1 Jen 1-27

________________________________

2 Dave 27-53

______________________________________________________________

3 Fevie pp 53-77

________________________________________________________________

4 Mimi pp 78-103

IV. POWERS OF ADMINISTRATIVE AGENCIES

Source and Scope of Powers and Functions of Administrative Agencies

1. Constitution;
2. Legislation; or
3. Both Constitution and Legislation

● The powers of administrative agencies are limited by the statutes creating them to those
conferred expressly or by necessary or fair implication.

Makati Stock Exchange vs. Securities Stock Exchange

SEC resolved to deny Makati Stock Exchange permission to operate a stock exchange
unless it agreed not to list for trading since it already listed the Manila Stock Exchange.

HELD: It is fundamental that an administrative officer has only such powers as are
expressly granted to him by the statute, and those necessarily implied in the exercise thereof.
Thus, it has been held that where the licensing statute does not expressly or impliedly authorize
the officer in charge, he may not refuse to grant license simply on the ground that a sufficient
number of licenses to serve the needs of the public have already been issued.

Nature of Administrative Actions

The power and functions granted to and exercised by administrative agencies are: (R-A-I)
1. Rule-making (quasi-legislative power);
2. Adjudication (quasi-judicial power); and
3. Incidental Powers arising from administrative determination such as:
a. Investigating;
b. Supervising;
c. Prosecuting
d. Advising;
 e. Declaring; and
f. Informally adjudicating.

Administrative Rule-Making vs. Adjudication

Administrative Rule-making (Legislation) Administrative Adjudication

Consists of the issuance of rules and Refers to its end product called order, award, or
regulations decision

General applicability Specific situation, hence it is particular and

immediate

Prospective that it envisages the Present determination of rights, privileges and

promulgation of a rule or regulation generally duties as of a previous or present time or
applicable in the future occurrence.

May be taken cognizance of by the courts on Congress may require certain quasi-judicial
the first instance as part of their judicial agencies to first take cognizance of the case
power. before resort to judicial remedies may be
allowed.

**To take advantage of the special expertise

possessed by administrative agencies. (Doctrine
of primary administrative jurisdiction)

Necessary feasibility studies, inquiries, Different modes of administrative determination

consultations and recommendations with form an important part in the process, from
affected stakeholders and the general public investigation up until a final ruling is made.
must be undertaken.

V. QUASI-LEGISLATIVE POWER

● Also known as the power of subordinate legislation or administrative rule-making.

● Defined as authority delegated by the lawmaking body to the administrative body to adopt rules
and regulations intended to carry out the provisions of law and implement legislative policy.
● Legislative rule is in the nature of subordinate legislation, designed to implement a primary
legislation by providing the details thereof.
● Promulgation of regulations of general power, as a rule, does not require notice and hearing.
- XPN: where the legislature itself requires it and mandates that the regulation shall be
based on certain facts as determined at an appropriate investigation.
● Administrative rules and regulations must be germane to the objects and purposes of the law, and
be not in contradiction to, but in conformity with, the standards prescribed by law.
- Deemed to have the force and effect of the law.

Kinds of administrative rules and regulation (L-I-C)

1. Legislative Rule - in the nature of subordinate legislation and designed to implement primary
legislation by providing the details thereof.
2. Interpretative Rule - intended to interpret, clarify or explain existing statutory regulations under
which the administrative body operates.
 3. Contingent Rule - issued by an administrative authority based on the existence of certain facts or
things upon which the enforcement of the law depends.

Legislative Rules (Supplementary or Detailed Legislation)

● Rules and regulations issued by an administrative agency pursuant to a delegated authority to fix
“the details” in the execution or enforcement of a policy set out in the law itself.
● Referred to as the “filling of details” or “subjects… of less interest” to carry out policy laid down by
the lawmakers.
● Regulation should be germane to the objectives and purposes of the law.
● This Court accords great respect to the decisions and/or actions of the administrative authorities.
- Reasons: Doctrine of Separations of Powers; presumed knowledgeability and expertise
in the enforcement of laws and regulations entrusted to their jurisdiction
● Examples of IRRs:
- Rules and regulations implementing the Labor Code and other related Department
Orders
- BIR Revenue Regulation Nos. 4-2019 and 6-2019, IRR on Tax Amnesties on
Delinquencies and Estate Taxes (RA 11213)

Ople vs. Torres

Petitioner contends that AO No. 308, for the purpose of the establishment of a national
computerized identification reference system, requires a legislative act, that the issuance of AO
No. 308 by the President is an unconstitutional usurpation of the legislative powers of the
Congress.

HELD: AO No. 308 involves a subject that is not appropriate to be covered by an

administrative order. An administrative order is an ordinance issued by the President which
relates to specific aspects in the administrative operation of government. It must be in harmony
with the law and should be for the sole purpose of implementing the law and carrying out the
legislative policy.
It cannot be simplistically argued that AO No. 308 merely implements the Administrative
Code of 1987. It established for the first time a National Computerized Identification Reference
System. Such requires a delicate adjustment of various contending state policies - the primacy of
national security, the extent of privacy interest against dossier-gathering by the government, the
choice of policies, etc.

Under AO No. 308, a citizen cannot transact business with government agencies
delivering basic services to the people without the contemplated identification card. It is thus clear
as daylight that without the ID, a citizen will have the difficulty exercising his rights and enjoying
his privileges. Given this reality, the contention that AO No. 308 gives no right and imposes no
duty cannot stand.

CIR vs. CA (GR No. 108358, Jan. 20, 1995)

On August 22, 1986, EO No. 41 was promulgated declaring one-time tax amnesty on
unpaid income taxes, later amended to include estate and donor’s taxes and taxes on business,
for the taxable years 1981 to 1985. ROH Auto Products Philippines, Inc. availed of the amnesty,
filed such returns in October 1986 and November 1986 and paid the corresponding tax amnesty
dues. On August 13, 1986, ROH Auto Products received from the CIR an assessment for
deficiency income and business taxes for its fiscal years September 30, 1981 and September 30,
1982. The taxpayer contends that it availed itself of the tax amnesty, hence the deficiency tax
 notice should forthwith be canceled and withdrawn. CIR denied the request on the ground that
RMO No. 4-87, implementing EO No. 41, has construed the tax amnesty coverage to include only
assessments issued by the BIR after promulgation of the EO and not assessments theretofore
made.

HELD: It is fundamental that all such issuances must not override, but must remain
consistent and in harmony with, the law they seek to apply and implement. Administrative rules
and regulations are intended to carry out, neither to supplant nor to modify, the law. The law could
have simply provided in its exclusionary clauses if it did not intend to include the already
assessed tax liabilities from 1981 to 1985. Hence, the executive order has been designed to in
the nature of a general grant of tax amnesty subject only to the cases specifically excepted by it.

Interpretative Rules
● Rules and regulations issued by an administrative authority construing or interpreting the
provisions of a statute to be enforced and they are binding upon all concerned until they are
changed.
● Examples: Memorandum Circulars and Orders of the BIR and the BSP.

Legislative Rules vs. Interpretative Rules

Legislative Rules Interpretative Rules

As to Source Promulgated pursuant to its Promulgated pursuant to its

quasi-legislative/rule-making functions. quasi-judicial capacity.

As to Function Makes a new law with the force and effect Merely interprets a
of a valid law. pre-existing law.

As to binding effect So long as the procedure fixed for its At best merely advisory, for it
promulgation is followed and its scope is is the courts that finally
within the statutory authority granted by the determine what the law
legislature, even if the courts are not in means.
agreement with the policy stated therein.

As to publication Need publication. Need not be published.

As to notice and Notice and hearing required Notice and hearing are not
hearing necessary.

Victoria’s Milling Co. vs. Social Security Commission

FACTS: Social Security Commission issued Circular No. 22 stating that all employers in
computing the premiums due to the System, will take into consideration and include in the
employee’s remuneration all bonuses and overtime pay, as well as the cash value of other media
of remuneration. The petitioner protested against the circular as contradictory to a previous
Circular No. 7 that expressly excluded the overtime pay and bonus in the computation of the
employers’ and employees’ respective monthly premium contributions. The petitioner also
included the proper interpretation of the term “compensation” as contemplated in RA 1161 which
excepted from its definition the bonuses, allowances and overtime pay.
 ISSUE: W/N Circular No. 22 is a rule or regulation as contemplated in Sec. 4(a) of RA
1161.

HELD: RA No. 1972 changed the definition of “compensation” to “All remuneration for
employment include the cash value of any remuneration paid in any medium other than the cash
except that part of remuneration in excess of P500.00 received during the month.” It will thus be
seen that the exclusion on bonuses , allowances and overtime pay prior to the amendment was
deleted by the amendatory law. Circular No. 22 was, therefore, issued to apprise those
concerned of the interpretation or understanding of the Commission, of the law as amended,
which was its duty to enforce. It did not add any duty or detail that was not already in the law as
amended. It merely stated and circularized the opinion of the Commission as to how the should
be construed.
Circular No. 22 purports merely to advise employers-members of the System of what, in
light of the amendment of the law, they should include in determining the monthly compensation.
Such circular did not require presidential approval and publication in the Official Gazette for its
effectivity.

Philippine Blooming Mills (PBM) vs. Social Security System (SSS)

FACTS: The PBM employed 6 Japanese technicians from April 28, 1957 to October 26,
1958. It sent an inquiry to SSS whether these employees are subject to compulsory coverage
under the System. Following the SSS’ affirmative response, PBM paid the required premium
contributions for these employees from September 1957 until their termination in October 1958.
Upon the termination of their employment, PBM, on behalf of and as attorney-in-fact for the
Japanese technicians, sought a refund of the premiums paid, arguing that they were entitled to a
rebate per the original Rule I, Section 3(d) of the SSS Rules and Regulations.

The SSS denied the claim for a refund, leading to PBM filing a petition with the Social
Security Commission, which was also denied on the grounds that the rule granting rebate upon
departure had been amended before the employees’ departure, requiring membership in the
System for at least two years before a refund can be allowed.

HELD: The SC affirmed the decision of SSS. The question pertinent to this case now is
whether or not the appellants are bound by the amended Rules requiring membership for 2 years
before refund of the premium contributions may be allowed.

These rules and regulations were promulgated to provide guidelines to be observed in

the enforcement of the law. As a matter of fact, Sec. 3 of Rule I is merely an enumeration of the
“general principles to (shall) guide the Commission” in the determination of the extent or scope of
the compulsory coverage of the law. It is not here pretended, that the amendment of this Sec.
3(d) of Rule I, as to eliminate the provision granting to these aliens the right to a refund of part of
their premium contributions upon their departure from the Philippines, is not in implementation of
the law or beyond the authority of the Commission to do.

CIR vs. CA (GR No. 119761, Aug. 29, 1996)

FACTS: Revenue Memorandum Circular (RMC) No. 37-93 was issued by the BIR in view
of the issued raised whether “HOPE”, “MORE” and “CHAMPION” cigarettes which are locally
manufactured are appropriately considered as locally manufactured cigarettes bearing a foreign
brand. Said RMC determined that “Since there is no showing who among the above-listed
manufacturers of the cigarettes bearing the said brands are the real owner/s thereof, then it
follows that the same shall be considered foreign brand for the purposes of determining the ad
valorem tax pursuant to Sec. 142 of the NIRC. This led to assessment for ad valorem tax
deficiency to Fortune Tobacco Inc., amounting to P9.59M.
Petitioner CIR opines that RMC 37-98 is merely interpretative ruling of the BIR which can
thus become effective without any prior need for notice and hearing, nor publication, and that its
issuance is not discriminatory since it would apply under similar circumstances to all locally
manufactured cigarettes.

HELD: It should be understandable that when an administrative rule is merely

interpretative in nature, its applicability needs nothing further than its bare issuance for it gives no
real consequence more than what the law itself has already prescribed. When the administrative
rule goes beyond merely providing for the means that can facilitate or render least cumbersome
the implementation of the law but substantially adds to or increases the burden of those
governed, it behooves the agency to accord at least to those directly affected a chance to be
heard, and thereafter to be duly informed, before that new issuance is given force and effect of
law.

RMC 37-93 cannot be viewed simply as a corrective measure or merely as construing

Sec. 142(c)(1) of the NIRC, as amended. Prior to the issuance of the RMC, “Hope luxury”,
“Premium More” and “Champion” cigarettes were in the category of locally manufactured
cigarettes not bearing foreign brands subject to 45% ad valorem tax. Hence, without RMC 37-93,
the enactment of RA 7654, would have had no new tax rate consequence on private respondent’s
products. By issuing the said RMC to increase tax rate, BIR did not simply interpret 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.

GMA Network v. Commission on Elections

FACTS: COMELEC promulgated Resolution No. 9615 changing the interpretation of said
candidates’ and political parties’ airtime limitation for political campaigns or advertisements from a
“per station” basis to a “total aggregate” basis. Petitioners questioned the provisions of the
aforementioned Resolution, thus, the COMELEC held public hearings. Thereafter, Resolution No.
9631 was issued amending provisions of RA 9615. Petitioners still found its provisions
objectionable and oppressive. It constitutes restrictive regulation on allowable broadcast time,
which violates freedom of the press, impairs people’s roght to suffrage and right to information.

HELD: The COMELEC promulgated Res. No. 9615 on January 15, 2013 and conducted
public hearing only on January 31, 2013. This circumstance renders the new regulation
questionable. It must not be overlooked that the new Resolution introduced radical change in the
manner in which the rules on airtime for political advertisements are to be reckoned. As such,
there is a need for adequate and effective means by which they may be adopted, disseminated
and implemented. It is not enought that they be published - or explained - after they have been
adopted.

As enunciated in CIR vs. CA, GR No. 119761, Aug. 29, 1996, “It should be
understandable that when an administrative rule is merely interpretative in nature, its applicability
 needs nothing further than its bare issuance for it gives no real consequence more than what the
law itself has already prescribed. When the administrative rule goes beyond merely providing for
the means that can facilitate or render least cumbersome the implementation of the law but
substantially adds to or increases the burden of those governed, it behooves the agency to
accord at least to those directly affected a chance to be heard, and thereafter to be duly informed,
before that new issuance is given force and effect of law.”

For failing to conduct prior hearing before coming up with Res. No. 9615, new rule on
aggregate airtime is declared defective and ineffectual.
XXX

In Legislative Rules
● Court is free to make three inquiries:
1. Whether the rule is within the delegated authority of the administrative agency;
2. Whether it is reasonable; and
3. Whether it was issued pursuant to a proper procedure.
● The court is not free to substitute its judgment as to desirability or wisdom of the rule for the
legislative body has committed those questions to administrative judgements and not to judicial
judgements.

In Interpretative Rules
● inquiry is not into the validity but into the correctness or propriety of the rule.
● Court is free to:
1. Give the force of the law to the rule;
2. go to the opposite extreme and substitute its judgement; or
3. give some intermediate degree of authoritative weight to the interpretative rule.

_______________________________________________________________________
5 Jobelle pp 103-129

___________________________________________________________________________
6 Krisha pp 129 - 155

United States v. Santos

Facts: Sec 28 of Admin Order No. 2 was issued by the Secretary of Agriculture and Commerce
which states that boats not subject to license under Act 4003 and this order may fish within 3 km
of the shoreline of islands and reservations over which jurisdiction is exercised by naval or
military authorities of the US. The accused- appellee Santos is charged with having ordered his
fishermen to manage and operate the motor launches registered in his name and to fish, loiter,
and anchor within 3 km of the shoreline over which jurisdiction is exercised by naval and military
authorities of the US, without permission from the Secretary of Agriculture and Commerce.

Ruling:

● Act No. 4003 contains no similar provision prohibiting boats not subject to license from
fishing within 3 km of the shoreline of islands and reservations over which jurisdiction is
exercised by naval or military authorities of the US, without permission from the Secretary
of Agriculture.
● In as much as the only authority granted to the Secretary, by Sec 4 of Act No. 4003, is to
issue from time to time such instructions, orders, rules and regulations consistent with
said Act, as may be necessary and proper to carry into effect the provisions thereof and
for the conduct of proceedings arising under such provisions - Act No. 4003 contains no
provision similar to those contained in the conditional clause of Sec 28 AO No. 2.
● The conditional clause in question supplies a defect of the law, extending it. This is
equivalent to legislating on the matter, a power which has not been and cannot be
delegated to him, it being exclusively reserved to the then Philippine Legislature by Jones
Law, and now to the National Assembly by the Consti.
● Such an 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 said conditional clause is null and void and without effect.

PP v. Hon Maceren

Facts: On Mar 5, 1969, five accused were charged for violation of Fisheries AO No. 84-1. The
five accused resorted to electro fishing in the waters of Barrio San Pablo “using their own motor
banca, and electrocuting device locally known as censored with webbed copper wire on the tip
and with the use of these devices, catches fish thru electric current. The lower court held that
since the law does not clearly prohibit electro fishing, as contemplated in the Fisheries law, the
executive and judicial departments cannot consider it unlawful.

Ruling:

● Fisheries Law does not expressly punish “electro fishing”. Notwithstanding the silence of
the law, the Secretary of Agriculture and Natural Resources, upon the recommendation of
 the Commissioner of Fisheries promulgated Fisheries AO No. 84 prohibiting electro
fishing in all Philippine waters.
● Sec 2 of the AO provides that it is unlawful to engage in electro fishing in any portion of
the Philippines.
● It was amended by the Secretary by issuing Fisheries AO No. 84, by changing the
underlined above into “in freshwater fisheries in the PH, such as river, lakes, swamps,
dams, irrigation canals and other bodies of freshwater”
● The Secretary and the Commissioner exceeded their authority in issuing Fisheries AO
No. 84 & 84-1 and that those orders are not warranted under the Fisheries Commission,
RA 3512. The reason is that the Fisheries Law does not expressly prohibit electro fishing.
● As electro fishing is not banned under that law, the Secretary and the Commissioner are
powerless to penalize it. In other words, AO No. 84 & 84-1, in penalizing such are devoid
of any legal basis. Had the lawmaking body intended to punish such, a penal provision to
that effect could have been easily embodied in the old Fisheries Law.
● The lawmaking body cannot delegate to an executive official the power to declare what
acts should constitute an offense. It can authorize the issuance of regulations and the
imposition of the penalty provided for in the law itself (PP v. Exconde)

PP v. Que Po Lay

Facts: Que Po Lay was charged for violating Central Bank Circular No. 20 in connection with RA
265 for having failed to sell to the Central Bank his US dollars, US checks and US money orders
in his possession. The appeal is based on the claim that said circular was not published in the
Official Gazette prior to the act or omission imputed to the appellant, and that consequently, said
circular had no force and effect. It contended that Commonwealth Act 638 and Act 2930 bothe
require said circular to be published, it being an order or notice of general applicability.

Ruling:

● As a rule, circulars and regulations especially like the Circular No. 20 in question which
prescribes a penalty for its violation should be published before becoming effective, this,
on the general principle and theory that before the public is bound by its contents,
especially a penal provision, a law, regulation, or circular must first be published and the
people officially and specifically informed of said contents and penalties.
● Said circular, particularly its penal provision , did not have any legal effect and bound no
one until its publication in the Official Gazette.
● The appellant could not be held liable for its violation, for it was not binding at the time he
was found to have failed to sell the foreign exchange in his possession within one day ff
his taking possession thereof.

Pesigan v. Judge Angeles

Facts: Petitioner, a carabao dealer, transported 26 carabaos and a calf to Batangas. In spite of
the permit to transport, and four certificates, the carabaos were confiscated by the town’s police
 station commander and the provincial veterinarian. The confiscation was based on the EO No.
626- A xxx.

Ruling:

● Said EO should not be enforced against the Pesigans on April 2 1982 because xxx is a
penal regulation published more than 2 months later in the Official Gazette dated June 14
1982.
● It became effective only 15 days thereafter as provided in Art 2 of the CC and Sec 11 of
the Revised Administrative COde.
● The word “laws” in Art 2 of the CC includes circulars and regulations which prescribe
penalties.
● Publication is necessary to apprise the public of the contents of the regulations and make
the said penalties binding on the persons affected thereby.
● A violation of EO 626- A because of its confiscation and forfeiture provision or sanction
makes it a penal statute. Justice and fairness dictate that the public must be informed of
that provision by means of publication in the Gazette before violators of the EO can be
bound thereby.
● Sec 551 of the Revised Admin Code provides that even bureau “regulations and orders
shall become effective only when approved by the Department Head and published in the
Official Gazette or otherwise publicly promulgated”. In this case, the head of the Public
Affairs Office of the Ministry of Agriculture was unaware of EO No. 626-A. The Pesigans
could not have been expected to be cognizant of such an EO.

Necessity of Notice and Hearing

● If the nature of the administrative agency is essentially legislative, the requirements of notice and
hearing are not necessary.
● Necessity depends on the character of the proceeding and the circumstances involved.
○ GR: 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.
○ EXC: 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.

No notice & hearing not necessary: When the rules laid down by an
administrative agency are meant to apply to all enterprises of a given kind
throughout the PH, they may partake of a legislative character.

Notice & hearing necessary: When the rules or rates apply exclusively to a
particular party, predicated upon the finding of fact, which fact was denied by said
party, in making said finding of fact, said agency performed a quasi-judicial
character.
● The power to fix or limit the rates or charges exacted by public service corporations may be
conferred upon administrative authorities without involving any unlawful delegation of legislative
power.
● The only standard which the legislature must prescribe for the guidance of the administrative
authorities is that the rate be reasonable and just. Even in the absence of an express requirement
as to reasonableness, this standard may be implied.

Case: Vigan Electric

v. Public Service Commission
Facts: Petitioner objected to reduction of rates without a hearing, alleging that its rates could only
be reduced only if proven by evidence to be excessive.

Ruling: Although the rule-making power and even the power to fix rates – when such rules
and/or rates are meant to apply to all enterprises of a given kind throughout the Philippines – may
partake of a legislative character. Since compliance with law must be presumed, it should be
assumed that petitioner’s current rates were fixed by respondent after proper notice and hearing.
Hence, modification if such rates cannot be made, over petitioner’s objection, without such notice
and hearing. Wherefore, we hold that the determination of the issue involved in the order
complained of partakes of the nature of a quasi- judicial function and that having been issued
without previous notice and hearing said order is clearly violative of the due process clause and,
hence null and void.

Philippine Consumers Foundation v. The Secretary of DECS

Facts: DepEd, Culture and Sports (DECS) issued an order authorizing increase in school fees as
recommended by the Task Force. Petitioner maintains that the questioned DO was issued in
violation if the due process clause of the Constitution in as much as the petitioner was not given
due notice and hearing before the said DO was issued.

Ruling:
● The function of prescribing rates by an administrative agency may be either a legislative
or an adjudicative function. If it were a legislative function, the grant of prior notice and
hearing to the affected parties is not a requirement of due process. As regards rates
prescribed by an administrative agency in the exercise of its quasi- judicial function, prior
notice and hearing are essential to the validity of such rules.
● When the rules and/or rates laid down by an administrative agency are meant to apply to
alle enterprises of a given kind throughout the country, they may partake of a legislative
character.
● Where the imposed apply exclusively to a particular party, based upon a finding of fact,
then its function is quasi-judicial in character.
● The issuance of the DO by the DECS is in the exercise of its legislative function. The
assailed DO prescribes the maximum school fees that may be charged by all private
schools in the country for school year 1987- 1988. This being so, prior notice and hearing
are not essential to the validity of its issuance.

PHILCOMSAT v. Alcuaz
Facts: Petitioner seeks to annul and set aside an Order issued by the Commissioner of the NTC
directing the provisional reduction of the rates which may be charged by petitioner for certain
specified lines of its services by 15% with the reservation to make further reductions later.
Petitioner submits that the questioned order violates procedural due process because it was
issued motu proprio, without notice to petitioner and without the benefit of a hearing. Petitioner
argues that the function involved in the rate fixing- power of NTC is adjudicatory and hence quasi-
judicial, not quasi-legislative; thus, notice and hearing are necessary, and the absence thereof
results in a violation of due process.

Ruling:
● The order in question which was issued by the NTC no doubt contains all the attributes of
a quasi-judicial adjudication. Foremost is the fact that said order pertains exclusively to
petitioner and to no other.
● We are, therefore, inclined to lend greater credence to petitioner’s ratiocination that an
immediate reduction in its rated would adversely affect its operations and the quality of its
service to the public considering the maintenance requirements, the projects it still has to
undertake, and the financial outlay involved.

Freedom from Debt Coalition et. al

v. Energy Regulatory Commission
Facts: MERALCO filed with the Energy Regulatory Commission (ERC) an Application for an
increase in rates and for grant of a provisional authority to implement the increase according to
the schedule attached to its Application. Petitioners opposed said application and some filed
Motions for Production of Documents. The ERC, without first resolving such motion, and
apparently without considering Lualhati’s Opposition, issued an Order provisionally approving
MERALCO’s ex parte application for rate increases. Petitioners questioned such provisional
approval of the ERC.

Ruling:
● Section 4(e), Rule 3 of the IRR does not require the conduct of a hearing prior to the
issuance of a provisional order. However, reading the aforementioned provisions of the
Public Service Act, the ERB Charter and the IRR in relation to one another, as they
should be read, the inexorable conclusion is that the provisional order cannot be issued
under the circumstances based exclusively on the application and supporting documents
thereof.
● The IRR explicitly requires, as a prerequisite to such issuance, that the ERC consider
also the comments of the consumers and the LGUs concerned on the application which
were filed within 30 days from their receipt of a copy of the application or the publication
thereof.
● If after the 30th day, no comments are filed by concerned parties, then and only then may
the ERC, if it deems proper under the circumstances, issue a provisional order on the
basis of the application and its supporting documents.
● The validity of the IRR including Sec 4(e) under Rule 3 thereof, is not in dispute. The IRR
was crafted by the DOE in consultation with relevant government agencies in accordance
with its mandate under the EPIRA.
● It is settled that an administrative agency possesses the power to issue rules and
regulations to implement the statute which it is tasked to enforce, unless another agency
is the one so authorized by the law as in the case of the EPIRA.
● So long as the rules and regulations are germane to the objects and purposes of the law
and conform to the standards prescribed thereby, they are deemed to have the force and
effect of law.
 ● The challenged provisions violate a couple of new requirements by the IRR:
1) the need to publish the application in a newspaper of general circulation
in the locality where the applicant operates; and
2) the need for ERC to consider the comments or pleadings of the
customers and LGU concerned in its action on the application or motion
for provisional rate adjustment.

● Indeed, the requirements address the right of the consuming public to due process and at
the same advance the cause of people empowerment which is also a policy goal of the
EPIRA along with consumer protection.

National Association of Electricity Consumers for Reforms et. al

v. Energy Regulation Commission

Facts: Petitioners NASECORE et al. seeks to nullify the June 2, 2004, ERC Order for the
approval of MERALCO’s unbundled rates, for lack of requisite publication of respondent
MERALCO’s amended application, thereby depriving the petitioners of procedural due process,
particularly the lack of publication of respondent MERALCO’s amended application for the
increase of its generation charge in violation of Sec 4(e) Rule 3 of the IRR of the EPIRA or RA
9136.

Ruling:
● The lack of publication of respondent MERALCO’s amended application for the increase
of its generation charge is fatal. By this omission, the consumers were deprived of the
right to file their comments thereon.
● The assailed order issued by the ERC was made without giving the consumers any
opportunity to file their comments in violation of Sec 4(e) Rule 3 of the IRR of the EPIRA.
● The consumers have the right to be informed of the based of respondent MERALCO’s
amended application for the increase of its generation charge in order to, if they so
desire, effectively contest the same.
● The requirement of publication in applications for rate adjustments is ancillary to the due
process requirement of notice and hearing. Its purpose is not merely to inform the
consumers that an application for rate adjustment has been filed by the public utility. It is
adequately inform them that an application has been made for the adjustment of the rates
being implemented by the public utility in order to afford them the opportunity to be heard
and submit their stand as to the propriety and reasonableness of the rates within the
period allowed by the Rule.
● The ERC is not precluded from promulgating rules, guidelines or methodology, such as
the GRAM, for the recovery by the distribution utilities of their fuel and purchased power
costs.
● However, these rules, guidelines or methodology so adopted should conform to the
requirements of pertinent laws, including Sec 4(e) Rule 3 of the IRR of the EPIRA.

In the absence of any specification by law, Book VII, Chapter 2 Sec 9 of the Revised Administrative Code
of 1987 provides for a mechanism to allow public participation in rule-making, to provide and afford
interested parties the opportunity to submit their views prior to the adoption of any rule.
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7 Euni