commonwealth Act 598. Montes argued that there is no duty imposed upon him to appeal to the President. Hence, this petition.

ISSUE: Whether or not Montes erred in filing the action immediately before the Court of First Instance of Manila instead of filing an appeal before the President of the Philippines?

HELD: The doctrine of exhaustion of administrative remedies requires where an administrative remedy is provided by statute, as in this case, relief must be sought by exhausting this remedy before the courts will act. The doctrine is a device based on considerations of comity and convenience. If a remedy is still available within the administrative machinery, this should be resorted to before resort can be made to the courts, not only to give the administrative agency opportunity to decide the matter by itself correctly, but also to prevent unnecessary and premature resort to the courts. Section 2 of Commonwealth Act 598 provides that: The Civil Service Board of Appeals shall have the power and authority to hear and decide all administrative cases brought before it on appeal, and its decisions in such cases shall be final, unless revised or modified by the President of the Philippines . The above-mentioned provision is a clear expression of the policy or principle of exhaustion of administrative remedies. If the President, under whom the Civil Service directly falls in our administrative system as head of the executive department, may be able to grant the remedy that petitioner pursues, reasons of comity and orderly procedure demand that resort be made to him before recourse can be had to the courts.

Case Digest: Leandro Montes vs. The Civil Service Board of Appeals and The Secretary of Public Works and Communications G.R. No. L-10759 :: 20 May 1957
Labrador, J.

FACTS:

Montes, a watchman of the Ports and Harbors Division, Bureau of Public Works, was exonerated by the Commissioner of Civil Service in an administrative case instituted against him for negligence in the performance of duty. He failed to pump out water from the bilge of Dredge no. 6 while under his carem which eventually led to the sinking of the same. He was ordered to resign without prejudice to reinstatement at the discretion of the appointing officer.

ISSUE:

Whether or not, without exhausting all administrative remedies, the CFI of Manila can take jurisdiction of the case.

HELD:

NO. Section 2 of Commonwealth Act No. 598 is a clear expression of the policy or principle of exhaustion of administrative remedies. If the President, under whom the Civil Service directly falls in our administrative system as head of the executive department, may be able to grant the remedy that petitioner pursues, reasons of comity and orderly procedure demand that resort be made to him before recourse can be had to the courts.

9. SMART COM vs. NTC Facts: On June 00, pursuant to its, rule-making and regulatory powers, NTC issued Memorandum Circular 13-6-2000, promulgating rules on the billing of telecommunications services. Pertinent parts:

complied

years lifespan of prepaid card f remaining value of call card

On Aug 00, NTC issued a Memorandum, containing measures to minimize theft of cell phones like compliance with the preceding Memo. On Oct 00, another Memo was issued for compliance with the preceding Memos.

Petitioners thereafter filed to declare nullification of NTC Memo Circulars. They contend that NTC has no jurisdiction, jurisdiction belongs to DTI where there has been a violation of Constitution, deprivation of property w/o due process and impairment of prepaid service. TRO was issued. Subsequently, the NTC motion to dismiss: failure to exhaust administrative remedies. RTC: injunction granted pending resolution of case. CA: Reversed, exhaust administrative remedies.

Issue: Whether or not the Courts have jurisdiction? YES.

Held: In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a party need not exhaust administrative remedies before going to court. Exhaustion applies only where the act of the administrative agency concerned was performed pursuant to its quasi-judicial function, and not when the assailed act pertained to its rule-making or quasi-legislative power.

Even assuming that the principle of exhaustion of administrative remedies apply in this case, the records reveal that petitioners sufficiently complied with this requirement. In like manner, the doctrine of primary jurisdiction applies only where the administrative agency exercises its quasi-judicial or adjudicatory function.

However, where what is assailed is the validity or constitutionality of a rule or regulation issued by the administrative agency in the performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts. In the case at bar, the issuance by the NTC of Memorandum Circular No. 13-6-2000 and its Memorandum dated October 6, 2000 was pursuant to its quasi-legislative or rule-making power. As such, petitioners were justified in invoking the judicial power of the Regional Trial Court to assail the constitutionality and validity of the said

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issuances.

In their complaint before the Regional Trial Court, petitioners averred that the Circular contravened Civil Code provisions on sales and violated the constitutional prohibition against the deprivation of property without due process of law. These are within the competence of the trial judge. Contrary to the finding of the Court of Appeals, the issues raised in the complaint do not entail highly technical matters. Rather, what is required of the judge who will resolve this issue is a basic familiarity with the workings of the cellular telephone service, including prepaid SIM and call cards and this is judicially known to be within the knowledge of a good percentage of our population and expertise in fundamental principles of civil law and the Constitution.

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TIO VS.VIDEOGRAM REGULATORY BOARD [151 SCRA 208; G.R. No. L-75697; 18 Jun 1987]

Facts: The case is a petition filed by petitioner on behalf of videogram operators adversely affected by Presidential Decree No. 1987, An Act Creating the Videogram Regulatory Bo ard" with broad powers to regulate and supervise the videogram industry.

A month after the promulgation of the said Presidential Decree, the amended the National Internal Revenue Code provided that:

"SEC. 134. Video Tapes. There shall be collected on each processed video-tape cassette, ready for playback, regardless of length, an annual tax of five pesos; Provided, That locally manufactured or imported blank video tapes shall be subject to sales tax."

"Section 10.Tax on Sale, Lease or Disposition of Videograms. Notwithstanding any provision of law to the contrary, the provinceshall collect a tax of thirty percent (30%) of the purchase price orrental rate, as the case may be, for every sale, lease or disposition of a videogram containing a reproduction of any motion picture or audiovisual program.

Fifty percent (50%) of the proceeds of the tax collected shall accrue to the province, and the other fifty percent (50%) shall accrue to themunicipality where the tax is collected; PROVIDED, That in Metropolitan Manila, the tax shall be shared equally by the City/Municipality and the Metropolitan Manila Commission.

The rationale behind the tax provision is to curb the proliferation and unregulated circulation of videograms including, among others, videotapes, discs, cassettes or any technical improvement or variation thereof, have greatly prejudiced the operations of movie houses and theaters. Such unregulated circulation have caused a sharp decline in theatrical attendance by at least forty percent (40%) and a tremendous drop in the collection of sales, contractor's specific, amusement and other taxes, thereby resulting in substantial losses estimated at P450 Million annually in government revenues.

Videogram(s) establishments collectively earn around P600 Million per annum from rentals, sales and disposition of videograms, and these earnings have not been subjected to tax, thereby depriving the Government of approximately P180 Million in taxes each year.

The unregulated activities of videogram establishments have also affected the viability of the movie industry.

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Issues:

(1) Whether or not tax imposed by the DECREE is a valid exercise of police power.

(2) Whether or nor the DECREE is constitutional.

Held: Taxation has been made the implement of the state's police power. The levy of the 30% tax is for a public purpose. It was imposed primarily to answer the need for regulating the video industry, particularly because of the rampant film piracy, the flagrant violation of intellectual property rights, and the proliferation of pornographicvideo tapes. And while it was also an objective of the DECREE toprotect the movie industry, the tax remains a valid imposition.

We find no clear violation of the Constitution which would justify us in pronouncing Presidential Decree No. 1987 as unconstitutional and void. While the underlying objective of the DECREE is to protect the moribund movie industry, there is no question that public welfare is at bottom of its enactment, considering "the unfair competition posed by rampant film piracy; the erosion of the moral fiber of the viewing public brought about by the availability of unclassified and unreviewedvideo tapes containing pornographic films and films with brutally violent sequences; and losses in government revenues due to the drop in theatrical attendance, not to mention the fact that the activities of video establishments are virtually untaxed since mere payment of Mayor's permit and municipal license fees are required to engage in business."

WHEREFORE, the instant Petition is hereby dismissed. No costs.

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TiovsVideogram Regulatory Board

Political Law The Embrace of Only One Subject by a Bill Tio is a videogram operator who assailed the constitutionality of PD 1987 entitled An Act Creating the Videogram Regulatory Board with broad powers to regulate and supervise the videogram industry. The PD was also reinforced by PD 1994 which amended the National Internal Revenue Code. The amendment provides that there shall be collected on each proce ssed video-tape cassette, ready for playback, regardless of length, an annual tax of five pesos; Provided, that locally manufactured or imported blank video tapes shall be subject to sales tax. The said law was brought about by the need to regulate the sale of videograms as it has adverse effects to the movie industry. The proliferation of videograms has significantly lessened the revenue being acquired from the movie industry, and that such loss may be recovered if videograms are to be taxed. Sec 10 of the PD imposes a 30% tax on the gross receipts payable to the LGUs. Tio countered, among others, that the tax imposition provision is a rider and is not germane to the subject matter of the PD. ISSUE: Whether or not the PD embraces only one subject. HELD: The Constitutional requirement that every bill shall embrace only one subject which shall be expressed in the title thereof is sufficiently complied with if the title be comprehensive enough to include the general purpose which a statute seeks to achieve. It is not necessary that the title express each and every end that the statute wishes to accomplish. The requirement is satisfied if all the parts of the statute are related, and are germane to the subject matter expressed in the title, or as long as they are not inconsistent with or foreign to the general subject and title. An act having a single general subject, indicated in the title, may contain any number of provisions, no matter how diverse they may be, so long as they are not inconsistent with or foreign to the general subject, and may be considered in furtherance of such subject by providing for the method and means of carrying out the general object. The rule also is that the constitutional requirement as to the title of a bill should not be so narrowly construed as to cripple or impede the power of legislation. It should be given a practical rather than technical construction. In the case at bar, the questioned provision is allied and germane to, and is reasonably necessary for the accomplishment of, the general object of the PD, which is the regulation of the video industry through the VRB as expressed in its title. The tax provision is not inconsistent with, nor foreign to that general subject and title. As a tool for regulation it is simply one of the regulatory and control mechanisms scattered throughout the PD. The express purpose of the PD to include taxation of the video industry in order to regulate and rationalize the uncontrolled distribution of videograms is evident from Preambles 2 and 5 of the said PD which explain the motives of the lawmakers in presenting the measure. The title of the PD, which is the creation of the VRB, is comprehensive enough to include the purposes expressed in its Preamble and reasonably covers all its provisions. It is unnecessary to express all those objectives in the title or that the latter be an index to the body of the PD.

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United States vsAng Tang Ho

Political Law Delegation of Power Administrative Bodies On 30July 1919, the Philippine Legislature (during special session) passed and approved Act No. 2868 entitled An Act Penalizing the Monopoly and Hoarding of Rice, Palay and Corn. The said act under extraordinary circumstances authorizes the Governor General to issue the necessary Rules and Regulations in regulating the distribution of such products. Pursuant to this Act, On 01 August 1919, the GG issued EO 53 which was published on 20 August 1919. The said EO fixed the price at which rice should be sold. On the other hand, Ang Tang Ho, a rice dealer, voluntarily, criminally and illegally sold a ganta of rice to Pedro Trinidad at the price of eighty centavos. The said amount was way higher than that prescribed by the EO. The sale was done on the 6 of August 1919. On 08 August 1919, he was charged in violation of the said EO. He was found guilty as charged and was sentenced to 5 months imprisonment plus a P500.00 fine. He appealed the sentence countering that there is an undue delegation of power to the Governor General. ISSUE: Whether or not there is undue delegation to the Governor General. HELD: Fist of, Ang Tang Hos conviction must be reversed because he committed the act prior to the publication of the EO. Hence, he cannot be ex post facto charged of the crime. Further, one cannot be convicted of a violation of a law or of an order issued pursuant to the law when both the law and the order fail to set up an ascertainable standard of guilt. The said Act, as to the judgment of the SC, wholly fails to provide definitely and clearly what the standard policy should contain, so that it could be put in use as a uniform policy required to take the place of all others without the determination of the insurance commissioner in respect to matters involving the exercise of a legislative discretion that could not be delegated, and without which the act could not possibly be put in use. The law must be complete in all its terms and provisions when it leaves the legislative branch of the government and nothing must be left to the judgment of the electors or other appointee or delegate of the legislature, so that, in form and substance, it is a law in all its details in presenti, but which may be left to take effect in future, if necessary, upon the ascertainment of any prescribed fact or event.
th

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US vs Tang Ho Case Digest US vs Tang Ho (1922) G.R. No. 17122

Facts: At its special session of 1919, the Philippine Legislature passed Act No. 2868, entitled "An Act penalizing the monopoly and holding of, and speculation in, palay, rice, and corn under extraordinary circumstances, regulating the distribution and sale thereof, and authorizing the Governor-General, with the consent of the Council of State, to issue the necessary rules and regulations therefor, and making an appropriation for this purpose". Section 3 defines what shall constitute a monopoly or hoarding of palay, rice or corn within the meaning of this Act, but does not specify the price of rice or define any basic for fixing the price. August 1, 1919, the Governor-General issued a proclamation fixing the price at which rice should be sold. Then, on August 8, 1919, a complaint was filed against the defendant, Ang Tang Ho, charging him with the sale of rice at an excessive price. Upon this charge, he was tried, found guilty and sentenced.

The official records show that the Act was to take effect on its approval; that it was approved July 30, 1919; that the Governor-General issued his proclamation on the 1st of August, 1919; and that the law was first published on the 13th of August, 1919; and that the proclamation itself was first published on the 20th of August, 1919.

Issue: WON the delegation of legislative power to the Governor General was valid.

Held: By the Organic Law, all Legislative power is vested in the Legislature, and the power conferred upon the Legislature to make laws cannot be delegated to the Governor-General, or anyone else. The Legislature cannot delegate the legislative power to enact any law. The case of the United States Supreme Court, supra dealt with rules and regulations which were promulgated by the Secretary of Agriculture for Government land in the forest reserve. These decisions hold that the legislative only can enact a law, and that it cannot delegate it legislative authority. The line of cleavage between what is and what is not a delegation of legislative power is pointed out and clearly defined. As the Supreme Court of Wisconsin says: That no part of the legislative power can be delegated by the legislature to any other department of the government, executive or judicial, is a fundamental principle in constitutional law, essential to the integrity and maintenance of the system of government established by the constitution.

Where an act is clothed with all the forms of law, and is complete in and of itself, it may be provided that it shall become operative only upon some certain act or event, or, in like manner, that its operation shall be suspended.

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The legislature cannot delegate its power to make a law, but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends to make, its own action to depend. It must be conceded that, after the passage of act No. 2868, and before any rules and regulations were promulgated by the Governor-General, a dealer in rice could sell it at any price, even at a peso per "ganta," and that he would not commit a crime, because there would be no law fixing the price of rice, and the sale of it at any price would not be a crime. That is to say, in the absence of a proclamation, it was not a crime to sell rice at any price. Hence, it must follow that, if the defendant committed a crime, it was because the Governor-General issued the proclamation. There was no act of the Legislature making it a crime to sell rice at any price, and without the proclamation, the sale of it at any price was to a crime. When Act No. 2868 is analyzed, it is the violation of the proclamation of the Governor-General which constitutes the crime. Without that proclamation, it was no crime to sell rice at any price. In other words, the Legislature left it to the sole discretion of the Governor-General to say what was and what was not "any cause" for enforcing the act, and what was and what was not "an extraordinary rise in the price of palay, rice or corn," and under certain undefined conditions to fix the price at which rice should be sold, without regard to grade or quality, also to say whether a proclamation should be issued, if so, when, and whether or not the law should be enforced, how long it should be enforced, and when the law should be suspended. The Legislature did not specify or define what was "any cause," or what was "an extraordinary rise in the price of rice, palay or corn," Neither did it specify or define the conditions upon which the proclamation should be issued. In the absence of the proclamation no crime was committed. The alleged sale was made a crime, if at all, because the Governor-General issued the proclamation. The act or proclamation does not say anything about the different grades or qualities of rice, and the defendant is charged with the sale "of one ganta of rice at the price of eighty centavos (P0.80) which is a price greater than that fixed by Executive order No. 53." We are clearly of the opinion and hold that Act No. 2868, in so far as it undertakes to authorized the Governor-General in his discretion to issue a proclamation, fixing the price of rice, and to make the sale of rice in violation of the price of rice, and to make the sale of rice in violation of the proclamation a crime, is unconstitutional and void.

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YNOT vs IAC Case Digest RESTITUTO YNOT, petitioner, vs. INTERMEDIATE APPELLATE COURT, THE STATION COMMANDER, INTEGRATED NATIONAL POLICE, BAROTAC NUEVO, ILOILO and THE REGIONAL DIRECTOR, BUREAU OF ANIMAL INDUSTRY, REGION IV, ILOILO CITY, respondents.

FACTS: The petitioner had transported six carabaos in a pump boat from Masbate to Iloilo on January 13, 1984, when they were confiscated by the police station commander of Barotac Nuevo, Iloilo, for violation of Executive Order No. 626-A which provides that the carabao or carabeef transported in violation of this Executive Order as amended shall be subject to confiscation and forfeiture by the government, to be distributed to charitable institutions and other similar institutions as the Chairman of the National Meat Inspection Commission may ay see fit, in the case of carabeef, and to deserving farmers through dispersal as the Director of Animal Industry may see fit, in the case of carabaos .

The petitioner sued for recovery, and the Regional Trial Court of Iloilo City issued a writ of replevin upon his filing of a supersedeas bond of P12,000.00. After considering the merits of the case, the court sustained the confiscation of the carabaos and, since they could no longer be produced, ordered the confiscation of the bond. The court also declined to rule on the constitutionality of the executive order, as raise by the petitioner, for lack of authority and also for its presumed validity.

The petitioner appealed the decision to the Intermediate Appellate Court,* 3 which upheld the trial court, ** and he has now come before us in this petition for review on certiorari.

ISSUES: Whether or not executive order no. 626-A is unconstitutional due misapplication of police power, violation of due process, and undue delegation of legislative power?

HELD: The protection of the general welfare is the particular function of the police power which both restraints and is restrained by due process. The police power is simply defined as the power inherent in the State to regulate liberty and property for the promotion of the general welfare. It is this power that is now invoked by the government to justify Executive Order No. 626-A, amending the basic rule in Executive Order No. 626, prohibiting the slaughter of carabaos except under certain conditions. To justify the State in thus interposing its authority in behalf of the public, it must appear, first, that the interests of the public generally, as distinguished from those of a particular class, require such interference; and second, that the means are reasonably necessary for the accomplishment of the purpose, and not unduly oppressive upon individuals.

In the light of the tests mentioned, we hold with the Toribio Case that there is no doubt that by banning the slaughter of these animals except where they are at least seven years old if male and eleven years old if female upon issuance of the necessary permit, the executive order will be conserving those still fit for farm work or breeding and preventing their improvident depletion.

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But while conceding that the amendatory measure has the same lawful subject as the original executive order, we cannot say with equal certainty that it complies with the second requirement, viz., that there be a lawful method. We note that to strengthen the original measure, Executive Order No. 626-A imposes an absolute ban not on the slaughter of the carabaos but on their movement, providing that "no carabao regardless of age, sex, physical condition or purpose (sic) and no carabeef shall be transported from one province to another." The object of the prohibition escapes us. The reasonable connection between the means employed and the purpose sought to be achieved by the questioned measure is missing.

We do not see how the prohibition of the inter-provincial transport of carabaos can prevent their indiscriminate slaughter, considering that they can be killed anywhere, with no less difficulty in one province than in another. Obviously, retaining the carabaos in one province will not prevent their slaughter there, any more than moving them to another province will make it easier to kill them there. As for the carabeef, the prohibition is made to apply to it as otherwise, so says executive order, it could be easily circumvented by simply killing the animal. Perhaps so. However, if the movement of the live animals for the purpose of preventing their slaughter cannot be prohibited, it should follow that there is no reason either to prohibit their transfer as, not to be flippant dead meat.

Even if a reasonable relation between the means and the end were to be assumed, we would still have to reckon with the sanction that the measure applies for violation of the prohibition. The penalty is outright confiscation of the carabao or carabeef being transported, to be meted out by the executive authorities, usually the police only. In the Toribio Case, the statute was sustained because the penalty prescribed was fine and imprisonment, to be imposed by the court after trial and conviction of the accused. Under the challenged measure, significantly, no such trial is prescribed, and the property being transported is immediately impounded by the police and declared, by the measure itself, as forfeited to the government. This measure deprives the individual due process as granted by the Constitution.

The due process clause was kept intentionally vague so it would remain also conveniently resilient. This was felt necessary because due process is not, like some provisions of the fundamental law, an "iron rule" laying down an implacable and immutable command for all seasons and all persons. Flexibility must be the best virtue of the guaranty. The very elasticity of the due process clause was meant to make it adapt easily to every situation, enlarging or constricting its protection as the changing times and circumstances may require.

Aware of this, the courts have also hesitated to adopt their own specific description of due process lest they confine themselves in a legal straitjacket that will deprive them of the elbow room they may need to vary the meaning of the clause whenever indicated.

The minimum requirements of due process are notice and hearing which, generally speaking, may not be dispensed with because they are intended as a safeguard against official arbitrariness. It is a gratifying commentary on our judicial system that the jurisprudence of this country is rich with applications of this guaranty as proof of our fealty to the rule of law and the ancient rudiments of fair play.

It has already been remarked that there are occasions when notice and hearing may be validly dispensed with notwithstanding the usual requirement for these minimum guarantees of due process. It is also

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conceded that summary action may be validly taken in administrative proceedings as procedural due process is not necessarily judicial only. In the exceptional cases accepted, however. there is a justification for the omission of the right to a previous hearing, to wit, the immediacy of the problem sought to be corrected and the urgency of the need to correct it.

In the case before us, there was no such pressure of time or action calling for the petitioner's peremptory treatment. The properties involved were not even inimical per se as to require their instant destruction. There certainly was no reason why the offense prohibited by the executive order should not have been proved first in a court of justice, with the accused being accorded all the rights safeguarded to him under the Constitution. Considering that, as we held in Pesigan v. Angeles, 21 Executive Order No. 626-A is penal in nature, the violation thereof should have been pronounced not by the police only but by a court of justice, which alone would have had the authority to impose the prescribed penalty, and only after trial and conviction of the accused.

To sum up then, we find that the challenged measure is an invalid exercise of the police power because the method employed to conserve the carabaos is not reasonably necessary to the purpose of the law and, worse, is unduly oppressive. Due process is violated because the owner of the property confiscated is denied the right to be heard in his defense and is immediately condemned and punished. The conferment on the administrative authorities of the power to adjudge the guilt of the supposed offender is a clear encroachment on judicial functions and militates against the doctrine of separation of powers. There is, finally, also an invalid delegation of legislative powers to the officers mentioned therein who are granted unlimited discretion in the distribution of the properties arbitrarily taken. For these reasons, we hereby declare Executive Order No. 626-A unconstitutional.

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RestitutoYnotvs Intermediate Appellate Court

Police Power Not Validly Exercised There had been an existing law which prohibited the slaughtering of carabaos (EO 626). To strengthen the law, Marcos issued EO 626-A which not only banned the movement of carabaos from interprovinces but as well as the movement of carabeef. On 13 Jan 1984, Ynot was caught transporting 6 carabaos from Masbate to Iloilo. He was then charged in violation of EO 626-A. Ynot averred EO 626-A as unconstitutional for it violated his right to be heard or his right to due process. He said that the authority provided by EO 626-A to outrightly confiscate carabaos even without being heard is unconstitutional. The lower court ruled against Ynot ruling that the EO is a valid exercise of police power in order to promote general welfare so as to curb down the indiscriminate slaughter of carabaos. ISSUE: Whether or not the law is valid. HELD: The SC ruled that the EO is not valid as it indeed violates due process. EO 626-A ctreated a presumption based on the judgment of the executive. The movement of carabaos from one area to the other does not mean a subsequent slaughter of the same would ensue. Ynot should be given to defend himself and explain why the carabaos are being transferred before they can be confiscated. The SC found that the challenged measure is an invalid exercise of the police power because the method employed to conserve the carabaos is not reasonably necessary to the purpose of the law and, worse, is unduly oppressive. Due process is violated because the owner of the property confiscated is denied the right to be heard in his defense and is immediately condemned and punished. The conferment on the administrative authorities of the power to adjudge the guilt of the supposed offender is a clear encroachment on judicial functions and militates against the doctrine of separation of powers. There is, finally, also an invalid delegation of legislative powers to the officers mentioned therein who are granted unlimited discretion in the distribution of the properties arbitrarily taken.

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Case Digest: Emmanuel Pelaez vs. The Auditor General

FACTS:

From September 4, 1964 to October 29, 1964 the President of the Philippines issued executive orders to create thirty-three municipalities pursuant to Section 69 of the Revised Administrative Code. Public funds thereby stood to be disbursed in the implementation of said executive orders. Suing as a private citizen and taxpayer, Vice President Emmanuel Pelaez filed a petition for prohibition with preliminary injunction against the Auditor General. It seeks to restrain from the respondent or any person acting in his behalf, from passing in audit any expenditure of public funds in implementation of the executive orders aforementioned.

ISSUE: Whether the executive orders are null and void, upon the ground that the President does not have the authority to create municipalities as this power has been vested in the legislative department.

RULING: Section 10(1) of Article VII of the fundamental law ordains: The President shall have control of all the executive departments, bureaus or offices, exercise general supervision over all local governments as may be provided by law, and take care that the laws be faithfully executed. The power of control under this provision implies the right of the President to interfere in the exercise of such discretion as may be vested by law in the officers of the executive departments, bureaus, or offices of the national government, as well as to act in lieu of such officers. This power is denied by the Constitution to the Executive, insofar as local governments are concerned. Such control does not include the authority to either abolish an executive department or bureau, or to create a new one. Section 68 of the Revised Administrative Code does not merely fail to comply with the constitutional mandate above quoted, it also gives the President more power than what was vested in him by the Constitution. The Executive Orders in question are hereby declared null and void ab initio and the respondent permanently restrained from passing in audit any expenditure of public funds in implementation of said Executive Orders or any disbursement by the municipalities referred to.

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AbakadaGuro Party List, et al vs Exec. Sec. Ermita

Facts: On May 24, 2005, the President signed into law Republic Act 9337 or the VAT Reform Act. Before the law took effect on July 1, 2005, the Court issued a TRO enjoining government from implementing the law in response to a slew of petitions for certiorari and prohibition questioning the constitutionality of the new law. The challenged section of R.A. No. 9337 is the common proviso in Sections 4, 5 and 6: That the President, upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006, raise the rate of value-added tax to 12%, after any of the following conditions has been satisfied: (i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two and four-fifth percent (2 4/5%); or (ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1%) Petitioners allege that the grant of stand-by authority to the President to increase the VAT rate is an abdication by Congress of its exclusive power to tax because such delegation is not covered by Section 28 (2), Article VI Consti. They argue that VAT is a tax levied on the sale or exchange of goods and services which cant be included within the purview of tariffs under the exemption delegation since this refers to customs duties, tolls or tribute payable upon merchandise to the government and usually imposed on imported/exported goods. They also said that the President has powers to cause, influence or create the conditions provided by law to bring about the conditions precedent. Moreover, they allege that no guiding standards are made by law as to how the Secretary of Finance will make the recommendation.

Issue: Whether or not the RA 9337's stand-by authority to the Executive to increase the VAT rate, especially on account of the recommendatory power granted to the Secretary of Finance, constitutes undue delegation of legislative power? NO

Held: The powers which Congress is prohibited from delegating are those which are strictly, or inherently and exclusively, legislative. Purely legislative power which can never be delegated is the authority to make a complete law- complete as to the time when it shall take effect and as to whom it shall be

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applicable, and to determine the expediency of its enactment. It is the nature of the power and not the liability of its use or the manner of its exercise which determines the validity of its delegation. The exceptions are: (a) delegation of tariff powers to President under Constitution (b) delegation of emergency powers to President under Constitution (c) delegation to the people at large (d) delegation to local governments (e) delegation to administrative bodies For the delegation to be valid, it must be complete and it must fix a standard. A sufficient standard is one which defines legislative policy, marks its limits, maps out its boundaries and specifies the public agency to apply it. In this case, it is not a delegation of legislative power BUT a delegation of ascertainment of facts upon which enforcement and administration of the increased rate under the law is contingent. The legislature has made the operation of the 12% rate effective January 1, 2006, contingent upon a specified fact or condition. It leaves the entire operation or non-operation of the 12% rate upon factual matters outside of the control of the executive. No discretion would be exercised by the President. Highlighting the absence of discretion is the fact that the word SHALL is used in the common proviso. The use of the word SHALL connotes a mandatory order. Its use in a statute denotes an imperative obligation and is inconsistent with the idea of discretion. Thus, it is the ministerial duty of the President to immediately impose the 12% rate upon the existence of any of the conditions specified by Congress. This is a duty, which cannot be evaded by the President. It is a clear directive to impose the 12% VAT rate when the specified conditions are present. Congress just granted the Secretary of Finance the authority to ascertain the existence of a fact--whether by December 31, 2005, the VAT collection as a percentage of GDP of the previous year exceeds 2 4/5 % or the national government deficit as a percentage of GDP of the previous year exceeds one and 1%. If either of these two instances has occurred, the Secretary of Finance, by legislative mandate, must submit such information to the President.

In making his recommendation to the President on the existence of either of the two conditions, the Secretary of Finance is not acting as the alter ego of the President or even her subordinate. He is acting

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as the agent of the legislative department, to determine and declare the event upon which its expressed will is to take effect. The Secretary of Finance becomes the means or tool by which legislative policy is determined and implemented, considering that he possesses all the facilities to gather data and information and has a much broader perspective to properly evaluate them. His function is to gather and collate statistical data and other pertinent information and verify if any of the two conditions laid out by Congress is present. Congress does not abdicate its functions or unduly delegate power when it describes what job must be done, who must do it, and what is the scope of his authority; in our complex economy that is frequently the only way in which the legislative process can go forward. There is no undue delegation of legislative power but only of the discretion as to the execution of a law. This is constitutionally permissible. Congress did not delegate the power to tax but the mere implementation of the law.

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TadlipvsBorres, Jr. [474 SCRA 441; A.C. No. 5708, November 11, 2005]
(Public Officers, Provincial Agrarian Reform Adjudicator) Facts: Respondent Atty. Fidel Borres, Jr. is a Provincial Agrarian Reform Adjudicator (PARAD) of the Department of Agrarian Reform Regional Arbitration Board (DARAB). A parcel land situated in Mambajao, Camiguin which was issued to EusebioArce. The land was formerly owned by Madarieta. Subsequently, a Deed of Transfer under PD 27 was executed by Madarieta, as represented by his wife, PelagiaMadarieta and EusebioArce. Six years later Arce died and was succeeded by two minors and Tadlip (his nephew), assumed the responsibility of tilling the land. Tadlip caused the reallocation of the disputed land. Respondent, as PARAD of DARAB issued an order dated 3 April 1998 granting the petition of complainant reallocating the land to him and heirs of Arce. However, the title was never transferred to the complainant and the heirs of Arce because unknown to them respondent rendered another Order dated 26 January 1999 cancelling the registration of the same OCT No. P-106 and ordering the issuance of a TCT ex parte in favor of Madarieta. He also approved the motion of execution filed by Madarieta. Complainant, a party interest in two DARAB cases, filed administrative complaints against respondent PARAD for the non-observance of the DARAB Rules on notice and hearing and his grant to the petitioner in the said DARAB cases of her motion for execution pending appeal in effect deprived complainant of the land he tills and the source of his income. Issue: WON a PARAD is a public officer. Held: Yes. Respondent is not only a lawyer practicing his profession, but also a provincial adjudicator, a public officer tasked with the duty of deciding conflicting claims of the parties. He is part of the quasijudicial system of our government. Thus, by analogy, the present dispute may be likened to administrative cases of judges whose manner of deciding cases was similarly subject of respective administrative cases. To hold the judge liable, this Court has time and again ruled that the error must be so gross and patent as to produce an inference of ignorance or bad faith or that the judge knowingly rendered an unjust decision.

Note: A member of the bar who assumes public office does not shed his professional obligations the Code of Professional Responsibility was not meant to govern the conduct of private practitioners alone, but of all lawyers including those in the government service.

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Tadlip vs. Borres, Jr. 474 SCRA 441

DOCTRINES: A lawyer assumes responsibilities well beyond the basic requirements of good citizenship as a servant of the law, a lawyer should moreover make himself an examplar of others to emulate. A member of the bar who assumes public office does not shed his professional obligations the Code of Professional Responsibility was not meant to govern the conduct of private practitioners alone, but of all lawyers including those in the government service.

FACTS: This case involves a parcel land of land situated in Mambajao, Camiguin which was issued OCT No. P106, Emancipation Patent No. A-028380 by the MAR to EusebioArce. The land was formerly owned by Angel Madarieta.

Subsequently, a Deed of Transfer under PD 27 was executed by Angel Madarieta, as represented by his wife, PelagiaMadarieta and EusebioArce.

Six years later Arce died and was succeeded by two minors and Tadlip, his nephew, assumed the responsibility of tilling the land. Tadlip caused the reallocation of the disputed land.

Respondent, as PARAD of DARAB issued an order dated 3 April 1998 granting the petition of complainant reallocating the land to him and heirs of Arce. However, the title was never transferred to the complainant and the heirs of Arce because unknown to them respondent rendered another Order dated 26 January 1999 cancelling the registration of the same OCT No. P-106 and ordering the issuance of a TCT ex parte in favor of Madarieta. He also approved the motion of execution filed by Madarieta.

ISSUE: Whether the respondent is guilty of gross ignorance of the law.

HELD: Respondent's non-observance of the DARAB Rules on notice and hearing and his grant to Madarieta of her motion for execution pending appeal in effect deprived complainant of the land he tills and the source of his income. Complainant woke up one day not knowing that the emancipated land which he thought was already reallocated to him was lost by order of respondent. He was not given the chance to defend his claim over the property. This is tantamount to deprivation of property without due process of law, a constitutional guarantee available to every individual.

The actual review of the subject issuance of the respondent should be undertaken in the proper judicial proceedings, and not by this Court at this time via an administrative action. Nevertheless, respondent's

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culpability under the Code of Professional Responsibility is indubitable. As a lawyer, the IBP determined, and we subscribe to such determination, that respondent violated Canon 1 of the Code of Professional Responsibility which states:

Canon 1A lawyer shall uphold the Constitution, obey the laws of the land and promote respect for law and for legal processes.

While the duty to uphold the Constitution and obey the laws is an obligation imposed upon every citizen, a lawyer assumes responsibilities well beyond the basic requirements of good citizenship. As a servant of the law, a lawyer should moreover make himself an exemplar of others to emulate.

A member of the bar who assumes public office does not shed his professional obligations. Hence the Code of Professional Responsibility, promulgated on 21 June 1988, was not meant to govern the conduct of private practitioners alone, but of all lawyers including those in government service. This is clear from Canon 6 of the said Code. Lawyers in government service are public servants who owe the utmost fidelity to the public service. Thus they should be more sensitive in the performance of their professional obligations, as their conduct is subject to the ever-constant scrutiny of the public.

Respondent, as a Provincial Adjudicator of the DARAB, was reposed with a higher gravamen of responsibility than a lawyer in private practice. The recommended penalty of two months suspension is too light under the circumstances, and a penalty of six (6) months' suspension more appropriate.

As held in recent cases, the penalty for a judge found to be guilty of gross ignorance of the law is six (6) months. In the case at bar, after due consideration of the facts involved, the Court believes and so holds that the same penalty should be imposed upon respondent as he disregarded pertinent rules of procedure of the DARAB that led to the unjust deprivation of complainant of his property.

WHEREFORE, premises considered, respondent is hereby SUSPENDED from the practice of law for a period of six (6) months.

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