Department of Finance vs. Asia United Bank, G.R. Nos. 240163 & 240168-69, December 1, 2021
Facts: Petitioner Department of Finance (DOF), through the Secretary of Finance, issued RR-42011
prescribing the rules on proper allocation of costs and expenses amongst income earning of banks and
other financial institutions for income tax reporting purposes. The respondent banks argued that the
regulations issued were without any basis in the Tax Code and encroached upon the power of the
Legislature. They filed a petition for a declaratory relief with the Regional Trial Court (RTC) of Makati
City, seeking to have RR No. 4-2011 declared null and void.
The RTC granted the petition and declared the regulations null and void for being issued beyond the
authority of the Secretary of Finance and the Commissioner of Internal Revenue.
Issue: Whether or not the RTC had jurisdiction over the petitions assailing the validity of Revenue
Regulations No. 4-2011.
2) Whether or not RR 4-2011 is valid.
Ruling: The Court ruled that RTC has no jurisdiction over the case. The Court held in Banco de Oro v.
Republic, that the CTA has jurisdiction to rule on constitutionality or validity of a tax law or regulation or
administrative issuance. Thus, the RTC should have acted upon the petition and should have dismissed
the same for lack of jurisdiction.
Anent the second issue, the Court held that RR 4-2011 is invalid. The Court clarified that the function of
promulgating rules and regulations may be legitimately exercised only for the purpose of carrying out
the provisions of the law into effect. Hence, administrative regulations cannot extend the law or amend
a legislative enactment, for settled is the rule that administrative issuances must not override, but must
remain consistent with the law they seek to apply and implement. They are intended to carry out, not
to supplant nor to modify the law. To underscore, it is only the Congress which has the power to repeal
or amend the law.
Here, without a doubt, the RR did not simply provide details for the enforcement of the provisions in the
Tax Code. Neither did it interpret the provisions of the Tax Code. Instead, RR 4-2011 modified what was
explicitly provided therein. This amounts to tax legislation which is a matter within the authority of the
legislative department only.
Cruz v. Youngberg, 56 Phil. 234
Petitioner Mauricio Cruz filed a petition before the Court of First Instance of Manila for the issuance of a
writ of mandatory injunction against the respondent, Stanton Youngberg, Director of the Bureau of
Animal Industry requiring him to issue a permit for the landing of ten large cattle for slaughter.
Petitioner Cruz assailed the constitutionality of Act No. 3155, which prohibits the importation of cattle
from foreign countries into the Philippine Islands.
Respondent demurred to the petition on the ground that it did not state facts sufficient to constitute a
cause of action. The demurred centered on two reasons:
1) That if Act No. 3155 were declared unconstitutional and void, the petitioner would not be
entitled to the relief demanded because Act. No. 3052 would automatically become effective
and would prohibit the respondent from giving the permit prayed for; and
2) That Act. No. 3155 was constitutional and, therefore, valid.
The court sustained the demurrer and dismissed the complaint.
ISSUES:
1. Whether or not Act. No. 3155 is unconstitutional.
2. Whether or not the lower court erred in not holding that the power given by Act. No 3155 to the
Governor-General to suspend or not, at his discretion, the prohibition provided in the act
constitutes an unlawful delegation of the legislative powers.
RULING:
No, the Court held that Act. No. 3155 is valid. The sole purpose of the said act was to protect the cattle
industry of the country and to prevent the introduction of cattle diseases through importation of foreign
cattle It is now generally recognized that the promotion of industries affecting the public welfare and
the development of the resources of the country are objects within the scope of the police power.
When Act. No 3155 was promulgated, there was a reasonable necessity, therefor it cannot be said that
the Legislature exceeded its power in passing the Act.
Anent the second issue, Jurisprudence provides that,” the true distinction, therefore is between the
delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and
conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the
law. The first cannot be done; to the latter no valid objection can be made.”
Romulo Mabanta vs. Home Development Mutual Fund
G.R. No. 131082
June 19, 2000
Petitioner Romulo Mabanta was exempted from the Pag-IBIG Fund coverage by respondent Home
Development Mutual Fund because of a superior retirement plan for the period January 1 to December
31, 1995. The HDMF Board of Trustees, issued Board Resolution No. 1011, Series of 1995 amending the
Rules and Regulations Implementing RA No. 7742. The petitioner filed an application for Waiver of
Suspension of Fund Coverage and attached a letter challenging the validity of the 1995 Amendments.
However, petitioner’s application was denied on the ground that there should be a clear use of “and/or”
and that the Rules are valid. Undaunted, petitioner filed a petition before the Court assailing the 1995
and 1996 Amendments to the rules and Regulations Implementing RA No. 7742 for being contrary to
law.
Issue: Whether or not the HDMF Board exceeded its rule-making power.
Ruling: Yes. The Court held that when the Board of Trustees of the HDMF required in Section 1, Rule VII
of the 1995 Amendments to the Rules and Regulations Implementing R.A. No. 7742 that employers
should have both provident/retirement and housing benefits for all its employees in order to qualify for
exemption from the fund, it effectively amended Section 19 of PD No. 1752. The Court, further held that
the HDMF cannot, in the exercise of its rule-make power, issue a regulation not consistent with the law
it seeks to apply. Indeed, administrative issuances must not override, supplant or modify the law, but
must remain consistent with the law they intend to carry out. Only Congress can repeal or amend the
law.
Lupangco vs. Court of Appeals
G.R. No. L-77372
April 29, 1988
Facts: Professional Regulation Commission (PRC), respondent, issued Resolution No. 105 as parts of its
“Additional Instructions to Examinees,” to all those applying for admission to take the licensure
examinations in accountancy. The provision bars examinees from attending review class, briefing, or
receive hand-out or review maters from lecturers, instructor officials, review centers or similar
institutions during the three days immediately preceding every examination day including examination
day. One who is caught committing the prohibited acts even without any ill motives will be barred from
taking future examinations conducted by the respondent PRC.
Reviewees, petitioners, filed a complaint before the RTC of Manila, Branch XXXII for injunction with a
prayer with the issuance of a writ of a preliminary injunction against respondent PRC to restrain the
latter from enforcing the above-mentioned resolution and to declare the same unconstitutional.
Respondent PRC filed a motion to dismiss on the ground that the lower court has no jurisdiction to
review and to enjoin the enforcement of its resolution. On appeal, the CA reversed the decision of the
lower court.
Issue: Whether or not the RTC is without jurisdiction to review and enjoin the enforcement of PRC’s
resolution.
Ruling: The Court held that the Regional Trial Court has jurisdiction to entertain Civil Case No. 86-37950
and enjoin the respondent PRC from enforcing its resolution. The Court found that there is no law
providing for the course of acting for a party who wants to question a ruling or order of the Professional
Regulation Commission. There is no provision in Presidential Decree No. 223, creating the Professional
Regulation Commission, that orders or resolutions of the Commission are appealable either to the CA or
the SC. Consequently, the case, which was filed in order to enjoin the enforcement of a resolution of
the respondent PRC alleged to be unconstitutional, should fall within the general jurisdiction of the
Court of First Instance, now the RTC.
The Court explained that in order to invoke the exclusive appellate jurisdiction of the Court of Appeals as
provided for in Section 9, paragraph 3 of B.P. Blg. 129, there has to be a final order or ruling which
resulted from proceedings wherein the administrative body involved exercised its quasi-judicial
functions. This does not cover rules and regulations of general applicability issued by the administrative
body to implement its purely administrative policies and functions like Resolution No. 105 which was
adopted by the respondent PRC as a measure to preserve the integrity of licensure examinations.
Anent the validity of Resolution No. 105, the Court found that it is not only unreasonable and arbitrary,
it also infringes on the examinees’ right to liberty guaranteed by the Constitution. Respondent PRC has
no authority to dictate on the reviewees as to how they prepare themselves for the licensure
examinations. They cannot be restrained from taking all the lawful steps needed to assure the
fulfillment of their ambition to become public accountants. They have every right to make use of their
faculties in attaining success in their endeavors.
De Jesus vs. Commission on Audit [G.R. No. 109023, August 12 1998]
Facts: Employees of the Local Water Utilities Administration (LWUA), herein petitioners, appealed to the
Commission on Audit, questioning the validity and enforceability of DBM-CCC No.10 discontinuing all
allowances and fringe benefits granted on top of basic salary.
Petitioners contended that DBM-CCC No. 10 is inconsistent with the provisions of Rep. Act 6758 (the law
it is supposed to implement) and, therefore, void. In addition, petitioners claimed that the said circular is
without force and effect because it was not published in the Official Gazette.
Issue: Whether or not DBM-CCC No.10 has legal force and effect notwithstanding the absence of
publication thereof in the Official Gazette.
Ruling: The Court ruled in the negative. Following the doctrine enunciated in Tanada, publication in the
Official Gazette or in a newspaper of general circulation in the Philippines is required. The Court held
that presidential decrees and executive orders promulgated by the President in the exercise of
legislative powers whenever the same are validly delegated by the legislature or, at present, directly
conferred by the Constitution. Administrative rules and regulations must also be published if their
purpose is to enforce or implement existing law pursuant to a valid delegation. Here, DBM-CCC No. 10 is
in the nature of an administrative circular the purpose of which is to enforce or implement an existing
law, therefore the government officials and employees concerned should be apprised and alerted by the
publication of subject circular in the Official Gazette or in a newspaper of general circulation in the
Philippines – to the end that they be given amplest opportunity to voice out whatever opposition they
may have, and to ventilate their stance on the matter. This approach is more in keeping with democratic
precepts and rudiments of fairness and transparency.
People vs. Maceren GR. No. L-32166
Facts: The accused were charged by a Constabulary investigator with having violated Fisheries
Administrative Order No. 84-1 due to electro fishing in the waters of Sta. Cruz. The said administrative
order was promulgated by the Secretary of Agriculture and Natural Resources and the Commissioner of
Fisheries under the old Fisheries Law and the law creating the Fisheries Commission. The Municipal
Court quashed the complaint and held that the law does not clearly prohibit electro fishing, hence, the
executive and judicial department cannot consider the same. On appeal, the CFI affirmed the dismissal.
Issue: Whether or not the administrative order penalizing electro fishing is valid.
Ruling: No. The Court held that the Secretary of Agriculture and Natural Resources and the
Commissioner of Fisheries exceeded their authority in issuing the administrative order. The old
Fisheries Law does not expressly prohibit electro fishing, and therefore both the Secretary of Agriculture
and Natural Resources and the Commissioner of Fisheries are powerless to penalize it. Had the
lawmaking body intended to punish electro fishing, a penal provision to that effect could have been
easily embodied in the old Fisheries Law.
Generally, what has been delegated cannot be delegated, like the Congress where legislative power is
delegated to them. One of the exceptions of this is subordinate legislation made by administrative
agencies. Under the theory of Administrative Law, what is delegated is in fact not “law-making” power,
but law-executing power.” Hence, administrative agencies have the power to fill up the details of a
statute passed by Congress in the course of its implementation.
Here, the act constitutes not only an excess of the regulatory power conferred upon the Secretary but
also an exercise of a legislative power which he does not have, and therefore the said provision is nul
and void and without effect.
Commissioner of Internal Revenue vs. Court of Appeals, G.R. No. 119761
Facts:
Fortune Tobacco Corporation is engaged in the manufacture of different brands of cigarettes such as
HOPE, MORE and CHAMPION. Since these products are listed in the World Tobacco Directory as
belonging to foreign companies, the position of Commissioner of Internal Revenue Bienvenido Tan, Jr.,
in his letter to Deputy Minister Ramon Diaz was to classify the said brands of cigarettes as foreign
brands subject to 55% ad valorem tax. However, Fortune Tobacco changed the names of Hope to Hope
Luxury and More to Premium More thereby removing the said brands from the foreign brand category.
About a month after the enactment and two (2) days prior the effectivity of RA 7654, Revenue
Memorandum Circular No. 37-93 (RMC 37-93), was issued by the BIR ruling that HOPE, MORE, and
CHAMPION manufactured by Fortune Tobacco Corporation are considered locally manufactured
cigarettes bearing a foreign brand subject to the 55% ad valorem tax on cigarettes.
Fortune Tobacco file a petition for review with the CTA, the latter upheld the position of Fortune
Tobacco and adjudged Revenue Memorandum Circular No. 37-93 to be defective, invalid and
unenforceable, such that when RA No. 7654 took effect on July 3, 1993, the brands in question were not
currently classified and taxed at 55% and were still classified as other locally manufacture cigarettes and
taxed at 45% or 20% as the case may be.
Issue: Whether or not RMC 37-93 issued by the BIR is valid.
Ruling: NO. The Court held that RMC 37-93 is not a valid administrative issuance. Prior to the issuance
of the questioned circular, Hope Luxury, Premium More, and Champion cigarettes were in the category
of locally manufactured cigarettes not bearing foreign brand subject to 45% ad valorem tax. Hence,
without RMC 37-93, the enactment of RA 7654, would have no new tax rate consequence on private
respondent’s products. Evidently, in order to place Hope Luxury, Premium More, and Champion
cigarettes within the scope of the amendatory law and subject to them to an increased tax rate, the now
disputed RMC 37-93 had to be issued. In so doing, the BIR not simply interpreted the law; verily it
legislated under its quasi-legislative authority. The due observance of the requirements of notice, of
hearing and of publication should not have been then ignored. The Court is convinced that the hastily
promulgated RMC 37-93 has fallen short of a valid and effective administrative issuance.
Philippine Consumers Foundation vs. Secretary of Education [ G.R. No. L-78385 August 31, 1987 ]
Facts:
The case hinges on the report submitted by the Task Force on Private Higher Education recommending
to the Department of Education, Culture and Sports (DECS) courses of action with respect to the
Government’s policy on increases in school fees for the school year 1987 to 1988. Thereafter, the DECS,
through the respondent Secretary of Education, Culture and Sports issued an Order authorizing among
others the 15% to 20% increase in school fees.
Herein petitioner Philippine Consumers Foundation, Inc. sought reconsideration of the said Order
claiming that the increases were too high. DECS modified its previous Order reducing the increases to a
lower ceiling of 10% to 15%, accordingly. The petitioner still opposed the Order in spite of the
reduction. The petitioner alleged that said Order was issued without any legal basis arguing that
authority of DECS to regulate school fees does not always include the power to increase the same.
Section 57 (3) of BP Blg. 232 (The Education Act of 1982), vests the DECS with the power to regulate the
education system; and Sec. 70 of the same act grants the DECS the power to issue rules which are
likewise necessary to discharge its functions and duties under the law.
Issue: Whether or not the fixing of school fees through department order by DECS is a valid delegation
of legislative power.
Ruling: YES. The Court held that the power granted to the educational department to regulate the
education system includes the power to prescribe school fees. No other government agency has been
vested with the authority to fix school fees as such, the power should be considered lodged with DECS if
it is to properly and effectively discharge its functions and duties under the law.