FACTS: A Chief Officer of a ship was killed in an accident in Japan. The widow filed a complaint for charges against the Eastern Shipping Lines with POEA, based on a Memorandum Circular No. 2, issued by the POEA which stipulated death benefits and burial for the family of overseas workers. ESL questioned the validity of the memorandum circular as violative of the principle of non- delegation of legislative power. It contends that no authority had been given the POEA to promulgate the said regulation; and even with such authorization, the regulation represents an exercise of legislative discretion which, under the principle, is not subject to delegation. Nevertheless, POEA assumed jurisdiction and decided the case.
ISSUE: Whether or not the Issuance of Memorandum Circular No. 2 is a violation of non-delegation of powers.
RULING:
No. SC held that there was a valid delegation of powers. The authority to issue the said regulation is clearly provided in Section 4(a) of Executive Order No. 797. ... "The governing Board of the Administration (POEA), as hereunder provided shall promulgate the necessary rules and regulations to govern the exercise of the adjudicatory functions of the Administration (POEA)."
It is true that legislative discretion as to the substantive contents of the law cannot be delegated. What can be delegated is the discretion to determine how the law may be enforced, not what the law shall be. The ascertainment of the latter subject is a prerogative of the legislature. This prerogative cannot be abdicated or surrendered by the legislature to the delegate.
The reasons given above for the delegation of legislative powers in general are particularly applicable to administrative bodies. With the proliferation of specialized activities and their attendant peculiar problems, the national legislature has found it more and more necessary to entrust to administrative agencies the authority to issue rules to carry out the general provisions of the statute. This is called the "power of subordinate legislation."
With this power, administrative bodies may implement the broad policies laid down in a statute by "filling in' the details which the Congress may not have the opportunity or competence to provide. This is effected by their promulgation of what are known as supplementary regulations, such as the implementing rules issued by the Department of Labor on the new Labor Code. These regulations have the force and effect of law.
There are two accepted tests to determine whether or not there is a valid delegation of legislative power:
1. Completeness test - the law must be complete in all its terms and conditions when it leaves the legislature such that when it reaches the delegate the only thing he will have to do is enforce it. 2. Sufficient standard test - there must be adequate guidelines or stations in the law to map out the boundaries of the delegate's authority and prevent the delegation from running riot.
Both tests are intended to prevent a total transference of legislative authority to the delegate, who is not allowed to step into the shoes of the legislature and exercise a power essentially legislative.
2 | P a g e
PEOPLE OF THE PHILIPPINES ISLAND vs. JOSE O. VERA Philippine Reports 45685. November 16, 1937
FACTS: In the case of Philippine Island vs. Mariano Cu Unjieng, Mariano was convicted of Perjury because of the issuance of fake quedans (warehouse receipt). Mariano is appealing for PROBATION in the said criminal case. It was filed with the Court of First Instance of Manila on Oct 15, 1931, petitioner herein Hongkong and Shanghai Banking Corporation intervening in the case as private prosecutor. On January 8, 1934, he got convicted and sentenced to an indeterminate penalty ranging from 4 yrs and 2 months of prision correctional to 8 yrs of prision mayor, to pay the cost and with reservation of civil action to the offended party, the hongkong and shanghai banking corporation. Upon appeal, the court modified the sentence to an indeterminate penalty of from 5 yrs, 6 months and 27 days of prision mayor but affirmed the judgment in all other aspects. Mariano filed a motion for reconsideration and four successive motions for new trial and got denied. Final judgment was on Dec 18, 1935. The instant proceedings have to do with the application for probation. Then judge Jose O. Vera presiding, set the petition for HEARING on April 5, 1937. The fiscal of the city of manila filed and opposition to the granting of probation and also the private prosecution which are the Hongkong and Shanghai Banking Corp. on the grounds of ACT NO 4221 assuming its not been repealed by section 2 of Art. 15 of the constitution, is a violation of equal protection of the laws for the reason that its applicability is not uniform throughout the Islands and because sec 11 of ACT NO 4221 endows the provincial boards with the power to make said law effective or otherwise in their respective provinces. ACT NO 4221 OR THE PROBATION LAW SECTION 11 states that this act shall apply only in the provinces in which the respective provincial boards have provided for the salary of a probation officer at rates not lower than those now provided for provincial fiscals. Said probation officers shall be appointed by the Secretary of Justice and shall be subject to the direction of the Probation Office.
ISSUES:
If the question of Is ACT 4221 unconstitutional properly raised? Is the Act unconstitutional?
RULING: YES, YES
People of the Philippines, represented by the Solicitor-General and the Fiscal of the City of manila, is such a proper party in the present proceedings. The unchallenged rule is that the person who impugns the validity of a statute must have a personal and substantial interest in the case such that he is sustain, or will sustain, direct injury as a result of its enforcement. If ACT 4221 continues, there will be a danger on our equal protection right. The section 11 of the act is unconstitutional because if the province doesnt have the salary for probation officer they wont have the PROBATION ACT on their province and it endangers the equal protection clause of the constitution. BECAUSE the budget for the probation officer is for only P50,000 and it has 49 provinces so it will not suffice. The other issue in the number 2 question is that if the PROBATION ACT has a conflict with the PARDONING POWER of the PRESIDENT which is NO because in Probation act it only postpones the judgment of the court temporarily while on PARDON it releases the punishment.
3 | P a g e
ABAKADA Guro Party List Officer Samson vs. The Hon. Executive Secretary Eduardo R. Ermita G.R. No. 168056
Facts: In response to mounting budget deficit, revenue generation, inadequate fiscal allocation R.A. No. 9337 is enacted through consolidation of three legislative bills namely, House Bill Nos. 3555 and 3705, and Senate Bill No. 1950.
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 petitions for certiorari and prohibition questioning the constitutionality of the new law.
Petitioners challenge R.A. No. 9337s because it granted stand- by authority to the Executive to increase the VAT rate, especially on account of the recommendatory power granted to the Secretary of Finance, authorizing the President upon recommendation of the Secretary of Finance, to raise the VAT rate to 12% effective January 1, 2006 after certain conditions provided for in the law have been satisfied to wit: (i) VAT collection as a percentage of GDP of the previous year exceeds 2 4/5 % or (ii) National government deficit as a percentage of GDP of the previous year exceeds 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 Constitution. 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?
Held: NO The taxing power has not been delegated by Congress to either or both the President and the finance secretary. What was delegated was only the power to ascertain the facts in order to bring the law into operation. In fact, there was really no delegation to speak of; there was merely a declaration of an administrative, not a legislative, function.
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 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. 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 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.
4 | P a g e
ABAKADA vs. Purisima GR No 166715
FACTS: ABAKADA filed petition for prohibition to prevent the implementation and enforcement of RA 9335 (Attrition Act of 2005).
This law aims to impose a system of rewards and punishment upon government officials who belonged to the BOC and the BIR. Officials belonging to these departments would be rewarded for collections in excess of the set quotas, and punished by dismissal if unable to reach the same quotas.
Officials may be dismissed from service if their revenue collections fall short of the 7.5% quota, however, the fixing of revenue targets has been delegated to the President. Therefore, according to the petitioners, it would be easy for the President to fix unrealistic and unattainable target in order to dismiss BIR or BOC personnel.
ISSUE: WON RA 9335 unduly delegates to the President the power to fix revenue targets without sufficient standards.
HELD: For a delegation to be valid it must be complete and it must fix a standard. A complete law sets forth the policy to be executed, carried out or implemented by the delegate. A sufficient standard is one that defines legislative policy, marks its limits, maps out its boundaries and specifies the public agency to apply it.
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. Constitutionality of RA 9335 is UPHELD.
Tatad vs Secretary of the Department of Energy GR No. 124360, November 5, 1997
Senator Tatad petitions that Republic Act No. 8180 entitled An Act Deregulating the Downstream Oil Industry is unconstitutional
Facts: *Prior to 1971 there was only 4 refining companies (SHELL, CALTEX, Bataan refining comp., FILOIL Refining) and 6 petroleum marketing companies ( ESSO, FILOIL, CALTEX, GITTY, MOBIL, SHELL) *By 1971 due to a national oil crisis the Oil Industry Comission (OIC) was created to regulate the business Until the early 1970s the downstream oil industries was controlled mostly by foreigners. To break the control by foreigners of our oil industry President Marcos created the Philippine National Oil Corporation (PNOC) on November 1973. PNOC acquired ownership of ESSO, FIloil, and created Petrophil (PETRON) In 1984, Pres. Marcos created PD NO. 1956-the Oil Price Stabilization Fund (OPSF) to cushion the effects of frequent changes in the price of oil caused by exchange rate adjustments or increase in the world market price of crude oil & import petroleum products By 1985 only 3 oil companies were operating in the country ( CALTEX, Shell, and the govt owned PNOC ) On May 1987, Pres. Corazon Aquino signed Eo NO. 172 creating the Energy Regulatory Board to regulate the business of importing, exporting, re- exporting, shipping, transporting, processing, refining, marketing, and distributing energy resources WHEN WARRANTED AND ONLY WHEN PUBLIC NECESSTY REQUIRES. On Dec 1992, Congress enacted RA 7638 or The Department Of Energy to prepare, integrate, coordinate, supervise and control all plans, programs, projects and activities of the government in relation to energy, exploration, utilization, distribution and conservation. On March 1996, Congress enacted RA 8180 entitled the Downstream Oil Industry Deregulation Act Of 1996.
The deregulation process has 2 phases: 1. Transitional Phase-period when the controls of the non-pricing aspects of the oil industry were to be lifted. (commenced on aug 12, 1996) 2. Full Deregulation Phase- full implementation of RA 8180 through EO. 372 (implemented on Feb 8.1997) 5 | P a g e
RA 8180 hopes to accomplish:
1 liberalization of oil importation, exportation, manufacturing, marketing, and distribution 2 implementation of an automatic pricing mechanism 3 implementation of an automatic formula to set margins of dealers and rates of haulers, water transport operators and pipeline concessionaires 4 restructuring of oil taxes Upon full deregulation, controls on the price of oil and the foreign exchange cover were to be lifted and the OPSF was to be abolished.
Issue: Whether RA 8180 and EO. 372 are unconstitutional.
Held: Yes. Petition is granted. RA 8180 is declared unconstitutional and EO 372 void.
RA 8180 violates section 19 of art 12 of the 1987 constitution Section 19 of art 12 of the 1987 constitution mandates: The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair completion shall be allowed. Sec 5B of RA 8180 provides: ...tariff duty shall be imposed and collected on imported crude oil at the rate of 3% and imported refined petroleum products at the rate of 7%... Sec 6 of RA 8180 provides: ...the DOE shall require the refiners and importers to maintain a minimum inventory equivalent to 10% of their respective annual sales volume or 40 days of supplies w/c ever is lower. Sec 9 of RA 8180 Provides that predatory pricing shall be prohibited.
Reasoning: RA 8180 needs provision to vouchsafe free and fair competition: The 4% tariff differential between the crude oil and refined petroleum products would make it difficult for the new oil companies to be at par, as to competitiveness, with the top oil companies in the country (shell, Caltex, Petron). The new companies would have to choose whether to set up a refinery, which cost millions, or to import their products but with a higher tariff rate. This difference in the tax discourages not only investors but also those who would set up an oil company. The high rate of ending inventory would also threatened the existence of new oil companies due to the set up cost needed to maintain and store the inventory. This high inventory will not largely affect the top oil companies because they already have enough capital to cover the cost needed. Section 19 of article 12 of the 1987 is based on free and fare competition. With the promulgation of RA 8180 the top oil companies are given the advantage to monopolize the market due to the tariff differential , inventory, and predatory pricing. Before the deregulation, Petron, Shell, Caltex had no real competitors but did not have a free run of the market because government controls both the pricing and non-pricing aspects of the oil industry. After the deregulation, Petron, shell, Caltex remain unthreatened by competition yet are no longer subject to control by government with respect to their pricing and non- pricing decisions. The aftermath of R.A 8180 is a deregulated market where competition can be corrupted and where market forces can be manipulated by oligopolies. **Note: Even thought RA 8180 contained a separability clause ( meaning if a provision is invalid the other parts declared valid shall subsist) the whole RA must be declared unconstitutional and invalid because those provisions declared unconstitutional is inherently the essence of RA 8180. ** The petition of Tatad that section 15 of RA 8180 constitutes an undue delegation of legislative power to the President and the Secretary of Energy because it does not provide a determinate or determinable standard to guide the executive branch in determining when to implement the full deregulation of the downstream oil industry is without merit. Sec 15 of RA 8180: Implementation of Full Deregulation-... the DOE shall, upon approval of the President, Implement the full deregulation of the downstream oil industry not later than march 1997. As far as practicable, the DOE shall time the full deregulation when the prices of crude oil and petroleum products in the world market are declining and when the exchange rate of the peso in relation to the US dollar is stable. Usually the court will use the completeness and sufficient standard test to determine whether or not there is delegation of legislative power but the court ruled that section 15 can hurdle both the test. It will be noted that Congress expressly provided that full deregulation will start at the end of March1997, regardless of the occurrence of any event. Full deregulation at the end of March 1997 is mandatory and the executive has no discretion to postpone it for any other reason. Thus the law is complete on the question of the final date of the full deregulation. 6 | P a g e
Tablarin v. Gutierrez G.R. No. 78164 July 31, 1987 Feliciano, J.
Facts: The petitioners sought admission into colleges or schools of medicine for the school year 1987-1988. However, the petitioners either did not take or did not successfully take the National Medical Admission Test (NMAT) required by the Board of Medical Education, one of the public respondents, and administered by the private respondent, the Center for Educational Measurement (CEM). On 5 March 1987, the petitioners filed with the Regional Trial Court, National Capital Judicial Region, a Petition for Declaratory Judgment and Prohibition with a prayer for Temporary Restraining Order and Preliminary Injunction. The petitioners sought to enjoin the Secretary of Education, Culture and Sports, the Board of Medical Education and the Center for Educational Measurement from enforcing Section 5 (a) and (f) of Republic Act No. 2382, as amended, and MECS Order No. 52, series of 1985, dated 23 August 1985 and from requiring the taking and passing of the NMAT as a condition for securing certificates of eligibility for admission, from proceeding with accepting applications for taking the NMAT and from administering the NMAT as scheduled on 26 April 1987 and in the future. After hearing on the petition for issuance of preliminary injunction, the trial court denied said petition. The NMAT was conducted and administered as previously scheduled.
Issue: Whether Section 5 (a) and (f) of Republic Act No. 2382, as amended, offend against the constitutional principle which forbids the undue delegation of legislative power, by failing to establish the necessary standard to be followed by the delegate, the Board of Medical Education
Held: The standards set for subordinate legislation in the exercise of rule making authority by an administrative agency like the Board of Medical Education are necessarily broad and highly abstract. The standard may be either expressed or implied. If the former, the non-delegation objection is easily met. The standard though does not have to be spelled out specifically. It could be implied from the policy and purpose of the act considered as a whole. In the Reflector Law, clearly the legislative objective is public safety.
In this case, the necessary standards are set forth in Section 1 of the 1959 Medical Act: the standardization and regulation of medical education and in Section 5 (a) and 7 of the same Act, the body of the statute itself, and that these considered together are sufficient compliance with the requirements of the non- delegation principle
Bureau of Customs Employees Association (BOCEA) vs. Margarito Teves G.R no. 181704 December 6, 2011
Facts: On January 25, 2005, former president Gloria Macapagal-Arroyo signed into law RA No. 9335 or otherwise known as the Attrition Act of 2005. The said act optimizes the revenue generation capability and collection of the BIR and the BoC. The law intends to encourage BIR and BoC officials and employees of rank-and-file, to exceed their revenue targets by providing a systems of sanctions and rewards through the creation of a Reward and Incentives Fund and a Revenue Performance Evaluation board. It covers all officials and employees of the BIR and the Bureau of Customs with at least six months of service, regardless of employment status. The fund is sourced from the collection of the BIR and the BOC in excess in their revenue targets for the year, as determined by the Development Budget and Coordinating Committee. Any incentive reward is taken from and allocated to the BBIR and the BOC in the contribution in the excess collection of the targeted amount of tax revenue. Petitioners directly filed against respondent Margarito B. Teves, in his capacity as the Secretary of the Department of Finance. Commissioner Napoleon L. Morales (Commissioner Morales), in his capacity as BOC Commissioner, and Lilian B. Hefti, in hercapacity as Commissioner of the Bureau of Internal Revenue (BIR), Contending that the enactment and implementation of R.A. No. 9335 are tainted with constitutional infirmities inviolation of the fundamental rights of its members. BOCEA opined that the revenue target was impossible to meet due to the Governments own policies on reduced Tariff rates and tax breaks to big businesses, the occurrence of natural calamities and because of other economicfactors BOCEA claimed that some BOC employees were coerced and forced to sign the Performance Contract. They alsoalleged they were threatened that if they 7 | P a g e
do not sign their respective Performance Contracts, they would face possible reassignment, reshuffling, or worse, be placed on floating status On March 3, 2008. BOCEA asserted that in view of theunconstitutionality of R.A. No. 9335 and its IRR, and their adverse effects on the constitutional rights of BOCofficials and employees, direct resort to this Court is justified.
Issue: Whether or not there is undue delegation of legislative power to the Board.
HELD: No. In the face of the increasing complexity of modern life, delegation of legislative power to various specialized administrative agencies is allowed as an exception to this principle. Given the volume and variety of interactions in todays society, it is doubtful if the legislature can promulgate laws that will deal adequately with and respond promptly to the minutiae of everyday life. Hence, the need to delegate to administrative bodies the principal agencies tasked to execute laws in their specialized fields, the authority to promulgate rules and regulations to implement a given statute and effectuate its policies. All that is required for the valid exercise of this power of subordinate legislation is that the regulation be germane to the objects and purposes of the law and that the regulation be not in contradiction to, but in conformity with, the standards prescribed by the law. These requirements are denominated as the completeness test and the sufficient standard test. 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. It 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. 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.
The Court finds that R.A. No. 9335, read and appreciated in its entirety, is complete in all its essential terms and conditions, and that it contains sufficient standards as to negate BOCEAs supposition of undue delegation of legislative power to the Board.
Philippine Coconut Producers Federation vs Republic GR 177857-58
Facts: R.A. 6260 was enacted creating the Coconut Investment Company (CIC) to administer the Coconut Investment Fund (CIF). The declaration of martial law saw the issuance of of several P.D. purportedly designed to improve the coconut industry through the collection and use of levy fund. One of which is P.D. 755 providing under Section 1: 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: Whether or not Sec. 1 of P.D. No. 755 is an invalid delegation of legislative power
Held: Section 1 of P.D. No. 755 is an invalid delegation of legislative power.
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. It 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.
8 | P a g e
In this case, the requisite standards or criteria are absent in P.D. No. 755. This decree authorizes 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. 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 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. P.D. No. 755 did not provide for any guideline, standard, condition or restriction by which the said shares shall be distributed to the coconut farmers that would ensure that the same will be undertaken to accelerate the growth and development of the coconut industry pursuant to its national policy. Thus, 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.