III. POWERS AND FUNCTIONS OF ADMINISTRATIVE AGENCIES: QUASI-LEGISLATIVE OR RULE-MAKING FUNCTION OF ADMINISTRATIVE AGENCIES

Question 1

What is the rule and what are the standards when it comes to Congress’s delegation of power to the Executive Branch?

Answer 1

Congress may delegate to another branch of Government the power to fill in the details in the execution, enforcement or administration of law.

Requisites:

1. Clear Policy (Completeness) – whether the statute was complete in all its terms and provisions when it left the hands of the legislature so that nothing was left to the judgment of any other appointee or delegate of the legislature.
2. Fixed standard (Sufficient Standard) – must lay down the rule or definite standard by which the administrative officer or board may be guided in the exercise of the discretionary powers delegated to it; Standard may be expressed or implied from the policy and purpose of the law considered as a whole

Question 2

Can the legislative branch delegate legislative power (law-making power)?

Answer 2

NO. If the act within itself does not define a crime and is not complete, and some legislative act remains to be done to make it law or a crime, the doing of which is vested in the Governor-General, the delegation of legislative power is unconstitutional and void.
The legislature cannot delegate its power to make a law. [United States v. Ang Tang Ho, G.R. No. 17122, 27 February 1922]

What cannot be delegated is the authority under the Constitution to make laws and to alter and repeal them; the test is the completeness of the statute in all its terms and provisions when it leaves the hands of the legislature. [Edu v. Ericta, supra]

Question 3

What are the rules when it comes to the delegation of matters of detail and the power to ascertain facts by the legislative branch?

Answer 3

The general rule, however, is limited by another rule that to a certain extent matters of detail may be left to be filled in by rules and regulations to be adopted or promulgated by executive officers and administrative boards. As a rule, an act of the legislature is incomplete and hence invalid if it does not lay down any rule or definite standard by which the administrative board may be guided in the exercise of the discretionary powers delegated to it.

The power to ascertain facts is such a power which may be delegated. There is nothing essentially legislative in ascertaining the existence of facts or conditions as the basis of the taking into effect of a law. That is a mental process common to all branches of the government. [People of the Philippine Islands, et al. v. Vera, G.R. No. L-45685, 16 November 1937]

Question 4

Can the President create municipal corporations?

Answer 4

NO.

The President cannot create/alter boundaries of/or change names of barrios or municipalities except by an act of Congress.
The authority to create municipal corps. is legislative. [Pelaez v. Auditor General, G.R. No. L-23825, 24 December 1965]

Question 5

How can unlawful delegation be avoided?

Answer 5

“To avoid the taint of unlawful delegation, there must be a standard, which implies at the very least that the legislature itself determines matters of principle and lays down fundamental policy. Otherwise, the charge of complete abdication may be hard to repel.

A standard thus defines legislative policy, marks its limits, maps out its boundaries and specifies the public agency to apply it. It indicates the circumstances under which the legislative command is to be effected. It is the criterion by which legislative purpose may be carried out. [Agustin v. Edu, et al., G.R. No. L-49112, 2 February 1979]

Question 6

What is required of delegation in relation to the purpose of the law?

Answer 6

It is well established in this jurisdiction that, while the making of laws is a non-delegable activity that corresponds exclusively to Congress, nevertheless the latter may constitutionally delegate authority to promulgate rules and regulations to implement a given legislation and effectuate its policies…All that is required is that the regulation should be germane to the objects and purposes of the law; that the regulation be not in contradiction with it; but conform to the standards that the law prescribes.’”

Delegation is most commonly indicated where the relations to be regulated are highly technical or where their regulation requires a course of continuous decision.” [Free Telephone Workers Union v. Minister of Labor and Employment, G.R. No. L-58184, 30 October 1981]

Question 7

What are the specific standards for the delegation of rate-fixing power?

Answer 7

In case of a delegation of rate-fixing power, the only standard which the legislature is required to prescribe for the guidance of the administrative authority is that the rate be reasonable and just. However, it has been held that even in the absence of an express requirement as to reasonableness, this standard may be implied.

The inherent power and authority of the State, or its authorized agent, to regulate the rates charged by public utilities should be subject always to the requirement that the rates so fixed shall be reasonable and just. A commission has no power to fix rates which are unreasonable or to regulate them arbitrarily. [Philippine Communications Satellite Corporation v. Alcuaz, et. al, G.R. No. 84818, 18 December 1989]

Question 8

What are the specific situations when legislative power may be delegated?

Answer 8

(1) Delegation of tariff powers to the President under Section 28(2) of Article VI of the Constitution;
(2) Delegation of emergency powers to the President under Section 23 (2) of Article VI of the Constitution;
(3) Delegation to the people at large;
(4) Delegation to local governments; and
(5) Delegation to administrative bodies. [Defensor-Santiago v. COMELEC, G.R. No. 127325 (1997) (non-delegation issue only)]

Question 9

Can the President amend the functions of an executive agency on their own?

Answer 9

NO.
Section 20, Title I of Book III of EO 292 speaks of other powers vested in the President under the law. The exercise of the President’s residual powers under this provision requires legislation, as the provision clearly states that the exercise of the President’s other powers and functions has to be “provided for under the law”. There is no law granting the President the power to amend the functions of the CHED. The President may not amend RA 7722 through an Executive Order without a prior legislation granting her such power. [Review Center Association of the Philippines v. Ermita, 583 SCRA 428 (2009)]

Question 10

Doctrine of Qualified Political Agency

Answer 10

Qualified political agency – heads of departments
are alter ego of the President, their acts are
presumed to be acts of the President until
repudiated

Question 11

Permissible Delegation: Ascertainment of Facts

Answer 11

Applying that principle, authorizations given by Congress to selected instrumentalities for the purpose of ascertaining the existence of facts to which legislation is directed have constantly been sustained. Moreover the Congress may not only give such authorizations to determine specific facts, but may establish primary standards, devolving upon others the duty to carry out the declared legislative policy; that is, as Chief Justice Marshall expressed it, “to fill up the details” under the general provisions made by the Legislature [Panama Refining Co. Ryan, supra]

Question 12

Can a non-judicial officer declare the existence of facts in order to support enforcement of a law?

Answer 12

YES.

“The mere fact that an officer is required by law to inquire the existence of certain facts and to apply the law thereto in order to determine what his official conduct shall be and the fact that these acts may affect private rights do not constitute an exercise of judicial powers. Accordingly, a statute may give to non-judicial officers the power to DECLARE the existence of facts which call into operation its provisions, and similarly may grant to commissioners and other subordinate officers power to ASCERTAIN and DETERMINE appropriate facts as a basis for procedure in the enforcement of particular laws.” [Lovina v. Moreno, G.R. No. L-178221, Nov. 29, 1963; 9 SCRA 557 (1963)]

Question 13

Is the authority to fill in details of the law legislative in nature?

Answer 13

NO.

It may confer an authority in relation to the execution of a law which may involve discretion, but such authority must be exercised under and in pursuance of the law. The Legislature must declare the policy of the law and fix the legal principles which are to control in given cases; but an administrative officer or body may be invested with the power to ascertain the facts and conditions to which the policy and principles apply.

Question 14

The rules of the Administrative Code do not apply to these bodies:

Answer 14

1. Congress
2. Judiciary
3. Constitutional Commissions
4. Military establishments exclusively related to Armed Forces personnel
5. Board of Pardons and Parole
6. State universities and colleges

SECTION 1. Scope.—This Book shall be applicable to all agencies as defined in the next succeeding section, except the Congress, the Judiciary, the Constitutional Commissions, military establishments in all matters relating exclusively to Armed Forces personnel, the Board of Pardons and Parole, and state universities and colleges.

Question 15

Agency vs. Person

Answer 15

SECTION 2. Definitions.—As used in this Book:

(1) “Agency” includes any department, bureau, office, commission, authority or officer of the National Government authorized by law or executive order to make rules, issue licenses, grant rights or privileges, and adjudicate cases; research institutions with respect to licensing functions; government corporations with respect to functions regulating private right, privileges, occupation or business; and officials in the exercise of disciplinary power as provided by law.
(6) “Person” includes an individual, partnership, corporation, association, public or private organization of any character OTHER than an agency.

Question 16

Define “Rule”

Answer 16

(2) “Rule” means any agency statement of GENERAL APPLICABILITY that IMPLEMENTS or INTERPRETS a law, fixes and describes the procedures in, or practice requirements of, an agency, including its regulations. The term includes memoranda or statements concerning the internal administration or management of an agency not affecting the rights of, or procedure available to, the public.

Question 17

Define “Rate”

Answer 17

(3) “Rate” means any charge to the public for a service open to all and upon the same terms, including individual or joint rates, tolls, classifications, or schedules thereof, as well as commutation, mileage, kilometerage and other special rates which shall be imposed by law or regulation to be observed and followed by any person.

Question 18

What must agencies do for every rule adopted?

Answer 18

Agencies must file with the UP Law Center every rule adopted.

SECTION 3. Filing.—(1) Every agency shall file with the University of the Philippines Law Center THREE (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months from that date shall not thereafter be the basis of any sanction against any party or persons.

(2) The records officer of the agency, or his equivalent functionary, shall carry out the requirements of this section under pain of disciplinary action.
(3) A permanent register of all rules shall be kept by the issuing agency and shall be open to public inspection.

Question 19

What are the exceptions to the 15-day effectivity of rules adopted by administrative agencies?

Answer 19

1. Law
2. Cases of imminent danger to public health, safety, and welfare which must be expressed in a statement accompanying the rule

SECTION 4. Effectivity.—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

Question 20

How often must publication of rules adopted take place?

Answer 20

Quarterly

SECTION 5. Publication and Recording.—The University of the Philippines Law Center shall:

(1) Publish a quarterly bulletin setting forth the text of rules filed with it during the preceding quarter; and
(2) Keep an up-to-date codification of all rules thus published and remaining in effect, together with a complete index and appropriate tables.

Question 21

Public participation in terms of rules adopted by administrative agencies

Answer 21

SECTION 9. Public Participation.—(1) If not otherwise required by law, an agency shall, as far as practicable, publish or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the adoption of any rule.

Rates must be published two weeks before hearing:
(2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published in a newspaper of general circulation at least two (2) weeks before the first hearing thereon.

(3) In case of opposition, the rules on contested cases shall be observed.

Question 22

What happens when a regulation is inconsistent with law?

Answer 22

Therefore, if the law does not give the Commissioner the power to review and revise unappealed decisions of the Collector of Customs in seizure cases, then the memorandum order even if duly approved and published in the Official Gazette, would equally have no effect for being inconsistent with law. [Syman v. Jacinto, 93 Phil 1093 (1953)]

Question 23

Can an administrative body dictate which acts are punishable as crimes?

Answer 23

NO.

The law itself cannot be extended.
The rule-making power must be confined to details for regulating the mode or proceeding to carry into effect the law as it has been enacted. A violation or infringement of a rule or regulation validly issued can constitute a crime punishable as provided in the authorizing statute and by virtue of the latter.

“to declare what shall constitute a crime and how it shall be punished is a power vested exclusively in the legislature, and it may not be delegated to any other body or agency”. [People v. Maceren, G.R. No. L-32166, Oct. 18, 1977; 79 SCRA 450]

The power of administrative agencies is thus confined to implementing the law or putting it into effect. Corollary to this is that administrative regulations cannot extend the law and amend a legislative enactment, for settled is the rule that administrative regulations must be in harmony with the provisions of the law
[Land Bank of the Philippines v. Court of Appeals, et al., 249 SCRA 149 (1995)
]

Question 24

When will the presumption of regularity for administrative orders not suffice?

Answer 24

WHEN A RIGHT IS VIOLATED

And we now hold that when the integrity of a fundamental right is at stake, this court will give the challenged law, administrative order, rule or regulation a stricter scrutiny. It will not do for the authorities to invoke the presumption of regularity in the performance of official duties. Nor is it enough for the authorities to prove that their act is not irrational for a basic right can be diminished, if not defeated, even when the government does not act irrationally. They must satisfactorily show the presence of compelling state interests and that the law, rule, or regulation is narrowly drawn to preclude abuses. [Ople vs. Torres, 293 SCRA 141 (1998)]

Question 25

What are the requisites when it comes to administrative Interpretative Rules and Regulationss?

Answer 25

To be valid, the administrative IRRs must comply with the following requisites (SPAR):
(1) Its promulgation must be authorized by the Legislature;
(2) It must be within the scope of the authority given by the Legislature;
(3) It must be promulgated in accordance with the prescribed procedure; and
(4) It must be reasonable.
[Lokin, Jr. v. COMELEC, 621 SCRA 385 (2010]

Question 26

What is the general rule and exception when it comes to publication of rules and regulations?

Answer 26

General Rule: Publish rules of general applicability/local application/. ‘… all statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity date is fixed by the legislature… publication must be in full or it is no publication at all since its purpose is to inform the public of the contents of the laws.’

Exception: No need to publish rules of specific applicability. ‘…no publication is required of the instructions issued by, say, the Minister of Social Welfare on the case studies to be made in petitions for adoption or the rules laid down by the head of a government agency on the assignments or workload of his personnel or the wearing of office uniforms.’

Question 27

What is the effect of lack of publication?

Answer 27

Lack of proper publication results in suspension of implementation pending compliance with the statutory requirements of publication and filing. [De Jesus v. Commission on Audit, 294 SCRA 152 (1998)

Both the requirements of publication and filing of administrative issuances intended to enforce existing laws are mandatory for the effectivity of said issuances. [Republic v. Pilipinas Shell Petroleum Corporation, 550 SCRA 680 (2008)]

Question 28

What is the requirement for penal regulations in order for them to be effective?

Answer 28

PUBLICATION

Circulars and regulations, especially like Circular No. 20 of the Central Bank which prescribes a penalty for its violation, should be published before becoming effective. Before the public may be bound by its contents, especially its penal provisions, a law, regulation or circular must be published and the people officially and specifically informed of said contents and its penalties.

Question 29

Principle of subordinate legislation

Answer 29

While the making of laws is a non-delegable power that pertains exclusively to Congress, nevertheless, the latter may constitutionally delegate the authority to promulgate rules and regulations to implement a given legislation and effectuate its policies, for the reason that the legislature finds it impracticable, if not impossible, to anticipate situations that may be met in carrying the law into effect…

Exception: Unless by express provision of the Act or by implication it has been withheld.”

Question 30

Requirements and limits to rate-fixing power

Answer 30

There is a legal presumption that the fixed rates are reasonable, and it must be conceded that the fixing of rates by the Government, through its authorized agents, involves the exercise of reasonable discretion and, unless there is an abuse of that discretion, the courts will not interfere.

Although the fixing of rates is a legislative and governmental power over which the Government has complete control, it has no power to fix rates that are unreasonable or to regulate them arbitrarily, and that as to whether a given rate is fair and reasonable is a judicial question over which the courts have complete control.

In case of a delegation of rate-fixing power, the only standard which the legislature is required to prescribe for the guidance of the administrative authority is that the rate be reasonable and just. However, it has been held that even in the absence of an express requirement as to reasonableness, this standard may be implied. [Phil. Communications Satellite Corp. v. Alcuaz, 180 SCRA 218 (1989)]

Question 31

Theories on what constitutes a reasonable rate

Answer 31

1. Net earnings
2. Original Cost
3. Cost of reproduction
4. Outstanding capitalization
5. Present value

In addition to what is known as the net earnings rule, there are four different theories of ascertaining what constitutes a reasonable rate, each of which is supposed to give a fair return on the reasonable value of the property. First, the original cost; second, cost of reproduction; third, outstanding capitalization; and, fourth, present value. [Ynchausti Co. v. Public Utility Commission, 42 Phil 621 (1922)]

Question 32

What is the general rule and exception/s when it comes to withdrawal, suspension, revocation, or annullment of licenses

Answer 32

GR: No license may be withdrawn, suspended, revoked or annulled without notice and hearing.

EXC:

(1) In cases of willful violation of pertinent laws, rules and regulations OR
(2) When public security, health, or safety require otherwise,

Question 33

Non-expiration of license

Answer 33

SECTION 18. Non-expiration of License.—Where the licensee has made timely and sufficient application for the renewal of a license with reference to any activity of a continuing nature, the existing license shall not expire until the application shall have been finally determined by the agency.

Question 34

Characteristics of licenses

Answer 34

1. A license or a permit is not a contract between the sovereignty and the licensee or permittee, as to which the constitutional prescription against impairment of the obligation of contracts may extend.
2. A license is rather in the nature of a special privilege of a permission or authority to do what is within its terms.
3. A license is not in any way vested, permanent or absolute.
4. A license granted by the State is always revocable.
5. The absence of an expiry date in a license does not make it perpetual. Notwithstanding that absence, the license cannot last beyond the life of the basic authority under which it was issued. [Gonzalo Sy Trading v. Central Bank of the Philippines, G.R. No. 41480, 30 1976]

Question 35

Explain filing vs. publication with regard to the effectivity of the rules and regulations

Answer 35

Administrative rules and regulations must be published if their purpose is to enforce or implement existing law pursuant to a valid delegation. Publication in the Official Gazette or a newspaper of general circulation is a condition sine qua non before statutes, rules or regulations can take effect.

Publication contemplated for the effectivity of the law does not refer to FILING with the ONAR, but rather the publication in the official gazette or a newspaper of GENERAL CIRCULATION. [Republic v. EXPRESS Telecommunications Co.]

Question 36

What is the effect of lack of publication and/or filing with ONAR of administrative issuances?

Answer 36

Administrative issuances which are not published or filed with the ONAR are ineffective and may not be enforced. In this case, Memorandum Circular No. 98-17 had not been registered with the ONAR when the order of suspension was issued. [GMA Network, Inc. v. Movie & Television Review Classification Board]

Question 37

What is the general rule, exception, and requirements for a valid penal regulation?

Answer 37

General Rule: Rules must not provide penal sanctions.

Exception: A violation or infringement of a rule or regulation validly issued can constitute a crime punishable as provided in the authorizing statute and by virtue of the latter [People v. Maceren].

For an administrative regulation to have the force of penal law:

1. The violation of the administrative regulation must be made a crime by the delegating statute itself; and
2. The penalty for such violation must be provided by the statute itself [Perez v. LPG Refillers Association of the Philippines, Inc., citing U.S. v. Panlilio].

Penal laws and regulations imposing penalties must be published before it takes effect [People v. Que Po Lay].

Question 38

Administrative interpretation and its requirements

Answer 38

Administrative interpretation is at best merely advisory; it is the courts that finally determine what the law means. [Victorias v Social Security Commission]

General Requirements of Interpretive Rules:

1. Must have been issued on authority of law;
2. Must be within the scope and purview of law; and
3. Must be reasonable.

Question 39

Can an administrative agency delegate its functions?

Answer 39

YES

The power conferred upon an administrative agency to issue rules and regulations necessary to carry out its functions has been held to be an adequate source of authority to delegate a particular function, unless by express provision of the Act or by implication it has been withheld. [Realty Exchange Venture Corp. v. Sendino]

Question 40

Rate-fixing power: is it quasi-legislative or quasi-judicial?

Answer 40

Generally, the power to fix rates is a quasi-legislative function, i.e., it is meant to apply to all. However, it becomes quasi-judicial when the rate is applicable only to a particular party, predicated upon a finding of fact [PHILCOMSAT v. Alcuaz, citing Vigan Electric Light Co. v. Public Service Commission].

Question 41

When is notice and hearing required for the validity of administrative action?

Answer 41

As a general rule that notice and hearing are not essential to the validity of administrative action where the administrative body acts in the exercise of executive, administrative, or legislative functions; but where a public administrative body acts in a judicial or quasi-judicial matter, and its acts are particular and immediate rather than general and prospective, the person whose rights or property may be affected by the action is entitled to notice and hearing.
The inherent power and authority of the State, or its authorized agent, to regulate the rates charged by public utilities should be subject always to the requirement that the rates so fixed shall be reasonable and just. [PHILCOMSAT v. Alcuaz]

Question 42

When are notice and hearing required in licensing?

Answer 42

When it is required by law (ex. contested cases).

Otherwise, it can be dispensed with (e.g., driver’s licenses) [Sec. 2, Chapter 1, Book VII, Admin. Code].

Question 43

Compromise and Arbitration in Administrative Proceedings

Answer 43

Book VII, Sections 10-15,

Administrative Code of 1987
Section 10. Compromise and Arbitration. – To expedite administrative proceedings involving conflicting rights or claims and obviate expensive litigations, every agency shall, in the public interest, encourage amicable settlement, comprise and arbitration.

Question 44

Notice and Hearing in Contested Cases

Answer 44

Book VII, Section 11. Notice and Hearing in Contested Cases. –

1. In any contested case all parties shall be entitled to notice and hearing. The notice shall be served at least five (5) days before the date of the hearing and shall state the date, time and place of the hearing.
2. The parties shall be given opportunity to present evidence and argument on all issues. If not precluded by law, informal disposition may be made of any contested case by stipulation, agreed settlement or default.
3. The agency shall keep an official record of its proceedings.