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Republic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. 138298 August 24, 2001

RAOUL B. DEL MAR,petitioner,vs.

PHILIPPINE AMUSEMENT AND GAMING CORPORATION, BELLE JAI-ALAI CORPORATION,

FILIPINAS GAMING ENTERTAINMENT TOTALIZATOR CORPORATION, respondents.

x---------------------------------------------------------x

G.R. No. 138982 August 24, 2001

FEDERICO S. SANDOVAL II and MICHAEL T. DEFENSOR,petitioners,

vs.

PHILIPPINE AMUSEMENT AND GAMING CORPORATION, respondent.JUAN MIGUEL ZUBIRI, intervenor.

R E S O L U T I O N

VITUG, J.:

In it's decision, dated 29 November 2000, the Court granted petitions filed by Raoul B. Del Mar, Federico S.

Sandoval 11 and Michael T. Defensor to enjoin the Philippine Amusement and Gaming Corporation(PAGCOR), Belle Jai-Alai Corporation (BELLE) and Filipinas Gaming Entertainment Totalizator Corporation

(FILGAME) from operating, maintaining or managing jai-alai games and from enforcing the 17th

June 1999

Agreement entered into among said respondents for that purpose.1

The ponenciapenned by Justice Reynato S. Puno, concurred in by Chief Justice Hilario G. Davide, Jr., and

Justices Jose A.R. Melo, Artemio V. Panganiban, Bernardo P. Pardo, Arturo B. Buena, Minerva P. Gonzaga-Reyes and Consuelo Ynares-Santiago, enucleated that PAGCOR was bereft of any franchise to operate,

maintain or manage jai-alai games whether by itself alone or in conjunction with its co-respondents. The

dissenting opinion of Justice Sabino R. de Leon, Jr., subscribed to by Justices Josue N. Bellosillo, Santiago M.

Kapunan and Leonardo A. Quisumbing, stated that PAGCOR had a valid franchise to conduct jai-alai gamesand had likewise the authority under that franchise to maintain, operate or manage jai-alai games through and in

association with its co-respondents BELLE and FILGAME pursuant to their agreement. The separate opinionof Justice Jose c. Vitug, shared by Justice Vicente V. Mendoza, expressed the view that the franchise accorded

to PAGCOR was broad enough to authorize it to operate sports and gaming pools, inclusive of jai-alai, thatauthority, however, did not allow it to contract any part of that franchise to its co-respondents BELLE and

FILGAME.

The subsequent motion for reconsideration were resolved in the Court's resolution of 19 June 2001, in this wise;viz:

"Acting on the motions for reconsideration filed by public respondent Philippine Amusement andGaming Corporation (PAGCOR) and private respondents Belle Jai-Alai Corporation (BELLE), and

Filipinas Gaming Entertainment Totalizator Corporation (FILGAME), seeking to reverse the court'sDecision dated November 29, 2000, only seven (7) justices, namely, Josue Bellosillo, Jose Melo,
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Santiago Kapunan, Leonardo Quisumbing, Consuelo Y. Santiago, Sabino de Leon and AngelinaGutierrez voted to grant the motions. For lack of required number of votes, the said motions for

reconsideration are denied. The opinions of Justices Puno, Melo, Vitug and De Leon are herewith madepart of this resolution."

Respondents have sought from the Court a clarification of the foregoing resolution.

During the deliberations of the Court culminating in the promulgation of its 19th

June 2001 resolution, the

justices voted thusly: (a) Chief Justice Hilario G. Davide, Jr., and Justices Reynato S. Puno, Artemio V.Panganiban, Bernardo P. Pardo and Minerva P. Gonzaga-Reyes held that PAGCOR had no valid franchise and

that, therefore, it had no authority to operate, maintain or manage jai-alai games, either by itself or inassociation with any other entity; (b) Justices Josue N. Bellosillo, Jose A.R. Melo, Santiago M. Kapunan,

Leonardo A. Quisumbing, Consuelo Ynares-Santiago, Sabino R. de Leon, Jr., and Angelina Sandoval-Gutierrezconcluded that PAGCOR had a valid franchise to conduct jai-alai games and that it could operate, maintain or

manage such games by itself or in association with BELLE and FILGAME conformably with their agreement;while (c) Justices Jose C. Vitug, Vicente V. Mendoza and Arturo B. Buena maintained that PAGCORalone

could operate, maintain or manage jai-alai games but that it could not contract, either directly or indirectly, anyof such activities to entities, including BELLE and FILGAME, which were not themselves holders of a valid

franchise.

In fine, the results of voting on the issues raised in the motions for reconsideration, can be summed up thusly:

On the issue of whether PAGCOR itself has a valid franchise to conduct jai-alai games, five members ofthe Court (Chief Justice Hilario G. Davide, Jr., and Justices Reynato S. Puno, Artemio V. Panganiban, Bernardo

P. Pardo, and Minerva P. Gonzaga-Reyes) have voted in the negative and ten members of the Court (JusticesJosue N. Bellosillo, Jose A. R. Melo, Jose C. Vitug, Vitug, Vicente V. Mendoza, Santiago M. Kapunan,

Leonardo A. Quisumbing, Arturo B. Buena, Consuelo Ynares-Santiago, Sabino R. De Leon, Jr. and AngelinaSandoval-Gutierrez) have voted in the affirmative; and on the issue of whether PAGCOR can operate,

maintain or manage jai-alai games in association with Belle and Filgame according to their assailedagreement, only seven members of the Court (Justices Josue N. Bellosillo, Jose A. R. Melo, Santiago M.

Kapunan, Leonardo A. Quisumbing, Consuelo Ynares-Santiago, Sabino R. De Leon, Jr., and Angelina

Sandoval-Gutierrez) have voted in the affirmative; while eight members of the Court have voted in the negativefive justices (Chief Justice Hilario G. Davide, Jr., and Justices Reynato S. Puno, Artemio V. Panganiban,Bernardo P. Pardo, and Minerva P. Gonzaga-Reyes) have voted in the negative on the thesis that PAGCOR has

no franchise to operate, maintain, or manage jai-alai, and three justices (Justices Jose C. Vitug, Vicente V.Mendoza, and Arturo B. Buena) have voted in the negative on the ground that only PAGCORby itself, not with

any other person or entity, can operate, maintain, or manage jai-alai games.

WHEREFORE, acting on the instant motions for clarification filed by respondents and on the basis of theresults of the voting heretofore elucidated, the Court resolves (a) to partially GRANT the motions for

clarification insofar as it is prayed that Philippine Amusement and Gaming Corporation (PAGCOR) has a validfranchise to, but only by itself(i.e., not in association with any other person or entity), operate, maintain and/or

manage the game of jai-alai, and (b) to DENY the motions insofar as respondents would also seek areconsideration of the Court's decision of 29 November 2000 that has, since then, (i) enjoined the continued

operation, maintenance, and/or management of jai-alai games by PAGCORin association with its co-respondents Belle Jai-Alai Corporation and/or Filipinas Gaming Entertainment Totalizator Corporation and (ii)

held to be without force and effect the agreement of 17 June 1999 among said respondents.

SO ORDERED.1wphi1.nt

Davide, Jr., C.J., Bellosillo, Melo, Puno, Kapunan, Mendoza, Panganiban, Quisumbing, Pardo, Buena,

Gonzaga-Reyes, Ynares-Santiago, De Leon, Jr., and Sandoval-Gutierrez, JJ., concur.


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Footnote:

1The dispositive portion of the decision reads:

"WHEREFORE, the petitions are GRANTED. Respondents PAGCOR, Belle Jai alai

Corporation and Filipinas Gaming Entertainment Totalizator Corporation are ENJOINED from

managing, maintaining and operating jai-alai games, and from enforcing the agreement enteredinto by them for that purpose." (p. 42, Decision.)


SUPREME COURTManila

FIRST DIVISION

G.R. No. 84811 August 29, 1989

SOLID HOMES, INC., petitioner,vs.TERESITA PAYAWAL and COURT OF APPEALS, respondents.

CRUZ, J .:

We are asked to reverse a decision of the Court of Appeals sustaining the jurisdiction of the Regional

Trial Court of Quezon City over a complaint filed by a buyer, the herein private respondent, againstthe petitioner, for delivery of title to a subdivision lot. The position of the petitioner, the defendant inthat action, is that the decision of the trial court is null and void ab initio because the case shouldhave been heard and decided by what is now called the Housing and Land Use Regulatory Board.

The complaint was filed on August 31, 1982, by Teresita Payawal against Solid Homes, Inc. beforethe Regional Trial Court of Quezon City and docketed as Civil Case No. Q-36119. The plaintiffalleged that the defendant contracted to sell to her a subdivision lot in Marikina on June 9, 1975, forthe agreed price of P 28,080.00, and that by September 10, 1981, she had already paid thedefendant the total amount of P 38,949.87 in monthly installments and interests. Solid Homessubsequently executed a deed of sale over the land but failed to deliver the corresponding certificate

of title despite her repeated demands because, as it appeared later, the defendant had mortgagedthe property in bad faith to a financing company. The plaintiff asked for delivery of the title to the lotor, alternatively, the return of all the amounts paid by her plus interest. She also claimed moral andexemplary damages, attorney's fees and the costs of the suit.

Solid Homes moved to dismiss the complaint on the ground that the court had no jurisdiction, thisbeing vested in the National Housing Authority under PD No. 957. The motion was denied. Thedefendant repleaded the objection in its answer, citing Section 3 of the said decree providing that "theNational Housing Authority shall have exclusive jurisdiction to regulate the real estate trade andbusiness in accordance with the provisions of this Decree." After trial, judgment was rendered in favor
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of the plaintiff and the defendant was ordered to deliver to her the title to the land or, failing this, torefund to her the sum of P 38,949.87 plus interest from 1975 and until the full amount was paid. Shewas also awarded P 5,000.00 moral damages, P 5,000.00 exemplary damages, P 10,000.00attorney's fees, and the costs of the suit. 1

Solid Homes appealed but the decision was affirmed by the respondent court, 2which also beratedthe appellant for its obvious efforts to evade a legitimate obligation, including its dilatory tactics duringthe trial. The petitioner was also reproved for its "gall" in collecting the further amount of P 1,238.47

from the plaintiff purportedly for realty taxes and registration expenses despite its inability to deliverthe title to the land.

In holding that the trial court had jurisdiction, the respondent court referred to Section 41 of PD No.957 itself providing that:

SEC. 41. Other remedies.-The rights and remedies provided in this Decree shall be in addition to any and

all other rights and remedies that may be available under existing laws.

and declared that "its clear and unambiguous tenor undermine(d) the (petitioner's) pretension that thecourt a quo was bereft of jurisdiction." The decision also dismissed the contrary opinion of the

Secretary of Justice as impinging on the authority of the courts of justice. While we are disturbed bythe findings of fact of the trial court and the respondent court on the dubious conduct of the petitioner,we nevertheless must sustain it on the jurisdictional issue.

The applicable law is PD No. 957, as amended by PD No. 1344, entitled "Empowering the NationalHousing Authority to Issue Writs of Execution in the Enforcement of Its Decisions Under PresidentialDecree No. 957." Section 1 of the latter decree provides as follows:

SECTION 1. In the exercise of its function to regulate the real estate trade and business and in addition toits powers provided for in Presidential Decree No. 957, the National Housing Authority shall haveexclusive jurisdiction to hear and decide cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer againstthe project owner, developer, dealer, broker or salesman; and

C. Cases involving specific performance of contractuala statutory obligations filed by buyers ofsubdivision lot or condominium unit against the owner, developer, dealer, broker or salesman. (Emphasissupplied.)

The language of this section, especially the italicized portions, leaves no room for doubt that"exclusive jurisdiction" over the case between the petitioner and the private respondent is vested notin the Regional Trial Court but in the National Housing Authority. 3

The private respondent contends that the applicable law is BP No. 129, which confers on regional trialcourts jurisdiction to hear and decide cases mentioned in its Section 19, reading in part as follows:

SEC. 19. Jurisdiction in civil cases.-Regional Trial Courts shall exercise exclusive original jurisdiction:

(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over


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which is conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit TrialCourts;

xxx xxx xxx

(8) In all other cases in which the demand, exclusive of interest and cost or the value of the property incontroversy, amounts to more than twenty thousand pesos (P 20,000.00).

It stresses, additionally, that BP No. 129 should control as the later enactment, having beenpromulgated in 1981, after PD No. 957 was issued in 1975 and PD No. 1344 in 1978.

This construction must yield to the familiar canon that in case of conflict between a general law and aspecial law, the latter must prevail regardless of the dates of their enactment. Thus, it has been heldthat-

The fact that one law is special and the other general creates a presumption that the special act is to beconsidered as remaining an exception of the general act, one as a general law of the land and the otheras the law of the particular case.

4

xxx xxx xxx

The circumstance that the special law is passed before or after the general act does not change theprinciple. Where the special law is later, it will be regarded as an exception to, or a qualification of, theprior general act; and where the general act is later, the special statute will be construed as remaining anexception to its terms, unless repealed expressly or by necessary implication.

5

It is obvious that the general law in this case is BP No. 129 and PD No. 1344 the special law.

The argument that the trial court could also assume jurisdiction because of Section 41 of PD No. 957,earlier quoted, is also unacceptable. We do not read that provision as vesting concurrent jurisdiction

on the Regional Trial Court and the Board over the complaint mentioned in PD No. 1344 if onlybecause grants of power are not to be lightly inferred or merely implied. The only purpose of thissection, as we see it, is to reserve. to the aggrieved party such other remedies as may be provided byexisting law, like a prosecution for the act complained of under the Revised Penal Code. 6

On the competence of the Board to award damages, we find that this is part of the exclusive powerconferred upon it by PD No. 1344 to hear and decide "claims involving refund and any other claimsfiled by subdivision lot or condominium unit buyers against the project owner, developer, dealer,broker or salesman." It was therefore erroneous for the respondent to brush aside the well-takenopinion of the Secretary of Justice that-

Such claim for damages which the subdivision/condominium buyer may have against the owner,developer, dealer or salesman, being a necessary consequence of an adjudication of liability for non-performance of contractual or statutory obligation, may be deemed necessarily included in the phrase"claims involving refund and any other claims" used in the aforequoted subparagraph C of Section 1 ofPD No. 1344. The phrase "any other claims" is, we believe, sufficiently broad to include any and all claimswhich are incidental to or a necessary consequence of the claims/cases specifically included in the grantof jurisdiction to the National Housing Authority under the subject provisions.

The same may be said with respect to claims for attorney's fees which are recoverable either byagreement of the parties or pursuant to Art. 2208 of the Civil Code (1) when exemplary damages areawarded and (2) where the defendant acted in gross and evident bad faith in refusing to satisfy theplaintiff 's plainly valid, just and demandable claim.


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xxx xxx xxx

Besides, a strict construction of the subject provisions of PD No. 1344 which would deny the HSRC theauthority to adjudicate claims for damages and for damages and for attorney's fees would result inmultiplicity of suits in that the subdivision condominium buyer who wins a case in the HSRC and who isthereby deemed entitled to claim damages and attorney's fees would be forced to litigate in the regularcourts for the purpose, a situation which is obviously not in the contemplation of the law. (Emphasissupplied.)

7

As a result of the growing complexity of the modern society, it has become necessary to create moreand more administrative bodies to help in the regulation of its ramified activities. Specialized in theparticular fields assigned to them, they can deal with the problems thereof with more expertise anddispatch than can be expected from the legislature or the courts of justice. This is the reason for theincreasing vesture of quasi-legislative and quasi-judicial powers in what is now not unreasonablycalled the fourth department of the government.

Statutes conferring powers on their administrative agencies must be liberally construed to enablethem to discharge their assigned duties in accordance with the legislative purpose. 8 Following thispolicy in Antipolo Realty Corporation v. National Housing Authority, 9 the Court sustained thecompetence of the respondent administrative body, in the exercise of the exclusive jurisdiction vested

in it by PD No. 957 and PD No. 1344, to determine the rights of the parties under a contract to sell asubdivision lot.

It remains to state that, contrary to the contention of the petitioner, the case of Tropical Homes v.National Housing Authority 10 is not in point. We upheld in that case the constitutionality of theprocedure for appeal provided for in PD No. 1344, but we did not rule there that the National Housing

Authority and not the Regional Trial Court had exclusive jurisdiction over the cases enumerated inSection I of the said decree. That is what we are doing now.

It is settled that any decision rendered without jurisdiction is a total nullity and may be struck down atany time, even on appeal before this Court. 11 The only exception is where the party raising the issue

is barred by estoppel,12

which does not appear in the case before us. On the contrary, the issue wasraised as early as in the motion to dismiss filed in the trial court by the petitioner, which continued toplead it in its answer and, later, on appeal to the respondent court. We have no choice, therefore,notwithstanding the delay this decision will entail, to nullify the proceedings in the trial court for lack of

jurisdiction.

WHEREFORE, the challenged decision of the respondent court is REVERSED and the decision ofthe Regional Trial Court of Quezon City in Civil Case No. Q-36119 is SET ASIDE, without prejudice tothe filing of the appropriate complaint before the Housing and Land Use Regulatory Board. No costs.

SO ORDERED.


SUPREME COURTManila

EN BANC

G.R. No. 159796 July 17, 2007

ROMEO P. GEROCHI, KATULONG NG BAYAN (KB) and ENVIRONMENTALIST CONSUMERS

NETWORK, INC. (ECN), Petitioners,


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vs.

DEPARTMENT OF ENERGY (DOE), ENERGY REGULATORY COMMISSION (ERC), NATIONAL

POWER CORPORATION (NPC), POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT

GROUP (PSALM Corp.), STRATEGIC POWER UTILITIES GROUP (SPUG), and PANAY

ELECTRIC COMPANY INC. (PECO), Respondents.

D E C I S I O N

NACHURA, J.:

Petitioners Romeo P. Gerochi,Katulong Ng Bayan (KB), and Environmentalist Consumers Network, Inc.

(ECN) (petitioners), come before this Court in this original action praying that Section 34 of Republic Act (RA)9136, otherwise known as the "Electric Power Industry Reform Act of 2001" (EPIRA), imposing the Universal

Charge,1and Rule 18 of the Rules and Regulations (IRR)

2which seeks to implement the said imposition, be

declared unconstitutional. Petitioners also pray that the Universal Charge imposed upon the consumers be

refunded and that a preliminary injunction and/or temporary restraining order (TRO) be issued directing therespondents to refrain from implementing, charging, and collecting the said charge.

3The assailed provision of

law reads:

SECTION 34. Universal Charge.Within one (1) year from the effectivity of this Act, a universal charge tobe determined, fixed and approved by the ERC, shall be imposed on all electricity end-users for the following

purposes:

(a) Payment for the stranded debts4in excess of the amount assumed by the National Government and

stranded contract costs of NPC5and as well as qualified stranded contract costs of distribution utilities

resulting from the restructuring of the industry;

(b) Missionary electrification;6

(c) The equalization of the taxes and royalties applied to indigenous or renewable sources of energy vis-

-vis imported energy fuels;

(d) An environmental charge equivalent to one-fourth of one centavo per kilowatt-hour (P0.0025/kWh),which shall accrue to an environmental fund to be used solely for watershed rehabilitation and

management. Said fund shall be managed by NPC under existing arrangements; and

(e) A charge to account for all forms of cross-subsidies for a period not exceeding three (3) years.

The universal charge shall be a non-bypassable charge which shall be passed on and collected from all end-

users on a monthly basis by the distribution utilities. Collections by the distribution utilities and the TRANSCOin any given month shall be remitted to the PSALM Corp. on or before the fifteenth (15th) of the succeeding

month, net of any amount due to the distribution utility. Any end-user or self-generating entity not connected toa distribution utility shall remit its corresponding universal charge directly to the TRANSCO. The PSALM

Corp., as administrator of the fund, shall create a Special Trust Fund which shall be disbursed only for thepurposes specified herein in an open and transparent manner. All amount collected for the universal charge shall

be distributed to the respective beneficiaries within a reasonable period to be provided by the ERC.

The Facts

Congress enacted the EPIRA on June 8, 2001; on June 26, 2001, it took effect.7
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On April 5, 2002, respondent National Power Corporation-Strategic Power Utilities Group8(NPC-SPUG) filed

with respondent Energy Regulatory Commission (ERC) a petition for the availment from the Universal Charge

of its share for Missionary Electrification, docketed as ERC Case No. 2002-165.9

On May 7, 2002, NPC filed another petition with ERC, docketed as ERC Case No. 2002-194, praying that theproposed share from the Universal Charge for the Environmental charge of P0.0025 per kilowatt-hour (/kWh),

or a total of P119,488,847.59, be approved for withdrawal from the Special Trust Fund (STF) managed byrespondent Power Sector Assets and

Liabilities Management Group (PSALM)10

for the rehabilitation and management of watershed areas.11

On December 20, 2002, the ERC issued an Order12in ERC Case No. 2002-165 provisionally approving thecomputed amount of P0.0168/kWh as the share of the NPC-SPUG from the Universal Charge for Missionary

Electrification and authorizing the National Transmission Corporation (TRANSCO) and Distribution Utilities tocollect the same from its end-users on a monthly basis.

On June 26, 2003, the ERC rendered its Decision13

(for ERC Case No. 2002-165) modifying its Order of

December 20, 2002, thus:

WHEREFORE, the foregoing premises considered, the provisional authority granted to petitioner NationalPower Corporation-Strategic Power Utilities Group (NPC-SPUG) in the Order dated December 20, 2002 is

hereby modified to the effect that an additional amount of P0.0205 per kilowatt-hour should be added to theP0.0168 per kilowatt-hour provisionally authorized by the Commission in the said Order. Accordingly, a total

amount of P0.0373 per kilowatt-hour is hereby APPROVED for withdrawal from the Special Trust Fundmanaged by PSALM as its share from the Universal Charge for Missionary Electrification (UC-ME) effective

on the following billing cycles:

(a) June 26-July 25, 2003 for National Transmission Corporation (TRANSCO); and

(b) July 2003 for Distribution Utilities (Dus).

Relative thereto, TRANSCO and Dus are directed to collect the UC-ME in the amount of P0.0373 per kilowatt-

hour and remit the same to PSALM on or before the 15th day of the succeeding month.

In the meantime, NPC-SPUG is directed to submit, not later than April 30, 2004, a detailed report to include

Audited Financial Statements and physical status (percentage of completion) of the projects using the prescribedformat.1avvphi1

Let copies of this Order be furnished petitioner NPC-SPUG and all distribution utilities (Dus).

SO ORDERED.

On August 13, 2003, NPC-SPUG filed a Motion for Reconsideration asking the ERC, among others,14

to setaside the above-mentioned Decision, which the ERC granted in its Order dated October 7, 2003, disposing:

WHEREFORE, the foregoing premises considered, the "Motion for Reconsideration" filed by petitioner

National Power Corporation-Small Power Utilities Group (NPC-SPUG) is hereby GRANTED. Accordingly, theDecision dated June 26, 2003 is hereby modified accordingly.

Relative thereto, NPC-SPUG is directed to submit a quarterly report on the following:
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1. Projects for CY 2002 undertaken;

2. Location

3. Actual amount utilized to complete the project;

4. Period of completion;

5. Start of Operation; and

6. Explanation of the reallocation of UC-ME funds, if any.

SO ORDERED.15

Meanwhile, on April 2, 2003, ERC decided ERC Case No. 2002-194, authorizing the NPC to draw up toP70,000,000.00 from PSALM for its 2003 Watershed Rehabilitation Budget subject to the availability of funds

for the Environmental Fund component of the Universal Charge.16

On the basis of the said ERC decisions, respondent Panay Electric Company, Inc. (PECO) charged petitioner

Romeo P. Gerochi and all other end-users with the Universal Charge as reflected in their respective electric billsstarting from the month of July 2003.

17

Hence, this original action.

Petitioners submit that the assailed provision of law and its IRR which sought to implement the same are

unconstitutional on the following grounds:

1) The universal charge provided for under Sec. 34 of the EPIRA and sought to be implemented underSec. 2, Rule 18 of the IRR of the said law is a tax which is to be collected from all electric end-users and

self-generating entities. The power to tax is strictly a legislative function and as such, the delegation of

said power to any executive or administrative agency like the ERC is unconstitutional, giving the sameunlimited authority. The assailed provision clearly provides that the Universal Charge is to bedetermined, fixed and approved by the ERC, hence leaving to the latter complete discretionary

legislative authority.

2) The ERC is also empowered to approve and determine where the funds collected should be used.

3) The imposition of the Universal Charge on all end-users is oppressive and confiscatory and amounts

to taxation without representation as the consumers were not given a chance to be heard andrepresented.

18

Petitioners contend that the Universal Charge has the characteristics of a tax and is collected to fund theoperations of the NPC. They argue that the cases

19invoked by the respondents clearly show the regulatory

purpose of the charges imposed therein, which is not so in the case at bench. In said cases, the respective

funds20

were created in order to balance and stabilize the prices of oil and sugar, and to act as buffer tocounteract the changes and adjustments in prices, peso devaluation, and other variables which cannot be

adequately and timely monitored by the legislature. Thus, there was a need to delegate powers to administrativebodies.21Petitioners posit that the Universal Charge is imposed not for a similar purpose.

On the other hand, respondent PSALM through the Office of the Government Corporate Counsel (OGCC)contends that unlike a tax which is imposed to provide income for public purposes, such as support of the
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government, administration of the law, or payment of public expenses, the assailed Universal Charge is leviedfor a specific regulatory purpose, which is to ensure the viability of the country's electric power industry. Thus,

it is exacted by the State in the exercise of its inherent police power. On this premise, PSALM submits thatthere is no undue delegation of legislative power to the ERC since the latter merely exercises a limited authority

or discretion as to the execution and implementation of the provisions of the EPIRA.22

Respondents Department of Energy (DOE), ERC, and NPC, through the Office of the Solicitor General (OSG),share the same view that the Universal Charge is not a tax because it is levied for a specific regulatory purpose,

which is to ensure the viability of the country's electric power industry, and is, therefore, an exaction in theexercise of the State's police power. Respondents further contend that said Universal Charge does not possess

the essential characteristics of a tax, that its imposition would redound to the benefit of the electric powerindustry and not to the public, and that its rate is uniformly levied on electricity end-users, unlike a tax which is

imposed based on the individual taxpayer's ability to pay. Moreover, respondents deny that there is unduedelegation of legislative power to the ERC since the EPIRA sets forth sufficient determinable standards which

would guide the ERC in the exercise of the powers granted to it. Lastly, respondents argue that the impositionof the Universal Charge is not oppressive and confiscatory since it is an exercise of the police power of the State

and it complies with the requirements of due process.23

On its part, respondent PECO argues that it is duty-bound to collect and remit the amount pertaining to the

Missionary Electrification and Environmental Fund components of the Universal Charge, pursuant to Sec. 34 ofthe EPIRA and the Decisions in ERC Case Nos. 2002-194 and 2002-165. Otherwise, PECO could be held liableunder Sec. 46

24of the EPIRA, which imposes fines and penalties for any violation of its provisions or its IRR.

25

The Issues

The ultimate issues in the case at bar are:

1) Whether or not, the Universal Charge imposed under Sec. 34 of the EPIRA is a tax; and

2) Whether or not there is undue delegation of legislative power to tax on the part of the ERC.26

Before we discuss the issues, the Court shall first deal with an obvious procedural lapse.

Petitioners filed before us an original action particularly denominated as a Complaint assailing the

constitutionality of Sec. 34 of the EPIRA imposing the Universal Charge and Rule 18 of the EPIRA's IRR. Nodoubt, petitioners have locus standi. They impugn the constitutionality of Sec. 34 of the EPIRA because they

sustained a direct injury as a result of the imposition of the Universal Charge as reflected in their electric bills.

However, petitioners violated the doctrine of hierarchy of courts when they filed this "Complaint" directly with

us. Furthermore, the Complaint is bereft of any allegation of grave abuse of discretion on the part of the ERC orany of the public respondents, in order for the Court to consider it as a petition for certiorari or prohibition.

Article VIII, Section 5(1) and (2) of the 1987 Constitution27

categorically provides that:

SECTION 5. The Supreme Court shall have the following powers:

1. Exercise original jurisdiction over cases affecting ambassadors, other public ministers and consuls,and overpetitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus.

2. Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the rules of court may

provide, final judgments and orders of lower courts in:
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(a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law,presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.

But this Court's jurisdiction to issue writs ofcertiorari, prohibition, mandamus, quo warranto, and habeas

corpus, while concurrent with that of the regional trial courts and the Court of Appeals, does not give litigantsunrestrained freedom of choice of forum from which to seek such relief.28It has long been established that this

Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts,or where exceptional and compelling circumstances justify availment of a remedy within and call for the

exercise of our primary jurisdiction.29This circumstance alone warrants the outright dismissal of the presentaction.

This procedural infirmity notwithstanding, we opt to resolve the constitutional issue raised herein. We are aware

that if the constitutionality of Sec. 34 of the EPIRA is not resolved now, the issue will certainly resurface in thenear future, resulting in a repeat of this litigation, and probably involving the same parties. In the public interest

and to avoid unnecessary delay, this Court renders its ruling now.

The instant complaint is bereft of merit.

TheFirst Issue

To resolve the first issue, it is necessary to distinguish the States power of taxation from the police power.

The power to tax is an incident of sovereignty and is unlimited in its range, acknowledging in its very nature nolimits, so that security against its abuse is to be found only in the responsibility of the legislature which imposes

the tax on the constituency that is to pay it.30

It is based on the principle that taxes are the lifeblood of thegovernment, and their prompt and certain availability is an imperious need.

31Thus, the theory behind the

exercise of the power to tax emanates from necessity; without taxes, government cannot fulfill its mandate ofpromoting the general welfare and well-being of the people.

32

On the other hand, police power is the power of the state to promote public welfare by restraining and

regulating the use of liberty and property.33It is the most pervasive, the least limitable, and the most demandingof the three fundamental powers of the State. The justification is found in the Latin maximssalus populi est

suprema lex (the welfare of the people is the supreme law) andsic utere tuo ut alienum non laedas (so use yourproperty as not to injure the property of others). As an inherent attribute of sovereignty which virtually extends

to all public needs, police power grants a wide panoply of instruments through which the State, asparenspatriae, gives effect to a host of its regulatory powers.

34We have held that the power to "regulate" means the

power to protect, foster, promote, preserve, and control, with due regard for the interests, first and foremost, ofthe public, then of the utility and of its patrons.

35

The conservative and pivotal distinction between these two powers rests in the purpose for which the charge is

made. If generation of revenue is the primary purpose and regulation is merely incidental, the imposition is a

tax; but if regulation is the primary purpose, the fact that revenue is incidentally raised does not make theimposition a tax.

36

In exacting the assailed Universal Charge through Sec. 34 of the EPIRA, the State's police power, particularly

its regulatory dimension, is invoked. Such can be deduced from Sec. 34 which enumerates the purposes forwhich the Universal Charge is imposed

37and which can be amply discerned as regulatory in character. The

EPIRA resonates such regulatory purposes, thus:

SECTION 2. Declaration of Policy.It is hereby declared the policy of the State:

(a) To ensure and accelerate the total electrification of the country;
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(b) To ensure the quality, reliability, security and affordability of the supply of electric power;

(c) To ensure transparent and reasonable prices of electricity in a regime of free and fair competition andfull public accountability to achieve greater operational and economic efficiency and enhance the

competitiveness of Philippine products in the global market;

(d) To enhance the inflow of private capital and broaden the ownership base of the power generation,transmission and distribution sectors;

(e) To ensure fair and non-discriminatory treatment of public and private sector entities in the process ofrestructuring the electric power industry;

(f) To protect the public interest as it is affected by the rates and services of electric utilities and other

providers of electric power;

(g) To assure socially and environmentally compatible energy sources and infrastructure;

(h) To promote the utilization of indigenous and new and renewable energy resources in power

generation in order to reduce dependence on imported energy;

(i) To provide for an orderly and transparent privatization of the assets and liabilities of the NationalPower Corporation (NPC);

(j) To establish a strong and purely independent regulatory body and system to ensure consumer

protection and enhance the competitive operation of the electricity market; and

(k) To encourage the efficient use of energy and other modalities of demand side management.

From the aforementioned purposes, it can be gleaned that the assailed Universal Charge is not a tax, but an

exaction in the exercise of the State's police power. Public welfare is surely promoted.

Moreover, it is a well-established doctrine that the taxing power may be used as an implement of policepower.

38In Valmonte v. Energy Regulatory Board, et al.

39and in Gaston v. Republic Planters Bank,

40this Court

held that the Oil Price Stabilization Fund (OPSF) and the Sugar Stabilization Fund (SSF) were exactions madein the exercise of the police power. The doctrine was reiterated in Osmea v. Orbos

41with respect to the OPSF.

Thus, we disagree with petitioners that the instant case is different from the aforementioned cases. With theUniversal Charge, a Special Trust Fund (STF) is also created under the administration of PSALM.

42The STF

has some notable characteristics similar to the OPSF and the SSF, viz.:

1) In the implementation of stranded cost recovery, the ERC shall conduct a review to determine

whether there is under-recovery or over recovery and adjust (true-up) the level of the stranded cost

recovery charge. In case of an over-recovery, the ERC shall ensure that any excess amount shall beremitted to the STF. A separate account shall be created for these amounts which shall be held in trustfor any future claims of distribution utilities for stranded cost recovery. At the end of the stranded cost

recovery period, any remaining amount in this account shall be used to reduce the electricity rates to theend-users.43

2) With respect to the assailed Universal Charge, if the total amount collected for the same is greater

than the actual availments against it, the PSALM shall retain the balance within the STF to pay forperiods where a shortfall occurs.

44
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3) Upon expiration of the term of PSALM, the administration of the STF shall be transferred to the DOFor any of the DOF attached agencies as designated by the DOF Secretary.

45

The OSG is in point when it asseverates:

Evidently, the establishment and maintenance of the Special Trust Fund, under the last paragraph of Section 34,

R.A. No. 9136, is well within the pervasive and non-waivable power and responsibility of the government tosecure the physical and economic survival and well-being of the community, that comprehensive sovereign

authority we designate as the police power of the State.46

This feature of the Universal Charge further boosts the position that the same is an exaction imposed primarily

in pursuit of the State's police objectives. The STF reasonably serves and assures the attainment and perpetuityof the purposes for which the Universal Charge is imposed, i.e., to ensure the viability of the country's electric

power industry.

The Second Issue

The principle of separation of powers ordains that each of the three branches of government has exclusivecognizance of and is supreme in matters falling within its own constitutionally allocated sphere. A logical

corollary to the doctrine of separation of powers is the principle of non-delegation of powers, as expressed inthe Latin maximpotestas delegata non delegari potest(what has been delegated cannot be delegated). This is

based on the ethical principle that such delegated power constitutes not only a right but a duty to be performedby the delegate through the instrumentality of his own judgment and not through the intervening mind of

another.47

In the face of the increasing complexity of modern life, delegation of legislative power to various specialized

administrative agencies is allowed as an exception to this principle.48

Given the volume and variety ofinteractions in today's society, it is doubtful if the legislature can promulgate laws that will deal adequately with

and respond promptly to the minutiae of everyday life. Hence, the need to delegate to administrative bodies -the principal agencies tasked to execute laws in their specialized fields - the authority to promulgate rules and

regulations to implement a given statute and effectuate its policies. All that is required for the valid exercise ofthis power of subordinate legislation is that the regulation be germane to the objects and purposes of the law and

that the regulation be not in contradiction to, but in conformity with, the standards prescribed by the law. Theserequirements are denominated as the completeness test and the sufficient standard test.

Under the first test, the law must be complete in all its terms and conditions when it leaves the legislature such

that when it reaches the delegate, the only thing he will have to do is to enforce it. The second test mandatesadequate guidelines or limitations in the law to determine the boundaries of the delegate's authority and prevent

the delegation from running riot.49

The Court finds that the EPIRA, read and appreciated in its entirety, in relation to Sec. 34 thereof, is complete in

all its essential terms and conditions, and that it contains sufficient standards.

Although Sec. 34 of the EPIRA merely provides that "within one (1) year from the effectivity thereof, aUniversal Charge to be determined, fixed and approved by the ERC, shall be imposed on all electricity end-

users," and therefore, does not state the specific amount to be paid as Universal Charge, the amountnevertheless is made certain by the legislative parameters provided in the law itself. For one, Sec. 43(b)(ii) of

the EPIRA provides:

SECTION 43. Functions of the ERC. The ERC shall promote competition, encourage market development,ensure customer choice and penalize abuse of market power in the restructured electricity industry. In
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appropriate cases, the ERC is authorized to issue cease and desist order after due notice and hearing. Towardsthis end, it shall be responsible for the following key functions in the restructured industry:

x x x x

(b) Within six (6) months from the effectivity of this Act, promulgate and enforce, in accordance with law, a

National Grid Code and a Distribution Code which shall include, but not limited to the following:

x x x x

(ii) Financial capability standards for the generating companies, the TRANSCO, distribution utilities and

suppliers: Provided, That in the formulation of the financial capability standards, the nature and function of theentity shall be considered: Provided, further, That such standards are set to ensure that the electric power

industry participants meet the minimum financial standards to protect the public interest. Determine, fix, andapprove, after due notice and public hearings the universal charge, to be imposed on all electricity end-users

pursuant to Section 34 hereof;

Moreover, contrary to the petitioners contention, the ERC does not enjoy a wide latitude of discretion in thedetermination of the Universal Charge. Sec. 51(d) and (e) of the EPIRA

50clearly provides:

SECTION 51. Powers.The PSALM Corp. shall, in the performance of its functions and for the attainment ofits objective, have the following powers:

x x x x

(d) To calculate the amount of the stranded debts and stranded contract costs of NPC which shall form

the basis for ERC in the determination of the universal charge;

(e) To liquidate the NPC stranded contract costs, utilizing the proceeds from sales and other property

contributed to it, including the proceeds from the universal charge.

Thus, the law is complete and passes the first test for valid delegation of legislative power.

As to the second test, this Court had, in the past, accepted as sufficient standards the following: "interest of lawand order;"

51"adequate and efficient instruction;"

52"public interest;"

53"justice and equity;"

54"public

convenience and welfare;"55

"simplicity, economy and efficiency;"56

"standardization and regulation of medicaleducation;"

57and "fair and equitable employment practices."

58Provisions of the EPIRA such as, among others,

"to ensure the total electrification of the country and the quality, reliability, security and affordability of thesupply of electric power"

59and "watershed rehabilitation and management"

60meet the requirements for valid

delegation, as they provide the limitations on the ERCs power to formulate the IRR. These are sufficientstandards.

It may be noted that this is not the first time that the ERC's conferred powers were challenged. In Freedom fromDebt Coalition v. Energy Regulatory Commission,

61the Court had occasion to say:

In determining the extent of powers possessed by the ERC, the provisions of the EPIRA must not be read in

separate parts. Rather, the law must be read in its entirety, because a statute is passed as a whole, and isanimated by one general purpose and intent. Its meaning cannot to be extracted from any single part thereof but

from a general consideration of the statute as a whole. Considering the intent of Congress in enacting theEPIRA and reading the statute in its entirety, it is plain to see that the law has expanded the jurisdiction of the

regulatory body, the ERC in this case, to enable the latter to implement the reforms sought to be accomplished
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by the EPIRA. When the legislators decided to broaden the jurisdiction of the ERC, they did not intend toabolish or reduce the powers already conferred upon ERC's predecessors. To sustain the view that the ERC

possesses only the powers and functions listed under Section 43 of the EPIRA is to frustrate the objectives ofthe law.

In his Concurring and Dissenting Opinion62in the same case, then Associate Justice, now Chief Justice,

Reynato S. Puno described the immensity of police power in relation to the delegation of powers to the ERCand its regulatory functions over electric power as a vital public utility, to wit:

Over the years, however, the range of police power was no longer limited to the preservation of public health,

safety and morals, which used to be the primary social interests in earlier times.Police power now requires theState to "assume an affirmative duty to eliminate the excesses and injustices that are the concomitants of an

unrestrained industrial economy." Police power is now exerted "to further the public welfarea concept asvast as the good of society itself." Hence, "police power is but another name for the governmental authority to

further the welfare of society that is the basic end of all government."When police power is delegated toadministrative bodies with regulatory functions, its exercise should be given a wide latitude. Police power takes

on an even broader dimension in developing countries such as ours, where the State must take a more activerole in balancing the many conflicting interests in society. The Questioned Order was issued by the ERC, acting

as an agent of the State in the exercise of police power. We should have exceptionally good grounds to curtail

its exercise. This approach is more compelling in the field of rate-regulation of electric power rates.Electricpower generation and distribution is a traditional instrument of economic growth that affects not only a few butthe entire nation. It is an important factor in encouraging investment and promoting business. The engines of

progress may come to a screeching halt if the delivery of electric power is impaired. Billions of pesos would belost as a result of power outages or unreliable electric power services. The State thru the ERC should be able to

exercise its police power with great flexibility, when the need arises.

This was reiterated inNational Association of Electricity Consumers for Reforms v. Energy Regulatory

Commission63

where the Court held that the ERC, as regulator, should have sufficient power to respond in realtime to changes wrought by multifarious factors affecting public ut ilities.

From the foregoing disquisitions, we therefore hold that there is no undue delegation of legislative power to theERC.

Petitioners failed to pursue in their Memorandum the contention in the Complaint that the imposition of theUniversal Charge on all end-users is oppressive and confiscatory, and amounts to taxation without

representation. Hence, such contention is deemed waived or abandoned per Resolution64of August 3, 2004.65Moreover, the determination of whether or not a tax is excessive, oppressive or confiscatory is an issue which

essentially involves questions of fact, and thus, this Court is precluded from reviewing the same.66

As a penultimate statement, it may be well to recall what this Court said of EPIRA:

One of the landmark pieces of legislation enacted by Congress in recent years is the EPIRA. It established anew policy, legal structure and regulatory framework for the electric power industry. The new thrust is to tapprivate capital for the expansion and improvement of the industry as the large government debt and the highly

capital-intensive character of the industry itself have long been acknowledged as the critical constraints to theprogram. To attract private investment, largely foreign, the jaded structure of the industry had to be addressed.

While the generation and transmission sectors were centralized and monopolistic, the distribution side wasfragmented with over 130 utilities, mostly small and uneconomic. The pervasive flaws have caused a low

utilization of existing generation capacity; extremely high and uncompetitive power rates; poor quality ofservice to consumers; dismal to forgettable performance of the government power sector; high system losses;

and an inability to develop a clear strategy for overcoming these shortcomings.
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Thus, the EPIRA provides a framework for the restructuring of the industry, including the privatization of theassets of the National Power Corporation (NPC), the transition to a competitive structure, and the delineation of

the roles of various government agencies and the private entities. The law ordains the division of the industryinto four (4) distinct sectors, namely: generation, transmission, distribution and supply.

Corollarily, the NPC generating plants have to privatized and its transmission business spun off and privatized

thereafter.67

Finally, every law has in its favor the presumption of constitutionality, and to justify its nullification, there mustbe a clear and unequivocal breach of the Constitution and not one that is doubtful, speculative, or

argumentative.68

Indubitably, petitioners failed to overcome this presumption in favor of the EPIRA. We find noclear violation of the Constitution which would warrant a pronouncement that Sec. 34 of the EPIRA and Rule

18 of its IRR are unconstitutional and void.

WHEREFORE, the instant case is hereby DISMISSED for lack of merit.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

epublic of the Philippines

SUPREME COURTManila

FIRST DIVISION

G.R. No. 76633 October 18, 1988

EASTERN SHIPPING LINES, INC., petitioner,

vs.PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), MINISTER OF LABOR ANDEMPLOYMENT, HEARING OFFICER ABDUL BASAR and KATHLEEN D. SACO, respondents.

Jimenea, Dala & Zaragoza Law Office for petitioner.

The Solicitor General for public respondent.

Dizon Law Office for respondent Kathleen D. Saco.

CRUZ, J .:

The private respondent in this case was awarded the sum of P192,000.00 by the Philippine OverseasEmployment Administration (POEA) for the death of her husband. The decision is challenged by thepetitioner on the principal ground that the POEA had no jurisdiction over the case as the husbandwas not an overseas worker.

Vitaliano Saco was Chief Officer of the M/V Eastern Polaris when he was killed in an accident inTokyo, Japan, March 15, 1985. His widow sued for damages under Executive Order No. 797 and
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Memorandum Circular No. 2 of the POEA. The petitioner, as owner of the vessel, argued that thecomplaint was cognizable not by the POEA but by the Social Security System and should have beenfiled against the State Insurance Fund. The POEA nevertheless assumed jurisdiction and afterconsidering the position papers of the parties ruled in favor of the complainant. The award consistedof P180,000.00 as death benefits and P12,000.00 for burial expenses.

The petitioner immediately came to this Court, prompting the Solicitor General to move for dismissalon the ground of non-exhaustion of administrative remedies.

Ordinarily, the decisions of the POEA should first be appealed to the National Labor RelationsCommission, on the theory inter alia that the agency should be given an opportunity to correct theerrors, if any, of its subordinates. This case comes under one of the exceptions, however, as thequestions the petitioner is raising are essentially questions of law. 1 Moreover, the private respondenthimself has not objected to the petitioner's direct resort to this Court, observing that the usualprocedure would delay the disposition of the case to her prejudice.

The Philippine Overseas Employment Administration was created under Executive Order No. 797,promulgated on May 1, 1982, to promote and monitor the overseas employment of Filipinos and toprotect their rights. It replaced the National Seamen Board created earlier under Article 20 of the

Labor Code in 1974. Under Section 4(a) of the said executive order, the POEA is vested with "originaland exclusive jurisdiction over all cases, including money claims, involving employee-employerrelations arising out of or by virtue of any law or contract involving Filipino contract workers, includingseamen." These cases, according to the 1985 Rules and Regulations on Overseas Employmentissued by the POEA, include "claims for death, disability and other benefits" arising out of suchemployment. 2

The petitioner does not contend that Saco was not its employee or that the claim of his widow is notcompensable. What it does urge is that he was not an overseas worker but a 'domestic employee andconsequently his widow's claim should have been filed with Social Security System, subject to appealto the Employees Compensation Commission.

We see no reason to disturb the factual finding of the POEA that Vitaliano Saco was an overseasemployee of the petitioner at the time he met with the fatal accident in Japan in 1985.

Under the 1985 Rules and Regulations on Overseas Employment, overseas employment is definedas "employment of a worker outside the Philippines, including employment on board vessels plyinginternational waters, covered by a valid contract. 3 A contract worker is described as "any personworking or who has worked overseas under a valid employment contract and shall include seamen" 4or "any person working overseas or who has been employed by another which may be a localemployer, foreign employer, principal or partner under a valid employment contract and shall includeseamen." 5 These definitions clearly apply to Vitaliano Saco for it is not disputed that he died while

under a contract of employment with the petitioner and alongside the petitioner's vessel, the M/VEastern Polaris, while berthed in a foreign country. 6

It is worth observing that the petitioner performed at least two acts which constitute implied or tacitrecognition of the nature of Saco's employment at the time of his death in 1985. The first is itssubmission of its shipping articles to the POEA for processing, formalization and approval in theexercise of its regulatory power over overseas employment under Executive Order NO. 797. 7Thesecond is its payment 8 of the contributions mandated by law and regulations to the Welfare Fund forOverseas Workers, which was created by P.D. No. 1694 "for the purpose of providing social andwelfare services to Filipino overseas workers."


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Significantly, the office administering this fund, in the receipt it prepared for the private respondent'ssignature, described the subject of the burial benefits as "overseas contract worker Vitaliano Saco." 9While this receipt is certainly not controlling, it does indicate, in the light of the petitioner's ownprevious acts, that the petitioner and the Fund to which it had made contributions considered Saco tobe an overseas employee.

The petitioner argues that the deceased employee should be likened to the employees of thePhilippine Air Lines who, although working abroad in its international flights, are not considered

overseas workers. If this be so, the petitioner should not have found it necessary to submit itsshipping articles to the POEA for processing, formalization and approval or to contribute to theWelfare Fund which is available only to overseas workers. Moreover, the analogy is hardlyappropriate as the employees of the PAL cannot under the definitions given be considered seamennor are their appointments coursed through the POEA.

The award of P180,000.00 for death benefits and P12,000.00 for burial expenses was made by thePOEA pursuant to its Memorandum Circular No. 2, which became effective on February 1, 1984. Thiscircular prescribed a standard contract to be adopted by both foreign and domestic shippingcompanies in the hiring of Filipino seamen for overseas employment. A similar contract had earlierbeen required by the National Seamen Board and had been sustained in a number of cases by this

Court. 10 The petitioner claims that it had never entered into such a contract with the deceased Saco,but that is hardly a serious argument. In the first place, it should have done so as required by thecircular, which specifically declared that "all parties to the employment of any Filipino seamen onboard any ocean-going vessel are advised to adopt and use this employment contract effective 01February 1984 and to desist from using any other format of employment contract effective that date."In the second place, even if it had not done so, the provisions of the said circular are neverthelessdeemed written into the contract with Saco as a postulate of the police power of the State. 11

But the petitioner questions the validity of Memorandum Circular No. 2 itself as violative of theprinciple of non-delegation of legislative power. It contends that no authority had been given thePOEA to promulgate the said regulation; and even with such authorization, the regulation represents

an exercise of legislative discretion which, under the principle, is not subject to delegation.

The authority to issue the said regulation is clearly provided in Section 4(a) of Executive Order No.797, reading as follows:

... The governing Board of the Administration (POEA), as hereunder provided shall promulgate thenecessary rules and regulations to govern the exercise of the adjudicatory functions of the Administration(POEA).

Similar authorization had been granted the National Seamen Board, which, as earlier observed, haditself prescribed a standard shipping contract substantially the same as the format adopted by thePOEA.

The second challenge is more serious as it is true that legislative discretion as to the substantivecontents of the law cannot be delegated. What can be delegated is the discretion to determine howthe law may be enforced, not whatthe law shall be. The ascertainment of the latter subject is aprerogative of the legislature. This prerogative cannot be abdicated or surrendered by the legislatureto the delegate. Thus, in Ynot v. Intermediate Apellate Court 12 which annulled Executive Order No.626, this Court held:

We also mark, on top of all this, the questionable manner of the disposition of the confiscated property asprescribed in the questioned executive order. It is there authorized that the seized property shall bedistributed to charitable institutions and other similar institutions as the Chairman of the National Meat


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Inspection Commission may see fit, in the case of carabaos.' (Italics supplied.) The phrase "may see fit" isan extremely generous and dangerous condition, if condition it is. It is laden with perilous opportunities forpartiality and abuse, and even corruption. One searches in vain for the usual standard and thereasonable guidelines, or better still, the limitations that the officers must observe when they make theirdistribution. There is none. Their options are apparently boundless. Who shall be the fortunatebeneficiaries of their generosity and by what criteria shall they be chosen? Only the officers named cansupply the answer, they and they alone may choose the grantee as they see fit, and in their ownexclusive discretion. Definitely, there is here a 'roving commission a wide and sweeping authority that isnot canalized within banks that keep it from overflowing,' in short a clearly profligate and therefore invaliddelegation of legislative powers.

There are two accepted tests to determine whether or not there is a valid delegation of legislativepower, viz, the completeness test and the sufficient standard test. Under the first test, the law must becomplete in all its terms and conditions when it leaves the legislature such that when it reaches thedelegate the only thing he will have to do is enforce it. 13 Under the sufficient standard test, there mustbe adequate guidelines or stations in the law to map out the boundaries of the delegate's authorityand prevent the delegation from running riot. 14

Both tests are intended to prevent a total transference of legislative authority to the delegate, who isnot allowed to step into the shoes of the legislature and exercise a power essentially legislative.

The principle of non-delegation of powers is applicable to all the three major powers of theGovernment but is especially important in the case of the legislative power because of the manyinstances when its delegation is permitted. The occasions are rare when executive or judicial powershave to be delegated by the authorities to which they legally certain. In the case of the legislativepower, however, such occasions have become more and more frequent, if not necessary. This hadled to the observation that the delegation of legislative power has become the rule and its non-delegation the exception.

The reason is the increasing complexity of the task of government and the growing inability of thelegislature to cope directly with the myriad problems demanding its attention. The growth of societyhas ramified its activities and created peculiar and sophisticated problems that the legislature cannot

be expected reasonably to comprehend. Specialization even in legislation has become necessary. Tomany of the problems attendant upon present-day undertakings, the legislature may not have thecompetence to provide the required direct and efficacious, not to say, specific solutions. Thesesolutions may, however, be expected from its delegates, who are supposed to be experts in theparticular fields assigned to them.

The reasons given above for the delegation of legislative powers in general are particularly applicableto administrative bodies. With the proliferation of specialized activities and their attendant peculiarproblems, the national legislature has found it more and more necessary to entrust to administrativeagencies the authority to issue rules to carry out the general provisions of the statute. This is calledthe "power of subordinate legislation."

With this power, administrative bodies may implement the broad policies laid down in a statute by"filling in' the details which the Congress may not have the opportunity or competence to provide. Thisis effected by their promulgation of what are known as supplementary regulations, such as theimplementing rules issued by the Department of Labor on the new Labor Code. These regulationshave the force and effect of law.

Memorandum Circular No. 2 is one such administrative regulation. The model contract prescribedthereby has been applied in a significant number of the cases without challenge by the employer. Thepower of the POEA (and before it the National Seamen Board) in requiring the model contract is not


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unlimited as there is a sufficient standard guiding the delegate in the exercise of the said authority.That standard is discoverable in the executive order itself which, in creating the Philippine OverseasEmployment Administration, mandated it to protect the rights of overseas Filipino workers to "fair andequitable employment practices."

Parenthetically, it is recalled that this Court has accepted as sufficient standards "Public interest" inPeople v. Rosenthal15"justice and equity" inAntamok Gold Fields v. CIR16 "public convenience andwelfare" in Calalang v. Williams 17 and "simplicity, economy and efficiency" in Cervantes v. Auditor

General, 18 to mention only a few cases. In the United States, the "sense and experience of men" wasaccepted in Mutual Film Corp. v. Industrial Commission, 19and "national security" in Hirabayashi v.United States. 20

It is not denied that the private respondent has been receiving a monthly death benefit pension ofP514.42 since March 1985 and that she was also paid a P1,000.00 funeral benefit by the SocialSecurity System. In addition, as already observed, she also received a P5,000.00 burial gratuity fromthe Welfare Fund for Overseas Workers. These payments will not preclude allowance of the privaterespondent's claim against the petitioner because it is specifically reserved in the standard

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