Anda di halaman 1dari 20

Citation:

Dante B., Editor Gatmaytan. Grandeur: Lectures Delivered on the Occasion of the Centennial of the University of the Philippines, College of Law (2013).

Content downloaded/printed from HeinOnline

Wed Jan 23 01:32:36 2019

-- Your use of this HeinOnline PDF indicates your acceptance of HeinOnline's Terms and Conditions of the license agreement available at https://heinonline.org/HOL/License

-- The search text of this PDF is generated from uncorrected OCR text.

Citation: Dante B., Editor Gatmaytan. Grandeur: Lectures Delivered on the Occasion of the Centennial of theHeinOnline Wed Jan 23 01:32:36 2019 -- Your use of this HeinOnline PDF indicates your acceptance of HeinOnline's Terms and Conditions of the license agreement available at https://heinonline.org/HOL/License -- The search text of this PDF is generated from uncorrected OCR text. Use QR Code reader to send PDF to your smartphone or tablet device " id="pdf-obj-0-21" src="pdf-obj-0-21.jpg">

Use QR Code reader to send PDF to your smartphone or tablet device

PHILIPPINE ADMINISTRATIVE RULEMAKING AND ADJUDICATION IN THE TWENTIETH CENTURY: ISSUES,

TRENDS, AND PERSPECTIVES

Salvador T. Car/ota

T

he

emergence

of administrative

agencies

with

rulemaking

and

adjudication powers is a twentieth century phenomenon with pervasive and far-reaching effects on modern day governance and on

private rights. With the rapidly increasing volume of administrative rulemaking and adjudication, it is not an exaggeration to say that there is hardly any aspect of modern life, which is left untouched by the rules and decisions of these administrative agencies. Even the practice of law

has been greatly

affected. The practice of the profession used to be

confined to appearances before regular courts of law. This is no longer entirely true. Today not a few members of the bar devote most, if not

all, of their time practicing law before these agencies. While their place in the Philippine legal system is now recognized, these unique agencies were virtually unheard of in the previous century, when the range of governmental regulation was quite limited. Philippine society then was relatively simpler and easier to govern. Governance was mainly focused on the traditional areas of tax collection, maintenance of peace and order, and the enforcement of the civil, commercial, and penal codes. The executive, legislative, and judicial authorities had the luxury of time to address the comparatively simpler problems that arose in these areas. The multifarious and more intricate issues or problems pertaining to modern day corporations, labor-management relations, social security, transportation, telecommunications, energy, housing and land use, and pollution were simply non-existent in the Philippine society of the nineteenth century. There was, consequently, no need for the State to create regulatory agencies such as the Securities and Exchange Commission, National Labor Relations Commission, Social Security Commission, Land Transportation and Franchising Regulatory Board, Civil Aeronautics Board, National Telecommunications Commission, Energy Regulatory Commission, Housing and Land Use Regulatory

CENTENNIAL LECTURES OF THE UP COLLEGE OFLAW

Board, and the Pollution Adjudication Board. The advent of the twentieth century, however, has radically altered the landscape of governance. It ushered a host of social, economic, technological, environmental, and population changes, which spawned a bewildering number of issues and problems that seriously challenged the capability of the traditional branches of government to effectively respond to these novel concerns. It was precisely the expansion of the areas of governmental regulation and the lack of time, expertise, and organizational aptitude of the executive, legislative, and judicial branches for effective regulatory control over the new areas which eventually compelled the State to create administrative agencies with delegated

hybrid powers of rulemaking and

adjudication. 1 Justice Laurel, speaking

for the Supreme Court in the case of PangasinanTransportation Co. v. Public Service Commission, 2 attributed the increasing reliance of the State to delegate powers to these agencies to "the growing complexity of modern life, the multiplication of the subjects of governmental regulation, and the increased difficulty of administering the laws." 3 Today, as we enter the second decade of a new millennium, we find these regulatory agencies all around us. With the inability of the three

branches of government to directly and effectively respond to the new developments brought about by our increasingly complex society, the

unmistakable trend is the continuing reliance by the State on the creation

of agencies with delegated rulemaking and adjudication powers.

There

is really no other choice inasmuch as the force of necessity dictates the rise of the regulatory agencies. Considering that these agencies have a great impact not just on the public interest but on private rights as well, it is important for us to be sensitive to the varied issues and problems associated with their rulemaking and adjudication powers and to be involved in the search for ways by which fairness can be maximized in the exercise of such powers.

  • I See Julius Stone, The Twentieth Centugy Administrative Explosion and After, 52 CALIF L. REv. 513, 516-517 (1964).

    • 2 G.R. No. 47065, 70 PHIL. REP. 221 (S.C.,June 26, 1940).

Administrative Rulemaking andAdjudication

I

ADMINISTRATIVE RULEMAKING AND ADJUDICATION AND THE DOCTRINE OF SEPARATION OF POWERS

The nature and scope of administrative rulemaking and adjudication

can be better appreciated when viewed

in

the light of the doctrine

of

separation of powers and its corollary doctrine of non-delegation of powers. The issue that was raised in the early stages of the development of regulatory agencies was whether or not the concentration of

executive, rulemaking, and adjudication powers in a single agency collides with the central idea behind the doctrine of separation of

powers

which

is

the

dispersal

of such

sovereign

functions

to

the

traditional executive, legislative, and judicial organs of government. A literal interpretation of the doctrine can theoretically lead to the

conclusion that there is such a conflict. Under this myopic view, the existence of regulatory agencies with hybrid powers is not in harmony

with

the

doctrine

and

the

trichotomy

that

was

set

up

by

our

constitutional system. The constitutional position of regulatory agencies is an issue that has engaged the attention of legal scholars. How are we to classify these ubiquitous agencies in the light of the dominant principle of separation of powers? In the first place, no matter how crucial their role is in governance, they do not constitute a fourth branch in our constitutional order. Secondly, because of their hybrid functions, they cannot be regarded as strictly or exclusively belonging to the executive, legislative, or judicial branches of government. So, how are we to explain their place in our constitutional system? The following observations on the doctrine of separation of powers and the constitutional position of administrative agencies are enlightening.

The separation of powers principle is a fundamental and

valid

dogma

of

our

constitutions. Its object is the

preservation of political safeguards against the capricious

exercise

of power; and, incidentally,

it

lays

down

the

broad lines of an efficient division of functions. Its logic is the logic of polarity rather than strict classification. History, convention, and constitutional mandate

definitely allocate certain functions to one or another of

the

three great organs.

where

But in many

crucial instances

there is pressure

for

the transfer

of old

or

the

creation

of

new

functions

or

for

the

better

CENTENIAL LEUTURES OF THE UP COLLEGE OF LAW

implementation of old ones, the logical implications of the principle are conflicting. Our constitutions recognize the legislative as the organ of widest law-making competence; our courts consequently presume that

legislative acts are constitutional.

If,

therefore,

the

legislature has seen fit to create an organism for the transaction of public business, its validity should be

sustained if one among competing logical implications

reasonably

supports

it.

At

such

points, the theory

of

separation is logically too infirm to condemn any

sensible or convenient

arrangement. We should in sum

keep in mind that the great end of the theory is, by

dispersing in some measure the centers of authority, to

prevent

absolutism.

It

is

not eternally

to

stratify

our

governmental arrangements 1789, or any other date. 4

in

the

particular

mold of

The prevention of absolutism and the capricious exercise of the sovereign powers of the State being the ultimate objective of allocating such powers to the three traditional organs of government, it stands to reason that if there are existing control or checking mechanisms that can keep the regulatory agencies within legal bounds in the exercise of their hybrid functions, then the existence of such agencies can be reconciled with the doctrine of separation of powers under our constitutional framework. As shall be pointed out subsequently, there are such control or checking mechanisms, although with varying efficacy.

II

RULEMAKING AND THE NON-DELEGATION

DOCTRINE

The basic idea behind the non-delegation doctrine is that since the constitution has conferred upon the legislature the power to make laws, the latter cannot evade responsibility by delegating such power to some other body or agency. As explained by the Supreme Court in the 1908 case of United States v. Barias, the non-delegation doctrine "is based on the ethical principle that such delegated power constitutes not only a right but a duty to be performed by the delegate by the instrumentality

  • 4 Louis L. JAFFE & NATHANIEL L. NATHANSON, ADMINISTRATIVE LAW: CASES AND

MATERIALS 37-38 (3d ed. 1968).

Administrative Rulemaking andAdjudication

of his own judgment acting immediately upon the matter of legislation

and not through the intervening mind of another.

' 5

Conventional legal thinking considers the delegation of rulemaking power to administrative agencies as an exception to the non-delegation

doctrine.

Judicial

decisions

perfunctorily

point

out

that

permissible is merely the delegation

of power to implement

what

is

the law.

Thus, rulemaking has been characterized as "subordinate legislation" to

denote the idea that it cannot transcend the limits of its statutory authority and the rules promulgated cannot be inconsistent with the law. That rulemaking is subject to the control of the legislature is too well

settled

in

administrative

law

to

require

an

extended discussion.

Nevertheless, the often quoted judicial declaration that the power to make the law cannot be delegated should not be too narrowly or literally

construed as it could obscure the reality that regulatory agencies do in fact make laws. Rulemaking is legislative in character. When the rules promulgated are within the scope of the rulemaking grant and when the legal requirements for the valid exercise of the rulemaking power are observed, such rules, according to settled jurisprudence, have the force

and effect of law. 6 This explains why the

Supreme Court, in the leading

case of Tanada v. Tuvera, has ruled that due process requires not only laws but also rules and regulations, except interpretative rules and internal rules, to be published in a newspaper of general circulation before they become effective. Moreover, under the Administrative Code

of 1987, rules take effect fifteen days from the date of filing with the University of the Philippines Law Center. 8

Pursuant

to

the

separation

of

powers

and

the

non-delegation

doctrines, jurisprudence has developed a test to determine when the delegation of power to agencies is permissible. In the case of Pelae Z v.

  • 5 G.R. No. 4349, 11 PHIL. REP. 327, 330

(S.C., Sept. 24, 1908).

  • 6 See People v. Que Po Lay, G.R. No. L-6791, 94 PHIL. REP. 640 (S.C., Mar. 29,

1954).

  • 7 G.R. No. L-63915, 146 SCRA 446 (Dec. 29, 1986) (Phil.).

  • 8 The Administrative Code in part provides:

Effecfiviy. - In addition to other rule-making requirements provided by law not inconsistent with this Book, each rule shall become effective fifteen (15) days from the date of filing as above provided unless a different date is fixed by law, or specified in the rule in cases of imminent danger to public health, safety and welfare, the existence of which must be expressed in a statement accompanying the rule. The agency shall take appropriate measures to make emergency rules known to persons who may be affected by them. ADMINISTRATIVE CODE, bk. VII, § 4, Exec. Ord. No. 292, as amended by Rep. Act No. 6682 (Phil.).

CENTENNIAL LECFURES OF THE UP COLLEGE OF LA W

Auditor General, 9 a 1965 case where the Supreme Court declared as unconstitutional the power delegated to the President under Section 68 of the previous Revised Administrative Code to create municipalities in

the

guise

of

"completeness

fixing boundaries, the Court laid down the so-called test." The Court declared that:

Although Congress may delegate to another branch of

the government

the

power

to

fill

in

the

details in

the

execution, enforcement or administration of a law, it is

essential,

to

forestall

a

violation

of

the

principle

of

separation of powers, that said law:

(a) be

complete in

itself - must set forth therein the policy to be executed,

carried out or implemented by the delegate -

and

(b) fix

a standard -

the

limits

of which

the

delegate

must

conform in the performance of his functions. Indeed, without a statutory declaration of policy, which is the essence of every law, and, without the aforementioned

standard, there would

be

no means

to determine with

reasonable

certainty

whether

the

delegate

has

acted

within or beyond the scope of his authority. Hence, he

could thereby arrogate upon himself the power, not only

to make

the law,

but

also

-

and this

is worse

-

to

unmake it, by adopting measures inconsistent with the

end sought to be attained by the Act of Congress,

thus

nullifying the

principle

of separation

of powers

 

and

system of

checks

and balances, and consequently,

undermining

the

very

foundation

of

our

republican

system.' 0

As explained by the Supreme Court, the "completeness test" appears

to be a workable device to prevent arbitrariness

in the exercise of

delegated powers. It is, however, in the fixing of standards

that the

functional value of this test can be seriously questioned. It is conceded

that if the standards are sufficiently definite or specific, the exercise of

discretion, to borrow the felicitous language

"canalized

of Justice Cardozo, can be

On the

within the banks that keep it from overflowing.""

other hand, if the standards are broad or vague, what could result is

  • 9 G.R. No. L-23825, 15 SCRA 569 (Dec. 24, 1965) (Phil.).

10

Id. at 576-577.

Administrative Rulemaking andAdjudicalion

unbridled discretion in the exercise of delegated powers. In the history

of delegation cases in the Philippines, broad standards, such as "interest

of law and order,"' 12

"public interest,"' 13 and "justice and substantial

merits of the case," 14 have been considered by the Supreme Court as sufficient standards that could withstand an attack on the constitutionality of the delegation of powers. The inability of the legislature to provide specific standards in every case of delegation of power is not difficult to discern if we consider the fact that administrative agencies operate in different areas, which are

subject to conditions and policy considerations with varying degrees of susceptibility to specific standards. It has been pointed out that the laying down of definite standards should take into account the number, vagueness, and degree of potential conflicts among the policy indications

which the legislature wants to be accommodated and the rate of change

and movement in the facts concerning

such policies." 5 In instances

where the fixing of specific standards cannot be done, Congress proceeds with the delegation of power by providing broad standards rather than withhold it and thereby frustrate the implementation of a desired legislative policy. Notwithstanding the difficulty involved in the fixing of specific standards, the Supreme Court has taken a perspective, which acknowledges that the delegation of powers to regulatory agencies is an imperative in our modern society. Consequently, it has assumed a liberal attitude in resolving issues on sufficiency of standards. 16 Viewed in the light of the inability of the legislature to supply definite or specific

standards in all instances of delegation of power, and considering the liberal posture of the Supreme Court in resolving questions on sufficiency of standards, an important issue pertaining to the efficacy of the non-delegation doctrine as a tool to curb the capricious exercise of delegated powers arises. It is noteworthy that Kenneth Culp Davis, a

  • 12 Rubi v. Provincial Bd., G.R. No. L-14078, 39 PHIL. REP. 660 (S.C., Mar. 7, 1919).

  • 13 People v. Rosenthal, G.R. No. L-46076-77, 68 PHIL. REP. 328 (S.C., June 12, 1939).

  • 14 Int'l Hardwood & Veneer Co. v. Pafigil Fed'n PHIL. REP. 602 (S.C., Nov. 25, 1940).

    • 15 Stone, supra note 1, at 533.

of Labor, G.R. No. L-47178, 70

16

It must

be noted, however, that while

this

liberal attitude

is manifest in

most

delegation cases, in four cases, the Supreme Court struck down the validity of the delegation of power. See Compania General de Tabacos de Filipinas v. Bd. of Pub. Util. Comm'rs, G.R. No. L-11216, 34 PHIL. REP. 136 (S.C., Mar. 6, 1916); United States v. Ang Tang Ho, G.R. No. 17122, 43 PHIL. REP. 1 (S.C., Feb. 27, 1922); People v. Vera,

G.R. No.

L-45685, 65 PHIL. REP. 56

(S.C., Nov. 16,

1937); Pelaez v. Auditor Gen.,

G.R. No. L-23825, 15 SCRA 569 (Dec. 24, 1965) (Phil.).

CENTENNAiL LECIVRES OF THE UP COLLEGE OFLAW

recognized authority on Administrative Law, considers the non- delegation doctrine as a failed doctrine. He advocates its modification into a judicial tool that can effectively control administrative discretion.

According to Davis:

The non-delegation doctrine can and should be altered to turn it into an effective and useful judicial tool. Its purpose should no longer be either to prevent delegation of legislative power or to require meaningful statutory standards; its purpose should be the much deeper one of protecting against unnecessary and uncontrolled discretionary power. The focus should no longer be exclusively on standards; it should be on the totality of protections against arbitrariness, including both safeguards and standards. The key should no longer be statutory words; it should be the protections the

administrators in fact provide, irrespective

of what the

statutes

say or fail to

say.

The focus of judicial inquiries

thus

should

shift

from

statutory

standards

to

administrative

safeguards and administrative standards.

As soon as that shift is accomplished, the protections

should grow beyond the non-delegation doctrine to a much broader requirement, judicially enforced, that as far as is practicable administrators must structure their discretionary power through appropriate safeguards and must confine and guide their discretionary power through standards, principles, and rules.

17

In addition to the modified non-delegation doctrine, Davis is also of the view that due process and the void for vagueness principle as applied to administrative policy can likewise be utilized to enable the courts to require the articulation of administrative standards and safeguards. 8

  • 17 KENNETH CULP DAvIs, ADMINISTRATIVE LAW TREATISE, 1970 SUPPLEMENT 40-

41(1971).

18

KENNETH

CULP DAvis,

KENNETH

CULP DAvIS'

ADMINISTRATIVE LAW

OF THE

SEVENTIES: SUPPLEMENTING ADMINISTRATiVE LAW TREATISE 39 (1976).

Administrative Rulemaking andAdjudication

III

79

LIMITATIONS ON THE RULEMAKING POWER

Being

in

the

nature

of

subordinate

legislation,

administrative

rulemaking is subject to certain limitations. The rulemaking grant is not a license for the agency to promulgate any rule. Aside from being

authorized by law, the rule must not be inconsistent with the law or the Constitution. It must likewise be reasonable and germane to the purpose

of the law. Agency perception regarding the desirability of the rule or its possible beneficial effects is immaterial where the rule is shown to be inconsistent with the law. The rule is void and can be successfully challenged in court. 19 The provision in Executive Order No. 292, otherwise known as the Administrative Code of 1987, on effectivity of rules and public participation through notice and hearing must be highlighted as it serves to provide safeguards that could maximize fairness in rulemaking. It is now a requirement for effectivity that three certified copies of every rule

shall be filed with the U.P.

Law Center. Moreover, it is expressly

provided that "each rule shall become effective fifteen (15) days from

the date of filing

...

unless a different date is fixed by law, or specified

in the rule in cases of imminent danger to the public health, safety and welfare, the existence of which must be expressed in a statement accompanying the rule." 20 This provision should be harmonized with the ruling in Tanada v. Tuvera 21 that laws and rules take effect fifteen days from publication in a newspaper of general circulation, unless otherwise

  • 19 Concerning the limits on the rulemaking power, see Olsen & Co., Inc. v. Aldanese,

G.R. No. L-18740, 43 PHIL. REP. 259 (S.C., Apr. 28, 1922); Sy Man v Jacinto, G.R. No.

L-5612, 93 PHIL. REP. 1093 (S.C., Oct. 31,

1953); People

v. Maceren, G.R. No.

L-

32166, 79 SCRA 450 (Oct. 18, 1977) (Phil.); Toledo v. Civil Serv. Comm'n, G.R. No.

92646-47,

202 SCRA 507 (Oct. 4, 1991) (Phil.); Comm'r v. Court of Appeals,

G.R. No.

108358, 240 SCRA 368

(Jan. 20,

1995)

(Phil.); Land Bank

of the Phil.

v. Court

of

Appeals, G.R. No. 118712, 249 SCRA 149 (Oct. 6, 1995) (Phil.); GMCR, Inc. v. Bell Telecomm. Phil., Inc., G.R. No. 126496, 271 SCRA 790 (Apr. 30, 1997) (Phil.); Ass'n of Philippine Coconut Desiccators v. Philippine Coconut Auth., G.R. No. 110526, 286

SCRA 109 (Feb. 10, 1998) (Phil.); Ople v. Torres, G.R. No. 127685, 293 SCRA

141

(July 23, 1998) (Phil.); Philippine Bank of Commc'ns v. Comm'r, G.R. No. 112024, 302

SCRA 241 (Jan. 28, 1999) (Phil.); China Banking Corp. v. Members of the Bd. of Trs.,

Home Dev. Mut. Fund, G.R. No. 131787, 307 SCRA 443

(May 19, 1999)

(Phil.);

Maxima Realty Mgmt. & Dev. Corp. v. Parkway Real Estate Dev. Corp., G.R. No.

136492, 422 SCRA 572 (Feb. 13, 2004) (Phil.).

  • 20 ADMINISTRATIVE CODE, bk. VII, §§ 3-4, Exec. Ord. No. 292, as amended by Rep.

Act No. 6682 (Phil.).

  • 21 G.R. No. L-63915, 146 SCRA 446 (Dec. 29, 1986) (Phil.).

CE1NTENNIAL LECITIRES OF THE UP COLLEGE OF LA w

provided by law. Under the Administrative Code of 1987, rules take effect fifteen days from the date of filing with the U.P. Law Center. On the other hand, in the Tanada ruling, rules take effect fifteen days from publication in a newspaper of general circulation. Suppose a rule was published in a newspaper of general circulation but was not filed in the

U.P. Law Center, will it take effect

fifteen days from publication?

Conversely, if it was filed in the U.P. Law Center but was not published in a newspaper of general circulation, will it take effect fifteen days from filing as provided in the Administrative Code of 1987? Subsequent

decisions of the Supreme Court, which affirmed Tanada, require for the effectivity of rules both publication and filing. 22 This means that if either the publication or filing of the rule comes ahead of the other, the

effectivity of the rule has to wait until the other requirement is complied with.

On public participation,

it

is

now

a requirement

that "an

agency

shall, as far as practicable, publish, or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the adoption of any rule. '' 23 The importance of public participation in rulemaking cannot be overemphasized. It must not be forgotten that administrators who wield rulemaking powers are not elected representatives of the people who can be changed by the electorate during elections. These administrators are appointed public officers without a constituency and, as a general rule, cannot be removed from office except for cause as provided by law and after due process. If they make rules unilaterally without the benefit of public participation, there is a greater probability of abuse in the exercise of the rulemaking power. In the making of laws in Congress, public participation is ensured through the public hearings conducted by the different congressional committees and through the activities of various lobby or pressure groups. There is no reason why public participation should not be made an integral part of the rulemaking process. By allowing the public to submit suggestions or counterproposals to a proposed agency rule, the agency can take a second look at its own proposed rule and, if need be,

  • 22 See Republic v. Express Telecomm. Co., G.R. No. 147096, 373 SCRA 316 (an. 15, 2002) (Phil.); Nat'l Ass'n of Elec. Consumers for Reforms v. Energy Regulatory Comm'n, G.R. No. 163935, 481 SCRA 480 (Feb. 2, 2006) (Phil.); GMA Network, Inc. v. Movie & Television Review & Classification Bd., G.R. No. 148579, 514 SCRA 191 (Feb. 5, 2007) (Phil.); Republic v. Pilipinas Shell Petroleum Corp., G.R. No. 173918, 550 SCRA 680 (Apr. 8, 2008) (Phil.).

  • 23 ADMINISTRATIvE CODE, bk. VII, § 9, Exec. Ord. No. 292, as amended by Rep. Act No. 6682 (Phil.).

Administraive Rulemakang andAdjdication

to accommodate the input from the public in the final shaping of the rule to be adopted. One of the significant innovations introduced by the Administrative Code of 1987 is the provision that "in the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published ina newspaper of general circulation at least two (2) weeks before the first hearing thereon., 24 Rate fixing is legislative in nature. However, there are instances when rate fixing assumes a quasi-judicial character. This happens, according to the Supreme Court in the leading case of Vigan Electric Li'gbt Co. v. Public Service Commission, 5 when the rate fixed applies exclusively to one enterprise or entity and is based on a finding of fact, in which case, due process requires notice and hearing. However,

when

the rate

to be

fixed

applies to all entities or enterprises of a given

kind, rate fixing becomes legislative in character and, unless the law requires otherwise, notice and hearing may be dispensed with. With the adoption of the policy of public participation in rate fixing, proposed rates of legislative character should now be published in a newspaper of

general circulation before the first hearing.

IV

JUDICIAL FUNCTION OF ADMINISTRATwE AGENCIES

If rulemaking is viewed as "subordinate legislation," the judicial function of administrative agencies is characterized as "quasi-judicial." However, it must be stressed at the outset that when agencies decide cases within their jurisdiction, they are truly exercising the judicial function just like the regular courts. The essential or constitutive elements of the judicial function may be reduced to the following: (1) a competent tribunal, (2) a case or controversy, and (3) a law to be applied to resolve the case. When an agency exercises its adjudicatory power to decide a case within its jurisdiction by applying the law, which it also administers, all of these elements concur. Thus, when there is, for instance, an unfair labor practice controversy, the case must be filed with the National Labor Relations Commission because it is the competent tribunal to decide the case by applying the pertinent provisions of the

Labor

Code.

So why

use

the

term

"quasi-judicial"

to

describe

the

  • 24 Id. 5 9(2).

  • 25 G.R. No. L-19850, 10 SCRA 46, 52-53 (an.

30, 1964)

(Phil.). The ruling of the

Supreme Court was subsequently reaffirmed in the case of Philippine Commc'ns Satellite Corp. v. Alcuaz, G.R. No. 84818, 180 SCRA 218 (Dec. 18, 1989) (Phil.).

CEi\TENNLL LECTURES OF THE UP COLLEGE OF LAW

adjudicatory power of the agencies?

The usage

of the term "quasi-judicial"

can

be explained

by

the

following considerations. First of all, these agencies are not regular

courts and are not part of the judiciary. They are creations of the legislature and they exercise delegated powers granted in the enabling statutes. In addition, the quantum of evidence in administrative proceedings is only substantial evidence or "such relevant evidence

which a reasonable mind will accept

as

adequate

to

support

a

conclusion, ' '26 while in civil and criminal cases, it is preponderance of

evidence and proof beyond reasonable doubt, respectively. Moreover,

although these agencies

can issue

subpoenas, writs of execution, and

even issue contempt

citations

when

the

law

expressly

grants

such

power, 7 they do

not strictly observe the technical rules of evidence and

procedure in the conduct of their proceedings.

The inapplicability

of

the

technical

rules

of

procedure

in

administrative proceedings is based on a laudable purpose. Unlike the regular courts, which move rather slowly, administrative agencies are created to act with dispatch and flexibility. Whether the reality matches this grand objective is, of course, an entirely different matter. It would be interesting to validate by empirical research the growing impression that many quasi-judicial agencies act like courts of law, forgetting the need to act with speed and flexibility. It is also important to take into account that, in many instances, the

administrators who wield adjudicatory powers are not members of the

bar and, therefore, not conversant with the highly technical rules

of

evidence and procedure. The Supreme Court had the opportunity to comment on this matter in a case involving the Board of Examiners for Surveyors. The Court noted that:

A rule so long respected, because it is buttressed upon reason and authority, is that technical rules of court practice, procedure and evidence are not to be applied with rigidity in administrative proceedings. We should have in mind the nature of administrative bodies, the character of the duties they are required to perform, the purposes for which they are organized and the persons

  • 26 Ang Tibay v. Court of Indus. Relations, G.R. No. L-46496, 69 PHIL. REP. 635 (S.C., Feb. 27, 1940).

  • 27 See ADMINISTRATIVE CODE, bk. VII, § 13, Exec. Ord. No. 292, as amended by

Rep. Act

No. 6682

(Phil.);

Gov't

Serv. Ins.

Sys.

v.

Civil

Serv. Comm'n,

96938, 202 SCRA 799 (Oct. 15, 1991) (Phil.).

G.R. No.

Administraive Rulemaking andAdjudication

who

compose

them.

members

of a board

Here of surveyors -

we

are

concerned

with

technical men but

not necessarily trained lawmen. In this posture, it is quite

reasonable to assume that their proceedings may not be conducted with that degree of exactness or with such

scrupulous observance of the complex technical rules expected in a legal battle before a court of justice. Their

acts should not be measured

by the same yardstick

exacted of a judge of a court of law. So much leeway is given an investigating administrative body. 28

To be sure, there are many administrators who are required by law to be members of the bar. This is especially true in cases where their adjudicatory powers cannot be exercised effectively without knowledge of law and procedure. But this is not a guarantee that they will conduct their proceedings swiftly and expeditiously without being hampered by the rigidities of the rules on evidence and procedure. Having emphasized the need for acting with dispatch and flexibility, we must hasten to add that agencies cannot take shortcuts and disregard

the

fundamental

requirements

of

procedural

due

process.

In

the

landmark and frequently quoted case of Ang Tibay v. Court of Industrial Relations, the Supreme Court enumerated the following "cardinal primary" rights or requirements which must be respected in administrative proceedings: (1) the right to a hearing, (2) consideration by the agency of the party's evidence, (3) the agency's decision must have something to support it, (4) the evidence to support a finding or conclusion must be substantial, (5) the decision must be rendered on the basis of the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected, (6) the agency must act on its own independent consideration of the law and facts of the case,

and not simply accept the views of a subordinate in arriving at a

decision,

and

(7)

the

decision of the agency must be rendered

in

a

manner that will enable the parties to know the issues involved and the explanation or reasons for the decision. 29 The last requirement is what we might call a "reasoned" decision, which usually includes a discussion of the facts, the issues, and the law upon which the decision is based. The principle of procedural due process embodies the idea of fairness. In dispensing fairness to the parties, however, the principle

  • 28 Asprec v. Itchon, G.R. No. L-21685, 16 SCRA 921 (Apr. 30, 1966) (Phil.).

  • 29 G.R. No. L-46496, 69 PHIL. REP. 635 (S.C., Feb. 27, 1940).

CENTEI'NIAL LEC17JRES OFTHE UP COLLEGE OF LAW

itself provides elbow room or flexibility to quasi-judicial agencies. Thus, unless the law expressly requires a formal evidentiary hearing, agencies can just require the presentation of position papers, affidavits, and other written presentations upon which they will base their decisions. What is

important is the opportunity to be heard. As long as the parties were

given

the

opportunity

to

explain their

side,

a formal

hearing is not

 

30

necessary.

V

CONTROL OVER ADMINISTRATIVE RULEMAKING AND ADJUDICATION

A full-blown discussion of the checking or control mechanisms over administrative rulemaking and adjudication would require an extensive analysis of the relationship of administrative agencies with the executive, legislative, and judicial branches of government. As previously mentioned, these agencies cannot be classified as exclusively belonging to any of the three branches. However, these traditional organs of

government do exercise control in varying degrees over the exercise of

administrative

power. Due

to

our

limited

time, we

can only

briefly

discuss the ways by which the three branches

unauthorized

or

capricious

exercise

of

powers

can by administrative

check

the

agencies. On the part of the President, the executive power that is vested in

him by the Constitution enables

him to exercise

supervision over the

entire bureaucracy and see to it that the laws are faithfully executed. He

is likewise authorized to exercise control over the executive

departments,

bureaus,

and

offices. 31

This

means

that

insofar as

departments, bureaus,

or offices

in

the

executive department, which

exercise rulemaking and adjudicatory powers are concerned, their

actions

or

decisions

can

be

changed, altered, or modified by the

President. With regard to agencies created by Congress, the President exercises control only when the enabling statutes expressly granted such power to him. Otherwise, if the law is silent, he cannot exercise control as the intention of Congress is clear that he cannot review the actions or decisions of these agencies.

  • 30 See

Gatus v. Quality House, Inc., G.R. No. 156766, 585 SCRA 177 (Apr. 16, 2009)

(Phil.); Medina v. Comm'n on Audit, G.R. No. 176478, 543 SCRA 684 (Feb. 4, 2008) (Phil.).

  • 31 CONST. (1987), art. VII, §§

1, 17 (Phil.).

Administrative Rulemaking andAdjudicaion

From the perspective of the legislature, its oversight power over the agencies can be utilized as a control mechanism. Theoretically, through the creation of oversight committees, agency operations are monitored or supervised to ensure that the exercise of delegated powers is in accord with legislative policies. On closer analysis, however, lack of time, expertise, and organizational aptitude for effective and continuing supervision-the very same factors that compelled the delegation of rulemaking and adjudicatory powers to the agencies-substantially diminish the functional value of these oversight committees as checks to administrative action. Neither can we realistically consider the congressional power to conduct investigations in aid of legislation as a

potent check on agency abuse or capriciousness in the exercise of their

powers. While the constitution mandates

that these investigations be

conducted

in aid of legislation, legislative history

shows

that

quite a

number

of these

investigations

are focused

on

the

past conduct of

public officials who are suspected of having violated laws already in existence. Oftentimes, the results of these investigations are recommendations to the Office of the Ombudsman for the criminal prosecution of officials who were investigated. Moreover, these investigations are not undertaken on a regular basis and they are mostly confined to major or sensational cases of graft and corruption. Clearly, legislative investigation in aid of legislation is not an effective tool to prevent administrative misbehavior. Concerning the efficacy of the non-delegation doctrine as a tool to prevent the capricious exercise of delegated powers, it has been noted

earlier that the fixing of legislative standards in the enabling statutes of

agencies

as required by the doctrine can only be considered as an

effective method of checking agency action when such standards are sufficiently definite or specific. Broad or vague standards are open invitations to absolute or unfettered discretion, which may or may not be exercised for the public interest. It is, however, the rules of administrative procedure enacted by Congress, which can help prevent uncontrolled discretion. It is noteworthy that Book VII of the Administrative Code of 1987 contains provisions, which prescribe procedural rules to be commonly observed by agencies in administrative rulemaking and adjudication. 32 If strictly followed, these rules can further enhance the opportunity to be heard of

  • 32 ADMINISTRATIVE CODE, bk. VII, §§ 9-16, Exec. Ord. No. 292, as amended by Rep.

Act No. 6682 (Phil.).

CENTENNIAL LECTURES OF THE UP COLLEGE OF LAW

the parties affected by agency action thereby ensuring their right to due process. The judiciary offers the most effective check on agency action through its power of judicial review. While the executive and legislative branches can control administrative rulemaking and adjudication only to a certain extent, the courts, through the various modes of judicial review provided in the Rules of Court, can better control agency behavior to ensure that it does not exceed the limits set by law. Undoubtedly, judicial review offers the most direct way to check arbitrariness in the exercise

of administrative power and it provides immediate relief to the adversely affected parties. In evaluating the efficacy of judicial review as a checking device over agency action, two major issues must be taken into consideration. The first issue is a threshold issue as it relates to its availability. If judicial review is available, the next issue that must be addressed pertains to the scope or extent of such review.

Regarding the issue of availability, it is appropriate

to

ask

at

this

point whether or not judicial review is available in cases where the enabling statute of the agency does not expressly provide for such review. Should the silence of the law be interpreted to mean that the intention of Congress is to withhold judicial review? The Supreme Court

answered

this question

in the negative

in

a

case

where the enabling

statute did not expressly provide for judicial review. The Court held that:

It is generally understood that as to administrative agencies exercising quasi-judicial or legislative power there is an underlying power in the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute. The purpose of judicial review is to keep the administrative agency within its jurisdiction and protect substantial rights of parties affected by its decisions. It is part of the system of checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications. Judicial review is proper in case of lack of jurisdiction, grave abuse of discretion, error of law, fraud or collusion. 33

  • 33 San Miguel Corp. v. Sec'y of Labor, G.R. No. L-39195, 64 SCRA 56 (May 16, 1975) (Phil.). See also Meralco Sec. Indus. Corp. v. Cent. Bd. of Assessment Appeals, G.R.

No. L-46245, 114 SCRA 260 (May 31, 1982) (Phil.); Uy v. Palomar, G.R. No. L-23248,

27 SCRA

287

(Feb. 28, 1969)

(Phil.); Sotto v. Ruiz, G.R. No. L-17419, 41

PHIL. REP.

Administrative Rulemaking andAdjudicaion

Notwithstanding the inherent power of the courts to scrutinize the acts of administrative agencies on questions of law and jurisdiction, a party seeking judicial intervention to protect his rights adversely affected by agency action must satisfy the requirements imposed by the doctrines on standing to challenge, exhaustion of administrative remedies, and ripeness before the reviewing court can take cognizance of his case.

Without going into the intricacies of the law on standing, it can be

stated that the fundamental

idea

behind it is

that "one

who is

in fact

adversely affected by governmental action should have standing to

challenge that action if it is judicially reviewable. '

On the other hand,

the rule on exhaustion of administrative remedies, which applies to the

quasi-judicial function of the agency, 35 and the ripeness doctrine,

which

applies to its legislative or rulemaking function, share a common

ultimate objective which is the prevention of the premature resort to the courts. The exhaustion of administrative remedies gives the agency the opportunity to correct its own errors, while the observance of the ripeness doctrine seeks "to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by challenging parties. 36 The other major issue concerning the scope of judicial review brings

into

focus

the

substantial

evidence

rule

in

the

review

of

agency

decisions. Under this rule, if the findings of fact of agencies exercising quasi-judicial function are supported by substantial evidence, the courts

will no longer review such findings. The rule is based on the respect that the judiciary bestows on the specialized knowledge, skills, or expertise of

the agencies, which judges may not likely possess. In determining the substantiality of evidence, the Administrative Code of 1987 reflects the lesson learned from the American case of Universal Camera Cor. v. NLRB 3 7 that the entire record of the case must be considered as a whole. The code provides that "Review shall be made

on the basis of the record taken as

a whole. The findings of fact of the

agency when supported by substantial evidence shall be final except

  • 468 (S.C., Mar. 18, 1921).

    • 34 DAVIS, supra note 17, at 486.

    • 35 Smart Commc'ns, Inc. v. Nat'l Telecomms. Comm'n, G.R. No.151908, 408 SCRA

      • 678 (Aug. 12, 2003) (Phil.).

        • 36 Abbott Labs. v. Gardner, 387 U.S. 136, 148-149 (1967).

        • 37 340 U.S. 474 (1951).

CENTENNIAL LECTURES OF THE UP COLLEGE OFLAW

when specifically provided otherwise by law." 38

The application of the substantial

evidence rule

in

the

review

of

agency decisions effectively narrows down the scope of review into questions of law and jurisdiction. However, this does not preclude the courts from reviewing the evidence on record if the substantiality of the

evidence is questioned. It must be emphasized that a decision not based on substantial evidence is a violation of due process. Hence, raising a question on the substantiality of the evidence supporting the findings of fact of the agency, in effect, raises a question of law. A unique situation can arise concerning the application of the

substantial evidence rule. It must be emphasized that for evidence to be substantial, it need not be preponderant. Consequently, there is always the possibility that, in a given case, both sides may be supported by substantial evidence. When this happens, however the agency decides the case, its decision is supported by substantial evidence, which should preclude the court from reviewing its findings of fact.

In

the

area

of administrative

rulemaking, the courts assume a

posture of self-restraint and refuse to intervene unless, of course, the rules are challenged to be ultra vires or outside the scope of the rulemaking authority delegated to the agency or in cases where the rules are inconsistent with either the law or the constitution. This attitude of self-restraint simply follows the prevalent notion that policy making in general is non-judicial business.

VI

CONCLUSION

I started this lecture by saying that the emergence of administrative agencies with rulemaking and adjudication powers is a twentieth century phenomenon. The question to ask at this juncture is: will the rise of these agencies continue in the twenty first century? The obvious answer is a clear and resounding yes. Surely, the inadequacies of the traditional

executive, legislative, and judicial organs of the State in terms of lack of time, expertise, and organizational aptitude to effectively deal with the problems associated with the complexities of modern life will not

disappear in this century.

As

we

have

seen,

it

inadequacies which compelled

the

delegation

was

precisely

of

rulemaking

these

and

38

ADMINIsTRATIvE CODE, bk. VII, § 25(7), Exec. Ord. No. 292, as amended by Rep.

Act No. 6682 (Phil.).

Administrative Rulemaking andAdjudication

adjudication powers to administrative agencies. The stark reality, therefore, is that, as our society becomes even more complex in the coming years, reliance by the State on the regulatory agencies will definitely increase. The expected proliferation of regulatory agencies in the twenty first century is a foregone conclusion. Rulemaking and adjudication will rapidly increase. In all probability, the volume of rulemaking will be far greater than the expected volume of legislation in Congress. Rules and regulations of varying kinds and with the force and effect of law will practically cover most, if not all, of our activities as citizens of a more complex society. Accepting the inevitability of more administrative rulemaking and adjudication in the future should prompt us to adopt a perspective that will enable us not only to understand and appreciate the critical role of regulatory agencies in modern day governance but also to realize that the uncontrolled exercise of administrative power can run roughshod over our rights as citizens. It is in this light that the continuing effort to search for safeguards that could maximize fairness in the administrative process must be viewed. Although significant strides have been made in this direction, there is always room for innovative approaches and

strategies.

There is

no doubt

that

the

expertise

of regulatory agencies

has

substantially contributed to good governance. However, it is well to be

reminded that: "Unless

we make

the requirements

for administrative

action strict

and

demanding,

experise,

the

strength of modern

government, can become a monster which rules with no practical limits on its discretion. Absolute discretion, like corruption, marks the beginning of the end of liberty." 39 As stakeholders in the administrative process, we must, therefore, be vigilant to ensure that administrative rulemaking and adjudication be kept within legal bounds.

39 New York v. United States, 342 U.S. 882 (1951)

(Douglas, J., dissenting), dted in

Bernard Schwartz, CrucialAreas in Administrative Law, 34 GEO. WASH. L. REv. 401, 405

(1966).